Executive Summary
Yeti Card & Gifts (Yeti) is an established retail business that offers a wide range of cards and gifts. Yeti's
motto is "Fun, Functional, & Funky, that's Yeti." Yeti opened two years ago as a retail gift store
specializing in Asian gifts and home decor. Yeti quickly out-grew its original space and is now located in
the Wigman Hospital/Physicians & Surgeons South Building, open Monday through Saturday 10 am – 6
pm. Yeti is currently finishing tenant improvements on their second location, a space in University
Heights. The grand opening is slated for July 4th.
The Market
Yeti has been successful in doing something that no other retail card/gift store has been able to do,
successfully appeal to two distinct target market segments. Yeti's first target segment is university
students. This segment is identified by their younger age and higher disposable income relative to their
household income. For many students, the years at university is the first time they are living away from
home and away from their parent's often watchful and restrictive eyes. This means that students like to
use their disposable income to its full potential, sometimes (unfortunately for them) beyond their
financial means. There are over 38,833 potential customers in this market segment.
The second distinct segment that Yeti has been successful in appealing to is the university faculty and
staff, Wigman Hospital staff, and the greater Cleveland Heights/University Heights community. This
segment is an older, more mature market relative. They are looking for a safe and friendly atmosphere
that provides a sense of nostalgia mixed with youthful excitement. This segment has over 191,590
potential customers.
Competitive Edge
Yeti's competitive edge is their ability to effectively serve both market segments at the same time, a feat
that no other gift/card shop has been able to do. Yeti has accomplished this by leveraging two
competitive advantages. The first element is a wide product selection that appeals to both target
markets. Yeti's other motto, "Risque not Raunchy" captures this idea well. While some of the products
come close to pushing the limits of good taste, nothing is offensive or outrageously obscene. This
creates an atmosphere that has an edge, but one in which anyone would feel comfortable. This wide
product span helps allow Yeti to serve two distinct sets of customers. A wide product selection is not
inherently enough on its own to serve two customer segments however. The second element of their
competitive edge is the high level of customer service that supports the broad product selection. The
store provides outstanding service to customers who feel like they are truly welcome and enjoy the
entire shopping experience. All of the Yeti employees are trained to create a helpful, gracious,
welcoming experience for all customers. The sales staff recognize that it is their job to provide the
customer with whatever type of assistance they may need. The customer will leave the store feeling that
Yeti exists to cater to their individual needs.
Having been open now for almost two years, Yeti Cards & Gifts has proven that they have been
successful in meeting the needs of two distinct customer segments. The Yeti concept is being led by the
husband and wife team of Dan and Ishada Gordon, both of whom bring a wealth of experience and skills
to the company. Yeti is currently preparing for the grand opening of their second location and its overall
growth looks quite promising. Sales forecasts indicate revenue of £169,000 for Year 3 and £180,000
for Year 4 with net profit of 5.96% and 7.59% respectively.
1.1 Mission
Yeti Cards & Gifts' goal is to provide new and exciting products in an environment that is fun and friendly
for customer and staff alike. Customer service is our #1 priority.
"Fun, Functional & Funky, that's Yeti."
1.2 Keys to Success
The keys to success are:
1. Offering items of a high quality-value relationship which are not available everywhere. This is
essential for maintaining the niche market sectors mentioned in the Executive Summary.
2. Advertising and promoting in areas that our target customer base will learn about our store.
3. Continuously reviewing our inventory and sales and adjusting our inventory levels accordingly.
1.3 Objectives
Yeti has two objectives for the organization. The objectives are lofty, yet achievable. By developing and
tracking progress toward the goals, the organization will push everyone to perform their best.

Open a second store in the University Heights community, increasing visibility and sales
potential.

Open a third store in Year 4.
Company Summary
Yeti Card & Gifts is a retail gift store specializing in cards, health and beauty products, novelty, candy, beverages,
and Japanese products. Yeti currently has two locations, their current store located at the Wigman Hospital/Physician
& Surgeons South Building, and a University Heights community store (opening soon) in the Madison Plaza inbetween existing tenants Starbucks and Noah's Bagels.
2.1 Company Ownership
Yeti Cards & Gifts is a single member Ohio registered L.L.C. owned wholly by Dan Gordon.
2.2 Company History
Yeti was originally founded two years ago. The popularity of Yeti was quickly apparent and the business out-grew the
location. The business soon moved into the Wigman Hospital/Physicians & Surgeons South Building to take
advantage of the 1,144 square foot highly visible retail space. The Wigman location was chosen to leverage its high
density of people. Wigman Hospital is Cuyahoga County's largest employer. On the east side of Yeti is The Case
Western Reserve, the state's largest private university with over 20,933 students, faculty, and employee. The move to
the Wigman building was also strategically timed to fill the vacancy of Jabberwocky Cards & Gifts which had just
closed their doors.
Yeti is currently in the tenant improvement stage of opening their second store in University Heights. This 800 square
foot store is located in the Madison Plaza in-between Starbucks and Noah's Bagel. This location was chosen
because of the high traffic counts (1,800) and the close proximity to two nationally known tenants.
Past Performance
2000
2001
2002
Sales
£72,554
£85,884
£100,212
Gross Margin
£47,160
£55,825
£65,138
Gross Margin %
65.00%
65.00%
65.00%
Operating Expenses
£62,554
£65,545
£68,778
6.00
6.00
6.00
Inventory Turnover
Balance Sheet
2000
2001
2002
Cash
£10,225
£10,988
£12,363
Inventory
£17,778
£15,554
£12,455
Other Current Assets
£0
£0
£0
Total Current Assets
£28,003
£26,542
£24,818
Long-term Assets
£5,000
£5,000
£5,000
Accumulated Depreciation
£2,751
£2,751
£2,751
Total Long-term Assets
£2,249
£2,249
£2,249
£30,252
£28,791
£27,067
Accounts Payable
£3,254
£4,254
£4,001
Current Borrowing
£0
£0
£0
Other Current Liabilities (interest free)
£0
£0
£0
£3,254
£4,254
£4,001
Long-term Liabilities
£20,000
£18,000
£15,000
Total Liabilities
£23,254
£22,254
£19,001
Paid-in Capital
£0
£0
£0
£6,998
£6,537
£2,612
£0
£0
£5,454
£6,998
£6,537
£8,066
£30,252
£28,791
£27,067
0
0
0
Current Assets
Long-term Assets
Total Assets
Current Liabilities
Total Current Liabilities
Retained Earnings
Earnings
Total Capital
Total Capital and Liabilities
Other Inputs
Payment Days
Products
Yeti carries a wide range of products chosen to be aligned with the private motto of "Risque, not
Raunchy." Yeti's products can be grouped into five main categories: cards, health and beauty, novelty,
candy and beverages, and Japanese products. The following list shows examples of products within their
respective categories:
Cards (vendors include: Winking Moon Press, Tetter Saw Cards, Mik Wright, Clayboys, Mojo Ryzen,
Image Connection, Unusual Cards, Cara Scissoria, Shag/Roger La Borde, Paper Troupe, Palm Breeze,
Smart Alex, and Classico San Francisco)
o
Birthday (boy, girl, romantic)
o
Blank
o
Wedding
o
New baby
o
Get well
o
General humor
o
I love you
o
Engagement
o
Missing you
o
Friendship
o
Encouragement
o
Sympathy
o
Postcards
Health and Beauty (vendors include: Blue Q, Fridge Fun, San-X, Tsukineko, T-n-T Candles)
o
Hand soap
o
Body wash/detergent
o
Shampoo
o
Moist towelettes
o
Lip balm
o
Moisturizer
o
Bubble bath
o
Body powder
o
Glitter ball/lotion
o
Compact mirror
o
Foot/hand/body cream
o
Large & small tampon case
o
Air freshener
o
Tweezers
o
Temporary body tattoos
o
Candles
Novelty (vendors include: Accoutrements, Hobbs & Dobbs, San-X, Lantor, Dark Horse, Blue Q, O.R.E.,
Three by Three, Lucy Lu, Hot Properties, Fridge Fun)
o
Stationary
o
Wigs
o
Glasses
o
Picture frames
o
Hats
o
Coffee mugs
o
Bags
o
Purses
o
Clocks
o
CD cases
o
String lights
o
Bookmarks
o
Action figures
o
Antenna toppers
o
Magnets
o
Key chains
o
Toothpick/toothbrush holders
o
Mist makers
o
Toilet seats
o
Stickers
o
Clothes hampers
o
Whoopee cushions
o
Squirt guns
Candy and Beverages (vendors include: Garvey, Hobbs & Dobbs, Golden Pacific, JFC Trading)
o
Hello Kitty Hi-Chew & Jelly candy
o
Gummi Bears/Army Guys/Hamburgers/French Fries/Donuts
o
Now & Later
o
Big Hunk
o
Bottle caps
o
Jolly Rancher
o
Blow Pops
o
Sugar Daddy
o
Nerds
o
Tangy Taffy
o
Sweet Tarts
o
Smarties
o
Sixlets
o
Dorks
o
Shock Tarts
o
Ducle de Leche
o
Abba Zabba
o
Sour Patch
o
Rocky Road
o
Runts
o
Spree
o
Gum
o
Soft drinks
o
Jones
o
Suntory-CC Lemon
o
CC Grape
o
Natchan (honey lemon, apple, grape, fruit punch flavors)
o
Woolong tea
o
Asahi cold asian tea drinks
o
Kirin cold tea drinks (milk tea, lemon tea)
o
Milk, coffee
o
Otsuka Pocari Sweat
o
Sokenbi-cha
o
JT peach water
o
Sapporo fruit & milk
o
Cream melon soda
o
Caffe latte
o
Citrus mix
o
Green tea
o
Chinese tea
Japanese products (vendors include: San-X, Masudamasu, Enadi, Kitamura, Tokyo-Inn, Etoile Kaito,
Okutani)

Stickers

Plush toys

Bottle caps

Movie merchandise

Mouse pads

Cell phone accessories

Zipper pulls

Patches

Animation fun packs
Market Analysis Summary
Yeti has identified two distinct market segments for each of the two different stores. For the
Cleveland Heights location there is the Case Western Reserve University students and the Wigman
Hospital/Cleveland Heights community. For the University Heights location there is the John Carroll
University students and the local community.
Age is a significant determinant in differentiating between the different segments. The student
segments are generally of a lower age than the surrounding community.
4.1 Market Segmentation
Cleveland Heights Store
Case Western Reserve community
20,044 students total. Largest private university in Ohio.

Female students, 53.6% of student population (10,747)
o

This group makes the most "lifestyle" purchases. They are either buying for themselves
to give their living space a personal touch, or buying items as a gift for a friend or
relative.
Male students, 46.4% of student population (9,297)
o

Male students are known for their infrequent shopping habits. They make occasional
purchases. These occasional purchasers will need to be converted into impulse buyers.
This can be accomplished by offering more items that appeal to their sense of
independence.
Case Western Reserve Univ. faculty (889) and employees
o
This segment makes less frequent purchases than the students
Wigman Hospital community/Cleveland Heights community
Wigman Hospital is the county's largest employer. Administrative offices have recently been moved to
this location, further consolidating the hospital into a dense employer.


Wigman Hospital community. Total population 2,700.
o
Higher income levels than students
o
Their work site is in very close proximity to Yeti, less than a block.
Cleveland Heights community. Total population 140,550. Ages:
o
15-19: 11,585 (8.4%)
o
20-24: 17,390 (12.6%)
o
25-34: 20,591 (14.9%)
o
35-44: 18,656 (13.5%)
o
45-54: 20,184 (14.6%)
o
55-59: 5,864 (4.3%)
University Heights Store
John Carroll University community 18,789 students total

Female students, 47.6% (8,937)
o

This group makes the most "lifestyle" purchases. They are either buying for themselves
to give their living space a personal touch, or buying items for a friend or relative to give
as a gift.
Males students, 52.4%, (9,852)
o
Male students are known for their infrequent shopping habits. They make occasional
purchases. These occasional purchasers will need to be converted into impulse buyers.
This can be accomplished by offering more items that appeal to their sense of
independence.

John Carroll Univ. faculty (830) and employees
o
This segment is likely to make fewer purchases than students
University Heights community. Total population 51,040. Ages:

15-19: 5,662 (11.5%)

20-24: 9,896 (20.1%)

25-34: 7,317 (14.8%)

35-44: 5,991 (12.1%)

45-54: 5,570 (11.3%)

55-59:1,603 (3.3%)
Market Analysis
2003
Potential Customers
Growth
Case Western Reserve
community
2%
2004
2005
2006
2007
CAGR
20,933
21,435
21,949
22,476
23,015
2.40%
Wigman
Hospital/Cleveland Hts. 2%
community
140,550
143,361
146,228
149,153
152,136
2.00%
John Carroll community 1%
19,619
19,815
20,013
20,213
20,415
1.00%
University Hts.
community
1%
51,040
51,550
52,066
52,587
53,113
1.00%
Total
1.74%
232,142
236,161
240,256
244,429
248,679
1.74%
4.2 Target Market Segment Strategy
The market segments were chosen for two specific reasons, location/proximity and customer
demographics, specifically age:
Location/Proximity
In the case of both the Cleveland Heights and University Heights stores, the location is quite convenient
to both the students and the surrounding communities. As our days become busier and busier, with less
and less free time, we tend to choose stores that are the most convenient. The more convenient the
location, the more free time that we have for ourselves.

Cleveland Heights. The store is within several blocks of a large university campus. Students are
continually walking off campus, looking for food, shopping, and diversions from school, all
convenient enough so that they can easily get back on campus for the next class. For the
Wigman Hospital community, the largest single employer in Cuyahoga County, Yeti is located
below their offices. Many people can just walk downstairs to the ground floor, and at most they
may have to walk a block to get to Yeti. Customers who need to do a bit of shopping on their
break or before they leave for home are able to get to Yeti within five minutes.

University Heights. Again, location is key in University Heights. The store is also only a few
blocks from the large campus making it quite accessible to students, faculty, and campus
employees. Yeti was able to secure a desired location within Madison Plaza, one of the premier
shopping areas. The fact that Yeti is situated next to Starbucks is significant. Starbucks is
nationally known for their real estate prowess, in addition to their marketing. Starbucks is very
good at choosing good retail locations for their stores, a prime reason that they have closed so
few poor performing stores in their history. On the other side of Yeti is another national retail
tenant, Noah's Bagel. Being surrounded by two national tenants, one of them being the mighty
Starbucks is quite material. Additionally, this retail space has customer daily walk-by traffic of
1,800, an impressive number.
Customer Demographics

University communities, both Case and John Carroll. While students do not have the highest
household income, since the majority of their time is spent in school instead of working, they
have a very high rate of disposable income. This can be explained by two reasons. First, when
students enter university, this is often the first time that they are no longer under the watchful
eye of their parents, who have controlled or affected the purchasing behavior and lifestyles of
their offspring. For many of the students, they suddenly have more freedom in the lives and
how they spend their money.
A second explanation of this phenomenon is that students tend to spend money in a short-sighted
manner. The overwhelming majority of students receive financial aid and it is uncommon for all of the
money from financial aid to be spent solely on books and tuition. Frequently a good portion becomes
their disposable income. Many students take the viewpoint that if they are going to be taking on debt to
complete school, then a little more debt, which provides them ample disposable income, is OK, as they
will eventually pay it off years down the road when they are making good money. These two
explanations offer insight into why students, those with low household incomes have high levels of
disposable income. Yeti recognizes this reality and caters to these students with products that appeal to
them.

Surrounding communities, both Cleveland Heights and University Heights. The members of the
community population, older than the university students, want a safe and friendly atmosphere
where they can enjoy a sense of nostalgia mixed with youthful excitement. The problem with
most card and gift shops is their inability to cater to a wide cross section of the population. They
are either too hip or trendy and turn off the more mature crowd, or they are too safe and
secure so that only your grandparents would shop there. This "hallmarkification" of gift and card
shops is quite common as evidenced by (name omitted), (name omitted), and (name omitted).
Yeti has been successful in appealing to both the young and hip crowd (students) as well as the
more mature crowd (university faculty, Wigman staff, and the surrounding city communities).
Yeti has accomplished this feat in part by offering a wide product selection with the two target
segments in mind and offering every customer benchmarked customer service, a way of treating
customers so that every customer that enters the store recalls their experience as a pleasant
experience that exceeded their expectations.
4.3 Industry Analysis
As mentioned in the previous section, gift and card shops typically fall into two distinct categories,
trendy and hip shops that appeal to a younger crowd, and conservative, "hallmarkified" stores that
appeal to an older, safety conscious crowd. It is unusual for a store to be able to straddle both
categories successfully.
Some stores will try by just carrying merchandise that appeals to the other category, but this approach
rarely works. In addition to having the merchandise for the desired market segments, the store must
have the look, feel, and customer service to make each market segment feel like they are wanted, that
make them feel like they are the typical individual that the store is catering to. Please review section 5.1,
the competitive edge for more information on how Yeti is able to accomplish what most in the industry
has been unable to.
4.3.1 Competition and Buying Patterns
Competitor #1
Pros: Massive purchasing power (over £30 million in sales last year including a computer and book
department); good location; guaranteed customers from the sale of text books.
Cons: Little to no parking; poor customer service; difficulty in selling anything but conservative
merchandise for fear of being offensive; youthful customer base keeps adults away.
Competitor #2
Pros: Good location next to Case Univ.; good selection of women's apparel; established customer base.
Cons: Little to no parking; very poor customer service; lack of diversity in customer base with young
women being their primary customer.
Competitor #3
Pros: Chagrin River Center tenant; plenty of parking; a national chain; average customer service.
Cons: Primary customers are 12-19 year olds; too loud background sound system; main focus is on
apparel (T-shirts); little to no advertising.
Competitor #4
Pros: Capitol Mall tenant; plenty of parking; national chain; large selection of movie paraphernalia.
Cons: Merchandise selection focused on too small of a customer base; poor customer service; little to
no advertising; distance from Case Univ. requires car or bus ride.
Competitor #5
Pros: Eighth St. Market tenant; average amount of parking; established customer base.
Cons: Poor customer service; poor merchandise selection.
Competitor #6
Pros: Two stores within walking distance of John Carroll Univ.; established customer base; large
merchandise selection.
Cons: Merchandise selection focused on older customers; too much merchandise clutters aisles and
creates claustrophobic conditions.
Competitor #7
Pros: Large national chain with ample parking; large selection of goods; average customer service.
Cons: Cannot respond to customer requests and the latest trends; focused on general merchandise, not
cards and gifts; distance from John Carroll Univ. requires a car or bus ride
Strategy and Implementation Summary
Yeti will leverage their competitive edge to quickly gain market penetration. Yeti has implemented a
unique and effective competitive advantage of having a product selection that caters to diverse market
segments, and supporting the product selection with excellent customer service, allowing customers
from different demographics to feel equally at home at Yeti and to create a memorable shopping
experience.
Yeti will rely on two forms of media for their marketing campaign, a strategy to raise awareness of
Yeti in the different target markets. The Cleveland Weekly will be used for print advertisements due to
its large reach and readership demographics which are aligned with Yeti's customer demographics. Yeti
will support their print advertising with a creative, in-house produced series of catchy Flash animated TV
commercials. The commercials will be aired on both local and cable TV.
Lastly, Yeti will undertake a sales strategy that focuses on extensive employee training to allow the
employees to assist customers with the wide range of products that they sell. Having an extensive
training program for employees signals Yeti's intentions of having long-term employees who are like
members of the family.
5.1 Competitive Edge
Yeti's competitive edge can be summed up as "Risque, not Raunchy." This indicates their ability to
appeal to a younger hipper crowd such as students, as well as an older, more mature crowd typical of
Wigman Hospital employees, university faculty members and employees, and surrounding community
members. "Risque, not Raunchy" is achieved to a larger degree through an intelligent product selection
that is supported by exemplary customer service.
Yeti sells items that appeal to a wide selection of the population. Some items may indeed seem to push
the limits of taste, but in general, none of the items sold are offensive or outrageously obscene. A good
litmus test for this feeling of risque not raunchy is that any of the customers, regardless of age feel as if
they could bring their parents into the store and not feel embarrassed.
Having a wide product selection is not sufficient, in and of itself, to appeal to a wide demographic group
of customers. Part of a customer's desire to explore stores such as Yeti is the experience that they have
while in the store; how they were treated; the help from employees; the feeling that they were
welcome in the store. All of the Yeti employees go through training that reinforces the notion that
exemplary customer service must be offered to every customer. The customer must feel like they were
treated with respect and that the employee truly wanted to help the customer in any way possible.
Having this level of customer service helps support the product selection in appealing to a wide range of
customers. Just having the right product selection is not enough, you could have the most desired,
coolest stuff, but if the experience is not noteworthy, the customer will not come back.
5.2 Marketing Strategy
Yeti's marketing strategy will be a strategic effort to develop an awareness of Yeti in the community and
the wide range of attractive products that they offer. The strategy will use several formats of media:

Print advertising: The Cleveland Weekly will be the print medium of choice. Not only is their
presence felt throughout the Cleveland metropolitan area (estimated readership is 278,000) but
they are the premier alternative media outlet for both Cleveland Heights and University Heights.

TV advertising: Television commercials are an expensive yet effective media source for a
marketing campaign. Production is often one of the large cost drivers for commercials. As a way
of significantly decreasing/eliminating production costs as well as developing a catchy, unique,
and memorable commercial piece, Dan Gordon will be leveraging his creative mind and the
technical assistance of a few university students to develop Flash-based commercials. These
commercials create an edgy, distinct message that will be able to communicate the range of
products and distinctiveness that Yeti has to offer. By reducing the production costs to almost
zero, other than sweat equity by Dan, Yeti will be able to use TV advertisements which they
would otherwise not be able to afford. The marketing plan calls for a 50% split between local
(WKYC Channel 9) and cable television. Additionally, Yeti will also be using "book end spots"
which are 15 second spots that surround a traditional 30 second spot but at a reduced air time
fee.
5.3 Sales Strategy
Yeti's sales strategy is an aggressive training/education regime for all employees. All employees will be
trained on the different product categories as well as the specific products within each category. The
more information each employee knows and can share with the customer, the increased likelihood a
sale will occur. This is especially important since Yeti carries a large product selection and it would be
easy for many products to get lost in the mix with no support from the sales associates.
The bottom line is that the more information the employees have regarding the products, how it is used,
who the product appeals to, etc., the larger the sales will be with each customer. Additionally, this
philosophy of proper training for the employees is aligned with Yeti's perspective that it is far less
expensive to train and maintain extraordinary employees and treat them well, than to invest minimally
in the employees but have to deal with high turnover.
5.3.1 Sales Forecast
Yeti has adopted a conservative sales forecasts in order to increase the likelihood of reaching the sales
goals and decreasing the possibility that the revenue figures will be incorrect. Yeti believes that the
forecasts are accurate since they are based on actual, historical numbers.
Sales Forecast
2003
2004
2005
Cards
£30,181
£39,887
£42,455
Health & Beauty
£26,861
£35,499
£37,785
Novelty
£23,541
£31,112
£33,115
Candy & Beverages
£25,352
£33,505
£35,662
Japanese
£22,334
£29,516
£31,417
Total Sales
£128,269 £169,520 £180,434
Direct Cost of Sales
2003
2004
2005
Cards
£10,563
£13,960
£14,859
Health & Beauty
£9,401
£12,425
£13,225
Novelty
£8,239
£10,889
£11,590
Candy & Beverages
£8,873
£11,727
£12,482
Japanese
£7,817
£10,331
£10,996
Subtotal Direct Cost of
Sales
£44,894
£59,332
£63,152
Sales
5.4 Milestones
Yeti has several milestones that will help guide the organization to success. The following table and
chart show these milestones.
Milestones
Milestone
Start Date
End Date
Budget
Manager
Department
University Hts store
opening
1/1/2003
7/4/2003
£0
Dan
Marketing
Website launch
5/1/2003
10/1/2003
£0
Dan
Department
Open third store
1/1/2006
6/30/2006
£0
Dan
Department
Totals
£0
Management Summary
Yeti was founded, is owned, and will be managed by Dan Gordon. Dan brings a wealth of topical
experience to Yeti to assist in its retail success. Dan's sales career began over 13 years ago when he
worked in retail sales for Mervyn's. After about a year he moved into a new position with Kaiser
Permanente as a Security Administration Assistant. In this position Dan was responsible for teaching
different classes to new hospital staff. It was this experience that provided the requisite skill set that he
now uses for training new employees. Next Dan spent several years as a wholesale buyer of a large
office supplies company. He was responsible for the development and implementation of policies and
procedures for client returns, overseeing over £.5 million in returns.
Since Sept. 14, 2001 Dan has dedicated his time to Yeti and has managed the Cleveland Heights store
and is in charge of purchasing, sales, advertising, maintenance, computer technology, and business
development.
Yeti is also supported by Ishada Gordon. Ishada has over four years of sales and client service from a
variety of different companies in Japan as well as the United States. Ishada also brings outstanding office
management skills that will be invaluable to Yeti. Ishada has also been helpful with business
development activities, raising money as well as developing vendor relationships with many different
Japanese companies. Her knowledge and assistance in the Japanese product category has provided Yeti
with an excellent Japanese product selection.
7.1 Personnel Plan
Dan will be the manager of both stores. His responsibilities include but are not limited to: sales,
purchasing, marketing, advertising, business development, computer technology, and employee
training.
Ishada's responsibilities include but are not limited to: office management, employee training, and
human resources.
The Cleveland Heights store will have two part-time employees. Their responsibilities include sales,
display organizing, restocking, and light cleaning.
Personnel Plan
2003
2004
2005
Dan
£14,400 £16,000 £17,000
Ishada
£14,400 £16,000 £17,000
Part-time employee
£3,864 £6,624 £6,624
Part-time employee
£3,864 £6,624 £6,624
Part-time employee
£3,864 £6,624 £6,624
Total People
5
5
5
Total Payroll
£40,392 £51,872 £53,872
Financial Plan
The following sections outline important financial information.
8.1 Important Assumptions
The following table details important financial assumptions.
General Assumptions
2003
2004
2005
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
30.00%
30.00%
30.00%
Other
0
0
0
8.2 Break-even Analysis
The Break-even Analysis indicates that £9,500 will be needed in monthly revenue to reach the breakeven point.
Break-even Analysis
Monthly Revenue Break-even £9,500
Assumptions:
Average Percent Variable Cost 35%
Estimated Monthly Fixed Cost £6,175
8.3 Projected Cash Flow
The following chart and table show projected cash flow.
Pro Forma Cash Flow
2003
2004
2005
Cash Sales
£128,269
£169,520
£180,434
Subtotal Cash from Operations
£128,269
£169,520
£180,434
Sales Tax, VAT, HST/GST Received
£0
£0
£0
New Current Borrowing
£0
£0
£0
New Other Liabilities (interest-free)
£0
£0
£0
New Long-term Liabilities
£20,000
£0
£0
Cash Received
Cash from Operations
Additional Cash Received
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
£148,269
£169,520
£180,434
Expenditures
2003
2004
2005
Cash Spending
£40,392
£51,872
£53,872
Bill Payments
£68,546
£107,359
£110,062
Subtotal Spent on Operations
£108,938
£159,231
£163,934
£0
£0
£0
Principal Repayment of Current Borrowing £0
£0
£0
Other Liabilities Principal Repayment
£0
£0
Long-term Liabilities Principal Repayment £2,464
£3,180
£3,180
Purchase Other Current Assets
£0
£0
£0
Purchase Long-term Assets
£15,000
£0
£0
Dividends
£0
£0
£0
Expenditures from Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
£0
Subtotal Cash Spent
£126,402
£162,411
£167,114
Net Cash Flow
£21,867
£7,109
£13,320
Cash Balance
£34,230
£41,339
£54,659
8.4 Projected Profit and Loss
The following table and charts illustrate the projected profit and loss.
Pro Forma Profit and Loss
2003
2004
2005
Sales
£128,269
£169,520
£180,434
Direct Cost of Sales
£44,894
£59,332
£63,152
Other Production Expenses
£0
£0
£0
Total Cost of Sales
£44,894
£59,332
£63,152
Gross Margin
£83,375
£110,188
£117,282
Gross Margin %
65.00%
65.00%
65.00%
Payroll
£40,392
£51,872
£53,872
Sales and Marketing and Other
Expenses
£6,000
£6,000
£6,000
Depreciation
£2,751
£3,000
£3,000
Leased Equipment
£0
£0
£0
Utilities
£3,300
£4,200
£4,200
Insurance
£4,200
£5,400
£5,400
Rent
£10,200
£13,200
£13,200
Payroll Taxes
£6,059
£7,781
£8,081
Other
£1,200
£1,200
£1,200
Total Operating Expenses
£74,101
£92,653
£94,953
Profit Before Interest and Taxes
£9,274
£17,535
£22,329
EBITDA
£12,024
£20,535
£25,329
Expenses
Interest Expense
£2,898
£3,095
£2,777
Taxes Incurred
£1,913
£4,332
£5,866
Net Profit
£4,463
£10,108
£13,687
Net Profit/Sales
3.48%
5.96%
7.59%
8.5 Projected Balance Sheet
The following table present the projected balance sheet.
Pro Forma Balance Sheet
2003
2004
2005
Cash
£34,230
£41,339
£54,659
Inventory
£5,982
£7,906
£8,415
Other Current Assets
£0
£0
£0
Total Current Assets
£40,212
£49,245
£63,074
£20,000
£20,000
£20,000
£8,502
£11,502
Assets
Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation £5,502
Total Long-term Assets
£14,498
£11,498
£8,498
Total Assets
£54,711
£60,743
£71,572
Liabilities and Capital
2003
2004
2005
Accounts Payable
£9,646
£8,750
£9,073
Current Borrowing
£0
£0
£0
Other Current Liabilities
£0
£0
£0
Subtotal Current Liabilities £9,646
£8,750
£9,073
Long-term Liabilities
£32,536
£29,356
£26,176
Total Liabilities
£42,182
£38,106
£35,249
Paid-in Capital
£0
£0
£0
Retained Earnings
£8,066
£12,529
£22,637
Earnings
£4,463
£10,108
£13,687
Total Capital
£12,529
£22,637
£36,324
Total Liabilities and Capital £54,711
£60,743
£71,572
Net Worth
£22,637
£36,324
Current Liabilities
£12,529
8.7 Business Ratios
The following table shows standard business ratios for Yeti Cards and Gifts. Industry Profile ratios are
shown for comparison. Our Standard Industrial Classification (SIC) industry class and code are: Gift,
novelty, and souvenir shop - 5947.
Ratio Analysis
2003
2004
2005
Industry Profile
28.00%
32.16%
6.44%
3.34%
Inventory
10.93%
13.02%
11.76%
40.42%
Other Current Assets
0.00%
0.00%
0.00%
23.99%
Total Current Assets
73.50%
81.07%
88.13%
80.29%
Long-term Assets
26.50%
18.93%
11.87%
19.71%
Total Assets
100.00%
100.00%
100.00%
100.00%
Current Liabilities
17.63%
14.41%
12.68%
36.19%
Long-term Liabilities
59.47%
48.33%
36.57%
15.42%
Total Liabilities
77.10%
62.73%
49.25%
51.61%
Net Worth
22.90%
37.27%
50.75%
48.39%
Sales Growth
Percent of Total Assets
Percent of Sales
Sales
100.00%
100.00%
100.00%
100.00%
Gross Margin
65.00%
65.00%
65.00%
37.74%
Selling, General & Administrative Expenses 0.00%
0.00%
0.00%
23.72%
Advertising Expenses
0.00%
0.00%
0.00%
2.14%
Profit Before Interest and Taxes
7.23%
10.34%
12.38%
1.65%
Current
4.17
5.63
6.95
1.98
Quick
3.55
4.72
6.02
0.74
Total Debt to Total Assets
77.10%
62.73%
49.25%
3.65%
Pre-tax Return on Net Worth
50.88%
63.79%
53.83%
58.19%
Pre-tax Return on Assets
11.65%
23.77%
27.32%
8.72%
Additional Ratios
2003
2004
2005
Net Profit Margin
3.48%
5.96%
7.59%
n.a
Return on Equity
35.62%
44.65%
37.68%
n.a
Inventory Turnover
8.57
8.54
7.74
n.a
Accounts Payable Turnover
7.69
12.17
12.17
n.a
Main Ratios
Activity Ratios
Payment Days
29
32
29
n.a
Total Asset Turnover
2.34
2.79
2.52
n.a
Debt to Net Worth
3.37
1.68
0.97
n.a
Current Liab. to Liab.
0.23
0.23
0.26
n.a
Net Working Capital
£30,566
£40,494
£54,001
n.a
Interest Coverage
3.20
5.67
8.04
n.a
Assets to Sales
0.43
0.36
0.40
n.a
Current Debt/Total Assets
18%
14%
13%
n.a
Acid Test
3.55
4.72
6.02
n.a
Sales/Net Worth
10.24
7.49
4.97
n.a
Dividend Payout
0.00
0.00
0.00
n.a
Debt Ratios
Liquidity Ratios
Additional Ratios