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Table of Contents
1.0 Executive
Summary....................................................................................................................................1
1.1
Objectives................................................................................................................................................1
1.2 Keys to
Success.......................................................................................................................................1
1.3
Mission....................................................................................................................................................1
Chart:
Highlights.......................................................................................................................................2
2.0 Company
Summary.....................................................................................................................................2
2.1 Company
Ownership..............................................................................................................................2
2.2 Start-up
Summary...................................................................................................................................2
Table:
Start-up...........................................................................................................................................3
Chart:
Start-up...........................................................................................................................................3
Table: Start-up
Funding............................................................................................................................4
2.3 Company Locations and
Facilities..........................................................................................................4
3.0
Services.......................................................................................................................................................4
3.1 Service
Description.................................................................................................................................5
3.2 Sales
Literature.......................................................................................................................................5
3.3
Fulfillment...............................................................................................................................................6
3.4
Technology..............................................................................................................................................6
3.5 Future
Services........................................................................................................................................7
4.0 Market Analysis
Summary.........................................................................................................................7
4.1 Target Market Segment
Strategy............................................................................................................7
4.1.1 Market
Needs...................................................................................................................................8
4.1.2 Market
Trends..................................................................................................................................8
4.1.3 Market
Growth.................................................................................................................................8
4.2 Service Business
Analysis......................................................................................................................9
4.2.1 Main
Competitors............................................................................................................................9
4.2.2 Business
Participants.....................................................................................................................10
4.3 Market
Segmentation............................................................................................................................10
Chart: Market Analysis
(Pie)..................................................................................................................11
Table: Market
Analysis...........................................................................................................................11
5.1 Competitive
Edge..................................................................................................................................12
5.2 Marketing
Strategy................................................................................................................................12
5.2.1 Marketing
Programs......................................................................................................................12
5.2.2 Pricing
Strategy..............................................................................................................................13
5.2.3 Promotion
Strategy........................................................................................................................13
5.3 Sales
Strategy........................................................................................................................................14
5.3.1 Sales
Forecast.................................................................................................................................15
Chart: Sales
Monthly..........................................................................................................................15
Chart: Sales by
Year...........................................................................................................................16
Table: Sales
Forecast..........................................................................................................................16
5.3.2 Sales
Programs...............................................................................................................................16
5.4 Strategic
Alliances................................................................................................................................17
5.5
Milestones.............................................................................................................................................18
Table:
Milestones....................................................................................................................................18
6.0 Management
Summary.............................................................................................................................18
6.1 Organizational
Structure.......................................................................................................................19
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Table of Contents
6.2 Management Team
Gaps......................................................................................................................19
6.3 Personnel
Plan.......................................................................................................................................19
Table:
Personnel......................................................................................................................................20
7.0 Financial
Plan............................................................................................................................................20
7.1 Important
Assumptions.........................................................................................................................21
Table: General
Assumptions...................................................................................................................21
7.2 Key Financial
Indicators.......................................................................................................................21
Chart:
Benchmarks..................................................................................................................................21
7.3 Break-even
Analysis.............................................................................................................................22
Chart: Break-even
Analysis....................................................................................................................22
Table: Break-even
Analysis....................................................................................................................22
.....................................................................................................................................................................22
7.4 Projected Profit and
Loss......................................................................................................................23
Chart: Profit
Monthly..............................................................................................................................23
Chart: Profit
Yearly.................................................................................................................................24
Chart: Gross Margin
Monthly................................................................................................................24
Chart: Gross Margin
Yearly...................................................................................................................25
Table: Profit and
Loss.............................................................................................................................26
.....................................................................................................................................................................26
7.5 Projected Cash
Flow.............................................................................................................................27
Chart:
Cash..............................................................................................................................................27
Table: Cash
Flow....................................................................................................................................28
.....................................................................................................................................................................28
7.6 Projected Balance
Sheet........................................................................................................................29
Table: Balance
Sheet...............................................................................................................................29
.....................................................................................................................................................................29
7.7 Business
Ratios.....................................................................................................................................30
Table:
Ratios...........................................................................................................................................30
Table: Sales
Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table:
Personnel................................................................................................................................................2
...........................................................................................................................................................................2
Table: General
Assumptions.............................................................................................................................3
...........................................................................................................................................................................3
Table: Profit and
Loss.......................................................................................................................................4
...........................................................................................................................................................................5
Table: Cash
Flow..............................................................................................................................................6
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Table of Contents
Table: Balance
Sheet.........................................................................................................................................7
Page 3
Ibrio, Inc.
1.0 Executive Summary Ibrio Incorporated is a small start-up
firm located in the business district of Palmyra, Pennsylvania. We
offer Internet and Web-related services to small businesses in the
Central Pennsylvania area. The services we offer include website
development and design, hosting, maintenance, marketing, and
analysis. Given our experience and expertise in both commercial Web
development and business-tobusiness sales, we believe we can offer
a unique and superior service to small business owners, in
comparison to what is currently available. The demand and growth
rate for Web development and marketing services in the small
business market is at an all time high and shows no sign of slowing
anytime soon. Even more astonishing is the fact that very few Web
development companies have taken advantage of the opportunity, as
there are no dominating participants in this huge market. We
believe the reason for this virtually untapped market is due to
expensive project costs, the highest profit margins in Web
development today are in servicing large- and medium-sized
corporations. We have developed a system that dramatically reduces
steep project costs and henceforth will allow us to offer the same
high-end Web development services as larger companies receive at a
much lower cost to the client. This business plan will highlight
many aspects of our system and our business. It will detail market
growth and demand, and it will outline our projected cash flow and
profit margins over the next three years. All numbers regarding our
projected company growth are based on previous information gathered
by activity in the company over the last few months of operation.
1.1 Objectives 1. Revenues of $200,000 by month 10. 2. Net Profit
of 25% in year one and 35% in year two. 3. 65% Gross margin by
month 10. 1.2 Keys to Success 1. Offering high-end Web services to
small businesses in a way that they can understand and afford. 2.
Build a strong residual income through secondary subscription-based
services tailored for small business (website hosting, marketing,
maintenance, consulting). 3. Establishing strategic partnerships
with area Internet service providers and computer consulting
companies to refer small business website projects to us in
exchange for high payoffs. 1.3 Mission Our mission is to provide
affordable, accessible, and streamlined Internet and Web services
to small businesses. We have developed a system for offering many
different types of Web services (site development, hosting,
marketing, and maintenance) that are exclusively tailored to fit
the needs and resources of small companies.
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Ibrio, Inc.
Chart: Highlights
Highlights$1,200,000
$1,000,000
$800,000
Sales Gross Margin Net Profit
$600,000
$400,000
$200,000
$0 Year 1 Year 2 Year 3
2.0 Company Summary Ibrio Incorporated is a start-up company
that will provide high-end, affordable Internet related services to
small businesses that are looking to expand their existing
marketing efforts to reach the Web. We have a system established
that will allow us to offer website development, hosting,
marketing, and maintenance of the same caliber that large companies
take advantage of, at a very affordable rate. 2.1 Company Ownership
Ibrio has been incorporated as a Pennsylvania S corporation based
in Lebanon county as of August 28, 2000. The corporation is
privately owned by David W. Hickethier, chief operations officer
and Richard B. Andrews, chief technology officer. 2.2 Start-up
Summary Our start-up plan is a well thought out base to propel us
forward with the proper equipment, marketing tools, and personnel
to start our venture. An initial cash investment by the owners in
the amount of $7,300 to purchase office furniture, computer
equipment, and software has been made. Both owners have also
invested a combined time of approximately 3,500 working hours
toward the start-up of Ibrio Inc. The cash requirement of $17,000
are funds that we need to provide the capital to run our business
for the first few months. This capital will fund two employees
payroll and equipment/supplies to get them started. It will cover
business expenses for a few months until our cash flow takes
over.
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Ibrio, Inc.
The four-year $20,000 loan has been secured from the XYZ bank to
supply the needed capital explained above. Table: Start-up
Start-up Requirements Start-up Expenses Business Cards Phone
Line Install (Two Lines) Computer Monitor InfoUSA Database Office
Equipment Dedicated Server Setup Fee Membership Fees DSL Setup and
Install Phones Total Start-up Expenses Start-up Assets Cash
Required Other Current Assets Long-term Assets Total Assets Total
Requirements $17,000 $7,650 $0 $24,650 $27,300 $60 $150 $200 $400
$580 $150 $600 $350 $160 $2,650
Chart: Start-up
Start-up
$24,000 $21,000 $18,000 $15,000 $12,000 $9,000 $6,000 $3,000 $0
Expenses Assets Investment Loans
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Ibrio, Inc.
Table: Start-up Funding
Start-up Funding Start-up Expenses to Fund Start-up Assets to
Fund Total Funding Required Assets Non-cash Assets from Start-up
Cash Requirements from Start-up Additional Cash Raised Cash Balance
on Starting Date Total Assets $7,650 $17,000 $0 $17,000 $24,650
$2,650 $24,650 $27,300
Liabilities and Capital Liabilities Current Borrowing Long-term
Liabilities Accounts Payable (Outstanding Bills) Other Current
Liabilities (interest-free) Total Liabilities Capital Planned
Investment David W. Hickethier Richard B. Andrews Additional
Investment Requirement Total Planned Investment Loss at Start-up
(Start-up Expenses) Total Capital $3,650 $3,650 $0 $7,300 ($2,650)
$4,650 $0 $20,000 $0 $0 $20,000
Total Capital and Liabilities Total Funding
$24,650 $27,300
2.3 Company Locations and Facilities We have an established
commercial office space in Palmyra, PA under a two year lease that
will expire in October of 2001 with an option to renew every 60
days thereafter. There is approximately 1,400 sq. ft. capable of
housing workstations for up to 12 workers. Palmyra is in Lebanon
county, less than a 60 minute drive to anywhere in our four county
target market area. 3.0 Services Ibrio Inc. is a full-service
Internet solutions provider for small businesses. We focus mainly
on the Web, offering the following as our key 'Bread & Butter'
website services: Design and development. Marketing and analysis.
Hosting and maintenance.
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Ibrio, Inc.
We currently offer the following secondary services: E-commerce
development. Website renovations and upgrades. Application
development (i.e. chatrooms, message boards, online polling,
live-feed audio/video, etc.). Website maintenance training.
Internet/website education seminars. Database construction.
We have plans to offer the following services within the next
year: Internet access service for small businesses. Local Area
Network (LAN) installation. Intranet setup and installation.
Result-based website marketing.
3.1 Service Description Website Design and Development: The
service that we offer to small businesses is modeled after the
service that larger Web development firms offer Fortune 1000
companies in the sense that it is completely customized and unique
to each individual client. Website Marketing and Analysis: After we
build the website for our client, or a new client introduces us to
their pre-existing site, we offer this service. As experts of the
Web, we can analyze and test a website based on an established set
of standards that account for the website's aesthetic value,
scalability, functionality, ease-of-use, and main customer base.
After an analysis has been made, we then explore and present to the
client a detailed list of the most efficient Internet marketing
tools and methods available to them within the constraints of their
budget. This type of service is pertinent to our company given the
fact that a very large percentage of our clients are on a tight
budget and can only afford to take advantage of marketing efforts
that are targeted directly at their desired demographic. Website
Hosting and Maintenance: This service is offered for two reasons.
The first reason is because they are both ongoing, continual
services that we can use to establish and maintain a strong
residual income. The second reason for offering these services is
to allow for packaging together with other services either Ibrio
Inc. offers, or services an outside company can provide, hence
allowing us to expand our range of small business Internet
services. 3.2 Sales Literature Ibrio Inc. currently distributes a
sales folder with all the pertinent information about our company
and services. This folder includes our strong points, history,
portfolio examples, and pricing packages info. It also contains
facts based on the growth and popularity of the Internet for small
businesses. Ibrio Inc. currently operates and maintains a
fully-functioning website that provides information about the
company, plus a variety of helpful resources for small business
owners which we will be constantly updating.
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Ibrio, Inc.
In the next six months, we plan to produce and distribute bulk
mail and fax flyers promoting our Web development and hosting
services to small businesses in Central PA to solicit new business.
We have plans to offer a more compact version of our main sales
folder in a brochure format. This brochure will be available both
as a mailer to interested parties and as a sales solicitation in
area businesses. 3.3 Fulfillment For the website design,
development, marketing, analysis, and maintenance we will employ
industry professionals to handle our clients' needs. Working for
the company presently is Brandon Andrews, a professional website
development engineer and strategist with four years of experience
in the commercial Web development industry. To keep employee costs
low, we have designed a "team" development system that will consist
of two full-time sales people and three full-time Web developers.
Of the Web developers, one position will be filled by a
highlyqualified senior Web professional and two lesser-qualified,
lower paid developers. All three will work full-time on separate
projects provided to them by the sales people. However, the senior
developer will have the duty of maintaining the same high quality
level of work in the junior developers' projects, that our clients
have learned to expect from us now. For the website hosting
services we offer, Ibrio Inc. has formed several alliances with
industry leaders to provide top-rate, reliable hosting solutions.
Forming the alliances has allowed us much flexibility in important
hosting features, customizability, and it has drove costs down
dramatically. All these benefits are crucial to preserving the
integrity of our company as being a 'fully-rounded Internet
solutions provider' for small businesses. 3.4 Technology It is a
given that technology and keeping up with new innovations strongly
influence our business. We operate a Windows based Local Area
Network (LAN) in the office that is equipped with the most current
software and hardware tools available to meet our project
requirements. Within the next year, we will be investing in
additional tools that will extend our capabilities in handling
various types of program files (i.e. Macintosh computers, large
capacity data storage, and high-end image scanners). We also have
plans to purchase licensing agreements with our major software
vendors to allow for automatic upgrades in new software tools.
Currently we own and operate both a professional digital and film
camera for the purpose of offering on-site and in-house product and
business photography to our clients. We would like to improve upon
these services in the near future by purchasing a more complete
photography system, it has been our experience that this is a
service many small businesses are recognizing as a crucial part of
their online marketing efforts and would take advantage of it were
we to offer such a service.
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Ibrio, Inc.
3.5 Future Services Local Area Network Installation: These days,
a quickly increasing number of small businesses are using computers
as a necessary tool in the everyday operations of the company. We
would like to be able to expand our current services to meet this
new demand. We will handle every aspect of setting up a small
business with an internal network of computers from purchasing,
installing, and configuring the machines to software integration
and educating the employees on proper usage and operating
functions. Intranet Setup Installation: In our plan, after
developing an Internet website for outside marketing purposes, we
would like to offer the service of implementing the website into
the network for use in all the business day-to-day operations. This
would include extensive product/service cataloging, vital employee
and management information, sharing of accounting and inventory
details, etc., all intended for strictly company uses. Internet
Access for Small Business: This feature would act as another
residual, packageable service. We would target small businesses
exclusively allowing us to provide more flexibility and
affordability to our clients through discounted high volume rates,
value added service packages, and much more aggressive technical
support services. Result-based Marketing: This is a service that no
small business can turn down. We have plans to offer aggressive,
intensified marketing services with the fees based solely on
results. To achieve this, we are in the process of forming multiple
partnerships and alliances with industry specific Internet websites
and various other software and service-oriented companies that
provide specific marketing services and tools based on results
achieved. We feel as though offering this rare service will
dramatically increase our portfolio of clients. 4.0 Market Analysis
Summary Ibrio Inc. will initially focus almost exclusively on small
companies looking to develop an Internet presence for the first
time. We will market our services to small business owners as a
"step-by-step" process, initially starting out with a small, simple
website, then gradually improving and adding to the site and their
entire online marketing efforts. Although we plan to bring on many
clients who simply will need an online presence and nothing more,
our most important and sought after clients will be those business
owners who are ready to implement a larger percentage of their
company onto the Internet. This type of client will traditionally
need one of the following services: E-commerce/shopping cart.
Database driven websites. Dynamic content and website features.
Aggressive online website marketing.
4.1 Target Market Segment Strategy Ibrio Inc. will focus the
majority of sales and marketing efforts toward attracting small
businesses. The reason for this decision is simply the low amount
of services available for a market with such a high demand. In
addition to the very promising supply and demand ratio, it is also
technically easier and less expensive to market to and attract
small website projects than larger projects.
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Ibrio, Inc.
4.1.1 Market Needs The need for small business Internet services
has existed for several years. Small businesses and start-up
businesses alike are migrating onto the Web at an astonishing rate
and making their online presence a higher priority than in earlier
years. We have noticed an enormous hole however in the small
business services that are currently available. Without a doubt,
there is a need for custom, high-end, dynamic services designed
exclusively for small businesses. At this point, the majority of
our competitors are offering services tailored around big business,
to small business owners, or they are offering the exact opposite,
onedimensional, "cookie cutter" type services. While every small
business has now recognized the need for having a presence on the
Internet, many do not know where to start, how much it will cost,
or even how it will benefit their company. It has been our
experience by talking to small business owners that the decision to
take advantage of the Web is not a matter of 'if' but a matter of
'when.' 4.1.2 Market Trends An important market trend right now is
the one toward aggressive online and website marketing. Although
many small businesses are still waiting to gain an Internet
presence, those who already have are beginning to look for more
options along the lines of improving their existing efforts. We
believe that in the upcoming years, small companies especially,
will start to look for more ways to increase the traffic to their
websites. Another important trend is the overall merging of daily
business operations with the Internet and World Wide Web. Just as
the majority of large companies have already started to use the Web
to handle interoffice tasks, we believe that many smaller companies
will begin to realize the time and money saving advantages to this
strategy. 4.1.3 Market Growth Our target market has been growing
and expanding toward Internet and Web usage at an astonishing rate.
In addition, Internet usage by our clients' customers has been
growing exponentially. Below are supporting facts on our target
market growth:
By 2001, small businesses (1-99 employees) will spend in upwards
of $22 billion to either gain an Internet presence or improve their
existing efforts. This number is up from $12 billion in 2000
(Activemedia Research). Small and home-based business' Internet
usage is at approx. 81%, this is an increase from only 26% usage in
1996. It is estimated to reach almost 95% by the year 2004 (IDC
Research). Total U.S. business Information Technology (IT)
expenditures for 2000 are $119.1 billion and will reach $285
billion by the year 2003. The year 2000 will also be the first year
that U.S. businesses spend more of their total IT expenditures on
Web-related services than on IT hardware (IDC Research). Currently,
the total number of online users in the U.S. is 107 million, by
2004 that number will grow to 210 million (IDC Research).
E-commerce revenue will reach nearly $6.8 trillion by the year
2004, up from $48.6 billion in 2000 (Forrester Research Group).
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Ibrio, Inc.
4.2 Service Business Analysis Web services and development
companies vary greatly in the type of service they offer and the
type of client they attract. Ibrio Inc. will be relatively unique
in the fact that we are marketing exclusively to small businesses.
This industry consists of many small Web development firms usually
less than 10 years old that generally start out offering services
to smaller companies but with long-term goals of catering to large,
corporate Web accounts. 4.2.1 Main Competitors
1. Teeple Graphics: Located approximately 10 miles from our
Palmyra offices, they offer Webdevelopment and graphic services.
Strengths: Teeple has a very strong clientele, by talking to
several of their Web development clients, we have come to the
conclusion that Teeple offers a very dependable and high-quality
service. Weaknesses: Teeple Graphics is owned and operated by
George Teeple, he is also the only employee working for the company
out of his home, and does not run his business as a fulltime
operation. In addition, Teeple Graphics requires all clients who
operate an e-commerce website to pay his company a commission on
the revenue generated by the site, this is paid on top of the
development fee that Teeple charges.
2. Sharp Innovations: Located approximately 30 miles from our
Palmyra offices, they offerWeb development services to small
businesses in the Lancaster, PA area. Strengths: Sharp Innovations
has a large market share in its area, offering a very broad range
of services from Web development, e-commerce, graphic design, and
Internet access. Weaknesses: Sharp Innovations is a young company
with very high overhead. They market themselves as "The Small
Business Internet Marketing Professionals of Central PA," but the
types of services they offer and their very high prices do not in
anyway reflect the needs of small business owners. It is also our
opinion, after reviewing Sharp Innovations' portfolio that they
lack a certain level of technical and aesthetic design knowledge
that so many small businesses are beginning to demand.
3. Say1.net: Located approximately 10 miles from our Palmyra, PA
location. They offer a widerange of community and business-related
Web services in the Lebanon, PA and surrounding areas. Strengths:
Say1 has established a 'portal' type website designed to serve the
Lebanon and surrounding areas with useful information regarding
community events and business listings. This could serve as a
valuable tool to their clients when marketing to that area.
Weaknesses: For a company that claims to be experts in marketing
for small business, they do virtually no advertising of their own
and it appears that they lack in the ability to bring on clients
that are outside the city of Lebanon. Even though Web development
is a service that Say1 offers, it is only one in a long list of
varied services and we believe this will dramatically hinder their
focus toward leading the industry in our market.
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Ibrio, Inc.
4. WebWorks: Located approximately 25 miles from our Palmyra, PA
offices. WebWorks offersWeb development and marketing services to
businesses in the Greater Harrisburg, PA area. Strengths: WebWorks
has been in the Web services business for almost six years and has
a very experienced team of developers and programmers. They also
offer outstanding marketing services. Weaknesses: Although WebWorks
is a direct competitor, they have begun to focus a large portion of
their services toward attracting medium- to large-sized companies.
Their pricing is dramatically higher than any competing firms in
the Central PA area and they now have put into effect a policy of
only excepting jobs of a certain size. 4.2.2 Business Participants
The Web services and development industry consists mainly of three
different types of firms. The first type are the very large, high
revenue companies who service larger Fortune 1000 corporations and
well-funded Internet based start-ups exclusively. In this category
are only a few worldwide participants that dominate. The second
type of firm offers pre-fabricated, all-in-one, proprietary type
Web services to any size company at a very low cost or without any
cost. The participants in this category consist of a few dominating
companies that mainly all have additional sources of revenue and
only offer Web services as a value-added service or additional
attraction. The third type of firm is our classification, that is
the smaller, usually very young companies that market to small- and
medium-sized businesses in their local area. Currently there are a
large number of participants in this category, but no dominating
forces. 4.3 Market Segmentation Our target market is separated into
the four surrounding counties listed below: Dauphin County: Located
to the West, approximately five miles from our location. The number
of businesses is estimated at 6,723. It will make up 23% of our
four county target area. Lancaster County: Located Southeast,
approx. 20 miles from our location. We would like to begin
marketing in this area within four months. The number of businesses
is estimated at 11,299. It will make up 40% of our target area.
Lebanon County: Our office is located in Lebanon County. Lebanon is
the smallest of the four counties and therefore we will market in
proportion to its size. The number of businesses is estimated at
2,547. It will make up 9% of our target area. York County: Located
Southwest, approx. 40 miles from our location. York county is the
last of the four counties we will market in. It will be late next
year before we begin marketing in this county. The number of
businesses is estimated at 8,238. It will make up 28% of our target
area. Our business allows us to offer services to small companies,
no matter their geographical location, and we plan to do so,
eventually expanding outside our immediate area. The above
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Ibrio, Inc.
counties are where we will market most heavily and expect to
receive the majority of our work. We do expect to receive a small
portion from outside this target area due to ad placement in a
national business directory. The above demographic information can
be found through the Geospatial & Statistical Data Center.
Chart: Market Analysis (Pie)
Market Analysis (Pie)
Dauphin County Lancaster County Lebanon County York County
Table: Market Analysis
Market Analysis Year 1 Potential Customers Dauphin County
Lancaster County Lebanon County York County Total Growth 2% 2% 2%
2% 1.88% 6,723 11,299 2,593 8,238 28,853 6,844 11,502 2,645 8,403
29,394 6,967 11,709 2,698 8,571 29,945 7,092 11,920 2,752 8,742
30,506 7,220 12,135 2,807 8,917 31,079 Year 2 Year 3 Year 4 Year 5
CAGR 1.80% 1.80% 2.00% 2.00% 1.88%
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Ibrio, Inc.
5.0 Strategy and Implementation Summary Ibrio Inc. will
initially focus all marketing and sales efforts toward the Central
Pennsylvania area, this includes Harrisburg, Lebanon, Lancaster,
and York counties. We will market ourselves as an Internet and Web
services organization devoted to offering high-end services to
small businesses exclusively. Our target customer will be the
owners of any small or home-based company who are looking to
implement their business into the Web. 5.1 Competitive Edge We have
a valuable competitive edge over our local competitors based on the
fact that we have streamlined all our services into the small
business market. Through setting up several strategic partnerships
with various Internet and Web-related companies, we are able to
offer our clients an affordable and efficient proprietary Web
package that will meet all their related needs. Ibrio Inc. also has
as its lead development manager, Brandon Andrews, a main principal
in the company. Brandon Andrews has four years of commercial Web
development experience and has been recognized as a leader and
innovator in the graphic design and layout areas of website
development. 5.2 Marketing Strategy Successful marketing of Web
services to small business owners depends on how you approach and
follow-up every potential client. It is very important to deliver
our marketing pitch in a clear, no non-sense method. Details of the
Internet and Web are still relatively unknown by many small
business owners, giving it the tendency to confuse and intimidate
easily. 5.2.1 Marketing Programs The following is a summary of our
marketing programs from the Milestones table: We will begin our
marketing by acquiring memberships from the following organizations
(October 2-9): Lebanon Chamber of Commerce. Harrisburg Chamber of
Commerce. Hershey Partnership.
We plan on doing a large scale marketing project during this
month including (March 5 - April 5, 2001): Radio advertising (WHP
580). Ad placement in local trade publications (The Central Penn
Business Journal). Billboard Ads to promote wide-spread name
recognition.
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Ibrio, Inc.
5.2.2 Pricing Strategy For most small business owners, cost,
both residual and one-time are huge influences on the decisions
they make regarding everyday operations of their company. Even
though we offer 100% customized services and our pricing is based
on an hourly fee, to make it easier and less confusing for the
clients, Ibrio has established a packaged pricing system.
Budget Domain Website Package ($585.00): For simple, information
based websites. Popular with companies who just need to gain an
Internet presence. Mid-Level Website Package ($945.00): Information
based websites with a large amount of content. Popular with
companies that have a large services/products list and/or want to
implement more of their business into the Web. Catalog Website
Package ($1,440.00): Usually reserved for product-oriented websites
that are e-commerce enabled. Popular with companies that have a
desire to market heavily on the Internet or sell their
products/services directly from the Web. Website Hosting (from
$15.00 to $45.00 per month): Depending on the type and size of the
website, the price for hosting can vary greatly. The average cost
of hosting for most clients is $25 per month. Website Maintenance
($45.00 per hour): We charge a set fee of $45.00 per hour billed in
10 minute increments. If a client feels as though they will need
their website updated or maintained on a regular basis, packages
are available at a discount rate.
5.2.3 Promotion Strategy Our target client is part of a very
specific demographic, for this reason, we market and promote our
services in a direct and specifically targeted manner. Print
Ads:
Currently we advertise in eight separate area yellow page
directories. All our ads appear under either the Internet Services
or Website Design headings. Ibrio Inc. also has an ad listing in a
national business directory under the heading of Web Developers. In
the near future we will feature ads in several area business
publications such as The Central Penn Business Journal and the
Who's Who in Dauphin County.
Direct Mail and Fax: We have sent out targeted bulk mail flyers
promoting special offerings by our company. We have participated in
targeted broadcast fax promotions to small businesses in our area.
In the near future we will begin a new aggressive, ongoing bulk
mail campaign to promote our Web development and hosting
services.
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Ibrio, Inc.
Mass Media Ads: We will begin advertising on a broader scale
within the next six months. Radio spots will be continuously played
during local area talk shows and news programs, this placement is
intended to reach the highest percentage of our target client
possible. Billboard ad placement will be the second mass media
marketing campaign we will implement into our marketing efforts.
Billboard ads will be intended as 'name recognition'
advertising.
Educational Seminars: Ibrio Inc. has been invited to speak to
business owners and managers at several Internet and Web-related
educational seminars on a variety of topic. In the near future, we
will promote our services through these seminars.
Local Area Commerce Groups: To promote our services and our name
as a participant in the Web services industry, we will be joining
many of the local area Chamber of Commerce groups and various other
strategic partnership clubs.
5.3 Sales Strategy Our clients are small business owners, most
are very protective of their company, and almost all of them are
salesmen themselves. We sell value, service, and quality when we
talk to business owners. We need to convince them that they can
look past all of the hype surrounding the Internet and still see
why having a website is worth the money spent. We currently utilize
a database system specifically targeted toward our desired
demographic to establish our first contact with every potential
client. It has proven a successful method for soliciting new
business directly due to the method in which we approach the first
call. The salesman always requests to speak to the business owner,
asking for him by his first name only, and when asked who is
calling, responds by providing simply his first name as well. Once
on the phone with the business owner, there is absolutely no script
and the salesman clearly identifies himself and asks the business
owner if he has ever considered having a website developed for his
company, no matter what the response, a brief conversation will
always pursue, sometimes leading to an appointment, and sometimes
to a follow-up call. Because we have full confidence in our
services, and recognize that business owners are generally open to
the idea of utilizing the Internet and most even consider it a
necessity, we take a very low-pressure, non-abrasive approach to
direct selling. We will normally present the information about our
company, portfolio, strengths, and pricing to the client and let
them make the decision on their own. This method has proven
successful provided that we keep our follow-up calls consistent and
regular until we receive either a yes or no answer.
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Ibrio, Inc.
5.3.1 Sales Forecast The following table and chart summarize our
forecast sales. We expect the first month of operations (October)
to be spent training the new developer and new salesman. November
will be our first month of operation and we expect to grow steadily
in the following months. Website development sales will be the
largest portion of our revenue with result-based marketing
following. Maintenance and hosting revenue will be built up slowly
but are the residual base we will stand on in the future. Chart:
Sales Monthly
Sales Monthly$28,000 $24,000 $20,000 $16,000
Website Development Result-based Marketing Maintenance
$12,000
Hosting$8,000 $4,000 $0 Month 1 Month 2 Month 3 Month 4 Month 5
Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
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Ibrio, Inc.
Chart: Sales by Year
Sales by Year$1,200,000 $1,000,000
Website Development$800,000
Result-based Marketing$600,000 $400,000 $200,000 $0 Year 1 Year
2 Year 3
Maintenance Hosting
Table: Sales Forecast
Sales Forecast Year 1 Sales Website Development Result-based
Marketing Maintenance Hosting Total Sales Direct Cost of Sales
Website Development Result-based Marketing Maintenance Hosting
Subtotal Direct Cost of Sales $117,000 $19,250 $14,230 $14,040
$164,520 Year 1 $0 $9,900 $0 $5,650 $15,550 $350,000 $81,900
$43,000 $40,000 $514,900 Year 2 $0 $35,000 $0 $15,000 $50,000
$750,000 $199,500 $130,000 $115,000 $1,194,500 Year 3 $0 $102,600
$0 $25,000 $127,600 Year 2 Year 3
5.3.2 Sales Programs The following is a summary of the our sales
programs from the Milestones table: October 9-16: Hiring first
salesman. We will be training this employee this month to make
telephone calls to business owners in the area and set appointments
to meet with them and show them what we have to offer. Starting in
mid-November he/she will begin meeting with clients alone. October
23 - November 2: We will be updating our sales literature including
creating brochures, and printing leaflets to be placed in our
presentation folders. February 12-26: Hiring second salesman. We
will be training this salesman in the same fashion previously
stated.
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Ibrio, Inc.
5.4 Strategic Alliances Currently, we do not participate in any
co-marketing or co-development efforts with outside companies.
However, we have specific plans to establish several strategic
partnership programs with area ISPs (Internet Service Providers)
and computer consulting companies. These partnerships are intended
to attract more sub-contracting work from potential competitors, in
exchange for a commission to be paid for each lead and resulting
new client.
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Ibrio, Inc.
5.5 Milestones The accompanying table lists important program
milestones, with dates and managers in charge, and budgets for
each. The milestone schedule indicates our emphasis on planning for
implementation. What the table doesn't show is the commitment
behind it. Our business plan includes complete provisions for
plan-vs.-actual analysis, and we will hold monthly follow-up
meetings every month to discuss the variance and course
corrections. Table: Milestones
Milestones Milestone Incorporation Acquire Start-up Financing
Accounting/Balance Sheet Setup Acquire Chamber Memberships Staff
Sales Position #1 Staff Development Position #1 Upgrade Current
Sales Literature Acquire Dedicated Web Host Service Staff
Development Position #2 Staff Sales Position #2 Acquire Large Scale
Outside Marketing Staff Developer Postion #3 Other Totals Start
Date 8/14/2000 8/14/2000 8/31/2000 10/2/2000 10/9/2000 10/16/2000
10/23/2000 11/1/2000 1/15/2001 2/12/2001 3/5/2001 3/19/2001
1/1/2001 End Date 8/28/2000 10/1/2000 8/31/2000 10/9/2000
10/16/2000 10/23/2000 11/6/2000 11/8/2000 2/1/2001 2/26/2001
4/5/2001 4/2/2001 1/1/2001 Budget $500 $0 $300 $600 $2,240 $3,200
$300 $770 $3,200 $2,240 $2,000 $3,200 $0 $18,550 Manager Dave Dave
Dave Dave Dave Brandon Dave Brandon Brandon Dave Dave Brandon ABC
Department Admin Admin Admin Marketing HR HR Sales Development HR
HR Marketing HR Department
6.0 Management Summary Ibrio Inc. is owned and operated by two
partners with equal equity in the company, and both directors in
the corporation. David Hickethier attended Williamson College on a
three year scholarship basis, earning his Associates Degree in
construction management. He has completed many business management
and business finance courses and has also had hands on experience
with managing people. He has one year experience in Internet and
Web-related sales and nearly two total years of professional sales
experience. R. Brandon Andrews is an experienced website developer
and strategist with over four years of commercial Web and Internet
services experience, plus numerous attendance to various related
seminars and educational classes. Previous to the forming of Ibrio
Inc., he owned and operated a sole-proprietorship, which offered
similar Web-related services, but did not market exclusively to
small business.
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Ibrio, Inc.
6.1 Organizational Structure Ibrio Inc. will depend on the two
main principals, David Hickethier and Brandon Andrews, for all
management responsibilities. This will include office management,
accounts receivable and payable, marketing, and talent recruitment.
David Hickethier will serve as chief operations officer and sales
manager. He will supervise all salesmen and all sales promotions
and projects. David will also be holding the office of the
treasurer therefore will be responsible for all financial related
matters. Brandon Andrews will serve as chief technology officer and
lead Web developer. He will be directly supervising all Web
development (employee and sub-contracting projects), and will also
be responsible for any necessary training in the same department.
6.2 Management Team Gaps The current management team will require
support in both the business development and administrative
departments. Both managers have had prior experience in these
fields, but feel as though their experience is limited given the
fact that prior working environments rarely required this type of
support. We will turn to Parks & Company, our finance and
accounting firm, to provide expert advise and counseling in both
the business development and administrative support departments.
This strategy will allow the partners of Ibrio Inc. to lend the
majority of their time to their respective areas of the company. We
will turn to the law offices of Keefer Wood Allen & Rahal, LLP
for all advice concerning the legal issues of running Ibrio, Inc.
6.3 Personnel Plan We visualize implementing a "team" development
system that will consist of two full-time sales people and three
full-time Web developers. Of the Web developers, one position will
be filled by a highly-qualified senior Web professional and two
lesser-qualified, lower paid developers. All three will work
full-time on separate projects provided to them by the sales
people. However, the senior developer will have the duty of
maintaining the same high quality level of work in the junior
developers' projects, that our clients have learned to expect from
us now. By May, 2001 we plan to have one of these teams fully
functional. The following table shows how we plan on making the
above a reality.
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Ibrio, Inc.
Table: Personnel
Personnel Plan Year 1 Production Personnel Brandon/Web Developer
Keith/Hired in Oct Developer #2/Hired in Feb Developer #3/Hired in
Apr Other Subtotal Sales and Marketing Personnel Dave/Marketing
Sales Position #1/Hired in Oct Sales Position #2/Hired in Feb Other
Subtotal General and Administrative Personnel N/A N/A Subtotal
Other Personnel N/A N/A Subtotal Total People Total Payroll $0 $0
$0 7 $68,492 $0 $0 $0 7 $159,000 $0 $0 $0 7 $245,000 $0 $0 $0 $0 $0
$0 $0 $0 $0 $3,400 $16,504 $10,096 $0 $30,000 $25,000 $23,000
$21,000 $0 $69,000 $60,000 $25,000 $23,000 $0 $108,000 $3,400
$16,228 $10,944 $7,920 $0 $38,492 $25,000 $23,000 $21,000 $21,000
$0 $90,000 $60,000 $27,000 $25,000 $25,000 $0 $137,000 Year 2 Year
3
7.0 Financial Plan Ibrio's financials summarize the following
areas: Important Assumptions. Key Financial Indicators. Break-even
Analysis. Projected Profit and Loss. Projected Cash Flow. Projected
Balance Sheet. Business Ratios.
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Ibrio, Inc.
7.1 Important Assumptions Our financial assumptions are based on
a steady economy and standard numbers for a business in our
industry. Table: General Assumptions
General Assumptions Year 1 Plan Month Current Interest Rate
Long-term Interest Rate Tax Rate Other 1 10.00% 13.00% 25.42% 0
Year 2 2 10.00% 13.00% 25.00% 0 Year 3 3 10.00% 13.00% 25.42% 0
7.2 Key Financial Indicators The following chart indicates our
key financial indicators over the next three years.
Chart: Benchmarks
Benchmarks7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Sales Gross Margin%
Operating Expenses Collection Days
Year 1 Year 2 Year 3
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Ibrio, Inc.
7.3 Break-even Analysis The following table and chart summarize
our break-even analysis. With two developers and two salesmen we
plan on developing eight sites in November and once the two new
hires are fully trained doubling the number to 16 sites a month.
(We don't plan on that happening until March 2001). The average
variable cost is an aggregate measure for all the types of services
which will be offered.
Chart: Break-even Analysis
Break-even Analysis$4,000 $3,000 $2,000 $1,000 $0 ($1,000)
($2,000) ($3,000) ($4,000) $0 $800 $1,600 $2,400 $3,200 $4,000
$4,800 $5,600 $6,400 $7,200 $8,000 $8,800
Table: Break-even Analysis
Break-even Analysis Monthly Revenue Break-even Assumptions:
Average Percent Variable Cost Estimated Monthly Fixed Cost 9%
$4,210 $4,649
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Ibrio, Inc.
7.4 Projected Profit and Loss Our projected profit and loss is
shown on the following table. Some highlights are the Gross Margin
at 67% for our first year and steadily increasing. Our Net
Profit/Sales starting at 26% and increasing by approximately 10%
the following two years to reach 45% by our third year. Chart:
Profit Monthly
Profit Monthly$12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4
Month 6 Month 8 Month 10 Month 12
Page 23
Ibrio, Inc.
Chart: Profit Yearly
Profit Yearly
$500,000
$400,000
$300,000
$200,000
$100,000
$0 Year 1 Year 2 Year 3
Chart: Gross Margin Monthly
Gross Margin Monthly$21,000 $18,000 $15,000 $12,000 $9,000
$6,000 $3,000 $0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Page 24
Ibrio, Inc.
Chart: Gross Margin Yearly
Gross Margin Yearly
$1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000
$300,000 $200,000 $100,000 $0 Year 1 Year 2 Year 3
Page 25
Ibrio, Inc.
Table: Profit and Loss
Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales
Production Payroll Other Total Cost of Sales Gross Margin Gross
Margin % Operating Expenses Sales and Marketing Expenses Sales and
Marketing Payroll Advertising/Promotion Travel Miscellaneous Total
Sales and Marketing Expenses Sales and Marketing % General and
Administrative Expenses General and Administrative Payroll Sales
and Marketing and Other Expenses Depreciation Rent Depreciation
Leased Equipment Utilities Insurance Payroll Taxes Other General
and Administrative Expenses Total General and Administrative
Expenses General and Administrative % Other Expenses: Other Payroll
Consultants Contract/Consultants Total Other Expenses Other % Total
Operating Expenses Profit Before Interest and Taxes EBITDA Interest
Expense Taxes Incurred Net Profit Net Profit/Sales $0 $0 $0 $0
0.00% $50,514 $59,964 $63,144 $2,600 $14,330 $43,034 26.16% $0 $0
$0 $0 0.00% $119,080 $255,820 $260,820 $2,302 $63,380 $190,139
36.93% $0 $0 $0 $0 0.00% $206,900 $723,000 $735,000 $1,664 $183,340
$537,996 45.04% $0 $0 $3,180 $4,500 $0 $0 $805 $0 $8,219 $0 $16,704
10.15% $0 $0 $5,000 $12,000 $2,000 $0 $2,000 $2,500 $19,080 $0
$42,580 8.27% $0 $0 $12,000 $24,000 $4,000 $0 $5,000 $5,000 $29,400
$0 $79,400 6.65% $30,000 $2,790 $1,020 $0 $33,810 20.55% $69,000
$3,500 $3,000 $1,000 $76,500 14.86% $108,000 $10,000 $7,000 $2,500
$127,500 10.67% $164,520 $15,550 $38,492 $0 $54,042 $110,478 67.15%
Year 2 $514,900 $50,000 $90,000 $0 $140,000 $374,900 72.81% Year 3
$1,194,500 $127,600 $137,000 $0 $264,600 $929,900 77.85%
Page 26
Ibrio, Inc.
7.5 Projected Cash Flow Cash flow projections for the first half
of the year are slightly declining and in May they begin to raise
sufficiently. We may need to borrow against our accounts
receivables but are projecting that the initial capital raised
should cover us until our cash becomes fluid.
Chart: Cash
Cash$40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000
$5,000 $0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2
Month 4 Month 6 Month 8 Month 10 Month 12
Net Cash Flow Cash Balance
Page 27
Ibrio, Inc.
Table: Cash Flow
Pro Forma Cash Flow Year 1 Cash Received Cash from Operations
Cash Sales Cash from Receivables Subtotal Cash from Operations
Additional Cash Received Sales Tax, VAT, HST/GST Received New
Current Borrowing New Other Liabilities (interest-free) New
Long-term Liabilities Sales of Other Current Assets Sales of
Long-term Assets New Investment Received Subtotal Cash Received
Expenditures Expenditures from Operations Cash Spending Bill
Payments Subtotal Spent on Operations Additional Cash Spent Sales
Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment Long-term Liabilities
Principal Repayment Purchase Other Current Assets Purchase
Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash
Balance $0 $0 $0 $0 $0 $0 $0 $109,256 $26,704 $43,704 $0 $0 $0
$4,589 $0 $20,000 $0 $340,187 $91,102 $134,806 $0 $0 $0 $5,222 $0
$20,000 $0 $650,103 $382,224 $517,029 $68,492 $40,764 $109,256
$159,000 $156,598 $315,598 $245,000 $379,881 $624,881 $0 $0 $0 $0
$0 $0 $10,700 $135,960 Year 1 $0 $0 $0 $0 $0 $0 $0 $431,289 Year 2
$0 $0 $0 $0 $0 $0 $0 $1,032,326 Year 3 $54,292 $70,969 $125,260
$169,917 $261,372 $431,289 $394,185 $638,141 $1,032,326 Year 2 Year
3
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Ibrio, Inc.
7.6 Projected Balance Sheet The balance sheet in the following
table shows managed but sufficient growth of net worth, and a
sufficiently healthy financial position. The monthly estimates are
included in the appendix. Table: Balance Sheet
Pro Forma Balance Sheet Year 1 Assets Current Assets Cash
Accounts Receivable Other Current Assets Total Current Assets
Long-term Assets Long-term Assets Accumulated Depreciation Total
Long-term Assets Total Assets Liabilities and Capital Current
Liabilities Accounts Payable Current Borrowing Other Current
Liabilities Subtotal Current Liabilities Long-term Liabilities
Total Liabilities Paid-in Capital Retained Earnings Earnings Total
Capital Total Liabilities and Capital Net Worth $9,050 $0 $0 $9,050
$20,000 $29,050 $18,000 ($2,650) $43,034 $58,384 $87,434 $58,384
$13,213 $0 $0 $13,213 $15,411 $28,624 $18,000 $40,384 $190,139
$248,523 $277,147 $248,523 $32,836 $0 $0 $32,836 $10,189 $43,025
$18,000 $230,523 $537,996 $786,519 $829,544 $786,519 $0 $3,180
($3,180) $87,434 Year 1 $20,000 $8,180 $11,820 $277,147 Year 2
$40,000 $20,180 $19,820 $829,544 Year 3 $43,704 $39,260 $7,650
$90,614 $134,806 $122,871 $7,650 $265,327 $517,029 $285,045 $7,650
$809,724 Year 2 Year 3
Page 29
Ibrio, Inc.
7.7 Business Ratios The following table shows the projected
businesses ratios. We expect to maintain healthy ratios for
profitability, risk, and return. The Industry Profile ratios, shown
for comparison, are based on Standard Industrial Classification
(SIC) code 7375, Information Retrieval Services. Table: RatiosRatio
Analysis Year 1 Sales Growth Percent of Total Assets Accounts
Receivable Other Current Assets Total Current Assets Long-term
Assets Total Assets Current Liabilities Long-term Liabilities Total
Liabilities Net Worth Percent of Sales Sales Gross Margin Selling,
General & Administrative Expenses Advertising Expenses Profit
Before Interest and Taxes Main Ratios Current Quick Total Debt to
Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
Additional Ratios Net Profit Margin Return on Equity Activity
Ratios Accounts Receivable Turnover Collection Days Accounts
Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt
to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working
Capital Interest Coverage Additional Ratios Assets to Sales Current
Debt/Total Assets Acid Test Sales/Net Worth 0.53 10% 5.67 2.82 0.54
5% 10.78 2.07 0.69 4% 15.98 1.52 n.a n.a n.a n.a $81,564 23.06
$252,114 111.14 $776,888 434.50 n.a n.a 0.50 0.31 0.12 0.46 0.05
0.76 n.a n.a 2.81 54 5.50 27 1.88 2.81 86 12.17 25 1.86 2.81 93
12.17 21 1.44 n.a n.a n.a n.a n.a 10.01 10.01 33.23% 98.25% 65.61%
Year 1 26.16% 73.71% 20.08 20.08 10.33% 102.01% 91.47% Year 2
36.93% 76.51% 24.66 24.66 5.19% 91.71% 86.96% Year 3 45.04% 68.40%
n.a n.a 1.57 1.19 70.60% 4.10% 13.80% 100.00% 67.15% 41.00% 1.70%
36.45% 100.00% 72.81% 35.88% 0.68% 49.68% 100.00% 77.85% 32.56%
0.84% 60.53% 100.00% 0.00% 78.10% 0.90% 1.90% 44.90% 8.75% 103.64%
-3.64% 100.00% 10.35% 22.87% 33.23% 66.77% 44.33% 2.76% 95.74%
4.26% 100.00% 4.77% 5.56% 10.33% 89.67% 34.36% 0.92% 97.61% 2.39%
100.00% 3.96% 1.23% 5.19% 94.81% 25.00% 46.30% 76.60% 23.40%
100.00% 49.40% 21.20% 70.60% 29.40% n.a. Year 2 212.97% Year 3
131.99% Industry Profile 9.70%
Page 30
Ibrio, Inc.
Dividend Payout
0.00
0.00
0.00
n.a
Page 31
AppendixTable: Sales Forecast
Sales Forecast Month 1 Sales Website Development Result-based
Marketing Maintenance Hosting Total Sales Direct Cost of Sales
Website Development Result-based Marketing Maintenance Hosting
Subtotal Direct Cost of Sales 0% 0% 0% 0% $0 $0 $0 $0 $0 Month 1 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 Month 2 $0 $0 $0 $0 $0 $4,800 $0 $110
$200 $5,110 Month 3 $0 $0 $0 $350 $350 $5,400 $0 $280 $300 $5,980
Month 4 $0 $0 $0 $350 $350 $7,200 $0 $510 $540 $8,250 Month 5 $0 $0
$0 $350 $350 $8,400 $0 $750 $780 $9,930 Month 6 $0 $0 $0 $350 $350
$8,400 $1,750 $1,010 $1,020 $12,180 Month 7 $0 $900 $0 $350 $1,250
$11,200 $2,100 $1,350 $1,340 $15,990 Month 8 $0 $1,080 $0 $1,100
$2,180 $14,000 $2,800 $1,790 $1,740 $20,330 Month 9 $0 $1,440 $0
$700 $2,140 $19,200 $3,500 $2,290 $2,200 $27,190 Month 10 $0 $1,800
$0 $700 $2,500 $19,200 $4,200 $2,810 $2,700 $28,910 Month 11 $0
$2,160 $0 $700 $2,860 $19,200 $4,900 $3,330 $3,220 $30,650 Month 12
$0 $2,520 $0 $700 $3,220 Month 2 Month 3 Month 4 Month 5 Month 6
Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Page 1
AppendixTable: Personnel
Personnel Plan Month 1 Production Personnel Brandon/Web
Developer Keith/Hired in Oct Developer #2/Hired in Feb Developer
#3/Hired in Apr Other Subtotal Sales and Marketing Personnel
Dave/Marketing Sales Position #1/Hired in Oct Sales Position
#2/Hired in Feb Other Subtotal General and Administrative Personnel
N/A N/A Subtotal Other Personnel N/A N/A Subtotal Total People
Total Payroll $0 $0 $0 0 $0 $0 $0 $0 2 $400 $0 $0 $0 4 $4,140 $0 $0
$0 4 $2,632 $0 $0 $0 4 $3,624 $0 $0 $0 6 $6,280 $0 $0 $0 6 $6,680
$0 $0 $0 7 $7,992 $0 $0 $0 7 $9,000 $0 $0 $0 7 $9,024 $0 $0 $0 7
$9,248 $0 $0 $0 7 $9,472 $0 $0 $0 $0 $0 $200 $0 $0 $0 $200 $200
$1,904 $0 $0 $2,104 $200 $1,080 $0 $0 $1,280 $300 $1,440 $0 $0
$1,740 $300 $1,680 $1,120 $0 $3,100 $300 $1,680 $1,232 $0 $3,212
$300 $1,680 $1,176 $0 $3,156 $400 $1,760 $1,288 $0 $3,448 $400
$1,760 $1,760 $0 $3,920 $400 $1,760 $1,760 $0 $3,920 $400 $1,760
$1,760 $0 $3,920 $0 $0 $0 $0 $0 $0 $200 $0 $0 $0 $0 $200 $200
$1,836 $0 $0 $0 $2,036 $200 $1,152 $0 $0 $0 $1,352 $300 $1,584 $0
$0 $0 $1,884 $300 $1,440 $1,440 $0 $0 $3,180 $300 $1,584 $1,584 $0
$0 $3,468 $300 $1,512 $1,512 $1,512 $0 $4,836 $400 $1,840 $1,656
$1,656 $0 $5,552 $400 $1,680 $1,512 $1,512 $0 $5,104 $400 $1,760
$1,584 $1,584 $0 $5,328 $400 $1,840 $1,656 $1,656 $0 $5,552 Month 2
Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10
Month 11 Month 12
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
Page 2
AppendixTable: General Assumptions
General Assumptions Month 1 Plan Month Current Interest Rate
Long-term Interest Rate Tax Rate Other 1 10.00% 13.00% 30.00% 0
Month 2 2 10.00% 13.00% 25.00% 0 Month 3 3 10.00% 13.00% 25.00% 0
Month 4 4 10.00% 13.00% 25.00% 0 Month 5 5 10.00% 13.00% 25.00% 0
Month 6 6 10.00% 13.00% 25.00% 0 Month 7 7 10.00% 13.00% 25.00% 0
Month 8 8 10.00% 13.00% 25.00% 0 Month 9 9 10.00% 13.00% 25.00% 0
Month 10 10 10.00% 13.00% 25.00% 0 Month 11 11 10.00% 13.00% 25.00%
0 Month 12 12 10.00% 13.00% 25.00% 0
Page 3
AppendixTable: Profit and Loss
Pro Forma Profit and Loss Month 1 Sales Direct Cost of Sales
Production Payroll Other Total Cost of Sales Gross Margin Gross
Margin % Operating Expenses Sales and Marketing Expenses Sales and
Marketing Payroll Advertising/Promotion Travel Miscellaneous Total
Sales and Marketing Expenses Sales and Marketing % General and
Administrative Expenses General and Administrative Payroll Sales
and Marketing and Other Expenses Depreciation Rent Depreciation
Leased Equipment Utilities Insurance Payroll Taxes Other General
and Administrative Expenses Total General and Administrative
Expenses General and Administrative % 12% $0 $0 $0 $0 $0 $0 0.00%
Month 2 $0 $0 $200 $0 $200 ($200) 0.00% Month 3 $5,110 $350 $2,036
$0 $2,386 $2,724 53.31% Month 4 $5,980 $350 $1,352 $0 $1,702 $4,278
71.54% Month 5 $8,250 $350 $1,884 $0 $2,234 $6,016 72.92% Month 6
$9,930 $350 $3,180 $0 $3,530 $6,400 64.45% Month 7 $12,180 $1,250
$3,468 $0 $4,718 $7,462 61.26% Month 8 $15,990 $2,180 $4,836 $0
$7,016 $8,974 56.12% Month 9 $20,330 $2,140 $5,552 $0 $7,692
$12,638 62.16% Month 10 $27,190 $2,500 $5,104 $0 $7,604 $19,586
72.03% Month 11 $28,910 $2,860 $5,328 $0 $8,188 $20,722 71.68%
Month 12 $30,650 $3,220 $5,552 $0 $8,772 $21,878 71.38%
$0 $0 $0 $0 $0 0.00%
$200 $0 $0 $0 $200 0.00%
$2,104 $230 $60 $0 $2,394 46.85%
$1,280 $230 $60 $0 $1,570 26.25%
$1,740 $230 $60 $0 $2,030 24.61%
$3,100 $300 $120 $0 $3,520 35.45%
$3,212 $300 $120 $0 $3,632 29.82%
$3,156 $300 $120 $0 $3,576 22.36%
$3,448 $300 $120 $0 $3,868 19.03%
$3,920 $300 $120 $0 $4,340 15.96%
$3,920 $300 $120 $0 $4,340 15.01%
$3,920 $300 $120 $0 $4,340 14.16%
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 0.00%
$0 $0 $0 $0 $0 $0 $0 $0 $48 $0 $48 0.00%
$0 $0 $300 $450 $0 $0 $55 $0 $497 $0 $1,302 25.48%
$0 $0 $300 $450 $0 $0 $70 $0 $316 $0 $1,136 18.99%
$0 $0 $300 $450 $0 $0 $70 $0 $435 $0 $1,255 15.21%
$0 $0 $300 $450 $0 $0 $80 $0 $754 $0 $1,584 15.95%
$0 $0 $330 $450 $0 $0 $80 $0 $802 $0 $1,662 13.64%
$0 $0 $330 $450 $0 $0 $90 $0 $959 $0 $1,829 11.44%
$0 $0 $330 $450 $0 $0 $90 $0 $1,080 $0 $1,950 9.59%
$0 $0 $330 $450 $0 $0 $90 $0 $1,083 $0 $1,953 7.18%
$0 $0 $330 $450 $0 $0 $90 $0 $1,110 $0 $1,980 6.85%
$0 $0 $330 $450 $0 $0 $90 $0 $1,137 $0 $2,007 6.55%
Page 4
AppendixOther Expenses: Other Payroll Consultants
Contract/Consultants Total Other Expenses Other % Total Operating
Expenses Profit Before Interest and Taxes EBITDA Interest Expense
Taxes Incurred Net Profit Net Profit/Sales $0 $0 $0 $0 0.00% $0 $0
$0 $217 ($65) ($152) 0.00% $0 $0 $0 $0 0.00% $248 ($448) ($448)
$217 ($166) ($499) 0.00% $0 $0 $0 $0 0.00% $3,696 ($972) ($672)
$217 ($297) ($891) -17.44% $0 $0 $0 $0 0.00% $2,706 $1,572 $1,872
$217 $339 $1,017 17.00% $0 $0 $0 $0 0.00% $3,285 $2,731 $3,031 $217
$629 $1,886 22.86% $0 $0 $0 $0 0.00% $5,104 $1,296 $1,596 $217 $270
$810 8.16% $0 $0 $0 $0 0.00% $5,294 $2,168 $2,498 $217 $488 $1,464
12.02% $0 $0 $0 $0 0.00% $5,405 $3,569 $3,899 $217 $838 $2,514
15.72% $0 $0 $0 $0 0.00% $5,818 $6,820 $7,150 $217 $1,651 $4,953
24.36% $0 $0 $0 $0 0.00% $6,293 $13,293 $13,623 $217 $3,269 $9,807
36.07% $0 $0 $0 $0 0.00% $6,320 $14,402 $14,732 $217 $3,546 $10,639
36.80% $0 $0 $0 $0 0.00% $6,347 $15,531 $15,861 $217 $3,829 $11,486
37.47%
Page 5
AppendixTable: Cash Flow
Pro Forma Cash Flow Month 1 Cash Received Cash from Operations
Cash Sales Cash from Receivables Subtotal Cash from Operations
Additional Cash Received Sales Tax, VAT, HST/GST Received New
Current Borrowing New Other Liabilities (interest-free) New
Long-term Liabilities Sales of Other Current Assets Sales of
Long-term Assets New Investment Received Subtotal Cash Received
Expenditures Expenditures from Operations Cash Spending Bill
Payments Subtotal Spent on Operations Additional Cash Spent Sales
Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment Long-term Liabilities
Principal Repayment Purchase Other Current Assets Purchase
Long-term Assets Dividends Subtotal Cash Spent $0 $0 $0 $0 $0 $0 $0
$5 $0 $0 $0 $0 $0 $0 $0 $550 $0 $0 $0 $0 $0 $0 $0 $4,287 $0 $0 $0
$0 $0 $0 $0 $4,209 $0 $0 $0 $0 $0 $0 $0 $5,669 $0 $0 $0 $0 $0 $0 $0
$8,723 $0 $0 $0 $0 $0 $0 $0 $9,259 $0 $0 $0 $0 $0 $0 $0 $11,746 $0
$0 $0 $0 $0 $0 $0 $14,184 $0 $0 $0 $0 $0 $0 $0 $15,138 $0 $0 $0 $0
$0 $0 $0 $17,299 $0 $0 $0 $0 $0 $0 $0 $18,187 $0 $5 $5 $400 $150
$550 $4,140 $147 $4,287 $2,632 $1,577 $4,209 $3,624 $2,045 $5,669
$6,280 $2,443 $8,723 $6,680 $2,579 $9,259 $7,992 $3,754 $11,746
$9,000 $5,184 $14,184 $9,024 $6,114 $15,138 $9,248 $8,051 $17,299
$9,472 $8,715 $18,187 0.00% $0 $0 $0 $0 $0 $0 $0 $0 Month 1 $0 $0
$0 $0 $0 $0 $0 $0 Month 2 $0 $0 $0 $0 $0 $0 $0 $1,686 Month 3 $0 $0
$0 $0 $0 $0 $0 $2,088 Month 4 $0 $0 $0 $0 $0 $0 $0 $6,166 Month 5
$0 $0 $0 $0 $0 $0 $0 $7,334 Month 6 $0 $0 $0 $0 $0 $0 $10,700
$20,284 Month 7 $0 $0 $0 $0 $0 $0 $0 $11,980 Month 8 $0 $0 $0 $0 $0
$0 $0 $14,955 Month 9 $0 $0 $0 $0 $0 $0 $0 $19,783 Month 10 $0 $0
$0 $0 $0 $0 $0 $23,315 Month 11 $0 $0 $0 $0 $0 $0 $0 $28,370 Month
12 $0 $0 $0 $0 $0 $0 $1,686 $0 $1,686 $1,973 $114 $2,088 $2,723
$3,443 $6,166 $3,277 $4,057 $7,334 $4,019 $5,565 $9,584 $5,277
$6,703 $11,980 $6,709 $8,246 $14,955 $8,973 $10,810 $19,783 $9,540
$13,774 $23,315 $10,115 $18,256 $28,370 Month 2 Month 3 Month 4
Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month
12
Page 6
AppendixNet Cash Flow Cash Balance ($5) $16,995 ($550) $16,445
($2,601) $13,844 ($2,121) $11,723 $497 $12,219 ($1,389) $10,830
$11,025 $21,855 $234 $22,089 $771 $22,860 $4,645 $27,505 $6,016
$33,521 $10,183 $43,704
Table: Balance Sheet
Pro Forma Balance Sheet Month 1 Assets Starting Balances Month 2
Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10
Month 11 Month 12
Current Assets Cash Accounts Receivable Other Current Assets
Total Current Assets Long-term Assets Long-term Assets Accumulated
Depreciation Total Long-term Assets Total Assets Liabilities and
Capital Current Liabilities Accounts Payable Current Borrowing
Other Current Liabilities Subtotal Current Liabilities Long-term
Liabilities Total Liabilities Paid-in Capital Retained Earnings
Earnings Total Capital Total Liabilities and Capital Net Worth $0
$0 $0 $0 $20,000 $20,000 $7,300 ($2,650) $0 $4,650 $24,650 $4,650
$147 $0 $0 $147 $20,000 $20,147 $7,300 ($2,650) ($152) $4,498
$24,645 $4,498 $95 $0 $0 $95 $20,000 $20,095 $7,300 ($2,650) ($650)
$4,000 $24,095 $4,000 $1,509 $0 $0 $1,509 $20,000 $21,509 $7,300
($2,650) ($1,542) $3,108 $24,618 $3,108 $1,964 $0 $0 $1,964 $20,000
$21,964 $7,300 ($2,650) ($525) $4,125 $26,089 $4,125 $2,359 $0 $0
$2,359 $20,000 $22,359 $7,300 ($2,650) $1,361 $6,011 $28,370 $6,011
$2,456 $0 $0 $2,456 $20,000 $22,456 $7,300 ($2,650) $2,171 $6,821
$29,276 $6,821 $3,583 $0 $0 $3,583 $20,000 $23,583 $18,000 ($2,650)
$3,635 $18,985 $42,567 $18,985 $4,982 $0 $0 $4,982 $20,000 $24,982
$18,000 ($2,650) $6,149 $21,499 $46,481 $21,499 $5,846 $0 $0 $5,846
$20,000 $25,846 $18,000 ($2,650) $11,101 $26,451 $52,297 $26,451
$7,761 $0 $0 $7,761 $20,000 $27,761 $18,000 ($2,650) $20,909
$36,259 $64,020 $36,259 $8,403 $0 $0 $8,403 $20,000 $28,403 $18,000
($2,650) $31,548 $46,898 $75,301 $46,898 $9,050 $0 $0 $9,050
$20,000 $29,050 $18,000 ($2,650) $43,034 $58,384 $87,434 $58,384 $0
$0 $0 $24,650 $0 $0 $0 $24,645 Month 1 $0 $0 $0 $24,095 Month 2 $0
$300 ($300) $24,618 Month 3 $0 $600 ($600) $26,089 Month 4 $0 $900
($900) $28,370 Month 5 $0 $1,200 ($1,200) $29,276 Month 6 $0 $1,530
($1,530) $42,567 Month 7 $0 $1,860 ($1,860) $46,481 Month 8 $0
$2,190 ($2,190) $52,297 Month 9 $0 $2,520 ($2,520) $64,020 Month 10
$0 $2,850 ($2,850) $75,301 Month 11 $0 $3,180 ($3,180) $87,434
Month 12 $17,000 $0 $7,650 $24,650 $16,995 $0 $7,650 $24,645
$16,445 $0 $7,650 $24,095 $13,844 $3,424 $7,650 $24,918 $11,723
$7,316 $7,650 $26,689 $12,219 $9,401 $7,650 $29,270 $10,830 $11,996
$7,650 $30,476 $21,855 $14,592 $7,650 $44,097 $22,089 $18,602
$7,650 $48,341 $22,860 $23,977 $7,650 $54,487 $27,505 $31,384
$7,650 $66,540 $33,521 $36,980 $7,650 $78,151 $43,704 $39,260
$7,650 $90,614
Page 7