Tech Plan Evaluation and Analysis
Prof Xavier
southern_oregon_pottery_1.pdf
SOUTHERN OREGON POTTERY Business Plan Prepared by Jaclyn Hayden
BA 499 SUMMER 2015 SOUTHERN OREGON UNIVERSITY
Professor Kurt Knudsen
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Executive Summary
The following business plan covers the opening and first three years of operation for
Southern Oregon Pottery LLC, a paint your own pottery studio to be located in Medford,
Oregon. This business is to be founded by Jac Hayden with the intent of being a fun,
relaxing activity for groups and individuals in the Jackson County area. At its inception,
Southern Oregon Pottery will simply focusing on providing materials, instruction, and
space for customers to paint and decorate clay items of various sizes, styles, and prices
to be glazed and fired by the business in order to create long-lasting pieces of art that
our guests will enjoy making and enjoy for years to come.
Southern Oregon Pottery will open on May 10th, 2016. This day allows the business
about six weeks to get adjusted and acquainted with the industry and consumer base
before diving into the busy summer season where an upswing in attendance is
expected. The business will be located at 1040 Crater Lake Avenue, Suite A in Medford,
Oregon. The business will be managed by owner Jac Hayden and will have four other
company regular employees as well as one contracted bookkeeper and will be open five
days a week year round, with an exception for federal holidays.
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Table of Contents
Executive Summary………………………………………….………………………………….1
Company Description……………………...……………………………………………………4
Mission Statement………………………………………………………………………4
Form of Business………………..……………………………………………………….4
Products and Services...…………..…………………………...…………………………4
Management & Staffing............………………………………………………………….4
Geographical Information……………...………………………………………………5
Financial Status……………………….…………………………………………………5
Development to Date……………………………………...…………….………………5
Future Development………………………………………..……...………………….....5
Industry Analysis…………………………………………………………………….…………..6
Classification……………………..………………………………………………………6
Growth……………………………...………………………….………………………….6
Trends………………………………...………………………………………………...…6
Seasonality…………….………………………………………………………....………..7
Regulations & Barriers to Entry....…………………………..…………………………..7
Target Market Analysis…………………………………...…………………….……………….7
Demographics......………………………………………………………………………....8
Geographic Description……..…………………………………………………………...8
Purchasing Patterns & Buying Sensitivity……………………………………………..8
Total Market Potential………..………………………………………………...………..9
Competitive Analysis……………………………………………………….………………...….9
Direct Competition………………………………………………………………..……10
Indirect Competition…………………………………………………………………...10
Future Competition…………………………………………………………………….10
Strategic Position & Risk Assessment………………………………………………………...11
SWOT Analysis…………………………………………………………………………11
Strengths………………………………………………………………………...11
Weaknesses……………………………………………………………………...11
Opportunities………………………………………………………...…………11
Threats…………………………………………………………………………..12
Risk Assessment………………………………………………………………………...12
Managing Risk………………………………….………………………………………12
Marketing……………………………………………………………………………………….12
Radio……………………………………………………………………………………..13
Other Advertising………………………………………......…………………………...13
Marketing Costs……………………….....……………………………………………...14
Facilities & Operations……….………………………………………………………...………14
Studio Space…………………………………………………………………………….14
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Hours of Operation……………………………………………………………………14
Machinery………………………………………………………………………………16
Materials………………………………………………………………………………...16
Other Equipment & Furniture…………………………………………………...……17
Contingency Plan………………………………………………………………………18
Technology……………………………………………………………………………………...18
Internet & Phone……………………………………………………………………….18
Point of Sale…………………………………………………………………………….18
Technology Equipment Costs………………………………………………….……...19
Management & Organization…………………………………………………………………19
Management Team…………………………………………………………………….20
Other Employees……………………………………………………………………......21
Organization…………………………………………………………………………….22
Social Responsibility…………………………………………………...……………….………22
Exit Plan…………………………………………………………………..........………………....23
Financial Statements…………………………………………………………………………...24
Cash Flows………………………………………………………………………………24
Income Statement………………………….…………………………………………...25
Balance Sheet…………………………………....………………………………………26
Breakeven Analysis…………………………………………………………………….27
Ratios…………………………………………………………………………………….28
Present Value Analysis………………….……………………………………………...29
Statement of Cash Flows…………………………………………………………….....29
References………………………………………………………………………………………30
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Company Description
Southern Oregon Pottery is a paint your own pottery studio which allows customers to
paint and decorate preformed clay figurines which will later be glazed and fired to
create sturdy, long lasting pieces. The company’s physical location is in Medford,
Oregon and has a web address of southernoregonpottery.com.
Mission Statement
Southern Oregon Pottery aims to add to the rich, artistic atmosphere of southern
Oregon by providing a space for pottery and craft enthusiasts of all types to create
artwork in a relaxed and fun environment.
Form of Business
Southern Oregon Pottery will be a sole proprietorship led by owner/manager Jac
Hayden. The company will open its doors to customers on May 10th, 2016. This will give
the company 4-6 weeks before the busy season begins. The company will begin moving
into its location at 1040 Crater Lake Avenue beginning May 1st, so as to make sure all
furniture, equipment, and supplies are properly set up and working. Hourly staff will go
through three hours of art training so they can properly assist customers when the
business opens. The staff will work together to get the location set up so that they all
have a hand in opening the business together, and are comfortable working together
before working with customers.
Products and Services
Southern Oregon Pottery will have one major offering to consumers – pottery painting.
The company will provide blank, unfinished clay pieces and figurines in a variety of sizes
and styles. After being painted and decorated using products provided by Southern
Oregon Pottery, the company will complete the firing and glazing process in a timely
manner and guests will be able to pick up their pieces in one weeks’ time.
Southern Oregon will also offer private studio rentals. This will allow groups to
guarantee the entire studio to themselves for any amount of hours they book. With the
hourly fee charged for the studio rental, the sitting fee will be waived for all guests. For
an additional hourly fee, a private group can request art instruction from the company’s
salaried art instructor. This service allows for a more structured atmosphere for groups
and is ideal for parties, school groups, and clubs.
Management and Staffing
The general manager will Jac Hayden, the owner and sole proprietor. The manager is
expected to present each business day for most business hours, as well as outside of
regular business hours to assist with private studio rentals, setup and cleanup of the
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studio, and assistance in firing/glazing/cooling pottery. In addition to the manager,
there will also be an art instructor who will work full time and will lead the staff in
instruction and assistance of customers. There will also be three hourly staff members
who work 18-30 hours weekly and work on various tasks from customer assistance,
sales, group reservations, setup and cleanup, and others as required. A bookkeeper will
be contracted from a local firm to work several hours monthly with the manager to
assist in proper bookkeeping, payments, etc.
Geographical Information
Southern Oregon Pottery will be located at 1040 Crater Lake Avenue, Suite A, Medford,
Oregon. This is a central location in the city of Medford, allowing for a high volume of
car and pedestrian traffic to clearly see the business. The location features a private
parking lot shared with three other suites. Southern Oregon Pottery’s space will be on
the ground floor of the two-story building. The location is in a commercial area and
within a short distance of several other businesses, but none that would be in direct
competition with Southern Oregon Pottery.
Financial Status
To avoid taking out loans, owner and manager Jac Hayden will invest $20,000 of
personal savings derived from five years of working full time jobs and payouts from
bonds given to her since childhood. This personal investment will go to mostly to
startup costs and will additionally cover costs as needed during the businesses slower
months.
Development to Date
To ensure future success of the business, thorough research has been done on the
demand and interest for a pottery painting studio in the Jackson County area that
Southern Oregon Pottery would serve. Target market, industry, and financial analyses
have been performed and financial statements have been drafted. Needs have been
determined and secured in regards to location, supplies, and staffing.
Future Development
In the future, Southern Oregon Pottery hopes to add a delivery service that would bring
finished art right to the artist’s doorstep. This would allow for additional convenience for
the customer and as it would require a fee, additional revenue for the business. The
hope is also to add a wine bar to the establishment. This would attract a different
audience and would allow for a looser, fun atmosphere during wine service hours. When
this feature begins service, it will feature only local wines. This will attract customers who
believe heavily in keeping local funds local, as well as allow for mutual advertising
between the wineries and Southern Oregon Pottery, who would require wineries being
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served in the business to feature Southern Oregon Pottery marketing material to be
featured in their tasting rooms or on their websites.
Industry Analysis
Classification
Southern Oregon Pottery will fall into NAICS code category 451120, defined as “Pottery
(unfinished pottery to be painted by customer on premises) stores (2012 NAICS
Definition, n.d.).” Several other craft and hobby store and business types fall into this
coding as well. Very little data on the paint-your-own-pottery industry is available.
Growth
As of 2013, the crafting industry was worth $29 billion and growing (Gorry, 2013).
Several factors attribute to this, including multimedia exposure of the industry, flexibility
of the industry, and an increase of disposable income since the end/slowing of recent
recessions. Per the United States Census Bureau, there were around 100 business falling
into NAICS category 451120 in Oregon in 2012. The map below, also courtesy of the
Census Bureau, indicates that 6-12 of them were located in Jackson County. Current
research indicates that this number has not changed notably since 2012. Per a 2014
report by Jocelyn Phillips with IBISWorld, “Competition will intensify and subdue growth
as disposable income levels recover.”
("Industry Snapshot," 2015).
Despite a rise in competition, the industry actually saw a decline of .6% annually in
2009-2014. However, growth is expected to pick up marginally, by about .3% annually in
2015-19 (Phillips, 2014).
Trends
Annual revenues in the industry are projected to raise only slightly in the next few years,
and this is directly related to the rising trend of discount stores and major mainstream
retailers flooding and taking over the market. With craft stores like Michaels’ being a
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major player in the craft industry, customers have become attuned to large retailers’
pricing and are beginning to shy away from small independent stores.
Seasonality
There are few seasonal factors in the arts and crafts and hobby industries. For business
that require a significant amount of time spent on hands on labor, the busiest time
would be that when the customer is the least distracted by other time-restraining
activities like work or school. Since children and families dominate the craft-making
industry, research into local businesses proves that summer tends to be the busiest
season. July and August are projected to be Southern Oregon Pottery’s busiest months
each year.
Regulations & Barriers to Entry
Much of the regulations of this industry are directed at the protection of children. Since
nearly all arts and crafts products can be or are geared towards children, they are strictly
enforced by the Consumer Product Safety Improvement Act (CPSIA) of 2008. This
regulation “included provisions addressing, among other things, lead, phthalates, toy
safety, durable infant or toddler products, third-party testing and certification, tracking
labels, imports, ATVs, civil and criminal penalties and SaferProducts.gov, a publically-
searchable database of reports of harm ("The Consumer Product Safety," 2013).” Aside
from this and other national and state regulations that all businesses must follow to
ensure their own legality and the safety of their customers, there is little regulation
specifically to the art and craft industry. As the make-your-own-pottery industry is fairly
new and independent, few if any regulations have been set specifically for it.
The biggest barrier to entry will be pricing. Especially with the rise of discount retailers
dominating the art and craft industry, consumers will be particularly aware of beginning
and increasing pricing. When creating their own art pieces, customers will consider the
price difference in going to a specialized studio vs. a generic craft store, such as
Michael’s or JoAnn Fabrics vs. DIY projects at home. Another barrier will be startup costs.
From space rentals to expensive professional-grade equipment to labor costs, opening
any business but especially one such as an art studio would require sizeable capital.
Target Market Analysis
The paint-your-own-pottery industry has the luxury of being like much of the arts and
crafts industry in that it is accessible to almost anyone. Low cost and low skill necessity
allow it be performed by anyone who has the desire to. The activities offered at
Southern Oregon Pottery will appeal to an audience with some disposable income, an
appreciation for art, and enjoyment of working with their hands and working with
others. The prediction is that groups will come into Southern Oregon Pottery in groups
of two or more, and that there will be a significant amount of family groups visiting. This
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differentiates the business from others that focus on solo work. It is also allows for a
certain age group. Pottery painting can be enjoyed by those of almost any age, but
there is expected to be little interest from consumers over the age of 55. Most private
studio rentals are expected to be for childrens’ birthday parties and school groups. At its
inception, Southern Oregon Pottery will intend to appeal to a mostly young and familial
target market. Jackson County, Oregon has a wide number of families and a fairly young
demographic on the whole, and therefor has a very sizeable market to appeal to.
Demographics
Southern Oregon Pottery intends to pursue customers falling into one or more of the
following categories:
Between the ages of 5-54
Enjoys hands on work such as painting
Personal or household income of $25,000+
Lives in Jackson County, Oregon
Geographic Information
Southern Oregon Pottery will be located in central Medford. Guests are projected to be
willing to travel up to 30 minutes to get to this business based on its unique offerings
and the distance to any similar businesses. Butte Falls, Oregon is the only city in the
county that would fall outside of this time range, but the town of less than 500 people,
per southernoregon.com, does not have many businesses of its own, especially of an
entertainment nature. Medford is a much larger town and is known to pull many
customers from smaller surrounding towns. In total, there are eleven cities within the
county which covers a space of 2,800 square miles. Per the United States Census Bureau,
Jackson County as a whole had 210,287 citizens in 2014.
Purchasing Patterns & Buying Sensitivity
According to a U.S. Census Bureau study in 2010, 6.1% of adult U.S. citizens had
participated in painting/drawing leisure activities within in last twelve months overall.
.7% of those people participated one a month and another .7% participated two or
three times a month, .6% participated once a week and 1% participated twice or more
weekly (“Arts, Recreation, & Travel," 2014). This survey is nearly identical to a 2008
Census Bureau survey which determined that 6% of people in the U.S. participated in a
pottery leisure activity at least once in the last twelve months. “Arts and Humanities--
Selected Federal Aid Programs,” 2008). According to another Census Bureau study, these
leisure activities added up to approximately $17.7billion in revenue in 2009 (“Consumer
Expenditures,” 2014), but down to $17.3billion in 2014 with 35% of that sum going to
hobby, craft, and art supplies (Phillips, 2014).
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Consumers have a lot of choices when choosing a leisure activity in Jackson County. One
of the first considerations they will make is the kind of activity they’d like to participate
in. Upon choosing an arts and crafts activity, the choices are limited down to just a few.
Consumers are particularly attuned to price in this industry and will consider the pros
and cons of spending approximately $12-25 per person on a craft project. They will also
consider that they will have to return to the store 7-10 days after their first visit in order
to pick up their wares. The amount of time and cost of traveling to the studio twice will
often play considerably into a consumer’s mind when deciding to visit Southern Oregon
Pottery, especially if the consumer lives in one of the farther corners of Jackson County,
or has a busy schedule that does not bring them near the studio often.
Total Market Potential
To determine the total market potential, meaning the potential number of times people
would come in and pay a sitting fee to participate in activities at Southern Oregon
Pottery, several numbers were calculated. All data used to determine the total market
potential was taken from the United States Census Bureau website. The most recent
data and statistical figures, ranging between years 2008 and 2014, were used. Firstly, the
number of people with in the target age range, 5-54, within Jackson County was found
to be 112,545, with a yearly population growth of just under 1%. The next step was to
determine approximately how many of these people were in households earning
$25,000 or more annually, which came to be 72.6%. This left a group of 81,708 citizens.
Using the previously noted 6% of persons participating in pottery at least once yearly, a
total of 4,902 (rounded from 4,902.48) potential customers was found. Based on
personal knowledge and research, a frequency of 1 was determined. This left a total
market potential of 4,902. This total market potential amount was used as the number
of sitting fees, not including private studio rentals, Southern Oregon Pottery would
expect in their first year of business.
Competitive Analysis
Southern Oregon Pottery has a specific business model, and faces a variety of
competitors in the Jackson County area that this business will focus on serving.
However, Southern Oregon Pottery will be the only in the area that does exactly what it
does, pottery painting and finishing in a studio-like, centrally located building. The
business will face a variety of other art-related businesses and stores throughout the
county.
Direct Competition
The main direct competitor will be HotPots, a mobile service that focuses on ceramic
painting. They are different in that they are a ‘party delivery service.’ They do not have a
brick and mortar location, and they do not offer the flexibility that Southern Oregon
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Pottery will. They also offer all of their services in packages, with minimum orders
starting in the $60 range. Southern Oregon Pottery will have the advantage of being
much more affordable, with no minimum purchase. At Southern Oregon Pottery,
customers can enjoy a fun, artistic experience for under $15 per person.
Also considered direct competitors would be businesses that sell pottery items. In
Jackson County, this would include Legends Pottery Outlet, Frank Phillips Pottery, and
Dodero Studio Ceramics.
Indirect Competition
Oregon, especially in the beautiful Jackson County area, is known as an outdoorsy,
natural-loving community. One of the biggest obstacles Southern Oregon Pottery will
face is convincing people to come inside and paint, rather than be outside with the
surrounding parks, rivers, hiking trails, etc. Potential customers only have a finite amount
of leisure time, and have to make the choice to spend it inside this business.
Once they have made the choice to visit a craft-based business, Southern Oregon
Pottery still faces some competitors. There are about ten craft businesses in Jackson
County that would be considered indirect competition, including:
Michael’s Arts & Crafts
Craft Warehouse
Scrappy Craft
JoAnn Fabrics
Dancing Beads
Also considered indirect competition would be the approximately ten paint-your-own
pottery studios in Oregon, each well outside Jackson County. Each studio would be at
least two to six hours away by car, rendering them outside a range that would be
considered direct competition.
Future Competition
With large discount stores like Michael’s and JoAnn Fabrics dominating the market, a
large influx of small independent studios and art stores is not expected. According to a
2012 U.S. Census Bureau study based on NAICS code 451120, the number of businesses
in this sector had declined by 12% in the last five years, leaving 172 businesses. More
recent decent from IBISWorld shows that the industry overall is currently declining at a
much slower pace, approximately .6% (Phillips, 2014). The same report suggests that the
industry in 2015 will begin to slowly start increasing again, at a rate of .3%. Such a slow
rate of increased business will not cause a concerning amount, if any, of new
competition to Southern Oregon Pottery in the near future, especially considering the
state’s recent steeper-than-average decline in the industry.
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Strategic Position & Risk Assessment
Southern Oregon Pottery has the advantage of being the only business of its kind in
Southern Oregon. However, the industry is vast and faces many uncertainties as it goes
from a period of decline to a projected period of growth. This business plans to stand
out from its direct and indirect competitors is several ways:
Unique business model unlike current competitors
Central location in high traffic area of Medford
Outstanding, service-oriented and art-oriented staff
Continuing advertisement throughout Jackson County
SWOT Analysis
By determining Southern Oregon Pottery’s strengths, weaknesses, opportunities, and
threats, the business can strategize how to best use its best assets while avoiding the
pitfalls that other new arts and crafts and services businesses might fall into.
Strengths
Affordable pricing that allows a large base of customers access to the business
Large and inviting space allowing up to 36 guests; open five days a week with
private studio rentals available
Professional art instructor on staff; all staff trained in aspects of painting and
ceramic making to better lead customers
Weaknesses
One direct and several indirect competitors in Jackson County
No current delivery, food or beverage services
New business having to face established and well-known competitors
Opportunities
Teaming up with other local businesses, such as wineries or material suppliers
Other units in same building allow for easy expansion if and when needed
Item delivery, extended hours, other services easily addible
Threats
Bargain retailers like Michael’s and JoAnn Fabrics present in Medford
Similar businesses in Oregon, with potential to expand into Jackson County
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Large number of other leisure activities in Jackson County.
Risk Assessment
The biggest risk Southern Oregon Pottery is making is the assumption that customers
will attend the business. Although the target market has been carefully determined and
studied and data-based projections made, there is no guarantee that this kind of
business will be as successful as projected.
Furthermore, there is a significant amount of indirect competition in Jackson County,
much of which is concentrated in Medford. Some of the most threatening of these
competitors would be Michael’s, which holds 22.9% of the market share covered by
NAICS code 451120 (Phillips, 2014). The Michael’s location in Medford does offer craft
classes and lessons but not ones that focus on pottery or ceramics, nor do they have a
significant or unique collection of these items in their store. In short, they do not have
anything that would make them a direct competitor to Southern Oregon Pottery, but
their presence alone is enough to intimidate a new and comparatively small craft
business.
Managing Risk
The best way to face competition is for Southern Oregon Pottery to play up their
uniqueness. In the business’ marketing campaign, it will be prominently advertised that
a fully time, professionally trained art instructor will be on staff. Careful attention will be
paid to attendance levels and customer wants, needs, and patterns. The manager/owner
will keep up with local events and will attend or advertise at them as appropriate. The
first year of business allows for a lot of flexibility in the business and changes will be
made as needed to better suit the target customer base.
Marketing
Because Southern Oregon Pottery is the only business that does exactly what it does in
Jackson County, the business will rely heavily on word-of-mouth marketing. This would
allow the business to reach a significant audience while saving a substantial amount of
money. Advertising is very expensive in nearly any region, but especially in Jackson
County, as there are few advertising outlets available and high necessity and
competition for them, especially from small businesses like Southern Oregon Pottery.
The area is known to be largely a tight-knit, familial place filled with many independent
businesses firmly supported and upheld by their community. Aside from word of mouth,
Southern Oregon Pottery will utilize an array of marketing tactics, including:
Radio
Flyers
Online
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Public appearances & presence at community events
There will be very few if any discounts or ‘money-saving’ promotions. Southern Oregon
Pottery’s products and services have value that is impressive considering the standard
prices. The business offers accessibility to nearly anyone based and low need of skill and
low pricing. The most expensive part of Southern Oregon Pottery’s marketing efforts will
be radio advertisements.
Radio
Based on some research, radio reaches upwards of twice as many consumers as other
media sources. However, it does tend to be on the expensive side, especially in a smaller
area like Jackson County. Because of the high cost, Southern Oregon Pottery will start by
advertising on only one two radio stations, KISS FM, and Hot 98.9. According to
gaebler.com, “The estimated ad rate for the radio station is $25.00.” This estimate covers
one 30-second advertisement. Southern Oregon Pottery would intend to run two ads
per day, seven days a week for the first month of business, May 2016. In order to hit all
audience types, the ads will run at a different time each day. This alone will cost $3,000
in startup marketing costs. After the first month, Southern Oregon Pottery will cut their
radio advertising in half, going down to one ad per radio station per day. Radio
advertising is very expensive and will stop running after six months. It will be used
occasionally, especially surrounding special occasions and new product or service
launches as a way of invigorating interest in the public eye.
Other Advertising
Southern Oregon Pottery will spend another $500 in the first month on other
advertisement forms, such as locally based websites, paper flyers, and a small amount of
sponsorship of local events such as the Britt Festival and sporting events at the AT&T
fields in Medford. The business has chosen not to partake in print advertising, as this
reaches a far smaller audience and would not be worth the advertising budget dollars.
A major component of Southern Oregon Pottery’s marketing tactics will public presence.
This will also tie into the business’s efforts for community outreach and social
responsibility. The owner/manager, Jac Hayden, will make serious efforts to attend and
speak of the business at as many social community events as possible. This includes
everything from attending chamber of commerce meetings throughout the county, to
attending festivals, concerts, etc. as both an involved community member and proactive
business owner. The rest of the employees will be required to participate in local events
as well, mostly volunteer opportunities. By having staff members out in the community,
talking about the business and showing their good community spirit, word of mouth will
spread quite easily and customers will be encouraged to repeatedly visit a wholesome
local business.
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Marketing Costs
Advertising will cost $3,500 in the first month of business, and $1,800 monthly for five
months after. In the final six months of the first year of business, marketing will be cut to
$500 monthly and will stay with this budget in years two and three.
Facilities and Operations
Southern Oregon Pottery will operate from Medford, Oregon at the address 1040 Crater
Lake Avenue, Suite A in Medford, Oregon. This is a first floor space at a two-story,
single-building address. At present the other units are occupied by an insurance agency
and two other small businesses. The block the business is located on sees between
15,300 and 15,800 cars going past it each day ("Medford 2012 Traffic Volumes"). This
allows for a very high level of visibility and an opportunity for many walk-ins, or visitors
who did not originally intend to visit the business but want to “check it out.”
Studio Space
A layout of the property is located below. The space has the benefit of being centrally
located in an area close to a shopping mall, grocery and convenience stores, and several
additional amenities that locals and travelers. It is also near to a hospital. The space is
passed by thousands of cars daily is in an easily accessible, easy to find location. One big
perk to this central location is the semi-private parking. The lot and building are shared
by three other suites, but there remains ample off-street parking. At 1,125 square feet,
the space offers one large room that provides ample room for a variety of tables, chairs,
and storage space. There is also a private office, which will store the kilns and other
operational equipment. On the opposite side of the space, there is a small kitchenette
area as well as storage closet and restroom.
Hours of Operation
Southern Oregon Pottery will operate from this location five days per week. It was
determined that the business would need three hourly employees in addition to the
fulltime, salaried manager/owner and art instructor. The business will be closed
Mondays and Tuesdays. Days off were chosen through personal research and
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determining that these tended to be slower days for current pottery-painting studios. In
order to give the manager and art instructor days off while still being present every day
of operation, and to keep workweek hours reasonable, it was determined that the store
would be closed two days a week rather than just one. Hours for the remaining days are
as follows:
Wednesday & Thursday: 11am-7pm
Friday & Saturday: 11am-9pm
Sunday: 12pm-5pm
Studio hours extended as rented for private use Wednesday through Sunday only.
In a typical week, the manager will work approximately 40-50 hours, the art instructor
will work approximately 40 hours, and the other employees will work 18 or 24 hours. A
typical workweek schedule would resemble the following:
Wednesday & Thursday Friday & Saturday Sunday
Owner: 10am-6pm Owner: 10am-6pm Owner : 10am-6pm
Instructor: 12pm-8pm Instructor: 12pm-9pm Instructor: 11am-6pm
Employee 1: 10am-4pm Employee 1: 10am-4pm Employee 3: 12pm-6pm
Employee 2: 2pm-8pm Employee 2: 4pm-10pm
Employee 3: 4pm-10pm
There will be periods that the entire studio will be rented out. When the studio is
privately rented, hourly employees are expected to work alongside the manager. In the
case of the art instructor, scheduled hours may change to accommodate private hire
clients who are paying extra for instruction, in order to control labor costs and not have
excessive workweek hours. First year studio rental projects no more than 24 hours of
private studio rental total in any given month. In the case of private studio rentals, the
hourly employee who has the least scheduled hours for the given week will be selected
the private studio hours.
Private studio rentals are priced by the hour. They are to be scheduled by any employee,
but must be confirmed by the owner/manager, Jac Hayden, to ensure proper set up,
staffing, and cleanup. There will be two tiers to the private studio rental. The first comes
at $125/hour and includes:
All sitting fees waved
Private studio time without other guests present
Assistance from the manager/owner and hourly employee
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The second tier comes at a price of $140/hour and includes:
All sitting fees waved
Private studio time without other guests present
Individual instruction and assistance from professional Art Instruction
Additional assistance from owner/manager and hourly employee
Private studio rentals are best suited for groups of 10-32. This type of service will not be
heavily promoted. Southern Oregon Pottery will attempt to keep their focus on normal
walk-in customers, but will happily allow for private studio rentals as requested. Because
of this lack of formal advertisement for this service, low private studio sales are
projected for Southern Oregon Pottery.
To keep on top of financials and other business figures that the staff does not have
enough formal training on, an independent bookkeeper will be contracted out to work
approximately ten hours per month. This person will work directly and only with the
owner/manager. An additional eight hours will be allotted for in March to allow for extra
time that will need to be spent getting annual taxes in order.
Machinery
One of the most important elements of a pottery business is a kiln. Southern Oregon
Pottery will function with two large-capacity kilns. The process of firing, glazing, and re-
firing takes many hours, so two kilns are necessary to manage the number of products
that will be going through the machines on a regular basis. The business will use two
Skutt KM1222-3 kilns, purchased for approximately $2,300 each. A total $5,000 startup
cost is allocated to kilns alone, as there are several costs that go along with the
purchase, setup, delivery, and accessories for the kilns. The kilns are warrantied for two
years by the manufacturer and will be purchased through clay-king.com. The small
amount of necessary additive equipment, such as heat moderators and cords, are
included in the purchase price. This machinery will be kept in the private office and is
strictly for personnel use only. All staff will go through training before being allowed to
use the machinery.
Materials
The activity to be done at Southern Oregon Pottery is simple. It is a paint-your-own-
pottery workshop. At present, this is the only service or activity offered by this business.
Several materials are needed to complete such a craft. Below are the materials that will
be used by customers and staff on a daily basis to create ceramic art, and the
retailer/supplier the items will be purchased from.
MATERIAL SUPPLIER
Smocks Kng.com
17
Paintbrushes Americanceramics.com
Paint Americanceramics.com
Unfinished Clay Pieces Wholesalemart.com
Finishing Glaze Bigceramicstore.com
The use of protective materials such as smocks, as well as use of paint, paintbrushes,
and glazing of the pieces, are included in the sitting fee. The ceramic pieces themselves
will come at four price points: $6, $12, $20, $40. Most painters will choose lower priced
items, although more experienced or creative artists will choose larger, more elaborate
and more expensive pieces. Guests typically stay at the studio for one to three hours,
and are projected to paint on average two pieces per visit. Southern Oregon Pottery will
mark up prices approximately 80-120% from what they are buying them for from the
wholesaler, so that pieces may fall into a preferable price point category. This is fairly
typical of this type of business, based on personal research.
Other Equipment & Furniture
The space at Southern Oregon Pottery allows approximately 36 people to comfortably
gather in the space, with ample walking and sitting room, as well as space for shelves to
display pieces available for purchase, art supplies, and other space as needed. The room
will be configured with several round and elongated tables. One large round table will
be used as a supply table, housing all paints and brushes while not in use. There will be
approximately 40 chairs at tables and in the office to be used as needed. Shelving units
towards the front of the store will be used for displaying items ready for pickup. An
extra work table and additional chairs will be located in the office. In the left corner of
the store, in front of the door to the office/machinery room, will be a desk where the
computer and cash register will be located. This will allow employees to view all guests
in the room while protecting valuable items at and behind the counter area. The
projected starting costs for all furniture, storage and display pieces, and small office
supplies (pens, paper, calendar, simple cash register, etc.), as well as minimal supplies for
the bathroom and kitchenette, are stated below.
ITEM (QUANTITY) COST PURCHASED FROM
Tables (8) $775 Office Max
Chairs (40) $1200 Target
Office Furniture $350 Office Max
Bookshelves for finished products $800 Home Depot
Floating shelves for unpainted pieces $500 Home Depot
Storage Cabinets $1390 Home Depot
Miscellaneous Office Supplies $100 Walmart
Studio Décor & Improvements $300 Various
18
This accounts for non-technology, non-equipment physical item startup costs of $5,415.
Approximately $500 will be spent each following year to repair and replace furniture and
equipment throughout the studio and office as needed.
Contingency Plan
Most areas have been covered in the case of emergencies or unexpected expenses. The
kilns, the most expensive equipment on the property, are covered for two years by full
warranties. Insurance covers most other potential issues. In the case of anything not
covered, a business credit card in the name of owner/manager Jac Hayden will have a
line of credit of $5400 and is to be used strictly for emergency purposes and is to be
paid off as quickly as possible by company-generated cash in order to avoid costly
interest payments.
Technology
As Southern Oregon Pottery is a craft business, technology needs are modest, and do
not require an excess of startup costs at this business. The business will use modern but
easy to use, low-tech software and hardware.
Internet & Phone
Internet service, as well as phone service, will be provided through CenturyLink.
Southern Oregon Pottery will take advantage of an advertised deal that guarantees a
rate of $68/month for three years, with an additional $118 in startup costs and services.
The manager and owner, Jac Hayden, has taken courses in web coding and design and
will serve as the company’s web master for southernoregonpottery.com. All staff
members will receive a @southernoregonpottery.com email address to which they will
be emailed their schedules and updates or newsletters on company happenings. The
domain name will be purchased through Godaddy.com for $240 per year. The business
will maintain a fairly simple but easy to navigate, informative website. Standard Wi-Fi
will be available onsite for staff and customers.
Point of Sale
Payment is accepted via cash or credit/debit card. Cash payments are to be made
through a standard register. Credit and debit card payments are rang in through a
Square card reader. All purchases are tracked through a point of sale. The manager and
art instructor will work together to create a tracking/ordering database for supplies
which will be kept on the business computer. Southern Oregon Pottery will use the
Lemon point of sale system. “Lemon POS is a configurable general Point of Sale, not
19
focused to a specific sector. It is aimed at micro, small and medium size businesses
("Lemon POS," 2015).” As Southern Oregon Pottery will start out as small business, but
certainly has the potential of growing into a larger one, this system is the perfect one for
it to grow with. One of the biggest advantages to this system is that it comes at no cost.
Once downloaded, the system is free to run. This will save Southern Oregon Pottery
upwards of $1800 plus update costs. This system also has many positive reviews from
other small businesses and is known to be simple and user friendly. Southern Oregon
Pottery staff will have to dedicate very little of their training time to learning this point
of sale system. As a free, software-only point of sale system, Lemon does not provide a
credit card reader. A Square reader will be purchased and used on all credit or debit
card transactions. “Plastic payments now account for 53 percent of consumer purchases
(Weinberg, 2014).” It is important to have a reliable credit card reader, as more than half
of sales will be conducted through it. Square, while a recent product, has tremendous
reviews from many similar small, independent businesses. Its fee is a low 2.75% per
transaction.
Technology Equipment Costs
While little technological equipment is needed at Southern Oregon Pottery, items of this
nature tend to have a significant price tag. The costs of tech items needed by the
business are listed below.
ITEM COST PURCHASED FROM
Lenovo Thinkpad X250 Laptop $836 Best Buy
HP Envy 5660 Printer $99 Best Buy
Cordless Phone $30 Walmart
Square Reader $29 Squareup.com
This leads to a total of $994 for physical technology startup costs. Technology, along
with furniture and equipment, will be displayed as ‘other operating expenses’ on the
financial statements.
Management & Organization
Southern Oregon Pottery will be a sole proprietorship owned by Jac Hayden, who will
also act as general manager. The intention is for the business to start out as a fairly small
operation that will require little managerial structure outside of the owner.
Management Team
20
Southern Oregon Pottery will be a sole proprietorship owned by Jac Hayden, who will
also act as general manager. The intention is for the business to start out as a small
operation that will require little managerial structure outside of the owner. The position
of owner/manager will not be paid for the first six months while the business is
recovering from startup costs and low attendance while the business gains recognition
and a stable customer base. After six months, the starting salary for this position is
$1800/ monthly equaling $10,800 in the first six months and $21,600 annually
thereafter. The manager/owner will have the most duties and responsibilities, including
but not limited to:
Opening/closing store
Booking private rentals
Bookkeeping/Checking figures
Inventory management
Guest assistance
Payroll
Hiring/Scheduling/Employee Relations
Webmaster
Marketing
Only one other full time staff member will be hired, who will also be salaried. This
person is intended to be a leader and manager to a lesser degree than the
owner/manager. This position will require art instruction job experience and preferably
some sort of degree or certification in relation to art. Their position will be referred to as
‘Art Instructor.’ They will have managerial power and be considered a superior to the
hourly employees without having the word ‘manager’ in their title. They will need to
have experience with pottery specifically, as this is the medium Southern Oregon Pottery
will deal in. The person who takes this position will be expected to work 40 hours per
week of regularly schedule shifts, as well as additional hours in which the studio has
been rented for private events. The position of Art Instructor will be paid $2,200
monthly, for a total of $26,400 yearly. This pay amount is considerably lower than
average, as craft artists earned a national average of $34,750 in 2012 ("Craft and Fine
Artists"). However, despite a lower starting salary this position has a litany of positive
aspects. Having a real, well-heard opinion and input on day to day operations is a huge
achievement for any person looking to further their career. Being able to teach the skills
they have honed for years on a daily basis is a rewarding and unique aspect of an
instructional job like this one. One of the most attractive features of this job that most
craft-related jobs cannot boast is the stability. “…Many, however, find it difficult to rely
21
solely on income earned from selling paintings or other works of art. Part-time and
variable work schedules are common for artists. Many also hold another job, in addition
to their work as an artist ("Craft and Fine Artists").” As Southern Oregon Pottery will
guarantee full time work and a consistent salary, the element of uncertainty is removed
from the job. The reasonable hours and days off also allow ample time for the Art
Instructor to conduct other work and create their own art in their spare time.
Other Employees
In addition to the manager and art instructor, three part time hourly workers will work
various shifts throughout each work week. These employees will not have managerial
responsibilities and will work shifts assisting guests and doing general cashiering,
greeting, cleanup, customer service, etc. These employees will work at the Oregon
minimum wage, currently $9.25/hour. Hourly employees will work no more than 25
hours per week. All hourly employees will receive training prior to the store opening so
they can better sell and master the product they are working with. Approximately three
hours training will be done by the manager and art instructor and must be complete
before employee can start working with customers. Requirements for hourly employees
include but are not limited to:
2+ years verified prior work experience
6 months + work experience with children and/or an artistic/craft
environment
High school diploma
3+ professional references
Open schedule, availability for variety of shifts
The owner/manager and/or the art instructor will be on site at any time an hourly
employee is present. Those with managerial power will be the only ones with keys to the
studio and office. They will also supervise in the glazing/firing process performed on the
ceramic pieces. Any staff member can schedule private studio rentals but must have the
event signed off on by the owner/manager before confirming it with the customer, to
assure that the proper employees are notified and the event is properly managed.
In addition to several hourly workers in the store, an independent
bookkeeper/accountant will be hired on an hourly basis. This person will be contracted
out by the owner/general manager Jac and will deal solely with her. Hours will be based
on business needs but are projected to equate approximately ten hours per month, with
a higher allotment during tax season. The role of this contracted person will be to track
and organize finances, consult with owner to keep business financially steady, assist in
creating budgets, prepare business taxes and dues during tax season, etc. This person is
22
projected to work for $16 per hour. Per payscale.com, this is slightly above the national
average of $15.57. The manager/owner will be doing a lot of day to day bookkeeping
practices, and will meet briefly with the bookkeeper to ensure that all finances, etc. are
taken care of properly.
Organization
Southern Oregon Pottery will be open five days a week, closed only on Monday and
Tuesday. Store hours are as follows:
Wednesday & Thursday: 11am-7pm
Friday & Saturday: 11am-9pm
Sunday: 12pm-5pm
The general manager will be present each day the store is open, but may be not present
for every hour the store is open as she will be there before and/or after the store
opens/closes on most days and may be away working on things for the business or off
site at any given time. The art instructor will work every day the business is open. With
private studio hires, the client can choose to hire the studio without the art instructor,
which will call only for one or two employees and the manager to work extra hours. The
art instructor is also expected to work private studio hire events per guest request. The
manager will approve adjusted shift times that accommodate private studio hires
outside of normal business hours. This would allow the art instructor to work outside of
normal hours but still work no more than 40-45 hours per week.
Southern Oregon Pottery employees will all report directly to the general manager.
Conduct is to maintain professionalism whilst creating a fun, relaxed environment.
Employees are expected to interact freely but appropriately with all guests. Uniform for
all employees will be ‘comfortable clothing and shoes’ and a smock with the company
name and logo. The employee smocks will be a different color than the provided to
guests ones to denote their association with the company. Employment for all will be
‘at-will,’ allowing both the manager and the employee to terminate employment at any
time with or without notice. Serious infractions in company policy, to be defined in an
employee handbook, will be documented and kept in the managers’ personal records. A
third documented infraction within 90 days or fourth overall will result in termination.
Southern Oregon Pottery aims for a fun environment for guests but also for employees,
but a certain level of employee behavior and work ethic will be demanded without
exception.
Social Responsibility
In its beginning years, Southern Oregon Pottery will not have the excess income to
invest heavily financially in the community, but will pursue outreach opportunities in
23
other ways. One goal is to gather all employees together once a month, on a day the
business is not open, to volunteer locally. The general manager will be in charge of
picking where to volunteer each month, reaching out to a variety of local outlets.
Repeated failure to participate in community outreach and volunteer opportunities will
be considered an infraction for the given employee. The business will also allow local
charities, fellow businesses, and individual causes to post posters and advertisements on
a bulletin board to be featured near the cashier counter. The general manager will be
responsible for monitoring what is posted, when, and for how long. Southern Oregon
Pottery will not offer discounts or complimentary painting sessions at the studio for
charities or similar organizations, but will happily work in the connection to mutually
promote within the local community.
Exit Plan
Southern Oregon will be up and running on May 10th, 2016 and will experience their
peak season shortly after this. Owner/manager Jac Hayden plans to put her entire life
savings into this business, but does not intend to own it for more than three years. After
the third year of business, Southern Oregon Pottery will still be profitable, even if only
by a very small margin. The owner/manager projects that the business can be sold for a
tidy profit over the $20,000 she put into it. Jac Hayden will be careful in selecting a
buyer for her business, and will continue to run Southern Oregon Pottery until a
preferable buyer comes along. The hope would be that an equally competent person
would step in and purchase the business and intend to run it with the same passion and
energy that the staff will have maintained over the previous three years. Southern
Oregon Pottery has the potential to become and continue to be a local institution and
with the right leadership, will certainly do so.
24
Financial Statements
Cash Flows
Southern Oregon Pottery
Pro Forma
Statement of Cash Flows
for the 12 Month Period Ending
Apr-17 Apr-18 Apr-19
Cash Flows from Operations
Net Income (697)$ 3,097$ 3,341$
Depreciation 994$ 1,052$ 1,052$
Changes in Working Capital
Accounts Receivable 1
-$ -$ -$
Inventories 1
-$ -$ -$
Other Current Assets 1
-$ -$ -$
Accounts Payable 2
-$ -$ -$
Other Current Liabilities 2
-$ -$ -$
Net Cash Provide by Operating Activities 297$ 4,149$ 4,393$
Cash Flows from Investing Activities
Purchases of Property and Equipment
Land -$ -$ -$
Buildings -$ -$ -$
Building/Leasehold Improvements 520$ -$ -$
Machinery & Equipment 5,000$ -$ -$
Automobiles -$ -$ -$
Office Equipment/Other -$ -$ -$
Total Property and Equipment 5,520$ -$ -$
Acquisition of Other Assets -$ -$ -$
Net Cash Used in Investing Activities 5,520$ -$ -$
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 20,000$ -$ -$
Payment of Dividends -$ -$ -$
Net Cash Provided by (Used in) Financing Activities 20,000$ -$ -$
Net Increase (Decrease) in Cash 14,777$ 4,149$ 4,393$
Plus Beginning Cash -$ 14,777$ 18,926$
Ending Cash 14,777$ 18,926$ 23,319$
25
Income Statement
26
Balance Sheet
Southern Oregon Pottery
Pro Forma
Income Statement
for the 12 Month Period Ending
Sales 197,392$ 100.0% 197,986$ 100.0% 198,580$ 100.0%
Less Cost of Sales:
Material 66,343$ 33.6% 66,542$ 33.6% 66,742$ 33.6%
Labor (including benefits) -$ 0.0% -$ 0.0% -$ 0.0%
Other Cost of Sales -$ 0.0% -$ 0.0% -$ 0.0%
Total Cost of Sales 66,343$ 33.6% 66,542$ 33.6% 66,742$ 33.6%
Gross Profit 131,049$ 66.4% 131,444$ 66.4% 131,838$ 66.4%
Operating Expenses
Personnel 78,494$ 39.8% 90,540$ 45.7% 90,540$ 45.6%
Depreciation 994$ 0.5% 1,052$ 0.5% 1,052$ 0.5%
Rent 11,940$ 6.0% 11,940$ 6.0% 11,940$ 6.0%
Electric 3,600$ 1.8% 3,600$ 1.8% 3,600$ 1.8%
Land Line/Internet 932$ 0.5% 932$ 0.5% 932$ 0.5%
Paint 6,000$ 3.0% 6,018$ 3.0% 6,036$ 3.0%
Brushes/Stencils/Etc 1,160$ 0.6% 720$ 0.4% 720$ 0.4%
Glaze 2,040$ 1.0% 2,040$ 1.0% 2,040$ 1.0%
0 -$ 0.0% -$ 0.0% -$ 0.0%
Bathroom/Kitchen/Misc. 1,025$ 0.5% 900$ 0.5% 900$ 0.5%
Square CC Reader Fees 2,878$ 1.5% 2,965$ 1.5% 3,053$ 1.5%
Business License 100$ 0.1% 100$ 0.1% 100$ 0.1%
0 -$ 0.0% -$ 0.0% -$ 0.0%
Website 240$ 0.1% 240$ 0.1% 240$ 0.1%
0 -$ 0.0% -$ 0.0% -$ 0.0%
Smocks 434$ 0.2% 254$ 0.1% 254$ 0.1%
Marketing 15,500$ 7.9% 6,000$ 3.0% 6,000$ 3.0%
Other Operating Expenses 6,409$ 3.2% 500$ 0.3% 500$ 0.3%
Total Operating Expenses 131,746$ 66.7% 127,801$ 64.5% 127,907$ 64.4%
Earnings Before Interest and Taxes (697)$ -0.3% 3,643$ 1.9% 3,931$ 2.0%
Interest Expense -$ 0.0% -$ 0.0% -$ 0.0%
Other Expense (Income) -$ 0.0% -$ 0.0% -$ 0.0%
Earnings Before Taxes (697)$ -0.3% 3,643$ 1.9% 3,931$ 2.0%
Income Taxes -$ 0.0% 546$ 0.3% 590$ 0.3%
Net Income (697)$ -0.3% 3,097$ 1.6% 3,341$ 1.7%
Return on Sales -0.35% 1.56% 1.68%
Return on Assets -3.61% 13.83% 12.98%
Return on Equity -3.61% 13.83% 12.98%
Apr-17 Apr-18 Apr-19
27
Breakeven Analysis
Apr-16 Apr-17 Apr-18 Apr-19
Assets
Cash -$ 14,777$ 18,926$ 23,319$
Accounts Receivable -$ -$ -$ -$
Inventory -$ -$ -$ -$
Other Current Assets -$ -$ -$ -$
Total Current Assets -$ 14,777$ 18,926$ 23,319$
Property and Equipment
Land -$ -$ -$ -$
Buildings -$ -$ -$ -$
Building/Leasehold Improvements -$ 520$ 520$ 520$
Machinery & Equipment -$ 5,000$ 5,000$ 5,000$
Automobiles -$ -$ -$ -$
Office Equipment/Other -$ -$ -$ -$
Total Property & Equipment -$ 5,520$ 5,520$ 5,520$
less acculumlated depreciation -$ (994)$ (2,046)$ (3,098)$
Total Fixed Assets -$ 4,526$ 3,474$ 2,422$
Other Assets -$ -$ -$ -$
Total Assets -$ 19,303$ 22,400$ 25,741$
Liabilities and Equity
Accounts Payable -$ -$ -$ -$
Short-term Loans Payable -$ -$ -$ -$
Other Current Liabilities -$ -$ -$ -$
Total Current Liabilities -$ -$ -$ -$
Long-term Debt -$ -$ -$ -$
Other Liabilities -$ -$ -$ -$
Total Liabilities -$ -$ -$ -$
Equity
Stock and Paid-in Capital -$ 20,000$ 20,000$ 20,000$
Retained Earnings -$ -$ (697)$ 2,400$
Current Year Earnings -$ (697)$ 3,097$ 3,341$
Total Equity -$ 19,303$ 22,400$ 25,741$
Total Liabilities and Equity -$ 19,303$ 22,400$ 25,741$
Debt/Equity #DIV/0! 0.0% 0.0% 0.0%
Debt/Total Assets #DIV/0! 0.0% 0.0% 0.0%
Southern Oregon Pottery
Pro Forma
Balance Sheet
for the Period Ending
28
Ratios
Southern Oregon Pottery
Pro Forma
Breakeven Analysis
for the 12 Month Period Ending
Apr-17 Apr-18 Apr-19
Summary of Income Statement By Cost Type
Sales 197,392$ 197,986$ 198,580$
Variable Costs
Variable Cost of Sales 66,343$ 66,542$ 66,742$
Variable Operating Costs 11,449$ 12,654$ 12,654$
Variable Interest, Taxes and Other -$ 546$ 590$
Total Variable Costs 77,792$ 79,742$ 79,986$
Contribution to Fixed Costs 119,600$ 118,244$ 118,594$
Fixed Costs
Fixed Cost of Sales -$ -$ -$
Fixed Operating Costs 120,297$ 115,147$ 115,253$
Fixed Interest, Taxes and Other -$ -$ -$
Total Fixed Costs 120,297$ 115,147$ 115,253$
Net Profit (Loss) (697)$ 3,097$ 3,341$
Margins Analysis
Variable Cost per $ of Sales 0.39$ 0.40$ 0.40$
Amount available per $ of Sales to Pay Fixed Costs 0.61$ 0.60$ 0.60$
Contribution Margin 60.59% 59.72% 59.72%
Breakeven Analysis
Breakeven Sales based on EBIT 198,542.66$ 192,811.45$ 192,989.04$
Breakeven Sales Based on All Expenses 198,542.66$ 192,811.45$ 192,989.04$
29
Present Value Analysis
Apr-16 Apr-17 Apr-18 Apr-19
Short-term Solvency
Current ratio (CA/CL)
Quick ratio (CA-inventory/CL)
Cash ratio (Cash/CL)
Long-term Solvency
Total Debt ratio (TL/TA) #DIV/0! 0.00 0.00 0.00
Debt-Equity ratio (TL/TE) #DIV/0! 0.00 0.00 0.00
Equity Multiplier (TA/TE) #DIV/0! 1.00 1.00 1.00
Times Interest Earned (EBIT/interest)
Cash Coverage (EBIT+depreciation/Interest)
Asset Utilization
Inventory Turnover (CGS/inventory)
Days' Sales in Inventory (365/Inventory Turnover)
Receivable Turnover (sales/AR)
Days' Sales in receivables (365/ Receivable Turnover)
Total Asset Turnover (sales/TA) 10.23 8.84 7.71
Capital Intensity (TA/sales) 0.10 0.11 0.13
Profitability Ratios
Profit Margin (NI/sales) -0.35% 1.56% 1.68%
ROA (NI/TA) -3.61% 13.83% 12.98%
ROE (NI/TE) -3.61% 13.83% 12.98%
Dupont Identity
ROE=(Profit Margin)(TA Turnover)(Equity Mulitpler) -3.61% 13.83% 12.98%
Market Value Ratios Not computed since not publicly traded
EPS (NI/# shares)
PE ratio (price per share/EPS)
Market to Book (market value/book value)
Ratios
Southern Oregon Pottery
Pro Forma
30
Statement of Cash Flows
References
Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-25 Apr-26
Present Value Analysis from Business Perspecitive
Cash from Operations 297$ 4,149$ 4,393$ -$ -$ -$ -$ -$ -$ -$
plus Interest Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Cash from Operations for NPV 297$ 4,149$ 4,393$ -$ -$ -$ -$ -$ -$ -$
Cash used for Investing Activities 5,340$ 180$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Cash from Financing Activities
New Borrowings (ST & LT) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Repayments (ST, LT, Other Liab) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Cash from Financing Activities -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Cash to Business for NPV Analysis (5,340)$ 117$ 4,149$ 4,393$ -$ -$ -$ -$ -$ -$ -$
Present Value of Cash Flow (5,340)$ 109$ 3,624$ 3,586$ -$ -$ -$ -$ -$ -$ -$
Net Present Value of Above Discount Rate Used for NPV Analysis
IRR (Internal Rate of Return)
Present Value Analysis from Primary Investor Perspecitive
Investment by Primary Investor -$
Additional Investment by Primary Investor -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Cash Received by Primary Investor -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Cash To Primary Investor -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Present Value of Cash Flow -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Present Value of Above Discount Rate Used for NPV Analysis
IRR (Internal Rate of Return)
7.00%
$0 7.00%
#NUM!
21.65%
Southern Oregon Pottery
Pro Forma
Present Value Analysis
$1,979
Southern Oregon Pottery
Pro Forma
Statement of Cash Flows Annual
for the Month Ending Total
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Apr-17
Cash Flows from Operations
Net Income (11,844)$ (191)$ 992$ 2,595$ 1,170$ 1,170$ 462$ 3,973$ (448)$ (266)$ 57$ 1,635$ (697)$
Depreciation 43$ 86$ 86$ 86$ 86$ 86$ 86$ 87$ 87$ 87$ 87$ 87$ 994$
Changes in Working Capital
Accounts Receivable 1
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Inventories 1
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Other Current Assets 1
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Accounts Payable 2
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Other Current Liabilities 2
-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Cash Provide by Operating Activities (11,801)$ (105)$ 1,078$ 2,681$ 1,256$ 1,256$ 548$ 4,060$ (361)$ (179)$ 144$ 1,722$ 297$
Cash Flows from Investing Activities
Purchases of Property and Equipment
Land -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Buildings -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Building/Leasehold Improvements 300$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 520$
Machinery & Equipment 5,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 5,000$
Automobiles -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Office Equipment/Other -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Total Property and Equipment 5,300$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 5,520$
Acquisition of Other Assets -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Cash Used in Investing Activities 5,300$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 20$ 5,520$
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 20,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 20,000$
Payment of Dividends -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Cash Provided by (Used in) Financing Activities 20,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 20,000$
Net Increase (Decrease) in Cash 2,899$ (125)$ 1,058$ 2,661$ 1,236$ 1,236$ 528$ 4,040$ (381)$ (199)$ 124$ 1,702$ 14,777$
Plus Beginning Cash -$ 2,899$ 2,775$ 3,832$ 6,493$ 7,729$ 8,965$ 9,493$ 13,532$ 13,151$ 12,952$ 13,076$ -$
Ending Cash 2,899$ 2,775$ 3,832$ 6,493$ 7,729$ 8,965$ 9,493$ 13,532$ 13,151$ 12,952$ 13,076$ 14,777$ 14,777$
31
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