Harborside Bait & Tackle Business Plan

Business Plan Prepared By:

Students of Spring 2015 Business Decision ManagementGateway Technical College

3520 30th Avenue, Kenosha, WI 53144(800) 247-7122

Date Prepared:

April 22, 2015

Executive Summary……………………………………………………………….…......41.1 Objectives………………………………………………………………...............51.2 Mission Statement……………………………………………………....………...5

Business Concept & Market Identification Section……………………………………52.1 Definition of Subject Matter….…………………………………….……..............52.2 Differentiation……………………………………………………………………..52.3 Competitive Analysis……………………………………………………………...5

Market Identification…………………………………………………………………….63.1 Target Market Identified…………………………………………………………..63.2 Marketing Segmentation Defined…………………………………………………73.3 Psychographics of Customer Identified…………………………………...………83.4 Demographics of Customer Identified…………………………………………….83.5 Geographics of Customer Identification…………………………………………..9

Marketing Plan………………………………………………………………………...104.1 Product Mix……………………………………………………………………...114.2 Unique Selling Proposition………………………...…………………………….114.3 Distribution………………………………………………………………….…...124.4 Point of Purchase……………………………………………………….………..124.5 Price Points……………………………………………………………….……...134.6 SWOT Analysis…..……………………………………………………………...134.6.1 Fishing SWOT Analysis…………………………………………………………134.6.2 Hunting SWOT Analysis………………………………………………..……….144.6.3 Café SWOT Analysis…………………………………………………………….15

Business Organization & Financial Structure………………………………………165.1 Business Organization …………………………………………………………...165.1.1 Liability & Risk Containment……………………………………………………175.1.2 Tax Management………………………………………………………………...185.1.3 Planned Growth………………………………………………………………….185.1.4 Financial Growth………………………………………………………………...185.2 Financial Structure ……………………………………………………………….185.2.1 Base Financial Structure…………………………………………………………195.2.2 Working Capital………………………………………………………………….19

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Table of Content

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5.2.3 Business Operations Expenditures……………………………………………….215.2.4 Identification of Debt & Equity………………………………………………….225.2.5 Expansion Funding………………………………………………………………22

Financial Performance…………………………………………………………………226.1 The Base Model………………………………………………………………….226.2 Sensitivity “A” Performance……………………………………………………..236.3 Sensitivity “B” Performance……………………………………………………..236.3.1 Exhibit Base Model 3 Year Performance………………………………………..246.3.2 Exhibit Sensitivity “A” Performance…………………………………………….316.3.3 Exhibit Sensitivity “B” Performance…………………………………………….376.4 Break Even Analysis……………………………………………………………..436.5 Sensitivity Analysis “A” Break Even……………………………………………436.6 Sensitivity Analysis “B” Break Even……………………………………………436.7 Base Model Years 1-3……………………………………………………………446.8 Sensitivity Analysis Model “A” Years 1-3………………………………………456.9 Sensitivity Analysis Model “A” Years 1-3………………………………………46

Exit Strategy…………………………………………………………………………….47

Summary………………………………………………………………………………...48

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Executive Summary

Locally and family owned, Harborside Bait and Tackle is located a few blocks away from Lake Michigan on 7th Av in downtown Kenosha, Wisconsin. Harborside will provide a one-stop service for fishermen and hunters. Harborside will offer fishing and hunting equipment as well as food to order for take-out or dine in and basic staples such as bread, butter, and milk. Harborside’s main target market is Loyal Experts. Their needs will still be fulfilled plus more. They will extend their market to more women and children.

Harboside Bait and Tackle wants to obtain a $333,000 business loan to help with the building acquisition, inventory, equipment, renovations, and working capital for this business plan. Harborside’s owner Bob DeAngelis will contribute $67,000 in the form of cash, existing equipment, and inventory.

Being close to the Lake Michigan, Harboside Bait and Tackle has a big advantage over their local competitors. They are the only business that will sell food and fishing and hunting supplies together in one place in downtown Kenosha. Expanding their services broadens Harborside’s target market that will create more customers and higher sales. They will provide more for the customers’ needs and wants that no other business around them can do. Being a “one stop shop” kind of business in the area of their target market will make them a great business to invest in. Harborside is already a known business in the downtown Kenosha area with a well-respected owner Bob DeAngelis.

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1.1 Objectives

1.2 Mission Statement

Business Concept & Definition of Product/Services

2.1 Definition of Subject Matter

Harborside Bait & Tackle is currently a local, family-owned and operated bait and tackle shop located on 7th Avenue in Kenosha, WI just off the shores of beautiful Lake Michigan. Don’t let the size of the shop limit the possibilities that it holds within. This business is up and growing, looking to move into a slightly more accommodating location.

Harborside Bait & Tackle offers different types of live, frozen, and preserved bait such as: minnows, worms, crayfish tails and spawn sacs. If you are looking for something artificial to cast out, don’t fret there is a large variety of different tackle equipment stocked too. They offer rod and reel combinations for every type of fisherman, homemade silicone worms, lures, trolling equipment, and special order electronic fish trackers.

Also, to make it easier on the fishermen themselves, they also sell licenses, both inland and Great Lakes stamps for trout and salmon. To make it a one-stop shop the store will offer breakfast, boxed lunches, and sell cases of beer to their customers from the cafe.

Since their new building will be able to handle a larger crowd, the owner will host different classes in order to turn your fishing into catching. He also plans on adding onto his current product line with hunting and gun supplies and a possible future indoor shooting range. This will help the business withstand the off-season months that winter creates to the sport of fishing in Wisconsin.

2.2 Differentiation

Harborside has expertise, knowledge, and genuine customer service that is hard to find elsewhere. The additions to be made (re: the hunting and gun supplies, café, and future possible indoor gun range) will expand what Harborside can offer its customers and give it the upper-hand to truly be a quality “one stop shop” for hungry sports men, women and families all throughout the year.

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2.3 Competitive Analysis

Harborside Bait & Tackle is a unique place in Southeastern Wisconsin that will continue to offer more than its competitors in every aspect. Direct competition is very slim.FishingFor fishing, competitors include the bait shops located in Winthrop Harbor, IL and Wind Pointe, WI, and the sporting goods stores Gander Mountain and Jalensky’s which are both located in Kenosha. When it comes to fishing, these places focus primarily on inland fishing as opposed to Great Lakes fishing which is very different. These locations lack the employee passion, expertise, knowledge, and genuine customer service that Harborside offers.

HuntingFor hunting, competitors include Gander Mountain and Jalensky’s. As mentioned above, these locations lack the needed passion, expertise, knowledge, and customer service.

Guns & ShootingFor guns, competitors include Gander Mountain, Jalensky’s, and The Gun Shop which is also located in Kenosha. For shooting, there are no indoor shooting ranges located in Kenosha and the nearest ones are as far as Milwaukee.

Market Identification

3.1 Identity of Target Market

Broadly, the target market can be defined as anyone who enjoys outdoors sports and lives in or near the greater Kenosha county area. However, in order to better define the specific target markets please refer to the following:

Primary Target Market: Loyal ExpertsAge- 40-70 years oldGender- Primarily maleInterests- Outdoors activities, big fishers & hunters, gun enthusiasts, and challenge seekersCareer- VariesLocation- Primarily Southeast Wisconsin (within 100 mile radius)Income- $20,000-$100,000 per year

Secondary Target Market: TouristsAge- 30-55 years oldGender- Primarily maleInterests- Outdoors activities, charter fishing, traveling, business entertainment, men-outings, bachelor parties, etc. Career- Varies

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Location- Chicago, IL through Milwaukee, WI and beyondIncome- $35,000-$100,000 per year

Tertiary Target Market: Family Time HobbyistsAge- Parents and/or grandparents 25-70 years old with children and/or grandchildren 5-18 years oldGender- Male and FemaleInterests- Outdoors activities/sports and family outingsCareer- VariesLocation- Primarily Southeast Wisconsin (within 100 mile radius)Income- $25,000-$100,000 per year

Quaternary Target Market: Breakfast & Lunch DinersAge- 18-65 years oldGender- Male and FemaleInterests- Dining out and being Harborside customersCareer- VariesLocation- Southeast Wisconsin, primarily Kenosha/Racine areaIncome- $20,000-$100,000 per year

3.2 Market Segmentation Defined

Fishing/Hunting/Gun Experts SegmentThis segment of people needs specialized service and unique inventory to fit their expert desires. They will also feel the need for “small talk” and trading secrets with others like them that are regulars in the store. They are different from other segments because they have knowledge of the product that is being sold. Word of mouth advertisement is the most effective for this segment of people. This segment will make up roughly 40 percent of the market.

Tourist SegmentThis segment of people are seasonal, meaning they only come around during the busy summer months. They will ask many questions and will expect thorough answers because they have chosen this shop instead of a well known competitor. They are different than the other segments because they are most likely new to fishing, hunting, or guns and have some level of disposable income. They may be introduced to Harborside by virtual advertisement and possibly be repeat customers up from Illinois. Although they will not constitute the bulk of the sales like the avid fishers/hunters/gunmen, they will spend the most money and will buy the most items because they are on vacation and will need more supplies to get the full experience. They react well to good customer service and expertise. This segment will make up roughly 20 percent of the market.

Family-Oriented SegmentThis segment of people will often include two or more people with at least one or more of the group being an adult. They will look for expert advice and will often be inexperienced. They may also be repeat customers that frequent three to four times a year which makes them different

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from the other segments. They will respond well to media advertising. This segment makes up roughly 15 percent of the market. They may not have as much disposable income so the average transaction could be smaller but also be more consistent. This segment will make up roughly 20 percent of the market.

Cafe SegmentThis segment of people may include local customers or customers from out of town that are interested in a meal from Harborside while they are there for whatever reason. Customers may only go to Harborside for the food, for the bait/supplies shop, or both. This segment will also respond well to media advertising and have disposable income. This segment will make up roughly 20 percent of the market.

3.3 Psychographics of Target Market

Given the variety of cultures within the target market, the psychographics of the customers can be defined as the following:

Fishing/Hunting/Gun ExpertsThese customers are primarily men who like to get their fishing/hunting/shooting day started early. They love the thrill of each sport and love to talk to other people that frequent the store. They also want to trust the product they are buying and like to feel valued. Experts will consider fishing/hunting/shooting a big aspect of their lives so will frequent the store the most, making them the biggest segment.

TouristsThese customers are usually looking for a little escape from home without going too far and to try something new. They like thinking they are finding something special that not a lot of other tourists know about and that is why specialized service is so important. They are looking to have fun and also relax on their group outings. They like to try new things even if they don’t know what they are doing. This makes teaching and instruction important when they are looking for a place to purchase their items. Out of state tourists aren’t uncommon. Historical sales data indicates a large portion of out of state customers are people who may have immigrated or are immediate family members of people from central Europe.

Family Time HobbyistsThese customers consist of families that may have at least one parental or grandparental figure with one or more children or grandchildren. They have strong family values as they like to do things with their family and teach them new things. They like to experience new things together to bring the family closer. They might require being taught the basics of fishing, hunting, or shooting which is why this shop might be their first stop as well as to get some basic supplies for their trips. They want to experience their surroundings and relax while spending time with their family.

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3.4 Demographics of Target Market

The demographics are very broad within this industry. However, the demographics can be well defined in categories such as age, gender, education, career, and income.

Primary Target Market: Loyal ExpertsAge- 40-70 years oldGender- Primarily maleEducation- High School, College, or bothCareer- VariesIncome- $20,000-$100,000 per year

Secondary Target Market: TouristsAge- 30-55 years oldGender- Primarily maleEducation- High School, College, or bothCareer- VariesIncome- $35,000-$100,000 per year

Tertiary Target Market: Family Time HobbyistsAge- Parents and/or grandparents 25-70 years old with children and/or grandchildren 5-18 years oldGender- Male and FemaleEducation- High School, College, or bothCareer- VariesIncome- $25,000-$100,000 per year

Quaternary Target Market: Breakfast & Lunch DinersAge- 18-65 years oldGender- Male and FemaleEducation- High School, College, or bothCareer- VariesIncome- $20,000-$100,000 per year

3.5 Geographics of Target Market

Harborside Bait & Tackle Shop is currently located on 4615 7th Avenue in Kenosha, Wisconsin. It is located near the shores of Lake Michigan and the port of Kenosha. Kenosha has been a great location for Harborside to establish itself as a successful business. Harborside’s proposed new location is still yet to be determined. Harborside’s goal is to stay close to Lake Michigan in Kenosha and find a location with great accessibility for customers with boats/trailers.Since the plan is for Harborside to remain in the same general area, the Geographic’s of the target market will not change.

Primary Target Market: Loyal Experts

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Location- Primarily Southeast Wisconsin (within 100 mile radius)

Secondary Target Market: TouristsLocation- Chicago, IL through Milwaukee, WI and beyond

Tertiary Target Market: Family Time HobbyistsLocation- Primarily Southeast Wisconsin (within 100 mile radius)Quaternary Target Market: Breakfast & Lunch DinersLocation- Southeast Wisconsin, primarily Kenosha/Racine area

Marketing Plan

Media Advertising

Harborside Bait & Tackle will get the word out using low cost local media outlets such as 95.1 WIIL Rock and Kenosha News. The local radio station with the highest ratings in the area, 95.1 WIIL Rock, offers an “Open Phone Thursday”, where one can call in and promote a business. The Kenosha News and The Happenings Magazine offer traditional print media advertising for small businesses at an affordable price.

Publicity

Harborside Bait & Tackle will use local businesses, venues, and events, such as; the Kenosha King Fish, Southport Marina to help spread the word about its renovation and relocation.

By buying a small section of the outfield wall of Simmonds Field to place a banner that will say; “Harborside’s ________ Opening (XX/XX/XXXX) Located on Sheridan Road, will provide exposure to over 1,000 people that attend Kingfish Games to let potential customer know exactly where and when Harborside Bait & Tackle will be relocating.

Interactive Marketing/Social Media Marketing

The owner knows his customer and their needs. He gets on a trusting supporting level with them. The owner offers his advice to help them succeed. Having such a friendly relationship with his customers will make them talk. Word of mouth is by far the best way to advertise because it gives a more trusting feeling if you hear the review from a personal source. Having the added café with the bait and tackle shop is a great way to get the fishermen to all share their stories and they’ll pass those fisher tales onto their friends saying “what they heard at Harborside Bait & Tackle”. Harborside Bait & Tackle will also use Facebook to get the word out. By liking our page you will then begin to receive posts that will inform the consumer of any upcoming events, special offers and coupons to use within the store. Harborside Bait & Tackle will have a YouTube channel that will provide information on how to fish on Lake Michigan. Harborside will use the equipment that can be purchased at their business.

Direct Marketing

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The owner will offer all of his customers the option to receive periodic emails about current fishing reports and conditions. Harborside respects the privacy of its customers but for those who permit it, Harborside will offer email updates on special sales and promotions. Harborside will utilize its website www.harborsidebait.com to highlight fishing reports and conditions for the occasional web surfer. This way, customers will have access to what they need to know at their fingertips.

Direct Response Marketing/Public Relations/Special Events

There will be a press release explaining Harborside Bait & Tackle has moved and they have expanded their business. Harborside Bait & Tackle will purchase a banner to have on the Kenosha County website to advertise their business. Harborside Bait & Tackle will provide frequent buyer incentives for buying certain items at their business. A special event that will attract families to the business will be family fishing clinics and tournaments. Harborside will sponsor some of these events and host them. It will get their name out to the community and what they can provide to them.

4.1 Product Mix

Hunting and fishing are the two most popular attractions to the outdoor sportsmen in Southeast Wisconsin. The three main types of fishing done are commercial, recreational and sport. Popular hunting sports include pheasant, deer and water fowl. These types of outdoor activities consist mostly of men in various age groups. Our target market will mostly be male, middle aged, boat and gun owners, who enjoy fishing or wildlife hunting. An added perk to Harborside Bait & Tackle is now they will provide deli style food, bakery goods, griddle food for breakfast and lunch, beer; as well as the basic staples such as eggs and milk. Selling food will attract a bigger demographic group which will include more women and children.

Harborside Bait & Tackle will sell items that are needed for every type of fishing. Some of the products will have a wide variety depending on what kind of fishing the customer is pursuing. Harborside will have a variety of rods, hooks, nets, synthetic and live bait, bobbers, line, reels, maps, weather gear, tackle boxes, and lures. Harborside will also have supplies for live lining, trolling, bottom fishing, and drift baiting.

Harborside Bait & Tackle will sell basic hunting items. Some items include guns, ammunition, knives, decoys, and bow accessories. These items are offered year round to accommodate all hunting seasons.

Harborside will have a griddle menu and bakery items for breakfast and a little dining area for people to sit at while eating their breakfast or to have a small bite if the weather isn’t appropriate to fish. They will sell your main staple products such as milk, bread, and eggs. Harborside will prepare and sell deli style lunch boxes and burgers to go or to eat at their diner. They will also have beer, ice, and soft drinks. The wide selection of food will provide convenience for Harborside’s customers.

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4.2 Unique Selling Proposition

Harborside Bait & Tackle will provide the most common and popular bait and tackle shop items for fishing on Lake Michigan. This will be easy for the people going fishing for the day.

Harborside Bait & Tackle will provide a deli style lounge along with the usual fishing and hunting items. Harborside Bait & Tackle will be open year round as opposed to seasonally. As business flourishes, there is a potential for adding an additional feature such as enclosed gun range.

Harborside’s target market will mostly be male fishing enthusiasts, who enjoy big water fishing on Lake Michigan or inland lakes whether it’s for sport, charter, or recreational purposes. By selling deli and diner style food, basic staples, beer, and soft drinks; Harborside will attractive a broader variety of people that will include children and women. They will attract tourists having food close to Lake Michigan. The fast and convenient service will create a pleasant atmosphere will also bring people to Harborside.

4.3 DistributionFishing Supplies: Harborside Bait & Tackle will be a retailer of fishing supplies and other necessities to fishermen and charter boats.

Hunting Supplies: Harborside Bait & Tackle will be a retailer of hunting supplies and other necessities to all hunters.

Café: Harborside Bait & Tackle offering food will sell to more than just the customers coming to buy fishing and hunting items.

4.4 Point of Purchase

Fishing Supplies Consumer: Harborside Bait & Tackle’s location is near the small boat harbor at Lake Michigan and will be located on or near Sheridan Road, a state highway. Traffic approaching the harbor will be exposed to Harborside’s location and signage attracting walk in trade. Merchandising in the store will highlight the hottest lures and fishing products currently available to attract the consumer’s eye.

Fishing Supplies Packaging: Harborside Bait & Tackle business will be displayed in an outdoors theme and provide an outdoor atmosphere. They will have premade bait and tackle boxes someone that is a beginner and different types of fish.

Hunting Supplies Consumer: Harborside Bait & Tackle’s location is near Sheridan Road, which is a main highway to get through the city. They will see Harborside Bait & Tackle’s bright

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signs and draw them in. The store will feature the hottest items up front where the consumer can see the hunting products available.

Hunting Supplies Packaging: Harborside Bait & Tackle’s merchandise will be displayed in an outdoor theme. Their specials will also relate to hunting and fishing.

Café Consumer: Harborside will name their breakfast and lunch menu specials with things that pertain to fishing and hunting. Harborside will have Friday fish fry’s. They will be more geared to “grab n go” kind of style which will fit a variety of people’s needs.

Café Packaging: Harborside’s food menu and diner will be displayed in an outdoors and nautical theme. Their specials will relate to fishing and hunting. Their décor will also provide an outdoor atmosphere and give the customer a feeling that relates to Harborside.

4.5 Price Points

Fishing Equipment: (Average Rod and Reel Combos) $30.00 – $50.00Tackle: $1.00-$7.00Bait: $2.00-$10.00Premade fishing tackle boxes: $20.00-$40.00Guns: $450 - $2000Ammo: $25 - $120Knives: $60 - $150Decoys: $55 - $250Archery: $65 - $200Breakfast: $1.00-$7.00Lunch: $2.00-8.00Lunch Boxes: $6.00Beer: $5.00-$20.00Staples: $2.00-$6.00Snacks/Beverages: $1.00-$3.00

4.6 SWOT Analysis

4.6.1 Fishing SWOT Analysis

Strengths

The owner and employees of Harborside Bait & Tackle are very knowledgeable and highly experienced anglers.

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Harborside is a small and locally owned establishment that prides itself on having a more personable relationship with their customers.

The relocation of Harborside will provide the opportunity to expand and upgrade their product offerings.

Harborside is the closest bait shop to Lake Michigan in Kenosha. Competing businesses are minimally 4 miles away.

Harborside is a full service DNR licensing agent.

Weaknesses

Competitors’ buying power may allow similar products to be offered at a lower price. There is a limited amount of funds for relocation. Lake Michigan fishing is seasonal. Harborside’s current location lacks visibility.

Opportunities Fulfilling customers’ varied needs with broader and diverse product selections. Extended hours of operation. Demographic is growing with more kids and women wanting to learn how to fish. Fishermen’s needs in a one stop shop location. Increased revenue from arcade machines.

Threats

The expanded operating cost of a larger facility. Competitors expanding product lines and convenient locations. Declining fish populations. Changes to regulations on fishing.

4.6.2 Hunting SWOT Analysis

Strengths

The owner and employees of Harborside Bait & Tackle are very knowledgeable and highly experienced with various types of hunting.

Harborside Bait & Tackle will sell all hunting licenses. The only hunting outfit in the surrounding area.

o Jalensky’s 10 mins/4 mileso Gander Mountain 16 mins/9 mileso Walmart 10 mins/5 miles

Being locally owned and a small business, Harborside Bait & Tackle will have a more personable relationship with their customers.

They have the opportunity to expand and upgrade their business large when relocating to a bigger building.

Place to eat if hunting conditions aren’t ideal

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Weaknesses

Competitors might offer some of the same products but cheaper There is a limited amount of funds for relocation There is not a lot going on during the off seasons of hunting Harborside Bait & Tackle is not yet well known with the additions Not highly visible Majority of hunting is seasonal Kenosha is not a “hunting” area

Opportunities

Gain added sales from the additional food and fishing supplies Develop relationships with vendors to provide more variety for the customers Fulfilling customers’ needs with bigger business Longer hours Demographic is wider-more kids and women want to learn Large market growth with increasing population

Threats

The cost of keeping business running is higher than expected Competition Location-People find a different place that is closer to them Customer service-there isn’t a department specifically for it A lot more regulations when serving food and selling beer People getting sick from food Regulations changes on hunting

4.6.3 Café SWOT Analysis

Strengths

Harborside is a small and locally owned establishment that prides itself on having a more personable relationship with their customers.

The relocation of Harborside will provide the opportunity to expand and upgrade their product offerings.

Provides fast and convenient service for buying food. Harborside will provide dine in or carryout services.

Weaknesses

Competitors’ buying power may allow similar products to be offered at a lower price. There is a limited amount of funds for relocation. Harborside’s current location lacks visibility.

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Opportunities

Fulfilling customers’ varied needs with broader and diverse product selections. Extended hours of operation. Having food at will increase Harborside’s demographics and population. Create a drive-thru Use food from local businesses. Have a variety of beers.

Threats

The expanded operating cost of a larger facility. Competitors expanding product lines and convenient locations. Economy is bad. Someone had a bad experience. A lot more regulations and health codes.

Business Organization & Financial Structure

5.1 Business Organization

Harborside Bait & Tackle is currently a Limited Liability Company which keeps liability at a minimum and is the ideal business structure. The expansion will however warrant a name change for the business. The name “Harborside Bait & Tackle” focuses entirely on fishing and does not reflect any of the new additions.

The section of the store that will include fishing, hunting, and gun supplies will be re-named possibly to with their new product lines. Fishing & Hunting Gun Shop”. The section of the store that will include the kitchen and dining area will be named separately in order to keep the businesses legally separate and also to ease the consumers mind about cross-contamination. While these two spaces will have separate outdoor entrances, they will be joined on the inside by a glass door. This concept will help ensure that customers who just want food service will not be turned off by walking through or by the bait, tackle, and hunting supply area to get to the café area.

Harborside’s sport shop and café will both be established as Limited Liability Companies naming, Bob DeAngelis as business owner. Two full time managers will be hired to help the owner overlook at least three part time employees. As business increases, new staff will be hired and trained as needed.

The reporting structure for Harborside’s sporting section will be the responsibility of the owner, Bob DeAngelis. These responsibilities will include storefront operations, employee relations, financial operations, marketing, training, and inventory management.

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5.1.1 Liability & Risk Containment

The current liabilities that Harborside Bait & Tackle has are as follows: In-store injuries “Not for Consumption” bait

The future liabilities that Harborside will have are as follows: Possible contamination between food and bait areas (health/food code violations) Classroom learning/teaching injuries Gun range injuries Financial Borrowing (unavoidable)

Harborside will both be established as Limited Liability Companies. Due to the liability associated with the business, it is important to limit potential risk of personal assets. In order to contain risks the following protections will be implemented:

Business Insurance Risk/Release of Liability Agreements (pertaining to gun range/classes in which

customers must sign) Security camera system Security alarm system

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Business Owner, Cafe Cook

Manager #1 Fishing, Hunting,

Gun Dept

Fishing, Hunting, Gun Dept Employee

Fishing, Hunting, Gun Dept Employee

Manager #2 Cafe Dept

Cafe Server

5.1.2 Tax Management

Both mangers will conduct bookkeeping and daily financial recording using the accounting program QuickBooks. Currently, Harborside’s tax obligation is being met by the owner, as the taxes are passed through the business to him and is dealt with on his annual personal tax return. After the expansion, the owner will start periodically drawing money out of the company in order to continue meeting this tax obligation when in a profitable position. In the future, local tax preparers may be assigned the task of reconciling and filing of all municipal, state, and federally required tax documentation.

5.1.3 Planned Growth

The growth opportunity for Harborside Outdoors: Fishing & Hunting Gun Shop will consist of improving the processes so that the business can incur maximum profit while maintaining cohesive and streamlined operations. After the business has grown into a profitable operation, the avenue of growth that will be explored by the owner is the addition of an indoor gun/shooting range to allow room for extra income during the slow winter months.

5.1.4 Financial Needs

Harborside Bait & Tackle’s expansion will require the owner to seek a new location and building to lease. Capital will be needed for first month’s rent & utilities, renovations, operating equipment purchasing, and inventory purchasing. To accommodate these financial needs, the owner will seek a loan from the SBA (Small Business Administration) and/or KABA (Kenosha Area Business Alliance) to facilitate an effective first year of business.

5.2 Financial Structure

In this section we have based the financial structure and the subsequent financial performance on two basic premises.

1. Diversification of product mix: In order to bridge through seasonality, weather and to facilitate the financial requirements of an expanded operation, the existing Great Lakes Fishing Sport market segment needs to be expanded and its offerings diversified. This plan now anticipates Harborside to include the sale of hunting supplies, utilizing the expertise of the owner. Additionally, Harborside will include a limited selection of convenience store items so as to service the surrounding neighborhood as well as the charter fishermen with staple food product items, snacks and beverages. Finally, we have included some entertainment equipment that neighbors and sportsman alike can engage when weather or timing allows. Inventory and equipment requirements have been adjusted to reflect the needs of the product mix expansion.

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2. The second premise presumes an anticipated acquisition and renovation costs. The original plan was to acquire a facility in a satisfactory location at a price of $130,000 with an additional $50,000 being included for renovation. We have then modeled two subsequent scenarios with a purchase price of $160,000 and then a final option at $190,000. In the Financial Performance section we have modeled both of the subsequent scenarios as Sensitivity “A” and Sensitivity “B” to follow the financial impact of an increased cost of acquisition.

5.2.1 Base Financial Structure

In the base financial structure we project an initial capitalization of $400,000 allocated as follows:

1. Building acquisition $130,000 2. Inventory $91,5003. Furniture fixtures and equipment $78,5004. Renovations $50,0005. Working capital $50,000

Total capitalization $400,000

Projected funding to be as follows:

From owner in the form of cash and existing equipment & inventory $67,000Business Loan $333,000

Total invested capital & borrowing $400,000

5.2.2 Working Capital

The base model, that assumes an acquisition price of $130,000, working capital needs are projected at $50,000 and represent approximately 90 days of operating expenses. Operating expenses are based on the following projected and planned expenses:

Sales and Costs Distribution:

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Product Mix Sales and Gross Margin Product Description Sales: % of sales GP

MWght. GPM

Tackle $ 56,000.00 10.22% 60% 6.1325%

Bait $ 30,000.00 5.48% 43% 2.3544%Convenience $ 216,000.00 39.42% 35% 13.7981%Hunting supplies $ 50,000.00 9.13% 40% 3.6503%Vending $ 48,000.00 8.76% 50% 4.3804%Diner/ Food $ 132,300.00 24.15% 60% 14.4880%Rental income from apartments $ 15,600.00 2.85% 90% 2.5625%Total $ 547,900.00 100.00% 47.3663%

Harborside Bait and Tackle, LLC

Base Operating AssumptionsHours of Operations; M-F 9-6 Sat-Sun 9-5Square Footage of Store 5,640 Sq.Ft.Staffing

1 Shift 206 hours

Fulltime manager 60 hours

Sales and Sales GrowthAvg. Annual Sale $ per sq ft. 97.15$ Years 1-3 Growth rate per year 2.50% Per Qtr after Yr 1

Expenses:Inflation and variable growth driven rate per year 0.75% Per Qtr after Yr 1

Sales and Cost of Goods Sold MatrixSales % of sales GPM Wghtd Contrib.

See Product Mix Table 100.00% 46.21% 46.21%0.00%

Weighted Avg. GPM 46.21%

Cost of goods soldSee Product Mix Table 100.00% 53.79% 53.79%

0.00%Weighted Avg. COGS 53.79%

5.2.3 Business Operations Expenditures

Page 20 of 48

Operating Expenses BasicsFixed Expense

/ Constant

Variable based

Expense Units / Notes

PersonnelTotal Hours per week

Wages per hour 9.00$ Salaries Manager (annual) 50,000.00$ FICA 7.65%FUTA 1.00%SUTA 0.50%

Insurance:General Liability insurance 1,500.00$ Workers Comp 3.00%Leasehold 3,000.00$ AnnualHealth Insurance -$ Annual

FacilitiesBuilding Size

Rent per sq ft. -$ Sq.Ft.Common area expenses 1.50$ Sq.Ft.

UtilitiesGas & Electric 2.50$ Sq.Ft.Water & Sewer 0.40$ Sq.Ft.

Data & TelecommunicationsTelephone base service 150.00$ Per monthLong Distance expenses -$ Per monthDSL Line 80.00$ Per monthWeb Hosting 20.00$ Per month

Office Supplies 20.00$ Per monthPostage 5.00$ Per monthJanitorial/ Janitorial Supplies 75.00$ Per monthWaste Removal 150.00$ Per monthAdvertising 2.00% % of sales Per monthProfessional Services

Legal 25.00$ Per monthAccounting 100.00$ Per month

Bank Fees -$ Per monthMisc. Expenses 50.00$ Per month

Income Taxes -State Wisconsin 0.00%Income Tax Federal <$50k 0.00%

5.2.4 Identification of Debt & Equity

Page 21 of 48

As described above (section 5.2.1) $67,000 of the initial capitalization of this business will come in the form of contributed equipment and inventory from the current operation of Harborside Bait & Tackle, the remaining $333,000 will be sourced in the form of a business loan. Harborside recognizes that it may need to seek a Small Business Administration Loan (7A Guarantee) in order to secure this business loan financing.

5.2.5 Expansion Funding

In the event that Harborside Bait & Tackle elects to open subsequent locations independent financing will need to be obtained through either the sale of membership units to outside investors or in combination with additional outside financing. The need for expansion is not foreseen nor planned at this time.

Financial Performance

We have performed three independent model performances for this proposed business. The main differentiation between each is based on the size of the acquisition of the proposed site. The base model assumes an acquisition of $130,000, Sensitivity “A” assumes an acquisition of $160,000 and Sensitivity “B” assumes an acquisition of $190,000. The renovation and operating budget for each variation remains constant throughout the models leaving only the acquisition costs as the differentiating item. In these models we prepare for 3 years of Income Statement, Balance Sheet and Cash flow performance. Additionally each of the models increase sales at a 2.5% increase per quarter after year 1 and increase expenses at a 0.75% per quarter rate after year 1 accounting for some modest level of inflation.

6.1 The Base Model (See all exhibits at the end of this section)

In the base model sales are projected to total $547,900 with costs of goods at $294,695 leaving a gross profit of $253,204.86 Operating expenses are tracking at $249,498 which includes $36,928 in depreciation leaving an Earnings Before Interest and Taxes (EBIT) of $3,705.72 and an Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) of $40,634. Earnings net of Interest Expense is projected at loss of ($19,086.04). Cash positions remain solid decreasing modestly from $50,000 down to $43,749 at the end of year one.

Year two sales are projected to increase to $583,010 with Gross Profit increasing to $269,430. Selling and Administrative expenses increase to $253,476 (including $36,928 in depreciation) due primarily to the inflation adjustment built into the model. EBIT increases to $15,954 with an EBITDA of $52,883, net income improving to a negative ($5,095.36) and cash balances improving to $49,748.

Year three likewise sees sales increase to $643,534 with gross profit at yearend of $297,401.16. Selling and administrative expenses of $260,670 (including depreciation of$36,928) providing

Page 22 of 48

for an EBIT of $37,428, an EBITDA of $74,356, Net income of $18,246.09 and a Cash balance of $ 77,220.95.

6.2 Sensitivity “A” Performance: Increase acquisition costs by $30,000 over base model (See all exhibits at the end of this section)

In the Sensitivity “A” model sales are projected to total $547,900 with costs of goods at $294,695 leaving a gross profit of $253,204.86 Operating expenses are tracking at $251,642 which includes $39,071.43 in depreciation leaving an Earnings Before Interest and Taxes (EBIT) of $1,562.86 and an Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) of $40,634. Earnings net of Interest Expense is projected at loss of ($22,244.88). Cash positions remain solid decreasing modestly from $50,000 down to $41,659.73 at the end of year one.

Year two sales are projected to increase to $583,010 with Gross Profit increasing to $269,430. Selling and Administrative expenses increase to $253,476 (including $36,928 in depreciation) due primarily to the inflation adjustment built into the model and the EBIT increases to $13,811.87 with an EBITDA of $52,883, net income improving to a negative ($8,176.56) and cash balances improving to $45,568.47

Year three likewise sees sales increase to $643,534 with gross profit at yearend of $297,401.16, selling and administrative expenses of $262,115 (including depreciation of $39,071.43) providing for an EBIT of $35,285.75, an EBITDA of $74,356, Net income of $15,248.15 and a Cash balance of $ 70,951.09.

6.3 Sensitivity “B” Performance: Increase acquisition costs by $60,000 over base model (See all exhibits at the end of this section)

In the Sensitivity “B” model sales are projected to total $547,900 with costs of goods at $294,695 leaving a gross profit of $253,204.86 Operating expenses are tracking at $255,927 which includes $43,357.14 in depreciation leaving an Earnings Before Interest and Taxes (EBIT) of ($2,722.85) and an Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) of $40,634. Earnings net of Interest Expense is projected at loss of ($28,562.55). Cash positions decrease from $50,000 down to $37,479.83 at the end of year one.

Year two sales are projected to increase to $583,010 with Gross Profit increasing to $269,430. Selling and Administrative expenses increase to $253,476 (including $43,357.14 in depreciation) due primarily to the inflation adjustment built into the model and the EBIT increases to $9,526.15 with an EBITDA of $52,883, net income improving to a negative ($14,338.95) and cash balances decreasing to $37,208.66

Year three likewise sees sales increase to $643,534 with gross profit at yearend of $297,401.16, selling and administrative expenses of $262,115 (including depreciation of $43,357.14) providing for an EBIT of $31,003, an EBITDA of $74,356, Net income of $9,252.25 and a Cash balance of $58,411.38.

Page 23 of 48

6.3.1 Exhibit Base Model 3 Year Performance

Harborside Bait and Tackle, LLCIncome StatementYear 1

Qtr 1 Qtr 2 Qtr 3 Qtr 4 TotalSales & Rental Income 136,975.00$ 136,975.00$ 136,975.00$ 136,975.00$ 547,900.00$ COGS 73,673.78$ 73,673.78$ 73,673.78$ 73,673.78$ 294,695.14$ Gross Profit 63,301.22$ 63,301.22$ 63,301.22$ 63,301.22$ 253,204.86$

Selling & Administrative CostsPersonnel

Wages 24,102.00$ 24,102.00$ 24,102.00$ 24,102.00$ 96,408.00$ Salaries 12,500.00$ 12,500.00$ 12,500.00$ 12,500.00$ 50,000.00$ Payroll taxes 3,349.08$ 3,349.08$ 3,349.08$ 3,349.08$ 13,396.33$

Insurance -$ General Liability insurance 375.00$ 375.00$ 375.00$ 375.00$ 1,500.00$ Workers Comp 1,098.06$ 1,098.06$ 1,098.06$ 1,098.06$ 4,392.24$ Leasehold 750.00$ 750.00$ 750.00$ 750.00$ 3,000.00$ Health Insurance -$ -$ -$ -$ -$

Lease ExpensesLease payments -$ -$ -$ -$ -$ Common area maintenance 2,115.00$ 2,115.00$ 2,115.00$ 2,115.00$ 8,460.00$

UtilitiesGas & Electric 3,525.00$ 3,525.00$ 3,525.00$ 3,525.00$ 14,100.00$ Water & Sewer 564.00$ 564.00$ 564.00$ 564.00$ 2,256.00$

Data and TelecommunicationsTelephone 450.00$ 450.00$ 450.00$ 450.00$ 1,800.00$ Long Distance -$ -$ -$ -$ -$ DSL /Data 240.00$ 240.00$ 240.00$ 240.00$ 960.00$ Web Hosting 60.00$ 60.00$ 60.00$ 60.00$ 240.00$

Office Supplies 60.00$ 60.00$ 60.00$ 60.00$ 240.00$ Postage 15.00$ 15.00$ 15.00$ 15.00$ 60.00$ Janitorial 225.00$ 225.00$ 225.00$ 225.00$ 900.00$ Waste Disposal 450.00$ 450.00$ 450.00$ 450.00$ 1,800.00$ Advertising 2,739.50$ 2,739.50$ 2,739.50$ 2,739.50$ 10,958.00$ Professional Services

Legal 75.00$ 75.00$ 75.00$ 75.00$ 300.00$ Accounting 300.00$ 300.00$ 300.00$ 300.00$ 1,200.00$

Bank Fees -$ -$ -$ -$ -$ Depreciation 9,232.14$ 9,232.14$ 9,232.14$ 9,232.14$ 36,928.57$ Misc. Expenses 150.00$ 150.00$ 150.00$ 150.00$ 600.00$

Total Selling and Administrative Expenses 62,374.79$ 62,374.79$ 62,374.79$ 62,374.79$ 249,499.14$ Earnings Before Interest and Taxes 926.43$ 926.43$ 926.43$ 926.43$ 3,705.72$ Interest Expense 5,854.66$ 5,751.40$ 5,646.32$ 5,539.39$ 22,791.76$ Earnings Before Taxes (4,928.23)$ (4,824.97)$ (4,719.89)$ (4,612.96)$ (19,086.04)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (4,928.23)$ (4,824.97)$ (4,719.89)$ (4,612.96)$ (19,086.04)$

Page 24 of 48

Balance Sheet Year 1Assets Qtr 1 Qtr 2 Qtr 3 Qtr 4

Current AssetsCash (6months expenses) 48,437.42$ 46,874.84$ 45,312.26$ 43,749.69$ Accounts Receivable -$ -$ -$ -$ Inventory (estimated inventory t/o rate= 45 days) 91,500.00$ 91,500.00$ 91,500.00$ 91,500.00$

Total Current Assets 139,937.42$ 138,374.84$ 136,812.26$ 135,249.69$

Fixed AssetsFurniture Fixture and Equipment

Shelving 27,000.00$ 27,000.00$ 27,000.00$ 27,000.00$ Kitchen equipment and dining rm fixtures 50,000.00$ 50,000.00$ 50,000.00$ 50,000.00$

Office Equipment -$ -$ -$ -$ Telecommunications/Data

Phone System 200.00$ 200.00$ 200.00$ 200.00$ Credit Card reader/printer 500.00$ 500.00$ 500.00$ 500.00$ Computers 300.00$ 300.00$ 300.00$ 300.00$ Fax/Copiers 500.00$ 500.00$ 500.00$ 500.00$

Leasehold improvementsStore interior and decorating 180,000.00$ 180,000.00$ 180,000.00$ 180,000.00$

Accumulated Depreciation (all items at 7years) (9,232.14)$ (18,464.29)$ (27,696.43)$ (36,928.57)$ Total Net Fixed Assets 249,267.86$ 240,035.71$ 230,803.57$ 221,571.43$

Total Assets 389,205.28$ 378,410.56$ 367,615.84$ 356,821.11$

LiabilitiesCurrent Liabilities

Accounts Payable (15 day terms) 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ Accrued Expenses

Total Short Term Liabilities 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$

Long Term LiabilitiesBusiness Loan (7 year) Fixed interest 330,633.51$ 324,663.76$ 318,588.92$ 312,407.16$

Total Long Term Liabilities 330,633.51$ 324,663.76$ 318,588.92$ 312,407.16$ Total Liabilities 331,633.51$ 325,663.76$ 319,588.92$ 313,407.16$

EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (4,928.23)$ (9,753.20)$ (14,473.09)$ Current Earnings (4,928.23)$ (4,824.97)$ (4,719.89)$ (4,612.96)$

Total Equity 57,571.77$ 52,746.80$ 48,026.91$ 43,413.96$

Total Liabilities and Equity 389,205.28$ 378,410.56$ 367,615.84$ 356,821.11$

Page 25 of 48

Cash Flow StatementQtr 1 Qtr 2 Qtr 3 Qtr 4

Cash from Operating ActivitiesNet Income (4,928.23)$ (4,824.97)$ (4,719.89)$ (4,612.96)$

Cash from Investment ActivitiesDepreciation 9,232.14$ 9,232.14$ 9,232.14$ 9,232.14$ Long Term Note Reduction 5,866.49$ $5,969.75 $6,074.83 $6,181.77Net Change in Accounts Payable -$ -$ -$ -$

Net change in Cash (1,562.58)$ (1,562.58)$ (1,562.58)$ (1,562.58)$ Beginning Cash 50,000.00$ 48,437.42$ 46,874.84$ 45,312.26$ Ending Cah Balance 48,437.42$ 46,874.84$ 45,312.26$ 43,749.69$

Check figuresCash on Balance sheet 48,437.42$ 46,874.84$ 45,312.26$ 43,749.69$ Cash on Cash Flow 48,437.42$ 46,874.84$ 45,312.26$ 43,749.69$ Difference -$ -$ -$ -$












Total Selling and Administrative Expenses 62,781.65$ 63,171.29$ 63,563.82$ 63,959.28$ 253,476.04$ Earnings Before Interest and Taxes 2,102.09$ 3,334.55$ 4,604.66$ 5,913.42$ 15,954.73$ Interest Expense 5,430.57$ 5,319.84$ 5,207.17$ 5,092.51$ 21,050.09$ Earnings Before Taxes (3,328.48)$ (1,985.29)$ (602.50)$ 820.91$ (5,095.36)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (3,328.48)$ (1,985.29)$ (602.50)$ 820.91$ (5,095.36)$

Page 26 of 48










Total Assets 347,202.06$ 338,815.46$ 331,698.97$ 325,891.24$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (19,086.04)$ (22,414.52)$ (24,399.81)$ (25,002.32)$ Current Earnings (3,328.48)$ (1,985.29)$ (602.50)$ 820.91$

Total Equity 40,085.48$ 38,100.19$ 37,497.68$ 38,318.59$


Page 27 of 48


Cash from Operating ActivitiesNet Income (3,328.48)$ (1,985.29)$ (602.50)$ 820.91$

Cash from Investment ActivitiesDepreciation 9,232.14$ 9,232.14$ 9,232.14$ 9,232.14$ Long Term Note Reduction $6,290.58 $6,401.31 $6,513.98 $6,628.65Net Change in Accounts Payable -$ -$ -$ -$

Net change in Cash (386.92)$ 845.54$ 2,115.65$ 3,424.41$ Beginning Cash 43,749.69$ 43,362.77$ 44,208.31$ 46,323.97$ Ending Cah Balance 43,362.77$ 44,208.31$ 46,323.97$ 49,748.38$


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Data and TelecommunicationsTelephone 467.13$ 470.63$ 474.16$ 477.72$ 1,889.65$ Long Distance -$ -$ -$ -$ -$ DSL /Data 249.14$ 251.00$ 252.89$ 254.78$ 1,007.81$ Web Hosting 62.28$ 62.75$ 63.22$ 63.70$ 251.95$




Total Selling and Administrative Expenses 64,369.73$ 64,783.27$ 65,199.90$ 65,619.66$ 259,972.55$ Earnings Before Interest and Taxes 7,249.78$ 8,626.74$ 10,045.35$ 11,506.73$ 37,428.60$ Interest Expense 4,975.83$ 4,857.09$ 4,736.27$ 4,613.32$ 19,182.51$ Earnings Before Taxes 2,273.96$ 3,769.64$ 5,309.08$ 6,893.41$ 18,246.09$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) 2,273.96$ 3,769.64$ 5,309.08$ 6,893.41$ 18,246.09$

Page 29 of 48










Total Assets 321,419.87$ 318,325.45$ 316,649.66$ 316,435.23$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (24,181.41)$ (21,907.45)$ (18,137.80)$ (12,828.72)$ Current Earnings 2,273.96$ 3,769.64$ 5,309.08$ 6,893.41$

Total Equity 40,592.55$ 44,362.20$ 49,671.28$ 56,564.69$



Cash from Operating ActivitiesNet Income 2,273.96$ 3,769.64$ 5,309.08$ 6,893.41$


Net change in Cash 4,760.77$ 6,137.73$ 7,556.35$ 9,017.72$ Beginning Cash 49,748.38$ 54,509.15$ 60,646.88$ 68,203.23$ Ending Cah Balance 54,509.15$ 60,646.88$ 68,203.23$ 77,220.95$


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6.3.2 Exhibit Sensitivity “A” Performance












Total Selling and Administrative Expenses 62,910.50$ 62,910.50$ 62,910.50$ 62,910.50$ 251,642.00$ Earnings Before Interest and Taxes 390.72$ 390.72$ 390.72$ 390.72$ 1,562.86$ Interest Expense 6,115.64$ 6,007.78$ 5,898.01$ 5,786.31$ 23,807.74$ Earnings Before Taxes (5,724.93)$ (5,617.06)$ (5,507.29)$ (5,395.60)$ (22,244.88)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (5,724.93)$ (5,617.06)$ (5,507.29)$ (5,395.60)$ (22,244.88)$

Page 31 of 48










Total Assets 403,147.08$ 391,294.15$ 379,441.23$ 367,588.31$







Total Equity 56,775.07$ 51,158.01$ 45,650.72$ 40,255.12$


Page 32 of 48

















Total Selling and Administrative Expenses 63,317.37$ 63,707.00$ 64,099.54$ 64,494.99$ 255,618.90$ Earnings Before Interest and Taxes 1,566.38$ 2,798.84$ 4,068.95$ 5,377.70$ 13,811.87$ Interest Expense 5,672.65$ 5,556.98$ 5,439.28$ 5,319.51$ 21,988.43$ Earnings Before Taxes (4,106.27)$ (2,758.15)$ (1,370.34)$ 58.19$ (8,176.56)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (4,106.27)$ (2,758.15)$ (1,370.34)$ 58.19$ (8,176.56)$

Page 33 of 48










Total Assets 356,911.04$ 347,466.24$ 339,291.55$ 332,425.62$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (22,244.88)$ (26,351.15)$ (29,109.29)$ (30,479.63)$ Current Earnings (4,106.27)$ (2,758.15)$ (1,370.34)$ 58.19$

Total Equity 36,148.85$ 33,390.71$ 32,020.37$ 32,078.56$



Cash from Operating ActivitiesNet Income (4,106.27)$ (2,758.15)$ (1,370.34)$ 58.19$


Net change in Cash (909.40)$ 323.06$ 1,593.17$ 2,901.92$ Beginning Cash 41,659.73$ 40,750.33$ 41,073.39$ 42,666.55$ Ending Cah Balance 40,750.33$ 41,073.39$ 42,666.55$ 45,568.47$


Page 34 of 48












Total Selling and Administrative Expenses 64,905.45$ 65,318.98$ 65,735.61$ 66,155.37$ 262,115.41$ Earnings Before Interest and Taxes 6,714.07$ 8,091.02$ 9,509.64$ 10,971.01$ 35,285.75$ Interest Expense 5,197.63$ 5,073.61$ 4,947.40$ 4,818.97$ 20,037.60$ Earnings Before Taxes 1,516.44$ 3,017.42$ 4,562.24$ 6,152.05$ 15,248.15$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) 1,516.44$ 3,017.42$ 4,562.24$ 6,152.05$ 15,248.15$

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Total Assets 326,896.05$ 322,743.43$ 320,009.43$ 318,736.81$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (30,421.44)$ (28,905.00)$ (25,887.58)$ (21,325.34)$ Current Earnings 1,516.44$ 3,017.42$ 4,562.24$ 6,152.05$

Total Equity 33,595.00$ 36,612.42$ 41,174.66$ 47,326.71$



Cash from Operating ActivitiesNet Income 1,516.44$ 3,017.42$ 4,562.24$ 6,152.05$




Page 36 of 48

6.3.3 Exhibit Sensitivity “B” Performance












Total Selling and Administrative Expenses 63,981.93$ 63,981.93$ 63,981.93$ 63,981.93$ 255,927.71$ Earnings Before Interest and Taxes (680.71)$ (680.71)$ (680.71)$ (680.71)$ (2,722.85)$ Interest Expense 6,637.60$ 6,520.53$ 6,401.40$ 6,280.17$ 25,839.69$ Earnings Before Taxes (7,318.32)$ (7,201.24)$ (7,082.11)$ (6,960.88)$ (28,562.55)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (7,318.32)$ (7,201.24)$ (7,082.11)$ (6,960.88)$ (28,562.55)$

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Total Assets 431,030.67$ 417,061.34$ 403,092.01$ 389,122.69$







Total Equity 55,181.68$ 47,980.44$ 40,898.33$ 33,937.45$


Page 38 of 48

















Total Selling and Administrative Expenses 64,388.80$ 64,778.43$ 65,170.97$ 65,566.42$ 259,904.62$ Earnings Before Interest and Taxes 494.95$ 1,727.41$ 2,997.52$ 4,306.28$ 9,526.15$ Interest Expense 6,156.80$ 6,031.26$ 5,903.52$ 5,773.52$ 23,865.11$ Earnings Before Taxes (5,661.85)$ (4,303.86)$ (2,906.00)$ (1,467.25)$ (14,338.95)$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) (5,661.85)$ (4,303.86)$ (2,906.00)$ (1,467.25)$ (14,338.95)$

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Total Assets 376,329.02$ 364,767.81$ 354,476.72$ 345,494.38$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (28,562.55)$ (34,224.40)$ (38,528.25)$ (41,434.25)$ Current Earnings (5,661.85)$ (4,303.86)$ (2,906.00)$ (1,467.25)$

Total Equity 28,275.60$ 23,971.75$ 21,065.75$ 19,598.50$


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Net change in Cash (1,954.38)$ (721.92)$ 548.19$ 1,856.95$ Beginning Cash 37,479.83$ 35,525.45$ 34,803.53$ 35,351.72$ Ending Cah Balance 35,525.45$ 34,803.53$ 35,351.72$ 37,208.66$













Total Selling and Administrative Expenses 65,976.88$ 66,390.41$ 66,807.04$ 67,226.80$ 266,401.12$ Earnings Before Interest and Taxes 5,642.64$ 7,019.60$ 8,438.21$ 9,899.58$ 31,000.03$ Interest Expense 5,641.24$ 5,506.63$ 5,369.65$ 5,230.26$ 21,747.78$ Earnings Before Taxes 1.40$ 1,512.97$ 3,068.56$ 4,669.33$ 9,252.25$ Income taxes State -$ -$ -$ -$ -$ Income Taxes Federal -$ -$ -$ -$ -$ Net Income (Earnings after Taxes) 1.40$ 1,512.97$ 3,068.56$ 4,669.33$ 9,252.25$

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Total Assets 337,848.40$ 331,579.38$ 326,728.98$ 323,339.95$






EquityInitial Paid In Capital 62,500.00$ 62,500.00$ 62,500.00$ 62,500.00$ Retained Earnings (42,901.50)$ (42,900.10)$ (41,387.14)$ (38,318.57)$ Current Earnings 1.40$ 1,512.97$ 3,068.56$ 4,669.33$

Total Equity 19,599.90$ 21,112.86$ 24,181.43$ 28,850.75$


Page 42 of 48


Cash from Operating ActivitiesNet Income 1.40$ 1,512.97$ 3,068.56$ 4,669.33$




Break Even Analysis

6.4 Base Model Break Even

Year One Selling and Administrative Expenses $249,499.14Year One Interest Expense $ 19,303.57Total Year One Fixed Expenses $268,802.71

Weighted Gross Profit = 46.21%

BE= Fixed expenses / Gross profit percentage = $581,698.14 Annual sales to breakeven pretax

6.5 Sensitivity Analysis “A” Break Even




6.6 Sensitivity Analysis “B” Break Even




Page 43 of 48

6.7 Base Model Years 1-3

Loan Amortorization Schedule

285,000.00$ 7.00%

Payments per year 12120

$3,309.09

Pay # Payment

Amount Interest Principle Balance due Qtrly

InterestQtrly

Principle

Cumulative Principle Reduction

285,000.00$ 1 $3,309.09 1,662.50$ $1,646.59 283,353.41$ 2 $3,309.09 1,652.89$ $1,656.20 281,697.21$ 3 $3,309.09 1,643.23$ $1,665.86 280,031.35$ 4,958.63$ $4,968.65 $4,968.654 $3,309.09 1,633.52$ $1,675.58 278,355.78$ 5 $3,309.09 1,623.74$ $1,685.35 276,670.43$ 6 $3,309.09 1,613.91$ $1,695.18 274,975.25$ 4,871.17$ $5,056.11 $10,024.757 $3,309.09 1,604.02$ $1,705.07 273,270.18$ 8 $3,309.09 1,594.08$ $1,715.02 271,555.16$ 9 $3,309.09 1,584.07$ $1,725.02 269,830.14$ 4,782.17$ $5,145.10 $15,169.86

10 $3,309.09 1,574.01$ $1,735.08 268,095.06$ 11 $3,309.09 1,563.89$ $1,745.20 266,349.86$ 12 $3,309.09 1,553.71$ $1,755.38 264,594.47$ 4,691.60$ $5,235.67 $20,405.5313 $3,309.09 1,543.47$ $1,765.62 262,828.85$ 14 $3,309.09 1,533.17$ $1,775.92 261,052.93$ 15 $3,309.09 1,522.81$ $1,786.28 259,266.64$ 4,599.44$ $5,327.83 $25,733.3616 $3,309.09 1,512.39$ $1,796.70 257,469.94$ 17 $3,309.09 1,501.91$ $1,807.18 255,662.76$ 18 $3,309.09 1,491.37$ $1,817.73 253,845.03$ 4,505.66$ $5,421.61 $31,154.9719 $3,309.09 1,480.76$ $1,828.33 252,016.70$ 20 $3,309.09 1,470.10$ $1,838.99 250,177.71$ 21 $3,309.09 1,459.37$ $1,849.72 248,327.99$ 4,410.23$ $5,517.04 $36,672.0122 $3,309.09 1,448.58$ $1,860.51 246,467.47$ 23 $3,309.09 1,437.73$ $1,871.36 244,596.11$ 24 $3,309.09 1,426.81$ $1,882.28 242,713.83$ 4,313.12$ $5,614.16 $42,286.1725 $3,309.09 1,415.83$ $1,893.26 240,820.57$ 26 $3,309.09 1,404.79$ $1,904.31 238,916.26$ 27 $3,309.09 1,393.68$ $1,915.41 237,000.85$ 4,214.30$ $5,712.98 $47,999.1528 $3,309.09 1,382.50$ $1,926.59 235,074.26$ 29 $3,309.09 1,371.27$ $1,937.83 233,136.44$ 30 $3,309.09 1,359.96$ $1,949.13 231,187.31$ 4,113.73$ $5,813.54 $53,812.6931 $3,309.09 1,348.59$ $1,960.50 229,226.81$ 32 $3,309.09 1,337.16$ $1,971.94 227,254.87$ 33 $3,309.09 1,325.65$ $1,983.44 225,271.43$ 4,011.40$ $5,915.87 $59,728.5734 $3,309.09 1,314.08$ $1,995.01 223,276.43$ 35 $3,309.09 1,302.45$ $2,006.65 221,269.78$ 36 $3,309.09 1,290.74$ $2,018.35 219,251.43$ 3,907.27$ $6,020.01 $65,748.57

Beginning Balance

Number of payment periods

Amount borrowedInterest rate

Monthly payment

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6.8 Sensitivity Analysis Model “A” Years 1-3


351,500.00$ 7.00%


$4,081.21

Pay # Payment


InterestQtrly

Principle


351,500.00$ 1 $4,081.21 2,050.42$ $2,030.80 349,469.20$ 2 $4,081.21 2,038.57$ $2,042.64 347,426.56$ 3 $4,081.21 2,026.65$ $2,054.56 345,372.00$ 6,115.64$ $6,128.00 $6,128.004 $4,081.21 2,014.67$ $2,066.54 343,305.46$ 5 $4,081.21 2,002.62$ $2,078.60 341,226.86$ 6 $4,081.21 1,990.49$ $2,090.72 339,136.14$ 6,007.78$ $6,235.86 $12,363.867 $4,081.21 1,978.29$ $2,102.92 337,033.22$ 8 $4,081.21 1,966.03$ $2,115.19 334,918.03$ 9 $4,081.21 1,953.69$ $2,127.52 332,790.51$ 5,898.01$ $6,345.63 $18,709.49

10 $4,081.21 1,941.28$ $2,139.94 330,650.57$ 11 $4,081.21 1,928.80$ $2,152.42 328,498.16$ 12 $4,081.21 1,916.24$ $2,164.97 326,333.18$ 5,786.31$ $6,457.33 $25,166.8213 $4,081.21 1,903.61$ $2,177.60 324,155.58$ 14 $4,081.21 1,890.91$ $2,190.31 321,965.27$ 15 $4,081.21 1,878.13$ $2,203.08 319,762.19$ 5,672.65$ $6,570.99 $31,737.8116 $4,081.21 1,865.28$ $2,215.93 317,546.26$ 17 $4,081.21 1,852.35$ $2,228.86 315,317.40$ 18 $4,081.21 1,839.35$ $2,241.86 313,075.54$ 5,556.98$ $6,686.66 $38,424.4619 $4,081.21 1,826.27$ $2,254.94 310,820.60$ 20 $4,081.21 1,813.12$ $2,268.09 308,552.51$ 21 $4,081.21 1,799.89$ $2,281.32 306,271.18$ 5,439.28$ $6,804.36 $45,228.8222 $4,081.21 1,786.58$ $2,294.63 303,976.55$ 23 $4,081.21 1,773.20$ $2,308.02 301,668.53$ 24 $4,081.21 1,759.73$ $2,321.48 299,347.05$ 5,319.51$ $6,924.13 $52,152.9525 $4,081.21 1,746.19$ $2,335.02 297,012.03$ 26 $4,081.21 1,732.57$ $2,348.64 294,663.39$ 27 $4,081.21 1,718.87$ $2,362.34 292,301.05$ 5,197.63$ $7,046.01 $59,198.9528 $4,081.21 1,705.09$ $2,376.12 289,924.92$ 29 $4,081.21 1,691.23$ $2,389.98 287,534.94$ 30 $4,081.21 1,677.29$ $2,403.93 285,131.01$ 5,073.61$ $7,170.03 $66,368.9931 $4,081.21 1,663.26$ $2,417.95 282,713.06$ 32 $4,081.21 1,649.16$ $2,432.05 280,281.01$ 33 $4,081.21 1,634.97$ $2,446.24 277,834.77$ 4,947.40$ $7,296.24 $73,665.2334 $4,081.21 1,620.70$ $2,460.51 275,374.26$ 35 $4,081.21 1,606.35$ $2,474.86 272,899.40$ 36 $4,081.21 1,591.91$ $2,489.30 270,410.10$ 4,818.97$ $7,424.67 $81,089.90

Beginning Balance



Monthly payment

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6.9 Sensitivity Analysis “B” Years 1-3


381,500.00$ 7.00%


$4,429.54

Pay # Payment


InterestQtrly

Principle


381,500.00$ 1 $4,429.54 2,225.42$ $2,204.12 379,295.88$ 2 $4,429.54 2,212.56$ $2,216.98 377,078.90$ 3 $4,429.54 2,199.63$ $2,229.91 374,848.99$ 6,637.60$ $6,651.01 $6,651.014 $4,429.54 2,186.62$ $2,242.92 372,606.07$ 5 $4,429.54 2,173.54$ $2,256.00 370,350.06$ 6 $4,429.54 2,160.38$ $2,269.16 368,080.90$ 6,520.53$ $6,768.09 $13,419.107 $4,429.54 2,147.14$ $2,282.40 365,798.50$ 8 $4,429.54 2,133.82$ $2,295.71 363,502.79$ 9 $4,429.54 2,120.43$ $2,309.11 361,193.68$ 6,401.40$ $6,887.22 $20,306.32

10 $4,429.54 2,106.96$ $2,322.58 358,871.11$ 11 $4,429.54 2,093.41$ $2,336.12 356,534.98$ 12 $4,429.54 2,079.79$ $2,349.75 354,185.23$ 6,280.17$ $7,008.45 $27,314.7713 $4,429.54 2,066.08$ $2,363.46 351,821.77$ 14 $4,429.54 2,052.29$ $2,377.24 349,444.53$ 15 $4,429.54 2,038.43$ $2,391.11 347,053.42$ 6,156.80$ $7,131.81 $34,446.5816 $4,429.54 2,024.48$ $2,405.06 344,648.36$ 17 $4,429.54 2,010.45$ $2,419.09 342,229.27$ 18 $4,429.54 1,996.34$ $2,433.20 339,796.07$ 6,031.26$ $7,257.35 $41,703.9319 $4,429.54 1,982.14$ $2,447.39 337,348.67$ 20 $4,429.54 1,967.87$ $2,461.67 334,887.00$ 21 $4,429.54 1,953.51$ $2,476.03 332,410.97$ 5,903.52$ $7,385.10 $49,089.0322 $4,429.54 1,939.06$ $2,490.47 329,920.50$ 23 $4,429.54 1,924.54$ $2,505.00 327,415.49$ 24 $4,429.54 1,909.92$ $2,519.61 324,895.88$ 5,773.52$ $7,515.09 $56,604.1225 $4,429.54 1,895.23$ $2,534.31 322,361.57$ 26 $4,429.54 1,880.44$ $2,549.10 319,812.47$ 27 $4,429.54 1,865.57$ $2,563.97 317,248.50$ 5,641.24$ $7,647.37 $64,251.5028 $4,429.54 1,850.62$ $2,578.92 314,669.58$ 29 $4,429.54 1,835.57$ $2,593.97 312,075.62$ 30 $4,429.54 1,820.44$ $2,609.10 309,466.52$ 5,506.63$ $7,781.99 $72,033.4831 $4,429.54 1,805.22$ $2,624.32 306,842.20$ 32 $4,429.54 1,789.91$ $2,639.63 304,202.58$ 33 $4,429.54 1,774.52$ $2,655.02 301,547.55$ 5,369.65$ $7,918.97 $79,952.4534 $4,429.54 1,759.03$ $2,670.51 298,877.04$ 35 $4,429.54 1,743.45$ $2,686.09 296,190.95$ 36 $4,429.54 1,727.78$ $2,701.76 293,489.19$ 5,230.26$ $8,058.36 $88,010.81

Beginning Balance



Monthly payment

Page 46 of 48

Exit Strategy

I. Third Party Acquisition

Harborside Bait & Tackle has held an outstanding reputation within the Fishing & Game industry as well as its local community. Harborside has been owned and operated by Bob DeAngelis. Bob recognizes the potential of an unsolicited acquisition offer from a competing sport and fishing business that may be looking to enter the local market space. In anticipation of that scenario Bob would use the higher of the following factors to consider an offer:

1. Full purchase price of the business to be based on a multiplier of six to eight times gross profits of the preceding year.

2. A multiplier of six times common equity.

II. Business Failure to Meet Financial Needs

In the event that Harborside Bait & Tackle, LLC fails to meet the financial needs required to meet its obligations the owner will proceed by exiting the business with as minimal a loss as possible. The owner will first divide and minimize store space allowing him to lease out separated building space to alternate business opportunities. The owner will also look to lease out the dining area and video game entertainment units to an outside operator. Funds from lease agreements will be used to help pay off any and all outstanding debts. If funds prove to be insufficient the owner will list the building for sale and liquidate all inventory selling off equipment and merchandise to pay off any remaining outstanding debt.

III. Retirement

The owner will exit this business endeavor after creating a flourishing business. The owner will take the necessary steps to minimize damage and maximize profit after he retires at the age of 80 or once the goal profitability has been met and is free of all financial obligations. The following are the sequential steps that may need to be made:

1. Harborside Bait & Tackle will look to be acquired first and foremost by a successor that has a passion for the business and most likely will be an ambitious manager who looks at Bob as a mentor. They will have a passion for the customers, the business and the future success of the company. If no protégé can financially or willfully take over the business the owner will entertain the option to maintain ownership and have a family member actively manage the business.

2. If the above options do not present themselves, then it shall be sold through a business broker to help negotiate a transaction. Information on the business, the product mix, inventory, historical financial data, and future projections will be offered to potential qualified buyers to assist in analyzing the potential purchase.

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3. If no successors are found, and a business broker has been deemed unsuccessful, Harborside Bait & Tackle will liquidate all inventory to the public first in the form of a “going out of business sale”. Any remaining inventory will then be either returned to the distributors, or offered to the competing businesses through trade publications. The owner will consider renting out the building for future income to satisfy the mortgage and taxes. If no renters can be established then the owner will sell the building to satisfy remaining debts.

Summary

Following the financial charts and sensitivity analysis it is shown that Harborside Bait & Tackle will be profitable and successful. The store has the unique twist of offering sporting goods and food for customers.

Harborside Bait & Tackle reaches its target market by understanding the needs of outdoor activities and getting through to their stomachs. The knowledge will inspire the community and tourists to be better at their sport. Also, keeping up with technological advances will offer more of a reach for Harborside Bait & Tackle’s consumer.

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Documents

Harborside Bait & Tackle Business Plan