its personnel and its capitalization. The key personnel at the company have all worked in fast food before (some in management and some at the restaurant level), and two have worked in the pizza segment. The company currently plans to open four locations, with one of the senior people on-site at each location. Purchasing for the stores will be done centrally to take advantage of quantity discounts wherever possible.
Each of the seven partners has contributed $100,000, and additional capital has been obtained from venture capitalists. It is assumed that the total capitalization should be more than adequate to cover the company's needs for the foreseeable future. However, the company intends to turn a profit after two years instead of the traditional five years, and expects that the contribution from the business will be sufficient to meet the operating needs.
Sales for the first year (total) are forecast at $960,000; sales for the second year are forecast at $1.4 million. It is expected that sales for the third through fifth years will increase at the rate of 20 percent per year. Expenses for the first year will be greater than in future years as the company is just getting established; these are estimated at $1.1 million for the first year. It is expected that cost of goods sold will total 70 percent of sales, with marketing activities slated at $125,000 for the first year and at approximately ten percent of sales for subsequent years.
The major weakness of the company is that it is untested. While each of the participants has worked for other restaurant organizations, some in management positions, none of these individuals have ever worked for themselves. The venture capitalists have not yet indicated that they are interested in a day-to-day influence on the business, but they also do not have strong re
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