Agricultural Safety Consulting Firm. Business Plan

Transcription

1 AgriculturalSafetyConsultingFirm BusinessPlan by MichaelPortugal AgriculturalSystemsManagement BioResourceandAgriculturalEngineeringDepartment CaliforniaPolytechnicStateUniversity SanLuisObispo 2011

2 TITLE : AgriculturalSafetyConsultingFirmBusinessPlan AUTHOR : MichaelPortugal DATESUBMITTED : May23,2011 RichardA.Cavaletto SeniorProjectAdvisor Signature Date RichardA.Cavaletto Signature Date ii

3 ACKNOWLEDGEMENTS FirstandforemostIwouldliketothankmyparentsforhelpingmakethisallpossible. WithouttheirhelpandsupportIwouldnotbeinthepositionthatIamtodayasa studentoraperson.iwouldliketothankdr.cavalettoforbeingunderstandingand guidingmethroughthisproject.thebraefacultyandstaffforputtingupwithmefor thelastfouryearsandprobablybeingthemostlevelheadeddepartmentoncampus. Toallofmyfamilyandfriends,thanksforbeinganimportantpartofmylifeandI treasureyouguys.lastlytoanyonewhoisreadingthisandithasbeen10yearssince thepublishdate,lookmeupifyoucomenearhanfordandi lltakeyououttolunch. iii

4 ABSTRACT ThisseniorprojectisforanagriculturalsafetyconsultingfirmbasedoutofHanford,CA. Thisfirmdoesnotpresentlyexistandwouldbeanewbusiness.Thisprojectfocuseson startingasafetyconsultingfirmandnotthespecificsofbeingasafetyconsultant.the majorityoftheinformationusedinthisreportcomesfrombusinessbooksandinternet sources.thebusinessplancanbefoundfollowingthereport. Usingconservativeestimatesthefinancialstatementsinthebusinessplanshowthatthe companycanearnasmallprofitstartingwiththefirstyear. iv

5 DISCLAIMER STATEMENT Theuniversitymakesitclearthattheinformationforwardedherewithisaproject resultingfromaclassassignmentandhasbeengradedandacceptedonlyasa fulfillmentofacourserequirement.acceptancebytheuniversitydoesnotimply technicalaccuracyorreliability.anyuseoftheinformationinthisreportismadebythe user(s)athis/herownrisk,whichmayincludecatastrophicfailureofthedeviceor infringementofpatentorcopyrightlaws. Therefore,therecipientand/oruseroftheinformationcontainedinthisreportagrees toindemnify,defendandsaveharmlessthestateitsofficers,agentsandemployees fromanyandallclaimsandlossesaccruingorresultingtoanyperson,firm,or corporationwhomaybeinjuredordamagedasaresultoftheuseofthisreport. v

6 TABLE OF CONTENTS Page SIGNATUREPAGE. ii ACKNOWLEDGEMENTS... iii ABSTRACT...iv DISCLAIMER STATEMENT... v TABLE OF CONTENTS...vi INTRODUCTION... 1 Background... 1 Justification... 1 Objectives... 2 LITERATURE REVIEW... 3 Agricultural Safety... 3 Business Plan Development... 5 PROCEDURES AND METHODS... 6 Planning... 6 Construction of Business Plan... 6 Analysis... 6 RESULTS... 7 DISCUSSION... 9 RECOMMENDATIONS REFERENCES APPENDICES APPENDIX A: HOW PROJECT MEETS REQUIREMENTS FOR ASM MAJOR APPENDIX B: BUSINESS PLAN vi

7 INTRODUCTION Safetyoftentimestakesabackseatinpeopleseverydaylives.Everyoneisguiltyof overlookingapotentiallydangeroussituationinthenameofspeedofconvenience.for examplehowmanypeopledoyouknowthatregularlychecktheconditionoftheirtires ontheirvehicle?probablynottoomany,buttherealityisthatifyouweretohaveatire failurewhiletravelingatahighrateofspeeditcouldleadtoacatastrophicaccident. Thesadrealityisthatmostofthesepeopledon tevenrealizethedangerouspotential onunmaintainedtiresortheknowledgeofhowtomaintainthemproperly. Thepreviousparagraphoutlinesaproblemwithasimplesolution.Peopleneedtobe educatedonthepotentialhazardsthattheyencounterintheireverydaylives.itwould beimpracticaltogohousetohouseandeducateindividualsontheirpersonalsafetybut thereisnoexcuseforpeoplenottobeeducatedattheirworkplaceaboutthehazards ofthetaskstheyperformtocarryouttheirjobduties.unfortunatelyintoday sworld withapremiumputonproductivity,thatisnotalwaysthecase.employersoweitto theiremployeestomakesurethattheyhavereceivedadequatesafetytrainingastheir bosswhousesthemtomakemoneyandasahumanbeing.employeesoweittotheir employertobeeducatedassomeonewhocollectsapaycheckfromthatcompanyand asfamilymembertotheirfamiliestoreturnhomesafelyeveryday. Background Employersarerequiredbylawtohaveasafetyprograminplacefortheemployees.The extentthattheseprogramsareenforcedandemployeeseducatedaboutthemvariesby company.morespecificallyinthecentralvalleyofcaliforniawheresmallfamilyfarms anddairiesareprevalentsafetyisusuallynotahottopicontheranch.combinethis withthefactthatemployeesareoftenoperatingequipmentthatisbigandpowerful anditisabadcombination. Justification Withspecializationcurrentlyinhotdemand,theroleofconsultantshasgrown.Youcan findaspecializedconsultantforjustabouteveryaspectoflifetodayfrominterior decoratingtobusinessdecisions.agriculturesimilarlyhasseenariseinthepresenceof consultants.forexamplemostsmallfarmsenlisttheservicesofapestcontroladvisor tohelpthemdecidethepropercourseofactionforpestcontrol.mostofthesesame smallfarmsalsolackintheirsafetyskills.thisistheresultofafewdifferentfactors. Themainonebeingthatsincetheyusuallyonlyhaveafewfulltimeworkers,their employeeturnoverrateishighamongstseasonalandparttimeworkers.another reasonisthatmanytasksthatmustbeperformedinagriculturedonotmeshwellwith safetyanditcanbeveryimpracticalandnotcosteffectivetocorrectthem.the underlyingreasonforallofthiscomesdowntomoney.thesesmallfarmsanddairies

8 simplycannotaffordtohaveafulltimeemployeeconstantlymonitoringsafetyor trainingnewemployees.furthermoretheycannotaffordtoconstantlyimprovetheir equipmenttomakeitsafer.thatiswherethisprojectcomesin.abusinessplanwillbe constructedfortheformationofanewbusinessspecializinginagriculturalsafety consulting.thebusinesswillspecializeinassistingclientswhooperateproduction agriculturalbusinesses.anon agriculturesafetyconsultantmightnotunderstandthe hardshipsandspecialchallengesthatgoalongwithproducingacrop.couplethefact thatagricultureisaninherentlydangerousindustryandthatmostsmallfarmsand dairieslackanadequatesafetyplan,thereseemstobeaseriousneedforapartially untappedmarket. Objectives Abusinessplanwillbecreateddetailingtheservicesthatthisnewcompanywilloffer. Additionallyitwillbedeterminedinthebusinessplanwhatthecostsofdoingbusiness willbeandhowmuchrevenuewillbegenerated.oncecostsareknownthenitcanbe determinedwhetheroutsidefinancingisneededtostartthebusiness.thegoalofthis businessplanistolaythegroundworkforanewagriculturalsafetycompanycalleda+ SafetytobeopenedJune30,2011inadditiontolayingoutwhatconstraintsneedtobe metforthebusinesstobeprofitable. 2

9 LITERATURE REVIEW Inordertoconstructacompetentbusinessplanandevenknowifthebusinesswouldbe viablesomeresearchneededtobedone.thereisonemaintopicthatneedstobe addressed.isthereamarketforthiscompany?informationwasalsoresearchedon howtowriteabusinessplan.mostofthebusinessplaninformationwasfoundinself helpbooks.themarketresearchwasconductedbyfindingagricultureaccident statisticswhichwerereadilyavailableontheinternet. Agricultural Safety Agricultureworklendsitselftounsafeworkingconditions.Onereasonbeingthatit doesnotusuallyfollowa40 hourworkweek.workinghoursareoftendictatedby weatherandcropschedule.farmersmightonlyhavesmallwindowtogetataskdone likeharvestingtheircropbeforeitgetsruined.soemployeesareneededtoputinlong andhardhourswhendemandedofthem.anotherreasonbeingthatworkersare constantlyexposedtothehazardsofworkingwithanimals,chemicalsandheavy equipment.thelongandhardhourscanwearonemployees,whichleadthemto lettingtheirguarddownwhencomingtosafety(runyan,2001). Thestatisticsbackupthefactthatagricultureisaninherentlydangerousindustry.On average20,000workerssufferadisablinginjuryand67ofthemarekilledeveryyear workinginagricultureincaliforniaalone.unfortunatelythesenumbersarenot decliningeither(centerforagriculturalbusiness CAB,2009). Injuriestoemployeescanbeverycostlytoanemployer.Theaverageinjurytoan employeecoststheemployer$27,000.whileadeathtoanemployeecoststhe employer$780,000onaverage(cab,2009).thecostsdon tendtherethough. Employerscanexpecthigherinsuranceratesiftheyhavetosubmitinjuryclaims.Plus aninjuryresultsinlostworkhours,whichcouldbecriticalduringabusyseason.notto mentionallthenon monetarycostsassociatedwithaninjuryordeathsuchaslow workermoraleoftheemotionaltollthatwillhappenifyouhavetodealwithadeath. Accidentratesforagriculturearealarminglyhigh.Usingcurrentstatisticsforaccidents oncaliforniafarmsitequatestoabout46disablinginjuriesper1000workers.thestate averageforallindustriesis35disablinginjuriesper1000workers.themostshocking partofthisdataisthatagricultureoutranksevenminingat42disablinginjuriesper 1000workers,whichislargelyregardedasthemostdangerousindustry(CAB,2009). Acrossthecountryonanaverageday243farmworkerssufferalosttimeinjuryandon average516dieeachyear(westernfarmpress,2008). Partofthereasonwhytheagricultureindustryissodangerousforworkersisbecause theyreceiveinadequatesafetytrainingandemployersaren twellversedinhowto 3

10 providethistraining(runyan,2001).thisfactcoupledwithaccidentstatisticsof workersinvolvedwithagriculturedisplayaneedforspecializedagriculturalsafety training. Communicationisakeyaspectofsafety.Employersneedtobeabletoeffectively communicatewiththeiremployeesinordertoprovideadequatesafetytraining.this presentsaproblemfortheagricultureindustry.ninety ninepercentofemployeesare ofhispanicdissent.ofthoseworkers96percentofthemusespanishastheirfirst language.evenmoretroublingisthat53percentofthemdon tspeakanyenglishand 57percentofthemcan treadenglish.thiscreatesahugecommunicationbarrier betweenemployerandemployee.consequentlymanyemployeesarenotreceiving adequatesafetyinstruction(aguirreinternational,2005). Thereisamovementamongsafetyprofessionalsgearedtowardchangingpeople s feelingstowardssafety.theybelievethataccidentsdon tjusthappen.accidentsare preventablethroughtrainingandeducation(cab,2009).againsignifyingtheneedfor moresafetyprofessionalsgearedtowardagriculture. Therearelawsandregulationsthatallemployersmustfollowwhenitcomestoworker safety.therearethreenotablelawsthatdealwithfarmsafety.theyarethefairlabor StandardsAct,OccupationalHealthandSafetyActandFederalInsecticide,Fungicide androdenticideact.theselawslayoutthedifferentregulationsemployersmust followconcerningsafety.howeverthesafetyofagriculturalemployeesisstillin jeopardybecausetheoccupationalhealthandsafetyactexemptfarmswithlessthan 10employeesaswellastheowner sfamily.infactthemajorityoffarmsintheu.s.fall underthisexemption.onlyninepercentoffarmsintheu.s.employmorethan10 workers.sincemostfarmersdonothavetofollowtheguidelinessafetyismoreoften thannotbrushedaside(runyan,2001). Californiahasalittledifferentpolicyonsafety.In1989virtueofSenateBill198all employersmustnowhaveaninjuryandillnesspreventionprogram.theiippmustbein writingandlayouthowexactlyyouaregoinghandlesafetyandwhoisincharge.you mustalsodocumentalltraining(cab,2009).inadditiontotheiippemployersmustalso postupallrelevantsafetypostersfortheirbusiness.cal OSHAisinchargeof enforcingsafetyregulationsandhandlingaccidentreports. Californiaisthenation stopproducingagriculturestateintermsofvalue;selling$2.8 billionworthofproductannually.moresignificantlyfresnocountyisthenation stop countywhenitcomestothevalueofagriculturalproductssold(california Mexico HealthInitiative,2005).FresnoisnotalonethoughintheagriculturerichCentralValley ofcalifornia.thereisalsokings,tulare,kern,madera,andmontereycountiescloseby whohaveverystrongagricultureindustries. 4

11 ApersoninterestedinbeingasafetyprofessionalshouldjointheInternational AssociationofSafetyProfessionals.Theycanhelpyoustayuptodateonallsafety regulationsandthecertificationthatyouneed(ehow,2009).anotherorganizationto joinisagsafe.accordingtotheirwebsitetheyholdtrainingsessionsforsafety professionalstofurthertheireducationaswellasconferences. Business Plan Development Havingabusinessplanisanimportantelementforstartingasuccessfulcompany.Not onlythat,itmightberequiredfromlendersinordertoobtainfinancingforacompany. Itwasfoundthatcompanieswithwrittenbusinessplanshad50percentgreatersales growthand12percenthighergrossprofitmarginsthancompanieswithoutwritten plans(peterson,2005). Itisalsoagoodideatohaveabusinessplanwhenstartingabusinessforyourself.Even moresoimportantifyouarefinancingyourself.bywritingabusinessplanitallowsfor indepthresearchanalysis.thebusinessplanwillultimatelyleadyoutomakean educateddecisiononwhethertheprospectivebusinessisaworthwhilepursuit (Paulson,2007). Thestructureofabusinesscanhavehugeimplicationsonfinancialmatters.The businessstructureshouldbechosenbasedoffofwhowillownthebusinessandwhat typesofproductsandservicesitwilloffer.themostbasicbusinessstructureisasole proprietorship.inasoleproprietorshipthereisonlyoneownerandbusinessprofitcan betreatedaspersonalincome.nolegalpaperworkneedstobefiledforasole proprietorship.asoleproprietorshipcanalsobeformedintoadifferenttypeof businessstructureatanytimewithminimalhassle(pakroo,2008). Whenabusinessisofferingprofessionalserviceslikeconsulting,professionalliability insuranceshouldbeobtained.thisinsurancewillprotectyoufromerrorsandomissions thatyoumakeinprovidingyourservice.astandardpolicycoversupto$1millionper incidentandupto$2millionperyear.premiumsforthistypeofinsurancegenerally rangefrom$1000to$1450ayear(techrepublic,2002). Abusinessthatwishestogrowwithouttakingondebtpracticesbootstrapfinancing. Thismethodoffinancingisadvantageousbecausetheownermaintainsalloftheequity ofthebusiness.thedisadvantageofthismethodisthatitcanslowthegrowthofthe business.bootstrapfinancingcanbeachievedbyexhaustingpersonalsourcesof fundingaswellasreinvestingprofitsbackintothebusiness(martin,2009). Abusinessplanneedstobereasonable.Goalsshouldnotbeoverestimated.Alongwith thatwhencreatingfinancialstatementsrealisticandattainablefiguresshouldbeused forrevenue.additionallycostsshouldbethoroughlyinvestigatedastonotleaveany out.unexpectedcostscanderailabusiness(harroch,2004). 5

12 PROCEDURES AND METHODS Planning Researchshowedthattoconstructasuccessfulbusinessplanthedetailsofthe prospectivebusinessneedtobethoughtout.asuitablelocationneedstobeselected wherethebusinesscanreachitstargetcustomers.thedifferentstructuresthata businesscanbeorganizedunderhavetobeconsideredaswellasthefeesthatgoalong withformingabusiness.thesefeescanvarybylocationdependingonthemunicipality incontrolaswellasthestructureofthebusiness.theothermajorcoststhatabusiness planmusttakeintoconsiderationareallthecoststhatitmightincur;whichconsistof fixedandvariablecosts.thesecostswillberesearchedtomakesurethatnoomissions aremadeinthebusinessplanandthatthecostsareaccurate. Asidefromcosts,potentialrevenuesneedtoberesearched.Thecurrentmarketrate thatasafetyprofessionalcanchargewillneedtobedeterminedbylookingatexisting firms.thevolumeofbusinessthatanewsafetyfirmcanexpectwillbedeterminedby surveyingpotentialclients.thelastfactorthatwillbeexaminedwithrespectto potentialrevenueiswhatservicesexistingsafetyconsultingcompaniescurrently provideonhowa+safetycancompetewiththem. Construction of Business Plan Toensurethatacompetentbusinessplanisconstructed,thedecisionwasmadetouse abusinessplannerdevelopedbytheagriculturalinnovation&commercialization CenteratPurdueUniversity(Purdue,2009).Thebusinessplannerapplicationusesa questionandanswerformattohelpdevelopthebusinessplan.theuserinputsanswers intothequestionfieldsandafterallquestionsarecompleteaformalbusinessplanis developed.furthermodificationcanbemadetothebusinessplanafteritisseenhow theanswersfitintothebusinessplan. Analysis Afterabusinessplanisconstructed,thefinancialstatementscanthenbeanalyzedto seeifa+safetyisafeasiblebusiness.itwillneedtobedeterminediftheownercan supplythemoneyneededtostartbusiness.theotherdeterminingfactorwillbeifthe owneriswillingtodedicatethetimeneededtorunthebusinessandbehappywith incomeandprofitsthatbusinesswillgenerate.thesenumberswillbefoundby examiningthefinancialstatementscontainedinthebusinessplan. 6

13 RESULTS A+Safetywillbeafullservicesafetyconsultingcompanythatspecializesinagricultural safety.itwillbebasedinhanford,carightintheheartofthecentralvalleyof Californiaknownforitsrichagricultureindustry.Serviceswillbeofferedfrom BakersfieldtoMerced.A+Safetywillbeownedandoperatedasasoleproprietorship. Thecompanywilloffervariouslevelsofservicetoitscustomers.Thatcouldbeaslittle asreviewingthecustomer'sexistingsafetyplanandmakingsureitisadequate.a+ Safetycouldalsoprovideeverythingthecustomerneedsinregardstosafety.For example;a+safetywoulddevelopasafetyplanforthecompanywhichincludesan adequateinjuryandillnessprotectionprogram.comeinandtraintheiremployeeson safeworkingpracticesandevensupplythecustomerwithnecessarysafetyequipment fortheiremployees. ThebusinessplanforA+SafetycanbeseeninAppendixB.Financialstatementsinthe businessplanshowthatthecompanycanoperateataprofit.thekeyfactorthatallows A+Safetytobeprofitablerightawayisthefactthatitwillbehomebased.Nothaving topayrent,utilities,propertytax,insurance,andothercoststhatcanbeassociatedwith abuildingisahugehelp.thereasonthatrentoramortgagepaymentarenot consideredacostforthebusinessisbecausethecompanyishomebasedandtheowner isgoingtohavehousingcostswhetherrunningabusinessoutofthehouseornot.the extraamountofelectricityneededtooperateacomputer,printer,phone,etc.is negligible. Startupcostsarealsominimalwhichhelpsinbeingabletolaunchthebusinessright away.estimatedstartupcostswere$5600.almosthalfofthatmoneyisdedicated towardscapitalequipmentpurchases,mostnotablyacomputerandprinter.other expendituresincludedlegalandfinancialadvice,furnishings,andbusinesscardsalong withafewotherthings.thecostsforthesethingswerealloverestimatedastomake surethattheywouldnotbeunderestimated. Whenconstructingthefinancialstatementsitwasestimatedthattherewouldbe$50of directcostsassociatedperclientserved.thosecostscoverthephysicalmaterialused toproducethesafetyplanssuchaspaper,ink,pens,etc..thatalsocoversthefuelused tovisittheclientsbusiness.otheroperatingexpenseswerecalculatedonayearlybasis. Travelexpensewasestimatedtobe$2000ayear.Fuelcostswereaddressedinthe directexpensesportionbutyoucan tjustcountfuelasyouronlyexpenseforoperating avehicle.everymileyouputonitdepreciatesitsvalue,tiresgetworndown,oilneeds tobechanged,andpartsgetwornout.eventhoughanexistingvehiclewillbeusedfor thebusiness,itwouldnotbeacompleteassessmentofthebusinessiftherewasn ta chargeforwearandtearonthevehiclethatwouldnotoccurasfrequentlythrough normaldriving.otheryearlyexpensesincluded$2000foradvertising.$300was 7

14 allottedforofficesupplies.professionalliabilityinsurancewasquotedfor$1200ayear. Lastly$5000formiscellaneousexpenses.Theseincludesubscribingtoprofessional safetyjournalsandpublications,stockinguponsafetyvideosfortraining,attending seminarsandothercoststhatmightpopup.againthesecostswerealloverestimated sothatwaythereisasafetyfactorsotospeak. Revenueisbasedoffoftheratesofexistingsafetyconsultants.Averagingoutthegoing ratesandbalancingthatbetweendifferentlevelsofservice,itwasdecidedthat$2000 ofrevenueperclientservedwouldbeafairassumption.anotherassumptionwasthe numberofclientsserved,whichwassetat15forthefirstyearandincreasingsome eachyearthereafterasthecompanybecomesmoreestablished.fifteenclientsseems likeanattainablegoalconsideringsheervolumeoffarmsanddairiespresentinthe CentralValley. InspectionofthefinancialstatementsshowsthatA+Safetyisaworthybusiness.If thingsgoaspredictedthecompanycanturnaprofitduringitsfirstyearofbusinesswith eachsubstantialyearreportinghigherprofitasclienteleisincreased.ofcourseas statedatthebeginningofthissection,thekeytothisbusiness ssuccessisbykeeping costslow.withlowcosts,thereislesspressureonthebusinesstobringinalotof revenuerightaway. ThetargetmarketforA+Safetyissmallagriculturalbusinesses,mostnotablysmall farmsanddairies.thereasonforthisisbecausethesesmallbusinessesaremostlikely nottohavetheirownsafetycoordinator,thusmeaningtheywouldlooktosafety consultanttoorganizetheirsafetyprogram. Comparingtheratesofothersafetyconsultants,theyrangedfrom$100 $165per hour.a+safetywillstartoutatthelowerendofthespectrum,charging$100anhour. Thelowerpricewillhopefullyattractmoreclientsallowingthebusinesstogrow. Betweensixmonthstoayear,thehourlyratewillbeevaluatedtoseeifitneedstobe adjusted.pricesforotherservicessuchastrainingsessionsforemployeesandthe actualwritingofasafetyplanwillbesetataflatrateforclientsvaryingwiththeamount ofworkthatwillberequiredandifsignificanttravelexpenseswillbeincurred.sinceit isimpossibletopredictexactlyhowmuchbusinessa+safetywillreceiveinitsfirstyear, forthesakeofthisbusinessplanitwasconservativelyestimatedthatthecompany wouldserve15clientsduringthefirstyearbringingin$2000ofrevenueperclient served.eachsubsequentyeardisplayedinthebusinessplanreflectsanincreaseinthe numberofclientsserved. Finallyoneotherpieceofpertinentinformationthatmustbediscussedisthatthe businesswilloperateasasoleproprietorship.sinceitisasoleproprietorshipprofitthat thecompanygeneratesisalsotheowner sincome.asthecompanygrowsconvertingit fromasoleproprietorshiptoalimitedliabilitycompanywillbeinvestigated. 8

15 DISCUSSION Thebusinessplanwasmadetobeverysimple,sothatwayitwouldbereallyeasyto determineifopeninganewsafetyconsultingcompanyinthecentralvalleyofcalifornia isworthwhile.insteadoftryingtofigureoutexactlyhowmuchofthedifferentservices eachcustomerwilldemand,asimplesetamountofrevenuewasdeterminedpereach clientserved.suresomeclientswillspendlessbutsomeclientswillalsospendmore. Themorevariablesthatareintroducedintoanequation,themorepossibleoutcomes thereare.thatiswhyafixedvaluewasplacedonrevenueperclient.it seasierto justifythateachclientwillspendanaverageamountofmoney;thanitistosaythis manyclientswilldemandthisamountofserviceandthisamountofclientswilldemand thattypeofservice,soonandsoforth. Therewerenotreallyanychangesmadetothisprojectasitprogressed.Itbasically endedthewayitwasenvisioned.anagriculturalsafetyconsultingcompanytargeting smallagriculturalbusinesses,whichisrunfromhome.thegoaloftheprojectwasto keepcostslow,sothatwaysomeonewithminimalequityandcapitolcouldstartit relativelyeasily. Startupandoperatingcostswerealloverestimatedtoallowforunforeseencosts.For example$2500wasallottedforthepurchaseofacomputer,printer,faxandcopy machine.howevercomputerpricesareconstantlydroppingandagoodcomputercan bepurchasedfor$1000orlessandanallinonelaserprinterfaxcopymachinecanalso behadforundera$1000,thusleavingasurplusthereforextraexpenses.thisthought processwasusedfordeterminingallexpenses. Thegoalofthebusinessistonotjustbeprofitable.Overtimesufficientequitywould liketobebuiltuptoallowa+safetytoventureintootherbusinessinterests.lookingat justwhatthisreportisfocusedonhowever,thereisevidencethatstartingan agriculturalsafetyconsultingfirmcouldbeaprofitablebusinessstartingwithyearone andgrowingprofitseachyearthereafter. Onefinalnotethatshouldbemadeisthatthereisnooutsidefinancinginvolvedin startingthebusiness.theownerhasenoughcashtocoverthestartupcostsbutnot enoughtopaythecostsofdoingbusiness.whiletheoreticallythebusinessplanshows thata+safetycanbringinenoughrevenuetopaythebills.itisnotreasonableto expectthecompanytostartbringinginrevenueondayone.thatmeansthatthe ownermusthavesufficientcashonhandtopaythebillswhilethecompanyisinits infancy.theotheroptionforsomeonethatcannotsupportthebusinessrightawayisto takeoutaloanuntilthecompanyisinfull fledgedoperation.theownermusthave enoughcashonhandtopaytheirpersonalbillstoosincethecompany sprofitistheir personalincome.thenetprofitinthefirstyearisonlyalittleover$13,000.thatisnot enoughmoneytoliveon. 9

16 RECOMMENDATIONS ForsomeonelookingtostartA+Safetyanimportantdecisionneedstobemade.Can theyaffordtostartthebusinesswithoutsecuringoutsidefunding?comparedtosome otherbusinessesthecostsinvolvedwithstartingandoperatinga+safetyareminiscule. Howeverforafirsttimebusinessownerorsomeonerightoutofcollege,theymightnot beabletoadequatelyfundthebusinessthemselves. Itisalsorecommendedthatwhoeverstartsthebusinessshouldcontinuetoexpand theirknowledgeofsafetyissuesandgaindifferentlevelsofcertification.thiscanbe achievedbytakingsafetyrelatedcourses,joiningprofessionalsocieties,subscribingto professionaljournals,andattendingseminarsputonbydifferentsafetyorganizations. Thesestepswillmakegiantleapstowardestablishingthelegitimacyofyourbusiness. Anotherrecommendationistomorecloselyinvestigatedifferentmarketingoptions. Whenfirststartingoutanewcompanyneedstogainsomerecognitionwithinitstarget market.therearemanywaystoaccomplishthisthroughprintads,radioandinternet. Thiscanalsobeaccomplishedthroughthesponsoringofpublicevents,likealittle leagueteamforexample.quitepossiblythebestmarketingisthroughwordofmouth. Peoplevalueotherpeople spersonalexperiencesveryhighly.sothegoalwouldbeto servesomeclientsanddoanoutstandingjobforthemsothatwaytheywillrecommend youtheirpeers.offeringareferralbonusisanotheroption. Overall,startingA+Safetyandmakingitprofitableisaveryattainablegoal.The businessplanprovidedlaysoutasuccessfulbusinessmodelthatgivesanindication whatparametersneedtobemetinorderforthecompanytobesuccessful.oncethe decisionismadethatthebusinesswillbestartedthenthatiswheremoredetailed decisionsneedtobemade.forexamplewhichcomputerwillbepurchased,whereare yougoingtoadvertise,doyouneedoutsidefinancing,etc.. 10

17 REFERENCES 1. AgricultureSafetyProgram.CenterforAgriculturalBusiness.14Mar.2009 < program.html> 2. AguirreInternational.2005.TheCaliforniaFarmLaborForceOverviewand TrendsfromtheNationalAgriculturalWorkersSurvey.AguirreInternational,CA, 54p. 3. PurdueUniversityAgriculturalInnovation&CommercializationCenter.Business Planner.15Mar.2009< 4. California MexicoHealthInitiative.2005.HealthPolicyFactSheet.University ofcalifornia. 5. ehowcareersandworkeditor.howtobecomeasafetyconsultant.9mar. 2009< safety consultant.html> 6. Harroch,R.D.2004.SmallBusinessKitforDummies.WileyPublishing,NJ,382p. 7. Martin,S.2009.BootstrapFinancingDefinition.9Mar.2009 < financing definition_3586.php> 8. Paulson,E.2007.TheCompleteIdiot sguidetostartingyourownbusiness. PenguinGroup,NewYork,409p. 9. Peterson,S.,P.E.JaretandB.F.Schenk.2005.BusinessPlansKitforDummies. WileyPublishing,NJ,337p. 10. Pakroo,P.H.2008.TheSmallBusinessStart UpKitforCalifornia.Nolo,CA, 378p. 11. Runyan,J.L.2001.FederalLawsandRegulationsAffectingFarmSafety. NationalAgSafetyDatabase.10May2009 < d001800/d001777/d html> 12. TechRepublic.2002.FindingandPricingProfessionalLiabilityInsurance.1April 2009< and pricing professionalliability insurance/ > 13. WesternFarmPress.2008.AgriculturalSafetyCouncilFormedtoReduceFarm Accidents.17Mar.2009< 0804/> 11

18 APPENDIXA HOWPROJECTMEETSREQUIREMENTSFORTHEASMMAJOR 12

19 HOW PROJECT MEETS REQUIREMENTS FOR THE ASM MAJOR ASM Project Requirements TheASMseniorprojectmustincludeaproblemsolvingexperiencethatincorporatesthe applicationoftechnologyandtheorganizationalskillsofbusinessandmanagement,and quantitative,analyticalproblemsolving. Application of Agriculture Technology.Theprojectinvolvessafeworkingpractices whileparticipatinginvariousfieldsofagriculturallabor. Application of Business and Management Skills.Theprojectfocusesontheeconomic feasibilityofstartinganewbusinessandthesubsequentmanagingofthatbusiness. Quantitative, Analytical Problem Solving Skills.Quantitativeandanalyticalproblem solvingwillbeusedintheprojectwhendeterminingthecosttostartanewbusiness andwhetherornotthebusinesscouldbeprofitable. Capstone Project Experience TheASMseniorprojectmustincorporateknowledgeandskillsacquiredinearlier coursework(major,supportand/orgecourses). BRAE129 LaboratorySkillsandSafety BRAE141 AgriculturalMachinerySafety BRAE321 AgriculturalSafety AGB202 SalesCommunicationandLeadership AGB212 AgriculturalEconomics AGB310 AgribusinessCreditandFinance AGB321 FarmRecords AGB401 ManagingCulturalDiversityinAgriculturalLabor ENGL148 ProfessionalWriting Econ201 SurveyofEconomics ASM Approach AgriculturalSystemsManagementinvolvesthedevelopmentofsolutionsto technological,businessormanagementproblemsassociatedwithagriculturalorrelated industries.asystemsapproach,interdisciplinaryexperience,andagriculturaltrainingin specializedareasarecommonfeaturesofthistypeofproblemsolving. 13

20 14 Interdisciplinary features.theprojectcombinestheskillsofagriculturalsafetyand AgriculturalBusiness. Specialized agricultural knowledge.thisprojectusesspecializedknowledgeof AgriculturalSafetyandAgriculturalBusiness.

21 APPENDIXB BUSINESSPLAN 15

22 A+Safety June5,2009 MichaelPortugal,Owner 16

23 TableofContents I.ExecutiveSummary II.LongTermGoals III.BusinessOverview A.ProductOffering IV.IndustryProfile A.IndustryAnalysis B.Competition V.MarketPotentialandCompetitorAnalysis VI.MarketingPlan A.Product/ServiceOffering B.ProductPricing VII.OperationandManagementPlan VIII.FinancialPlan 17

24 ExecutiveSummary A+Safetywillbeafullservicesafetyconsultingcompanythatspecializesinagricultural safety.itwillbebasedinhanford,carightintheheartofthecentralvalleyof Californiaknownforitsrichagricultureindustry.Serviceswillbeofferedfrom BakersfieldtoMerced.A+Safetywillbeownedandoperatedasasoleproprietorship. Thecompanywilloffervariouslevelsofservicetoitscustomers.Thatcouldbeaslittle asreviewingthecustomer'sexistingsafetyplanandmakingsureitisadequate.a+ Safetycouldalsoprovideeverythingthecustomerneedsinregardstosafety.For example;a+safetywoulddevelopasafetyplanforthecompanywhichincludesan adequateinjuryandillnessprotectionprogram.comeinandtraintheiremployeeson safeworkingpracticesandevensupplythecustomerwithnecessarysafetyequipment fortheiremployees. DuetolargeagricultureindustrypresentintheCentralValleythereisalargedemand foracompanyspecializinginagriculturalsafety.oftentimespeoplethatarenot connectedwithagriculturedon'tunderstandthehardshipsinvolvedwithrunninga dairyorfarm.longstrenuousworkhoursarerequiredandsometimesunconventional methodsofgettingthejobdone.throughobservationmostsmallagricultural businessesdonothaveanadequatesafetyplaninplace. Becauseofthelowoverheadandstartupcostsinvolvedwiththisbusinessventure,it willmakeitrelativelyeasytoturnaprofit.asyouwillseeintheattachedfinancial statementsthebusinessiscapableofturningaprofitinthefirstyear.thefiguresused tocompilethefinancialreportswereallinconservativeinnature.conservative meaningthatthebusinessplandidnotwanttooverestimateclientbaseor underestimateexpenses. 18

25 LongTermGoals WiththisventureIwouldliketoaccomplishthefollowinggoals: 1. Ownandoperateaprofitablebusiness. 2. Servethelocalagricultureindustry. 3. Haveaflexiblescheduleinordertodedicatelotsoftimetomyfamilyandstill provideanincome. 4. Generateenoughcapitaltopursueotherbusinessventures. 19

26 BusinessOverview Myserviceswillbepurchasedbyfarms,ranchesanddairies.Theyaretheconsumer. Thetypicalcustomerwillbeownersofsmalleragriculturalbusinesses;10,000acresand less.theywillbuymyservicesbecausetypicallytheyarenotlargeenoughtojustify havingtheirownfulltimesafetymanager.oftentimestheyarealsonotwellversed enoughintheintricaciesofsafetytoprovidetheirownsafetyplanandtraining. Myserviceisprovidingagriculturalbusinessessuchasfarmsanddairieswithsafety consulting.iwillbeaonestopshopforthem.startingwithdevelopingasafetyplanfor themtomakingsuretheyhavetheproperdocumentsonhandtoprovidingthemwith safetyequipmenttotrainingtheiremployeesifneedbe.iwillcomeouttotheirplace ofbusinesstoassesstheirneedsandprovidethemwitharecommendationand estimateformyservices.iwillalwaysbeavailableforthemtoconsultwithshouldthey choosetousemyservices.myservicesarenotlimitedtoagriculturalbusinessesthatis justmyspecialty. Customerswillbasicallycallmeupandexplaintheirneeds.Iftheychoosetousemy service,iwillputtheirsafetyprograminplaceandthentheyareresponsibletomake surethatisbeingfollowed.theydon'thavetoworryaboutanyofthetechnicalissues. Myserviceswillbenefitconsumersbysavingthemmoney.Itwillalsobeaconvenience tothembecausetheywillnothavetoworryaboutimplementingtheirownsafetyplan. Customerswillhiremebecauseit'sgoingtosavethemfrompotentiallegaltrouble, keeptheiremployeessafeandsavethemmoneyinthelongrun. Iwillusethefollowingobjectivestoaccomplishmygoals: 1. Establishaclientbase. 2. Securetheresourcesneededtodevelopsafetyplans. 3. Seekfundingtogetthebusinessstarted. Icanusethefollowingstrengthstoaccomplishmyvisionandgoals. 1. Iamanoutgoingpersonwhichisneededtoestablishaclientbaseforanew business. 2. Mydesiretobeselfemployed. 3. Willingnesstoworkhard. 4. Mypassionforagriculture. 5. Myknowledgeofgeneralsafety. 20

27 Ineedtobeawareofthefollowingweaknessesthatmayinhibittheventure'ssuccess. 1. Gettingdistractedwiththingsthataren'timportant. 2. Tryingtotakeontoomuchatonetime. ProductOffering Theservicestobeofferedhavenobarriersoutsideofthenormalstepsrequiredtostart anewbusiness.therearethreebasicthingsthatbusinessneedstodoinorderto conductbusiness. 1. FileafictitiousbusinessnamewiththeKingsCountyAssessor,Clerk/Recorder. 2. SetupataxaccountwiththeStateBoardofEqualization. 3. Obtainprofessionalliabilityinsuranceforerrorsandomissions. 21

28 IndustryProfile IndustryAnalysis Iaminthesafetyconsultingindustry.Competitorscanrangefrominsurance companies,companiesbasedofftheinternettolocalconsultantslikemyself. TheeconomyintheregioninwhichI'llcompeteisnotveryhealthyatthistime. Unemploymentishigh.Waterisscarceandmilkpricesarelow.Howeverwhendealing withsomethinglikeacoworacropyoucan'tjusthaltproduction.youcan'tstop feedingyouranimalsforhalfayearorlayoffyourworkerstemporarily.sobusiness mustgoonevenifitisnotprofitablecurrently.sorelativelyspeakingeventhoughthe economyispoorthedemandforagriculturalservicesisrelativelystable. Competition Mycompetitorsarebusinessesthatprovidesafetyplansforcompanies.Mybiggest competitorswillbeinsurancecompaniesandinternetbasedproviders.more specificallythereisacompanythatofferssafetyconsultingservicesinhanford.their nameisagproinsurance. 22

29 MarketPotentialandCompetitorAnalysis Thecustomersinmymarketaresmallfarmersanddairymen.Theyarelargeenoughto havesomeemployeesoutsideoffamilybutforthemostpartnotlargeenoughtohave afulltimesafetymanagerlikealargecorporationwould.theyoftentimesarenot educatedpasthighschoolanddonothavethespecializedknowledgetokeepupwith safetyregulations.theyareusedtothefactthattheyhavetohireconsultantsfor thingsoutsidetheirscopeofknowledgetomaximizetheprofitabilityoftheirbusiness. Demandformyservicesisbasedoffofafewdifferentthings.Thefirstbeingthatlotsof agriculturalbusinessesuseconsultantstohelpwiththeirbusiness.youseeitwith dairiesusingnutritionists.farmsusingagronomistsandpestcontroladvisors.those arethemostprevalentconsultingservicesusedbyagriculturalbusinessesbutthereare othersalso.basedonthatfact,ibelievethattheywouldbeopentousingsafety consultingservices.iftheydon'tknowhowtodosomethingorneedadvicetheyare notafraidtocallinhelp. Anotherreasonisthatwiththeagricultureindustryinthecentralvalleyisnotinthe bestoffinancialtimescurrentlybetweenlackofwaterforcropsandlowmilkpricesfor dairymen.thatbeingsaidibelievethatamarketwillopenupwithsomeofthelarger agriculturebusinessesthatcurrentlyhaveafulltimesafetymanager.safetyisnot essentialtoproducingaproduct.socompanieslookingtocutcostscouldeliminate theirsafetymanagerpositionandturntoconsultantsinordertosavemoney. LastlyfrommyownpersonalexperienceswithmanysmallfarmersanddairymanthatI knowwhichisjustasmallpercentageoftotalagriculturalbusinesses.manyofthem don'thaveaformalsafetyplaninplaceoriftheydoitisjustthebareminimum.by convincingthesebusinessesthatitintheirbestinterestlongtermandthebestinterest oftheiremployeestohaveasafetyprogram,icouldexpandthemarket'sdemand. Asmentionedabove,thelocalcompetitorisAgProInsurance.Theirbasicsafety packageis$2300,whichincludesaninjuryandillnesspreventionprogram.italso includesabulletinboardalongwiththepropersignagetobedisplayedatyourplaceof business.agproalsoprovidesafirstaidkitalongwithsomeotherrequireditems dependingonthetypeofbusiness.includedinthepackageis2annualsitevisitswith eachadditionalvisitcosting$175.finallytheyprovidespecializedtrainingonindividual topicssuchasforkliftcertificationorharassmenttrainingat$500pertopic. A+SafetywilldifferentiateitselffromAgProInsurancebyprovidingthesameservicesat alowerprice.thisisaccomplishedbykeepingthecompany soverheadataminimum. A+willalsogaincustomersbyprovidingthemwithamorepersonalexperiencethatis accomplishedbybeinganowner/operator. Twentyfarmsweresurveyedforpotentialinterestinusingasafetyconsultant.These 23

30 farmsrangedinsizefrom80to10,000acres.overall11expressedinterestinusinga safetyconsultantandninesaidthattheywouldn t.the11farmsthatsaidtheywould potentiallyuseasafetyconsultantrangedinsizefrom2,100acresto6,700acres.allof thesmallsizedfarmssaidtheydidnotneedasafetyconsultantbecausetheowner alongwiththeowner sfamilydidvirtuallyalloftheworkperformedonthefarmandif theydidhaveanemployeetheycouldtrainthemthemselves.thelargerfarmsdidn t seethemselvesusingasafetyconsultantfortworeasons.theywerelargeenoughthat theyhadenoughmanagementpeopleforoneofthemanagerstobeinchargeofa safetyprogramalongwiththeirotherduties.alsoduringthebusytimesoftheyear theyhiredalotofseasonalworkersthroughlaborcontractors.theselaborcontractors providesafetytrainingthemselvestotheiremployees.thefarmsthatfellintothat middlecategoryexpressedthattheywouldutilizeasafetyconsultantbecausethe ownerswereintimatelyinvolvedwiththeoperationofthefarmanddidnothavetime toconcentrateonrunningasafetyprogram.typicallytheyhad3 10employeesin additiontoanyfamilymembersthathelpedout.sobasedonthisquicksurveya+ Safetyneedstoconcentrateontargetingmediumsizedfarmingoperations. 24

31 MarketingPlan Promotionofmyserviceswillincludeavarietyofthings.Tostartoutitwillbemostly lowbudgetthings.postingflyersatstrategiclocations.puttinganadvertisementinag Sourcemagazine.Radioadvertisingwillalsobeutilizedbecauseradioadvertisinghas proventobeveryeffectiveandwhenstartinganewbusinessitisessentialtogetyour nameout.asimplewebsitewillalsobesetupbecausesomanypeoplesearchfor servicesontheinternet.asthebusinessgrowsandmoremoneycanbededicatedto thepromotionalbudgetsponsorshipofyouthsportsteamsandcharityeventswillbe explored. Mypublicrelationsstrategyistoprovidesponsorshipstovariousorganizationswhen thebudgetallows. Product/ServiceOffering Theserviceissafetyconsulting.Icanprovidevariouslevelsofservicetocustomer dependingontheirneeds.icansetupasafetyplanforthem.icandotheirinjuryand illnesspreventionprogramforthem.ifthey'recomfortableprovidingsafetytrainingfor theiremployeesicancomeinanddothatforthem.icanmakesurethattheyhaveall theappropriatematerialsafetydatasheetsonhand.icanmakesurethattheyhaveall theproperpersonalprotectionequipmentneededfortheiremployees.finallyastheir businessevolvesicanupdatetheirsafetyplan.thecustomercanchoosetouseallof theseservicesorjustoneofthese.italldependsontheirneeds.iamlocalandoncall sothatwayifsomethingcomesupicanrespondrightaway. SomeofthespecificservicesthatIwillprovidearethewritingofanInjuryandIllness PreventionProgram.Anotherservicewillbetheinspectionofacompany sfacilitiesto makesurethattheyhavethepropersafetysystemsinplacesuchaseyewashstations, fireextinguishers,hazardousmaterialsstorage,materialsafetyanddatasheets,etc..i couldalsobehiredtoprovidesafetytrainingtoemployeesforspecificpiecesof equipmentandoperationsonthefarm.forexampleprovidingsafetytrainingto employeesatthebeginningofthetomatoharvestseason. Mytargetcustomerscanbestbedescribedassmallagriculturalbusinessowners.More specificallyfarmersanddairymen.althoughmytargetmarketisnotlimitedtothem andmayincludeagriculturalbusinessesofallshapesandsizes.inactualitythoughmy servicescouldbeusedbyanybusiness. Thekeyneedsofmytargetcustomersthatmyservicecanfillisknowledgeofrelevant safetycodesandsafeworkingpractices.iamalsoaconvenienceforthemtoobecause Icanprovidetheirsafetytrainingforthemaswellassupplythemwithsafety equipment.inthelongrunitwillsavethemtimeandmoneybyusingmyservices. 25

32 ProductPricing Mybasepricingpolicyisbelowmarketprice.ItisnotgoingtobesolowthatIcan'tturn aprofitbutitisalittlebitlessthanthemarketprice.thereasonforthisisbecausei havelowoverheadcostsanddon'thavethecostofemployees.mainlyijustneedto accountforthecostofmytime. Myspecialpricingprogramsincludeadiscountforcustomersthatchoosetousemefor everythingsafetyrelatedintheirbusiness.thatmeansihandletheirsafetyprogram 100%.Fromdevelopingaplantotrainingtheemployees. Thesefeaturesprovidethefollowingbenefitstomycustomers: 1. Quickresponsetime.I'mlocalandalwaysavailableforthecustomer. 2. Servicescustomtailoredtotheirneeds.I'mnotgoingtowritethecustomerupa genericsafetyplan.icanprovidetheexactservicesthatthecustomerneeds. 3. Abilitytomodifyexistingsafetyplan.Iwillhavecustomers'filesonhandand canmodifythemasthecustomer'sbusinessevolves. 4. Thefocusisonagriculturalbusinesses.Ispecializeinagricultureandhavea deeppassionandrespectforagriculture.iunderstandspecialhardshipsthatare involvedwithagriculture. Myproduct sfeaturesdifferfrommycompetitors inthefactthatothersafety consultantsmightnotbelocal.theymightnotspecializeinagriculturesotheydon't understandtheneedsofthecustomer.alsoiftheyarenotlocaltheycan'tprovidethe quickresponsetimethatican.ifthecompetitorisjustsomeinternetbasedcompany theymightnotbeabletocustomizetheplantothecustomer'sneeds.chance'sareit willjustbesomegenericplanandifthecustomer'sbusinessevolvestheywillhaveto payforawholenewplaninsteadofjustbeingabletomodifyitwithme. 26

33 OperationandManagementPlan Thebusinesswillbesolelyrunbymyself.Lawyerswillbecontractedasneededfor thingsthatareoutsideofmyscope.iwillhandlealloftheconsultingaswellasclerical duties. Theinputsnecessarytorunmybusinessarerelativelyminimalcomparedtosomeother businesses.ineedafewessentialthings.mostimportantlymyknowledgeof agriculturalsafetyprovidedthroughmypreviouseducationinadditiontocontinuingmy educationasneeded.ineedmethodsofcommunicationsuchasaphoneandfax machine.ineedacomputertopreparedocuments.ineedsafetytrainingmaterialto use.industryjournalstokeepmeupdatedoncurrentissues.iwillneedtransportation sothatwayicantraveltothelocationofthebusinessesusingmyservices.ialsoneed miscellaneousofficesuppliesnecessarytocarryoutmyservices.theservicesoffered willbetheproductofmyownwork. Theventurewillbelocatedoutofmyhouseforthetimebeingtokeepcostsminimal whilestartingthebusiness.everythingthatineedtoperformmyservicescouldeasily behousedinmyownhome. Mybusinesswilloperateasasoleproprietorshiptostartoutbecauseofthesimplicity involvedingettingitstarted.asthebusinessgrowsinadditiontomypersonalassets, switchingitovertoacorporationwillbeseriouslyconsidered. Forthefirstthreeyearsthecompanywillpracticebootstrapfinancing.Thiswillbe accomplishedbystartingthebusinesswithpersonalsavings.profitwillalsobe reinvestedintothecompanyduringthistimeperiod.startinginyearfouriwillbegin takingasalaryof$50,000.duringthefirstthreeyearsthecompanywillnotrequiremy attentionfulltimeduetoasmallclientbasesoiwillbeasubstituteteacherwhenthe companydoesn trequiremytimeandthiswillprovidealivableincome. 27

34 FinancialPlan Balance Sheet Assets Startup Year1 Year2 Year3 Year4 Year5 Current Cash $1,000 $14,466 $35,632 $64,747 $84,784 $136,151 Inventory $0 $0 $0 $0 $0 $0 NonCurrent Machineryand $2,500 $2,188 $1,875 $1,563 $1,250 $2,740 Equipment Buildingsand $0 $0 $0 $0 $0 $0 Structures Land $0 $0 $0 $0 $0 $0 Trucksand $0 $0 $0 $0 $17,500 $15,000 Vehicles Total Assets $3,500 $16,653 $37,507 $66,309 $103,534 $153,891 Liabilities Term/Mortgage $0 $0 $0 $0 $0 $0 s Total Liabilities $0 $0 $0 $0 $0 $0 Owner's Equity Retained $13,153 $20,854 $28,802 $37,224 $50,357 earnings Contributed $1,000 CashCapital ContributedinkindCapital $9,000 Owner'sEquity $3,500 $16,653 $37,507 $66,309 $103,534 $153,891 TotalLiabilities+ Owner'sEquity $10,000 $16,653 $37,507 $66,309 $103,534 $153,891 28

35 Income Statement Year1 Year2 Year3 Year4 Year5 Income Grosssales $30,000 $38,625 $49,730 $64,027 $82,435 Expenses Materials,Labor,Utilities $750 $938 $1,172 $1,465 $1,831 Total Direct Expenses $750 $938 $1,172 $1,465 $1,831 Gross Profit $29,250 $37,688 $48,558 $62,562 $80,604 General and administrative expenses Non productionwages $0 $0 $0 $0 $0 OccupancyCosts $0 $0 $0 $0 $0 Taxesandlicenses $0 $0 $0 $0 $0 Transportation/shipping $0 $0 $0 $0 $0 Advertising $2,000 $2,060 $2,122 $2,185 $2,251 OtherExpenses $5,000 $5,150 $5,305 $5,464 $5,628 OfficeSupplies $300 $309 $318 $328 $338 Travel $2,000 $2,060 $2,122 $2,185 $2,251 Start upcosts $2,100 Depreciation $313 $313 $313 $2,813 $3,070 TotalG&AExpenses $11,713 $9,892 $10,179 $12,975 $13,537 Earningsbeforeinterestand taxes $17,538 $27,796 $38,379 $49,587 $67,066 InterestExpense $0 $0 $0 $0 $0 IncomeTaxes $4,384 $6,942 $9,577 $12,363 $16,709 Net Profit $13,153 $20,854 $28,802 $37,224 $50,357 29

36 Statement of Cash Flows Year1 Year2 Year3 Year4 Year5 InitialCash $1,000 $14,466 $35,632 $64,747 $84,784 CashFromOperations SalesIncome $30,000 $38,625 $49,730 $64,027 $82,435 CashExpenses $12,150 $10,517 $11,038 $11,627 $12,298 Net $17,850 $28,109 $38,691 $52,400 $70,136 CashfromCapital Purchases/Sales CapitalInvestments $3,500 $0 $0 $20,000 $2,060 CashfromFinancing NewCapital $3,500 $0 $0 $0 $0 PrinciplePayments $0 $0 $0 $0 $0 Net $3,500 $0 $0 $0 $0 Taxes $4,384 $6,942 $9,577 $12,363 $16,709 EndingCash $14,466 $35,632 $64,747 $84,784 $136,151 Valuation InvestmentOutlay $3,500 DiscountRate 8% NetCashIncome StartupPeriod(year1) $13,466 Averageyearlycashflow(years2 5) $202,164 ValueofBusiness Minimum(netassetsinbusinessattheendof $153,891 fiveyears) Projected $561,717 InternalRateofReturn 199% Breakeven Analysis Year1 Year2 Year3 Year4 Year5 Breakeven Volume (average) TotalDirectCosts $16,097 $16,833 $19,756 $25,338 $30,246 2.Perunitrevenue(average) $2, $2, $2, $2, $2, Perunitcosts(average) $50.00 $51.50 $53.05 $54.64 $

37 31