Plan Outline
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SIC 7319 Business Services - Advertising, nec
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Advertising Marketing Consulting Business Plan
Pioneer Consulting
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Financial Plan
The following sections will present the break-even analysis, profit and loss, cash flow, and the balance sheet.
7.1 Break-even Analysis
The Break-even Analysis is laid out in the following table and chart.
| Break-even Analysis | |
| Monthly Revenue Break-even | $1,190 |
| Assumptions: | |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $1,190 |
7.2 Projected Profit and Loss
The following table will indicate projected profit and loss for three years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $23,850 | $35,000 | $52,000 |
| Direct Cost of Sales | $0 | $0 | $0 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $0 | $0 | $0 |
| Gross Margin | $23,850 | $35,000 | $52,000 |
| Gross Margin % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $12,000 | $24,000 | $35,000 |
| Sales and Marketing and Other Expenses | $0 | $500 | $500 |
| Depreciation | $0 | $0 | $0 |
| Cell Phone | $480 | $480 | $480 |
| Utilities | $0 | $0 | $0 |
| Insurance | $0 | $0 | $0 |
| Rent | $0 | $0 | $0 |
| Payroll Taxes | $1,800 | $3,600 | $5,250 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $14,280 | $28,580 | $41,230 |
| Profit Before Interest and Taxes | $9,570 | $6,420 | $10,770 |
| EBITDA | $9,570 | $6,420 | $10,770 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $2,871 | $1,926 | $3,231 |
| Net Profit | $6,699 | $4,494 | $7,539 |
| Net Profit/Sales | 28.09% | 12.84% | 14.50% |
7.3 Projected Cash Flow
The following chart and table indicates projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $5,963 | $8,750 | $13,000 |
| Cash from Receivables | $14,643 | $24,733 | $36,687 |
| Subtotal Cash from Operations | $20,605 | $33,483 | $49,687 |
| 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 | $20,605 | $33,483 | $49,687 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $12,000 | $24,000 | $35,000 |
| Bill Payments | $4,863 | $6,259 | $9,218 |
| Subtotal Spent on Operations | $16,863 | $30,259 | $44,218 |
| 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 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $16,863 | $30,259 | $44,218 |
| Net Cash Flow | $3,742 | $3,224 | $5,469 |
| Cash Balance | $4,092 | $7,316 | $12,785 |
7.4 Projected Balance Sheet
The following is the projected balance sheet for three years.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $4,092 | $7,316 | $12,785 |
| Accounts Receivable | $3,245 | $4,762 | $7,075 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $7,337 | $12,078 | $19,860 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $7,337 | $12,078 | $19,860 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $288 | $535 | $778 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $288 | $535 | $778 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $288 | $535 | $778 |
| Paid-in Capital | $1,000 | $1,000 | $1,000 |
| Retained Earnings | ($650) | $6,049 | $10,543 |
| Earnings | $6,699 | $4,494 | $7,539 |
| Total Capital | $7,049 | $11,543 | $19,082 |
| Total Liabilities and Capital | $7,337 | $12,078 | $19,860 |
| Net Worth | $7,049 | $11,543 | $19,082 |
7.5 Business Ratios
The following table provides important ratios for the real estate industry, as determined by the Standard Industry Classification (SIC) Index, 7319, Advertising, nec.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 46.75% | 48.57% | 8.50% |
| Percent of Total Assets | ||||
| Accounts Receivable | 44.23% | 39.43% | 35.63% | 36.10% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 42.70% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 80.20% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 19.80% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 3.93% | 4.43% | 3.92% | 46.70% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 9.80% |
| Total Liabilities | 3.93% | 4.43% | 3.92% | 56.50% |
| Net Worth | 96.07% | 95.57% | 96.08% | 43.50% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 100.00% | 100.00% | 100.00% | 0.00% |
| Selling, General & Administrative Expenses | 71.91% | 87.16% | 85.50% | 79.10% |
| Advertising Expenses | 0.00% | 1.43% | 0.96% | 4.20% |
| Profit Before Interest and Taxes | 40.13% | 18.34% | 20.71% | 1.60% |
| Main Ratios | ||||
| Current | 25.47 | 22.59 | 25.54 | 1.70 |
| Quick | 25.47 | 22.59 | 25.54 | 1.43 |
| Total Debt to Total Assets | 3.93% | 4.43% | 3.92% | 56.50% |
| Pre-tax Return on Net Worth | 135.76% | 55.62% | 56.44% | 4.60% |
| Pre-tax Return on Assets | 130.43% | 53.16% | 54.23% | 10.50% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 28.09% | 12.84% | 14.50% | n.a |
| Return on Equity | 95.03% | 38.93% | 39.51% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 5.51 | 5.51 | 5.51 | n.a |
| Collection Days | 57 | 56 | 55 | n.a |
| Accounts Payable Turnover | 17.88 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 23 | 25 | n.a |
| Total Asset Turnover | 3.25 | 2.90 | 2.62 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.04 | 0.05 | 0.04 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $7,049 | $11,543 | $19,082 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.31 | 0.35 | 0.38 | n.a |
| Current Debt/Total Assets | 4% | 4% | 4% | n.a |
| Acid Test | 14.21 | 13.68 | 16.44 | n.a |
| Sales/Net Worth | 3.38 | 3.03 | 2.73 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
