August 1998

This sample business plan has been made available to users of Business Plan Pro™, business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information.

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This is a business plan. It does not imply an offering of securities.

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.3 Key Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2 Company Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.3 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.1 Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.3 Competitive Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.4 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.5 Macro-environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.6 Important Features and Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.7 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.8 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.9 Future Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.2.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.3.1 Business Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.3.2 Distributing a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.3.3 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.3.4 Main Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.2.1 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175.2.2 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185.4 Strategic Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196.2 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196.3 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237.4 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247.5 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247.6 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267.7 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Table of Contents

7.8 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

8.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308.1 Implementation Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308.2 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table of Contents

1.0 Executive Summary

We are currently in a highly lucrative market in a rapidly growing economy. The current trend towards an increase in the number of entrepreneurs and competition amongst existing companies presents an opportunity for an increased demand for market information and services that will enable companies to stay ahead of the pack.

Our services will be positioned very carefully: they will be of extremely high quality, relevant, timely and accurate, tailored to the clients' needs so as to enable them to make the right decisions, in turn leading towards growth of their companies, benefiting the overall economy.

Palms and Bonds offers the expertise that a proactive-oriented and market-opportunity seeking company needs to develop and enter new product distribution and new market segments in new markets. We intend to provide a number of necessary services to the business community and to the public. These can be summed up in two main divisions -- Business and Training Services. Our business services can be taken as marketing research, market research reports, project-based consulting, business and marketing plans, plan consulting and writing, high-level retainer consulting and company registration. Our training services include workshops and seminars on such topics as sales and marketing, as well as in-house training of receptionists, secretaries, and sales and marketing personnel.

Our marketing strategy will be based mainly on ensuring that customers know what needs the services are able to fulfill, and making the right information available to the right target customer. We intend to implement a market penetration strategy that will ensure that we are well known and respected in our respective industry. We will ensure that our services' prices take into consideration people's budgets, and that these people appreciate the services, know that it exists, and where to find it. The marketing will convey the sense of quality in every picture, every promotion, and every publication. Our promotional strategy will involve integrating advertising, events, personal selling, public relations, direct marketing and Internet marketing, details of which are provided in the marketing section of this plan.

Our target markets will range from persons in the corporate towers, small or medium businesses, to home institutions needing information on their particular area of concern. The common bond will be the appreciation of the importance of quality information that will enable correct decisions to be made, holding all things equal. Palms and Bonds prides itself on its analytical ability, its value-added service, competitive fees, its high standards of quality and its adaptability to changes in the market and in the method of its practice.

Palms and Bonds intends to provide the client with more than just information and planning tools. We intend to provide quality information that is customized to the client's needs, in the process assisting them on how best to use the available information. By employing our services, our clients are assured of consultants dedicated to finding the right answers for their business and enabling them to benefit long after we have finished our work. We are in this line of work because we like efficiency and because we understand and believe in problem solving and market/marketing research.

As we grow we want to grow right. For example we recognize that we have to be in constant touch with our stakeholders to ensure market knowledge at all times. This is the nature of the channels we deal with. Also, we intend to build our management team correctly. We need the right people in the right place at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows -- a mutually beneficial relationship.

In a nutshell, we don't just intend to market and sell our service, but to market and sell customized information, solutions and a total-quality environment. This will ensure we establish a reputable corporate image.

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Note: All displayed currency values represent Botswanan Pula (P).

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Highlights (Planned)

1.1 Objectives

Our business strategy will revolve around the need to provide quality information to our various target clients/customers, in the process fully satisfying their needs. This shall be undertaken through recruitment of a professional marketing research and business consultancy team and the production of good quality reports designed to cater to the client's needs. These reports/proposals shall be professionally done so as to be reflective of our intended image and reputation. We shall position ourselves as a quality service provider that strives to provide accuracy, relevancy and specific information. We intend to establish a good rapport with all the relevant government agencies and private institutions that may in turn refer us to aspiring entrepreneurs.

With time our presence on the World Wide Web will increase the knowledge of our services to the various market segments we shall be targeting. This is particularly so with foreign firms looking at establishing themselves in Botswana, hence providing them easy access to local information. In such a case Web presence is a natural objective in reaching the appropriate potential customers. We also intend to have brochures that will enable clients to have an understanding of the types of services we offer and advantages of doing so. In addition to well-done brochures, company profiles and business cards often have a triggering effect on clients contemplating investing in Botswana. These will undoubtedly generate increased sales of our products.

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1.2 Mission

Palms and Bonds offers clients reliable, quality information and proposals for business development, market development, and channel development that will maximize business development. A true alternative to in-house resources we offer a very high level of practical experience, know-how, contacts, and confidentiality. At Palms and Bonds we are able to provide comprehensive solutions to our clients' problems that will foster business development. Clients must know that working with Palms and Bonds is a more professional, less risky way to develop new areas even than working completely in-house with their own people. Palms and Bonds must also be able to maintain financial balance, charging a competitive and realistic value for its services, and delivering an even higher value to its clients. Initial focus will be development of the local market clientele.

Our mission statement is:"We endeavor to understand our customers' business so well as to be able to offer comprehensive solutions to their problems."

1.3 Key Success Factors

The keys to Palms and Bonds success will undoubtedly be effective market segmentation through identification of several niche markets and implementation strategies. Along these lines the company intends to implement personal selling and direct marketing strategies to the target markets. Our personal selling marketing strategies will rotate around keeping in touch with investment and finance bodies for major clients and word-of-mouth for more individual investors. our key success factors will include the following:

1. Excellence in fulfilling the promise: completely confidential, reliable, trustworthy expertise and information. This dictates that we have the latest technology and software.

2. Uncompromising commitment to the quality of the work: that is, quality data, information and solutions.

3. Developing visibility to generate new business leads. 4. Leveraging from a single pool of expertise into multiple revenue generation

opportunities: retainer consulting, project consulting, market research, and market research published reports.

5. Successful niche marketing: we intend to find and target the quality-conscious customer in the right channels, making sure that the customer will find us through aggressive marketing.

6. Timeous response to clients orders: we cannot afford to delay the client's order for whatever reason as this will have a negative bearing on our image and reputation, including future business. We need to be continually communicating with the client.

7. Marketing know-how: in an increasingly competitive market there is need to aggressively market our business and the services we provide so as to be continuously at the top of our prospective and current clients minds.

8. Entrepreneurial Flair: market volatility and increasing duplication of business ideas advocates that we continuously keep abreast of new trends and our competitors.

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2.0 Company Summary

Palms and Bonds is a relatively new company providing high-level expertise in local business development, market identification and development, channel development, distribution strategies, and marketing strategies for all types of products and services. It will focus initially on providing and satisfying two kinds of markets:

1. Providing market research to local clients looking at developing their businesses for the increasingly competitive markets, be they new or established.

2. Providing market research services to foreign investors looking at investing in the local markets.

As it grows it will take on people and consulting work in related markets. It will also look for additional leverage by establishing relationships and representations with international market research organizations.

2.1 Company Ownership

Palms and Bonds is a Private Limited company formed on the 28th of April 1999. Its fiscal year is the calendar year. Messrs. TTT. and SSS. equally own the company.

2.2 Company Services

Palms and Bonds offers expertise in market research, channel distribution, channel development, and market development that allow clients to choose their preferred relationship: these include retainer consulting relationships, project-based consulting, sales representation and market representation, project-based market research, published market research, information forum events, business plans, and marketing plans.

2.3 Start-up Summary

Total start-up capital and expenses covered (including legal costs, logo design, stationery and related expenses) came to approximately P49,600. Start-up assets required and utilized included personal computers, vehicles, office furniture, and other office equipment. Please find below the start-up table.

Note: All displayed currency values represent Botswanan Pula (P).

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Table: Start-up

Start-up

Requirements

Start-up ExpensesLegal $1,200Stationery etc. $2,000Brochures $3,000Sales Calls $1,200Expensed equipment $20,000Rent $1,200Staff training $5,000Communications system $5,000Other $11,000Total Start-up Expense $49,600

Start-up Assets NeededCash Balance on Starting Date $20,400Other Short-term Assets $0Total Short-term Assets $20,400

Long-term Assets $0Total Assets $20,400Total Requirements $70,000

Funding

InvestmentMr. T. $35,000Mr. S. $35,000Other $0Total Investment $70,000

Short-term LiabilitiesAccounts Payable $0Current Borrowing $0Other Short-term Liabilities $0Subtotal Short-term Liabilities $0

Long-term Liabilities $0Total Liabilities $0

Loss at Start-up ($49,600)Total Capital $20,400Total Capital and Liabilities $20,400

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Expenses Assets Investment Loans

Start-up

3.0 Services

Palms and Bonds offers the expertise a proactive-oriented and market-opportunity seeking company needs to develop and enter new product distribution and new market segments in new markets. We intend to provide a number of necessary services to the business community and to the public. These can be summed up in two areas -- Business and Training Services. Our business services can be taken as high-level retainer consulting, market research reports, project-based consulting, business and marketing plans, plan consulting and writing, and company registration. Our training services include workshops and seminars on such topics as sales and marketing, as well as in-house training of receptionists, secretaries, and sales and marketing personnel.

3.1 Service Description

Our business planning services include: assisting companies with the research and structuring of comprehensive, written business and marketing plans; providing a written business plan package, which delivers a complete, detailed business plan to the client, specifically designed to meet their needs, that is, FAP applications, bank loans, NDB loans, restructuring, new product development, market expansion, etc.

In many cases, small businesses often consider next year's budget an acceptable business plan. Any investor or banker will disagree and insist on much more information prior to making a financial decision regarding funding a business. We want to provide the opportunity for businesses, which have potential to receive the funding that would help them become solid employers.

• Market research: (Discussion omitted in this sample business plan) • Retainer consulting: (Discussion omitted) • Cash Flow Analysis: (Discussion omitted)

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• Project consulting: (Discussion omitted)

3.2 SWOT Analysis

We are presently in a highly lucrative market in a rapidly growing economy. We foresee our strengths as the ability to respond timeously to the market dictates and to provide custom designed market research services to our clients. In addition through aggressive marketing and quality management we intend to become a well respected leader in our respective industry. Our key personnel have a wide and thorough knowledge of the local and international markets and expertise, which will go a long towards penetrating the market. However, we acknowledge the fact that few companies are aware of the actual importance of market research and marketing and its contribution to the whole business strategy. Below are the summarized strengths, weaknesses, opportunities, and threats.

3.2.1 Strengths

• Strategic market segmentation and implementation strategies. • Diversified market segments. Ensures the lack of dependency on one particular market. • Combination of skills in directorship. The directors intend to jointly develop business

strategy and long-term plans, having wide experience in market and product know-how, and strong financial management and business know-how.

• Establishment and maintenance of a well-known business name. • An aggressive and focused marketing campaign. • A marketing plan with clear goals and strategies.

3.2.2 Weaknesses

• Lack of a solid well-established network in the market research arena. • The introduction of new organizational practices and personnel who have not previously

worked together presents a challenge to the organization. • Establishment on the Internet will produce technological challenges.

3.2.3 Opportunities

• Specific niche. Appreciation for high quality, accurate, unbiased and relevant information.

• The introduction of the International Financial Services Centre (IFSC) presents a vast opportunity, as both foreign and local firms will be looking for information, which may assist on entering their respective markets.

• Current growth of the economy in comparison to other economies presents an opportunity for an increased number of foreign investors to invest in the markets.

• The current drive towards localization is causing an increasing number of local individuals to invest and start their own businesses.

• The new generation of entrepreneurs, corporations, professionals, business owners has a far greater appreciation for the need for adequate planning and relevant information.

• Internet marketing and sales -- though still in its infancy. • Increasing number of foreign firms, especially from South Africa looking at penetrating

the local markets.

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• Financial assistance given by the government on the credibility of business plans. However the results of the review of the FAP by the Botswana Institute of Development Policy Analysis need to be taken into consideration as it could be scrapped or replaced by a new scheme.

• Existence of well-established government organs that deal directly with aspiring entrepreneurs -- local and foreign, presents us with a networking opportunity.

3.2.4 Threats

The present growth in the economy may result in increased numbers of business consultants, leading to increased competition and confusion amongst clients. This competition could emerge from a variety of given sources including:

• Established mass-market consultants' development of new lines and vertically integrating so as to be totally in control of all services required by the client.

• New marketing strategies and tactics by established companies. • Existing competition. • The current plethora of 'fly-by-night' business consultancy firms in existence. • Other start-up companies generated by healthy economic growth nation-wide. • Existence of well established government organs that deal directly with aspiring

entrepreneurs, both local and foreign.

3.3 Competitive Comparison

We have sought to identify competition in terms of companies that satisfy the same client needs that we intend to. Our competitors are few in our main service, and, including Government agencies, numerous in our ancillary services. There will be a need to strongly differentiate ourselves from these other businesses. However on a broader scale our competition comes in several forms:

1. The most significant competition is no market research consulting at all, companies

choosing to do market research, business development and channel development in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they don't have time for additional responsibilities in new market development or new channel development. Also, Palms and Bonds can approach alliances, investment bodies, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can't.

2. The high-level prestige management consulting: XXX and international firms. These are essentially generalists who take their name-brand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work.

3. The third general kind of competitors are the various trading and Investment bodies. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level customized consulting that Palms and Bonds will provide.

4. The fourth kind of competition are the business consultancy firms, which undertake business plans for various organizations. For example: LLL, MMM, NNN, and OOO Consultancy.

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5. The fifth kind of competition are the numerous "fly-by-night" business consultants that claim to offer the same services as we do. Often they offer a below par service with no qualified personnel.

3.4 Critical Issues

The critical issues emerge from the SWOT analysis and review of the market. Having acknowledged these factors we where able to make the following summarization:

1. We are currently in a highly lucrative market in a rapidly growing economy. Having undertaken a thorough SWOT analysis we may conclude that our intended business will be in a category, which may be classified as Ideal -- whereby it is high in major opportunities and low in major threats.

2. We foresee our intended ability to respond timeously to the market dictates and to provide quality information designed to match the client's needs as a major variable in enabling us to compete in the market. This is especially so in the case of market research as the new millennium will see even more organizations needing such to be undertaken on their behalf due to the time and non-biased factors. Through continuous research and development of current and potential markets, and a well-integrated promotional strategy we intend to be able to fully satisfy the client beyond their expectations. In the long run this will ensure that we establish a good reputation for ourselves as well as continual referrals.

3. Our key personnel have a wide and thorough knowledge of the local market and expertise, which will go a long way towards penetrating the market. However we acknowledge the weakness of a medium-sized company without a lot of experience, and the threat of new competition taking aim at our niche.

3.5 Macro-environment

At a large scale, market research demonstrates that the business consultancy market we intend to enter is growing and changing. Generally there is a trend toward executive turnover in medium to large companies today. That is, corporate restructuring, privatization, and increased small business development providing for a younger more ambitious market in the executive and small business sector. Research indicates that this new generation of executives being more educated and aware of the global environment assesses and implements information to a much higher degree than past trends have indicated. This is exacerbated by the increase in competition in all industries making it necessary for individuals to have relevant information at their fingertips. Therefore with the emergence of this generation of individuals, the appreciation of quality information and business solutions/ recommendations that provide for and enables the company to grow, dictates that our service lines will be popular.

The current drive by the government towards a more diversified economy presents an opportunity for our business to propel and excel in our intended markets, benefiting from the support of the concerned institutions and trade bodies. In addition with the country increasingly becoming an economic hub we foresee the demand for high quality information to be on the rise. Through undertaking of our business activities professionally we foresee that it should not be too difficult to gain market acceptance provided we deliver the final product timeously and of good quality, at competitive prices.

Furthermore Small, Medium and Micro Enterprises are well recognized as a potentially important source of employment generation apart from the diversification that they inevitably result in. They in turn reflect the declining importance of centralized mass production, along with technical change, the growth of information technology and the growth of the service

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sector.

Employment in Botswana by the type of Employer

Government 36%Large Employer 32%Medium Employer 4%Small Employer 14%Micro Employer 14%

Source: BIDPA estimates

3.6 Important Features and Comparison

Although there are a number of attorneys and accountants who write or assist in writing a business plan, the reality is that these professionals provide invaluable services in the areas in which they specialize, but lack the imagination to write a comprehensive and effective business plan. The attorneys tend to dwell on the legal aspects and contractual arrangements while accountants sweat over the balance sheets, cash flow statements, product costs and income statements. Additionally, these vitally necessary professionals cannot afford to spend the many hours necessary to work on a business plan when they could be earning much more per hour concentrating on their particular field of expertise.

Our expertise lies in the ability to listen to a business owner and perceive their vision for their company over the next few years. We can envision what the business person is looking for in the future, then put it in writing and at a cost they can live with.

3.7 Sales Literature

The business will begin with a general corporate brochure establishing the positioning. This brochure was developed as part of the start-up expenses including the business cards and Company Profile, mainly for the large organizations that often recommend services to potential investors. Compliment slips are also on the cards so as to raise awareness of the company and its services.

Literature and mailings for the initial market forums will be very important.

3.8 Technology

Palms and Bonds will maintain the latest market research software and Windows capabilities including:

1. Complete email facilities on the Internet for working with clients directly through email delivery of drafts and information.

2. Complete presentation facilities for preparation and delivery of multimedia presentations on Windows machines, in formats including on-disk presentation, live presentation, or video presentation.

3. Complete desktop publishing facilities for delivery of regular retainer reports, project output reports, marketing materials, and market research reports.

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3.9 Future Services

In putting the company together we have attempted to offer enough services to allow us to always be in demand by our clients. However, economics has provided us with a new era of opportunities for the small business in which we can only guess at the needs. The most important factor in developing future services is market need. Our understanding of the needs of our target market segments is one of our competitive advantages. It is critical to our effort to develop the right new services. We also have what we call a "core service engine" (market research) that will be the foundation of future products. In the future, Palms and Bonds will broaden its coverage by expanding into additional markets (e.g., the whole of southern Africa) and additional product areas. However in doing so we will strive to ensure that it is compatible with the existing services.

Now we have the possibility of new money being loosened for entrepreneurs and that means there will be a substantial increase in the number of feasibility studies and business plans. This provides additional business for virtually every area of business service we provide. We are also studying the possibility of newsletter or electronic newsletter services (for the international market), or perhaps special on-topic reports, pending further research on client needs.

4.0 Market Analysis Summary

We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been brought about by amongst other things, the relaxation of foreign exchange policies and macro economic policies geared towards attracting foreign investors into the country. The fiscal and monetary policies of the government geared towards maintaining growth with social justice have largely contributed towards this, evidenced by our economy averaging a growth rate of 7% since 1990 -- very high by international standards.

The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity for Palms and Bonds to make a valuable contribution towards achieving this goal. This will result in implementation of modern market research techniques and transfer of knowledge. Having undertaken a thorough and comprehensive research of the market we realized that there was a need for a specialized market research firm that focuses on producing market research reports that are tailored to the clients needs. Though there are business consultancy firms currently on the market, some of whom have been in existence for a relatively long period of time, we believe that there is a market need for one (ourselves in this instance) that particularly focuses on market research. We intend to provide services of extremely high quality -- something that cannot be over-emphasized in the international arena with the current drive towards globalization.

We appreciate that entering such a market is not a bed of roses and intend to implement an aggressive marketing strategy, well supported by the other business functions. The above prognosis influenced our decision to enter the business consultancy industry.

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4.1 Market Segmentation

Palms and Bonds will be focusing on local businesses and foreign investors looking at investing in the country. These will be small, medium, and large-sized companies looking for a total service and quality work.

Our most important group of potential customers are foreign investors. These are potential investors who want to have a feel and understanding of the local markets and the opportunities, and constraints they present to them. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company's name and reputation.

Large corporations: one of our most important market segment is the large organization looking at penetrating new or existing markets. These companies will be calling on Palms and Bonds for development functions that are better spun off than managed in-house, for market research, and feasibility studies.

Medium-sized growth companies: particularly in rapidly expanding markets, Palms and Bonds will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.

Small-sized companies: in an increasingly competitive environment entrepreneurs are becoming more cautious in the markets they seek to enter and on establishing new market opportunities. They are often seeking for prior research to be done to identify possible markets that are suited to their resources and capabilities.

Hence the most likely types of businesses to require our services would include:

• New businesses seeking investment or start-up capital • New firms looking at investing in the country • Existing companies which are expanding or introducing a new product/ service.

The table below summarizes the total market potential.

Small sized companies

Medium sized companies

Professional firms

Large sized companies

Financial institutions

Other

Market Analysis (Pie)

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Table: Market Analysis

Market AnalysisPotential Customers Growth 1998 1999 2000 2001 2002 CAGRSmall sized companies 2% 200 204 208 212 216 1.94%Medium sized companies 8% 1,200 1,296 1,400 1,512 1,633 8.01%Professional firms 9% 900 981 1,069 1,165 1,270 8.99%Large sized companies 1% 100 101 102 103 104 0.99%Financial institutions 14% 70 80 91 104 119 14.19%Other 3% 150 155 160 165 170 3.18%Total 7.60% 2,620 2,817 3,030 3,261 3,512 7.60%

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making the right information available to the right target customer. We will ensure that our services' prices take into consideration people's budgets, and that these people appreciate the service and know that it exists, including where to find it. The marketing will convey the sense of quality in every picture, every promotion, and every publication. There is already a sense of segment strategy in the way we define our target market. We are choosing to compete in areas that lend themselves to local competition, service and channel areas that match our strengths, and avoid our weaknesses.

Our strategy calls for the development of relationships with investment bodies, attorneys, accountants and financial institutions to support our business with referrals. Interviews with commercial loan officers have indicated that there is a serious need for a professional firm like ours to help their clients in market/marketing research, and development of comprehensive and concise business and marketing plans.

4.2.1 Market Needs

Palms and Bonds intends to provide the client with more than general market information. We intend to provide accurate, relevant, specific and timely information that will enable our clients to make more accurate decisions. This information we intend to be available to our clients at competitive rates.

We understand that our target markets need more than just information but information that will enable them to make more informed decisions. Our target client wants information that is relevant to their needs and easily understandable so as to make the right decisions. We don't just intend to provide a service, but to provide one of unparalleled nature relative to the market.

4.2.2 Market Trends

Our intended markets are increasingly growing towards recognizing the difference between poor quality business consultancy service and that of high quality. This development is an important trend for us as it represents our target market, and hence opportunity. We now are having an increasing number of people who appreciate quality information and the importance of having comprehensive and concise market and business plans undertaken.

Another trend is the one toward greater use of specialized and focused consultants, instead of in-house resources. Companies are looking for out-sourcing (but unfortunately few offer such a service) and, in general, a preference for variable costs instead of fixed costs.

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4.3 Service Business Analysis

The consulting "industry" is pulverized and disorganized, with many smaller consulting organizations and individual consultants for every one of the few dozen well-known companies. These other organizations often offer a service, which is not to the client's satisfaction. In addition they often claim to offer a service, which they are not fully capable of providing satisfactorily.

Consulting participants range from major international name-brand consultants to hundreds of individuals. One of Palms and Bonds' challenges will be establishing itself as a real consulting company, specializing in market research, positioned as a relatively risk-free corporate purchase. The business consulting industry may be segmented by economics and needs patterns. This incorporates some of the service type differences, but in a more practical sense:

Mainline Services: these include marketing/market research undertaken through advertising, direct mail, referrals and sales literature. Essentially these will be customized to the client's needs.

Ancillary Services: these include services such as trading licenses and company formation, which tend to be similar with not much to differentiate amongst providers except speed of execution. We intend to have an extremely efficient and 'state-of-the-art' business centre that will cater to our clients' needs. Service provider decisions don't tend to be major decisions/events covering relatively insignificant amounts.

4.3.1 Business Participants

At the highest level are the few well-established major names in management consulting. Most of these are organized as partnerships established in major markets around the world, linked together by interconnecting directors and sharing the name and corporate wisdom. Some evolved from accounting companies and some from management consulting. These companies charge very high rates for consulting, and maintain relatively high overhead structures and fulfillment structures based on partners selling and junior associates fulfilling.

(Discussion omitted in this sample plan)

4.3.2 Distributing a Service

Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor.

The major name-brand houses have locations in the main mall, and executive-level managers or partners develop new business through industry associations, business associations, chambers of commerce and industry, etc., and in some cases social associations such as country clubs.

The medium-level houses tend to be general in terms of services and specific in terms of target market -- targeting FAP seeking clients/individuals. They are not easily able to leverage their business through distribution, which we intend to be one of our competitive advantages.

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4.3.3 Competition and Buying Patterns

The key element in purchase decisions made at the Palms and Bonds client level is trust in the professional reputation and reliability of the consulting firm. The most important factor in this market is the quality of the service. The majority of the investment referrals said they were not satisfied with the current plans often submitted for their approval as they were of poor quality.

4.3.4 Main Competitors

There are numerous companies operating in Gaborone who classify themselves as "business consultants". However, upon contacting these, it appears that the vast majority of these companies are bookkeeping and secretarial services companies. There are some companies that provide services similar to those offered by us and that is good, but none of them specialize in market/marketing research. The following are some of our main competitors:

The high-level prestige management consulting firms

Strengths: Prime locations managed by owner-partners with a high level of presentation and understanding of general business. Enviable reputations, which make purchase of consulting an easy decision for a manager, despite the very high prices.

Weaknesses: General business knowledge doesn't substitute for the specific market, channel, and distribution expertise of Palms and Bonds, focusing on local markets and products/services. Also, fees are extremely expensive, and work is generally done by very junior-level consultants, even though sold by high-level partners.

General Business Consultancy firms

Strengths: Expertise in certain functional areas particularly bookkeeping. Palms and Bonds intends not to compete with general business consultancy firms in these markets.

Weaknesses: The inability to spread beyond a specific focus, or to rise above a specific focus, to provide actual marketing and market research expertise, experience, and wisdom beyond the specifics.

The most significant competition is no consulting at all, companies choosing to do market research, business development and channel development in-house.

Strengths: No incremental cost except travel; also, the general work is done by the people who are entirely responsible, the planning is done by those who will implement it.

Weaknesses: Most managers are terribly overburdened already, unable to find incremental resources in time and people to apply to incremental opportunities. Also, there is a lot of additional risk in market and channel development done in-house from the ground up. Finally, retainer-based antenna consultants can greatly enhance a company's reach and extend its position into conversations that might otherwise never have taken place.

Attorneys and Accounting firms

Strengths: Able to provide sound accounting or legal advice and services with the plans being done by the partners.

Weaknesses: They often lack the imagination to write a comprehensive and effective business

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plan. The attorneys tend to dwell on the legal aspects and contractual arrangements while accountants sweat over the balance sheets, cash flow statements, product costs and income statements. Very little market research, if any, is often undertaken, and often ineffectively.

5.0 Strategy and Implementation Summary

Our marketing strategy emphasizes focus. This will be the key. We are a relatively small company and hence must focus on certain kinds of services with certain kinds of users. Initially Palms and Bonds will focus on the local market and in the market research and training fields. The target customers will include key decision-makers in the large, medium and small-sized organizations in a start-up and growth periods.

• We are currently building image and awareness through consistency and distinctiveness in our service provision.

• We intend to focus on delivering quality service and end product that in turn produces good referrals, which can then generate revenue.

• We intend to always have a relatively heavy personal selling component to our marketing. Hence we intend to always be active in personal relationships with clients and strategic allies keeping abreast of their needs and wants.

• We are focusing advertising on several key media.

5.1 Competitive Edge

Our competitive edge will be our dominance of market information, customer orientation and traditional hardwork Although there are many "supposed" business consultants we intend to offer more than just a professional service but mesh well the various crafts together harmoniously.

Though we shall be serving different market segments we intend to focus on the individual or group who wants high quality information and plans customised to their needs. In the case of marketing and business plans they should be able to work harmoniously/beautifully in the intended environment, both on a macro and micro scale. Though our clients might range from large corporations, small or medium businesses, institutions or resellers what is important to the customer is total satisfaction with the end product matched to their capabilities and resources.

5.2 Marketing Strategy

One core element of our strategy will be that of differentiation from our competitors. In terms of marketing, we intend to sell our company as a differentiated strategic ally, not just our services. In price, we intend to offer reasonable and competitive prices in comparison to competition and we need to be able to sustain that. Market penetration through lower prices shall be undertaken where need be whilst premium pricing in the case of high quality services targeted at the upper-end of the market. Our service marketing will recognize more that our product. Service and establishing long relationships with clients will be key to our future service marketing. We primarily intend to sell a relationship more than services.

Our service marketing will emphasize the benefits of conducting adequate planning and the use of quality information and identification of 'windows of opportunity'. We intend to sell access to market knowledge and quality. This will come out in our advertising, delivery and collateral such as sales literature and business cards. Our service marketing's most important

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challenge will be the problem of being accepted and appreciated on the market as a provider of quality marketing research services and business plans. Hence we intend to not only meet client's expectations but to exceed them.

We intend to focus on the individual or group who wants information that may not be readily available, specially customized to their requirements. However not wanting to limit our horizons in the initial period we intend to serve other clients requiring services such as company registration and trading licenses.

In all cases we intend to provide a thorough understanding and appreciation of the service to the client as well as follow up to ensure customer satisfaction. We also intend to inform the customer on how best to maintain and/or improve their market positions.

5.2.1 Pricing Strategy

Palms and Bonds will be competitively priced in relation to the dictates of the market. The pricing fits with the general positioning of Palms and Bonds as providing high-level quality expertise.

We intend our income structure to match our cost structure, so as to ensure that the salaries/consultants fees we pay to assure good reports and service are balanced by the fee we charge. We will make sure that we charge for the service, workmanship and any delivery with our aim being to achieve a gross profit margin of at least 50%. Naturally services targeted at the higher end of the market will have higher mark ups as these clients are less price sensitive. All in all we intend our prices to be extremely competitive on the market.

Consulting will be based on Pula per hour per project in the initial year for project consulting, market research, and retainer consulting. With time and as we become known on the market we foresee an increase in our consultancy fee -- tempered by market dictates. Market research reports should be competitively priced which will, of course, require that reports be very well planned, focusing on very important topics, and well presented.

5.2.2 Promotion Strategy

Our promotion strategy will be based primarily on informing potential customers of our existence and making the right information available to our target customer. Since we shall be targeting different segments the promotional tools and messages may vary slightly to match the intended market. However in all cases the marketing will convey the sense of quality and professionalism in every picture, every promotion and every publication. In such a market we cannot afford to appear in or produce second-rate material with poor labels that make our services look less than they are. Hence we intend to leverage our presence using quality brochures and other sales literature, including promotional material such as pens, complimentary slips and stickers. We intend to spread the word about our business through the following:

• Advertising (Discussion omitted) • Personal Selling (Discussion omitted) • Public Relations (Discussion omitted) • Direct Marketing (Discussion omitted) • Internet Marketing (Discussion omitted).

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5.3 Sales Strategy

The sales forecast monthly summary is included in the appendix. The annual sales projections for three years are included in the table below. It should be noted that as we become established and known on the market we project sales to increase at a faster rate than the initial year.

Note: All displayed currency values represent Botswanan Pula (P).

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

All services

Other

Sales Monthly (Planned)

Table: Sales Forecast (Planned)

Sales ForecastSales 1999 2000 2001All services $366,300 $612,000 $734,400Other $0 $0 $0Total Sales $366,300 $612,000 $734,400

Direct Cost of Sales 1999 2000 2001All services $79,500 $117,000 $140,400Other $0 $0 $0Subtotal Direct Cost of Sales $79,500 $117,000 $140,400

5.4 Strategic Alliances

In today's volatile and competitive environment it is becoming increasingly essential for organizations to concentrate on their core activities so as to gain and maintain a competitive advantage. This brings out the advantage of undertaking strategic alliances with organizations that the firm may benefit from and vice versa. At this writing, strategic alliances with ZZZ and YYY are possibilities, given the content of existing interest and discussions. We are also looking at establishing alliances with several accounting and legal firms, which often come into contact with our target market. Given the background of prospective partners, we might also be talking to United States and South

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African companies in the near future.

6.0 Management Summary

The management team mainly comprising the shareholders has wide expertise and broad knowledge of the services and markets, which if well planned for, will enable the business to realize its goals and objectives. As we grow, we will take on additional consulting help and personnel.

Management style will reflect the participation of the shareholders. The company intends to respect its community and treat all employees well. We will develop and nurture the company as community. We do not intend to be very hierarchical.

6.1 Organizational Structure

Palms and Bonds shall be managed by working partners. The company, simply because of its size, will function more as a partnership than a corporate organization, in the early stages. With such a group, it will be simple to communicate with and support one another. As the company grows there will be more structure to the organization, with new employees being assigned a supervisor or subordinate. When the company is at its full staff potential, it will operate as any closely held organization, but maintain the personal interest in each employee's personal and family welfare and their contributions to the business. In the beginning we assume four partners: (Discussion omitted in this sample plan).

6.2 Management Team

Palms and Bonds business requires a very high level of knowledge, analytical ability and expertise, which means that it will not be easily leveragable in the common consulting company mode in which partners run the business and make sales, while associates fulfill. Partners will necessarily be involved in the fulfillment of the core business proposition, providing the expertise to the clients. The initial personnel plan is still tentative. It should involve three to five partners, one to three consultants, with good staff support, an office manager, and a secretary. Later, we intend to add more partners, consultants, and sales staff.

Partners' resumes were included as an attachment to this plan, but have been omitted in this sample plan.

6.3 Personnel Plan

The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are included here. We believe this plan is a acceptable compromise between fairness and expedience, and meets the commitments of our mission statement. We do not intend to be a large organization or "top heavy" as our industry does not require our doing so. We want the company to stay lean and flexible so that we can respond to a client's needs quickly. To do this, we will use outside consultants whose fees, in most cases, will be passed on to the client, indirectly, through our fees. However as we expand and increase in size (increase in the number of projects received) we do expect to increase our personnel.

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We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job satisfaction and enrichment through delegation of authority. Our compensation will include health care, generous profit sharing, plus a minimum of three weeks vacation.

In-house training shall be continuous with regular external training being undertaken particularly following any new developments in the market. This is to ensure that we are continuously able to anticipate our client's problems and needs and provide them with solutions -- a proactive approach, which is so essential in our line of business.

We acknowledge the fact that successful recruiting, motivation and discipline procedures are keys to the growth of the organization. Hence we intend to promote and maintain good labour relations, strong morale and high quality work per employee through undertaking the following: (Discussion omitted).

Note: All displayed currency values represent Botswanan Pula (P).

Table: Personnel (Planned)

Personnel Plan1999 2000 2001

Partners $0 $72,000 $82,800Internal Consultants $16,000 $16,000 $16,000External Consultants $26,000 $18,000 $20,700Office Manager $9,000 $18,000 $20,700Personal Assistant $9,200 $9,000 $10,356Secretarial Staff $3,600 $6,000 $6,900Research Staff $4,500 $3,600 $4,140Other $9,000 $0 $0Total Payroll $77,300 $142,600 $161,596

Total People 0 0 0Payroll Burden $0 $0 $0Total Payroll Expenditures $77,300 $142,600 $161,596

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7.0 Financial Plan

We want to finance growth mainly through cash flow and equity. We recognize that this means we will have to grow more slowly than we might like.

The most important factor in our case is collection days. We can't push our clients hard on collection days, because they are in larger companies and will normally have marketing authority, not financial authority. Therefore we need to develop a permanent system of receivables financing, using one of the established financial companies in that business. In turn we intend to ensure that our investors are compatible with our growth plan, management style and vision. Compatibility in this regard means:

1. A fundamental respect for giving our customers value, and for maintaining a healthy and congenial workplace.

2. Respect for realistic forecasts, and conservative cash flow and financial management. 3. Cash flow as first priority, growth second, profits third. 4. Willingness to follow the company and contribute valuable input to strategy and

implementation decisions.

Of these only the last two are flexible.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendices. From the beginning, we recognize that collection days are critical, but not a factor we can influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions.

Some of the more important underlying assumptions are:

• We assume a strong economy, without major recession. • We assume, of course, that there are no unforeseen changes in economic policy to

make our clients' products immediately obsolete.

The table below summarizes key financial assumptions, including 30-day average collection days, sales entirely on invoice basis including the 30% deposit policy, expenses mainly on net 30 basis, 30 days on average for payment of invoices, and present-day interest rates. Table: General Assumptions

General Assumptions1999 2000 2001

Short-term Interest Rate % 10.00% 10.00% 10.00%Long-term Interest Rate % 10.00% 10.00% 10.00%Tax Rate % 25.00% 25.00% 25.00%Expenses in Cash % 10.00% 10.00% 10.00%Sales on Credit % 75.00% 75.00% 75.00%Personnel Burden % 0.00% 0.00% 0.00%

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7.2 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales and operating expenses, and a bump in our collection days as we spread the business during expansion.

Collection days are very important. We do not want to let our average collection days get above 30 under any circumstances. This could cause a serious problem with cash flow, because our working capital situation is chronically tight. However, we recognize that we cannot control this factor easily, because of the relationship with our clients.

0

0

0

1

1

1

1

1

2

2

2

Sales Gross OpEx AR Est.

1998

1999

2000

Benchmarks (Planned)

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7.3 Break-even Analysis

The following table summarizes our break-even analysis. With fixed costs of P9,250 per month at the outset (a bare minimum), we need to bill P11,600 to cover our costs. We don't really expect to reach break-even until several months into the business operation. The break-even assumes variable costs of 20 percent of revenue. This assumption is probably too high, and therefore conservative, because, at least in the beginning, most of our cost of fulfillment is actually the compensation of the consultants.

Note: All displayed currency values represent Botswanan Pula (P).

($10,000)

($5,000)

$0

$5,000

$10,000

$0 $4,000 $8,000 $12,000 $16,000 $20,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 11,555Monthly Sales Break-even $11,555

Assumptions:Average Per-Unit Revenue $1.00Average Per-Unit Variable Cost $0.20Estimated Monthly Fixed Cost $9,244

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7.4 Expense Forecast

Initial marketing expenses were relatively high as we sought to become known on the market. This was brought about by the development of sales literature, advertising expenses, function expenses including lunches and dinners with interested stakeholders. As our market share increases and capital is generated, further marketing programs and the expansion of those in existence at the time will be undertaken, to ensure market development. The expenses generated by our marketing strategies will be high in the initial stages of design and implementation. However with time these programs will start generating revenue for the business, which we shall in turn reinvest. The fruits of the above are soon to be gained.

7.5 Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing from more than P366,000 the first year to P612,000 the second, and P734,400 in the third year. Profits are calculated to be around P175,870 the first year during the start-up phase of this business. This will be representative of a net profit margin of approximately 36%, which though it may not seem that impressive is relatively good for a start-up firm in our business. Hence we do expect to more than break-even in the first year of operation.

As with the break-even, we are projecting very conservatively regarding cost of sales and gross margin. Our cost of sales should be much lower, and gross margin higher, than in this projection. Initially, we will depend on our internal consultants for most of fulfillment, which is why costs should be lower than shown, although occasionally we shall engage the services of outside consultants as discussed in our personnel plan. We prefer to project conservatively so that we make sure we have enough cash.

Note: All displayed currency values represent Botswanan Pula (P).

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Table: Profit and Loss (Planned)

Pro Forma Profit and Loss1999 2000 2001

Sales $366,300 $612,000 $734,400Direct Cost of Sales $79,500 $117,000 $140,400Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $79,500 $117,000 $140,400Gross Margin $286,800 $495,000 $594,000Gross Margin % 78.30% 80.88% 80.88%Operating Expenses: Advertising/Promotion $7,830 $6,000 $7,200Travel $4,800 $3,600 $4,200Miscellaneous $2,400 $2,400 $3,000Payroll Expense $77,300 $142,600 $161,596Payroll Burden $0 $0 $0Depreciation $0 $0 $0Public Relations $2,400 $2,400 $3,600Utilities $1,800 $1,800 $2,400Insurance $0 $0 $0Rent $14,400 $18,000 $19,200Contract/Consultants $0 $0 $0

------------ ------------ ------------Total Operating Expenses $110,930 $176,800 $201,196Profit Before Interest and Taxes $175,870 $318,200 $392,804Interest Expense Short-term $0 $0 $0Interest Expense Long-term $0 $0 $0Taxes Incurred $43,968 $79,550 $98,201Extraordinary Items $0 $0 $0Net Profit $131,903 $238,650 $294,603Net Profit/Sales 36.01% 39.00% 40.11%

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7.6 Projected Cash Flow

Cash flow projections are critical to our success. The first year monthly cash flow chart appears below and the monthly figures are shown in the appendices. The annual cash flow figures are included here.

Note: All displayed currency values represent Botswanan Pula (P).

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Net Cash Flow

Cash Balance

Cash (Planned)

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Table: Cash Flow (Planned)

Pro Forma Cash Flow 1999 2000 2001

Cash ReceivedCash from Operations: Cash Sales $91,575 $153,000 $183,600From Receivables $240,795 $436,241 $539,462 Subtotal Cash from Operations $332,370 $589,241 $723,062

Additional Cash ReceivedExtraordinary Items $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of other Short-term Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0 Subtotal Cash Received $332,370 $589,241 $723,062

Expenditures 1999 2000 2001Expenditures from Operations:Cash Spent on Costs and Expenses $15,710 $23,075 $27,820Wages, Salaries, Payroll Taxes, etc. $77,300 $142,600 $161,596Payment of Accounts Payable $125,828 $200,380 $245,681 Subtotal Spent on Operations $218,838 $366,055 $435,097

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Short-term Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0 Adjustment for Assets Purchased on Credit $0 $0 $0 Subtotal Cash Spent $218,838 $366,055 $435,097

Net Cash Flow $113,532 $223,186 $287,965Cash Balance $133,932 $357,119 $645,084

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7.7 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position.

Note: All displayed currency values represent Botswanan Pula (P).

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets 1999 2000 2001Cash $133,932 $357,119 $645,084Accounts Receivable $33,930 $56,689 $68,027Other Short-term Assets $0 $0 $0Total Short-term Assets $167,862 $413,807 $713,110Long-term AssetsLong-term Assets $0 $0 $0Accumulated Depreciation $0 $0 $0Total Long-term Assets $0 $0 $0Total Assets $167,862 $413,807 $713,110

Liabilities and Capital1999 2000 2001

Accounts Payable $15,560 $22,855 $27,555Current Borrowing $0 $0 $0Other Short-term Liabilities $0 $0 $0Subtotal Short-term Liabilities $15,560 $22,855 $27,555

Long-term Liabilities $0 $0 $0Total Liabilities $15,560 $22,855 $27,555

Paid-in Capital $70,000 $70,000 $70,000Retained Earnings ($49,600) $82,303 $320,953Earnings $131,903 $238,650 $294,603Total Capital $152,303 $390,953 $685,556Total Liabilities and Capital $167,862 $413,807 $713,110Net Worth $152,303 $390,953 $685,556

7.8 Business Ratios

The following table provides important business ratios for the consulting industry, as determined by the Standard Industry Classification (SIC) Index code 8742, Management Consulting Services.

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Table: Ratios (Planned)

Ratio Analysis1998 1999 2000 Industry Profile

Sales Growth 0.00% 67.08% 20.00% 8.60%

Percent of Total AssetsAccounts Receivable 20.21% 13.70% 9.54% 24.40%Inventory 0.00% 0.00% 0.00% 3.80%Other Short-term Assets 0.00% 0.00% 0.00% 46.70%Total Short-term Assets 100.00% 100.00% 100.00% 74.90%Long-term Assets 0.00% 0.00% 0.00% 25.10%Total Assets 100.00% 100.00% 100.00% 100.00%

Other Short-term Liabilities 0.00% 0.00% 0.00% 42.80%Subtotal Short-term Liabilities 9.27% 5.52% 3.86% 33.70%Long-term Liabilities 0.00% 0.00% 0.00% 17.20%Total Liabilities 9.27% 5.52% 3.86% 50.90%Net Worth 90.73% 94.48% 96.14% 49.10%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 78.30% 80.88% 80.88% 0.00%Selling, General & Administrative Expenses 42.29% 41.89% 40.77% 83.50%Advertising Expenses 2.14% 0.98% 0.98% 1.20%Profit Before Interest and Taxes 48.01% 51.99% 53.49% 2.60%

Main RatiosCurrent 10.79 18.11 25.88 1.59Quick 10.79 18.11 25.88 1.26Total Debt to Total Assets 9.27% 5.52% 3.86% 60.00%Pre-tax Return on Net Worth 115.47% 81.39% 57.30% 4.40%Pre-tax Return on Assets 104.77% 76.90% 55.08% 10.90%

Business Vitality Profile 1998 1999 2000 IndustrySales per Employee $0 $0 $0 $0Survival Rate 0.00%

Additional Ratios 1998 1999 2000Net Profit Margin 36.01% 39.00% 40.11% n.aReturn on Equity 86.61% 61.04% 42.97% n.a

Activity RatiosAccounts Receivable Turnover 8.10 8.10 8.10 n.aCollection Days 23 36 41 n.aInventory Turnover 0.00 0.00 0.00 n.aAccounts Payable Turnover 9.09 9.09 9.09 n.aTotal Asset Turnover 2.18 1.48 1.03 n.a

Debt RatiosDebt to Net Worth 0.10 0.06 0.04 n.aShort-term Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity RatiosNet Working Capital $152,303 $390,953 $685,556 n.aInterest Coverage 0.00 0.00 0.00 n.a

Additional RatiosAssets to Sales 0.46 0.68 0.97 n.aCurrent Debt/Total Assets 9% 6% 4% n.aAcid Test 8.61 15.63 23.41 n.aSales/Net Worth 2.41 1.57 1.07 n.aDividend Payout $0 0.00 0.00 n.a

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8.0 Controls

The local business consultancy market has been growing steadily over the last several years. With this in mind we intend our marketing programs to expand accordingly. The introduction of quality sales and marketing literature will enable Palms and Bonds to effectively market to potential customers with a positive image and impression. We project sales to increase accordingly, as we continue establishing a reputation for ourselves, especially in the market research area. With time a presence on the internet and participation in local and regional conferences and trade shows will be key milestones to expanding sales and marketing potentials through the utilization of new channels and identification of potential customers.

Throughout the year we intend to undertake regular evaluations of our business and marketing programs so as to ensure that we are in line with our intended objectives. In summary we intend to undertake the following:

1. Tracking and follow-up: we intend to have the discipline, as an organization, to track results of the business plan and make sure that we implement.

2. Market segment focus: we intend to have the discipline to maintain the market segment focus.

3. Saying no: though difficult initially we intend to be able to say no to special deals that take us away from the target focus and are unprofitable.

8.1 Implementation Programs

Palms and Bonds will start to establish alliances with reputable and reliable suppliers of information. We will continue preparing our sales literature mainly in-house with the assistance of a reputable printing organization agency. We also intend to engage the services of well qualified consultants. Thereafter there shall be delegation of responsibility for maximum effectiveness.

8.2 Contingency Planning

We intend to watch our results very carefully. We may need to concentrate less on certain services than others, if we intend to get the margin up or clients become difficult to attract. We might be able to avoid the straight competition with the major companies by focusing more on the previously mentioned services -- market and marketing research.

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Appendix Table: Sales Forecast (Planned)

Sales ForecastSales Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun JulAll services $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Sales $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800

Direct Cost of Sales Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun JulAll services $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500

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Appendix Table: Personnel (Planned)

Personnel PlanAug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Partners $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Internal Consultants $0 $0 $0 $0 $0 $0 $0 $0 $4,000 $4,000 $4,000 $4,000External Consultants $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $4,000 $4,000 $4,000 $4,000Office Manager $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Personal Assistant $600 $600 $600 $600 $800 $800 $800 $800 $800 $800 $800 $1,200Secretarial Staff $0 $0 $0 $400 $400 $400 $400 $400 $400 $400 $400 $400Research Staff $0 $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500Other $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Total Payroll $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100

Total People 0 0 0 0 0 0 0 0 0 0 0 0Payroll Burden $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Payroll Expenditures $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100

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Appendix Table: General Assumptions

General AssumptionsAug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Short-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Expenses in Cash % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Sales on Credit % 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00%Personnel Burden % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

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Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and LossAug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Sales $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800Direct Cost of Sales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Cost of Sales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500Gross Margin $7,250 $5,300 $8,550 $13,800 $20,800 $25,300 $31,300 $31,300 $31,300 $37,300 $37,300 $37,300Gross Margin % 85.29% 77.94% 79.17% 82.14% 80.62% 72.70% 76.72% 76.72% 76.72% 79.70% 79.70% 79.70%Operating Expenses: Advertising/Promotion $900 $630 $630 $630 $630 $630 $630 $630 $630 $630 $630 $630Travel $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400Miscellaneous $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200Payroll Expense $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100Payroll Burden $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Public Relations $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200Utilities $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Rent $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $3,650 $3,380 $3,380 $8,280 $8,480 $8,480 $8,480 $8,480 $14,480 $14,480 $14,480 $14,880Profit Before Interest and Taxes $3,600 $1,920 $5,170 $5,520 $12,320 $16,820 $22,820 $22,820 $16,820 $22,820 $22,820 $22,420Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Interest Expense Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Incurred $900 $480 $1,293 $1,380 $3,080 $4,205 $5,705 $5,705 $4,205 $5,705 $5,705 $5,605Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit $2,700 $1,440 $3,878 $4,140 $9,240 $12,615 $17,115 $17,115 $12,615 $17,115 $17,115 $16,815Net Profit/Sales 31.76% 21.18% 35.90% 24.64% 35.81% 36.25% 41.95% 41.95% 30.92% 36.57% 36.57% 35.93%

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Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Cash ReceivedCash from Operations: Cash Sales $2,125 $1,700 $2,700 $4,200 $6,450 $8,700 $10,200 $10,200 $10,200 $11,700 $11,700 $11,700From Receivables $213 $6,333 $5,200 $8,250 $12,825 $19,575 $26,250 $30,600 $30,600 $30,750 $35,100 $35,100 Subtotal Cash from Operations $2,338 $8,033 $7,900 $12,450 $19,275 $28,275 $36,450 $40,800 $40,800 $42,450 $46,800 $46,800

Additional Cash ReceivedExtraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Received $2,338 $8,033 $7,900 $12,450 $19,275 $28,275 $36,450 $40,800 $40,800 $42,450 $46,800 $46,800

Expenditures Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun JulExpenditures from Operations:Cash Spent on Costs and Expenses $520 $476 $632 $716 $1,086 $1,649 $1,799 $1,799 $1,649 $1,799 $1,799 $1,789Wages, Salaries, Payroll Taxes, etc. $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100Payment of Accounts Payable $156 $4,667 $4,331 $5,715 $6,555 $9,943 $14,882 $16,187 $16,142 $14,882 $16,187 $16,184 Subtotal Spent on Operations $1,276 $5,743 $5,563 $11,931 $13,341 $17,291 $22,380 $23,685 $29,490 $28,380 $29,685 $30,072

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Spent $1,276 $5,743 $5,563 $11,931 $13,341 $17,291 $22,380 $23,685 $29,490 $28,380 $29,685 $30,072

Net Cash Flow $1,062 $2,290 $2,337 $519 $5,934 $10,984 $14,070 $17,115 $11,310 $14,070 $17,115 $16,728Cash Balance $21,462 $23,751 $26,088 $26,607 $32,541 $43,524 $57,594 $74,709 $86,019 $100,089 $117,204 $133,932

Appendix

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Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets Starting Balances Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun JulCash $20,400 $21,462 $23,751 $26,088 $26,607 $32,541 $43,524 $57,594 $74,709 $86,019 $100,089 $117,204 $133,932Accounts Receivable $0 $6,163 $4,930 $7,830 $12,180 $18,705 $25,230 $29,580 $29,580 $29,580 $33,930 $33,930 $33,930Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Short-term Assets $20,400 $27,624 $28,681 $33,918 $38,787 $51,246 $68,754 $87,174 $104,289 $115,599 $134,019 $151,134 $167,862Long-term AssetsLong-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Assets $20,400 $27,624 $28,681 $33,918 $38,787 $51,246 $68,754 $87,174 $104,289 $115,599 $134,019 $151,134 $167,862

Liabilities and CapitalAug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Accounts Payable $0 $4,524 $4,141 $5,501 $6,229 $9,448 $14,342 $15,647 $15,647 $14,342 $15,647 $15,647 $15,560Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Short-term Liabilities $0 $4,524 $4,141 $5,501 $6,229 $9,448 $14,342 $15,647 $15,647 $14,342 $15,647 $15,647 $15,560

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $4,524 $4,141 $5,501 $6,229 $9,448 $14,342 $15,647 $15,647 $14,342 $15,647 $15,647 $15,560

Paid-in Capital $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000Retained Earnings ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600)Earnings $0 $2,700 $4,140 $8,018 $12,158 $21,398 $34,013 $51,128 $68,243 $80,858 $97,973 $115,088 $131,903Total Capital $20,400 $23,100 $24,540 $28,418 $32,558 $41,798 $54,413 $71,528 $88,643 $101,258 $118,373 $135,488 $152,303Total Liabilities and Capital $20,400 $27,624 $28,681 $33,918 $38,787 $51,246 $68,754 $87,174 $104,289 $115,599 $134,019 $151,134 $167,862Net Worth $20,400 $23,100 $24,540 $28,418 $32,558 $41,798 $54,413 $71,528 $88,643 $101,258 $118,373 $135,488 $152,303

Appendix

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