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General Contracting Company Business Plan


BUSINESS PLAN     SMITH CONTRACTORS, INC.

123 Main Street, Suite H Spokane, Washington 99204

Smith Contractors, Inc. specializes in national tenant improvements, retail market facilities, and commercial properties. Their primary goal of meeting customers' construction needs through quality workmanship and successful relationships with owner management teams is evidenced by their expanding base of repeat clients. This plan was provided by Ameriwest Business Consultants, Inc.

  • EXECUTIVE SUMMARY
  • OBJECTIVES & GOALS, AND STRATEGIES FOR ACHIEVING THEM
  • BUSINESS DESCRIPTION, STATUS, & OUTLOOK
  • MANAGEMENT AND OWNERSHIP
  • MARKET ANALYSIS
  • MARKETING STRATEGIES
  • FINANCIAL PLANS

EXECUTIVE SUMMARY

BUSINESS DESCRIPTION

Smith Contractors, Inc. is a general contracting company founded in February 1990 by a select group of individuals with a high level of construction experience. The firm specializes in national tenant improvements, retail market facilities, and commercial properties. Smith Contractors' primary goal of meeting customers' construction needs through quality work-manship and successful relationships with owner management teams is evidenced by our expanding base of repeat clients. Smith Contractors offers national construction services, preconstruction services, job site and project management, administrative support, and document control. Smith Contractors evaluates projects for constructability, provides cost estimates, helps maintain project scheduling, and works with owners to meet quality and time objectives. Smith Contractors can suggest cost effective means of construction and help select the best subcontractors for each project. Once a project is begun, Smith Contractors maintains full-time superintendents who are responsible for all daily logs, reviewing quality and timeliness of subcontractors, conducting safety meetings and maintaining good communications with the owner. The client list includes many nationally known firms including Ross, Sears, Dockers, Fashion Bar, and Nike. Smith Contractors is licensed or authorized to pull building permits in all 50 states.

CURRENT POSITION AND FUTURE OUTLOOK

The business is in its seventh year of operation. Operations are conducted from facilities located at 123 Main Street in Spokane, Washington. Sales increased nearly fifty percent in 1998 and are expected to do the same in 2000. These healthy increases are expected to continue for another three years and then begin to level off. An area of opportunity in the future will be working on international projects. This will be on a limited basis and will be at the request of existing customers.

MANAGEMENT AND OWNERSHIP

The company is set up as a corporation with John Smith owning 85% of the stock and Bill Brown owning the remaining 15%. A "C" corporation type of entity was chosen for liability protection, tax considerations, growth plans, stock option plans, and the opportunity to raise capital from investors more easily. John Smith serves as President and C.E.O. John has over 18 years of contractor experience and has run the operations of two national firms. Other key employees include Bill Brown, Vice-President and Consultant; Mark Brown, Marketing Manager; and Ralph Brown, Director of Construction. Smith Contractors also employs nine other people in various capacities. When volume picks up, additional part-time or full-time employees will be hired as the workload requires. Smith Contractors will continue to utilize the services from consultants in areas such as planning, budgeting, accounting, general business advising, and law.

UNIQUENESS AND DIFFERENTIATION OF THE SERVICE

Smith Contractors, Inc. will continue to specialize in serving nationally known retailers. It is only one of twenty plus contractors that are trusted to handle projects for retailers on a national scale. The company utilizes the most current technology to enable it to not only provide competitive pricing but also for the monitoring of existing projects. Through the use of a digital camera, Smith Contractors can post pictures of current projects on its website. This allows customers to constantly monitor status of projects. Smith Contractors will continue to secure jobs in the booming West Coast region, but its focus will always be on the national marketplace. It will only occasionally compete with Washington contractors for business.

It is rare in today's business world to find a true market void. That is exactly what Smith Contractors has done. It has combined the latest in technology with an unfilled need and has promised to deliver a high quality new product at a competitive price. Our services have limited competition in Washington and even nationally. We have built an excellent reputation of bringing projects in on time and on budget. We are now considered contractor of first choice by many well known companies.

FUNDS REQUIRED AND USAGE

To continue to fund its growth, Smith Contractors will be seeking $100,000 to $350,000 in additional funding. This may come from either investors or from additional loans. Any additional funds obtained will be for working capital and advertising. By changing the way it pays subcontractors and suppliers and collects payments from customers, the amount of new funds specified above may be reduced dramatically. These changes are already in progress and will be ongoing. In the past, Smith Contractors often funded a major portion of a project until it was completed. From now on, this funding will be kept to a minimum.

Five-Year Income Statement Summary

MOST LIKELY CASE Actual Actual Annualized Projected Projected
1995 1996 1997 1998 1999
Total Revenue 2,767,519 4,126,409 6,180,872 8,035,134 10,043,917
Cost of Sales 2,231,679 3,186,679 5,111,028 6,644,336 8,305,420
Gross Profit 535,840 939,730 1,069,844 1,390,797 1,738,497
Selling, General, Expense 484,219 817,440 878,206 1,023,211 1,179,191
Operating Income 51,621 122,290 191,638 363,586 559,305
Other Income (Expenses) 25,619 30,797 30,000 30,600 36,000
Income Before Taxes $77,240 $153,087 $221,638 $398,186 $595,305
Income Taxes $885 $52,198 $75,572 $135,769 $202,981
Income After Taxes 76,355 100,889 146,066 262,417 392,324
OPTIMISTIC CASE
Total Revenue 2,767,519 4,126,409 7,417,046 9,642,160 12,052,700
Cost of Sales 2,231,679 3,186,679 6,133,234 7,973,204 9,966,505
Gross Profit 535,840 939,730 1,283,813 1,668,957 2,086,196
Selling, General, Expense 484,219 817,440 1,053,847 1,227,853 1,415,030
Operating Income 51,621 122,290 229,966 441,104 671,166
Other Income (Expenses) 25,619 30,797 36,000 36,720 43,200
Income Before Taxes $77,240 $153,087 265,966 477,824 714,366
Income Taxes $885 $52,198 90,686 162,923 243,577
Income After Taxes 76,355 100,889 175,279 314,901 470,789
PESSIMISTIC CASE Actual Actual Annualized Projected Projected
1995 1996 1997 1998 1999
Total Revenue 2,767,519 4,126,409 4,944,698 6,428,107 8,035,134
Cost of Sales 2,231,679 3,186,679 4,088,822 5,315,469 6,644,336
Gross Profit 535,840 939,730 855,875 1,112,638 1,390,797
Selling, General, Expense 484,219 817,440 702,565 818,569 943,353
Operating Income 51,621 122,290 153,310 294,069 447,444
Other Income (Expenses) 25,619 30,797 24,000 24,480 28,800
Income Before Taxes $77,240 $153,087 177,310 318,549 476,244
Income Taxes $885 $52,198 60,457 108,615 162,385
Income After Taxes 76,355 100,889 116,853 209,934 313,860

OBJECTIVES & GOALS, AND STRATEGIES FOR ACHIEVING THEM

  1. To provide a high quality service so that customers will perceive great value.
  2. To obtain additional funding to fuel continued expansion.
  3. Our goal is to become one of the premier nationally known retail contractors in the country within three years.
  4. Smith Contractors plans to closely monitor changing technology to be certain that the company is using the latest and most cost effective equipment and that it keeps up with current trends in the marketplace.
  5. To provide Smith Contractors with at least $700,000 in retained earning over the next five years.
  6. Upon request from an existing customer we will become active in the international construction scene.

In addition to the above goals, we will survey our customers and make changes in our programs and add services to meet their changing ideas in the marketplace.

STRATEGIES FOR ACHIEVING GOALS

To achieve the above goals, we will concentrate on providing outstanding quality and continue to bring projects in on time and on budget. Obtaining repeat business is a key to continued success for any contractor serving national retailers. Smith Contractors currently serves nine customers. By the end of 2000 this is expected to increase to twenty. As the Washington economy continues to see rapid growth, Smith Contractors will take advantage of an even greater share of this marketplace than it has in the past. It will be able to capitalize on the reputation it has built on a national level for producing quality projects which come in on time and on budget.

Our major goals include maximizing sales and building our client/customer base with a close eye on profitability.

BUSINESS DESCRIPTION, STATUS, & OUTLOOK

Smith Contractors, Inc. will continue on its current path of growth. Its main office is fully staffed and equipped and able to handle nearly double the amount of sales with little additional expenses. Its first full year of business saw Smith Contractors equal industry averages. Over the next several years, if it meets the modest growth goals outlined in this plan, it will do much better than peer operations. According to the recent newsletter of Store Fixture Manufacturing, monthly retail construction spending has grown from $42 billion to $51 billion during the past year.

The biggest problem this venture will face will be creating customer awareness of our services and funding the growth. We will use a combination of advertising techniques and word of mouth to increase this awareness. Once a general awareness is present, the company has a virtually unlimited growth potential

Until May 1, 1999, subcontractors were paid 90% of their contract at completion of the project prior to or close to Smith Contractors, Inc. receiving its 50% draw minus retainage and prior to billing application two to the owner for 100% minus 10% retainage. The second draw to subcontractors was their 10% retainage plus approved change orders and was paid prior to Smith Contractors receiving 100% minus 10% retainage. This resulted in Smith Contractors financing the majority of its jobs. Effective May 1, 1997, Smith Contractors will pay subcontractors only after it has received 100% minus 10% retainage. The subcontractors then will receive 100% of their contracts minus 10% retainage. Smith Contractors is able to institute these new procedures due to different terms negotiated on new contracts with owners and subcontractors and because of its position and reputation in the industry.

With the implementation of the new billing and payment terms, Smith Contractors has changed dramatically its cash flow position from one of financing the majority of each project's expenses to financing only the 10% retainage and a much smaller percentage of change orders. Smith Contractors will only pay the subcontractors when the owner has paid Smith Contractors up to the final 10% retainage.

The future holds the promise for almost unlimited growth and income as the business matures and considers other markets and products. Complementary products such as international jobs will be considered in the future in response to customer requests.

MANAGEMENT AND OWNERSHIP

John Smith is the majority stockholder and serves as President and C.E.O. of Smith Contractors. He has 30 years' experience in the construction industry and has "hands-on, ground-up" knowledge of all facets of the construction business. He received a degree in home building construction from San Matino College. He completed over 96 additional hours in construction technology at the University of Washington. He has played a key role and functioned in a management capacity in most impact areas of the industry. His supervisory positions in the administrative, operational, technological, and fiscal areas of this discipline have afforded him the skills, experience, and talents necessary to lead Smith Contractors into the new century. John Smith is heavily involved in sales, public relations, banking, personnel, and planning.

Bill Brown is the minority stockholder and serves as Vice President and Consultant to Smith Contractors. He received a M.S. degree in civil engineering from the University of Florida in 1960. He is a licensed civil and structural engineer. He is a senior project manager for the El Martino Texas office. He has a total of more than 40 years of engineering experience. His investment in money and time in Smith Contractors has been critical to its success.

Ralph Brown serves as Director of Construction. He received a B.A. degree from Indiana University in 1990. He now has over ten years of experience in commercial tenant improvement project management in national and local markets. He has handled up to 17 projects at one time. Project experience includes military and government facilities, airports, hospitals, universities, offices, banks, and retail stores. He has managed a project that received a contractor AIA award for "Excellence in Construction." All of his projects have been completed on or ahead of schedule. He has hands-on experience in preparing bids, determination of subcontractor qualifications, and preparation of critical path schedules. He writes and awards all contracts. He is responsible for scheduling of all subcontractors and materials and conducts pre-construction meetings. He supervises all project progress meetings, training superintendents, and is responsible for the certification of all change orders. Ralph is involved in sales, public relations, personnel, operations, planning, purchasing, equipment, and labor.

Mark Brown has been recently hired as the Marketing Manager. He received a M.S. degree from Illinois Tech College, a B.B.A. and B.A. from the University of Oregon. He has over seven years of experience in a variety of high level management positions, working for both private industry and different levels of the United States government. Mark is involved in sales, public relations, advertising, marketing, and planning.

The business is set up as a "C" corporation. This form of legal entity was chosen primarily for liability reasons and makes it easier to secure investors. The company employs nine other highly trained employees in office management and project administration. As the business grows additional part-time or full-time employees may be added to handle the increased workload.

Smith Contractors maintains membership in the Better Business Bureau and the Association of Building Contractors.

MARKET ANALYSIS

MARKET OVERVIEW, SIZE, AND SEGMENTS

Currently, the national market distribution is shared by about fifty plus participants. They are located all over the country. This market segment has been relatively stable over the past five years.

The Washington economy is in the midst of a particularly strong growth period. Many new jobs are being added to the local community. Ever increasing numbers of Californians are coming to this area. All of these factors are cause for a much greater need for retail construction services. All of this activity can only help our kind of business.

Listed below are just some of the reasons that the Washington and the Washington area, in particular, is growing and why it is a good time for a business such as ours.

  • The local economy is booming and virtually busting at the seams.• Washington has become a magnet for insurance organizations. More than 65 nationally based insurance organizations are headquartered here. The largest, Allstate, has over 1,200 employees and an operating budget of over $85 million.
  • Washington has a new airport and a nearby free trade enterprise zone that should grow and attract even more new businesses.
  • The Seattle airport adds an economic boost to the entire state.
  • Every week, we see articles in the newspapers of Oregon residents and companies relocating here.
  • The world-renowned Four Seasons Hotel is building a new convention facility.
  • Sprint and Microsoft are undergoing large increases in their operations here that should add many hundreds of employees.
  • Many experts predict King County to become the second fastest growing county in the state between now and the year 2000.
  • The local economy is now more diversified than it was when troubles occurred in the local economy in the late 1980s and early 1990s.

The estimated population of King County in 1998 was 685,000 people. The number of households was 275,000. Currently, this market is growing at an annual rate of 3-5%. Projections see this trend continuing through the next decade.

The state of Washington has nearly five million people and is expanding at about 3% per year.

From the above figures it can readily be seen that the potential local market for our services is huge. We feel with our pricing and value we will become one of the premier retail construction companies in the country.

CUSTOMER PROFILE

Our customers are usually large nationally known firms in a variety of fields. Projects that Smith Contractors, Inc. and/or their personnel have managed over the past few years include:

  • Roberts, Inc.
  • Hodge Foundation
  • J. W. Cook Landscaping
  • Pugh Engineering
  • Braunt Products Ltd.

COMPETITION

The following table summarizes some of the national firms we consider competition:

Competitor Name Estimated Sales Strengths Weaknesses
O'Malley $250,380,500 Very large, multiple offices Majority of business is local, not national
Brown $20,000,000 Provides quality competitive work No major weaknesses noted
Miller $28,118,068 Multiple client base Not popular with subcontractors
Business Construction Services Unknown Very large, oldest national firm Seem too large to properly monitor projects
Westwood $16,761,895 They have multiple offices Currently bidding way under market cost which will ultimately hurt them with poorly managed clients
The national marketplace is currently shared by about 50 plus major firms.

RISK ANALYSIS—STRENGTHS/WEAKNESSES

We feel we have strengths in administration, overall management, human resources, quality of service, operations, servicing, quality of service, company policies, service features, reliability, desirability, and pricing. We appear to be about average in finance/planning, sales force, and overhead. Our minor weaknesses are in the areas of marketing and advertising and finding lenders who will finance receivables. We have just begun to look at this area. We have recently hired a marketing manager to provide expertise and direction. We have obtained the services of a highly qualified business consultant to aid in financial projections, help put together a business plan, and develop strategies to fund future growth. Our staff is highly trained, well motivated and provided with an excellent benefit package. Client issues are given the highest priority. The business is highly competitive and has excellent facilities which are fully equipped. The business is ready for significant increases in sales with little additional need for staff or equipment.

We have low risk exposure in the areas of technology, inflation/interest rates, regulatory environment, local and national economies, management ability, dependence on other companies, location, facilities, and suppliers.

We perceive medium risk exposure in the competitive position, vulnerability to substitutes, financial performance, finance, and planning. We have or will soon retain the services of a full-time marketing manager, a full-time controller, and a business consultant to help in various areas such as marketing, financial controls, and general overall business operation advice. We do not perceive any high risks associated with our company.

Since we are still a relatively new business we will continue to obtain help when needed in areas necessary to complement our abilities.

MARKETING STRATEGIES

PRICING AND VALUE

Pricing is based upon subcontractors price plus overhead and profit. Prices are driven by competition. Current competition dictates a percent of mark-up. We currently win about one-third of the projects we bid on. We come in second on nearly seventy percent of the rest of the jobs we bid on.

At this point there is a certain amount of price inelasticity in this service. Customers are very sensitive to pricing changes. With the current level of competition we must be careful not to price ourselves out of the market. On the other hand, if we offer additional services we can open up other opportunities to increase income. Pricing will be reviewed on a monthly basis.

SELLING TACTICS

Our company's marketing strategy will incorporate plans to promote our line of services through several different channels and on different levels of use. We make use of referrals, cold calls, visits to customers and advertising. We plan to utilize our website as a selling tool.

Advertising tools we will utilize include brochures, catalogs, targeted advertisements, lead generation, lead referral and follow-up systems, information gathering, and dissemination. To better reach the local market we will meet with building owners and property managers to present our track record of success. In addition, we will advertise in Washington and Oregon newspapers, local trade journals, and business newspapers that target business clientele. We will join the local association for property managers.

Nationally, we will advertise by way of our brochure that will be sent to potential clients. We will advertise through the Internet. If any interest is shown, we will invite them to tour our facilities and meet our professional staff.

ADVERTISING, PROMOTION, AND DISTRIBUTION OF SERVICES

We recognize that the key to success at this time requires extensive promotion. Advertising goals include all of the following:

  • Position the company to become one of the premier retail contractors in the country.
  • Increase general awareness of our company both locally and nationally.
  • Increase general awareness of our company and its outstanding track record.
  • Maximize efficiency by continually monitoring media effectiveness.
  • Maintain an ad in the Yellow Pages in Spokane and Seattle and consider an ad in the Internet Yellow Pages.
  • Continually update our brochure to explain our service and company.
  • Consider using a direct mail approach.
  • Use a mix of media to saturate the marketplace.

PUBLIC RELATIONS

We will develop a public relations policy that will help increase awareness of our company and product. To achieve these goals we will consider some or all of the following:

Develop a press release and a company backgrounder as a public relations tool.

Develop a telephone script to handle customer and advertiser contacts.

Develop a survey to be completed by customers to help determine the following:

  1. How did they hear about us?
  2. What influenced them to use our service?
  3. How well did our service satisfy their needs?
  4. How efficient was our service?
  5. Did they have any problems getting through to us?
  6. Did they shop competitors before selecting us?
  7. How did they initially perceive our company and product?
  8. Where are most of our customers located?
  9. Do they have suggestions for improving our service or our approach to advertising?
  10. What additional services would they like us to offer?11.Would they recommend us to others?

SMITH CONTRACTORS, INC.

Throughout this business plan we have taken a very conservative approach to developing our financial projections.

ASSUMPTIONS, DEFINITIONS, AND NOTES

The following assumptions were used in preparing the projections in this business plan:

  • Inflation rates to remain stable at 3-5%.
  • Assume growth rates of 30% and 25% for 1998 and 1999 respectively.
  • Robust national and local economies.
  • Interest rates to remain flat and basically unchanged.
  • Payroll taxes and benefits will equal 26.43% of total payroll expenses.
  • Assumes outstanding debt of $800,000 will remain in place.
  • Office supplies/postage expenses are set at .00327 of monthly income.
  • Contingency and miscellaneous expenses are set at 5% of total income.
  • Telephone and utilities expense are set at .0063285 of total sales.
  • Assumes growth in sales of 30% and 25% for 1998 and 1999 respectively.
  • Assumes cost of sales/subcontractors will remain at 82.69% of sales.
  • In 1998 and 1999 the same seasonality will be maintained as was shown for 1997.
  • The following expenses will increase by 5% in 1998 and 1999:—Salaries, Officer —Salaries-Office —Blueprint Supplies —Gas and Oil —Licenses —Rent
  • Office maintenance and improvements will be .00083 of sales for 1997-1999.
  • Computer expenses will be .00077 of sales.
  • Vehicle expenses will be .002005 of sales.
  • Vehicle leases will be .0034402 of sales.
  • Entertainment will be maintained at .0009163 of sales.
  • Freight will be .005096 of sales for 1997-1999.
  • Travel will be .0040424 of sales.
  • Employee business expenses will be .0026239.
  • Insurance will be .0129505 of sales.
  • Advertising/Public Relations will be .0032013 of sales for 1997-1999.
  • Professional services will be .0122461.
  • Equipment leases will be .0073654 of sales.
  • Subscriptions and memberships will be .0001402 of sales.
  • Income taxes for 1997-1999 will be .3409693 of gross income.

FINANCIAL PLANS

Five-Year Financial Summary —Financial Inputs & Summary

First Year of Start-Up 1996
Corporation Type (C or S)? C "C" Corporation format selected; Income taxes will be computed.
Start-Up
Operating Data 1996 Year 1 Year 2 Year 3 Year 4 Year 5
Days sales in accounts receivable 25 25 27 30 35
Days materials cost in inventory 5 5 5 5 5
Days finished good in inventory 5 5 5 5 5
Days materials cost in payables 30 34 38 40 42
Days payroll expense accrued 10 10 10 10 10
Days operating expense accrued 15 15 20 20 20
Expense Data
Direct labor as % of sales 36.00% 36.08% 35.58% 35.36% 34.78%
Other payroll as % of sales 10.99% 9.44% 8.96% 8.70% 8.24%
Payroll taxes as % of sales 3.55% 3.17% 3.05% 2.98% 2.87%
Insurance as % of sales 4.83% 4.39% 4.30% 4.27% 4.16%
Legal/accounting as % of sales 0.289% 0.259% 0.255% 0.235% 0.234%
Other overhead as % of sales 7.19% 7.06% 7.05% 6.90% 6.96%
Expense Data
Direct labor $747,000 $919,380 $1,006,368 $1,084,622 $1,158,174
Other payroll $228,000 $240,600 $253,530 $266,807 $274,447
Payroll taxes $73,600 $80,730 $86,263 $91,542 $95,529
Insurance $100,320 $111,876 $121,515 $130,850 $130,635
Legal/accounting $6,000 $6,600 $7,200 $7,200 $7,800
Other overhead $149,243 $179,795 $199,416 $211,656 $231,732
Other Operating Expenses $557,163 $619,601 $667,923 $708,054 $748,143
Financing Data (1996 on) Deprec. Capital Tot. Debt Curr. Portion LT Portion Rate
Long-term debt $170,000 $10,428 $159,572 10.00%
Short-term debt $0 10.00%
Capital stock issued $30,000
Additional paid-in capital $0
Accumulated depreciation (as of 1995) $0

Five-Year Financial Summary—Balance Sheet

ASSETS As of 1/1/95 Actual 1995 Actual 1996 Annualized 1997 Projected 1998 Projected 1999
Current Assets
Cash and cash equivalents $13,362 $529,572 $630,260 $821,302 $975,639 $1,426,603
Accounts receivable $6,882 $427,864 $963,105 $1,016,034 $1,320,844 $1,651,055
Inventory $0 $0 $0 $0 $0 $0
Other current assets $0 $22,083 $7,554 $15,000 $30,000 $30,000
Total Current Assets $20,514 $979,519 $1,600,919 $1,852,336 $2,326,483 $3,107,658
Fixed Assets
Automobiles $0 $9,057 $0 $0 $0 $0
Cattle $12,703 $12,703 $12,703 $12,703 $12,703 $12,703
Equipment/Furnitures/Fixtures $50,915 $99,047 $136,347 $136,347 $136,347 $136,347
Subtotal $63,618 $120,807 $149,050 $149,050 $149,050 $149,050
Less-accumulated depreciation $29,467 $33,791 $31,727 $48,975 $48,975 $48,975
Total Fixed Assets $34,151 $87,016 $117,323 $100,075 $100,075 $100,075
Intangible Assets
Cost $0 $0 $0 $0 $0 $0
Less-accumulated amortization $0 $0 $0 $0 $0 $0
Total Intangible Assets $0 $0 $0 $0 $0 $0
Other assets $540 $5,164 $45,442 $50,000 $60,000 $65,000
Total Assets $55,205 $1,071,699 $1,763,684 $2,002,411 $2,486,558 $3,272,733
LIABILITIES AND STOCKHOLDERS 'EQUITY
Current Liabilities
Accounts payable $0 $48,588 $584,033 $563,545 $752,583 $1,071,147
Notes payable $0 $0 $350,000 $350,000 $350,000 $350,000
Current portion of long-term debt $0 $57,895 $13,652 $15,000 $15,000 $15,000
Income taxes $0 $4,965 $38,653 $75,572 $100,769 $162,981
Accrued expenses $0 $7,223 $21,577 $39,125 $46,620 $54,695
Other current liabilities $0 $0 $0 $0 $0 $0
Total Current Liabilities $0 $118,671 $1,007,915 $1,043,242 $1,264,972 $1,653,823
Non-Current Liabilities
Long-term debt $0 $802,588 $529,559 $529,559 $529,559 $529,559
Deferred income $0 $0 $0 $0 $0 $0
Deferred income taxes ($8,883) $4,846 $27,000 $35,000 $35,000 $40,000
Other long-term liabilities $9,917
Total Liabilities $1,034 $926,105 $1,564,474 $1,607,801 $1,829,531 $2,223,382
Stockholders' Equity Capital stock issued
Additional paid in capital $0 $0 $0 $0 $0 $0
Retained earnings ($28,329) $63,094 $116,710 $312,110 $574,527 $966,851
Total Equity $54,171 $145,594 $199,210 $394,610 $657,027 $1,049,351
Total Liabilities and Equity $55,205 $1,071,699 $1,763,684 $2,002,411 $2,486,558 $3,272,733
"C" Corporation (Y/N) Y
Cash balance positive or (negative) Positive Positive Positive Positive Positive Positive
Amount sheet is out-of-balance $0 $0 $0 $0 $0 $0
Amount cash flow out-of-balance $0 $0 $0 $0 $0

Five-Year Financial Summary—Income Statement

Sales Actual 1995 Actual 1996 Annualized 1997 Projected 1998 Projected 1999
Sales $2,767,519 $4,126,409 $6,180,872 $8,035,134 $10,043,917
Cost of sales $2,231,679 $3,186,679 $5,111,028 $6,644,336 $8,305,420
Gross profit $535,840 $939,730 $1,069,844 $1,390,797 $1,738,497
Expenses
Operating expenses $391,889 $713,582 $769,833 $909,419 $1,059,710
Interest $81,703 $86,613 $108,373 $113,792 $119,481
Depreciation $10,628 $$17,245 $0 $0 $0
Amortization $0 $0 $0 $0 $0
Total expenses $484,219 $817,440 $878,206 $1,023,211 $1,179,191
Operating income $51,621 $122,290 $191,638 $367,586 $559,305
Other income and expenses
Gain (loss) on sale of assets
Other (net) $25,619 $30,797 $30,000 $30,600 $36,000
Subtotal $25,619 $30,797 $30,000 $30,600 $36,000
Income before tax $77,240 $153,087 $221,638 $398,186 $595,305
Taxes (Federal & State) $885 $52,198 $75,572 $135,769 $202,981
Rate 1.146% 34.10% 34.10% 34.10% 34.10%
Net income $76,355 $100,889 $146,066 $262,417 $392,324
Retained earnings-beginning ($28,329) $63,094 $116,710 $312,110 $574,527
Dividends paid $0 $0 $0 $0 $0
Retained earnings-ending $48,026 $163,983 $262,776 $574,527 $966,851
Detailed Supporting Information
Cost of sales
Direct labor $0 $0 $0 $0 $0
Sub-Contractors $2,231,679 $3,186,679 $5,111,028 $6,644,336 $8,305,420
Other costs

Five-Year Financial Summary—Cash Flow Sheet

1995 1996 1997 1998 1999
Cash from operations
Net earnings (loss) $76,355 $100,889 $146,066 $262,417 $392,324
Add-depreciation and amortization $10,628 $17,245 $0 $0 $0
Net cash from operations $86,983 $118,134 $146,066 $262,417 $392,324
Cash provided (used) by operating activities
Accounts Receivable ($420,982) ($535,241) ($52,929) ($304,810) ($330,211)
Inventory $0 $0 $0 $0 $0
Other current assets ($22,083) $14,529 ($7,446) ($15,000) $0
Other non-current assets ($4,624) ($40,278) ($4,558) ($10,000) ($5,000)
Accounts payable $48,588 $535,445 ($20,488) $189,038 $318,564
Current portion of long-term debt $57,895 ($44,243) $1,348 $0 $0
Income taxes $13,729 $33,688 $36,919 $25,197 $62,212
Accrued expenses $7,223 $14,354 $17,548 $7,495 $8,075
Other current liabilities $0 $0 $0 $0 $0
Dividends paid $0 $0 $0 $0 $0
Net cash from operations ($320,254) ($21,746) ($29,606) ($108,080) $53,640
Investment transactions
Increases (decreases)
Automobiles $9,057 ($9,057) $0 $0 $0
Cattle $0 $0 $0 $0 $0
Equipment $48,132 $37,300 $0 $0 $0
Intangible assets $0 $0 $0 $0 $0
Net cash from investments $57,189 $28,243 $0 $0 $0
Financing transactions
Increases (decreases)
Short-term notes payable $0 $350,000 $0 $0 $0
Long-term debt $802,588 ($273,029) $0 $0 $0
Deferred income $0 $0 $0 $0 $0
Deferred income taxes $13,729 $22,154 $8,000 $0 $5,000
Other long-term liabilities ($9,917) $0 $0 $0 $0
Capital stock and paid in capital $0 $0 $0 $0 $0
Net cash from financing $806,400 $99,125 $8,000 $0 $5,000
Net increase (decrease) in cash $515,940 $167,270 $124,460 $154,337 $450,964
Cash at beginning of period $13,632 $529,572 $630,260 $821,302 $975,639
Cash at the end of period $529,572 $630,260 $821,302 $975,639 $1,426,603

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Cash Flow Projection - First Year

Month Start-Up Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Nov-96 Dec-96 Jan-97 Feb-97 Mar-97 Apr-97 May-97
Cash Receipts:
Number of Houses 4 6 8 10 12 14
Income-Stucco 50,000 75,000 100,000 125,000 150,000 175,000
Income-Miscellaneous 0 0 0 0 0 0
Owner's Equity (15%) 30,000
Loan 170,000
Total Cash Received 200,000 50,000 75,000 100,000 125,000 150,000 175,000
Disbursements:
Cost of Gds Sold/Inventory 21,000 14,000 21,000 28,000 35,000 42,000 49,000
Salaries-Officers 8,000 8,000 8,000 8,000 8,000 8,000
Salaries-Manager 5,000 5,000 5,000 5,000 5,000 5,000
Salaries-Superintendent 4,000 4,000 4,000 4,000 4,000 4,000
Salaries-Office 2,000 2,000 2,000 2,000 2,000 2,000
Labor-Scaffolding/Clean-Up 64,400 1,600 2,400 3,200 4,000 4,800 5,600
Payroll Taxes & Benefits 5,150 5,350 5,550 5,750 5,950 6,150
Subcontract Labor-Lathe 6,400 9,600 12,800 16,000 19,200 22,400
Subcontract Labor-Brown/Color 10,000 15,000 20,000 25,000 30,000 35,000
Maintenance & Repair 500 500 500 500 500 500
Vehicles - Fuel 540 810 1,080 1,350 1,620 1,890
Insurance-Workman's Comp 6,180 6,420 6,660 6,900 7,140 7,380
Insurance-Other 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Telephone/Radio/Utilities 500 1,000 1,000 1,000 1,000 1,000 1,000
Advertising/Marketing/P.R. 500 500 500 500 500 500
Professsional Services 2,000 500 500 500 500 500 500
Office Expense/Postage 255 383 510 638 765 893
Organ. Exp./Amortization 1,000 50 50 50 50 50 50
Depreciation 1,973 1,973 1,973 1,973 1,973 1,973
Trucks/Equipment/Furniture 54,000
Equipment Rental/Leases 1,400 2,100 2,800 3,500 4,200 4,900
Rent 5,000 2,500 2,500 2,500 2,500 2,500 2,500
Miscellaneous Expenses 8,000 1,500 2,250 3,000 3,750 4,500 5,250
Total Cash Paid Out 156,900 74,048 92,336 110,623 128,911 147,198 165,486
Loans Section:
Interest 1,417 1,410 1,403 1,396 1,389 1,382
Principal 830 837 844 851 858 865
Cash Payments to Loans 2,247 2,247 2,247 2,247 2,247 2,247
Taxable Income -25,465 -18,746 -12,026 -5,307 1,413 8,133
Income Tax (25.9%) -6,490 -4,777 -3,065 -1,352 360 2,073
Net Income -18,975 -13,968 -8,961 -3,954 1,053 6,060
Loans (Balance) 170,000 169,170 168,333 167,490 166,639 165,781 164,916
Dividends Paid -9,488 -6,984 -4,481 -1,977 526 3,030
Beginning Cash 43,100
Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals
Jun-97 Jul-97 Aug-97 Sep-97 Oct-97 Nov-97
16 20 22 20 18 16 166
200,000 250,000 275,000 250,000 225,000 200,000 2,075,000
0 0 0 0 0 0 $0
200,000 250,000 275,000 250,000 225,000 200,000 $2,075,000
56,000 70,000 77,000 70,000 63,000 56,000 $581,000
8,000 8,000 8,000 8,000 8,000 8,000 $96,000
5,000 5,000 5,000 5,000 5,000 5,000 $60,000
4,000 4,000 4,000 4,000 4,000 4,000 $48,000
2,000 2,000 2,000 2,000 2,000 2,000 $24,000
6,400 8,000 8,800 8,000 7,200 6,400 $66,400
6,350 6,750 6,950 6,750 6,550 6,350 $73,600
25,600 32,000 35,200 32,000 28,800 25,600 $265,600
40,000 50,000 55,000 50,000 45,000 40,000 $415,000
500 500 500 500 500 500 $6,000
2,160 2,700 2,970 2,700 2,430 2,160 $22,410
7,620 8,100 8,340 8,100 7,860 7,620 $88,320
1,000 1,000 1,000 1,000 1,000 1,000 $12,000
1,000 1,000 1,000 1,000 1,000 1,000 $12,000
500 500 500 500 500 500 $6,000
500 500 500 500 500 500 $6,000
1,020 1,275 1,403 1,275 1,148 1,020 $10,583
50 50 50 50 50 50 $600
1,973 1,973 1,973 1,973 1,973 1,973 $23,680
$0
5,600 7,000 7,700 7,000 6,300 5,600 $58,100
2,500 2,500 2,500 2,500 2,500 2,500 $30,000
6,000 7,500 8,250 7,500 6,750 6,000 $62,250
183,773 220,348 238,636 220,348 202,061 183,773 $1,967,543
1,374 1,367 1,360 1,352 1,345 1,337 $16,531
872 880 887 894 902 909 $10,428
2,247 2,247 2,247 2,247 2,247 2,247 $26,959
14,852 28,285 35,004 28,299 21,594 14,889 $90,927
3,785 7,208 8,921 7,212 5,503 3,794 $23,172
11,067 21,076 26,084 21,087 16,091 11,095 $67,754
164,043 163,164 162,277 161,383 160,481 159,572
5,534 10,538 13,042 10,544 8,046 5,547 33,877

Cash Flow Projection - Second Year


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Month Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19
Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98
Cash Receipts:
Number of Houses 12 12 10 12 14 16 18
Income-Stucco 156,000 156,000 130,000 156,000 182,000 208,000 234,000
Income-Miscellaneous 0 0 0 0 0 0 0
Owner's Equity
Loan
Total Cash Received 156,000 156,000 130,000 156,000 182,000 208,000 234,000
Disbursements:
Cost of Gds Sold/Inventory 44,160 44,160 36,800 44,160 51,520 58,880 66,240
Salaries-Officers 8,500 8,500 8,500 8,500 8,500 8,500 8,500
Salaries-Manager 5,250 5,250 5,250 5,250 5,250 5,250 5,250
Salaries-Superintendent 4,200 4,200 4,200 4,200 4,200 4,200 4,200
Salaries-Office 2,100 2,100 2,100 2,100 2,100 2,100 2,100
Labor-Scaffolding/Clean-Up 5,040 5,040 4,200 5,040 5,880 6,720 7,560
Payroll Taxes & Benefits 6,273 6,273 6,063 6,273 6,483 6,693 6,903
Subcontract Labor-Lathe 26,880 26,880 26,880 26,880 26,880 26,880 26,880
Subcontract Labor-Brown/Color 31,500 31,500 26,250 31,500 36,750 42,000 47,250
Maintenance & Repair 750 750 750 750 750 750 750
Vehicles - Fuel 1,620 1,620 1,350 1,620 1,890 2,160 2,430
Insurance-Workman's Comp 7,527 7,527 7,275 7,527 7,779 8,031 8,283
Insurance-Other 1,250 1,250 1,250 1,250 1,250 1,250 1,250
Telephone/Radio/Utilities 1,050 1,050 1,050 1,050 1,050 1,050 1,050
Advertising/Marketing/P.R. 525 525 525 525 525 525 525
Professsional Services 550 550 550 550 550 550 550
Office Expense/Postage 796 796 663 796 928 1,061 1,193
Organ. Exp./Amortization 50 50 50 50 50 50 50
Depreciation 1,973 1,973 1,973 1,973 1,973 1,973 1,973
Equipment/Furniture
Equipment Rental/Leases 5,880 5,880 5,880
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