4 0 Market Analysis Summary Java Net example essay topic

Internet Cafe Business PlanJavaNet Internet Cafe 1.0 Executive Summary Java Net, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. Java Net is the answer to an increasing demand. The public wants: (1) access to the methods of communication and volumes of information now available on the Internet, and (2) access at a cost they can afford and in such a way that they aren't socially, economically, or politically isolated. Java Net's goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication.

This business plan is prepared to obtain financing in the amount of $24,000. The supplemental financing is required to begin work on site preparation and modifications, equipment purchases, and to cover expenses in the first year of operations. Additional financing has already been secured in the form of: (1) $24,000 from the Oregon Economic Development Fund (2) $19,000 of personal savings from owner Cale Bruckner (3) $36,000 from three investors (4) and $9,290 in the form of short-term loans. Java Net will be incorporated as an LLC corporation.

This will shield the owner Cale Bruckner, and the three outside investors, Luke Walsh, Doug Wilson, and John Underwood, from issues of personal liability and double taxation. The investors will be treated as shareholders and therefore will not be liable for more than their individual personal investment of $12,000 each. The financing, in addition to the capital contributions from the owner, shareholders and the Oregon Economic Development Fund, will allow Java Net to successfully open and maintain operations through year one. The large initial capital investment will allow Java Net to provide its customers with a full featured Internet cafe. A unique, upscale, and innovative environment is required to provide the customers with an atmosphere that will spawn socialization. Successful operation in year one will provide Java Net with a customer base that will allow it to be self sufficient in year two.

Highlights Click to Enlarge 1.1 Objectives Java Net's objectives for the first three years of operation include: o The creation of a unique, upscale, innovative environment that will differentiate Java Net from local coffee houses. o Educating the community on what the Internet has to offer. o The formation of an environment that will bring people with diverse interests and backgrounds together in a common forum. o Good coffee and bakery items at a reasonable price. o Affordable access to the resources of the Internet and other online services. 1.2 Mission As the popularity of the Internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life. Java Net provides communities with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment. People of all ages and backgrounds will come to enjoy the unique, upscale, educational, and innovative environment that Java Net provides.

1.3 Keys to Success The keys to the success for Java Net are: o The creation of a unique, innovative, upscale atmosphere that will differentiate Java Net from other local coffee shops and future Internet cafes. o The establishment of Java Net as a community hub for socialization and entertainment. o The creation of an environment that won't intimidate the novice user. Java Net will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer. o Great coffee and bakery items. 1.4 Risks The risks involved with starting Java Net are: o Will there be a demand for the services offered by Java Net in Eugene? o Will the popularity of the Internet continue to grow, or is the Internet a fad? o Will individuals be willing to pay for the service Java Net offers? o Will the cost of accessing the Internet from home drop so significantly that there will not be a market for Internet Cafes such as Java Net? 2.0 Company Summary Java Net, soon to be located in downtown Eugene on 10th and Oak, will offer the community easy and affordable access to the Internet. Java Net will provide full access to email, , FTP, Usenet and other Internet applications such as Telnet and Gopher. Java Net will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.

Java Net will appeal to individuals of all ages and backgrounds. The instructional Internet classes, and the helpful staff that Java Net provides, will appeal to the audience that does not associate themselves with the computer age. This educational aspect will attract younger and elderly members of the community who are rapidly gaining interest in the unique resources that online communications have to offer. The downtown location will provide business people with convenient access to their morning coffee and online needs. 2.1 Company Ownership Java Net is a privately held Oregon Limited Liability Corporation. Cale Bruckner, the founder of Java Net, is the majority owner.

Luke Walsh, Doug Wilson, and John Underwood, all hold minority stock positions as private investors. 2.2 Start-up Summary Java Net's start-up costs will cover coffee making equipment, site renovation and modification, capital to cover losses in the first year, and the communications equipment necessary to get its customers online. The communications equipment necessary to provide Java Net's customers with a high-speed connection to the Internet and the services it has to offer make up a large portion of the start-up costs. These costs will include the computer terminals and all costs associated with their set-up. Costs will also be designated for the purchase of two laser printers and a scanner. In addition, costs will be allocated for the purchase of coffee making equipment.

One espresso machine, an automatic coffee grinder, and minor additional equipment will be purchased from Allann Brothers. The site at 10th and Oak will require funds for renovation and modification. A single estimated figure will be allocated for this purpose. The renovation / modification cost estimate will include the costs associated with preparing the site for opening business. Start-up Start-up Requirements Start-up Expenses Legal $500 Stationery etc. $500 Brochures $500 Consultants $2,000 Insurance $700 Rent $1, 4454-group Automatic Coffee Machine $10,700 Bean Grinder $795 Computer Systems (x 11) $24,310 Communication Lines $840 Fixtures / Re-model $20,000 Total Start-up Expenses $62,290 Start-up Assets Needed Cash Balance on Starting Date $24,000 Start-up Inventory $2,000 Other Current Assets $0 Total Current Assets $26,000 Long-term Assets $0 Total Assets $26,000 Total Requirements $88,290 Funding Investment Cale Bruckner $19,000 Luke Walsh $12,000 Doug Wilson $12,000 John Underwood $12,000 Total Investment $55,000 Current Liabilities Accounts Payable $0 Current Borrowing $9,290 Other Current Liabilities $0 Current Liabilities $9,290 Long-term Liabilities $24,000 Total Liabilities $33,290 Loss at Start-up ($62,290) Total Capital ($7,290) Total Capital and Liabilities $26,000 Start-up Click to Enlarge 2.3 Company Locations and Facilities A site has been chosen at 10th and Oak in downtown Eugene.

This site was chosen for various reasons, including: o Proximity to the downtown business community. o Proximity to trendy, upscale restaurants such as West Brothers. o Proximity to LTD's Eugene Station. Parking availability. o Low cost rent - $. 85 per square foot for 1700 square feet. o High visibility. All of these qualities are consistent with Java Net's goal of providing a central hub of communication and socialization for the Eugene community. 3.1 Service Description Java Net will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to Java Net customers are listed below: o Access to external POP 3 email accounts. o Customers can sign up for a Java Net email account.

This account will be managed by Java Net servers and accessible from computer systems outside the Java Net network. o FTP, Telnet, Gopher, and other popular Internet utilities will be available. o Access to Netscape or Internet Explorer browser. o Access to laser and color printing. o Access to popular software applications like Adobe Photo Shop and Microsoft Word. Java Net will also provide its customers with access to introductory Internet and email classes. These classes will be held in the afternoon and late in the evening. By providing these classes, Java Net will build a client base familiar with its services. The computers, Internet access, and classes wouldn't mean half as much if taken out of the environment Java Net will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide Java Net customers with a home away from home.

A place to enjoy the benefits of computing in a comfortable and well-kept environment. 3.2 Competitive Comparison Java Net will be the first Internet cafe in Eugene. Java Net will differentiate itself from the strictly-coffee cafes in Eugene by providing its customers with Internet and computing services. 3.3 Fulfillment Java Net will obtain computer support and Internet access from Bellevue Computers located in Eugene. Bellevue will provide the Internet connections, network consulting, and the hardware required to run the Java Network. Allann Brothers will provide Java Net with coffee equipment, bulk coffee, and paper supplies.

At this time, a contract for the bakery items has not been completed. Java Net is currently negotiating with Humble Bagel and the French Horn to fulfill the requirement. 3.4 Technology Java Net will invest in high-speed computers to provide its customers with a fast and efficient connection to the Internet. The computers will be reliable and fun to work with. Java Net will continue to upgrade and modify the systems to stay current with communications technology. One of the main attractions associated with Internet cafes, is the state of the art equipment available for use.

Not everyone has a Pentium PC in their home or office. 3.5 Future Services As Java Net grows, more communications systems will be added. The possibility of additional units has been accounted for in the current floor plan. As the demand for Internet connectivity increases, along with the increase in competition, Java Net will continue to add new services to keep its customer base coming back for more. 4.0 Market Analysis Summary Java Net is faced with the exciting opportunity of being the first-mover in the Eugene cyder-cafe market. The consistent popularity of coffee, combined with the growing interest in the Internet, has been proven to be a winning concept in other markets and will produce the same results in Eugene.

4.1 Market Segmentation Java Net's customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee. The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community. Java Net's target market falls anywhere between the ages of 18 and 50.

This extremely wide range of ages is due to the fact that both coffee and the Internet appeal to a variety of people. In addition to these two broad categories, Java Net's target market can be divided into more specific market segments. The majority of these individuals are students and business people. See the Market Analysis chart and table below for more specifics.

Furthermore, Java Net will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use Java Net's PCs, or plug their notebooks into Internet connections. Java Net's target market covers a wide range of ages: from members of Generation X who grew up surrounded by computers, to Baby Boomers who have come to the realization that people today cannot afford to ignore computers. 4.2. 1 Market Needs Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee will remain constant over the next five years. The rapid growth of the Internet and online services, that has been witnessed worldwide, is only the tip of the iceberg. The potential growth of the Internet is enormous, to the point where one day, a computer terminal with an online connection will be as common and necessary as a telephone.

This may be 10 or 20 years down the road, but for the next five years, the online service provider market is sure to experience tremendous growth. Being the first cyder-cafe in Eugene, Java Net will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, Java Net will hold a 100 percent share of the cyder-cafe market in Eugene. In the next five years, competitors will enter the market. Java Net has set a goal to maintain greater than a 50 percent market share. 4.2. 2 Market Trends A market survey was conducted in the Fall of 1996.

Key questions were asked of fifty potential customers. Some key findings include: o 35 subjects said they would be willing to pay for access to the Internet. o Five dollars an hour was the most popular hourly Internet fee. o 24 subjects use the Internet to communicate with others on a regular basis. 4.3 Service Business Analysis The retail coffee industry in Eugene experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for good coffee in Eugene. The University is a main source of demand for coffee retailers.

The climate in Eugene is extremely conducive to coffee consumption. Current trends in the Northwest reflect the popularity of fresh, strong, quality coffee and specialty drinks. Eugene is a haven for coffee lovers. The popularity of the Internet is growing exponentially. Those who are familiar with the Internet are well aware of how fun and addictive surfing the Net can be. Those who have not yet experienced the Internet, need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies.

Java Net seeks to provide its customers with affordable Internet access in an innovative and supportive environment. Due to intense competition, cafe owners must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage. The founder of Java Net realizes the need for differentiation and strongly believes that combining a cafe with complete Internet service is the key to success. The fact that no cyder-cafes are established in Eugene, presents Java Net with a chance to enter the window of opportunity and enter into a profitable niche in the market. 4.3. 1 Business Participants There are approximately 16 coffee wholesalers in Lane County.

These wholesalers distribute coffee and espresso beans to over 20 retailers in the Eugene area. Competition in both channels creates an even amount of bargaining power between buyers and suppliers resulting in extremely competitive pricing. Some of these major players in the industry (i.e. Allann Brothers Coffee Co., Inc. and Coffee Corner Ltd.) distribute and retail coffee products. The number of online service providers in Eugene is approximately eight and counting. These small, regional service providers use a number of different pricing strategies. Some charge a monthly fee, while others charge hourly and / or phone fees.

Regardless of the pricing method used, obtaining Internet access through one of these firms can be expensive. Larger Internet servers such as America Online (AOL), Prodigy, and CompuServe, are also fighting for market share in this rapidly growing industry. These service providers are also rather costly for the average consumer. Consumers who are not convinced they would frequently and consistently travel the Internet, will not be willing to pay these prices. 4.3. 2 Distribution Patterns The dual product / service nature of Java Net's business faces competition on two levels. Java Net competes not only with coffee retailers, but also with Internet service providers.

The good news is that Java Net does not currently face any direct competition from other cyder-cafes in the Eugene market. There are a total of three cyder-cafes in the state of Oregon: one located in Portland and two in Ashland. Heavy competition between coffee retailers in Eugene creates an industry where all firms face the same costs. There is a positive relationship between price and quality of coffee. Some coffees retail at $8/pound while other, more exotic beans may sell for as high as $16/pound.

Wholesalers sell beans to retailers at an average of a 50 percent discount. For example, a pound of Sumatran beans wholesales for $6.95 and retails for $13.95. And as in most industries, price decreases as volume increases. 4.3. 3 Competition and Buying Patterns The main competitors in the retail coffee segment are Cafe Paradiso, Full City, Coffee Corner and Allann Bros. These businesses are located in or near the downtown area, and target a similar segment to Java Net's (i.e. educated, upwardly-mobile students and business people). Competition from online service providers comes from locally-owned businesses as well as national firms. There are approximately eight, local, online service providers in Eugene.

This number is expected to grow with the increasing demand for Internet access. Larger, online service providers, such as AOL and CompuServe are also a competitive threat to Java Net. Due to the nature of the Internet, there are no geographical boundaries restricting competition. 5.0 Strategy and Implementation Summary Java Net has three main strategies. The first strategy focuses on attracting novice Internet users.

By providing a novice friendly environment, Java Net hopes to educate and train a loyal customer base. The second, and most important, strategy focuses on pulling in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves an important function at Java Net. Power users have knowledge and web-browsing experience that novice Internet users find attractive and exciting. The third strategy focuses on building a social environment for Java Net customers.

A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at Java Net, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide. 5.1 Strategy Pyramids The following subtopics provide an overview of Java Net's three key strategies. Strategy pyramid graphics are presented in the appendices of this plan. 5.1. 1 Attract Novice Internet Users Java Net's first strategy focuses on attracting novice Internet users.

Java Net plans on attracting these customers by: o Providing a novice friendly environment. Java Net will be staffed by knowledgeable employees focused on serving the customer's needs. o A customer service desk will always be staffed. If a customer has any type of question or concern, a Java Net employee will always be available to assist. o Java Net will offer introductory classes on the Internet and email. These classes will be designed to help novice users familiarize themselves with these key tools and the Java Net computer systems. 5.1. 2 Attract Power Internet Users Java Net's second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at Java Net.

Java Net plans on attracting this type of customer by: o Providing the latest in computing technology. o Providing scanning and printing services. o Providing access to powerful software applications. 5.1. 3 Social Hub The third strategy focuses on building a social environment for Java Net customers. 5.2 Competitive Edge Java Net will follow a differentiation strategy to achieve a competitive advantage in the cafe market. By providing Internet service, Java Net separates itself from all other cafes in Eugene. In addition, Java Net provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet providers in Eugene. 5.3 Marketing Strategy Java Net will position itself as an upscale coffee house and Internet service provider.

It will serve high-quality coffee and espresso specialty drinks at a competitive price. Due to the number of cafes in Eugene, it is important that Java Net sets fair prices for its coffee. Java Net will use advertising as its main source of promotion. Ads placed in The Register Guard, Eugene Weekly, and the Emerald will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel. Furthermore, Java Net will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by Java Net. 5.3.

1 Pricing Strategy Java Net bases its prices for coffee and specialty drinks on the 'retail profit analysis' provided by our supplier, Allann Brothers Coffee Co., Inc. Allann Brothers has been in the coffee business for 22 years and has developed a solid pricing strategy. Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyder-cafe in Eugene. Therefore, Java Net considered three sources to determine the hourly charge rate.

First, we considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as America Online. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual.

Second, Java Net looked at how cyder-cafes in other markets such as Portland and Ashland went about pricing Internet access. Third, Java Net used the market survey conducted in the Fall of 1996. Evaluating these three factors resulted in Java Net's hourly price of five dollars. 5.3. 2 Promotion Strategy Java Net will implement a pull strategy in order to build consumer awareness and demand.

Initially, Java Net has budgeted $5,000 for promotional efforts which will include advertising with coupons for a free hour of Internet time in local publications and in-house promotions such as offering customers free Internet time if they pay for an introduction to the Internet workshop taught by Java Net's computer technician. Java Net realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share. 5.4 Sales Strategy As a retail establishment, Java Net employs people to handle sales transactions. Computer literacy is a requirement for Java Net employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance.

Java Net's commitment to friendly, helpful service is one of the key factors that distinguishes Java Net from other Internet cafes. 5.4. 1 Sales Forecast Sales forecast data is presented in the chart and table below. Responsibility for implementation falls on the shoulders of Cale Bruckner. This Milestones Table below will be updated as the year progresses using the actual tables. New milestones will be added as the first year of operations commences. Milestones Click to Enlarge Milestones Milestones Milestone Start Date End Date Budget Manager Department Business Plan 1/1/1998 2/1/1998 $1,000 Cale Bruckner Admin Secure Start-up Funding 2/15/1998 3/1/1998 $1,000 Cale Bruckner Admin Site Selection 3/1/1998 3/15/1998 $1,000 Cale Bruckner Admin Architect Designs 4/1/1998 5/1/1998 $1,000 Cale Bruckner Admin Designer Proposal 4/1/1998 4/15/1998 $1,000 Cale Bruckner Admin Technology Design 4/1/1998 4/15/1998 $1,000 Cale Bruckner Admin Year 1 Plan 6/1/1998 6/5/1998 $1,000 Cale Bruckner Admin Personnel Plan 7/1/1998 7/10/1998 $1,000 Cale Bruckner Admin Accounting Plan 7/1/1998 7/5/1998 $1,000 Cale Bruckner Admin Licensing 9/1/1998 9/15/1998 $1,000 Cale Bruckner Admin Totals $10,000 6.0 Management Summary Java Net is owned and operated by Mr. Cale Bruckner.

The company, being small in nature, requires a simple organizational structure. Implementation of this organizational form calls for the owner, Mr. Bruckner, to make all of the major management decisions in addition to monitoring all other business activities. 6.1 Personnel Plan The staff will consist of six part-time employees working thirty hours a week at $5.50 per hour. In addition, one full-time technician (who is more technologically oriented to handle minor terminal repairs / inquiries ) will be employed to work forty hours a week at $10.00 per hour. The three private investors, Luke Walsh, Doug Wilson and John Underwood will not be included in management decisions. This simple structure provides a great deal of flexibility and allows communication to disperse quickly and directly.

Because of these characteristics, there are few coordination problems seen at Java Net that are common within larger organizational chains. This strategy will enable Java Net to react quickly to changes in the market. Internet sales were estimated by calculating the total number of hours each terminal will be active each day and then generating a conservative estimate as to how many hours will be purchased by consumers. Cost of Goods Sold: The cost of goods sold for coffee-related products was determined by the 'retail profit analysis' we obtained from Allann Bros. Coffee Co. The cost of bakery items is 20% of the selling price. The cost of Internet access is $660 per month, paid to Bellevue Computers for networking fees.

The cost of e-mail accounts is 25% of the selling price. Fixture Costs: Fixture costs associated with starting Java Net are the following: 11 computers = $22,000, two printers = $1,000, one scanner = $500, one espresso machine = $10,700, one automatic espresso grinder = $795, two coffee / food preparation counters = $1,000, one information display counter = $1,000, one drinking / eating counter = $500, sixteen stools = $1,600, six computer desks w / chairs = $2,400, stationery goods = $500, two telephones = $200, decoration expense = $14,110 for a total fixture cost of $50,000. Salaries Expense: The founder of Java Net, Cale Bruckner, will receive a salary of $24,000 in year one, $26,400 in year two, and $29,040 in year three. Payroll Expense: Java Net intends to hire six part-time employees at $5.75/hour and a full-time technician at $10.00/hour. The total cost of employing seven people at these rates for the first year is $7,240/month. Rent Expense: Java Net is leasing a 1700 square foot facility at $.

85/sq. foot. The lease agreement Java Net signed specifies that we pay $2,000/month for a total of 36 months. At the end of the third year, the lease is open for negotiations and Java Net may or may not re-sign the lease depending on the demands of the lessor. Utilities Expense: As stated in the contract, the lessor is responsible for the payment of utilities including gas, garbage disposal, and real estate taxes. The only utilities expense that Java Net must pay is the phone bill generated by fifteen phone lines; thirteen will be dedicated to modems and two for business purposes.

The basic monthly service charge for each line provided by US West is $17.29. The 13 lines used to connect the modems will make local calls to the network provided by Bellevue resulting in a monthly charge of $224.77. The two additional lines used for business communication will cost $34.58/month plus long distance fees. Java Net assumes that it will not make more than $40.00/month in long distance calls. Therefore, the total cost associated with the two business lines is estimated at $74.58/month and the total phone expense at $299.35/month. In addition, there will be an additional utility expense of $800 for estimated E WEB bills.

Marketing Expense: Java Net will allocate $5,000 for promotional expenses at the time of start-up. These dollars will be used for advertising in local newspapers in order to build consumer awareness. For additional information, please refer to section 5.0 of the business plan. Insurance Expense: Java Net has allocated $1,440 for insurance for the first year. As revenue increases in the second and third year of business, Java Net intends to invest more money for additional insurance coverage. Legal and Consulting Fees: The cost of obtaining legal consultation in order to draw up the paper work necessary for an LLC is $1,000.

Depreciation: In depreciating our capital equipment, Java Net used the Modified Accelerated Cost Recovery Method. We depreciated our computers over a five-year time period and our fixtures over seven years. Taxes: Java Net is an LLC and, as an entity, it is not taxed. However, there is a 15% payroll burden. Accounts Payable: Java Net acquired a $24,000 loan from a bank at a 10% interest rate. The loan will be paid back at $750/month over the next three years.

The $9,290 short term loan will be paid back at a rate of 8%. 7.1 Important Assumptions Basic assumptions are presented in the table below. General Assumptions General Assumptions 1999 2000 2001 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 25.42% 25.00% 25.42%Other 0 0 07.2 Key Financial Indicators Profit growth data is presented in the chart below. Profit Monthly Click to Enlarge 7.3 Break-even Analysis Break-even data is presented in the chart and table below. Break-even Analysis Click to Enlarge Break-even Analysis Break-even Analysis: Monthly Units Break-even 4,923 Monthly Revenue Break-even $12,461 Assumptions: Average Per-Unit Revenue $2.53 Average Per-Unit Variable Cost $0.50 Estimated Monthly Fixed Cost $10,0007.4 Projected Profit and Loss P & L data is presented in the table below. Cash Flow Pro Forma Cash Flow 1999 2000 2001 Cash Received Cash from Operations: Cash Sales $248,878 $303,548 $333,903 Cash from Receivables $0 $0 $0 Subtotal Cash from Operations $248,878 $303,548 $333,903 Additional Cash Received Sales Tax, VAT, HST / GST Received $0 $0 $0 New Current Borrowing $2,000 $5,000 $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 $250,878 $308,548 $333,903 Expenditures 1999 2000 2001 Expenditures from Operations: Cash Spending $14,345 $15,972 $17,218 Payment of Accounts Payable $223,877 $282,485 $302,633 Subtotal Spent on Operations $238,223 $298,457 $319,851 Additional Cash Spent Sales Tax, VAT, HST / GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $9,290 $2,000 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $9,600 $5,000 $4,800 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $257,113 $305,457 $324,651 Net Cash Flow ($6,235) $3,091 $9,252 Cash Balance $17,765 $20,856 $30,108 Cash Click to Enlarge 7.6 Projected Balance Sheet Our projected balance sheet is presented in the table below.