One Week At A Time

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Educational Website Business Plan

Financial Plan

One Week At A Time is a business that is very financially simple. Our only expenses consist of marketing, website hosting, and one salary starting in late 2003. Our marketing expenses and salary could even be cut if necessary, since generating lots of income isn't the primary goal for this business.

Even though generating tons of cash and a huge salary isn't the goal, we do want to remain profitable and keep a positive cash flow and cash balance to keep the business running strong and keep it healthy. As long as we keep our expenses low, even minor amounts of sales should achieve that goal, as shown in the following financial plan.

8.1 Important Assumptions

The Financial Plan for One Week At A Time makes the following assumptions:

  • That we will be able to generate traffic for our website through our marketing methods.
  • That affiliate programs for Earth-friendly products will remain available and that those retailers will stay in business and fulfill orders correctly and on time.
  • That people will remain interested in helping the environment.
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 Break-even Analysis

Our Break-even Analysis is quite simple. We earn revenue by receiving commissions on products we recommend in our weekly tips. This means we don't produce any products so we don't have a variable unit cost. We estimate that we'll receive around $2 per sale made since most of the companies will pay 5-15% in commission on products ranging from $5-$20.

Our fixed costs are cheap. This accounts for our website hosting, miscellaneous bills and expenses, and some search engine marketing.

Break-even Analysis
Monthly Revenue Break-even $314
Assumptions:
Average Percent Variable Cost 6%
Estimated Monthly Fixed Cost $296

8.3 Projected Profit and Loss

One Week At A Time expects to have a tremendous net profit due to our lack of expenses, cost of goods, and only having one employee. Conversely, we don't expect to generate a huge amount of sales, or really end up earning that much in net income.

We expect to reach net profit for 2003 and 2004 which we plan on contributing to various environmental causes we support.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $13,621 $14,983 $16,482
Direct Cost of Sales $796 $0 $0
Other Costs of Goods $0 $0 $0
Total Cost of Sales $796 $0 $0
Gross Margin $12,825 $14,983 $16,482
Gross Margin % 94.16% 100.00% 100.00%
Expenses
Payroll $1,000 $2,000 $4,000
Sales and Marketing and Other Expenses $1,200 $2,300 $4,500
Depreciation $0 $0 $0
Web Site Hosting $1,200 $1,200 $1,200
Payroll Taxes $150 $300 $600
Other $0 $0 $0
Total Operating Expenses $3,550 $5,800 $10,300
Profit Before Interest and Taxes $9,275 $9,183 $6,182
EBITDA $9,275 $9,183 $6,182
Interest Expense $0 $0 $0
Taxes Incurred $2,783 $2,755 $1,855
Net Profit $6,493 $6,428 $4,327
Net Profit/Sales 47.67% 42.90% 26.25%

8.4 Business Ratios

The ratios in our table should point to One Week At A Time being a simple business with a chance and level of profitability.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 10.00% 10.00% 0.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 100.00%
Total Current Assets 100.00% 100.00% 100.00% 100.00%
Long-term Assets 0.00% 0.00% 0.00% 0.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 10.25% 3.56% 3.42% 0.00%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 10.25% 3.56% 3.42% 0.00%
Net Worth 89.75% 96.44% 96.58% 100.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.16% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 46.49% 57.10% 73.75% 0.00%
Advertising Expenses 0.00% 0.00% 0.00% 0.00%
Profit Before Interest and Taxes 68.10% 61.29% 37.51% 0.00%
Main Ratios
Current 9.76 28.09 29.23 0.00
Quick 9.76 28.09 29.23 0.00
Total Debt to Total Assets 10.25% 3.56% 3.42% 0.00%
Pre-tax Return on Net Worth 113.56% 62.92% 32.67% 0.00%
Pre-tax Return on Assets 101.92% 60.68% 31.55% 0.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 47.67% 42.90% 26.25% n.a
Return on Equity 79.49% 44.04% 22.87% n.a
Activity Ratios
Accounts Payable Turnover 6.57 12.17 12.17 n.a
Payment Days 27 41 27 n.a
Total Asset Turnover 1.50 0.99 0.84 n.a
Debt Ratios
Debt to Net Worth 0.11 0.04 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $8,168 $14,596 $18,923 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.67 1.01 1.19 n.a
Current Debt/Total Assets 10% 4% 3% n.a
Acid Test 9.76 28.09 29.23 n.a
Sales/Net Worth 1.67 1.03 0.87 n.a
Dividend Payout 0.00 0.00 0.00 n.a

8.5 Projected Cash Flow

Starting with our initial investment, One Week At A Time plans on always having a positive cash balance and cash flow. Even though some companies suffer from negative cash flow on occasion, we foresee no reason that we should ever be spending more in expenses than we're bringing in from sales.

Our low overhead and initial investment keep us from needing to ever borrow cash or sell off assets to contribute to our cash balance. Our only true fixed expense is website hosting. Any marketing expenses can be trimmed so that we keep our goal of maintaining a positive cash flow and cash balance.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $13,621 $14,983 $16,482
Subtotal Cash from Operations $13,621 $14,983 $16,482
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 $13,621 $14,983 $16,482
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $1,000 $2,000 $4,000
Bill Payments $5,196 $6,949 $8,023
Subtotal Spent on Operations $6,196 $8,949 $12,023
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 $6,196 $8,949 $12,023
Net Cash Flow $7,425 $6,034 $4,459
Cash Balance $9,100 $15,135 $19,594

8.6 Projected Balance Sheet

Due to our keeping expenses low and slowly growing our site traffic and sales, the company's net worth will gradually increase over time. We aren't in a race, and have no motivation to try and rush anything and/or spend money frivolously to reach any of our goals.

Our liabilities are very slim, and our sales forecast is conservative so we are more likely to beat these projections than to fail at reaching them.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $9,100 $15,135 $19,594
Other Current Assets $0 $0 $0
Total Current Assets $9,100 $15,135 $19,594
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $9,100 $15,135 $19,594
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $933 $539 $670
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $933 $539 $670
Long-term Liabilities $0 $0 $0
Total Liabilities $933 $539 $670
Paid-in Capital $3,000 $3,000 $3,000
Retained Earnings ($1,325) $5,168 $11,596
Earnings $6,493 $6,428 $4,327
Total Capital $8,168 $14,596 $18,923
Total Liabilities and Capital $9,100 $15,135 $19,594
Net Worth $8,168 $14,596 $18,923