teralyn kanka OWNER, CEO
Monday, June 13, 2011
e h t PANY
M CO
EXECUTIVE SUMMARY MODEMAP is a privately owned, consumer fashion magazine committed to delivering quality content with a strong, beautiful design. It strives to provide the best
catwalk and trend coverage in the industry, coupled with high impact graphics and compelling articles, all packaged neatly into a 100+ page super glossy collectable magazine . Business planning and prototype development are currently underway with an expected first issue launch date in January 2012.
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VISION & MISSION We believe in inspiring creativity through beautiful design and imagery. We believe that inspiration is
worth holding on to and needs to be referenced every now and again. Creative imagery is important in the design world & our subscribers deserve nothing less. Our passion & experience in the industry are what drive us to provide you with the absolute best information and visual journey there is to find.
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OBJECTIVES In our first year of business we hope to: • Publish a 132 page, high-gloss promotional issue with 50,000 press runs. • Gain 20,000 subscribers through direct sampling. • Gain an additional 30,000 subscribers for issue #2 through organizational sales • Sell 26 advertisement pages per issue.
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s t c u d o r p & S E C I V SER
THE PRODUCT MODEMAP is driven by content, circulation, & advertising. The typical consumer fashion magazine has an ad to editorial ratio of 1:1, while MODEMAP’s is 1:4. There are 26 ad pages & 128 editorial pages in a typical 132 pages issue.
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s t c u d o r p & S E C I V SER
THE PRODUCT The company plans to publish 2 issues/year based on the seasonality of fashion week. Each will cover a 6 month time period, but because of the in-depth nature of content and the quality of high-resolution images, the shelf life of each issue would extend well beyond six months. In fact, the very nature of the magazine, and of the audience it targets, suggests that MODEMAP is a collectable print magazine with an eternal shelf
life.
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s t c u d o r p & S E C I V SER
THE PRODUCT Development of the magazine is currently underway . Issue one is set to launch during the second week of
January, 2012 , just prior to the kick off of fashion week for the Autumn/Winter 2012/2013 season. Subscribers of this issue will receive the print publication along with member-only access to MODEMAP’s digital version online at www.modemap.com.
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s t c u d o r p & S E C I V SER
THE COST
CIRCULATION
Circulation - 50,000 press runs Size - 8.5” x 11” (standard) Pages - 132 Paper/Binding - glossy/perfect
Cost/unit = $1.80 Cost/1 issue = $89,250
Bulk production of the issue lowers MODEMAP’s cost substantially, as does direct distribution from the third party facility to the subscriber. At $90,000 for 50,000 press runs, the cost to produce a single issue is roughly $1.80.
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THE PRICE
CIRCULATION
Single-Copy: $9 Subscription: $18 2/year
The pricing structure depends on both circulation & advertising. Subscription prices must be within market range but must also represent MODEMAP’s image & the expectation of that image for its readers. Price points for circulation & advertising differ, therefore each component has it’s own pricing model.
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THE PRICE
ADVERTISING
• CPM: Readership per thousand dollars spent
• Prices based on: size of ad, location within publication, & frequency of ad.
Monday, June 13, 2011
50,000 circulation x 4 readers per issue 200,000 readership 26 ad pages x $10,000 per page $26,000 ad sales per issue 200k x $50 average CPM $10,000 full page ad
s t c u d o r p & S E C I V SER
DISTRIBUTION • Subscriptions - Mailed directly from printers. • Single-copies - Regional wholesalers deliver to specialty book stores & predetermined retailers. 50% discount off cover price.
• Distribution charges (1st promotional issue) - printing, labeling, and mailing. Included on start-up summary.
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MARKET SEGMENTATION Highly targeted audience of fashion industry professionals and fashion lovers. Females Ages: 25 to 35 HHI: $75,000
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TARGET MARKET The MODEMAP reader is an innovator - active in trying new products. She has knowledge and experience in the fashion industry, reads all the major fashion magazines Elle, Vogue, Harper’s Bazaar, Marie Claire - and gets her daily dose of online fashion heaven with fashion blogs, bookmarked for easy access. She spends her hard-earned money to buy quality magazines. Devoted, trusting, and obsessed with all things fashion.
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COMPETITION Elle Collections (UK) $18.99 (US) / ÂŁ9 or $14 (UK) 25-35, core Elle readers, & the fashion obsessed 50,000 initial press runs, to 65,000 current circulation Catwalk coverage - 100% fashion content
Vogue Collections (Paris) $21/issue or $45/2 issue subscription (US) Fashion insiders & lovers 50,000 press runs Catwalk coverage - 100% fashion content
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COMPETITIVE ADVANTAGE Our exclusive fashion magazine is the only of its kind in the US, giving MODEMAP a unique position and definite advantage in the market. With no direct competitors, and prices far lower than competitor’s that include oversees shipping costs, Modemap is the only fashion magazine available with complete, biannual coverage of fashion week.
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MARKET STRATEGY Our strategy is based on serving our clearly defined niche market of fashion industry professionals. Fashion experts and the simply obsessed are a committed and passionate clientele. The task is to reach and inform the target market.
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MARKET STRATEGY DIGITAL EDITION
t m g m AM TE
KEY PERSONNEL YEAR 1: Unpaid
Teralyn Kanka, Owner/Editor-in-Chief Total 15 yrs experience in fashion/layout & design Passion, vision, & determination Roles: magazine layout & design, editorial content, circulation mgmt, marketing, advertising & subscription sales.
Jihan Bowes, Magazine Consultant, Runway Analyst 5 years experience with Conde Nast NYC mag. & fashion connections: Glamour, Allure, Calvin Klein Fashion week access Roles: operations management, catwalk correspondence
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KEY PERSONNEL YEAR 1: Unpaid
James Kanka, Photography/Videography/Graphic Design 10 years experience video production, photography, & design Roles: Fashion photography,
Boaz Lyu, CPA/Industry Connection 2 yrs experience accounting @ Deloitte Fashion forecasting start-up company Roles: accounting/financing/taxes prep, etc.
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KEY PERSONNEL YEAR 2: Paid
Teralyn Kanka, Owner/Editor-in-Chief $55K/year
Oversees operations Editorial & design of magazine
New Hire, Advertising Sales Manager Pay rate based on commission Establishes & maintains relationships/communication with advertisers Handles all advertising sales
New Hire, Circulation Manager
Monday, June 13, 2011
l a i c n START-UP SUMMARY S a N f inJECTIO O R P
Equipment Furniture Supplies Expenses
6,808 899 311 105,070
funding
Total Start-Up Expenses
$113,088
For details, see page # of the written plan. Monday, June 13, 2011
Private Investor
75,000
Personal Investment
50,000
Investment Needed
113,088
Total Reserve
$11,912
l a i c n INCOME STATEMENT S a N f inJECTIO O R P
2014
2013
2012
Revenue Cost of Sales Gross Margin Total Expenses
1,791,000 489,600 1,301,400 196,166
1,455,000 390,000 1,065,000 169,670
1,002,000 75,600 926,400 124,259
Net Income
$939,449
$761,031
$681,820
Projected Increase:
For details, see page # of the written plan. Monday, June 13, 2011
19%
11%
l a i c n CASH FLOW S a N f inJECTIO O R P
2014
2013
2012
Cash at beg. of year Cash - Operating Activities Cash - Investing Activities Cash - Financing Activities
144,262 49,000 0 0
123,262 21,000 0 0
11,912 -13,650 0 125,000
Cash at End of Year
$193,262 $144,262 $123,262
Projected Increase:
For details, see page # of the written plan. Monday, June 13, 2011
33%
17%
l a i c n BALANCE SHEET S a N f inJECTIO O R P
2014
2013
2012
Total Assets
1,813,262
1,464,262
1,049,662
Total Liabilities
729,551
579,970
230,930
Total Owner’s Equity
1,813,262
1,464,262
1,049,662
Total Liabilities & Owner’s Equity
1,813,262 1,464,262 1,049,662
Projected Increase:
For details, see page # of the written plan. Monday, June 13, 2011
23%
39%
l a i c n BREAK-EVEN ANALYSIS S a N f inJECTIO O R P
Total Fixed Costs Variable Cost
109,738 $1.80
Selling Price Break-Even Units
$9. 15,242
Break-Even Sales For details, see page # of the written plan. Monday, June 13, 2011
$137,173
theD EN
Thank you for your time.
Monday, June 13, 2011
REVENUES
OFFICE FURNITURE Desk/Chair File Cabinet Total Furniture
700 199 $899
OFFICE SUPPLIES Paper Stationary & Business Cards Ink Total Office Supplies
48 150 113 $311
START-UP EXPENSES Equip./Furn./Supp. 8,018 Business License 150 Promotional Issue (50,000 press runs) 89,250 Media Kit (5,000 press runs) 2,450 Postage 400 Insurance (prepaid) 3,000 Online Service 120 Travel 9,700 Subtotal 113,088 Total Start-Up Expenses $113,088
FUNDING Private Investor Personal Investment Investment Needed Total Reserve
Monday, June 13, 2011
75,000 50,000 113,088 $11,912
For the Years Ended December 31, 2012, 2013, 2014
2,200 1,999 1,899 200 60 400 50 $6,808
I N CO M E STAT E M E N T by Year
Apple MapBook Pro Apple iMac Adobe Design Premium 5.5 Quick Books iWork Printer / Scanner / Fax Machine Phone Total Store Equipment
Pro forma
STA RT- UP SUM MAR Y
OFFICE EQUIPMENT
2014
Circulation Advertising Total Revenue Cost of Sales Gross Margin
855,000 936,000 $1,791,000 489,600 $1,301,400
2013 47.7% 52.3% 27.3% 72.7%
2012
675,000 780,000 $1,455,000 390,000 $1,065,000
46.4%
49,000 2,450 20,000 21,000 $92,450
3.4%
53.6% 26.8% 73.2%
378,000 624,000 $1,002,000 75,600 $926,400
37.7% 62.3% 7.5% 92.5%
OPERATING EXPENSES Sales& Marketing Expenses Sales & Marketing Payroll Advertising Promotion Travel Total Sales & Marketing Expenses General & Administrative General & Administrative Payroll Office Equipment/Furniture Office Supplies Phone Web Hosting & Domains Licenses Insurance (prepaid) Payroll Taxes Total General & Administrative Total Operating Expenses
71,000 0 1,932 100 120 0 3,000 7,564 $83,716 $196,166
Net Income (Loss) Before Taxes Income tax (15%) Net Income (Loss) After Taxes
1,105,234 165,785 $939,449
Assumptions Circulation Revenue Cost of Sales Sales & Marketing Payroll Advertising Promotion Travel General & Administrative Payroll Office Equipment/Furniture Office Supplies Phone Web Hosting & Domains Licenses Payroll Taxes
51,000 2,450 35,000 24,000 $112,450
2.8% 0.1% 2.0% 1.3% 6.3% 4.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.2% 0.4% 4.7% 11.0% 61.7% 9.3% 52.5%
65,000 0 1,932 100 120 0 3,000 7,068 $77,220 $169,670 895,330 134,300 $761,031
0.2% 1.4% 1.4% 6.4% 4.5% 0.0% 0.1% 0.0% 0.0% 0.0% 0.2% 0.5% 5.3% 11.7% 61.5% 9.2% 52.3%
0 2,450 89,250 19,400 $111,100
0.0%
0 7,707 2,082 100 120 150 3,000 0 $13,159 $124,259
0.0%
802,141 120,321 $681,820
Subscription & single-copy sales. See Sales Forecasts, lower right $$$ printing/issue, $$$ postage/issue, $$$ labeling/issue. See Personnel Plan below Direct Mail - $$$ for, Media Kit - $2,450 for 5,000 copies/year 1st year includes promotional issue See Travel Expenses, lower left See Personnel Plan below $6,808 equipment + $899 furniture = $7,707 Initial $150 on business cards, $161/month on paper & ink $150 single start-up fee 6.2% FICA on payroll wages
0.2% 8.9% 1.9% 11.1%
0.8% 0.2% 0.0% 0.0% 0.0% 0.3% 0.0% 1.3% 12.4% 80.1% 12.0% 68.0%
145,774
124,774
11,912
OPERATING EXPENSES Cash receipts from customers Cash paid for Sales & Marketing Expenses General Operating & Admin. Expenses Income taxes Net Cash Flow - Operating Expenses
171,000
135,000
77,112
51,000 71,000 0 $49,000
49,000 65,000 0 $21,000
89,250 0 0 ($12,138)
0 0
0 0
0 0
0 0 $0
0 0 $0
0 0 $0
INVESTING ACTIVITIES Cash receipts from Sale of property and equipment Collection of principal on loans Cash paid for Purchase of property and equipment Making loans to other entities Net Cash Flow - Investing Activities Cash receipts from Private Investment Personal Investment Cash paid for Repayment of loans Net Cash Flow - Financing Activities
Assumptions Cash receipts from customers Sales & Marketing Expenses General Operating & Admin. Expenses
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ASSETS
2014
2013
2012
Current Assets Cash Accounts receivable Total Current Assets
194,774 1,620,000 1,814,774
145,774 1,320,000 1,465,774
124,774 924,888 1,049,662
Total Assets
$1,814,774
$1,465,774
$1,049,662
74,166 489,600 0 165,785 729,551
55,670 390,000 0 134,300 579,970
35,009 75,600 0 120,321 230,930
1,085,223 1,085,223
885,805 885,805
818,732 818,732
$1,814,774
$1,465,774
$1,049,662
0.40 2.49 1,085,223 1.67 0.67
0.40 2.53 885,805 1.65 0.65
0.22 4.55 818,732 1.28 0.28
LIABILITIES & OWNER’S EQUITY Current Liabilities Accounts payable - operating Accounts payable - production Short-term loans Income taxes payable Total current liabilities Owner's Equity Retained Earnings Total owner's equity
Total Liabilities and Owner's Equity Common Financial Ratios
FINANCING ACTIVITIES
Net Increase in Cash Cash at End of Year
by year as of December 31
2012
BAL ANC E SHEE T
2013
Pro forma
FLOW by Year For the Years Ended December 31 Pro forma CASH
2014
0 0
0 0
75,000 50,000
0 $0
0 $0
0 $125,000
49,000 $194,774
21,000 $145,774
112,862 $124,774
20% of total circulation sales (yr1: $378,000 x .02 = $77,112) Payroll, (1st year - promotional issue in cash, no payroll) Payroll
Debt Current Working Capital Assets-to-Equity Debt-to-Equity Assumptions Cash Assets Accounts Receivable Accounts Payable Accounts payable - production Short-term loans Income taxes payable
Cash at end of the year from cash flow statement Total sales - cash receipts from customers Includes all operating expenses except payroll cost of printing/labeling/mailing 15% of net income (before taxes), from income statement
FIXED COSTS Advertising - Media Kit Promotion Payroll Supplies/Equip./etc Travel Online Service Total Fixed Costs (TFC)
2,450 89,250 0 8,218 9,700 120 $109,738
VARIABLE COSTS (Variables Costs based on Dollar Amount per Unit) Cost of Circulation Sales 1.80 per unit Overhead 0.00 per unit Other (specify) 0.00 per unit Sum: $1.80 Total Variable Cost per Unit (V) Contribution Margin per unit (CM) = P - V Contribution Margin Ratio (CMR) = 1 - V / P = CM / P
1.80 7.20 80.0%
BREAK-EVEN POINT Break-Even Units (X) = TFC / (P - V) Break-Even Sales (S) = X * P = TFC / CMR
15,242 units 137,173
TARGETED NET INCOME 700,000 Targeted Net Income Before Taxes (NIBT) Units required to reach targeted NIBT, X = (TFC + NIBT) / (P-V)112,464 units Sales required to reach targeted NIBT, S = (TFC + NIBT) / CMR 1,012,173 Rate of return on sales before taxes = NIBT / S
69.2%
Tax Rate (T)
25%
Net Income After Taxes (NIAT) = (1-T)*NIBT Rate of return on sales after taxes = NIAT / S
525,000 51.9%
Assumptions Advertising fixed cost Promotion Payroll
Media kit, direct mail, reply card, etc Production cost of promotional 1st issue No paid employees during first year
Supplies/Equip./etc Travel
Includes flight & hotel expenses for fashion week
Online service Monday, June 13, 2011
SALES FORE CAST
BRE AK- EVE N ANA LYS IS - Magazine Circulati
Jan 1, 2011 - Jun 30, 2011 For the Period: Selling Price (P): $9.00 Break-Even Units (X): 15,242 units Break-Even Sales (S): $137,173
UNIT SALES
YEAR 3
YEAR 2
YEAR 1
Subscription 2 issues/yr. Single Unit Ad Revenue Pages Total Unit Sales
40,000 10,000 52 50,052
30,000 5,000 52 35,052
20,000 2,000 52 Ad/Edit. ratio: 20/80 - 132 pages/issue = 22,052 26 ad pages, 128
UNIT PRICES $ Subscription 2 issues/yr. Single Unit Ad Revenue Pages
editorial pages. 26 pages/issue x2 = 52 pages/year
18 9 18,000
18 9 15,000
18 9 12,000
720,000 45,000 765,000 936,000 $1,701,000
540,000 22,500 562,500 780,000 $1,342,500
Subscription 2 issues/yr.
3.60
3.60
3.60 costs include
Single Unit
1.80
1.80
6,300
5,250
1.80 distribution, etc 0 Ad page sales
Subscription 2 issues/yr.
144,000
108,000
72,000
Single Unit Ad Revenue Pages
18,000 327,600
9,000 273,000
3,600 0
Subtotal Direct Cost of Sales $489,600
$390,000
$75,600
SALES $ Subscription 2 issues/yr. Single Unit Total Circulation Ad Revenue Pages Total Sales
360,000 9,000 50% of single issue at $9 (after 369,000 distributor margin) 624,000 $993,000
DIRECT UNIT COSTS $
Ad Revenue Pages
printing &
DIRECT COST OF SALES $
divided by 52 ad pages/year, times 35% commissions on sales
PERSONNEL PLAN
SALES & MARKETING PERSONNEL
2014
2013
2012
36,000 15,000 $51,000
34,000 15,000 $49,000
0 0 $0
Teralyn Kanka, CEO/Editor 56,000 Daphne Kane, Journalist 0 Jihan Bowes, Runway Correspondent/Magazine Specialist 0 James Kanka, Photographer/Graphic Designer 15,000 Subtotal $71,000
50,000 0 0 15,000 $65,000
0 0 0 0 $0
6
6
1
$122,000
$114,000
$0
Ad Sales Manager Subscription Manager Subtotal
GENERAL & ADMIN. PERSONNEL
Total People
Total Payroll
Monday, June 13, 2011