GlobeSpan Meeting Planners, Inc.

Start your own business plan »

Global Event Planning Business Plan

Financial Plan

As a service or knowledge-based corporation, GlobeSpan Meeting Planners, Inc. will begin with very little start-up costs, and one long-term loan to allow the owners the ability to establish the company. As indicated on the following charts and tables, GlobeSpan will grow to need fewer funds over time to maintain growth. By year five, GlobeSpan will be completely debt-free and working with nearly the same overhead as it did on day one.

8.1 Important Assumptions

The following table of General Assumptions outline our conservative general assumptions on an annual basis. A monthly outline of the important assumptions is included in the appendix. Overall, we are assuming the forecasted business climate as outlined in the Business Climate Section will remain steady. Additionally, we assume our strategic partner, HelmsBriscoe's positioning within the industry will continue to grow.

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 25.42% 25.00% 25.42%
Other 0 0 0

8.2 Key Financial Indicators

GlobeSpan shows, in the Key Financial Indicators chart which follows, three Benchmarks: Sales, Gross Margin, and Operating Expenses. We expect sales to grow steadily over the next three years while our gross margin remains unchanged and our operating expenses only rise slightly over the next three years.

8.3 Break-even Analysis

The following chart and table summarizes our monthly break-even analysis, with fixed costs at approximately $10,200 and commission needed at the same to break even.

Break-even Analysis
Monthly Revenue Break-even $9,061
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $9,061

8.4 Projected Profit and Loss

GlobeSpan's projected income statement is shown in the following table. We show a conservative first year with approximately $120,000 in commissions; however, this grows to over $170,000 in 2002, and over $280,000 in 2003. With relatively low operating expenses, our net profits nearly quadruple in the second year, and almost double in the third. We have offered a detailed monthly outline of income in the appendix.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $120,416 $171,250 $284,750
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $120,416 $171,250 $284,750
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $96,000 $100,800 $105,840
Sales and Marketing and Other Expenses $4,600 $0 $0
Depreciation $0 $0 $0
Sales Telephone Cost $5,808 $6,098 $6,403
Service Telephone Cost $1,800 $1,890 $1,985
Sales On-line Service $264 $264 $264
Service On-line Service $264 $264 $264
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $108,736 $109,316 $114,756
Profit Before Interest and Taxes $11,680 $61,934 $169,994
EBITDA $11,680 $61,934 $169,994
Interest Expense $4,305 $3,077 $1,794
Taxes Incurred $1,844 $14,714 $42,751
Net Profit $5,531 $44,143 $125,449
Net Profit/Sales 4.59% 25.78% 44.06%

8.5 Projected Cash Flow

As demonstrated by the Projected Cash Flow Chart below, GlobeSpan's cash balance is healthy, with our projected cash flow being negative for our first few months and then a slow recovery during the remainder of the year. Our net cash flow for fiscal year 2001 is -($21,600) with our cash balance at $28,000. Significant to note, in year one our long-term borrowing repayment will amount to over $12,800. A detailed monthly cash flow analysis is provided in the appendix.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $120,416 $171,250 $284,750
Subtotal Cash from Operations $120,416 $171,250 $284,750
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 $120,416 $171,250 $284,750
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $96,000 $100,800 $105,840
Bill Payments $16,524 $26,506 $51,229
Subtotal Spent on Operations $112,524 $127,306 $157,069
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 $12,822 $12,822 $12,822
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $125,346 $140,128 $169,891
Net Cash Flow ($4,930) $31,122 $114,859
Cash Balance $45,070 $76,192 $191,050

8.6 Projected Balance Sheet

GlobeSpan has planned for success as outlined, this is evident in the projected balance sheet below. Our net worth will be a -($11,800) in year one to almost $127,000 in year three. We have outlined monthly estimates in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $45,070 $76,192 $191,050
Other Current Assets $0 $0 $0
Total Current Assets $45,070 $76,192 $191,050
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $45,070 $76,192 $191,050
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,361 $2,162 $4,394
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,361 $2,162 $4,394
Long-term Liabilities $37,178 $24,356 $11,534
Total Liabilities $39,539 $26,518 $15,928
Paid-in Capital $4,800 $4,800 $4,800
Retained Earnings ($4,800) $731 $44,874
Earnings $5,531 $44,143 $125,449
Total Capital $5,531 $49,674 $175,123
Total Liabilities and Capital $45,070 $76,192 $191,050
Net Worth $5,531 $49,674 $175,123

8.7 Business Ratios

GlobeSpan's projected business ratios are illustrated in the following chart. It is noteworthy that our net working capital will quadruple by year three and our debt to net worth ratio shrinks to an impressive 0.57 by year three. We look forward to healthy ratios for profitability, risk and return. The final column, Industry Profile, contains ratios based on the personal services industry, as defined by the Standard Industry Classification (SIC) Index code 7299.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 42.22% 66.28% 17.90%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 37.10%
Total Current Assets 100.00% 100.00% 100.00% 52.80%
Long-term Assets 0.00% 0.00% 0.00% 47.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 5.24% 2.84% 2.30% 33.90%
Long-term Liabilities 82.49% 31.97% 6.04% 28.00%
Total Liabilities 87.73% 34.80% 8.34% 61.90%
Net Worth 12.27% 65.20% 91.66% 38.10%
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 96.27% 75.91% 57.39% 72.70%
Advertising Expenses 1.74% 0.00% 0.00% 2.20%
Profit Before Interest and Taxes 9.70% 36.17% 59.70% 4.00%
Main Ratios
Current 19.09 35.24 43.48 1.81
Quick 19.09 35.24 43.48 1.33
Total Debt to Total Assets 87.73% 34.80% 8.34% 61.90%
Pre-tax Return on Net Worth 133.33% 118.49% 96.05% 6.30%
Pre-tax Return on Assets 16.36% 77.25% 88.04% 16.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 4.59% 25.78% 44.06% n.a
Return on Equity 100.00% 88.87% 71.63% n.a
Activity Ratios
Accounts Payable Turnover 8.00 12.17 12.17 n.a
Payment Days 31 31 22 n.a
Total Asset Turnover 2.67 2.25 1.49 n.a
Debt Ratios
Debt to Net Worth 7.15 0.53 0.09 n.a
Current Liab. to Liab. 0.06 0.08 0.28 n.a
Liquidity Ratios
Net Working Capital $42,709 $74,030 $186,656 n.a
Interest Coverage 2.71 20.13 94.73 n.a
Additional Ratios
Assets to Sales 0.37 0.44 0.67 n.a
Current Debt/Total Assets 5% 3% 2% n.a
Acid Test 19.09 35.24 43.48 n.a
Sales/Net Worth 21.77 3.45 1.63 n.a
Dividend Payout 0.00 0.00 0.00 n.a