Grassroots Wireless

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Internet ISP Wireless Business Plan

Financial Plan

The following sections outline important financial information.

8.1 Break-even Analysis

Average per-unit revenue: based on the $20 monthly access fee.
Average per-unit variable cost: costs based on infrastructure, and administrative costs.
Estimated monthly fixed costs: Internet connections costs.

Break-even Analysis
Monthly Revenue Break-even $8,072
Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $7,668

8.2 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $36,584 $132,665 $211,443
Direct Cost of Sales $1,829 $6,633 $10,572
Other Costs of Sales $0 $0 $0
Total Cost of Sales $1,829 $6,633 $10,572
Gross Margin $34,755 $126,032 $200,871
Gross Margin % 95.00% 95.00% 95.00%
Expenses
Payroll $58,800 $75,600 $87,600
Sales and Marketing and Other Expenses $2,400 $5,600 $12,000
Depreciation $996 $1,002 $1,002
Rent $2,400 $2,400 $2,400
Utilities $9,600 $13,000 $15,000
Insurance $3,000 $3,000 $3,000
Payroll Taxes $8,820 $11,340 $13,140
Other $6,000 $6,000 $6,000
Total Operating Expenses $92,016 $117,942 $140,142
Profit Before Interest and Taxes ($57,261) $8,090 $60,729
EBITDA ($56,265) $9,092 $61,731
Interest Expense $0 $0 $0
Taxes Incurred $0 $2,427 $18,219
Net Profit ($57,261) $5,663 $42,510
Net Profit/Sales -156.52% 4.27% 20.10%

8.3 Projected Cash Flow

The following table and chart display the Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $36,584 $132,665 $211,443
Subtotal Cash from Operations $36,584 $132,665 $211,443
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 $36,584 $132,665 $211,443
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $58,800 $75,600 $87,600
Bill Payments $31,112 $49,195 $77,871
Subtotal Spent on Operations $89,912 $124,795 $165,471
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 $89,912 $124,795 $165,471
Net Cash Flow ($53,328) $7,870 $45,972
Cash Balance $2,172 $10,042 $56,014

8.4 Projected Balance Sheet

The following table presents the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,172 $10,042 $56,014
Other Current Assets $0 $0 $0
Total Current Assets $2,172 $10,042 $56,014
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $996 $1,998 $3,000
Total Long-term Assets $4,004 $3,002 $2,000
Total Assets $6,176 $13,044 $58,014
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,938 $4,142 $6,603
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,938 $4,142 $6,603
Long-term Liabilities $0 $0 $0
Total Liabilities $2,938 $4,142 $6,603
Paid-in Capital $70,000 $70,000 $70,000
Retained Earnings ($9,500) ($66,761) ($61,098)
Earnings ($57,261) $5,663 $42,510
Total Capital $3,239 $8,902 $51,412
Total Liabilities and Capital $6,176 $13,044 $58,014
Net Worth $3,239 $8,902 $51,412

8.5 Business Ratios

The following table illustrates the different Business Ratios, based on NAICS code 518111, Internet Service Providers.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 262.63% 59.38% 15.97%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 56.35%
Total Current Assets 35.17% 76.99% 96.55% 87.48%
Long-term Assets 64.83% 23.01% 3.45% 12.52%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 47.56% 31.76% 11.38% 30.66%
Long-term Liabilities 0.00% 0.00% 0.00% 23.07%
Total Liabilities 47.56% 31.76% 11.38% 53.73%
Net Worth 52.44% 68.24% 88.62% 46.27%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 100.00%
Selling, General & Administrative Expenses 251.52% 90.73% 74.90% 73.80%
Advertising Expenses 0.00% 0.00% 0.00% 1.37%
Profit Before Interest and Taxes -156.52% 6.10% 28.72% 1.03%
Main Ratios
Current 0.74 2.42 8.48 1.97
Quick 0.74 2.42 8.48 1.50
Total Debt to Total Assets 47.56% 31.76% 11.38% 59.78%
Pre-tax Return on Net Worth -1767.98% 90.88% 118.12% 2.93%
Pre-tax Return on Assets -927.10% 62.02% 104.68% 7.28%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -156.52% 4.27% 20.10% n.a
Return on Equity -1767.98% 63.62% 82.69% n.a
Activity Ratios
Accounts Payable Turnover 11.59 12.17 12.17 n.a
Payment Days 27 26 24 n.a
Total Asset Turnover 5.92 10.17 3.64 n.a
Debt Ratios
Debt to Net Worth 0.91 0.47 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($765) $5,900 $49,412 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.17 0.10 0.27 n.a
Current Debt/Total Assets 48% 32% 11% n.a
Acid Test 0.74 2.42 8.48 n.a
Sales/Net Worth 11.30 14.90 4.11 n.a
Dividend Payout 0.00 0.00 0.00 n.a