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Business Plan Pro Table Wizards guide you step by step through then financials to produce solid numbers, charts and tables that are preferred by banks, lenders, and the SBA. It even does the math for you, just plug in your numbers and the software will do the rest!
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6.0 Financial Plan
- We want to finance our aircraft loan through cash flow from our aircraft rental.
- We want to pay for our engine overhaul at the recommended TBO through cash savings acquired during our aircraft rental.
- In order to attract larger sums of money, we will offer a 10-hour block of aircraft rental for $630 ($63/hour) which is reduced from our normal rental rate of $65 per hour. Additionally, we will offer M-GLAS employees the same $63 per hour rate for block or non-block rentals.
6.1 Important Assumptions
The financial plan depends on the number of revenue hours flown each month in our aircraft.
The most important assumptions crucial to our success are:
- The aircraft will maintain flying status other than routine, required inspections lasting a day or two.
- We will not have any major aircraft accidents or incidents that will result in major downtime.
- We also assume that student pilot starts will continue to increase and the demand for pilots will continue.
General Assumptions
| General Assumptions |
| | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Plan Month | 1 | 2 | 3 | 4 | 5 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
| Tax Rate | 28.17% | 28.00% | 28.17% | 28.00% | 28.17% |
| Other | 0 | 0 | 0 | 0 | 0 |
6.2 Sales Forecast
Our Sales Forecast tables shows our estimated aircraft rental revenue. This monthly breakdown can be seen in the appendix. Estimated operating expenses and other charges are listed in the Profit and Loss table.
Sales Forecast
| Sales Forecast |
| Sales | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Aircraft Rental | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| Other | $0 | $0 | $0 | $0 | $0 |
| Total Sales | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| | | | | | |
| Direct Cost of Sales | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Aircraft Rental | $0 | $0 | $0 | $0 | $0 |
| Other | $0 | $0 | $0 | $0 | $0 |
| Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 |
Sales Monthly
6.3 Break-even Analysis
Breaking down our monthly fixed costs enables us to calculate how much the aircraft needs to be flown each month to maintain profitability. Our monthly fixed costs include:
- Hangar rental.
- Aircraft insurance.
- Engine overhaul fund.
- Aircraft loan payments.
- Routine aircraft maintenance and inspection costs.
- Estimated monthly fuel costs.
The following chart and table summarizes our break-even analysis.
Break-even Analysis
Break-even Analysis
| Break-even Analysis: |
| Monthly Units Break-even | 40 |
| Monthly Revenue Break-even | $2,623 |
| | |
| Assumptions: | |
| Average Per-Unit Revenue | $65.00 |
| Average Per-Unit Variable Cost | $0.25 |
| Estimated Monthly Fixed Cost | $2,613 |
6.4 Projected Profit and Loss
With monthly fixed costs of hangar rent, renter and instructor insurance, an engine overhaul fund, aircraft loan, planned maintenance and inspections, and fuel, we can actively market our aircraft to obtain the correct number of students to exceed our expenses while making the aircraft convenient for the students to schedule for training and rental.
A loss is expected for the first few months while a student base is carefully chosen and constructed. We hope to increase our number of flight hours flown each month by 25% until the break-even point is reached. At that time, we will assess the number of students and the number of hours being flown to determine how many more students and renters we want to increase our profits and maintain good aircraft availability.
NOTE: You will notice in the year 2003 that the company is showing a net loss for the year. This is the year that we estimate the aircraft engine will require a factory overhaul. This expense ranges from $13,000 to $20,000, depending on several variables. Therefore, we have chosen to show an overhaul expense of $15,000 for that year. However, this was only shown to demonstrate the effect of not properly saving for the overhaul expense. We have allocated a certain percentage of each flight hour toward the engine overhaul savings fund which will cover all of our expenses, thus, hopefully returning Lansing Aviation to a net profit for 2003.
Profit and Loss
| Pro Forma Profit and Loss |
| | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Sales | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 |
| Production Payroll | $0 | $0 | $0 | $0 | $0 |
| Other | $0 | $0 | $0 | $0 | $0 |
| | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total Cost of Sales | $0 | $0 | $0 | $0 | $0 |
| Gross Margin | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| Gross Margin % | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Operating Expenses: | | | | | |
| Sales and Marketing Expenses: | | | | | |
| Sales and Marketing Payroll | $0 | $0 | $0 | $0 | $0 |
| Fixed Operation Costs | $27,530 | $27,530 | $27,530 | $27,530 | $27,530 |
| Aircraft Upgrades | $1,500 | $0 | $0 | $0 | $0 |
| Miscellaneous | $0 | $0 | $0 | $15,000 | $0 |
| | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total Sales and Marketing Expenses | $29,030 | $27,530 | $27,530 | $42,530 | $27,530 |
| Sales and Marketing % | 63.42% | 58.82% | 57.35% | 96.66% | 57.35% |
| General and Administrative Expenses: | | | | | |
| General and Administrative Payroll | $0 | $0 | $0 | $0 | $0 |
| Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 |
| Depreciation | $0 | $0 | $0 | $0 | $0 |
| Leased Equipment | $0 | $0 | $0 | $0 | $0 |
| Utilities | $0 | $0 | $0 | $0 | $0 |
| Insurance | $0 | $0 | $0 | $0 | $0 |
| Insurance | $0 | $0 | $0 | $0 | $0 |
| Payroll Taxes | $0 | $0 | $0 | $0 | $0 |
| Other General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 |
| | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 |
| General and Administrative % | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other Expenses: | | | | | |
| Other Payroll | $0 | $0 | $0 | $0 | $0 |
| Unforeseen Maintenance & Repairs | $1,700 | $1,000 | $1,000 | $1,000 | $1,000 |
| | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total Other Expenses | $1,700 | $1,000 | $1,000 | $1,000 | $1,000 |
| Other % | 3.71% | 2.14% | 2.08% | 2.27% | 2.08% |
| | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total Operating Expenses | $30,730 | $28,530 | $28,530 | $43,530 | $28,530 |
| Profit Before Interest and Taxes | $15,045 | $18,270 | $19,470 | $470 | $19,470 |
| Interest Expense | $3,042 | $2,289 | $1,728 | $1,350 | $972 |
| Taxes Incurred | $3,368 | $4,475 | $4,997 | $0 | $5,210 |
| Net Profit | $8,636 | $11,507 | $12,745 | ($880) | $13,288 |
| Net Profit/Sales | 18.87% | 24.59% | 26.55% | -2.00% | 27.68% |
6.5 Projected Cash Flow
The following cash flow projections show the amounts anticipated from the first few months during the student accumulation period through the company's rental saturation.
Cash flow is critical to our success, for payment of the insurance and aircraft loan payments as well as the fuel costs required to operate and the hangar to house the airplane.
Cash
Cash Flow
| Pro Forma Cash Flow |
| | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| | | | | | |
| Cash Received | | | | | |
| Cash from Operations: | | | | | |
| Cash Sales | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| Cash from Receivables | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash from Operations | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| | | | | | |
| Additional Cash Received | | | | | |
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Received | $45,775 | $46,800 | $48,000 | $44,000 | $48,000 |
| | | | | | |
| Expenditures | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Expenditures from Operations: | | | | | |
| Cash Spending | $3,713 | $3,529 | $3,523 | $4,488 | $3,468 |
| Payment of Accounts Payable | $33,016 | $31,784 | $31,733 | $40,286 | $31,357 |
| Subtotal Spent on Operations | $36,730 | $35,314 | $35,256 | $44,774 | $34,825 |
| | | | | | |
| Additional Cash Spent | | | | | |
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $3,200 | $3,650 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $2,600 | $3,780 | $3,780 | $3,780 | $3,780 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Spent | $42,530 | $42,744 | $39,036 | $48,554 | $38,605 |
| | | | | | |
| Net Cash Flow | $3,245 | $4,056 | $8,964 | ($4,554) | $9,395 |
| Cash Balance | $3,545 | $7,602 | $16,566 | $12,012 | $21,407 |
6.6 Projected Balance Sheet
The balance sheet in the following table shows some very important information regarding our short-term and long-term financial goals.
Balance Sheet
| Pro Forma Balance Sheet |
| | | | | | |
| Assets | | | | | |
| Current Assets | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Cash | $3,545 | $7,602 | $16,566 | $12,012 | $21,407 |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $3,545 | $7,602 | $16,566 | $12,012 | $21,407 |
| Long-term Assets | | | | | |
| Long-term Assets | $36,000 | $36,000 | $36,000 | $36,000 | $36,000 |
| Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 |
| Total Long-term Assets | $36,000 | $36,000 | $36,000 | $36,000 | $36,000 |
| Total Assets | $39,545 | $43,602 | $52,566 | $48,012 | $57,407 |
| | | | | | |
| Liabilities and Capital | | | | | |
| Current Liabilities | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 |
| Accounts Payable | $410 | $389 | $389 | $495 | $383 |
| Current Borrowing | ($3,200) | ($6,850) | ($6,850) | ($6,850) | ($6,850) |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | ($2,790) | ($6,461) | ($6,461) | ($6,355) | ($6,467) |
| | | | | | |
| Long-term Liabilities | $29,800 | $26,020 | $22,240 | $18,460 | $14,680 |
| Total Liabilities | $27,010 | $19,559 | $15,779 | $12,105 | $8,213 |
| | | | | | |
| Paid-in Capital | $10,450 | $10,450 | $10,450 | $10,450 | $10,450 |
| Retained Earnings | ($6,550) | $2,086 | $13,592 | $26,337 | $25,457 |
| Earnings | $8,636 | $11,507 | $12,745 | ($880) | $13,288 |
| Total Capital | $12,536 | $24,042 | $36,787 | $35,907 | $49,195 |
| Total Liabilities and Capital | $39,545 | $43,602 | $52,566 | $48,012 | $57,407 |
| Net Worth | $12,536 | $24,042 | $36,787 | $35,907 | $49,195 |
6.7 Business Ratios
We expect to see flat ratios of profitability during the first year while we build our customer base. We expect these ratios to improve in the second and succeeding years. The following table shows the projected ratios for Lansing Aviation. The Industry Profile comes from Standard Industry Code #8299, Schools and Educational Services.
Ratios
| Ratio Analysis |
| | FY 2000 | FY 2001 | FY 2002 | FY 2003 | FY 2004 | Industry Profile |
| Sales Growth | 0.00% | 2.24% | 2.56% | -8.33% | 9.09% | 9.50% |
| | | | | | | |
| Percent of Total Assets | | | | | | |
| Accounts Receivable | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 15.50% |
| Inventory | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 1.30% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 45.60% |
| Total Current Assets | 8.97% | 17.43% | 31.51% | 25.02% | 37.29% | 62.40% |
| Long-term Assets | 91.03% | 82.57% | 68.49% | 74.98% | 62.71% | 37.60% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| | | | | | | |
| Current Liabilities | -7.06% | -14.82% | -12.29% | -13.24% | -11.27% | 43.30% |
| Long-term Liabilities | 75.36% | 59.68% | 42.31% | 38.45% | 25.57% | 17.30% |
| Total Liabilities | 68.30% | 44.86% | 30.02% | 25.21% | 14.31% | 60.60% |
| Net Worth | 31.70% | | |
