Ideal Business Support Services

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Business Support Insurance Business Plan

Financial Plan

The following sections will outline the important financial assumptions, key financial indicators, break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Break-even Analysis

The break-even analysis indicates what is needed in monthly revenue to break even.

Break-even Analysis
Monthly Revenue Break-even $13,445
Assumptions:
Average Percent Variable Cost 15%
Estimated Monthly Fixed Cost $11,428

7.2 Important Assumptions

The following table highlights some of the important financial assumptions for Ideal.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $110,861 $238,293 $256,203
Direct Cost of Sales $16,629 $35,744 $38,430
Other $0 $0 $0
Total Cost of Sales $16,629 $35,744 $38,430
Gross Margin $94,232 $202,549 $217,773
Gross Margin % 85.00% 85.00% 85.00%
Expenses
Payroll $102,960 $122,160 $122,160
Sales and Marketing and Other Expenses $3,000 $2,500 $2,500
Depreciation $2,832 $2,832 $2,832
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
Insurance $1,800 $1,800 $1,800
Rent $9,600 $9,600 $9,600
Payroll Taxes $15,444 $18,324 $18,324
Other $0 $0 $0
Total Operating Expenses $137,136 $158,716 $158,716
Profit Before Interest and Taxes ($42,904) $43,833 $59,057
EBITDA ($40,072) $46,665 $61,889
Interest Expense $0 $0 $0
Taxes Incurred $0 $10,958 $15,010
Net Profit ($42,904) $32,875 $44,046
Net Profit/Sales -38.70% 13.80% 17.19%

7.4 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 $38,801 $83,403 $89,671
Cash from Receivables $48,735 $128,079 $162,764
Subtotal Cash from Operations $87,536 $211,482 $252,435
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 $3,000 $0 $0
Subtotal Cash Received $90,536 $211,482 $252,435
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $102,960 $122,160 $122,160
Bill Payments $42,443 $79,346 $86,611
Subtotal Spent on Operations $145,403 $201,506 $208,771
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 $145,403 $201,506 $208,771
Net Cash Flow ($54,867) $9,976 $43,664
Cash Balance $2,533 $12,509 $56,173

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,533 $12,509 $56,173
Accounts Receivable $23,325 $50,136 $53,904
Other Current Assets $0 $0 $0
Total Current Assets $25,858 $62,645 $110,077
Long-term Assets
Long-term Assets $8,500 $8,500 $8,500
Accumulated Depreciation $2,832 $5,664 $8,496
Total Long-term Assets $5,668 $2,836 $4
Total Assets $31,526 $65,481 $110,081
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,530 $6,610 $7,164
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,530 $6,610 $7,164
Long-term Liabilities $0 $0 $0
Total Liabilities $5,530 $6,610 $7,164
Paid-in Capital $70,000 $70,000 $70,000
Retained Earnings ($1,100) ($44,004) ($11,129)
Earnings ($42,904) $32,875 $44,046
Total Capital $25,996 $58,871 $102,917
Total Liabilities and Capital $31,526 $65,481 $110,081
Net Worth $25,996 $58,871 $102,917

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 524298, Other Insurance Related Activities, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 114.95% 7.52% 3.95%
Percent of Total Assets
Accounts Receivable 73.99% 76.57% 48.97% 24.53%
Other Current Assets 0.00% 0.00% 0.00% 69.49%
Total Current Assets 82.02% 95.67% 100.00% 94.07%
Long-term Assets 17.98% 4.33% 0.00% 5.93%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 17.54% 10.10% 6.51% 29.76%
Long-term Liabilities 0.00% 0.00% 0.00% 9.55%
Total Liabilities 17.54% 10.10% 6.51% 39.31%
Net Worth 82.46% 89.90% 93.49% 60.69%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 85.00% 85.00% 85.00% 100.00%
Selling, General & Administrative Expenses 123.70% 71.20% 67.71% 60.33%
Advertising Expenses 1.62% 0.55% 0.51% 1.26%
Profit Before Interest and Taxes -38.70% 18.39% 23.05% 6.43%
Main Ratios
Current 4.68 9.48 15.36 2.23
Quick 4.68 9.48 15.36 2.00
Total Debt to Total Assets 17.54% 10.10% 6.51% 49.79%
Pre-tax Return on Net Worth -165.04% 74.46% 57.38% 7.52%
Pre-tax Return on Assets -136.09% 66.94% 53.65% 14.98%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -38.70% 13.80% 17.19% n.a
Return on Equity -165.04% 55.84% 42.80% n.a
Activity Ratios
Accounts Receivable Turnover 3.09 3.09 3.09 n.a
Collection Days 55 87 114 n.a
Accounts Payable Turnover 8.68 12.17 12.17 n.a
Payment Days 27 28 29 n.a
Total Asset Turnover 3.52 3.64 2.33 n.a
Debt Ratios
Debt to Net Worth 0.21 0.11 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $20,328 $56,035 $102,913 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.28 0.27 0.43 n.a
Current Debt/Total Assets 18% 10% 7% n.a
Acid Test 0.46 1.89 7.84 n.a
Sales/Net Worth 4.26 4.05 2.49 n.a
Dividend Payout 0.00 0.00 0.00 n.a