Plan Outline
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SIC 4911 Electric, Gas and Sanitary Services - Electric services
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Electrical Contractor Business Plan
Premiere Electric
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Financial Plan
The financial plan is presented in the following topics.
8.1 Break-even Analysis
The following table and chart show the break-even figures for Premiere Electric.
| Break-even Analysis | |
| Monthly Revenue Break-even | $9,365 |
| Assumptions: | |
| Average Percent Variable Cost | 35% |
| Estimated Monthly Fixed Cost | $6,087 |
8.2 Projected Profit and Loss
The following table and chart outline the projected profit and loss for three years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $84,987 | $120,000 | $160,000 |
| Direct Cost of Sales | $29,745 | $39,600 | $52,800 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $29,745 | $39,600 | $52,800 |
| Gross Margin | $55,242 | $80,400 | $107,200 |
| Gross Margin % | 65.00% | 67.00% | 67.00% |
| Expenses | |||
| Payroll | $42,000 | $44,940 | $48,086 |
| Sales and Marketing and Other Expenses | $1,100 | $2,000 | $3,000 |
| Depreciation | $2,748 | $2,748 | $2,748 |
| Leased Equipment | $12,000 | $12,000 | $12,000 |
| Utilities | $2,400 | $2,400 | $2,400 |
| Insurance | $0 | $0 | $0 |
| Rent | $6,500 | $6,500 | $6,500 |
| Payroll Taxes | $6,300 | $6,741 | $7,213 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $73,048 | $77,329 | $81,947 |
| Profit Before Interest and Taxes | ($17,806) | $3,071 | $25,253 |
| EBITDA | ($15,058) | $5,819 | $28,001 |
| Interest Expense | $2,200 | $2,200 | $2,200 |
| Taxes Incurred | $0 | $261 | $6,916 |
| Net Profit | ($20,006) | $610 | $16,137 |
| Net Profit/Sales | -23.54% | 0.51% | 10.09% |
8.3 Projected Balance Sheet
The table shows projected balance sheet for three years.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $7,274 | $8,720 | $25,034 |
| Accounts Receivable | $9,188 | $12,973 | $17,297 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $16,461 | $21,693 | $42,331 |
| Long-term Assets | |||
| Long-term Assets | $22,000 | $22,000 | $22,000 |
| Accumulated Depreciation | $2,748 | $5,496 | $8,244 |
| Total Long-term Assets | $19,252 | $16,504 | $13,756 |
| Total Assets | $35,713 | $38,197 | $56,087 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $4,020 | $5,893 | $7,646 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $4,020 | $5,893 | $7,646 |
| Long-term Liabilities | $22,000 | $22,000 | $22,000 |
| Total Liabilities | $26,020 | $27,893 | $29,646 |
| Paid-in Capital | $40,000 | $40,000 | $40,000 |
| Retained Earnings | ($10,300) | ($30,306) | ($29,697) |
| Earnings | ($20,006) | $610 | $16,137 |
| Total Capital | $9,694 | $10,303 | $26,441 |
| Total Liabilities and Capital | $35,713 | $38,197 | $56,087 |
| Net Worth | $9,694 | $10,303 | $26,441 |
8.4 Projected Cash Flow
The following table and chart show the projected cash flow for Premiere Electric.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $21,247 | $30,000 | $40,000 |
| Cash from Receivables | $54,553 | $86,215 | $115,676 |
| Subtotal Cash from Operations | $75,800 | $116,215 | $155,676 |
| 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 | $75,800 | $116,215 | $155,676 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $42,000 | $44,940 | $48,086 |
| Bill Payments | $56,226 | $69,829 | $91,276 |
| Subtotal Spent on Operations | $98,226 | $114,769 | $139,362 |
| 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 | $98,226 | $114,769 | $139,362 |
| Net Cash Flow | ($22,426) | $1,446 | $16,314 |
| Cash Balance | $7,274 | $8,720 | $25,034 |
8.5 Business Ratios
The following table provides important ratios for the industry, as determined by the Standard Industry Classification (SIC) Index, 4911, Electrical Services.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 41.20% | 33.33% | -1.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 25.73% | 33.96% | 30.84% | 5.10% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 26.70% |
| Total Current Assets | 46.09% | 56.79% | 75.47% | 32.80% |
| Long-term Assets | 53.91% | 43.21% | 24.53% | 67.20% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 11.26% | 15.43% | 13.63% | 21.10% |
| Long-term Liabilities | 61.60% | 57.60% | 39.22% | 38.10% |
| Total Liabilities | 72.86% | 73.03% | 52.86% | 59.20% |
| Net Worth | 27.14% | 26.97% | 47.14% | 40.80% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 65.00% | 67.00% | 67.00% | 57.80% |
| Selling, General & Administrative Expenses | 88.54% | 66.49% | 56.91% | 22.80% |
| Advertising Expenses | 1.29% | 1.67% | 1.88% | 0.10% |
| Profit Before Interest and Taxes | -20.95% | 2.56% | 15.78% | 11.10% |
| Main Ratios | ||||
| Current | 4.10 | 3.68 | 5.54 | 1.45 |
| Quick | 4.10 | 3.68 | 5.54 | 1.09 |
| Total Debt to Total Assets | 72.86% | 73.03% | 52.86% | 59.20% |
| Pre-tax Return on Net Worth | -206.39% | 8.45% | 87.19% | 4.10% |
| Pre-tax Return on Assets | -56.02% | 2.28% | 41.10% | 10.20% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -23.54% | 0.51% | 10.09% | n.a |
| Return on Equity | -206.39% | 5.92% | 61.03% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 6.94 | 6.94 | 6.94 | n.a |
| Collection Days | 58 | 45 | 46 | n.a |
| Accounts Payable Turnover | 14.99 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 25 | 27 | n.a |
| Total Asset Turnover | 2.38 | 3.14 | 2.85 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 2.68 | 2.71 | 1.12 | n.a |
| Current Liab. to Liab. | 0.15 | 0.21 | 0.26 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $12,442 | $15,799 | $34,685 | n.a |
| Interest Coverage | -8.09 | 1.40 | 11.48 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.42 | 0.32 | 0.35 | n.a |
| Current Debt/Total Assets | 11% | 15% | 14% | n.a |
| Acid Test | 1.81 | 1.48 | 3.27 | n.a |
| Sales/Net Worth | 8.77 | 11.65 | 6.05 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
