"When you have Snake Eyes, abducters have No-Dice!" ^©

1. What are costs of development?
2. What are manufacturing costs?
3. How should our product be distributed?
4. Tables

Through careful assessment we were able to determine our break-even price, which we interpreted as the point where revenues equal expenses. According to information obtained regarding Snake Eyes, we found that our break-even point will occur halfway through the second year of production.

At the moment, manufacturing costs are minimal as we are capable of producing our own product. Nevertheless, we hope to eventually transform into a company that uses an effective mass production manufacturing method.

In terms of distribution, it is in our best interest to sell Snake Eyes straight to several variety retail stores, including places like Wal-Mart and Canadian Tire. Upon further growth of the company, we hope to form a strategic alliance with a watch company, such as Timex, so that they can integrate our system into some of their sales products.

Table 2.0:Projected Financial Activity for Two Years of Operation

	Year 1	Year 2
% of Market Tapped	0.05	0.15
Sales (Units)	$4,275.00	$11,853.00
Revenue from Sales	$256,500.00	$711,180.00
Expenses
Start Up	$30,000.00	$20,000.00
Marketing & Advertising Expense	$40,000.00	$40,000.00
Car Expense	$3,000.00	$3,000.00
Administration and Legal Fees	$10,000.00	-
Miscellaneous Expense	$1,200.00	$1,200.00
Supplies Expense	$400.00	$1,000.00
Insurance Expense - car	$3,000.00	$3,000.00
Insurance Expense - equipment	$6,000.00	$6,000.00
Depreciation Expense - car	$1,000.00	$300.00
Depreciation Expense - equipment	$5,000.00	$1,000.00
Cost of Goods Sold	$171,000.00	$474,120.00
Labour Expense	$30,000.00	$90,000.00
Telephone Expense	$600.00	$600.00
Utilities Expense	$1,000.00	$2,000.00
Rent Expense	$3,600.00	$3,600.00
Total Expenses	$305,800.00	$639,620.00
Net Income/Loss	-$49,900.00	$71,560.00

We believe we will sell 200 products in the first month and have a growth rate of 10% per month in sales, for the first year. In the second year however, this growth rate will drop to about 7.5%. This estimation is reasonable since we only tap into 0.05% of the market in our first year, whereas in year two this figure grows to $11,853, which is still a relatively small figure, since it only represents 0.15% of the market, and eventually hope to tap into 5% of the market within 7 years.

The startup figure that was created takes into account the need to produce 200 products for a total of $8,000 dollars, all without any revenue. Additionally, we would be buying some office equipment, furniture, and a company van as displayed above. Furthermore, we will be spending some money in order to register the business, and the name. Although these figures don’t add up to $30,000, since much of this information is hypothetical, a safety buffer has been included. Another factor that has to be considered is the fact that we would need a steady flow of advertising and marketing throughout the first 2 years. This will be vital in order to maintain our growth rate and increase the recognition of our product and company. Through several alliances and “love donations”, we have devoted $40,000 for the budget, however, the advertising expense per month will be very different. This is due to the fact that we will initially have capital of $60,000 dollars; as a result, the money generated from the revenue of sales will be reinvested in the business in order to pay our expenses.

As the year progresses, more revenue is earned and more revenue can be contributed to the advertising. The car expense figure was drawn up based on the fact that we would have to deliver many of our products to customers and would do so using the company van, since our volume is relatively low. The car expense figure demonstrates the costs related to the distribution of the product. We would also like to patent our product and its name and this would cost around $10,000, a figure that was documented from an internet source. Our labour costs were predicted using a figure of 7 dollars an hour for each partner. In addition to this, 1 product could be produced each hour by one person; as a result, a rounded figure of $30,000 was projected. This figure will grow proportionally in year 2, and is currently $90,000. At this point the labour can be handed over to full time workers; as a result, the partners won’t need to put anymore sweat equity into the business. The figures given for insurance expense and depreciation expense are based on figures quoted by companies and accounting standards set by Revenue Canada. Our company will be based out of the lower level of 36 Ambleside Crescent, in Unionville Ontario. For complete use of this office space, it will be a monthly rate of $300. In addition to this, we will be paying for our own utilities and telephones, as outlined above. A business telephone line costs $50 a month and utilities won’t cost much, since we will be operating the business on a part time basis.

In the first year No-Dice Co. does not expect to make a profit, as indicated. Nonetheless, in the second year of operation, No-Dice Co. hopes turn a profit of $70,000. The breakeven point has been calculated to occur around the middle of the second year of operations, assuming that No-Dice Co. continues selling Snake Eyes at a price of 60 dollars. The price of manufacturing each unit has been calculated to 40 dollars and as a result, our manufacturing costs add up to $201,000. This figure includes labour, as well as the cost of goods sold.

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© No-Dice Co. July 2003