Business Solutions Consulting

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Consulting Planning Business Plan

Financial Plan

BSC expects to raise $100,000 as its own capital, and to borrow $100,000 guaranteed by the SBA as a 10-year loan. This provides the bulk of the current financing required.

8.1 Break-even Analysis

BSC's Break-even Analysis is based on the average of the first-year figures for total sales by salaries, bonuses costs, and all other operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk. Such analysis shows that BSC will break-even by the tenth month of operations.

Break-even Analysis
Monthly Units Break-even 56
Monthly Revenue Break-even $76,150
Assumptions:
Average Per-Unit Revenue $1,362.36
Average Per-Unit Variable Cost $0.00
Estimated Monthly Fixed Cost $76,150

8.2 Projected Profit and Loss

As the profit and loss table shows, BSC expects to continue its steady growth in profitability over the next three years of operations.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $1,106,240 $2,300,980 $4,417,881
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $1,106,240 $2,300,980 $4,417,881
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $600,000 $660,000 $726,000
Sales and Marketing and Other Expenses $216,600 $227,430 $238,802
Depreciation $6,000 $6,300 $6,615
Utilities $1,200 $1,266 $1,336
Payroll Taxes $90,000 $99,000 $108,900
Other $0 $0 $0
Total Operating Expenses $913,800 $993,996 $1,081,652
Profit Before Interest and Taxes $192,440 $1,306,984 $3,336,229
EBITDA $198,440 $1,313,284 $3,342,844
Interest Expense $8,050 $6,065 $5,356
Taxes Incurred $45,725 $325,230 $846,597
Net Profit $138,666 $975,689 $2,484,276
Net Profit/Sales 12.53% 42.40% 56.23%

8.3 Projected Cash Flow

As the cash flow statement illustrates, BSC expects to maintain a steady rate of cash flow over the next three years of operations.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $1,106,240 $2,300,980 $4,417,881
Subtotal Cash from Operations $1,106,240 $2,300,980 $4,417,881
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 $1,106,240 $2,300,980 $4,417,881
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $600,000 $660,000 $726,000
Bill Payments $327,069 $640,332 $1,156,442
Subtotal Spent on Operations $927,069 $1,300,332 $1,882,442
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 $36,000 $6,700 $7,486
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $45,000 $55,000
Dividends $0 $0 $0
Subtotal Cash Spent $963,069 $1,352,032 $1,944,928
Net Cash Flow $143,171 $948,947 $2,472,953
Cash Balance $293,171 $1,242,118 $3,715,072

8.4 Projected Balance Sheet

Following is a copy of the company's projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $293,171 $1,242,118 $3,715,072
Other Current Assets $20,000 $20,000 $20,000
Total Current Assets $313,171 $1,262,118 $3,735,072
Long-term Assets
Long-term Assets $25,000 $70,000 $125,000
Accumulated Depreciation $6,000 $12,300 $18,915
Total Long-term Assets $19,000 $57,700 $106,085
Total Assets $332,171 $1,319,818 $3,841,157
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $35,505 $54,164 $98,711
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $35,505 $54,164 $98,711
Long-term Liabilities $64,000 $57,300 $49,814
Total Liabilities $99,505 $111,464 $148,525
Paid-in Capital $99,500 $99,500 $99,500
Retained Earnings ($5,500) $133,166 $1,108,855
Earnings $138,666 $975,689 $2,484,276
Total Capital $232,666 $1,208,355 $3,692,631
Total Liabilities and Capital $332,171 $1,319,818 $3,841,157
Net Worth $232,666 $1,208,355 $3,692,631

8.5 Business Ratios

The following table outlines the important business ratios for Business Solutions Consulting, as determined by the Standard Industry Classification (SIC) Index. Ratios for the Business Consulting services industry (SIC 8748) are used as a benchmark in this table.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 108.00% 92.00% 12.40%
Percent of Total Assets
Other Current Assets 6.02% 1.52% 0.52% 44.70%
Total Current Assets 94.28% 95.63% 97.24% 74.50%
Long-term Assets 5.72% 4.37% 2.76% 25.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 10.69% 4.10% 2.57% 44.30%
Long-term Liabilities 19.27% 4.34% 1.30% 16.00%
Total Liabilities 29.96% 8.45% 3.87% 60.30%
Net Worth 70.04% 91.55% 96.13% 39.70%
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 87.63% 57.71% 43.51% 80.80%
Advertising Expenses 10.85% 5.48% 2.99% 1.30%
Profit Before Interest and Taxes 17.40% 56.80% 75.52% 2.20%
Main Ratios
Current 8.82 23.30 37.84 1.75
Quick 8.82 23.30 37.84 1.38
Total Debt to Total Assets 29.96% 8.45% 3.87% 60.30%
Pre-tax Return on Net Worth 79.25% 107.66% 90.20% 3.80%
Pre-tax Return on Assets 55.51% 98.57% 86.72% 9.70%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 12.53% 42.40% 56.23% n.a
Return on Equity 59.60% 80.75% 67.28% n.a
Activity Ratios
Accounts Payable Turnover 10.18 12.17 12.17 n.a
Payment Days 27 25 23 n.a
Total Asset Turnover 3.33 1.74 1.15 n.a
Debt Ratios
Debt to Net Worth 0.43 0.09 0.04 n.a
Current Liab. to Liab. 0.36 0.49 0.66 n.a
Liquidity Ratios
Net Working Capital $277,666 $1,207,955 $3,636,360 n.a
Interest Coverage 23.91 215.50 622.93 n.a
Additional Ratios
Assets to Sales 0.30 0.57 0.87 n.a
Current Debt/Total Assets 11% 4% 3% n.a
Acid Test 8.82 23.30 37.84 n.a
Sales/Net Worth 4.75 1.90 1.20 n.a
Dividend Payout 0.00 0.00 0.00 n.a