Consulting Seminars Business Plan

Seminars

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Financial Plan

The financial plan depends on initial investment of $25K from the founder plus a five-year loan of $30K. Much as we'd like to bootstrap this business without initial investment, it just isn't worth it. The rest of the plan is reasonably conservative, but there does have to be money at risk.

The bank loan will be secured with real estate owned by the founder.

8.1 Important Assumptions

Important general assumptions are shown in the following table.

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 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Key Financial Indicators

The benchmarks chart shows changes in sales, operating expenses, gross margin, and collection days. We think the chart speaks for itself, and what it says is that the numbers and assumptions are reasonable.

8.3 Break-even Analysis

Unfortunately, the break-even analysis shows that it takes more than $20,000 per month in sales to break even. That's not an easy figure to make, especially not in the beginning before the marketing efforts begin to take effect.

Break-even Analysis
Monthly Units Break-even 57
Monthly Revenue Break-even $23,441
Assumptions:
Average Per-Unit Revenue $409.64
Average Per-Unit Variable Cost $154.50
Estimated Monthly Fixed Cost $14,600

8.4 Projected Profit and Loss

As shown in the following table, the business doesn't make money in the first year, but turns very profitable in the third.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $257,255 $444,750 $707,250
Direct Cost of Sales $97,025 $122,750 $162,500
Other Production Expenses $3,500 $5,000 $5,000
Total Cost of Sales $100,525 $127,750 $167,500
Gross Margin $156,730 $317,000 $539,750
Gross Margin % 60.92% 71.28% 76.32%
Expenses
Payroll $102,000 $145,000 $195,000
Sales and Marketing and Other Expenses $49,000 $62,500 $86,000
Depreciation $0 $0 $0
Utilities $2,400 $2,400 $2,400
Insurance $500 $500 $500
Rent $6,000 $6,600 $7,200
Payroll Taxes $15,300 $21,750 $29,250
Other $0 $0 $0
Total Operating Expenses $175,200 $238,750 $320,350
Profit Before Interest and Taxes ($18,470) $78,250 $219,400
EBITDA ($18,470) $78,250 $219,400
Interest Expense $3,678 $1,257 $0
Taxes Incurred $0 $23,098 $65,820
Net Profit ($22,148) $53,895 $153,580
Net Profit/Sales -8.61% 12.12% 21.72%

8.5 Projected Cash Flow

With the financing plan as projected, the business remains cash positive throughout the first three years. That does depend of course on investment capital and loans.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $257,255 $444,750 $707,250
Subtotal Cash from Operations $257,255 $444,750 $707,250
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $15,000 $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 $272,255 $444,750 $707,250
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $102,000 $145,000 $195,000
Bill Payments $167,195 $235,855 $349,398
Subtotal Spent on Operations $269,195 $380,855 $544,398
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $19,868 $25,132 $0
Other Liabilities Principal Repayment $10,000 $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 $299,063 $405,987 $544,398
Net Cash Flow ($26,808) $38,763 $162,852
Cash Balance $20,392 $59,155 $222,007

8.6 Projected Balance Sheet

The balance sheet shows that the negative net worth is gradually solved with profits later on. Debts are repaid ahead of schedule.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $20,392 $59,155 $222,007
Other Current Assets $2,000 $2,000 $2,000
Total Current Assets $22,392 $61,155 $224,007
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $22,392 $61,155 $224,007
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $10,207 $20,207 $29,480
Current Borrowing $25,132 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $35,339 $20,207 $29,480
Long-term Liabilities $0 $0 $0
Total Liabilities $35,339 $20,207 $29,480
Paid-in Capital $25,000 $25,000 $25,000
Retained Earnings ($15,800) ($37,948) $15,948
Earnings ($22,148) $53,895 $153,580
Total Capital ($12,948) $40,948 $194,528
Total Liabilities and Capital $22,392 $61,155 $224,007
Net Worth ($12,948) $40,948 $194,528

8.7 Business Ratios

The following table outlines several important ratios. Standard industry ratios for business seminars are not readily available, but the final column, Industry Profile, details specific ratios based on the Business Start-up Consultancy Services industry as it is classified by the Standard Industry Classification (SIC) code, 8472. The annual ratios for Seminars show steadily improving financial results.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 72.88% 59.02% 8.60%
Percent of Total Assets
Other Current Assets 8.93% 3.27% 0.89% 46.70%
Total Current Assets 100.00% 100.00% 100.00% 74.90%
Long-term Assets 0.00% 0.00% 0.00% 25.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 157.82% 33.04% 13.16% 42.80%
Long-term Liabilities 0.00% 0.00% 0.00% 17.20%
Total Liabilities 157.82% 33.04% 13.16% 60.00%
Net Worth -57.82% 66.96% 86.84% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.92% 71.28% 76.32% 0.00%
Selling, General & Administrative Expenses 69.53% 59.16% 54.60% 83.50%
Advertising Expenses 5.83% 5.62% 5.66% 1.20%
Profit Before Interest and Taxes -7.18% 17.59% 31.02% 2.60%
Main Ratios
Current 0.63 3.03 7.60 1.59
Quick 0.63 3.03 7.60 1.26
Total Debt to Total Assets 157.82% 33.04% 13.16% 60.00%
Pre-tax Return on Net Worth 171.05% 188.03% 112.79% 4.40%
Pre-tax Return on Assets -98.91% 125.90% 97.94% 10.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -8.61% 12.12% 21.72% n.a
Return on Equity 0.00% 131.62% 78.95% n.a
Activity Ratios
Accounts Payable Turnover 17.38 12.17 12.17 n.a
Payment Days 27 23 25 n.a
Total Asset Turnover 11.49 7.27 3.16 n.a
Debt Ratios
Debt to Net Worth 0.00 0.49 0.15 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($12,948) $40,948 $194,528 n.a
Interest Coverage -5.02 62.27 342,254,547.03 n.a
Additional Ratios
Assets to Sales 0.09 0.14 0.32 n.a
Current Debt/Total Assets 158% 33% 13% n.a
Acid Test 0.63 3.03 7.60 n.a
Sales/Net Worth 0.00 10.86 3.64 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Units Break-even 57
Monthly Revenue Break-even $23,441
Assumptions:
Average Per-Unit Revenue $409.64
Average Per-Unit Variable Cost $154.50
Estimated Monthly Fixed Cost $14,600
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $257,255 $444,750 $707,250
Direct Cost of Sales $97,025 $122,750 $162,500
Other Production Expenses $3,500 $5,000 $5,000
Total Cost of Sales $100,525 $127,750 $167,500
Gross Margin $156,730 $317,000 $539,750
Gross Margin % 60.92% 71.28% 76.32%
Expenses
Payroll $102,000 $145,000 $195,000
Sales and Marketing and Other Expenses $49,000 $62,500 $86,000
Depreciation $0 $0 $0
Utilities $2,400 $2,400 $2,400
Insurance $500 $500 $500
Rent $6,000 $6,600 $7,200
Payroll Taxes $15,300 $21,750 $29,250
Other $0 $0 $0
Total Operating Expenses $175,200 $238,750 $320,350
Profit Before Interest and Taxes ($18,470) $78,250 $219,400
EBITDA ($18,470) $78,250 $219,400
Interest Expense $3,678 $1,257 $0
Taxes Incurred $0 $23,098 $65,820
Net Profit ($22,148) $53,895 $153,580
Net Profit/Sales -8.61% 12.12% 21.72%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $257,255 $444,750 $707,250
Subtotal Cash from Operations $257,255 $444,750 $707,250
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $15,000 $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 $272,255 $444,750 $707,250
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $102,000 $145,000 $195,000
Bill Payments $167,195 $235,855 $349,398
Subtotal Spent on Operations $269,195 $380,855 $544,398
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $19,868 $25,132 $0
Other Liabilities Principal Repayment $10,000 $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 $299,063 $405,987 $544,398
Net Cash Flow ($26,808) $38,763 $162,852
Cash Balance $20,392 $59,155 $222,007
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $20,392 $59,155 $222,007
Other Current Assets $2,000 $2,000 $2,000
Total Current Assets $22,392 $61,155 $224,007
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $22,392 $61,155 $224,007
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $10,207 $20,207 $29,480
Current Borrowing $25,132 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $35,339 $20,207 $29,480
Long-term Liabilities $0 $0 $0
Total Liabilities $35,339 $20,207 $29,480
Paid-in Capital $25,000 $25,000 $25,000
Retained Earnings ($15,800) ($37,948) $15,948
Earnings ($22,148) $53,895 $153,580
Total Capital ($12,948) $40,948 $194,528
Total Liabilities and Capital $22,392 $61,155 $224,007
Net Worth ($12,948) $40,948 $194,528
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 72.88% 59.02% 8.60%
Percent of Total Assets
Other Current Assets 8.93% 3.27% 0.89% 46.70%
Total Current Assets 100.00% 100.00% 100.00% 74.90%
Long-term Assets 0.00% 0.00% 0.00% 25.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 157.82% 33.04% 13.16% 42.80%
Long-term Liabilities 0.00% 0.00% 0.00% 17.20%
Total Liabilities 157.82% 33.04% 13.16% 60.00%
Net Worth -57.82% 66.96% 86.84% 40.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.92% 71.28% 76.32% 0.00%
Selling, General & Administrative Expenses 69.53% 59.16% 54.60% 83.50%
Advertising Expenses 5.83% 5.62% 5.66% 1.20%
Profit Before Interest and Taxes -7.18% 17.59% 31.02% 2.60%
Main Ratios
Current 0.63 3.03 7.60 1.59
Quick 0.63 3.03 7.60 1.26
Total Debt to Total Assets 157.82% 33.04% 13.16% 60.00%
Pre-tax Return on Net Worth 171.05% 188.03% 112.79% 4.40%
Pre-tax Return on Assets -98.91% 125.90% 97.94% 10.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -8.61% 12.12% 21.72% n.a
Return on Equity 0.00% 131.62% 78.95% n.a
Activity Ratios
Accounts Payable Turnover 17.38 12.17 12.17 n.a
Payment Days 27 23 25 n.a
Total Asset Turnover 11.49 7.27 3.16 n.a
Debt Ratios
Debt to Net Worth 0.00 0.49 0.15 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($12,948) $40,948 $194,528 n.a
Interest Coverage -5.02 62.27 342,254,547.03 n.a
Additional Ratios
Assets to Sales 0.09 0.14 0.32 n.a
Current Debt/Total Assets 158% 33% 13% n.a
Acid Test 0.63 3.03 7.60 n.a
Sales/Net Worth 0.00 10.86 3.64 n.a
Dividend Payout 0.00 0.00 0.00 n.a