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 Table of Contents

1.0 Executive Summary.....................................................................................................................1

1.1 Objectives....................................................................................................................................1
1.2 Mission...........................................................................................................................................1
Chart: Highlights...........................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................2
2.2 Start-up Summary....................................................................................................................2
Table: Start-up Funding.............................................................................................................3
Chart: Start-up..............................................................................................................................4
Table: Start-up..............................................................................................................................4
3.0 Services.............................................................................................................................................5
3.0 Services.............................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................5
4.1 Market Segmentation..............................................................................................................5
Chart: Market Analysis (Pie).....................................................................................................6
Table: Market Analysis................................................................................................................6
4.2 Target Market Segment Strategy.......................................................................................7
4.3 Service Business Analysis......................................................................................................7
4.3.1 Competition and Buying Patterns...............................................................................7
5.0 Strategy and Implementation Summary.............................................................................7
5.1 Sales Strategy............................................................................................................................8
5.1.1 Sales Forecast....................................................................................................................8
Table: Sales Forecast..............................................................................................................8
Chart: Sales Monthly...............................................................................................................9
Chart: Sales by Year................................................................................................................9
5.2 Competitive Edge......................................................................................................................9
5.3 Marketing Strategy.................................................................................................................10
5.4 Milestones..................................................................................................................................10
Table: Milestones........................................................................................................................10
Chart: Milestones........................................................................................................................11
6.0 Management Summary.............................................................................................................11
6.1 Personnel Plan..........................................................................................................................11
Table: Personnel..........................................................................................................................12
7.0 Financial Plan................................................................................................................................12
7.1 Important Assumptions........................................................................................................12
Table: General Assumptions...................................................................................................12
7.2 Projected Cash Flow...............................................................................................................12
Table: Cash Flow.........................................................................................................................12
Chart: Cash...................................................................................................................................13
7.3 Break-even Analysis...............................................................................................................13
Chart: Break-even Analysis....................................................................................................14
Table: Break-even Analysis....................................................................................................14
7.4 Projected Profit and Loss.....................................................................................................14

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 Table of Contents

Chart: Profit Monthly.................................................................................................................15

Chart: Profit Yearly.....................................................................................................................15
Chart: Gross Margin Monthly.................................................................................................16
Chart: Gross Margin Yearly.....................................................................................................16
Table: Profit and Loss................................................................................................................16
7.5 Projected Balance Sheet......................................................................................................18
7.5 Projected Balance Sheet......................................................................................................18
Table: Balance Sheet.................................................................................................................18
7.6 Business Ratios........................................................................................................................19
7.6 Business Ratios........................................................................................................................19
Table: Ratios.................................................................................................................................19
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................7
Table: Balance Sheet...........................................................................................................................7

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 Betcher Chiropractic

1.0 Executive Summary

Betcher Chiropractic is an Oregon L.L.C. with doctor Tarri Betcher as the majority owner.
Betcher Chiropractic is a start-up business that will achieve profitability by the second year of
operation.

The Market
Demand for chiropractic medicine has been growing over the last few years. Growth is due to
acceptance by many insurance policies, and an increase of published research that indicates the
effectiveness for patients. Betcher Chiropractic has identified two distinct customer segments:
individuals ages 45-65 and individuals ages 20-44.

Services
Chiropractors diagnose and treat patients whose health problems are associated with the body's
muscular, nervous, and skeletal systems, especially the spine. Chiropractors believe
interference with these systems impairs normal functions and lowers resistance to disease.
They also hold that the spinal or vertebral dysfunction alters many important body functions by
affecting the nervous system and the skeletal imbalance through joint or articular dysfunction.

This chiropractor's approach to health care is holistic, emphasizing the patient's overall health
and wellness. Betcher Chiropractic recognizes that there are many factors that can affect one's
wellness including but not limited to: exercise, diet, rest, environment, and hereditary. Betcher
Chiropractic provides natural, drugless, nonsurgical health treatments, relying on the bodies
inherent recuperative functions.

Competitive Edge
Betcher Chiropractic treats every patient with the philosophical approaches of individualism and
holistic medicine. Wellness problems are generally affected by various systems working
together and should be treated accordingly. Success is achieved by addressing and managing
the problems that prompted the patient to visit the doctor.

1.1 Objectives

1. To create a health care facility whose goal is to exceed patient's expectations. This will be
tracked with patient surveys as the feedback mechanism.
2. To increase the number of clients served by at least 25% each year.
3. To create a start-up business surviving off its own cash by month 20 of operation.
4. To build a strong repeat and referral client base.

1.2 Mission

Betcher Chiropractic's mission is simply to attract and maintain clients by offering the most
uniquely individualized and professional care available, and to promote the well being of all
patients while helping each to achieve and maintain the highest quality of life.

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 Betcher Chiropractic

Chart: Highlights

1.3 Keys to Success

1. Location: providing easy accessibility and amply parking for patients that may have
physical limitations.

2. Environment: providing an environment that is both relaxing and professional.

3. Convenience: offering patients extended business hours.

4. Reputation: establishing an excellent reputation within the community.

2.0 Company Summary

Betcher Chiropractic has been established as an Oregon L.L.C. in 2003.

2.1 Company Ownership

Tarri Betcher D.C. has a majority ownership interest in Betcher Chiropractic.

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 Betcher Chiropractic

2.2 Start-up Summary

Please see the following start-up chart and table for a detailed breakdown of the various
expenses. Tarri brings $2,500 of already existing equipment.

The following equipment are needed for start up.

 One drop style adjusting table.

 One ultra sound/high volt physical therapy machine.
 Computer software including DSL connection, QuickBooks Pro, and Microsoft Office.
 Filing cabinet.
 Two phone lines with answering machine and fax machine.
 Copy machine.
 Reception area furniture and decorations.

Existing equipment:

 Two adjusting tables (one bench style and one portable).

 Computer system with printer.
 Desk.
 Activator chiropractic instrument.
 Welch Allyn oto-opthomoscope.
 Lettmann stethoscope.
 Tyco blood pressure instrument with all cuffs.
 Chiropractic and medical health care library.

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 Betcher Chiropractic

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $21,500
Start-up Assets to Fund $58,500
Total Funding Required $80,000

Assets
Non-cash Assets from Start-up $17,500
Cash Requirements from Start-up $41,000
Additional Cash Raised $0
Cash Balance on Starting Date $41,000
Total Assets $58,500

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $20,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $20,000

Capital

Planned Investment
Investor 1 $40,000
Investor 2 $20,000
Additional Investment Requirement $0
Total Planned Investment $60,000

Loss at Start-up (Start-up Expenses) ($21,500)

Total Capital $38,500

Total Capital and Liabilities $58,500

Total Funding $80,000

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 Betcher Chiropractic

Chart: Start-up

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $300
Advertising $2,000
Stationery etc. $200
Brochures $150
Consultants $150
Insurance $800
Rent deposit and 1st and last months rent $2,700
Rent for six months $7,200
Leasehold improvements $5,000
Expensed equipment $2,000
Other $1,000
Total Start-up Expenses $21,500

Start-up Assets
Cash Required $41,000
Other Current Assets $2,500
Long-term Assets $15,000
Total Assets $58,500

Total Requirements $80,000

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 Betcher Chiropractic

3.0 Services

Chiropractors, also known as doctors of chiropractic or chiropractic physicians, diagnose and

treat patients whose health problems are associated with the body's muscular, nervous, and
skeletal systems, especially the spine. Chiropractors believe interference with these systems
impairs normal functions and lowers resistance to disease. They also hold that the spinal or
vertebral dysfunction alters many important body functions by affecting the nervous system,
and the skeletal imbalance through joint or articular dysfunction.

This chiropractor's approach to health care is holistic, emphasizing the patient's overall health
and wellness. Betcher Chiropractic recognizes that there are many factors that can effect one's
wellness including but not limited to: exercise, diet, rest, environment, and hereditary. Betcher
Chiropractic provides natural, drugless, nonsurgical health treatments, relying on the bodies
inherent recuperative functions.

Betcher Chiropractic specializes in the following body areas for treatment:

 Back pain: Many factors can be responsible for back pain. Betcher Chiropractic will attempt
to restore a more normal motion and position of affected spinal bones through specific
chiropractic adjustments.

 Shoulder pain: There is a range of shoulder pain from a persistent ache that merely
irritates to acute pain the affects daily activities.

 Neck pain: Betcher Chiropractic can have significant success in reducing a wide range of
neck pains.

 Headaches: Some studies estimate that 25% of the population have a headache right now.
Headaches are often caused by a malfunction of spinal bones in the neck and upper back.

 Whiplash: Whiplash is defined as an injury to the neck by a sudden movement of the head
and a variety of directions. Betcher Chiropractic is often able to offer significant relief from
pain caused by whiplash.

4.0 Market Analysis Summary

Betcher Chiropractic has identified two distinct market segments that it will target. The largest
segment is individuals ages 45-65. This is the age group that begins to experience an increased
incidence of health problems. The second market segment is individuals age 20-44. This group
is interested in chiropractic medicine due their larger acceptance of alternative medicine.

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 Betcher Chiropractic

4.1 Market Segmentation

Betcher Chiropractic has identified two distinct market segments that it will target services to.

Individuals age 45-65

This customer segment has experienced an increase in wellness issues, particularly those that
are related to the vertebral dysfunction. This segment often has the disposable income to pay
for visits in the event that their insurance does not cover chiropractic visits.

 Have a household income of at least $65,000

 67% of the group have at least an undergraduate degree
 29% of the customers have a graduate degree
 Tend to fall in the middle or slightly to the left politically
 Are open to try new treatments in search of a wellness program that will reduce their
current pain levels
 44% of the customer are vegetarian
 67% of the customers are cognizant of their food intake and are careful to analyze their diet

Individuals age 25-44

This segment is in search of a wellness treatment/program to address their constant or
intermittent pains. This segment may or may not have tried a more traditional medical
treatment, with no relief. This is a more liberal group that is embracing alternative therapy in
replace of more traditional western medicine regimes.

 Have an individual income of at least $35,000

 76% of the group population have an undergraduate degree
 24% of the group have a graduate degree or some graduate course work
 Are politically liberal
 54% have tried another type of alternative treatments to address their wellness issues
 49% of the group are vegetarians

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 Betcher Chiropractic

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Individuals age 45 - 65 15% 345,090 396,854 456,382 524,839 603,565 15.00%
Individuals age 20 - 44 10% 387,090 425,799 468,379 515,217 566,739 10.00%
Total 12.44% 732,180 822,653 924,761 1,040,056 1,170,304 12.44%

4.2 Target Market Segment Strategy

Betcher Chiropractic has targeted these groups for two separate but important reasons. Each
factor applies more directly to one of the two different groups.

 Health Problems: A variety of health problems associated with the body's muscular,
nervous, and skeletal systems is the impetus for the majority of customers age 45-65. It is
at this mid to late portion of a person's life that they began to develop more wellness
issues. This customer segment seeks out chiropractors to aid in the management of the
pain/discomfort.

 Openness to alternative medicine: For individuals age 25-44, the willingness to try
alternative medicine therapy is a significant motivator for the customers to use a
chiropractor's treatment. They are open to the possibility that an alternative form of
treatment can be effective in allowing them to manage their pain. This openness to
alternative treatment could be a result of western medicine's ineffectiveness, or a willness
to try non-conventional means.

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 Betcher Chiropractic

4.3 Service Business Analysis

Chiropractors are licensed doctors of chiropractic medicine. All states regulate the practice of
chiropractic and grant licenses to chiropractors who meet educational and examination
requirements. Most state boards require a four year bachelors degree in additional to
chiropractic college coursework from an accredited program for becoming a Doctor of
Chiropractic. There are currently 16 accredited Chiropractic Education programs.

The job market for chiropractors is growing at a faster rate than the average of all occupations.
There are about 50,000 licensed chiropractors, most in a solo practice, although some practice
with a group. Median annual earnings of salaried chiropractors was $67,030 in 2000. The
middle 50% earned between $44,030 and $105,520 a year.

Self employed doctors typically earn more than their salaried counterparts. Typically
chiropractic doctors experience relatively low earnings initially, increasing as their practice
grows.

4.3.1 Competition and Buying Patterns

There are approximately 2,300 chiropractic doctors in Oregon, 1,390 in Portland alone. In
Portland, 89% of the chiropractors are in a solo practice. The direct competitors to Betcher
Chiropractic are other local chiropractors. Indirect competitors are other alternative treatment
providers as well as more traditional physicians.

Buying patterns of customers are usually dictated by the element of networking or word of
mouth. Patients are more likely to visit a doctor that is recommended to them, however not
everyone can get a referral. Patients that have success with a chiropractor are often quite vocal
about their results thereby increasing the word of mouth effect.

5.0 Strategy and Implementation Summary

Betcher Chiropractic will leverage its competitive edge of a strict individual, holistic approach
which is more successful than other doctors by truly concentrating on the individual and making
specific analysis and recommendations for the particular individual. The marketing strategy will
employ several different methods including free public seminars, print advertising, and
networking activities. The sales effort will be a specific and conscious effort to exceed the
customer's expectations. This effort recognizes the significant value of word of mouth referrals
and by adopting this approach fuels these customer base building activities.

5.1 Sales Strategy

The sales strategy is based on the need to exceed all of the customer's expectations. By
exceeding all expectations, customer's will have only positive things to say about Betcher
Chiropractic. Additionally, a patient that has been successfully treated is particularly vocal
about the experience with their friends and aquaintances because the improvement of one's
wellness is so fundamental and apparent in one's life.

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 Betcher Chiropractic

5.1.1 Sales Forecast

Betcher Chiropractic has developed a conservative forecast that recognizes growth in a doctor's
practice is slow, steady and incremental. This type of growth is acceptable because it adopts a
long-term perspective as opposed to short-term profits that are unlikely to be sustainable.
Please review the following chart and table for more detailed information of the sales forecasts.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Routine treatment $25,432 $83,455 $96,554
Initial examination and diagnosis $11,190 $36,720 $42,484
Total Sales $36,622 $120,175 $139,038

Direct Cost of Sales Year 1 Year 2 Year 3

Routine treatment $509 $1,669 $1,931
Initial examination and diagnosis $509 $1,669 $1,931
Subtotal Direct Cost of Sales $1,017 $3,338 $3,862

Chart: Sales Monthly

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 Betcher Chiropractic

Chart: Sales by Year

5.2 Competitive Edge

Betcher Chiropractic's competitive edge is the holistic individual approach to wellness. The basic
assumptions of this approach are:

1. Each patient is a distinct individual. While there are many common problems among
people, each individual's body reacts differently to different stimuli and the most effective
treatment assumes that analysis must be made using traditional flow chart frameworks
while taking into account the significant individual variance.

2. All wellness treatments must be addressed in a holistic manner. The human body is
a complex "ecosystem" of many interconnected systems. Wellness problems are rarely
specific to an organ or system, they are generally affected by various systems working
together and should be treated accordingly.

Betcher Chiropractic treats every patient with these philosophical approaches. Betcher
Chiropractic is able to offer more effective treatment relative to other doctors because its
mission is to treat patients in the most effective manner. Success is achieved by addressing the
problems that prompted the patient to visit the doctor. By religiously following the above
mentioned approaches Betcher Chiropractic can offer more effective care.

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 Betcher Chiropractic

5.3 Marketing Strategy

The marketing strategy is based on three different types of activities:

1. Public Seminars: Betcher Chiropractic will offer numerous free public seminars in an effort
to increase visibility in the surrounding communities. Seminars are an effective way of
introducing Betcher Chiropractic to prospective customers. They increase visibility of
Betcher Chiropractic and provide a venue to develop a trust relationship with the individual,
an important foundation of a doctor-patient relationship.

2. Print Advertising: Betcher Chiropractic has identified several publications that Betcher
Chiropractic will advertise in including The Oregonian and Willamette Weekly.

3. Networking: This marketing effort recognizes that the buying patterns of patients are
often based on who you know. By performing numerous networking activities both
professional and personally, Betcher Chiropractic will be introduced to a larger number of
people and this will increase the number of conversions from potential customer to patient.

5.4 Milestones

Betcher Chiropractic has identified four specific milestones that will be ambitious but achievable
goals for the organization:

1. Completion of the business plan.

2. Secure and prepare the facilities.
3. Full time status.
4. Profitability.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Completion of business plan 1/1/2003 2/1/2003 $0 Dr. Betcher Marketing
Securing and preparing facilities 1/1/2003 3/1/2003 $0 Dr. Betcher Department
Full time status 1/1/2003 8/1/2003 $0 Dr. Betcher Department
Profitability 1/1/2003 6/0/04 $0 Dr. Betcher Department
Totals $0

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 Betcher Chiropractic

Chart: Milestones

6.0 Management Summary

Tarri Betcher received her undergraduate degree in Biology from the University of Oregon.
Throughout school Tarri believed hat she wanted to serve in some sort of care taker role but
was unsure in what capacity.

During her final year, Tarri assisted a chiropractor. What she really enjoyed about this line of
work was the amount of success or progress that the doctor made with each patient.

Recognizing that most chiropractors are in solo practice, Tarri took an additional year of post
undergraduate course work to strengthen her business/small business management skills in
anticipation of a future practice.

Tarri began her four year chiropractic college course work at the Portland Chiropractic College.
During this four year period where Tarri, was an honors student, earning all of her education
requirements and participating in numerous clinics providing her with hands-on experience.
Upon graduation Tarri began work on a business plan for the new solo practice, a recognition of
the importance of a plan in the success of her future business venture.

6.1 Personnel Plan

Dr. Tarri Betcher will be the doctor and sole employee for the first part of year one. Once
sufficient business has developed, Dr. Betcher will employ an office assistant that will help with
scheduling and appointments, bookkeeping, answering phones, and other various
activities. This will free up the doctors time to allow her to service the patients. Please review
the following table which contains detailed personnel information.

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 Betcher Chiropractic

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Dr. Betcher $26,500 $40,000 $50,000
Office Assistant $8,000 $14,400 $14,400
Total People 2 2 2

Total Payroll $34,500 $54,400 $64,400

7.0 Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Projected Cash Flow

The following chart and table will indicate Projected Cash Flow.

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 Betcher Chiropractic

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $9,156 $30,044 $34,759
Cash from Receivables $18,697 $70,124 $99,762
Subtotal Cash from Operations $27,853 $100,168 $134,521

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $27,853 $100,168 $134,521

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $34,500 $54,400 $64,400
Bill Payments $28,678 $45,596 $50,229
Subtotal Spent on Operations $63,178 $99,996 $114,629

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $3,036 $2,783 $2,783
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $66,214 $102,779 $117,412

Net Cash Flow ($38,361) ($2,611) $17,109

Cash Balance $2,639 $28 $17,138

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 Betcher Chiropractic

Chart: Cash

7.3 Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to reach the break-even
point.

Chart: Break-even Analysis

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 Betcher Chiropractic

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $5,685

Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $5,527

7.4 Projected Profit and Loss

The following table will indicate Projected Profit and Loss.

Chart: Profit Monthly

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 Betcher Chiropractic

Chart: Profit Yearly

Chart: Gross Margin Monthly

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 Betcher Chiropractic

Chart: Gross Margin Yearly

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $36,622 $120,175 $139,038
Direct Cost of Sales $1,017 $3,338 $3,862
Other $0 $0 $0
Total Cost of Sales $1,017 $3,338 $3,862

Gross Margin $35,605 $116,837 $135,176

Gross Margin % 97.22% 97.22% 97.22%

Expenses
Payroll $34,500 $54,400 $64,400
Sales and Marketing and Other Expenses $3,520 $4,010 $4,180
Depreciation $3,000 $3,000 $3,000
Utilities (all) $3,300 $3,900 $4,000
Insurance - malpractice $1,210 $1,530 $1,550
Insurance - workers comp $220 $260 $260
Insurance - liability $2,200 $2,600 $2,600
Rent $13,200 $15,600 $16,000
Payroll Taxes $5,175 $8,160 $9,660

Total Operating Expenses $66,325 $93,460 $105,650

Profit Before Interest and Taxes ($30,720) $23,377 $29,526

EBITDA ($27,720) $26,377 $32,526
Interest Expense $1,836 $1,557 $1,279
Taxes Incurred $0 $5,455 $7,179

Net Profit ($32,556) $16,365 $21,067

Net Profit/Sales -88.90% 13.62% 15.15%

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Betcher Chiropractic

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 Betcher Chiropractic

7.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $2,639 $28 $17,138
Accounts Receivable $8,769 $28,776 $33,293
Other Current Assets $2,500 $2,500 $2,500
Total Current Assets $13,908 $31,305 $52,931

Long-term Assets
Long-term Assets $15,000 $15,000 $15,000
Accumulated Depreciation $3,000 $6,000 $9,000
Total Long-term Assets $12,000 $9,000 $6,000
Total Assets $25,908 $40,305 $58,931

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $3,000 $3,815 $4,156
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,000 $3,815 $4,156

Long-term Liabilities $16,964 $14,181 $11,398

Total Liabilities $19,964 $17,996 $15,554

Paid-in Capital $60,000 $60,000 $60,000

Retained Earnings ($21,500) ($54,056) ($37,691)
Earnings ($32,556) $16,365 $21,067
Total Capital $5,944 $22,309 $43,376
Total Liabilities and Capital $25,908 $40,305 $58,931

Net Worth $5,944 $22,309 $43,376

7.6 Business Ratios

The following table outlines some of the more important ratios from the Office of
Chiropractors industry. The final column, Industry Profile, details specific ratios based on the
industry as it is classified by the Standard Industry Classification (SIC) code, 8041.

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 Betcher Chiropractic

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 228.15% 15.70% 5.93%

Percent of Total Assets

Accounts Receivable 33.85% 71.40% 56.50% 21.14%
Other Current Assets 9.65% 6.20% 4.24% 45.36%
Total Current Assets 53.68% 77.67% 89.82% 71.11%
Long-term Assets 46.32% 22.33% 10.18% 28.89%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 11.58% 9.46% 7.05% 29.10%

Long-term Liabilities 65.48% 35.18% 19.34% 19.50%
Total Liabilities 77.06% 44.65% 26.39% 48.60%
Net Worth 22.94% 55.35% 73.61% 51.40%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.22% 97.22% 97.22% 100.00%
Selling, General & Administrative Expenses 187.02% 84.16% 82.76% 75.10%
Advertising Expenses 3.00% 1.00% 0.86% 0.61%
Profit Before Interest and Taxes -83.88% 19.45% 21.24% 3.98%

Main Ratios
Current 4.64 8.21 12.73 1.86
Quick 4.64 8.21 12.73 1.38
Total Debt to Total Assets 77.06% 44.65% 26.39% 10.80%
Pre-tax Return on Net Worth -547.68% 97.81% 65.12% 60.83%
Pre-tax Return on Assets -125.66% 54.14% 47.93% 27.59%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -88.90% 13.62% 15.15% n.a
Return on Equity -547.68% 73.35% 48.57% n.a

Activity Ratios
Accounts Receivable Turnover 3.13 3.13 3.13 n.a
Collection Days 55 76 109 n.a
Accounts Payable Turnover 10.56 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 1.41 2.98 2.36 n.a

Debt Ratios
Debt to Net Worth 3.36 0.81 0.36 n.a
Current Liab. to Liab. 0.15 0.21 0.27 n.a

Liquidity Ratios
Net Working Capital $10,908 $27,490 $48,774 n.a
Interest Coverage -16.74 15.01 23.09 n.a

Additional Ratios
Assets to Sales 0.71 0.34 0.42 n.a
Current Debt/Total Assets 12% 9% 7% n.a
Acid Test 1.71 0.66 4.72 n.a
Sales/Net Worth 6.16 5.39 3.21 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Routine treatment 0% $0 $0 $1,100 $1,325 $1,656 $1,998 $2,254 $2,626 $2,998 $3,232 $3,698 $4,545
Initial examination and diagnosis 0% $0 $0 $484 $583 $729 $879 $992 $1,155 $1,319 $1,422 $1,627 $2,000
Total Sales $0 $0 $1,584 $1,908 $2,385 $2,877 $3,246 $3,781 $4,317 $4,654 $5,325 $6,545

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Routine treatment $0 $0 $22 $27 $33 $40 $45 $53 $60 $65 $74 $91
Initial examination and diagnosis $0 $0 $22 $27 $33 $40 $45 $53 $60 $65 $74 $91
Subtotal Direct Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182

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 Appendix

Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Dr. Betcher 0% $0 $2,000 $2,000 $2,000 $2,300 $2,300 $2,400 $2,500 $2,500 $2,700 $2,800 $3,000
Office Assistant 0% $0 $0 $0 $0 $800 $800 $900 $900 $1,000 $1,200 $1,200 $1,200
Total People 0 1 1 1 2 2 2 2 2 2 2 2

Total Payroll $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200

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 Appendix

Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current 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 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 Appendix

Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $1,584 $1,908 $2,385 $2,877 $3,246 $3,781 $4,317 $4,654 $5,325 $6,545
Direct Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182

Gross Margin $0 $0 $1,540 $1,855 $2,318 $2,797 $3,156 $3,676 $4,197 $4,525 $5,177 $6,363
Gross Margin % 0.00% 0.00% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22%

Expenses
Payroll $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200
Sales and Marketing and Other $0 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320
Expenses
Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Utilities (all) $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Insurance - malpractice $0 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110
Insurance - workers comp $0 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20
Insurance - liability $0 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Rent 15% $0 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Payroll Taxes 15% $0 $300 $300 $300 $465 $465 $495 $510 $525 $585 $600 $630

Total Operating Expenses $250 $4,700 $4,700 $4,700 $5,965 $5,965 $6,195 $6,310 $6,425 $6,885 $7,000 $7,230

Profit Before Interest and Taxes ($250) ($4,700) ($3,160) ($2,845) ($3,647) ($3,168) ($3,039) ($2,634) ($2,228) ($2,360) ($1,823) ($867)
EBITDA $0 ($4,450) ($2,910) ($2,595) ($3,397) ($2,918) ($2,789) ($2,384) ($1,978) ($2,110) ($1,573) ($617)
Interest Expense $165 $162 $160 $158 $156 $154 $152 $150 $148 $146 $143 $141
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($415) ($4,862) ($3,320) ($3,003) ($3,803) ($3,322) ($3,191) ($2,783) ($2,375) ($2,506) ($1,966) ($1,008)
Net Profit/Sales 0.00% 0.00% -209.62% -157.40% -159.47% -115.46% -98.32% -73.61% -55.02% -53.84% -36.92% -15.41%

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 Appendix

Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $0 $0 $396 $477 $596 $719 $811 $945 $1,079 $1,164 $1,331 $1,636
Cash from Receivables $0 $0 $0 $40 $1,196 $1,443 $1,801 $2,167 $2,448 $2,849 $3,246 $3,507
Subtotal Cash from Operations $0 $0 $396 $517 $1,792 $2,162 $2,612 $3,112 $3,527 $4,013 $4,578 $5,144

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $396 $517 $1,792 $2,162 $2,612 $3,112 $3,527 $4,013 $4,578 $5,144

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200
Bill Payments $5 $246 $2,614 $2,655 $2,667 $2,838 $2,850 $2,888 $2,916 $2,945 $3,011 $3,043
Subtotal Spent on Operations $5 $2,246 $4,614 $4,655 $5,767 $5,938 $6,150 $6,288 $6,416 $6,845 $7,011 $7,243

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $258 $2,499 $4,867 $4,908 $6,020 $6,191 $6,403 $6,541 $6,669 $7,098 $7,264 $7,496

Net Cash Flow ($258) ($2,499) ($4,471) ($4,391) ($4,228) ($4,029) ($3,791) ($3,429) ($3,142) ($3,085) ($2,686) ($2,353)

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 Appendix
Cash Balance $40,742 $38,242 $33,772 $29,381 $25,153 $21,124 $17,333 $13,905 $10,763 $7,678 $4,992 $2,639

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 Appendix

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $41,000 $40,742 $38,242 $33,772 $29,381 $25,153 $21,124 $17,333 $13,905 $10,763 $7,678 $4,992 $2,639
Accounts Receivable $0 $0 $0 $1,188 $2,579 $3,172 $3,887 $4,520 $5,189 $5,979 $6,620 $7,368 $8,769
Other Current Assets $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Total Current Assets $43,500 $43,242 $40,742 $37,460 $34,460 $30,824 $27,511 $24,353 $21,594 $19,242 $16,798 $14,860 $13,908

Long-term Assets
Long-term Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Accumulated Depreciation $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000
Total Long-term Assets $15,000 $14,750 $14,500 $14,250 $14,000 $13,750 $13,500 $13,250 $13,000 $12,750 $12,500 $12,250 $12,000
Total Assets $58,500 $57,992 $55,242 $51,710 $48,460 $44,574 $41,011 $37,603 $34,594 $31,992 $29,298 $27,110 $25,908

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $159 $2,525 $2,566 $2,573 $2,743 $2,754 $2,791 $2,818 $2,845 $2,910 $2,940 $3,000
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $159 $2,525 $2,566 $2,573 $2,743 $2,754 $2,791 $2,818 $2,845 $2,910 $2,940 $3,000

Long-term Liabilities $20,000 $19,747 $19,494 $19,241 $18,988 $18,735 $18,482 $18,229 $17,976 $17,723 $17,470 $17,217 $16,964
Total Liabilities $20,000 $19,906 $22,019 $21,807 $21,561 $21,478 $21,236 $21,020 $20,794 $20,568 $20,380 $20,157 $19,964

Paid-in Capital $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Retained Earnings ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500)
Earnings $0 ($415) ($5,277) ($8,597) ($11,601) ($15,403) ($18,725) ($21,916) ($24,700) ($27,075) ($29,581) ($31,547) ($32,556)
Total Capital $38,500 $38,085 $33,223 $29,903 $26,899 $23,097 $19,775 $16,584 $13,800 $11,425 $8,919 $6,953 $5,944
Total Liabilities and Capital $58,500 $57,992 $55,242 $51,710 $48,460 $44,574 $41,011 $37,603 $34,594 $31,992 $29,298 $27,110 $25,908

Net Worth $38,500 $38,085 $33,223 $29,903 $26,899 $23,097 $19,775 $16,584 $13,800 $11,425 $8,919 $6,953 $5,944

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