Written Business Plan Evaluation

Stressless Events

“We reduce the stress involved in

executing a successful event”

BA 499

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Executive Summary The Company Stressless Events, a sole proprietorship, is a high quality event staffing company operated by its owner, Steffanie Weaver. The company serves the Medford-Ashland area in Jackson County, Oregon. It provides homeowners with staff/service for their in-home entertainment. Stressless Events intends to capitalize on the inabilities of existing competitors by providing consistently high customer service and service quality allowing the hosts to socialize with their guests. The Concept Steffanie Weaver created this company to serve a niche market that had been neglected by competitors. She came to realize that this market exists through frequent in-home catering request of business acquaintances at her previous place of employment. Mrs. Weaver then researched the service needs for in-home events resulting in a list of job duties including waiting, bartending, valet parking and event preparation. Market Opportunity The company targets households with an annual income greater than $75.000 in the Medford- Ashland area, the two largest cities in Jackson County, Oregon. According to Census 2000 data, more than 10,000 households meet that criterion, creating a large potential customer base for the company. Furthermore, these two cities house large public as well as private corporations employing executives and managers that provide in-home entertainment to business partners, friends, and their families. Competitive Advantages and Distinction Stressless Events capitalizes on its consistently high customer service and quality. All of its employees maintain current Food Handling and Alcohol certification to ensure safety. The company focuses on the niche market of private in-home parties differentiating itself from local caterers, restaurants and event planners that focus on larger corporate events. Another advantage of the company is its owner, a recent Summa Cum Laude graduate from Southern Oregon University, who is known to many of its potential customers through past events at the University. Management The owner, Steffanie Weaver, leads her employees by setting an example of great customer service skills and exceptional quality of service, skills she acquired working at Southern Oregon University catering. She worked in the catering business for four consecutive years in Ashland, Oregon. Her dedication to the service industry has been recognized through awards such as “Student Manager of the Year 2001.” In addition, she has a thorough understanding of technology allowing her to easily maintain customer as well as employee records.

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Milestones Stressless Events will hire an assistant manager in year two of operations to allow for the owner to spend sufficient time on record keeping activities. Due to the increased fixed cost caused by this hiring, the company will recognize a loss in year two. It is the goal of the company to realize positive net income in year three of operations and thereafter. The company will face a large amount of competition when entering the market. This competition consists mainly of the host and friends that help organize events. Caterers and restaurants also service private events but their market share appears minute. It is the intend of Stressless Events to replace 25% of events that hosts cater themselves as well as 25% of event at which friends assist by year three of operations. Financials The company projects a moderate growth rate of events of 15% per year as well as an average increase of one hour per event per year. These growth rates result in a positive Net Income of $ 4,757 in year three while returning $2000 per month and 50% of any positive Net Income to the owner, Steffanie Weaver. The remaining 50% will be reinvested in the company, thus funding growth internally rather than seeking outside investments.

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Table of Contents

Executive Summary .....................................................................................2-3 Table of Contents .........................................................................................4 Company Description ..................................................................................5-7 Industry Analysis & Trends........................................................................8-9

Competition ..................................................................................................10-12 Strategic Position & Risk Assessment........................................................13-14 Target Market ..............................................................................................15-16 Marketing Plan.............................................................................................17-18 Operations ....................................................................................................19-22 Technology....................................................................................................23 Management & Organization .....................................................................24-25 Financial Analysis ........................................................................................26 Bibliography .................................................................................................27 Appendix .......................................................................................................I-IX

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Company Description Stressless Events is a sole-proprietorship based in Southern Oregon that provides event planning and staffing services for entertainment at home. The company serves the Medford-Ashland, OR, area with the company office being located in Medford, OR. Company’s Mission Stressless Events is a high-quality service company that provides staffing and experience to allow our customers to entertain successfully yet without stress at home. We work together with our customers to ensure that every event will be memorable. Our goal is complete customers satisfaction through high quality. We will retain a moderate growth rate to ensure a personal relationship with each of our customers. Stressless Events employs motivated young adults to help them finance their college education. It is our financial goal to achieve and maintain a positive net income by 2006. Legal Issues Stressless Events is a sole proprietorship operated by its owner, Steffanie Weaver. The company is registered to conduct its business in Medford, Ashland, Jackson County, and in the State of Oregon as of June 2004. In addition, Stressless Events has secured a strategic partnership with Southern Oregon University catering services to facilitate recruiting as well additional customers. The company also has made arrangements with Allstate Insurance to provide liability insurance.1 In addition to legal regulations, Stressless Events will also abide local health regulations regarding sanitation and food handling. Due to the fact that Stressless Events operates in the customer’s kitchen, a health certification for the company is not necessary.2 Nonetheless, Stressless Events requires its entire staff to have a current Food Handler’s card to ensure their knowledge of proper food handling procedures. Services Stressless Events provides staffing for in-home entertainment. The staff is cross-trained to perform the following duties: valet parking, bartending, preparation, waiting, and clean up. The staff will prepare all meals in the customer’s kitchen using appliances and utensils provided by the customer. If the customer requests additional duties, we will accommodate those needs to the best of our abilities. Stressless Events will also assist its customers with additional services for events outside its regular scope to continue close and complete customer relationships. Such events (weddings, parties outside a home) can be organized on a case-by-case basis. If the demand for this sector grows, Stressless Events will develop standard services that customers can choose from but are not limited to.

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Management/Leadership Stressless Events is owned and operated by Steffanie Weaver, a recent Southern Oregon University (SOU) graduate with 4-years of experience in the food service industry. She is known to many of her initial customers through events at her previous place of employment, SOU catering, where she helped plan and execute large campus wide events as well as small, private parties. Mrs. Weaver has industry relationships with chefs (such as Mike Brown) and experienced caterers (such as MaryAnn LaFazio). These consulting relationships enable her to provide her customers with custom fit menus and decorations that go beyond her personal expertise. Starting year two of operations, Stressless Events also employs a part-time assistant manager that will be chosen from the existing workforce. This assistant manager will have shown to be a team leader as well as a great example in regards to customer service. Workforce Stressless Events employs motivated young adults, mainly college students. The staff shows the following characteristics: good customer service skills, knowledge of proper food handling procedures, team spirited, and cross-trained to perform multiple tasks involved in completing events. Financial Status Stressless Events won’t seek outside funding to start its operations due to the fact that many of its costs are variable costs. The company will respond to negative cash on hand at the end of the year by using short-term borrowings in increments of $1000. During the first year of operations, the owner will only receive a salary of $1000 per month to keep operating costs low. With price increases every two years and an annual growth rate of events of 15%, Stressless Events will be able to meet all its financial obligations without short-term borrowings by the third year of operations. While planner’s fees usually range from 10-20 percent of the event’s budget,5 Stressless Events chooses to charge for its staff an hourly rate of $15. The owner and assistant manager will be paid salaries whereas part-time employees are compensated at $10 per hour worked. The owner will manage financial record keeping using integrated spreadsheets in Excel. Development Stage Stressless Events is registered in Medford, Ashland, Jackson County, and in the State of Oregon as of June 2004. Stressless Events is a seed company with services starting July 2004. The company has existing customer contacts through the owner that will allow the company to grow the number of events serviced at 15% per year. Prior to starting operations, the company has compiled a list of part-time employees and ensured proper training of all staff members.

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Goals/Vision for the Future Stressless Events strives to be the quality leader in the private event/in-home entertaining industry in the Medford-Ashland area. Within three years of operations, the company will be the market share leader regarding the niche market of private events. During the first year, the owner and manager, Steffanie Weaver, is the only full-time employee of the company. In year two, the company will hire a part-time management assistant to aid the owner in the management of customer relationships and events. In year three, the position of the assistant manager will become full-time. Exit Plan Once the assistant manager has proven to be effective in customer relationships and employee training while maintaining the high-set standards of quality and customer service, the owner will be restructuring the company as a Limited Liability Partnership. The assistant manager will be offered to become a limited partner in the company and assume greater responsibilities while being rewarded with an increased percentage of the net income as an annual bonus. This will allow the owner to maintain control over the company as well as being able to step back a little bit, thus allowing her to start her desired family.

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Industry Analysis & Trends Stressless Events is taking advantage of its superior customer service and quality in an underserved market. Event Planning vs. Staffing Industry Stressless Events falls within two industries: Event planning and staffing. While there is an abundance of staffing services and employment offices within the Medford area, none of them are specialized in providing customers with staffing for in-home entertainment. The customer who seeks to entertain at home is looking for reliable service while maintaining flexibility regarding the choice of service. Local caterers on the other hand, tend to focus on large corporate events, weddings or large family gatherings.3 Stressless Events is filling the niche that has been deficient in both of those industries. The company will ensure a high quality service for all sizes of in-home entertainment. It will provide trained and licensed staff to its customers to create a well-organized and relaxing atmosphere at the event. Economic Cycles/Seasonality Because of its focus on high-income level customers, Stressless Events is fairly independent from economic cycles. During economic downturns, the scope and reason for events tend to change but not the amount and size of them. Furthermore, high-income business executives appear to gather when the economy is slowing down to discuss future opportunities of the company.4 Seasonality on the other hand is a large concern for Stressless Events. Many customers focus their events around holidays (Thanksgiving, Christmas, and Easter) and major events in their private as well as business life (new home, promotion, birthday). Historically, events are held more frequently in the summer time because it allows people to sit outside on patios and enjoy the view from the host’s house. Stressless Events therefore realizes 50% of its yearly revenues between June and September and an additional 25% between Thanksgiving and Christmas. 4 Barriers to Entry One of the major dangers of this type of service industry is the low level of barriers to entry. Foodservice staff needs to have current County-issued Food Handler’s cards, bartenders need a State-issued serving permit, and valet parking staff needs a current driver’s license. Besides providing its employees with the means to receive those licenses, Stressless Events is also required to upkeep its licenses and registrations. As easy as it is for this company to obtain all necessary licenses and registrations, as easy it could be for future entrants to this market.

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Key Success Factors/Core Competencies Stressless Events prides itself to provide its customers with outstanding quality and customer service by responding quickly and satisfactory to the exact need of the customer. Satisfying customers is one of the most important success factors in the service industry and will therefore be our number one priority. Ongoing customer relationships also provide Stressless Events with a competitive edge because word-of-mouth has proven to be an effective yet no direct costs advertising tool. The owner herself is responsible to keep close customer relationships by being available from the initial request for service through the after-party follow-up conversation. The staff is highly motivated and team-oriented, which in turn allows events to run smoothly and seemingly without stress to the customer.

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Competition

Stressless Events faces a few established event planners and caterers as well as staffing services in the Medford area. In addition to direct competitors, the company also competes with the homeowner’s option to plan and execute the event without any outside assistance. Market Share Distribution After completing a survey of 50 potential customers (household income greater than $75.000), the current distribution between competitors is as follows:4

Current Distribution amongst Competitors

Self-Service Friends Caterers Restaurants Event Planners

After two years of operation, Stressless Events will be the primary provider of in-home entertainment services excluding self-service in the Medford area. Mainly, our market share is expected to be replacing 25% of “host self-service”, 50% of friend’s help, and 25% of local caterers, restaurants, and event planning services.

Two-Year Pojection

Stressless Events Self-Service Friends Caterers Restaurants Event Planners

View summary sheets of survey on page I of Appendix

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Advantages over Competition A competitive analysis is included in the appendix (page I). The main advantages Stressless Events has over its competitors are: • 4 years of experience in planning and executing small, private parties as well as large (1000

attendants) events

• Close customer relationship through owner

• Focus on local, direct and private services only

• Consistent high quality instead of mass production

• Cross-trained staff performing multiple duties if needed

• Employment of college students and young adults

Competitive Positions After reviewing the customer research questionnaire, Stressless Events ranks its competition as follows: • Self- service without assistance

• Self-service with friend’s assistance

• Local catering services

• Local restaurants that provide catering services

• Event planners

The main advantage to a homeowner of performing all parts of creating a memorable event without assistance is total control and no additional staffing costs. The downfall of this choice is the increased stress level and lack of professional expertise. In addition, the host is forced to upkeep the buffet instead of being able to socialize. Having to work during the event also does not display social status as well as having employees work. Established local caterers on the other hand allow the host to be part of the event. But as research has shown, many caterers seek larger accounts than small parties, which in turn shows in the lack of flexibility, quality, and service. Restaurants that are also providing catering services (such as McCully House, Jacksonville, OR), can provide the customer with quality food but they lack the experience in out-of-the house- service. Many times, private events start at a different time than previously arranged and numbers of attendees fluctuate. According to the customer research questionnaire, restaurants are fairly inflexible about menu options and time changes.4

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Strategic Opportunities In the questionnaire, potential customers expressed their dissatisfaction with current in-home entertainment service providers mostly due to: • High mark-up

• Low customer service

• Inconsistent quality

• Low level of flexibility

Stressless Events will capitalize on the lack of knowledge of local caterers, the lack of out-of- house know-how of restaurants and the big event seeking event planners. The company’s staff will operate in the clients’ house according to their wishes, thus allowing them to enjoy being a social host. Our staff is very flexible and therefore able to respond to last-minute changes in numbers of attendees as well as changes in menu.

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Strategic Position & Risk Assessment Stressless Events will capitalize on the following core competencies to provide service to its customers: • Consistent, high quality

• Close customer relationships

• High flexibility in services

The strategic position of Stressless Events is based on evaluating the following: A. Customer needs

B. Industry trends

C. Competitors ability to compete

D. Our strength

E. Risks Customer Needs The customer of Stressless Events is part of a household earning more than $75.000 per year and located in the Medford-Ashland area. This customer is looking to entertain successfully at home when inviting their business and family acquaintances as well as family and friends, and wishes to do so with as little stress involved as possible. Quality of service is also a major concern for this customer because of his/her social status. Industry Trends The event planning industry is turning towards providing services for large corporate events as well as weddings and large family gatherings.12 In the event planning as well as the catering industry, it is common to charge commission ranging from 10-20% of the event’s budget.5 Competitors Ability to Compete The event planning, food or staffing service industries are not new and therefore a few well- established service providers are operating in the Medford area. These competitors appear to be unaware of the changing demographics in the area. They seek the fast track for revenue by organizing fewer yet larger events. Small private events are not as profitable and therefore seem to be declared “unimportant” and subsequently lack the extra care in customer service and quality. Our Strength As outlined in the S.W.O.T. analysis in the appendix (page II), Stressless Events is focusing on small, private events to give high-income families the quality and customer service they seek. Many of the customers envision their event to great detail. We are able to accommodate their wishes by our high level of flexibility and a close customer relationship. Our company composes each of our event teams in such a way that it can fulfill each customer’s individual needs.

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Risks The owner of Stressless Events has tested its service and the market has responded positively to the offering. The most eminent risks are therefore changes in management in competing local companies bringing in a better understanding of the underserved private market, and a risk of execution in that the owner will not be able to effectively manage the growth of the company. With growth comes an increased customer base of which most if not all will continue to expect the owner, the face of the company, to be 100% involved in all aspects of the contract. The main risk is a direct result of this: The demand for quality service could outgrow the owner’s abilities and cause the overall quality to deteriorate over time. Strategic Position After assessing the risks, we realize that the biggest threat to the company is the growth potential, which could threaten high quality and customer service standards. With its legal form of a sole proprietorship, Stressless Events will be in danger of loosing one of its core competencies only as long as the owner does not learn to delegate some of the client relationship to a trusted assistant. The owner will ensure proper training, skills of the staff and introduction of the assistant to receptive clients as needed. She will ensure a high level of quality and strive for complete customer satisfaction by remaining “in charge” and setting the standards the company is known for. Stressless Events is providing exceptional customer service and quality to its customers. We provide our customers with the services they need to make their in-home entertaining successful and fun. Our customers inform us of needs and expectations for each individual event and we then provide a custom-fit package to execute the event. By focusing on small, private events only, Stressless Events is able to provide its customers with the extra service and care they seek.

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Target Market Demographic Description Stressless Events’ target market is comprised of white administrators and executives above 40 with limited spare time to prepare for private events. The target market segment owns at least one home, one car and the annual household income is greater than $75.000 per year. Geographic Description The main target markets are Medford and Ashland and surrounding areas because they are the largest two cities within Jackson County.6 Service will also be provided in other areas of Jackson County such as Jacksonville and Central Point, but the main focus remains in the Medford- Ashland area. Lifestyle / Psychographic Description The target market can mainly be characterized as status driven individuals who like to show that they are socially responsible by hiring college students. Many of the targeted families have a housekeeper thus allowing them to have a presentable home at any given time. While target customers are economically well off, they still consider themselves as price conscious shoppers, meaning that they look for the best value when buying goods or services. Target customers subscribe to magazines such as Home Style as well as Business Week. Many explore the continents for vacation or shopping purposes. Cars represent a status symbol, thus resulting in a line-up of BMWs, Mercedes’, large SUVs or Old-timers in the driveways. Purchasing Pattern Description The bandwagon phenomenon appears to strongly influence the target customer’s purchasing decisions because most customers purchase the service after they have experienced it at another person’s home. Potential customers see the host being able to socialize instead of providing the service themselves, which reminds them of all the time they have spent in the kitchen to provide an event of their own. This encourages the potential customer to ask the host on how they contacted the service provider and what their overall experience has been. Subsequently, the potential customer asks the event staff for contacting information allowing him/her to be a social host at the next event. The spontaneity of event varies widely. Some events are planned well in advance (Christmas, New Years, 4th of July); other events are the result of moderately spontaneous decisions (surprise birthday party, welcome home party). In either one of the cases, the customer tends to contact the first person/company that comes to mind.4

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Buying Sensitive Description The target customer of Stressless Events is willing to pay a premium price for premium services. It is of highest importance to provide the customer with quality, a well-known organizer, convenience of the purchase and execution as well as a high level of customer service. A medium level of importance has been given to product features as well as advertising. Not as important are the following factors: price and special offers. Target customers of Stressless Events are buying the services provided because of their limited time. Many current customers have mentioned the fact that they feel more comfortable working with (or employing) a person they are familiar with and feel they can trust. For that extra feel of confidence and trust, the customer is willing to pay a premium rate to ensure that they will receive the person they asked for. Market Size and Trends According to Census 2000, 16.4% (or 71.500) households of Jackson County earn an income greater than $75.000. Assuming that this data reflects the household income distribution of Ashland and Medford residents, Stressless Events has a customer base of approximately 13800 households.7,8,9 In addition to this starting customer base, the population percent change in Jackson County (2%) is greater than in Oregon (1.5%) or the United States as a whole (1.2%).7,10,11 This encourages the company’s future prospects of an increasing customer base because the “economic base in Jackson County is varied and growing […and] is also a popular retirement destination.”6 Strategic Opportunities Stressless Events will serve the increasing population of Jackson County, OR with emphasis in the Medford-Ashland area in the niche market - currently underserved - of in-home entertaining. According to Census 2000, 16.4% of households in Jackson County have an annual income greater than $75.000 thus providing the company with a large and sustainable customer base in the area. As potential customer research has shown, there is a dire need for a catering service that focuses on food preparation as well as staffing events for in-home entertainment. Stressless Events will strive to fill the need for such service and be the leading in-home entertainment caterer in the Medford–Ashland area. As purchasing patterns have shown, many new customers will contact Stressless Events after experiencing great service at an event. Reinforced by this information, Stressless Events will strive to completely satisfy its customers and guests at the event through fast, efficient and friendly service making the event as “Stressless” as possible for the host.

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Marketing Plan Company’s Message Stressless Events provides its customers with unprecedented quality and customer service through its flexible and well-trained service staff, thus allowing the customer to enjoy the pleasures of in-home entertainment. Four P’s of Marketing vs. Five F’s of Customer Needs Stressless Events focuses its marketing strategy on the first of the four P’s: Product, as well as the third F: Freedom. It is the company’s main goal to display quality and flexibility of its service at events. This will result in guests seeing a host that does not have to stress about details of the event and is therefore able to socialize with his/her guests. Due to the fact that socializing is the desired part of an event,4 the host as well as guests are positively impacted by the service being that it allows them to enjoy the event. Marketing Vehicles Stressless Events will mainly use brochures and business cards to disseminate information to potential customers. Most of these brochures and business cards will be handed out directly to an inquisitive attendee at a catered event. Stressless Events will also give business cards to its current customers so that they can pass on the information to acquaintances of theirs. Focusing on these practices proves most effective while cost-efficient because it eliminates “cold-calling.” Using brochures, business cards and conversations at events fits the company image regarding the close customer relationship as well as providing the potential customer with a solid understanding of what services are provided. Marketing Tactics Stressless Events chooses not to use media advertising in newspapers or on radio stations. Instead, the company will focus on deepening existing customer relationships by expanding into areas that have been proposed by existing customers as well as relying on exposure at the event to prospective new clients. Stressless Events focuses on customer-based marketing through repeat sales. Using its existing customer database, the owner will contact its customers one month prior to a major holiday to inquire about service needs so that a spot in the company schedule can be arranged and employees can be scheduled in advance. Again, this will deepen the relationship between company and customer because it assures service even on a busy holiday such as Christmas. Another marketing tactic is the strong use of strategic partnerships. Stressless Events will be a member of the local Chamber of Commerce allowing it to network with other local businesses. It will also sign distribution agreements with local event management firms that are unable to staff events they are planning. In addition to regular distribution agreements, Stressless Events will engage in partnerships with event managers to bundle its services as a part of the total package they are selling. While distribution agreements are continued throughout the existence of the company, bundling will only be offered during the start-up phase to increase revenues in order to cover costs.

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Sales Structure All employees are expected to be good sources of information when asked about services, but they also understand the core sales motto: If in doubt, ask the boss!” As Stressless Events starts its second operating year, the owner will hire a part-time assistant manager to help organize and staff events. After a thorough training process, the assistant manager will then be able to make competent decisions and give reliable information to current as well as prospective customers. The main incentive for the assistant manager to fulfill the responsibilities of a competent sales person is the guaranteed salary he/she is receiving at month end. The assistant manager will initially be trained through on-the-job training by shadowing the owner to get familiarized with the steps involved in organizing and executing a successful event. As he/she understands the basic steps of the event process, he/she will then learn the organizational part of the business (mainly record keeping responsibilities). The owner will then decided which accounts are available for the assistant to take over and periodically check with clients as well as the assistant manager regarding satisfaction of services provided. Another important part of the sales structure are previous clients that “recruit” friends, co- workers or family, to use the service provided by Stressless Events. Current customers will be granted a 10% “Loyalty Discount” after referring at least five new customers. It is the job of the owner – starting year two, also of the assistant manager - to ensure that clients are well informed about the different services provided by the company. The owner can ensure the level of knowledge by providing all clients with current business cards and brochures. Satisfied customers are a great way of expanding sales through word-of-mouth advertising, thus creating additional sales. The owner herself will ensure event follow-up by remaining in contact with all clients. After the completion of an event, the owner will spend some time with the customer – either in person or via phone/e-mail - asking about how he/she viewed the services provided during the event. Even when the assistant manager is organizing and executing the event, the owner will remain to be the “face of the organization” and therefore all calls and e-mails will be subject to review by the owner. By remaining in-charge, the owner can control and therefore ensure timeliness of order fulfillment, accordance with food handling procedures, service as well as appearance guidelines. This will show in the overall consistency in quality and service.

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Operations Facilities The company office will be located in the private residence of its owner, Steffanie Weaver. Besides the office, Stressless Events is operating in the private kitchen of their clients thus allowing the company to keep overhead cost at a minimum. In addition to its office, the company owns one company car. The reason for this business to be home-based is the overall comfort level the company wishes to set. The client, if wanting to come to the office, is supposed to feel comfortable and at home to encourage a relaxed conversation atmosphere as opposed to a sterile office space environment. The home office facilitates that the owner, and later the assistant manager, engage in a close customer relationship. Production/ Labor Force Control During the first year of operations, Stressless Events will have excess production capacities. The owner will spend some of her time with employee recruiting to ensure enough capacity for busier times. The employees will consist of young adults, mainly college students. Many college students today try to earn some extra money while attending school. The customer is willing to pay a premium rate because they are trying to give back to the community by supporting college students. Due to paying above minimum wage, Stressless Events chooses among its applicants. While many students will apply for this on-call basis job, the owner will choose dedicated and flexible people with great work ethics to ensure proper implementation of quality standards. The screening process involves applications, interviews as well as reference checks. All employees will then have to attend a County issued Food Handler’s class to learn about proper food handling procedures. While this class is not required by law - due to the fact that Stressless Events is operating in private kitchens – Stressless Events will ensure proper training of all employees by requiring this class. The line of authority in Stressless Events is defined as follows: The owner oversees all parts of the operations. While she might be part of an event crew, she also supervises the employees and the assistant manager as well as organizes the financials. The organizational flowchart that derives form the highly hierarchical structure can be depicted as follows:

OWNER

Part-time Employees

Assistant Manager

Team Team Team Team TeamTeam Team

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Financial Control Stressless Events will send out confirmations of scheduled events to the customer as soon as all arrangements have been made through the owner or the assistant manager. Changes can be made without penalty fees up to 48 hours prior to the event. If an event needs to be canceled within the 48-hour time frame, a cancellation fee of $50 will be charged to cover incurred office expenses. As for method of payments, Stressless Events will only accept cash or checks to pay for its services. The acceptable time of payment is within 7 days of the event. The employees of Stressless Events will be paid at the end of the month for the month ending. Research and Development Stressless Events is focusing its research and development efforts on existing customer research and industry trade shows. Customers will be a primary source of information because their demands can change over time and with that, the services provided by Stressless Events will have to change in order to retain its customers. When the owner meets with the customer to make arrangements for future events, she will include a little informal survey requesting information for proposed changes or additional offerings. In addition, Stressless Events will be member of the National Association of Catering Executives (NACE), which is a sponsor of “The Special Event 2003” – an event industry important gathering place. Being a member of NACE allows the company to increase its networking opportunities as well as expand its knowledge base regarding recent trends in the catering industry. Stressless Events will also be informed of trade shows and conferences.12 Contingency Planning Stressless Events is highly susceptible to “disasters” such as technical difficulties (phone, internet, and car) and personal dilemmas (sickness). To prepare for personnel cancellations, Stressless Events will maintain an up-to-date phone list of all its employees including information on when and how they can be reached, when they can work, and how fast they usually are able to respond to a call. To prepare for technical difficulties, Stressless Events will ensure that all event teams are equipped with a cell phone thus enabling them to call for help when needed. The owner will also have a cell phone as a secondary business phone so that customers can reach her even if regular phone lines are down (for example: due to a storm). Stressless Events will also set up its email system in a way that customer requests are forwarded to the owner’s voice mail in case the owner is not able to check the email server.

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Order Fulfillment/Customer Service The flow of order processing is depicted in the chart below:

The nature of the contact could either be a customer contacting the company through any of the telecommunication means or the owner of the company contacting an existing customer via a company letter to inform of upcoming holidays and company offerings for those holidays. Once the client and owner have met and discussed specific information regarding the event, the owner/assistant manager will then enter the event into the company event calendar and start scheduling employees for the event. Any subsequent changes will be noted in that event calendar and any staffing changes will be promptly executed. When the event is entered into the event calendar, an initial event billing will be sent out to the customer for review. If any changes need to be made, the owner will assist the customer to refine their order to exactly meet their expectations in regards to price and service. A revised billing will be sent out prior to the event. A final bill will be sent within one working day of the event. Most importantly, at the end of the event, the supervising staff member will consult with the client in person to communicate whether the services provided matched the expectations of the client. In case the service was not as anticipated, the supervising staff member will make notes of things to be improved in a memo and offer a discount if the company was at fault for dissatisfaction. It is Stressless Events’ primary concern to leave a satisfied customer that is willing to contact and refer the company again for future events.

STRESSLESS EVENTS’

Event Calendar

“Contact”

EVENT

Follow-up Conversation

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Safety/Health Regulations Stressless Events is fortunate to not be subject to County governed health regulations due to the fact that it’s operating out of private kitchens. Nonetheless, the company prides itself to train all its employees with regards to proper food handling through County-taught Food Handler’s Classes. In addition, the owner, assistant manager and some of its servers will also be attending OLCC Alcohol serving classes to understand the rules and regulations regarding liquor. Insurance & Legal The company needs insurance for its car(s), and liability insurance in case any of the employees damage property of one of its clients. The liability insurance premium is based on whether employees will be serving alcohol at these events or not. Because Stressless Events chooses to be serving alcohol at any of its events, the liability insurance premium will be around $2500 per year. If Stressless Events was to choose not to provide alcohol service at the events, the liability insurance premium would drop dramatically to only $500 per year.1 As past events have shown, in home entertainment does involve social drinking of some sort. Many clients offer their guest wine, beer and even spirits. It is therefore highly likely, that Stressless Events will be asked to perform bartending of some sort at these events. To educate its employees about rights and responsibilities as a bartender in Oregon, select employees will be sent to attend an alcohol serving class, including the corresponding certification. Stressless Events will not have a legal department due to the (hopefully) low legal involvement of the company. By a thorough screening process of its employees, the owner of Stressless Events will try to ensure hiring of trustworthy employees. In case the company does get involved legal matters, a lawyer will be hired on a per case basis.

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Technology

Stressless Events is not a technology-based business. Nonetheless, it is very important to keep track of clients as well as employees even in the service industry. The technology needs for the company might appear rather simplistic but realizing that technology is needed to survive in the modern business environment provides Stressless Events with a competitive edge. Hardware Stressless Events will primarily need a computer with enough storage capacity to store information on clients and employees. While it would be helpful to have a laptop computer for mobility, it is not a primary need in the initial stages of the company. Software The software needs for Stressless Events are as follows: The company will need programs to facilitate record keeping for employee and client information as well as an accounting package. The owner is well experienced in the use of Microsoft Excel and ACCESS and will use these tools to perform the record keeping. The desktop computer will be equipped with Microsoft Office XP Professional to facilitate ease and professional look of faxes, letters and other company correspondence. Spreadsheets, databases and word programs will be integrated with macros to perform tasks such as sending out mailings as well as combining and updating information. Telecommunications Stressless Events can be contacted through phone, email, and fax as well as over the owner’s cell phone. All event teams will be equipped with a company cell phone to ensure that they can be reached at any point in time as well giving them the means to call for help in emergency situations. Stressless Events chooses not to operate its own web site because of the design and maintenance requirements.

24

Management & Organization Owner The owner of Stressless Events, Steffanie Weaver, will lead the company to be the quality and service leader in the in-home entertainment industry in the Medford-Ashland area. She has four years of industry related experience obtained when working at Southern Oregon University as the student manager of the catering services. As the student manager, she was responsible for hiring and maintaining a reliable workforce. The catering services provided service for events as small as five people and as large as 1000 attendants. Mrs. Weaver has successfully created databases to retain employee information, thus enabling her to efficiently schedule staff for even large events. She is a certified Microsoft Office User Specialist in Excel and ACCESS, two programs that will be primary means to record keeping. Another important strength of Mrs. Weaver is her ability to adjust quickly to changes. She has learned in the past five years that flexibility is a very important trait of a successful event manager and mastered to deal with constant changes while maintaining quality of service. Assistant Manager (to be added in year 2) The assistant manager of Stressless Events is to be a person that has proven to be a pillar of strength to the organization. This person has exemplified outstanding customer service at past events and has displayed a thorough knowledge and understanding of the service industry. The owner will hire the assistant manager through an application process to allow many of its employees to apply for this position. The hiring process will mainly be based on past positive working experience and a strong team spirit. Management Compensation and Incentives The owner and assistant manager will receive salaries instead of hourly wages. While the owner’s salary will be calculated as follows: $1000 year 1, $1500 year 2, $2000 year 3, plus 50% of Net Income if positive), the assistant manager will receive $750 in year 2 and $1250 in year 3. The assistant manager will also receive an end-of-the–year bonus calculated at 5% of a positive Net income. Part-Time Employees All part-time employees will be compensated at $10 per hour. At the end of the year, the company will hold an awards banquet to honor employees that have portrayed outstanding customer service skills. This award will be given annually to a single employee and a team. The award will consists of a gift certificate ($100) as well as a certificate of appreciation.

25

Consultants During each tax season, Stressless Events will hire an accountant to do its annual tax preparations. During the year, the owner is responsible to maintain all records and receipts. This practice will allow the company to keep accounting bills as low as possible while ensuring proper tax filings. As mentioned in the legal section of the operations part, Stressless Events will hire attorneys on a case-by-case basis. Due to the nature of the industry, Stressless Events will not need constant legal services. But due to service contracts that could be broken or liability issues, Stressless Events will keep information of local attorneys that specialize in contract law or liability claims. In addition to professional services such as accountants and attorneys, Stressless Events will also maintain a strong relationship with local industry specialists. The owner will keep a list of local caterers that are willing to offer expertise (free-of-charge) on decorations or execution of certain events. She also keeps in touch with executive chefs of her previous place of employment to inform herself regarding new culinary trends and presentation tips. Management Style The organizational structure of Stressless Events is very hierarchal and therefore the lines of authority are extremely clean-cut. The owner has complete control over who is working, when they are working and how long they are working. At the initial hiring, she will give the employee a list of “do’s” and “don’ts” (code of conduct) to be followed at all times. If any of these working requirements are violated, the employee is subject to immediate termination – he/she will not be called again. The owner accepts full responsibility for any service provided to the customer – whether good or bad. Within the organization, suggestions can be made by any of the employees to the owner. In the end, she does realize that she is only one mind and great ideas could come from any of her employees. But the implementation of any of the suggestions is subject to her approval. All part-time employees will meet with the owner to learn about service procedures, job expectations, and customer service skills. Skills such as food preparation will be taught and enhanced through on-the-job training. On-the-job training is a common practice in the food service industry because it is difficult to imagine all possible contingencies of an event.

26

Financial Analysis For complete financial statements as well as the assumption sheet, please refer to pages III-IX of the appendix. Financial Goal The owner, Steffanie Weaver, defines the financial goal as follows: Stressless Events is expected to generate positive Net Income starting year three of operations while returning at least $2000 in monthly salary to the owner. According to the projected income statement, this goal will be met in year three therefore meeting the financial objective. Staffing/Payroll The major cost associated with any service business, including Stressless Events, is the personnel cost. Stressless Events only employs two salary-paid people: the owner and an assistant manager (starting year two). All other employees are part-time and are on-call basis only. This allows the company to maintain low fixed cost during low event months. The company will pay legally required payroll expenses (Worker’s compensation, Unemployment, Medicare, Social Security) but chooses not to pay health or retirement benefits. Cash-Flow Projections Stressless Events operates on a cash only base in regards to accounts payable as well as accounts receivable. During the first year of operations, Stressless Events is projected to realize a negative Cash-Flow during the month of November in the amount of $396. If the projections remain accurate, the owner chooses to only be compensated $500 for that month thus creating a positive Cash-Flow balance. If negative Cash-Flows occur after year one, they will be covered by short- term borrowings in increments of $1000. Break-Even Analysis Many of the financial ratios are returning non-valuable values due to the lack of tangible assets of the company. The most valuable analysis is therefore the Break-Even analysis because it provides the company with a tool to estimate the amount of sales needed in order to pay for all its fixed costs. For example, the company realizes a loss in the operating year ending June 2006 due to the fact that the break-even point has not been met ($55165.12). To prevent future losses, the owner will use this tool to estimate needed sales for the upcoming year - especially when major changes in fixed costs occur such as adding an assistant in year two.

27

Bibliography 1 Lee, Travis. Allstate Insurance. Telephone Quote. 12 Nov, 2002. 2 Jackson County Environmental Health. Telephone Interview. 12 Nov, 2002. 3 Hicks, Kimberly. Cordially Invited Wedding & Event Planning. Personal Interview. 16 Oct,

2002. 4 Doering, Steffanie. “Customer Research Questionnaire.” October 2002. 5 Richards, Kirsten. “Last-Minute Party Planning.” Sales & Marketing Management. Nov 1994,

Vol. 164 Issue 13 [sic], p126, 1p, 1c. 6 Project A. Jackson County Oregon. <http://www.co.jackson.or.us>

11 Nov, 2002. 7 American FactFinder. “Jackson County, Oregon.” U.S. CensusBureau..

<http://factfinder.census.gov/bf/_lang=en_vt_name=DEC_2000_SF> 11 Nov, 2002. 8 “Medford Community Profile.” Oregon Economic & Community Development Department.

<http://159.121.111.9/FMPro?-db=Community.fp4&-Format=forms> 11 Nov, 2002. 9 “Ashland Community Profile.” Oregon Economic & Community Development Department.

<http://159.121.111.9/FMPro?-db=Community.fp4&-Format=forms> 11 Nov, 2002. 10 “State and County QuickFacts.” U.S. Census Bureau.

<http://quickfacts.census.gov/qfd/states/00000.html> 11 Nov, 2002. 11 “Jackson County, Oregon.” U.S. Census Bureau.

<http://quickfacts.census.gov/qfd/states/41/41029.html> 11 Nov, 2002. 12 “The Professional Caterer.” The National Association of Catering Executives. EBS Virtual

Communications, CA. October/November 2002. <http://www.nace.net/procaterer/october02/index.html> 11 Nov, 2002.

I

Appendix

Self-Service Friends Caterers Restaurants Event Planners Total 126 39 8 3 2 178

71% 22% 4% 2% 1% 100%

Customer Research Questionary Summary

H IG

H M

E D

IU M

LO W

LOW MEDIUM HIGH

Competitive Analysis

Customer Satisfaction

C us

to m

er In

vo lv

em en

t i n

E ve

nt

Caterer/ Restaurant

Event Planner

FRIEND'S HELP

HOST's SELF SERVICE

STRESS- LESS EVENTS

Stressless Events Self-Service Friends Caterers Restaurants Event Planners Total 54.25 94.5 19.5 6 2.25 1.5 178 30% 53% 11% 3% 1% 1% 100%

GOAL within Two Years

II

S.W.O.T. Analysis Strength • High quality of service • Close relationship with customer • Flexibility of service arrangements • Cross-trained event teams Weaknesses • Low-growth rate due to marketing choices made • Liability of owner because of its legal form • Turnover rate of part-time employees due to graduation from college Opportunities • Underserved market • High school seniors as part-time employees • Expansion to include larger events on regular basis • Expand services to all areas of Jackson and Josephine County Threats • Low barriers to entry • Changes in health regulations • Existing competitors changing their scope of business to include private in-home events

III

FINANCIALS

STRESSLESS EVENTS Pro Forma

Income Statement for the 12 Month Period Ending

Sales 43,500$ 100.0% 52,201$ 100.0% 73,800$ 100.0% Less Cost of Sales:

Labor (including benefits) 19,411$ 44.6% 15,528$ 29.7% 18,816$ 25.5% Total Cost of Sales 19,411$ 44.6% 15,528$ 29.7% 18,816$ 25.5%

Gross Profit 24,089$ 55.4% 36,673$ 70.3% 54,984$ 74.5%

Operating Expenses Personnel 14,506$ 33.3% 31,350$ 60.1% 41,497$ 56.2% Depreciation 462$ 1.1% 500$ 1.0% 600$ 0.8%

504$ 1.2% 500$ 1.0% 500$ 0.7% 2,520$ 5.8% 2,500$ 4.8% 2,500$ 3.4%

300$ 0.7% 400$ 0.8% 500$ 0.7% 120$ 0.3% 120$ 0.2% 155$ 0.2%

1,560$ 3.6% 1,560$ 3.0% 1,560$ 2.1% 720$ 1.7% 750$ 1.4% 750$ 1.0% 300$ 0.7% 300$ 0.6% 300$ 0.4% 500$ 1.1% 750$ 1.4% 1,000$ 1.4%

Other Operating Expenses -$ 0.0% -$ 0.0% -$ 0.0% Total Operating Expenses 21,492$ 49.5% 38,730$ 74.3% 49,362$ 66.9%

Earnings Before Interest and Taxes 2,597$ 5.9% (2,057)$ -4.0% 5,621$ 7.6%

Interest Expense -$ 0.0% 24$ 0.0% 25$ 0.0% Earnings Before Taxes 2,597$ 5.9% (2,081)$ -4.0% 5,596$ 7.6%

Income Taxes 390$ 0.9% -$ 0.0% 839$ 1.1% Net Income 2,207$ 5.0% (2,081)$ -4.0% 4,757$ 6.5%

Return on Sales 5.07% -3.99% 6.45%

Phone Internet Service

Jun-05 Jun-06 Jun-07

Lease Payment Car Insurance Cell Phone Year-End Award

Bond Liability Insuran

IV

Jun-04 Jun-05 Jun-06 Jun-07

Assets Cash -$ 1,169$ 289$ 4,646$ Other Current Assets -$ -$ -$ -$

Total Current Assets -$ 1,169$ 289$ 4,646$ Property and Equipment

Automobiles -$ -$ -$ -$ Office Equipment/Other -$ 1,500$ 1,800$ 1,800$

Total Property & Equipment -$ 1,500$ 1,800$ 1,800$ less acculumlated depreciation -$ (462)$ (962)$ (1,562)$

Total Fixed Assets -$ 1,038$ 838$ 238$ Other Assets -$ -$ -$ -$

Total Assets -$ 2,207$ 1,127$ 4,884$

Liabilities and Equity Accounts Payable -$ -$ -$ -$ Short-term Loans Payable -$ -$ 1,000$ -$ Other Current Liabilities -$ -$ -$ -$

Total Current Liabilities -$ -$ 1,000$ -$ Long-term Debt -$ -$ -$ -$ Other Liabilities -$ -$ -$ -$

Total Liabilities -$ -$ 1,000$ -$

Equity Retained Earnings -$ -$ 2,207$ 127$ Current Year Earnings -$ 2,207$ (2,081)$ 4,757$

Total Equity -$ 2,207$ 127$ 4,884$

Total Liabilities and Equity -$ 2,207$ 1,127$ 4,884$

STRESSLESS EVENTS Pro Forma

Balance Sheet for the Period Ending

STRESSLESS EVENTS Pro Forma

Statement of Cash Flows for the Month Ending

Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 Cash Flows from Operations

Net Income 1,681$ 1$ 1$ (705)$ 707$ 1,645$ 707$ (705)$ (705)$ 707$ Depreciation -$ 42$ 42$ 42$ 42$ 42$ 42$ 42$ 42$ 42$ Changes in Working Capital

Accounts Receivable1 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Inventories1 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Other Current Assets1 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Accounts Payable2 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Other Current Liabilities2 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Net Cash Provide by Operating Activities 1,681$ 43$ 43$ (663)$ 749$ 1,687$ 749$ (663)$ (663)$ 749$

Cash Flows from Investing Activities Purchases of Property and Equipment

Land -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Buildings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Building/Leasehold Improvements -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Machinery & Equipment -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Automobiles -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Office Equipment/Other 1,500$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Total Property and Equipment 1,500$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Acquisition of Other Assets -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Net Cash Used in Investing Activities 1,500$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Cash Flows from Financing Activities Short-term Borrowings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Repayment of Short-term Borrowings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Long-term Borrowings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Repayment of Long-term Borrowings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Acquire (Repay) Other Liabilities -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Sale of Stock -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Payment of Dividends -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Net Cash Provided by (Used in) Financing Activities -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Net Increase (Decrease) in Cash 181$ 43$ 43$ (663)$ 749$ 1,687$ 749$ (663)$ (663)$ 749$

Plus Beginning Cash -$ 181$ 224$ 267$ (396)$ 353$ 2,040$ 2,789$ 2,126$ 1,463$

Ending Cash 181$ 224$ 267$ (396)$ 353$ 2,040$ 2,789$ 2,126$ 1,463$ 2,212$

VI

STRESSLESS EVENTS Pro Forma

Statement of Cash Flows for the 12 Month Period Ending

Jun-05 Jun-06 Jun-07 Cash Flows from Operations

Net Income 2,207$ (2,081)$ 4,757$ Depreciation 462$ 500$ 600$

Net Cash Provide by Operating Activities 2,669$ (1,581)$ 5,357$

Cash Flows from Investing Activities Purchases of Property and Equipment

Automobiles -$ -$ -$ Office Equipment/Other 1,500$ 300$ -$

Total Property and Equipment 1,500$ 300$ -$ Acquisition of Other Assets -$ -$ -$

Net Cash Used in Investing Activities 1,500$ 300$ -$

Cash Flows from Financing Activities Short-term Borrowings -$ 1,000$ -$ Repayment of Short-term Borrowings -$ -$ 1,000$

Net Cash Provided by (Used in) Financing Activities -$ 1,000$ (1,000)$

Net Increase (Decrease) in Cash 1,169$ (881)$ 4,357$

Plus Beginning Cash -$ 1,169$ 289$

Ending Cash 1,169$ 289$ 4,646$

VII

STRESSLESS EVENTS Pro Forma

Breakeven Analysis for the 12 Month Period Ending

Jun-05 Jun-06 Jun-07

Summary of Income Statement By Cost Type

Sales 43,500$ 52,201$ 73,800$ Variable Costs Variable Cost of Sales 19,411$ 15,528$ 18,816$ Variable Operating Costs -$ -$ -$ Variable Interest, Taxes and Other 390$ -$ 839$

Total Variable Costs 19,801$ 15,528$ 19,655$

Contribution to Fixed Costs 23,699$ 36,673$ 54,145$

Fixed Costs Fixed Cost of Sales -$ -$ 0$ Fixed Operating Costs 21,492$ 38,730$ 49,362$ Fixed Interest, Taxes and Other -$ 24$ 25$

Total Fixed Costs 21,492$ 38,754$ 49,388$

Net Profit (Loss) 2,207$ (2,081)$ 4,757$

Margins Analysis

Variable Cost per $ of Sales 0.46$ 0.30$ 0.27$ Amount available per $ of Sales to Pay Fixed Costs 0.54$ 0.70$ 0.73$

Contribution Margin 54.48% 70.25% 73.37%

Breakeven Analysis

Breakeven Sales based on EBIT 39,449.34$ 55,130.96$ 67,279.06$

Breakeven Sales Based on All Expenses 39,449.34$ 55,165.12$ 67,313.25$

VIII

ASSUMPTIONS The figures on the previous financial forms are based on the following assumptions:

Events During the first year of operations, an event will need to be staffed on average with 2.5 employees working 8 hours. The total of 20 hours includes 3 Prep hours, 7 server hours, 7 bartending hours and 3 valet-parking hours. During the first year of operations, Stressless Events will staff 145 events thus resulting in 2900 hours of service. Each hour of service is billed at an hourly rate of $15, which will be increased after two years to $17.50 per hour. Satisfied customers are assumed to be repeat customers for an average of six events per year. Over the next three years, the services for servers, bartenders and valet-parking will steadily increase at 15% per year whereas the requests for preparation service will increase at 15% per year as well as an hour increase of service hours per event in the preparation section. YEAR 1 YEAR 2 YEAR 3 Hours/$ Hours/$ Hours/$ Preparation 435/ 6525 645/ 9679 957/ 16750 Serving 1015/ 15225 1167/ 17509 1342/ 23491 Bartending 1015/ 15225 1167/ 17509 1342/ 23491 Valet-Parking 435/ 6525 500/ 7504 575/ 10068

Employee Staffing / Compensation

• Owner or assistant manager is one of the employees working at the events • Owner salary will equal $1000 per month or 20% of Net Sales whichever is greater

during the first year of operations • Owner salary in the following two years will increase by $500 per month (annual

increase) and 5% of Net Sales during the next two years; again, paid is the greater of the two amounts

• Assistant manager part-time in second year of operations ($750 per month) • Assistant manager increased salary of $1100 starting year 3 • Employees will not receive retirement or health insurance benefits • All part-time employees will be paid $10 per hour worked • Part-time employees will receive up to a 10% annual increase upon performance

review (averaging at 5%)

IX

Accounts Management/ Financing • All accounts receivable and payable will be cash only • Part-time employees will be paid monthly according to their time-card • Owner and assistant manager will be paid monthly according to salary agreements • If needing outside funding, the following interest rates apply

Short-term Rates Long-term Rates

• Tax rates are computed using the following chart

Tax Rates by Range Range Rate

$ - $ 10,000 15% $ 10,001 $ 50,000 25% $ 50,001 $100,000 35% $100,001 or greater 45%

• Year-End cash on hand is never to be below $250 to ensure cash for bills • If Year-End cash on hand is below $250, short-term borrowings will be used to

increase cash in increments of $1000 • If Net Income is positive, a performance bonus of 50% of Net income will be paid to

the owner at the beginning of the next year

Year Ended Jun-05 Jun-06 Jun-07

4.50% 4.75% 5.00% 6.00% 6.50% 7.00%