Business Plan Sample for a Cannabis Cultivation Business Start-Up

Description
CannaCult is
applying for a
cultivation license
and will be
conducting
business from a
4,000 sq. ft.
facility in
Colorado.
Company will
have the ability to
vegetate up to
500 plants and
flowers
concurrently, will
grow up to 11
different strains
of marijuana, and
will have the
ability to grow
from seedling to
finished product.
CannaCult
BUSINESS PLAN
Supervisor:
Category: Cannabis Cultivation
Date Created:
00.00.2017
Date Issued:
00.00.2017
| Your Business Name: | Address Line: | Country: | City: |Zip Code: | Telephone: | Fax: | E-mail: | Website:

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................................... 5
Business Summary ............................................................................................................................................................5
Goals & Objectives.............................................................................................................................................................6
COMPANY SUMMARY ....................................................................................................................................10
The Company....................................................................................................................................................................11
Start-Up Summary...........................................................................................................................................................12
MARKET OVERVIEW........................................................................................................................................14
Market Analysis Summary ..............................................................................................................................................15
Target Market ...................................................................................................................................................................16
STRATEGY & IMPLEMENTATION...................................................................................................................20
Online Advertising Obstacles .........................................................................................................................................21
Marketing Strategy...........................................................................................................................................................22
Cannabis Directories .......................................................................................................................................................23
SWOT Analysis..................................................................................................................................................................24
SALES FORECAST ............................................................................................................................................25
Sales Strategy ...................................................................................................................................................................25
Sales Forecast...................................................................................................................................................................26
OPERATING PLAN...........................................................................................................................................28
Hours of Operation .........................................................................................................................................................29
Physical Security Plan......................................................................................................................................................29
Video Surveillance............................................................................................................................................................30
MANAGEMENT ................................................................................................................................................30
Management Summary ..................................................................................................................................................30
Personnel Plan .................................................................................................................................................................30
FINANCIAL PLAN .............................................................................................................................................30
Profit & Loss Forecast .....................................................................................................................................................30
Cash Flow Statement.......................................................................................................................................................30
Balance Sheet...................................................................................................................................................................30
Main Financial Ratios.......................................................................................................................................................30
APPENDIX.........................................................................................................................................................30

CANNABIS CULTIVATION
Business Plan
4
Executive Summary

Executive Summary
Business Summary
$1,78,668
$120,000
f
CannaCult is a new cultivation company which is intending to penetrate into the cannabis market
CULTIVATION
Own and operate a medical cannabis cultivation facility in the state of Colorado. Sell high-grade cannabis
wholesale to dispensary and cannabis extractors and edible manufacturers.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Year 1 Year 2 Year 3 Year 4 Year 5
Profit Forecast ($ 000)
Revenue
Gross Profit
EBITDA
Net Income
-
1,000
2,000
3,000
4,000
5,000
6,000
-
200
400
600
800
1,000
1,200
1,400
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Flow ($ 000)
Operational Cash Flow Ending Period Cash Flow

Business Plan
6
Goals & Objectives
Main Goals:
✓ To build a successful commercial cultivation facility and build a recognizable brand in a
rapidly growing industry.
✓ To be fully compliant with all state and local municipalities and be primed and ready for
national expansion as federal laws adjust and evolve to the benefit of the cannabis
industry.
✓ To be supplying one of the best medicines in the state of Colorado to the dispensaries and
manufactures.
Mission:
✓ To grow one of the best medical cannabis products for patients that need this type of
medicine in Colorado.
Main Objectives:
✓ Getting the Colorado Cannabis Grower license
✓ Net annual income to support operational expenses.
✓ Monthly sales and capacity increasing steadily throughout the first years.
✓ Become profitable by the end of the first year of operations.
Keys to Success
✓ Focusing on producing unique, high quality, cannabis products.
✓ Maintaining a nimble operational structure and cultivation strong relationships with
dispensaries and manufactures that will allow it to quickly respond to shifting customer
needs.
✓ Working in conjunction with the local community to foster good will and understanding
of the benefits medicinal cannabis provides its afflicted citizenry.

Market & Opportunities
Executive Summary
Nearly 60% of the U.S. population now lives in states that have legalized some form of cannabis
use and sales, illustrating the rising acceptance of cannabis nationwide and highlighting the
industry’s immense potential for future growth.
Arcview Market Research, in partnership with New Frontier Data, have released a special update
to the official Arcview Market Research growth projections in light of victories from 8 of the 9
cannabis ballot initiatives. The passage of initiatives in Colorado, Nevada, Massachusetts, Maine,
Florida, Arkansas, Montana, and North Dakota will add $7.4 billion to the 2020 market forecast.
According to the 5th edition of Cannabis Market research, the overall market projection for legal
adult-use and medical sales in the U.S. will reach $22.6 billion by 2021. That brings the compound
annual growth rate (CAGR) to 28%.
Colorado saw $996.2 million in legal sales of
medical and recreational pot in 2015,
according to the Denver Post‘ calculations of
tax data reported this week (and throughout
2015) by the state’s Department of Revenue.
In 2014, the state’s legal pot vendors sold
roughly $699 million of the drug.
In Colorado, recreational marijuana sales
approached $900 million in 2016, up 49%
from 2015.
There were 514 licensed cultivators in the
recreational market in January 2016, but by
December, that number shot up to 625, a
22% increase.
The number of cultivators in the medical
market also increased in 2016, but by a
relatively modest 5.3%, hitting 791 in December versus 751 in January.
California
38%
Washingto
n
13%
Colorado
11%
Florida
15%
Massachusetts
8%
Ohio
8%
Pennsylvania
7%
Figure 1. Total cannabis sales, including medical and
recreational, top 7 2025

Business Plan
8
Products & Services
The three primary methods of cultivation - outdoor, greenhouse and indoor - have different
production profiles.
The Cons of outdoor growing include:
- Growing location is government regulated
- Dry season requires more effort in watering
- Deer like to eat and destroy if not tended
Main indoor cons include:
- Maintaining proper ventilation is difficult
- Higher household energy costs
- Pumped with fertilizers
Due to the high energy costs and difficulties with water supplying Company intends to develop
marijuana growing business in greenhouses. Those structures are showing an average cost
savings of 33% - electric costs for growing marijuana for that way can drop to about $350 a
pound.
It all starts with our core product line, which will be packaged and distributed Statewide.
The main features and benefits of product:
The medicinal effects of Cannabis are vast and well noted. Cannabis can be used for pain relief,
anxiety, stress, decreased appetite, insomnia, cancer treatment, and relief from side effects of
chemotherapy, PTSD and more.
Company will have the ability to vegetate up to 500 plants and flowers concurrently, will grow up
to 11 different strains of marijuana, and will have the ability to grow from seedling to finished
product.

Business Plan
10
Company Summary
Company Summary

Company Summary
The Company
CannaCult intends to start its growing business from July 2017.
CannaCult is applying for a cannabis cultivation license and will be conducting business from a
4,000-sq. ft. facility in Colorado.
CannaCult will employ up to 5 people to carry out the operation for a cannabis cultivation license.
CannaCult premises is located in an enterprise zone in the city of Colorado.
CannaCult will produce up to 2 strains within
5 months of becoming a licensed cultivator.
Company will have the ability to vegetate up
to 500 plants and flowers concurrently, will
grow up to 11 different strains of marijuana,
and will have the ability to grow from seedling
to finished product.
CannaCult will dry and process all cannabis
into labeled/inventoried vacuum sealed bags
before delivery to compassion centers.
Start-up requirements
CAPEX Q 1 Q 2 Q 3 Q 4
Security system
alarm and fire
3,000
Camera system
installed
10,000
Computers (4) 4,000
Office furniture 2,000
Lights (120 per 1000
watt)
35,000
CO2 generators (4
units)
4,000
A/C systems (4 units) 30,000
Master Controllers (3
units)
4,000
TOTAL 92,000 92,000 0 0 0

Business Plan
12
Start-Up Summary
The total start-up expenses for the first year that the business starts operating is
approximately $1,200,000, however it is required about $320,000 initial investments until
profit stability is achieved.
Wholesale revenue from the second quarter will cover the business setting up.
Initial Investments would cover
capital expenses and fixed
expenses. Capital expenses consist
of the following:
✓ Security Equipment, including
security system alarm and fire
$3000 and camera system installed
$10000
✓ Office Equipment, including 4
computers $4000 and office
furniture $2000
✓ Growing Equipment, including
120 1000 watt vita lights $35000,
CO2 generators 4 units $4000, A/C
systems 4 units $30000 and master
controllers for each room $4000
Start-up requirements
OPEX Q 1 Q 2 Q 3 Q 4
Electricity, gas, water 26,431 73,292 73,292 73,292
Direct labor 32,500 36,250 36,250 36,250
Growing solutions 976 2,929 2,929 2,929
Trimming & Lab
testing
40,092 120,277 120,277
Taxes 22,780 68,339 68,339 68,339
Legal fees & Licensing
& Accounting
35,000
Inventory/supplies,
soil and fertilizer and
other initial costs
20,000
Salaries 15,000 22,500 22,500 22,500
Brokers and Sellers
fee (5% for half of
sales)
6,346 19,037 19037
Misc. 2,100 2,100 2,100 2,100
TOTAL 1,096,083 154,787 251,848 344,724 344,724

Business Plan
14
Market Overview
Company Timeline

Market Overview
Although the federal government still considers the use of
cannabis a criminal offence, more than half the states of
America have legalized it in some form. Most states sell it
only for medical purposes, often broadly defined. But
eight states – Alaska, Colorado, Colorado, Maine, Nevada,
Massachusetts, Oregon and Washington – and the
country's capital have gone further, legalizing the
recreational use. Legal weed is more high-priced than the
black market variety, but it is better value: three times
more potent and only about 50% more expensive1
.
The size of the market for legal marijuana in the United
States is projected to grow to $8.1 billion in 2017 and to
$11.2 billion in 2018, that represents 21% and 38% growth
over the previous years, driven largely by adult
recreational sales of cannabis, the researchers found. The
passage of initiatives in Colorado, Nevada, Massachusetts,
Maine, Florida, Arkansas, Montana, and North Dakota will
add $7.4 billion to the 2020 market forecast.
According to the 5th edition of
Cannabis Market research, the
overall market projection for legal
adult-use and medical sales in the
U.S. will reach $22.6 billion by
2021. That brings the compound
annual growth rate (CAGR) to
28%2
.
Continued revenue growth will
attract more investors. The
industry has already begun to see
signs of this, such as last year’s
news that cannabis-focused Privateer Holdings had secured a $75 million investment from
Founders Fund, the firm founded by billionaire Peter Thiel.
f
1
http://www.economist.com/blogs/graphicdetail/2016/02/daily-chart-10
2
http://www.arcviewmarketresearch.com/
Main Trends and Growth Factors
✓ A total of 28 states have already
legalized marijuana in some
forms.
✓ The biggest driver of growth in
coming years is the legalization
of marijuana in some forms by
more states.
✓ In 2015, legal cannabis sales in
the U.S. reached $5.7 billion, a
23% jump from the year before.
✓ In 2016, legal cannabis sales in
the U.S. reached $6.7 billion, a
17.5% jump from the year
before.
✓ It is predicted that sales will
further grow in 2017, reaching
an estimated $7.1 billion in total
U.S. sales.
Market Analysis Summary
4.3 4.9 5.6 7.0 7.0 7.3 7.7
1.4
1.8
2.5
4.2
7.6
10.7
14.9
0
5
10
15
20
25
2015 2016 2017
(projected)
2018
(projected)
2019
(projected)
2020
(projected)
2021
(projected)
Figure 2. Medical and recreational sales combined, billion dollars

Business Plan
16
Target Market
Market Analysis
Market Analysis
72/360
72/360
Twenty-eight states and the District of Columbia currently have laws legalizing marijuana in
some form.
Nearly 60% of the U.S. population now lives in states that have legalized some form of cannabis
use and sales, illustrating the rising acceptance of cannabis nationwide and highlighting the
industry’s immense potential for future growth.
9 November 2016 three new states approved cannabis medical using: Arkansas, Florida and
North Dakota. Four others that already had medical cannabis laws, legalized recreational. New
markets could create $7 billion to $8 billion in additional retail revenue for the industry,
according to estimates by Marijuana Business Daily.
Figure 3. Cannabis legalizing map, the United States

Market Overview
Colorado Market
Marijuana businesses in Colorado, which
voted to legalize the drug recreationally in
2012, reported $900 million in legal sales of
medical and recreational marijuana and
related products in 2016, according to the
latest batch of tax data from the state's
Department of Revenue.
In 2015, the state saw a 42% bump in legal
cannabis sales from 2014, which was the year
the state's legal recreational pot market
opened for business. Medical marijuana has
been legal in the state since 2000.
Through October 2016, Colorado has
collected more than $150 million in taxes
from legal marijuana sales, including nearly
$50 million from a specific excise tax that directs funds to school construction projects. The first
$40 million collected annually from the excise tax is earmarked for the school projects.
The medical industry can be a tremendous asset
to a state wanting to expand into the adult-use
space. Colorado did it right, by offering the first
adult-sales licenses to medical operators who
have the knowledge and experience to ensure a
successful adult-use roll out.
California
2,692
Washington
1,097
Colorado
1,994
Oregon
571
Michigan
500
Arizona
281
Figure 4. Medical and recreational cannabis sales in top states, 2016
California accounted for 27% of the 2016
legal market in North America, Colorado
represented 20% and Washington
represented 11%.

Business Plan
18
Target Market
According to Arcview’s
estimate for 2016,
based on the 2015
SAMHSA annual
survey, 8.8% of
Americans are using
cannabis on a monthly
basis.
However,legitimization
of existing demand for
smokable flower is just
the beginning for the
legal cannabis market.
The early sales results
from the first adult-use
markets in Colorado,
Washington and
Oregon point to a
significant, untapped
market opportunity for alternative methods of consumption.
Adult-use legalization and the normalization of cannabis consumption is prompting development of a
variety of different ingestion methods, which are broadening the appeal of cannabis. A closer
examination of sales trends in the bellweather state of Colorado provides insight into the future
opportunity of these alternative cannabis products. According to BDS Analytics’ retail sales tracking
data for 2014-2016, Colorado’s retail sales in adult-use and medical dispensaries grew from $675
milion in 2014, to over $1.3 million in 2016. While all categories of cannabis products enjoyed healthy
growth, alternative methods of consumption outpaced traditional flower sales. In Q1 2014 when
adult-use launched in Colorado, over 70% of sales came from dried flower; in Q3 2016, that was down
to 56%. In contrast, concentrate sales were $20 million in Q1 2014, or 13% of sales. By Q3 of 2016
they had quadrupled to $80 million and 22% of sales. Edibles (including candy, beverages, tinctures,
and all food) more than tripled during the same period, from $17m to $53m, moving from 11% to
14% of sales. Vape pens and vape products, candy, and other portable and convenient methods of
consumption are especially popular with Colorado consumers

Industry Analysis
Industry Analysis

Business Plan
20
Strategy &
Implementation

Strategy & Implementation
Online Advertising Obstacles
Because cannabis is illegal under federal law, state governments and online advertising platforms
are placing strict rules on how companies can market their products.
Google, Facebook and Twitter all have advertising policies that restrict the promotion of the sale
of cannabis. Google’s policy prohibits ads that promote “substances that alter mental state for
the purpose of recreation.” Facebook restricts any “illegal, prescription, or recreational drugs.”
And Twitter bans “illegal drugs” as well as substances that cause “legal highs.” Instagram and
Facebook have decided to go a step further by removing pages of cannabis related businesses.
Alternative Online Advertising Options
Three most effective strategies for legal marijuana companies are direct marketing at industry
conferences and other events, building communities around marijuana-related concerns such as
health and wellness and aggregating online cannabis publishers, which don’t raise any legal
concerns:
 Mantis. Mantis provides alternative options for advertisers. The model is slightly different
– the cost per click prices are set vs. a bid market. But they offer a solid and growing
network of sites including The Cannabist, Leafly, The Daily Chronic, and more. Mantis
reaches 6 million unique visitors each month. A nice complement to display ads is pay per
click content marketing to promote a brand.
 420 Network. Marketing themselves as “the advertising network for alternative lifestyle
brands”, 420 Network offers both CPC and fixed price advertising options.
 420 Click. Offering targeted Pay Per Click ads that display across their network of cannabis
related websites, 420 Click can be a great option for getting service in front of an
interested audience, and only be charged when someone clicks an ad. The site touts itself
as “The Marijuana Advertising Network” and an account can be launched for as little as
$10 which makes the risk negligible.
 Women Grow. Founded in 2014, Women Grow is now the largest national network of
cannabis professionals with Monthly Events for women & men in 45 cities across the US &
Canada.
 Cannabrand is a full-service cannabis branding agency, dedicated to the marketing of
cannabis products and services.

Business Plan
22
Marketing Strategy
Marketing and advertising campaign includes:
✓ Meeting with whole buyers and dispensaries management
✓ E-mail Marketing
✓ Promotional directly through special platforms, including:
• weedmaps.com
• leafly.com
• stickyguide.com
• www.cannasaver.com
• cannabiscouponcodes.com
• weedealio.com
✓ Advertising and articles in the thematic Magazines, including:
• Dope
• Cannabis Now
• 420 Magazine
• Marijuana Venture
• MG Magazine
✓ Business events and conferences
✓ Business and industry associations
✓ Website development, Branding appearance development, including mission statement,
logo, colors, brochures etc. SEO optimization, focusing on:
• Keywords
• Adding fresh content
• Improving link popularity.
✓ AdWords. Testing various keywords to select familiar to topic and at the same time
acceptable by Google’s algorithm: green, medicine, 502, infused, relaxing, stimulating,
enhanced, alternative therapies, alternative medicine, natural, and others.
✓ Mantis, 420 Network, 420 Click

Cannabis Directories
WEEDMAP
https://weedmaps.com/earth/us/
Marijuana dispensary finder on
the planet. With over 7,750
listings throughout the U.S.,
Canada, and Europe.
WeedMaps has 2.8
million unique visitors
each month.
LEAFY
https://www.leafly.com/
Leafy is a cannabis information
resource for finding the right
strains and products. Services
include: cannabis finder, online
store, branding, doctors’ portal.
49,950 unique visitors
per day.
https://www.stickyguide.com/bay-
area
Medical marijuana dispensary,
doctor and medicine directory
with reviews.
each month.
https://www.cannasaver.com/ Canna-Saver is website for
cannabis and related coupons,
devoted to medical marijuana
deals and savings. Offers a
constant flow of deals and
savings from the top cannabis
and medical marijuana retailers.
each month.
http://cannabiscouponcodes.com/ Website with cannabis coupon
codes.
each month.
https://www.weedealio.com/ Weedealio is one of the known
companies in providing the best
of the deals related to
Marijuana, weed deals and other
cannabis products.
each month.

Business Plan
24
SWOT Analysis
S
• Well-equipped
rooms can run
produce the year-
round harvests.
• The owners other
cannabis businesses
are near the Mother
Earth premises.
• ThegGrowing
premises is located
along highway in an
industrial area.
W
• Product liability /
legal issues
• Crop loss possibility
due to pests, heat,
human error, etc.
• Difficulties with
finding employees.
Location is a bit
remote and not
much depth in local
workforce
• High energy
consumption
O
• High growth
industry
• Trend toward
greater cannabis
legalization,
including the use of
cannabis for
recreational
purposes
• Global Market
T
• A significant drop in
wholesale pricing
• Enforcement of
federal law,
uncertainty with
president election
• Possible Rhode
Island law changing
• Indicators of a
slowed global
economy

Sales Forecast
Sales Strategy
As growing stage will start from July 2017, sales are projected to be started from the 2017
autumn and they will significantly increase from the second year.
Table 1. Growing Assumptions, first six months
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17
Number of Rooms 3 3 3 3 3 3
Indoor Sq. Ft available 4,800 4,800 4,800 4,800 4,800 4,800
Sq. ft. available for growing 1,920 1,920 1,920 1,920 1,920 1,920
Number of Plants 65 65 65 65 65 65
Yields, pounds - - 130 130 130
1,701
3,402 3,402 3,402 3,402 3,402 3,402
1 2 3 4 5 6 7
Yields (lbs)

Business Plan
26
Sales Forecast
CannaCult will produce up to 2 strains within 5 months of becoming a licensed cultivator.
Company will have the ability to vegetate up to 500 plants and flowers concurrently, will grow up
to 11 different strains of marijuana, and will have the ability to grow from seedling to finished
product. CannaCult intends to grow 5-7 exclusive strains that other growers do not have.
Taxes
For large-scale cultivators and small scale caregivers, that amounts to a $350-dollar tax per plant.
1,776,814
3,137,345 3,198,264 3,259,184 3,320,103 3,350,563 3,381,022
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Figure 5. Sales Forecast, $

Business Plan
28
Operating Plan
Web Plan Summary

Operating Plan
Hours of Operation
During regular business hours, our premises will be accessible on request to an identified
inspector. Outside of regular business hours, our premises will be accessible on request to an
identified inspector who has reason to believe a violation has occurred.
Physical Security Plan
Premises Access
✓ All external doors and gates will be secured by commercial locks rated to ANSI grade 1 or
✓ similar standards and materials will be available on-site for inspection to verify the
security
✓ rating.
✓ During not operating hours, all usable marijuana, harvested plants, and finished product
will be stored indoors on the premises in a secure area with all entries secured with a steel
door in a steel frame or the equivalent and commercial locks.
✓ When not operating, all exterior doors, windows, or other points of ingress/egress will be
locked.
Premises Alarm & Monitoring
✓ The premises will have an alarm system programmed to activate upon unauthorized
breach of
✓ any door, window, or other point of entry.
✓ The alarm system will be capable of detecting unauthorized access to any portion of the
premises, including any unenclosed portion of an outdoor production operation.
✓ The alarm system will provide notification to an authorized representative in the event of
any unauthorized entry to any portion of the premises.
✓ The alarm system will provide a mechanism to contact law enforce by one or more of the
following methods:
o At least two “panic buttons” are installed on the premises that can trigger the alarm
system and immediately notify a security company or law enforcement.
o Mobile “panic buttons” are carried by all license representatives on the premises
that can trigger the alarm system and immediately notify a security company or law
enforcement.
o An operational landline telephone is present at all times within the limited access
area that is capable of contacting security or law enforcement.

Business Plan
30
Video Surveillance
1. The premises will be equipped with a video surveillance system.
2. Cameras will cover all areas where any marijuana items (including plants and waste) will
be present at any time including pathways where product will be moved, without any “blind
spots”
3. Cameras will cover all areas within 15 feet of all points of entry/exit from the licensed
premises in all directions.
4. All cameras will record continuously 24 hours a day at a resolution of 1280 x 720 pixels or
better in all lighting conditions.
5. All cameras will cover areas where marijuana items will be present and all cameras
covering the surveillance area record at a minimum of 10 frames per second.
6. All cameras will cover exterior non-limited access areas record at a minimum of 5 frames
per second.
7. The surveillance room will contain a list of personnel authorized to access the surveillance
system.
8. We will keep a log of all maintenance activity for the surveillance equipment including
name of the individual, date and time of access, and reason for access.
9. The surveillance system will include a monitor capable of viewing video from any camera,
a digital archiving device, and a printer.
10. The surveillance system will have a backup battery that will provide at least one hour of
continuous recording in event of any power failure.
11. An authorized representative will receive immediate notification within one hour of the
failure of any security camera or portion of the surveillance system.
12. All required recordings, including the backups of the surveillance area recordings kept for
90 days with a method to store video longer than 90 days if requested.

Business Plan
32
Management

Management
Management Summary
CONFIDENTIAL

Business Plan
34
Personnel Plan
Training Plans
1. Train employees at time of hire on business operations and compliance.
2. Train employees regularly after hire.
3. Training plan and training log will be available for inspection on the licensed premises.
4. Any person entering data into the Cannabis Tracking System (CTS) first be trained by the
CTS administrator for the license?
5. All individuals will be required to have a valid Marijuana Worker Permit complete the required
training and maintain their permit while working on behalf of the Licensee.
Position $
Master grower,
annual
100,000
Assistant to master
grower, annual
45,000
Trimming, per pound 150
Plant maintenance
and general labor,
annual (3)
90,000
Board
Head Cultivator
Robert Obrien
Assistant
Trimmers/Packagers
General Manager
Maintenance &
General Labor

Business Plan
36
Financial Plan

Profit & Loss Forecast
Financial Plan
Business’s revenue is projected to grow significantly during first years’ timeframe. The yearly
projections are in the table below.
Table 2. Income Statement, $
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Revenue 1,776,814 3,137,345 3,198,264 3,259,184 3,320,103
Direct Costs 764,510 1,059,344 1,059,344 1,059,344 1,059,344
Gross Profit 1,012,304 2,078,001 2,138,921 2,199,840 2,260,759
% of revenue 57% 66% 67% 67% 68%
Operating Expense
Legal Fees & Licensing & other
initial costs for setting up 55,000 5,000 5,000 5,000 5,000
Licensing, accounting, and other
legal fees - 30,000 30,000 30,000 30,000
Other Overheads 8,400 8,400 8,400 8,400 8,400
Total Sales & Marketing
Expenses 44,420 78,434 79,957 81,480 83,003
Total Operating Expense 107,820 121,834 123,357 124,880 126,403
Operating Income (EBITDA) 904,483 1,956,168 2,015,564 2,074,960 2,134,357
% of revenue 51% 62% 63% 64% 64%
Depreciation and Amortization 9,200 9,200 9,200 9,200 9,200
Earnings Before Interest & Taxes
(EBIT) 895,283 1,946,968 2,006,364 2,065,760 2,125,157
Income Tax 358,113 778,787 802,546 826,304 850,063
Net Income 537,170 1,168,181 1,203,818 1,239,456 1,275,094
% of revenue 30% 37% 38% 38% 38%

Business Plan
38
Cash Flow Statement
The cash flow projections show that business will have sufficient cash to support the activity. The
following table presents a view of projected cash flow of the business.
Table 3. Cash Flow Statement, $
Net Income 537,170 1,168,181 1,203,818 1,239,456 1,275,094
Cash Flow from Operations
Depreciation 9,200 9,200 9,200 9,200 9,200
Change in Receivables - - - - -
Change in Inventory - - - - -
Change in Accounts Payable - - - - -
Change in Accrued Expenses - - - - -
Total Cash Flow from Operations 546,370 1,177,381 1,213,018 1,248,656 1,284,294
Cash Flow from Investing
Capital Expenditures (CAPX) (92,000) - - - -
Other - - - - -
Total Cash Flow from Investing (92,000) - - - -
Cash Flow from Financing
Revolver Issuance / (Repayment) - - - - -
Long-Term Debt Issuance / (Repayment) - - - - -
New Equity Investments 320,000 - - - -
Dividends - - - - -
Total Cash Flow from Financing 320,000 - - - -
Total Change in Cash 774,370 1,177,381 1,213,018 1,248,656 1,284,294
Beginning Period Cash - 774,370 1,951,751 3,164,769 4,413,425
Ending Period Cash 774,370 1,951,751 3,164,769 4,413,425 5,697,719

Balance Sheet
Table 4. Projected Balance Sheet, $
Assets
Current Assets
Cash 774,370 1,951,751 3,164,769 4,413,425 5,697,719
Receivables - - - - -
Inventory - - - - -
Total Current Assets 774,370 1,951,751 3,164,769 4,413,425 5,697,719
Long Term Assets
Property Plant & Equipment
(PPE), gross 92,000 92,000 92,000 92,000 92,000
Accumulated Depreciation of
PPE (9,200) (18,400) (27,600) (36,800) (46,000)
PP&E, net 82,800 73,600 64,400 55,200 46,000
Total Assets 857,170 2,025,351 3,229,169 4,468,625 5,743,719
Liabilities
Current Liabilities
Long Term Liabilities - - - - -
Total Liabilities - - - - -
Equity (see funding rounds sheet)
Current Period Net Income 857,170 2,025,351 3,229,169 4,468,625 5,743,719
Plus: Prior Period Retained
Earnings - - - - -
Current Period Retained
Earnings 857,170 2,025,351 3,229,169 4,468,625 5,743,719
Total Equity 857,170 2,025,351 3,229,169 4,468,625 5,743,719
Total Liabilities and Equity 857,170 2,025,351 3,229,169 4,468,625 5,743,719

Business Plan
40
Main Financial Ratios
The return on equity ratio (ROE) measures how much the owner and investors earn for their
investment in the company. The higher the ratio percentage, the better return is.
In general, financial analysts consider return on equity ratios in the 15-20% range as representing
attractive levels of investment quality. As we can see ROE for our project is higher and in average
draw up 46%.
Return on assets (ROA) gives an idea as to how efficient management is at using its assets to
generate earnings.
Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings as compared to its expenses and other relevant costs incurred during a
specific period.
Table 5. Main Financial Ratios
Ratio Analysis Year 2 Year 3 Year 4 Year 5 Avg.
Return on Equity 81.1% 45.8% 32.2% 25.0% 46.0%
Return on Assets
Return on Sales 37.2% 37.6% 38.0% 38.4% 37.8%
Asset turnover 2.18 1.22 0.85 0.65 1.22
Profitability
Gross margin 66.2% 66.9% 67.5% 68.1% 67.2%
SG&A as % of Sales 3.9% 3.9% 3.8% 3.8% 3.8%
Operating Margin 62.1% 62.7% 63.4% 64.0% 63.0%

Business Plan
42
Appendix
Appendix
Appendix

Business Plan
44
Video Surveillance
Video Surveillance

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