Budgeting

We have to start spending our money to establish this company in the marketplace. The following is my proposed monthly budgets for the above-designated divisions. These are based on seat of the pants ``wing it'' insight.

   Marketing Division     $14,000
   Operations Division    $10,500
   Technical Division     $10,500

These figures were calculated on the basis of exhaustion of our in-the-bank capital in 4 months assuming no additional revenue from sales. The budget I propose would make me extremely unhappy were I the manager of each of the above divisions. Thus, I claim it is close to reality.

The above numbers also closely equal my estimate for the net revenue from sales if we assume that Sun-Flex takes as many systems as they have taken over the last three months, and that other sales stay equal. We can augment the above figures by spending capital or forecasting increasing sales, but I would be uncomfortable with an increase beyond 25%.

I assume that any increase in sales over the next 90 days will be used to increase the above budgets proportionally. I am open to the establishment of a separate customer support division, but as there is nobody to manage it currently, now isn't the time to do it.

Existing salaries are to be paid from the above budgets. The technical budget will pay for Greg and Duff's salaries, and the operations budget will cover John and Jane Kern, and Kathy Marcelius. The royalty payments to Mike Riddle and Mike Ford are assumed to be subtracted directly from sales and are not included in these budget figures.

The technical budget assumes that we can continue to get the machines to develop on for free and that we can do effective work in that environment. If this is not correct, we would have to steal from the Operations or Marketing budgets for equipment.

The marketing budget allows for extensive advertising and additional personnel. If the advertising can be arranged on a co-op basis, or the personnel can be recruited on a commission basis, funds from this account may be reassigned to the others.