Plan Outline
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SIC 3714 Transportation Equipment - Motor vehicle parts and accessories
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Lift Bed Manufacturer Business Plan
Load Hog
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Financial Plan
Our financial picture is encouraging. If we can secure the levels of financial support we are now seeking, we will be able to improve on forecasted results.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are as follows:
| General Assumptions | |||
| 2001 | 2002 | 2003 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 12.00% | 12.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
Our Break-even Analysis is based on true observed expenses over the last three years. Including payroll, rent, utilities, insurance, and basic marketing costs, our observation is that $80,000 is a realistic estimate.
| Break-even Analysis | |
| Monthly Units Break-even | 1,554 |
| Monthly Revenue Break-even | $142,484 |
| Assumptions: | |
| Average Per-Unit Revenue | $91.70 |
| Average Per-Unit Variable Cost | $39.68 |
| Estimated Monthly Fixed Cost | $80,822 |
7.3 Projected Profit and Loss
The company's projected Income Statements are presented below.
| Pro Forma Profit and Loss | |||
| 2001 | 2002 | 2003 | |
| Sales | $4,479,283 | $10,087,800 | $18,048,700 |
| Direct Cost of Sales | $1,938,489 | $4,845,600 | $8,975,300 |
| Production Payroll | $99,600 | $129,000 | $266,000 |
| Comissions | $67,577 | $166,000 | $325,000 |
| Total Cost of Sales | $2,105,666 | $5,140,600 | $9,566,300 |
| Gross Margin | $2,373,617 | $4,947,200 | $8,482,400 |
| Gross Margin % | 52.99% | 49.04% | 47.00% |
| Operating Expenses | |||
| Sales and Marketing Expenses | |||
| Sales and Marketing Payroll | $116,000 | $261,000 | $455,000 |
| Advertising/Promotion | $323,171 | $400,000 | $500,000 |
| Travel | $84,000 | $100,000 | $200,000 |
| Miscellaneous | $69,000 | $100,000 | $125,000 |
| Total Sales and Marketing Expenses | $592,171 | $861,000 | $1,280,000 |
| Sales and Marketing % | 13.22% | 8.54% | 7.09% |
| General and Administrative Expenses | |||
| General and Administrative Payroll | $66,000 | $124,000 | $154,000 |
| Sales and Marketing and Other Expenses | $0 | $0 | $0 |
| Depreciation | $72,000 | $72,000 | $72,000 |
| Leased Equipment | $18,784 | $25,000 | $60,000 |
| Utilities/Phone/Postage | $28,484 | $90,000 | $200,000 |
| Insurance | $37,440 | $75,000 | $100,000 |
| Rent | $22,500 | $30,000 | $50,000 |
| Payroll Taxes | $84,480 | $190,200 | $319,500 |
| Other General and Administrative Expenses | $0 | $0 | $0 |
| Total General and Administrative Expenses | $329,688 | $606,200 | $955,500 |
| General and Administrative % | 7.36% | 6.01% | 5.29% |
| Other Expenses: | |||
| Other Payroll | $0 | $120,000 | $190,000 |
| Consultants | $0 | $0 | $0 |
| Contract/Consultants | $48,000 | $30,000 | $50,000 |
| Total Other Expenses | $48,000 | $150,000 | $240,000 |
| Other % | 1.07% | 1.49% | 1.33% |
| Total Operating Expenses | $969,859 | $1,617,200 | $2,475,500 |
| Profit Before Interest and Taxes | $1,403,758 | $3,330,000 | $6,006,900 |
| EBITDA | $1,475,758 | $3,402,000 | $6,078,900 |
| Interest Expense | $137,050 | $138,700 | $124,900 |
| Taxes Incurred | $314,915 | $797,825 | $1,495,008 |
| Net Profit | $951,794 | $2,393,475 | $4,386,992 |
| Net Profit/Sales | 21.25% | 23.73% | 24.31% |
7.4 Projected Cash Flow
The chart and table below outlines the projected annual Cash Flow for the first three years of this plan.
| Pro Forma Cash Flow | |||
| 2001 | 2002 | 2003 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $0 | $0 | $0 |
| Cash from Receivables | $3,142,915 | $8,381,237 | $15,626,353 |
| Subtotal Cash from Operations | $3,142,915 | $8,381,237 | $15,626,353 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $175,000 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $500,000 | $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 | $3,817,915 | $8,381,237 | $15,626,353 |
| Expenditures | 2001 | 2002 | 2003 |
| Expenditures from Operations | |||
| Cash Spending | $281,600 | $634,000 | $1,065,000 |
| Bill Payments | $2,833,305 | $7,681,212 | $12,979,610 |
| Subtotal Spent on Operations | $3,114,905 | $8,315,212 | $14,044,610 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $75,000 | $75,000 | $75,000 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $48,000 | $48,000 | $48,000 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $3,237,905 | $8,438,212 | $14,167,610 |
| Net Cash Flow | $580,010 | ($56,975) | $1,458,743 |
| Cash Balance | $582,816 | $525,842 | $1,984,585 |
7.5 Projected Balance Sheet
Load Hog's projected Balance Sheet is presented below.
| Pro Forma Balance Sheet | |||
| 2001 | 2002 | 2003 | |
| Assets | |||
| Current Assets | |||
| Cash | $582,816 | $525,842 | $1,984,585 |
| Accounts Receivable | $1,362,959 | $3,069,521 | $5,491,868 |
| Inventory | $437,784 | $1,094,318 | $2,026,959 |
| Other Current Assets | $5,418 | $5,418 | $5,418 |
| Total Current Assets | $2,388,977 | $4,695,099 | $9,508,830 |
| Long-term Assets | |||
| Long-term Assets | $362,502 | $362,502 | $362,502 |
| Accumulated Depreciation | $140,330 | $212,330 | $284,330 |
| Total Long-term Assets | $222,172 | $150,172 | $78,172 |
| Total Assets | $2,611,149 | $4,845,271 | $9,587,002 |
| Liabilities and Capital | 2001 | 2002 | 2003 |
| Current Liabilities | |||
| Accounts Payable | $664,697 | $628,345 | $1,106,083 |
| Current Borrowing | $485,239 | $410,239 | $335,239 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $1,149,936 | $1,038,584 | $1,441,322 |
| Long-term Liabilities | $873,710 | $825,710 | $777,710 |
| Total Liabilities | $2,023,646 | $1,864,294 | $2,219,032 |
| Paid-in Capital | $375,886 | $375,886 | $375,886 |
| Retained Earnings | ($740,177) | $211,617 | $2,605,092 |
| Earnings | $951,794 | $2,393,475 | $4,386,992 |
| Total Capital | $587,503 | $2,980,978 | $7,367,970 |
| Total Liabilities and Capital | $2,611,149 | $4,845,271 | $9,587,002 |
| Net Worth | $587,503 | $2,980,978 | $7,367,970 |
7.6 Business Ratios
The company's business ratios are presented below, the final column, Industry Profile, contains ratios for the motor vehicle parts and accessories industry, as determined by the standard industry classification (SIC) index code 3714, Motor Vehicle Parts and Accessories.
| Ratio Analysis | ||||
| 2001 | 2002 | 2003 | Industry Profile | |
| Sales Growth | 2077.61% | 125.21% | 78.92% | 4.40% |
| Percent of Total Assets | ||||
| Accounts Receivable | 52.20% | 63.35% | 57.28% | 24.50% |
| Inventory | 16.77% | 22.59% | 21.14% | 23.00% |
| Other Current Assets | 0.21% | 0.11% | 0.06% | 21.50% |
| Total Current Assets | 91.49% | 96.90% | 99.18% | 69.00% |
| Long-term Assets | 8.51% | 3.10% | 0.82% | 31.00% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 44.04% | 21.43% | 15.03% | 38.20% |
| Long-term Liabilities | 33.46% | 17.04% | 8.11% | 14.20% |
| Total Liabilities | 77.50% | 38.48% | 23.15% | 52.40% |
| Net Worth | 22.50% | 61.52% | 76.85% | 47.60% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 52.99% | 49.04% | 47.00% | 26.20% |
| Selling, General & Administrative Expenses | 32.64% | 25.96% | 23.39% | 15.10% |
| Advertising Expenses | 7.21% | 3.97% | 2.77% | 0.50% |
| Profit Before Interest and Taxes | 31.34% | 33.01% | 33.28% | 2.40% |
| Main Ratios | ||||
| Current | 2.08 | 4.52 | 6.60 | 1.86 |
| Quick | 1.70 | 3.47 | 5.19 | 1.01 |
| Total Debt to Total Assets | 77.50% | 38.48% | 23.15% | 52.40% |
| Pre-tax Return on Net Worth | 215.61% | 107.06% | 79.83% | 5.40% |
| Pre-tax Return on Assets | 48.51% | 65.86% | 61.35% | 11.30% |
| Additional Ratios | 2001 | 2002 | 2003 | |
| Net Profit Margin | 21.25% | 23.73% | 24.31% | n.a |
| Return on Equity | 162.01% | 80.29% | 59.54% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 3.29 | 3.29 | 3.29 | n.a |
| Collection Days | 55 | 80 | 87 | n.a |
| Inventory Turnover | 9.10 | 6.33 | 5.75 | n.a |
| Accounts Payable Turnover | 5.15 | 12.17 | 12.17 | n.a |
| Payment Days | 28 | 31 | 24 | n.a |
| Total Asset Turnover | 1.72 | 2.08 | 1.88 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 3.44 | 0.63 | 0.30 | n.a |
| Current Liab. to Liab. | 0.57 | 0.56 | 0.65 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $1,239,041 | $3,656,516 | $8,067,508 | n.a |
| Interest Coverage | 10.24 | 24.01 | 48.09 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.58 | 0.48 | 0.53 | n.a |
| Current Debt/Total Assets | 44% | 21% | 15% | n.a |
| Acid Test | 0.51 | 0.51 | 1.38 | n.a |
| Sales/Net Worth | 7.62 | 3.38 | 2.45 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
