MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE
ENTREPRENUERSHIP GROUP ASSIGNMENTS

GROUP NO# 30
NAME REG NO# M.O.E %
TEDDINGTON SHUMBAYAONDA R124922X PDP HACC
RUVIMBO MUDZINGWA R123905E PDP HACC
INNOCENT SHUMBA R124234X PDP HACC
CHARITY NDAREVANI R124051N PDP HACC
TINOTENDA SVETA R124473W PDP HACC
TERENCE MUNAMATI R125277C PDP HACC
TAPIWA SAMUPENDA R124976A CDP HRMK
GODWIN NHEMACHENA R124457V CDP HRMK
RUMANO YEVAI CDPHRMK
PERSEVERANCE NYAKURIMA CDP HRMK
LIAH SAURAMBA R124665X CDP HMAN
HONOUR TEMBO R125688E PDP HMAN
TARIRO MHARIRA R125234N PDP HRET
HILDAH HOVE R126310E PDP HRET
DESIRE DAMBUZA R124625F PDP HIRM

Page 1
Page 1
0 Executive Summary..................................................................................................................................1
Chart: Highlights.................................................................................................................................1
1.1 Objectives..........................................................................................................................................2
1.2 Mission..............................................................................................................................................2
1.3 Keys to Success.................................................................................................................................2
2.0 Company Summary...............................................................................................................................3
2.1 Company Ownership.........................................................................................................................3
2.2 Start-up Summary..............................................................................................................................4
Table: Start-up.....................................................................................................................................4
Chart: Start-up.....................................................................................................................................4
2.3 Company Locations and Facilities.....................................................................................................5
3.0 Products.................................................................................................................................................5
3.1 Product Description...........................................................................................................................5
3.2 Competitive Comparison...................................................................................................................6
3.3 Sales Literature..................................................................................................................................6
3.4 Sourcing.............................................................................................................................................7
3.5 Sales Programs...................................................................................................................................7
3.6 Future Products..................................................................................................................................7
4.0 Market Analysis Summary....................................................................................................................8
4.1 Market Segmentation.........................................................................................................................9
Table: Market Analysis........................................................................................................................9
Chart: Market Analysis (Pie)...............................................................................................................9
4.2 Target Market Segment Strategy.....................................................................................................10
4.2.1 Market Needs............................................................................................................................10
4.2.2 Market Trends...........................................................................................................................11
4.3 Industry Analysis.............................................................................................................................11
4.3.1 Trends in Food Service Retail..................................................................................................12
4.3.2 Competition and Buying Patterns.............................................................................................12
4.3.3 Main Competitors.....................................................................................................................13
4.3.4 Foreign Vs. Local Franchising.................................................................................................13
5.0 Strategy and Implementation Summary..............................................................................................14
5.1 Competitive Edge............................................................................................................................14
Page 1
 5.2 Marketing Strategy..........................................................................................................................14
5.2.1 Pricing Strategy........................................................................................................................14
5.2.2 Brand Challenges......................................................................................................................14
5.2.3 Marketing Programs.................................................................................................................15
5.2.4 Positioning Statement...............................................................................................................15
5.3 Sales Strategy...................................................................................................................................15
5.3.1 Sales Forecast...........................................................................................................................16
Table: Sales Forecast.....................................................................................................................16
Chart: Sales Monthly.....................................................................................................................17
Chart: Sales by Year......................................................................................................................17
5.4 Strategic Alliances...........................................................................................................................18
5.5 Milestones........................................................................................................................................18
Chart: Milestones...............................................................................................................................18
Table: Milestones...............................................................................................................................19
6.0 Web Plan Summary.............................................................................................................................19
6.1 Website Marketing Strategy............................................................................................................19
6.2 Development Requirements.............................................................................................................20
7.0 Management Summary........................................................................................................................20
7.1 Management Team..........................................................................................................................20
7.2 Organizational Structure..................................................................................................................20
7.3 Personnel Plan.................................................................................................................................21
Table: Personnel................................................................................................................................21
8.0 Financial Plan......................................................................................................................................21
8.1 Start-up Funding..............................................................................................................................21
Table: Start-up Funding.....................................................................................................................22
8.2 Break-even Analysis........................................................................................................................22
Chart: Break-even Analysis...............................................................................................................23
Table: Break-even Analysis...............................................................................................................23
8.3 Projected Profit and Loss.................................................................................................................24
8.3 Projected Profit and Loss.................................................................................................................24
Chart: Profit Monthly........................................................................................................................24
Chart: Profit Yearly...........................................................................................................................25
Page 2
 Chart: Gross Margin Monthly...........................................................................................................25
Chart: Gross Margin Yearly..............................................................................................................26
Table: Profit and Loss........................................................................................................................26
8.4 Projected Cash Flow........................................................................................................................27
Chart: Cash........................................................................................................................................27
Table: Cash Flow...............................................................................................................................28
8.5 Projected Balance Sheet..................................................................................................................29
8.5 Projected Balance Sheet..................................................................................................................29
Table: Balance Sheet.........................................................................................................................29
8.6 Business Ratios................................................................................................................................29
Table: Ratios......................................................................................................................................30
Table: Sales Forecast...................................................................................................................................1
Table: Personnel..........................................................................................................................................2
Table: Personnel..........................................................................................................................................2
Table: Profit and Loss..................................................................................................................................3
Table: Profit and Loss..................................................................................................................................3
Table: Cash Flow.........................................................................................................................................4
Table: Cash Flow.........................................................................................................................................4
Table: Balance Sheet...................................................................................................................................6
Table: Balance Sheet...................................................................................................................................6

Page 3
1.0 Executive Summary

Fast Six is a locally owned fast food outlet that will be positioned as a locally owned restaurant. Fast
Six will provide a combination of excellent foods at affordable prices, with fun packaging and
atmosphere. Fast Six is the answer to an increasing demand for light fast foods and other snacks, to
be consumed by students during lunch hours as most of them do not favor eating heavy meals
offered at the Dinning Hall (DH) continuously and whilst relaxing during free periods waiting for
other lectures.

At Midlands State University (MSU) Graduate School of Business Leadership (GSBL) the is only
one food outlet,the university DH,which offers sadza and rice as their main meals most of the
time.The survey and observations we carried out showed that most of the students are complaining
on the quality of food and services being offered at the DH. There are nine departments at the faculty
of commerce excluding the department of law and the total number of the students is............ which
clearly identifies the niche market we want to target.

Our main priority is to establish one outlet at the GSBL, later on our effort will be a further
development of more Fast Food outlets at Batanai and Main campus.

This plan is prepared to obtain a location for the initial launch of this concept. Additional financing
will need to be secured for the two subsequent outlets, anticipated in year 2017. The financing, from
retained earnings gained from year one up to year three and contributions from partners, will allow
Fast Six to successfully open and expand through year three. The initial capital investment will allow
Fast Six to provide its customers with a value-driven, entertaining experience through the creativity
of its founders.

Fast Six will entice students to bring their friends and other Lecturers with our innovative
environment, fresh-cut Fast Six fries, and a selection of unique snacks.

Please note that all tables are in United States Dollars (USD)

Chart: Highlights
1.1 Objectives

 To establish a presence as a successful start-up local fast food outlet and gain a market share at
GSBL.

 To offer fast foods which are of a high quality and meeting the needs of students and lecturers.

 To expand our outlets to Batanai and the Main Campus after three years of trading at GSBL.

 To maximise profits

1.2 Mission

Our main goal is to be one of the most successful fast food outlets at MSU, starting with one outlet
located at GSBL as a "market tester."

We want our customers to have the total experience when visiting our outlet(s) and website as they
will learn about these fascinating new meals. We will sell six fast foods all with our official brand
attached to them.

Our main focus will be serving high-quality food at an affordable price.

1.3 Keys to Success

To succeed in this business we must:

 Create a unique, innovative, entertaining menu that will differentiate us from the DH.
 Control costs at all times, in all areas and implement a conservative approach to growth policy.
 Sell the products that are of the highest quality, as well as keeping the customers happy with all
of our meals.
 Provide 100% satisfaction to our customers and maintaining the level of excellent services
among other competitors.
 Encourage the two most important values in fast food business: brand and image, as these two
ingredients are a couple of main drivers in marketing communications.
  Promote good values of restaurant culture and business philosophy.

s
2.0 Company Summary
What is Fast Six?
Fast Six represents six different meals on our menu being sold by the restaurant,of which our main
meal being fries and marinated chicken.We use the recipes derived from a local recipe book which is
known as .........Our outlet also provides excellent and friendly customer service to support the
ambience of fun, energetic and youthful lifestyle. 

Youthful and fresh surroundings

We will imitate successful establishments, such as Chicken Slice and Food Express, which represent
the majority of our core target market, between 18 to 35 years of age. Our restaurant will feature
display cooking of our featured Fast Six Fries from cutting to frying. Our customers will also be able
to read our in-house brochures in regards to all knowledge about Fast Six Fries and our featured
sauces. Our store will be decorated with fast food setting, such as a bright counter and display menu
on the wall.

Quality food
Each store will offer nothing but freshly prepared Fast Six foods, sandwiches and variety of unique
blend sauces, all served with old-fashioned home-style care.

Open everyday
Our store is open everyday from 9am to 5pm and during the weekends from 10am to 12pm

2.1 Company Ownership

Fast Six is a partnership held by 16 partners which consist of active and sleeping partners.

Miss Ruvimbo Mudzingwa did food and nutrition studies at her O’level and learnt things to do with
meal planning, preparation and hygiene and has a Certificate of HEXCO in Bakery and is currently
doing a Bachelor of Commerce in Accounting Degree and have more than 2 years of experience in
the food sector.

Shumba Innocent and Terrence Munamati both are true entrepreneurs by heart, their latest
entrepreneurial project is offering printing and typing services in Nehosho.
 Shumbayaonda Teddington holds a Certificate in Technical Graphics Design from the ZIMSEC.His
projects are widely varied from product design to brand development of our products.

Nhemachena Godwin, Yevai Rumano and Tapiwa Samapenda are responsible for the marketing
department.The three are currently studying marketing at degree level at MSU.

Liah Sauramba and Owner Tembo,will be the managers and are undertaking degrees in Management
and majoring in Finance.

2.2 Start-up Summary

The retail outlet will be rented at one of the target location shopping malls. Our preference is Space
A, for the main reason of reaching larger traffic.

Startup requirements will be financed through owner investments.

Table: Start-up

Start-up

Requirements

Start-up Expenses
Kitchen and Fixtures $21,600
Furniture and Interior $16,500
Legal $3,000
Rent $15,000
Packaging and Stationary $8,500
Contingencies $4,200
Total Start-up Expenses $68,800

Start-up Assets
Cash Required $50,000
Other Current Assets $0
Long-term Assets $0
Chairs and Tables
Mini Fridge

Total Assets $50,000

 Total Requirements $118,800

Chart: Start-up

2.3 Company Locations and Facilities

Fast Six locations will range in size from 15 – 20 meter square and will seat from 15 – 25 guests.
Our first location will be on the larger end of this range. The location will feature its own originality
in merchandise display and other brand building attributes. We will equip the outlet with modern
furniture and aim for cleanliness and an open feeling.

The space selection will be chosen based upon the following criteria:



 Easy access.


All of these qualities are consistent with Fast Six goal of providing a top quality fast food
experience. We want "word-of-mouth" to be our best form of marketing, where our customers value
our brand as something exciting and cannot wait to tell their friends and neighbors.

Fast Six will directly compete with several food outlets which are the Dinning Hall,Tuckshop and
other individual sellers around the GSBL Campus.

3.0 Products

We want to focus only on selling fast foods and refreshments at affordable prices,and these include
fries and chicken,coffee,hot-dogs, pies,sandwiches and popcorns.Alcoholic drinks will not be sold in
our outlet, as Fast Six promotes a healthy and positive university lifestyle.
 In promoting the Fast Six lifestyle, we will offer various merchandise with our logo and colors, from
hats to t-shirts to our members.Fast Six foods will offer on the spot services and take aways to its
customers.

3.1 Product Description

Fast Six primarily sells its main dish which is fries and chicken and our unique dipping sauces.The
other five meals are part and parcel of the products provided,for variety sake though fries and
chicken are the main product.

Fast Six-style fries are available in large plain (choose 1 dips), large with chicken (choose 2 dip),
with addition of garlic.

The dips for Fast Six style fries can also be served with sandwiches; they are available in more than
5 flavors:

 Satay Sauce
 Roasted Pepper Mayo
 Lava Cheese
 Black Pepper Sauce
 Curry Ketchup
 Korean BBQ
 Hot Chili Sauce
 Garlic Dip

3.2 Competitive Comparison

Fast Six has several advantages over its leading competitors:

 Unique flavors of dipping sauce.

 We expect a high degree of enthusiasm and offer a fun store with friendly staff, that reflects the
company's youthful and energetic culture.
 Our fried potato is made 100% fresh.
 Our dipping sauce is also made fresh without preservatives.
  Our innovative packaging will be more convenient than our competitors

3.3 Sales Literature

Fast Six will use advertising and sales programs to get the word out to customers.

 2,000 color flies to be distributed throughout the GSBL campus and in nearest locations where
students reside.like in Nehosho,Senga and Batanai.

 We will have our own Facebook page on which we will place our adverts

3.4 Sourcing

Fresh potatoes and other vegetables will be supplied weekly by our supplier directly from the farm.
Our main aim is to become an key account of the suppliers which are .............and.........

Marketing Plan

4.0 Market Analysis Summary

A much broader appeal exists for weekend slots because those are the days when most of our core
target market enjoys the mall going activities.

 Age - Youngsters, single, currently enrolled in college and high school

 Gender - We will target both sexes, with a slight skew for males due to their lower attention to
dietary concerns.
 Status - We going to cater for all classes of customers

Our concept will have a very broad appeal. It is our goal to be the hip destination for fast food
craving to all.

According our recent survey of students at GSBL who are between 18 - 45 years, 60% of those
interviewed like fast foods of which 40% are ladies. 80% of them like fast foods on a regular basis,
 and 20% of them claimed that they like fast foods very much. The survey also provided the
following particular reasons for the need of fast foods at MSU.

 Lack of variety from the DH,same food year round

 To protect the status of other students who belong to the upper class
 Students are complaining on quantity and quality of the food
 Parents give more money to kids and students to buy lunch. Fast food is naturally their first
choice, because of the brand building effort that heavily targets their age group.
 Unreliable services offered by the tuckshops and other individual vendors,for example running
out of stock when demand is high.

4.1 Market Segmentation

We are targeting MSU students at GSBL as our primary market. The outlet will be situated behind
lecture room 13,where the are stone benches where students relax during free slots.

Our secondary market segment is the MSU workers both blue and white-collar employees.We are
targeting about 100 MSU workers at GSBL.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3
Potential Customers Growth
Students 15% 500 575 661
Working Staff 10% 50 55 60
Visiting and Block 20% 350 420 504
Students
Total 35% 900 1050 1225

Target Market Analysis Computations

We have used market factor derivation to come up with the market potential and sales potential figures.
Market Potential this is the maximum possible sales that are available to some sellers(DH,tuckshop and
Fast six) in an industry for a stated marketing future period.
Sales Potential this is the maximum possible sales that are available to a particular organisation,in an
industry for a stated marketing future period.
GSBL number of students and MSU workers = 7500
Potential Customers =60%
Estimated Fast Six Customer Percentage =20%
Average income spent on fast foods per month by our customers $10
Market Potential Calculation
7500*60% =4500students
Sales Potential Calculation
4500*20% =900students
Estimated Sales value figure per month for Fast Six
900*$10 =$9000

4.3.2 Competition and Buying Patterns

The competition in this arena is the fiercest in all other metropolitan areas in SE Asia. Singapore is a
compact city, but has a lot to offer. Usually there are a minimum of two of the same outlets within a
radius of less than 300 meters. For instance, Bread Talk opens one outlet inside the Ngee Ann City
Shopping Centre and another just across the street inside the Far East Plaza Shopping Centre. It is
quite common for retailers to implement this kind of strategy, due to the high volume of people
strolling around the main area of Orchard Road.

Another reason is because many retailers do not want to lose sales opportunity, as the competitors
are offering substitutions and similar product categories. This phenomenon has made Singapore the
best place to shop. If you just missed Häagen Dazs waffle at CK Tang Shopping Mall, there is
another Häagen Dazs across the street at the new Paragon Shopping Centre.

4.3.3 Main Competitors

Our main competitors in this segment are any food outlets within the 1 kilometer radius around the
GSBL campus. In our location, there is Dining Hall at GSBL campus, GSBL Tuckshop, Sunshine
Takeaway, KwaMother, and other individual sellers that sell fast foods.

DH
DH is a MSU owned food outlet which sells Sadza, Rice, Chicken and Beef. DH is popular among
MSU students and workers as it offers food services to its customers. Commonly, the DH outlets are
big as they can serve and accommodate around 100 customers each at a time. It is a choice for those
who want heavy meals.
 Tuckshop
Tuckshop is a MSU owned positioned as an income earning outlet which offers refreshments, pies,
chips and other small food stuffs as biscuits and stationery. It is situated at the center of the GSBL
campus thereby making it a more convenient place for its customers.

Sunshine takeaway
Sunshine takeaway is a newly established restaurant located at Senga shops which offers foods as
Sadza, rice, chips, chicken, beef stew, pork, salads, ice creams and other refreshments. And its
penetration strategy have had made some impact in the market of Senga area.

KwaMother
KwaMother is a food outlet that is located at Senga shops about a kilometer from GSBL campus at
the back of Lucky Seven supermarket. KwaMother offers food as Sadza, chicken, beef, and fish.

Other players
These are various students and some individuals that sell foods as sandwiches, chips and Sadza,
chicken and beef stew. Students sell sandwiches at the GSBL and individuals prepares Sadza from
their homes to sell to the students.

5.1 Competitive Edge

 Our unique dipping sauces provide a unique taste that is different from those of our competitors.
 Enthusiastic and friendly staff
 Our fries are made of 100% fresh potatoes
 Convenient packaging will position us at the same level with other fast food outlets as Sunshine
takeaway.

Sales force

The organisation will have 16 full time employees that are the members and will employee two more
employees that are not the members. This will be done in order for them to help when there is
pressure and also when most of the members are in lectures.

5.2 Marketing Strategy

Our strategy will be based on focusing marketing strategy were we will focus mainly to the GSBL
campus and then we will try to differentiate our products to those of our competitors through
offering and ensuring quality foods at all the times and offering a price for the foods that will match
the quantity of food making customers experience real value for their money. Focusing strategy will
be on maintaining quality and establishing a strong brand (Fast Six) in the local market of Senga
area and a combination of local media and local store marketing programs will be utilized at our
food outlet.

5.2.1 Pricing Strategy

Our pricing strategy is positioned as generic meaning that $1.00 is the average consumer spending
for a snack or light lunch. We are going to use cost plus pricing strategy where we are going to add a
 small percentage markup to the cost of production of each unit (snack). There will be no credit
facilities offered to the customers. The customers will be served over the counter.

5.2.2 Brand Challenges

Fast six must establish a distinct brand to stand out from the other fast food competitors.

 Our logo is distinct as fresh, energetic and playful with color elements that are eye catching.
 Product names are geared toward the target market (teens), with items such as "UBA/USA Fries”
which are fun and easy to remember.

5.2.3 Marketing Programs

We will deploy three different marketing tactics to increase customer awareness of Fast Six Foods.
Our most important tactic will be word-of-mouth and in-store marketing.

The second tactic will be local store marketing. These will be low-budget plans that will provide
community support and awareness of our facility. The last marketing effort will be utilizing local
media. Although, this will be the most costly, this tactic will be used sparingly as a supplement
where necessary. 

 In-Store Marketing
o In-store fliers at point of purchase containing our concept and philosophy.
o Wall posters.
o In-store viewing of making fries process from cutting to frying.
o Outdoor signage
o Grand opening promotion.

 Local Store Marketing

o Fliers and posters
o T-shirts and caps with Fast Six logo.

5.2.4 Positioning Statement

Our main focus in marketing will be to increase customer awareness at GSBL. We will direct all of
our tactics and programs toward the goal of explaining who we are and what we are all about. We
will price our products fairly, keep our standards high, and execute the concept so that word-of-
mouth will be our main marketing force.
5.3.1 Sales Forecast

We anticipate the highest peak of sales during month ends, beginning of the semester and soon after
semester-break. This is because students receive money from home during month ends and after
semester break they came back loaded.
Management plan

7.0 Management Summary

The initial management team depends on the founders themselves, with little back-up. As we grow,
we will take on additional help in certain key areas. Part of our basic philosophy will be able to run
our executive management as a knowledge sharing fellowship. We will not add additional overhead
until absolutely necessary. This will mean that the initial staff support team will have to work extra.
By doing this, we will keep our overhead as low as possible, allowing us to adequately staff our
outlet. This will also allow us and future business partners to recoup investments as quickly as
possible and enjoy a higher return.

At present time, Fast Six is being owned by its 16 founders. Others that have helped on the
development of this business venture will be offered an opportunity to grow together with the
company at the appropriate time, and when the time comes, the 16 founders’ share will be
consolidated as one entity.

7.1 Management Team

Fast Six Foods is currently the creative idea of its 16 founders. As the partnership is small in nature,
it only requires a simple organizational structure. Implementation of this organization form calls for
all 16 individuals to make all major management decisions in addition to monitoring all other
business activities.

Management structure

Current plan is to have our accounting and payroll functions done by an in-house bookkeeping. Mr.
Tinotenda Sveta will be responsible for accounting and business development of Fast Six, Ms. Tariro
Mharira, will be the Head of Human Resources Division, Mr. Samapenda Tapiwa and Ms. Rumano
Yevai will be responsible for the Marketing Department, Mr. Tembo Owner will be responsible for
the Purchasing department and Ms. Ndarevani Charity will be responsible for the Customer Service
department.
7.3 Personnel Plan

Our initial employees will include two workers who will be all-rounder workers who will work only
during the mid-week and they help us when we are experiencing high traffic from customers and
also when we are not available especially during lecture times. Each employee will work for 20-30
hours per week.

In the long run, as we expand our product category and retail outlets, we will employ more people in
general workers positions and spread other members to other middle management posts but this will
be done basing on merit basis of hardworking to ensure the focus of our work, including site
managers.

Table: Personnel

Personnel Plan
Year 1
General workers:
Worker one(200per month*8) $1600
Worker two(200per month*8) $1600

Total Payroll $3200

8.0 Financial Plan

The company is now privately held by Harry Hip, Guy Fry, Carl Cone, and Sam Sauce. Future
shares will be offered after two consecutive years of operating in Singapore.

8.1 Start-up Funding

Currently, the company is owned by the original 4 founders, who each will contribute $200,000 for
the same amount of share, 25%. This will more than cover start-up requirements, and provide the
business with a cash cushion to use for expansion over the first three years.
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $68,800
Start-up Assets to Fund $50,000
Total Funding Required $118,800

Assets
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $50,000
Additional Cash Raised $681,200
Cash Balance on Starting Date $731,200
Total Assets $731,200

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Eric Yam $200,000
Martin Ng $200,000
David Lu $200,000
Sagita Suwandi $200,000
Additional Investment Requirement $0
Total Planned Investment $800,000

Loss at Start-up (Start-up Expenses) ($68,800)

Total Capital $731,200

Total Capital and Liabilities $731,200

Total Funding $800,000

8.2 Break-even Analysis
Our break-even analysis shows that we need unit sales over 9,700 per month to break even. We do
not expect to begin turning a profit until year three.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 9,706

Monthly Revenue Break-even $32,104

Assumptions:
Average Per-Unit Revenue $3.31
Average Per-Unit Variable Cost $0.73
Estimated Monthly Fixed Cost $24,979
8.3 Projected Profit and Loss
As the Profit and Loss shows, Fresin Fries will run at a loss for the first two years, using up some of
the cash reserves initially invested by the founders. As sales increase, we will expand into new
locations to aggressively spread brand recognition. This increase in visibility will allow us to take up
less expensive locations off of Orchard Road, while maintaining our flagship operation, the first
store, in a prime spot.

Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $279,163 $558,327 $1,116,654
Direct Cost of Sales $61,957 $123,914 $247,827
Other Costs of Sales $0 $0 $0
Total Cost of Sales $61,957 $123,914 $247,827

Gross Margin $217,207 $434,413 $868,826

Gross Margin % 77.81% 77.81% 77.81%

Expenses
 Payroll $88,200 $262,000 $449,600
Marketing/Promotion $10,000 $10,000 $10,000
Depreciation $0 $0 $0
Rent $174,000 $248,000 $298,000
Utilities $2,550 $5,000 $8,000
New location setup $25,000 $50,000 $50,000

Total Operating Expenses $299,750 $575,000 $815,600

Profit Before Interest and Taxes ($82,543) ($140,587) $53,226

EBITDA ($82,543) ($140,587) $53,226
Interest Expense $0 $0 $0
Taxes Incurred $0 $0 $0

Net Profit ($82,543) ($140,587) $53,226

Net Profit/Sales -29.57% -25.18% 4.77%

8.4 Projected Cash Flow

The following chart and table show the Projected Cash Flow for Fresin Fries.

Chart: Cash
Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $279,163 $558,327 $1,116,654
Subtotal Cash from Operations $279,163 $558,327 $1,116,654

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $279,163 $558,327 $1,116,654

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $88,200 $262,000 $449,600
Bill Payments $244,265 $430,245 $599,286
Subtotal Spent on Operations $332,465 $692,245 $1,048,886

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $332,465 $692,245 $1,048,886

Net Cash Flow ($53,301) ($133,918) $67,767

Cash Balance $677,899 $543,981 $611,748
8.5 Projected Balance Sheet
Fresin's projected company balance sheet follows. We expect to run at a loss for the first two years,
decreasing our net worth slightly. As the operation becomes more profitable in the third year, our net
worth rises again.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $677,899 $543,981 $611,748
Other Current Assets $0 $0 $0
Total Current Assets $677,899 $543,981 $611,748

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $677,899 $543,981 $611,748

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $29,242 $35,911 $50,452
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $29,242 $35,911 $50,452

Long-term Liabilities $0 $0 $0
Total Liabilities $29,242 $35,911 $50,452

Paid-in Capital $800,000 $800,000 $800,000

Retained Earnings ($68,800) ($151,343) ($291,930)
Earnings ($82,543) ($140,587) $53,226
Total Capital $648,657 $508,070 $561,296
Total Liabilities and Capital $677,899 $543,981 $611,748

Net Worth $648,657 $508,070 $561,296

8.6 Business Ratios
The following table outlines some of the more important ratios from the Fast Food Restaurants and
Stands industry. The final column, Industry Profile, details specific ratios based on the industry as it
is classified by the Standard Industry Classification (SIC) code 5812.
Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 100.00% 100.00% 8.67%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 37.31%
Total Current Assets 100.00% 100.00% 100.00% 45.97%
Long-term Assets 0.00% 0.00% 0.00% 54.03%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 4.31% 6.60% 8.25% 17.94%

Long-term Liabilities 0.00% 0.00% 0.00% 22.26%
Total Liabilities 4.31% 6.60% 8.25% 40.20%
Net Worth 95.69% 93.40% 91.75% 59.80%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 77.81% 77.81% 77.81% 59.05%
Selling, General & Administrative 107.37% 102.99% 73.04% 39.24%
Expenses
Advertising Expenses 0.00% 0.00% 0.00% 1.96%
Profit Before Interest and Taxes -29.57% -25.18% 4.77% 1.92%

Main Ratios
Current 23.18 15.15 12.13 1.04
Quick 23.18 15.15 12.13 0.66
Total Debt to Total Assets 4.31% 6.60% 8.25% 50.22%
Pre-tax Return on Net Worth -12.73% -27.67% 9.48% 6.90%
Pre-tax Return on Assets -12.18% -25.84% 8.70% 13.87%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -29.57% -25.18% 4.77% n.a
Return on Equity -12.73% -27.67% 9.48% n.a

Activity Ratios
Accounts Payable Turnover 9.35 12.17 12.17 n.a
Payment Days 27 27 26 n.a
Total Asset Turnover 0.41 1.03 1.83 n.a

Debt Ratios
Debt to Net Worth 0.05 0.07 0.09 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $648,657 $508,070 $561,296 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 2.43 0.97 0.55 n.a
Current Debt/Total Assets 4% 7% 8% n.a
Acid Test 23.18 15.15 12.13 n.a
Sales/Net Worth 0.43 1.10 1.99 n.a
Dividend Payout 0.00 0.00 0.00 n.a