Document Storage Business Plan

Shaw's Records Management and Data Storage

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Financial Plan

The following is the financial plan for Shaw's Records Management and Data Storage.

7.1 Break-even Analysis

The monthly break-even point is calculated in the following table and chart.

Break-even Analysis
Monthly Revenue Break-even $51,695
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $46,915

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $644,000 $760,000 $900,000
Direct Cost of Sales $59,550 $85,000 $100,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $59,550 $85,000 $100,000
Gross Margin $584,450 $675,000 $800,000
Gross Margin % 90.75% 88.82% 88.89%
Expenses
Payroll $385,200 $404,000 $426,000
Sales and Marketing and Other Expenses $36,000 $40,000 $50,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $12,000 $12,000 $12,000
Rent $60,000 $60,000 $60,000
Payroll Taxes $57,780 $60,600 $63,900
Other $0 $0 $0
Total Operating Expenses $562,980 $588,600 $623,900
Profit Before Interest and Taxes $21,470 $86,400 $176,100
EBITDA $21,470 $86,400 $176,100
Interest Expense $13,375 $10,500 $7,500
Taxes Incurred $2,428 $22,770 $50,580
Net Profit $5,666 $53,130 $118,020
Net Profit/Sales 0.88% 6.99% 13.11%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $161,000 $190,000 $225,000
Cash from Receivables $347,325 $545,562 $645,505
Subtotal Cash from Operations $508,325 $735,562 $870,505
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 $15,000 $0 $0
Subtotal Cash Received $523,325 $735,562 $870,505
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $385,200 $404,000 $426,000
Bill Payments $224,641 $306,470 $351,615
Subtotal Spent on Operations $609,841 $710,470 $777,615
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 $30,000 $30,000 $30,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $639,841 $740,470 $807,615
Net Cash Flow ($116,516) ($4,908) $62,891
Cash Balance $40,884 $35,977 $98,867

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $40,884 $35,977 $98,867
Accounts Receivable $135,675 $160,113 $189,608
Other Current Assets $0 $0 $0
Total Current Assets $176,559 $196,090 $288,475
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $176,559 $196,090 $288,475
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $28,493 $24,893 $29,259
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $28,493 $24,893 $29,259
Long-term Liabilities $120,000 $90,000 $60,000
Total Liabilities $148,493 $114,893 $89,259
Paid-in Capital $365,000 $365,000 $365,000
Retained Earnings ($342,600) ($336,934) ($283,804)
Earnings $5,666 $53,130 $118,020
Total Capital $28,066 $81,197 $199,217
Total Liabilities and Capital $176,559 $196,090 $288,475
Net Worth $28,067 $81,197 $199,217

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 4226, Special Warehouse and Storage, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 18.01% 18.42% 1.00%
Percent of Total Assets
Accounts Receivable 76.84% 81.65% 65.73% 23.10%
Other Current Assets 0.00% 0.00% 0.00% 22.30%
Total Current Assets 100.00% 100.00% 100.00% 46.50%
Long-term Assets 0.00% 0.00% 0.00% 53.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.14% 12.69% 10.14% 31.00%
Long-term Liabilities 67.97% 45.90% 20.80% 25.60%
Total Liabilities 84.10% 58.59% 30.94% 56.60%
Net Worth 15.90% 41.41% 69.06% 43.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.75% 88.82% 88.89% 100.00%
Selling, General & Administrative Expenses 89.87% 81.83% 75.78% 79.70%
Advertising Expenses 5.59% 5.26% 5.56% 0.30%
Profit Before Interest and Taxes 3.33% 11.37% 19.57% 1.50%
Main Ratios
Current 6.20 7.88 9.86 1.50
Quick 6.20 7.88 9.86 1.22
Total Debt to Total Assets 84.10% 58.59% 30.94% 56.60%
Pre-tax Return on Net Worth 28.84% 93.48% 84.63% 3.10%
Pre-tax Return on Assets 4.58% 38.71% 58.45% 7.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.88% 6.99% 13.11% n.a
Return on Equity 20.19% 65.43% 59.24% n.a
Activity Ratios
Accounts Receivable Turnover 3.56 3.56 3.56 n.a
Collection Days 56 95 95 n.a
Accounts Payable Turnover 8.88 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 3.65 3.88 3.12 n.a
Debt Ratios
Debt to Net Worth 5.29 1.42 0.45 n.a
Current Liab. to Liab. 0.19 0.22 0.33 n.a
Liquidity Ratios
Net Working Capital $148,067 $171,197 $259,217 n.a
Interest Coverage 1.61 8.23 23.48 n.a
Additional Ratios
Assets to Sales 0.27 0.26 0.32 n.a
Current Debt/Total Assets 16% 13% 10% n.a
Acid Test 1.43 1.45 3.38 n.a
Sales/Net Worth 22.95 9.36 4.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $51,695
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $46,915
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $644,000 $760,000 $900,000
Direct Cost of Sales $59,550 $85,000 $100,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $59,550 $85,000 $100,000
Gross Margin $584,450 $675,000 $800,000
Gross Margin % 90.75% 88.82% 88.89%
Expenses
Payroll $385,200 $404,000 $426,000
Sales and Marketing and Other Expenses $36,000 $40,000 $50,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $12,000 $12,000 $12,000
Rent $60,000 $60,000 $60,000
Payroll Taxes $57,780 $60,600 $63,900
Other $0 $0 $0
Total Operating Expenses $562,980 $588,600 $623,900
Profit Before Interest and Taxes $21,470 $86,400 $176,100
EBITDA $21,470 $86,400 $176,100
Interest Expense $13,375 $10,500 $7,500
Taxes Incurred $2,428 $22,770 $50,580
Net Profit $5,666 $53,130 $118,020
Net Profit/Sales 0.88% 6.99% 13.11%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $161,000 $190,000 $225,000
Cash from Receivables $347,325 $545,562 $645,505
Subtotal Cash from Operations $508,325 $735,562 $870,505
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 $15,000 $0 $0
Subtotal Cash Received $523,325 $735,562 $870,505
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $385,200 $404,000 $426,000
Bill Payments $224,641 $306,470 $351,615
Subtotal Spent on Operations $609,841 $710,470 $777,615
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 $30,000 $30,000 $30,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $639,841 $740,470 $807,615
Net Cash Flow ($116,516) ($4,908) $62,891
Cash Balance $40,884 $35,977 $98,867
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $40,884 $35,977 $98,867
Accounts Receivable $135,675 $160,113 $189,608
Other Current Assets $0 $0 $0
Total Current Assets $176,559 $196,090 $288,475
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $176,559 $196,090 $288,475
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $28,493 $24,893 $29,259
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $28,493 $24,893 $29,259
Long-term Liabilities $120,000 $90,000 $60,000
Total Liabilities $148,493 $114,893 $89,259
Paid-in Capital $365,000 $365,000 $365,000
Retained Earnings ($342,600) ($336,934) ($283,804)
Earnings $5,666 $53,130 $118,020
Total Capital $28,066 $81,197 $199,217
Total Liabilities and Capital $176,559 $196,090 $288,475
Net Worth $28,067 $81,197 $199,217
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 18.01% 18.42% 1.00%
Percent of Total Assets
Accounts Receivable 76.84% 81.65% 65.73% 23.10%
Other Current Assets 0.00% 0.00% 0.00% 22.30%
Total Current Assets 100.00% 100.00% 100.00% 46.50%
Long-term Assets 0.00% 0.00% 0.00% 53.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.14% 12.69% 10.14% 31.00%
Long-term Liabilities 67.97% 45.90% 20.80% 25.60%
Total Liabilities 84.10% 58.59% 30.94% 56.60%
Net Worth 15.90% 41.41% 69.06% 43.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.75% 88.82% 88.89% 100.00%
Selling, General & Administrative Expenses 89.87% 81.83% 75.78% 79.70%
Advertising Expenses 5.59% 5.26% 5.56% 0.30%
Profit Before Interest and Taxes 3.33% 11.37% 19.57% 1.50%
Main Ratios
Current 6.20 7.88 9.86 1.50
Quick 6.20 7.88 9.86 1.22
Total Debt to Total Assets 84.10% 58.59% 30.94% 56.60%
Pre-tax Return on Net Worth 28.84% 93.48% 84.63% 3.10%
Pre-tax Return on Assets 4.58% 38.71% 58.45% 7.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.88% 6.99% 13.11% n.a
Return on Equity 20.19% 65.43% 59.24% n.a
Activity Ratios
Accounts Receivable Turnover 3.56 3.56 3.56 n.a
Collection Days 56 95 95 n.a
Accounts Payable Turnover 8.88 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 3.65 3.88 3.12 n.a
Debt Ratios
Debt to Net Worth 5.29 1.42 0.45 n.a
Current Liab. to Liab. 0.19 0.22 0.33 n.a
Liquidity Ratios
Net Working Capital $148,067 $171,197 $259,217 n.a
Interest Coverage 1.61 8.23 23.48 n.a
Additional Ratios
Assets to Sales 0.27 0.26 0.32 n.a
Current Debt/Total Assets 16% 13% 10% n.a
Acid Test 1.43 1.45 3.38 n.a
Sales/Net Worth 22.95 9.36 4.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a