Plan Outline
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SIC 7349 Business Services - Building maintenance services, nec
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Cleaning Service Business Plan
Mother's House Cleaning Service
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Financial Plan
The following subtopics will provide more financial information.
7.1 Important Assumptions
See following table for MHCS' general assumptions.
| 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 | 17.08% | 25.00% | 17.08% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
The break-even analysis is based on an average billing unit. The calculations are based on a $1.00 unit of revenue and costs of sales as a percentage of $1.00.
| Break-even Analysis | |
| Monthly Revenue Break-even | $11,140 |
| Assumptions: | |
| Average Percent Variable Cost | 3% |
| Estimated Monthly Fixed Cost | $10,797 |
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 | $178,970 | $181,491 | $186,598 |
| Direct Cost of Sales | $5,508 | $5,903 | $6,150 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $5,508 | $5,903 | $6,150 |
| Gross Margin | $173,462 | $175,588 | $180,448 |
| Gross Margin % | 96.92% | 96.75% | 96.70% |
| Expenses | |||
| Payroll | $110,889 | $118,200 | $128,460 |
| Sales and Marketing and Other Expenses | $6,013 | $5,968 | $5,968 |
| Depreciation | $0 | $0 | $0 |
| Additional Payroll Burden | $9,058 | $10,841 | $10,942 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $1,200 | $1,200 | $1,200 |
| Insurance | $2,400 | $2,400 | $2,400 |
| Rent | $0 | $0 | $0 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $129,560 | $138,609 | $148,970 |
| Profit Before Interest and Taxes | $43,902 | $36,979 | $31,478 |
| EBITDA | $43,902 | $36,979 | $31,478 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $12,108 | $9,245 | $5,378 |
| Net Profit | $31,794 | $27,734 | $26,101 |
| Net Profit/Sales | 17.76% | 15.28% | 13.99% |
7.4 Projected Cash Flow
The following table will indicate projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $178,970 | $181,491 | $186,598 |
| Subtotal Cash from Operations | $178,970 | $181,491 | $186,598 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $5,000 | $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 | $183,970 | $181,491 | $186,598 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $110,889 | $118,200 | $128,460 |
| Bill Payments | $32,586 | $37,925 | $32,397 |
| Subtotal Spent on Operations | $143,475 | $156,125 | $160,857 |
| 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 | $5,000 | $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 | $148,475 | $156,125 | $160,857 |
| Net Cash Flow | $35,495 | $25,366 | $25,741 |
| Cash Balance | $44,570 | $69,935 | $95,677 |
7.5 Projected Balance Sheet
The following table will indicate the projected balance sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $44,570 | $69,935 | $95,677 |
| Inventory | $1,492 | $1,599 | $1,666 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $46,062 | $71,534 | $97,343 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $46,062 | $71,534 | $97,343 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $5,193 | $2,931 | $2,639 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $5,193 | $2,931 | $2,639 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $5,193 | $2,931 | $2,639 |
| Paid-in Capital | $13,000 | $13,000 | $13,000 |
| Retained Earnings | ($3,925) | $27,869 | $55,603 |
| Earnings | $31,794 | $27,734 | $26,101 |
| Total Capital | $40,869 | $68,603 | $94,704 |
| Total Liabilities and Capital | $46,062 | $71,534 | $97,343 |
| Net Worth | $40,869 | $68,603 | $94,704 |
7.6 Business Ratios
The following table contains important business ratios from the building maintenance services industry, as determined by the Standard Industry Classification (SIC) Index code 7349.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 1.41% | 2.81% | 7.30% |
| Percent of Total Assets | ||||
| Inventory | 3.24% | 2.24% | 1.71% | 3.80% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 44.90% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 73.40% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 26.60% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 11.27% | 4.10% | 2.71% | 44.40% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 16.40% |
| Total Liabilities | 11.27% | 4.10% | 2.71% | 60.80% |
| Net Worth | 88.73% | 95.90% | 97.29% | 39.20% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 96.92% | 96.75% | 96.70% | 0.00% |
| Selling, General & Administrative Expenses | 94.22% | 93.58% | 91.63% | 81.70% |
| Advertising Expenses | 0.93% | 1.06% | 1.03% | 1.30% |
| Profit Before Interest and Taxes | 24.53% | 20.38% | 16.87% | 2.00% |
| Main Ratios | ||||
| Current | 8.87 | 24.40 | 36.89 | 1.67 |
| Quick | 8.58 | 23.86 | 36.26 | 1.33 |
| Total Debt to Total Assets | 11.27% | 4.10% | 2.71% | 60.80% |
| Pre-tax Return on Net Worth | 107.42% | 53.90% | 33.24% | 3.50% |
| Pre-tax Return on Assets | 95.31% | 51.69% | 32.34% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 17.76% | 15.28% | 13.99% | n.a |
| Return on Equity | 77.79% | 40.43% | 27.56% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 5.89 | 3.82 | 3.77 | n.a |
| Accounts Payable Turnover | 7.28 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 42 | 32 | n.a |
| Total Asset Turnover | 3.89 | 2.54 | 1.92 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.13 | 0.04 | 0.03 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $40,869 | $68,603 | $94,704 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.26 | 0.39 | 0.52 | n.a |
| Current Debt/Total Assets | 11% | 4% | 3% | n.a |
| Acid Test | 8.58 | 23.86 | 36.26 | n.a |
| Sales/Net Worth | 4.38 | 2.65 | 1.97 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
