Adapted from content excerpted from the American Express® OPEN Small Business Network
Use the following funding request and return from a start-up retail operation as a model for creating your own.
International News
International News is a new magazine store/newsstand that will set itself apart from other newsstands in the University City area by offering a broad range of domestic magazines, international magazines, specialized periodicals and journals, fan-zines, and other “zines” not available elsewhere in the region. This magazine “superstore” will also offer a variety of candies, snacks and high-end tobacco products (imported cigarettes, cigars, etc.). Its target customers are a mix of upscale shoppers and college students.
We have established that the following are our financial needs:
Capital/Equipment Needs $37,127 Leasehold Improvements $29,250 Start-up Inventory $77,434 Prepaid Expense & Deposits $4,489 Loan & Lease Fees $5,812 Miscellaneous Start-Up Costs $9,000 Cash Reserve $42,697 Total $205,809
We believe that the initial funding of $205,809 will be sufficient to carry International News through to initial profitability. These financial needs will be met through a blend of bank loans, equipment leases and personal cash investment. At present, we anticipate that we will meet our capital/equipment needs by leasing $48,590 of equipment and fixtures. We will seek a start-up capital loan in the amount of $96,500.
The loans and leases will be secured by the value of the capital equipment purchased, the value of the inventory. In addition, Jake Sims, one of the three partners, will continue in his present position as vice-president of ZiTek, thus providing a personal guarantee of payment. The remainder of the funds will come from a personal cash investment of $60,000.
We anticipate that we will be able to sustain minimum gross margins of 39%. We will seek to increase this level through management of our inventory and sourcing. We further anticipate that, after our initial year of operation, we will be able to sustain a net return of sales of 16%-17% – higher than current industry averages.
Furthermore, with this level of performance, we anticipate expanding our presence outside the University City region to other “college towns” after 3 years. Should this concept take off as anticipated, we see “International News” as an ideal candidate for a public stock offering.
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