Heavy Lifting, Inc.

Start your own business plan »

Aircraft Weighing Systems Business Plan

Financial Plan

The business is expected to grow annually at 100-200%. The growth is self-funding after the initial period gaining Government approval by FAA US. The growth rate is restricted by the need to maintain quality of product.

7.1 Valuation

For an initial investment of $1,000,000, an outside investor will receive 20% of the initial shares of Heaving Lifting, Inc., substantial dividends by 2010, and a buy-out option when the company goes public (in 2010 or 2011). We project a sales-based valuation of the company over $480,000,000 in 2010. This number could be substantially higher if the consumer demand for mandatory weigh bridges on all commercial flights in Asia and Europe matches the likely demand in the U.S. With an ending valuation on the initial outside investment of $96.1 Million, this represents an IRR of 91%.

Investment Analysis
Start Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment
Investment $1,000,000 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $7,000,000 $15,000,000 $25,000,000
Ending Valuation $0 $0 $0 $0 $0 $96,160,000
Combination as Income Stream ($1,000,000) $0 $0 $7,000,000 $15,000,000 $121,160,000
Percent Equity Acquired 20%
Net Present Value (NPV) $3,872,003
Internal Rate of Return (IRR) 91%
Assumptions
Discount Rate 10.00%
Valuation Earnings Multiple 10 10 10 10 10
Valuation Sales Multiple 2 2 2 2 2
Investment (calculated) $2,000,000 $0 $0 $0 $0 $0
Dividends $0 $0 $7,000,000 $15,000,000 $25,000,000
Calculated Earnings-based Valuation $880,000 $57,020,000 $122,240,000 $248,520,000 $480,800,000
Calculated Sales-based Valuation $8,010,000 $94,100,000 $128,140,000 $252,260,000 $480,500,000
Calculated Average Valuation $4,445,000 $75,560,000 $125,190,000 $250,390,000 $480,650,000

7.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. They key underlying assumptions are:

  • Growth of 100-200% per annum.
  • Marketing coup by product uniqueness and speed of entry.
  • Limited initial competition. 
  • Stable costs.
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 9.17% 0.00% 10.00% 10.00% 10.00%
Tax Rate 33.00% 33.00% 33.00% 33.00% 33.00%
Sales Tax 9 0 0 0 9

7.3 Break-even Analysis

In the start-up period we will build up to two (2) Heavy Lifting weigh bridges. The first two (2) units, in CA and Dublin will be used for trial as well as operational purposes. The Heavy Lifting systems will be at:

  • San Diego International Airport (1)
  • Dublin, Ireland (1)

These two, along with two Heavy Lifting outside-manufactured weigh bridges, will be sold in the first year. The Break-even table, below, reflects the fact that we do not expect to be profitable until the second year.

Break-even Analysis
Monthly Revenue Break-even $236,541
Assumptions:
Average Percent Variable Cost 65%
Estimated Monthly Fixed Cost $82,866

7.4 Projected Profit and Loss

Profits are expected to be in line with sales forecasts, per annum, after the first year of operations (2 years from start-up). This profit level relies on an expanding market and increasing sales. We are confident that we will meet these high sales goals after the first year, as publicity about our first weigh bridges brings us new customers and initiates a public safety (and international security) debate about aircraft weight laws and enforcement.

Overhead costs for the first year of operations consists of:

  • Office space based on current property leasing rates. Office space sufficient for CEO office, Office manager office, Board room, Communications and printing room, Project manager office space, and tea and coffee making facilities.
  • CEO salary package including executive health insurance, term life insurance ($250,000) and comprehensive world travel insurance $200,000 plus travel (Flight and rental car), accommodation (Marriott/Hyatt or equivalent hotels and food expenses. Estimate based on two business class flights to San Diego per month, accommodation for up to 10 days per month and food at $100 per day. Domestic travel (Flight and rental car), accommodation Marriott Hotels or equivalent) and food ($100 per day).
  • Technical director expenses. Travel (Flight and rental car costs), accommodation (Marriott or equivalent) and food expenses as required. Estimate based on one business class flight between Gold Coast City and San Diego per month, accommodation for up to 10 days per month and food at $100 per day. Domestic business class travel (Flight cost), accommodation costs (Marriott Hotel or equivalent) and food costs (100 per day)  in San Diego estimated at up to 5 days per month. 
  • Project director fees charged on a consultant basis at cost plus expenses.
  • Legal services director fees charged on an advisory basis at cost plus expenses.
  • Research & Development costs for software development.
  • Office staff consisting of Office manager based on current salaries in Gold Coast City, $75,000 plus benefits: Medi bank private; parking and pension plan (Over ten years service).
  • Software engineer at $100,000/year.
  • Office equipment consisting of furniture and furnishings, computer equipment, office equipment including, scanner, copier, printer, facsimile phone system and office computer network.
  • Office cubicle space for project management, technical management and software engineer.
  • Tea and coffee making facilities.
  • Stationery and office supplies sufficient for annual production of reports, letters, papers, power point presentations, regulations library (Digital), technical data library (Digital) and online conferences and presentations.
  • Heavy Lifting database server and mass storage equipment including secure backup and power loss system.
  • Office security system (Response alarm). 
Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $4,006,000 $47,050,000 $64,070,000 $126,130,000 $240,250,000
Direct Cost of Sales $2,602,600 $35,250,000 $41,645,500 $81,900,000 $156,000,000
Manufacturing costs $192,000 $2,256,000 $3,072,000 $6,040,000 $11,400,000
Total Cost of Sales $2,794,600 $37,506,000 $44,717,500 $87,940,000 $167,400,000
Gross Margin $1,211,400 $9,544,000 $19,352,500 $38,190,000 $72,850,000
Gross Margin % 30.24% 20.28% 30.21% 30.28% 30.32%
Expenses
Payroll $922,488 $955,000 $955,000 $955,000 $955,000
Sales and Marketing and Other Expenses $20,400 $20,000 $20,000 $20,000 $20,000
Depreciation $36,000 $36,000 $36,000 $36,000 $36,000
Leased Equipment $5,004 $5,000 $5,000 $5,000 $5,000
Rent and Utilities $10,500 $18,000 $18,000 $18,000 $18,000
Payroll Taxes $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0
Total Operating Expenses $994,392 $1,034,000 $1,034,000 $1,034,000 $1,034,000
Profit Before Interest and Taxes $217,008 $8,510,000 $18,318,500 $37,156,000 $71,816,000
EBITDA $253,008 $8,546,000 $18,354,500 $37,192,000 $71,852,000
Interest Expense $86,263 $0 $74,155 $64,155 $54,155
Taxes Incurred $43,146 $2,808,300 $6,020,634 $12,240,309 $23,681,409
Net Profit $87,599 $5,701,700 $12,223,711 $24,851,536 $48,080,436
Net Profit/Sales 2.19% 12.12% 19.08% 19.70% 20.01%

7.5 Projected Cash Flow

This business plan cash flows positively due to the fact that customers pay 50% of the price in advance. The balance is payable on completion, net 30 days.

As the contractors are paid progress payments for work completed, the cash flow will always remain positive without the need for borrowing.

For those sales subject to finance, a separate business plan is required.

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $3,000,000 $47,000,000 $64,000,000 $126,000,000 $240,000,000
Cash from Receivables $1,004,000 $51,901 $69,961 $129,880 $249,762
Subtotal Cash from Operations $4,004,000 $47,051,901 $64,069,960 $126,129,881 $240,249,761
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 $4,004,000 $47,051,901 $64,069,960 $126,129,881 $240,249,761
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $922,488 $955,000 $955,000 $955,000 $955,000
Bill Payments $2,937,634 $37,087,541 $49,992,440 $96,224,545 $183,708,062
Subtotal Spent on Operations $3,860,122 $38,042,541 $50,947,440 $97,179,545 $184,663,062
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $99,000 $100,000 $100,000 $100,000 $100,000
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $7,000,000 $15,000,000 $25,000,000
Subtotal Cash Spent $3,959,122 $38,142,541 $58,047,440 $112,279,545 $209,763,062
Net Cash Flow $44,878 $8,909,360 $6,022,520 $13,850,335 $30,486,699
Cash Balance $2,344,878 $11,254,238 $17,276,758 $31,127,093 $61,613,792

7.6 Projected Balance Sheet

The table below presents the balance sheet for Heavy Lifting, Inc. This table reflects a positive cash position throughout the period of this financial plan and dramatic growth in net worth.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $2,344,878 $11,254,238 $17,276,758 $31,127,093 $61,613,792
Accounts Receivable $2,000 $99 $139 $259 $497
Other Current Assets $250,000 $250,000 $250,000 $250,000 $250,000
Total Current Assets $2,596,878 $11,504,338 $17,526,897 $31,377,352 $61,864,289
Long-term Assets
Long-term Assets $400,000 $400,000 $400,000 $400,000 $400,000
Accumulated Depreciation $36,000 $72,000 $108,000 $144,000 $180,000
Total Long-term Assets $364,000 $328,000 $292,000 $256,000 $220,000
Total Assets $2,960,878 $11,832,338 $17,818,897 $31,633,352 $62,084,289
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $47,279 $3,317,038 $4,179,887 $8,242,805 $15,713,307
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $47,279 $3,317,038 $4,179,887 $8,242,805 $15,713,307
Long-term Liabilities $891,550 $791,550 $691,550 $591,550 $491,550
Total Liabilities $938,829 $4,108,588 $4,871,437 $8,834,355 $16,204,857
Paid-in Capital $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
Retained Earnings ($65,550) $22,049 ($1,276,251) ($4,052,540) ($4,201,003)
Earnings $87,599 $5,701,700 $12,223,711 $24,851,536 $48,080,436
Total Capital $2,022,049 $7,723,749 $12,947,460 $22,798,997 $45,879,433
Total Liabilities and Capital $2,960,878 $11,832,338 $17,818,897 $31,633,352 $62,084,289
Net Worth $2,022,049 $7,723,749 $12,947,460 $22,798,997 $45,879,433

7.7 Business Ratios

The following table outlines some of the more important ratios from the Other Airport Operations industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the NAICS Industry Classification code, 488119.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth 0.00% 1074.49% 36.17% 96.86% 90.48% 11.53%
Percent of Total Assets
Accounts Receivable 0.07% 0.00% 0.00% 0.00% 0.00% 20.03%
Other Current Assets 8.44% 2.11% 1.40% 0.79% 0.40% 28.06%
Total Current Assets 87.71% 97.23% 98.36% 99.19% 99.65% 52.69%
Long-term Assets 12.29% 2.77% 1.64% 0.81% 0.35% 47.31%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.60% 28.03% 23.46% 26.06% 25.31% 27.08%
Long-term Liabilities 30.11% 6.69% 3.88% 1.87% 0.79% 21.42%
Total Liabilities 31.71% 34.72% 27.34% 27.93% 26.10% 48.50%
Net Worth 68.29% 65.28% 72.66% 72.07% 73.90% 51.50%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 30.24% 20.28% 30.21% 30.28% 30.32% 44.67%
Selling, General & Administrative Expenses 0.00% 85.78% 76.98% 0.00% 0.00% 24.70%
Advertising Expenses 0.00% 62.07% 52.09% 0.00% 0.00% 0.44%
Profit Before Interest and Taxes 5.42% 18.09% 28.59% 29.46% 29.89% 0.57%
Main Ratios
Current 54.93 3.47 4.19 3.81 3.94 1.65
Quick 54.93 3.47 4.19 3.81 3.94 1.32
Total Debt to Total Assets 31.71% 34.72% 27.34% 27.93% 26.10% 65.98%
Pre-tax Return on Net Worth 6.47% 110.18% 140.91% 162.69% 156.41% 0.78%
Pre-tax Return on Assets 4.42% 71.92% 102.39% 117.26% 115.59% 2.29%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 2.19% 12.12% 19.08% 19.70% 20.01% n.a
Return on Equity 4.33% 73.82% 94.41% 109.00% 104.80% n.a
Activity Ratios
Accounts Receivable Turnover 502.88 502.88 502.88 502.88 502.88 n.a
Collection Days 60 8 1 1 1 n.a
Accounts Payable Turnover 62.61 12.17 12.17 12.17 12.17 n.a
Payment Days 31 15 27 23 23 n.a
Total Asset Turnover 1.35 3.98 3.60 3.99 3.87 n.a
Debt Ratios
Debt to Net Worth 0.46 0.53 0.38 0.39 0.35 n.a
Current Liab. to Liab. 0.05 0.81 0.86 0.93 0.97 n.a
Liquidity Ratios
Net Working Capital $2,549,599 $8,187,299 $13,347,010 $23,134,547 $46,150,983 n.a
Interest Coverage 2.52 0.00 247.03 579.16 1,326.12 n.a
Additional Ratios
Assets to Sales 0.74 0.25 0.28 0.25 0.26 n.a
Current Debt/Total Assets 2% 28% 23% 26% 25% n.a
Acid Test 54.88 3.47 4.19 3.81 3.94 n.a
Sales/Net Worth 1.98 6.09 4.95 5.53 5.24 n.a
Dividend Payout 0.00 0.00 0.57 0.60 0.52 n.a