develop positive cash flow. 3As the attached profit and loss projection and cash flow forecast indicate, however, we expect the corporation to begin to generate a positive cash flow and profit before the end of the first year of operations. To accomplish this, however, the corporation needs a total infusion of $150,000 equity capital. The founders have contributed half of that amount and are seeking additional investors for the balance. In exchange for a $75,000 investment, the investor would receive a one-third interest in the company. This would take the form of one-third of the stock in DAY INTERNATIONAL, INC. and one-third representation on the Board of Directors. As noted in Section B above, the existing shareholders are willing to design a shareholders agreement to protect the interests and representation of the minority shareholders.     3Since DAY is already in operation, it would be normal practice to include a balance sheet of operations to date. I do not do this here both because of space limitations and because we have not discussed balance sheets in the text. If your business is in operation, ask your bookkeeper or accountant to help you prepare a balance sheet and include it.     Profit projections show that if all goes according to plan, the investor can expect no return of his investment in the first year of operation and substantial profit in the second. (The accompanying profit and loss forecast shows a $338,255 profit for DAY INTERNATIONAL, INC. by the second year.) While the dividend policy of the corporation will be to pay modest dividends to investors in order to generate capital for growth, it can be expected that some of the available profits will be distributed to the shareholders. In addition, the investor can expect significant capital gains should the corporation make a public stock offering. The founders plan to do this after several years of profitable operations.     WarningWarning to investors! Heretofore you have read an optimistic review of DAY INTERNATIONAL, INC. and its chances for future success. However, you should realize that the electronics business is a risky one. Many new products fail, while others succeed for a brief time, only to be supplanted by new technology, changing public taste or foreign competition. While we believe we have planned carefully and well for each of these eventualities, we want to emphasize one thing loud and clear: Anyone who invests in DAY INTERNATIONAL, INC. is taking a substantial risk. While we believe chances of success are excellent, this is by no means guaranteed. In short, please do not invest money that you cant afford to lose. Appendix 3: Business Plan for a Project Development     Overview     Project developments differ from normal businesses in several ways. Most importantly, the development business ends when the project is sold. That means that the developer normally knows the selling price of the project before beginning development, and it means that his profit depends almost solely on his ability to control costs. Sometimes the project is sold before it is finished, making cost control even more critical.     The cash flow projection in this example is a model for project development forecasting, and I recommend that you use it for your project.     John Reynolds plans to fix up a house that has inadequate plumbing and electrical work. In addition, the house has been unoccupied for several years and most of the windows are broken and the floors are in sad shape.