QuickReturns

Start your own business plan »

Mail Order Returns Business Plan

Financial Plan

Our financial success depends on reaching desired market share and maintaining superb customer retention rate. Additional rounds of investor financing must be secured in years one and two to ensure the company growth until it reaches the self-sustaining level of sales. At the moment, the company seeks seed financing to cover the initial costs.

7.1 Projected Profit and Loss

The following table summarizes the estimated income statement of QuickReturns for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $433,246 $20,665,177 $77,836,804
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $433,246 $20,665,177 $77,836,804
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $1,387,992 $3,127,000 $4,608,000
Sales and Marketing and Other Expenses $1,637,496 $14,240,500 $15,151,000
Depreciation $0 $0 $0
Telephone $12,000 $70,000 $100,000
Software and Web site development $777,000 $600,000 $800,000
Office supplies and subscriptions $82,404 $350,000 $450,000
Rent $34,800 $60,000 $99,600
Legal & Accounting $55,956 $72,000 $84,000
Equipment Rental $230,000 $2,280,000 $3,000,000
Utilities $6,960 $12,000 $19,920
Payroll Taxes $208,199 $469,050 $691,200
Hardware & Maintenance $322,500 $54,000 $403,500
Other $240,000 $600,000 $700,000
Total Operating Expenses $4,995,307 $21,934,550 $26,107,220
Profit Before Interest and Taxes ($4,562,061) ($1,269,373) $51,729,584
EBITDA ($4,562,061) ($1,269,373) $51,729,584
Interest Expense $0 $0 $0
Taxes Incurred $0 $0 $13,147,936
Net Profit ($4,562,061) ($1,269,373) $38,581,648
Net Profit/Sales -1053.00% -6.14% 49.57%

7.2 Break-even Analysis

QuickReturns will generate sufficient monthly revenues to cover its average monthly fixed expenses. The company will reach that sales level at the beginning of year two.

Break-even Analysis
Monthly Units Break-even 76,309
Monthly Revenue Break-even $416,276
Assumptions:
Average Per-Unit Revenue $5.46
Average Per-Unit Variable Cost $0.00
Estimated Monthly Fixed Cost $416,276

7.3 Projected Cash Flow

QuickReturns' estimated Cash Flow Analysis for the next three years in shown below. As stated before, the company plans to attract additional rounds of investor financing in years one and two.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $187,419 $9,185,433 $45,397,211
Subtotal Cash from Operations $187,419 $9,185,433 $45,397,211
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 $2,000,000 $11,500,000 $0
Subtotal Cash Received $2,187,419 $20,685,433 $45,397,211
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $1,387,992 $3,127,000 $4,608,000
Bill Payments $3,316,887 $17,552,152 $33,345,271
Subtotal Spent on Operations $4,704,879 $20,679,152 $37,953,271
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 $4,704,879 $20,679,152 $37,953,271
Net Cash Flow ($2,517,460) $6,281 $7,443,941
Cash Balance $1,032,540 $1,038,822 $8,482,763

7.4 Projected Balance Sheet

Projected Balance Sheets for three years are shown below.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $1,032,540 $1,038,822 $8,482,763
Accounts Receivable $245,827 $11,725,570 $44,165,163
Other Current Assets $50,000 $50,000 $50,000
Total Current Assets $1,328,367 $12,814,392 $52,697,925
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $1,328,367 $12,814,392 $52,697,925
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $290,428 $1,545,826 $2,847,711
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $290,428 $1,545,826 $2,847,711
Long-term Liabilities $0 $0 $0
Total Liabilities $290,428 $1,545,826 $2,847,711
Paid-in Capital $5,750,000 $17,250,000 $17,250,000
Retained Earnings ($150,000) ($4,712,061) ($5,981,435)
Earnings ($4,562,061) ($1,269,373) $38,581,648
Total Capital $1,037,939 $11,268,566 $49,850,214
Total Liabilities and Capital $1,328,367 $12,814,392 $52,697,925
Net Worth $1,037,939 $11,268,566 $49,850,214

7.5 Business Ratios

The company's Business Ratios are shown below, the last column, Industry Profile, contains ratios for the business services industry, as determined by the Standard Industry Classification (SIC) Index code 7389.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 4669.85% 276.66% 8.20%
Percent of Total Assets
Accounts Receivable 18.51% 91.50% 83.81% 26.30%
Other Current Assets 3.76% 0.39% 0.09% 44.20%
Total Current Assets 100.00% 100.00% 100.00% 74.30%
Long-term Assets 0.00% 0.00% 0.00% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 21.86% 12.06% 5.40% 49.00%
Long-term Liabilities 0.00% 0.00% 0.00% 13.80%
Total Liabilities 21.86% 12.06% 5.40% 62.80%
Net Worth 78.14% 87.94% 94.60% 37.20%
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 1153.00% 106.14% 50.16% 81.40%
Advertising Expenses 115.41% 48.39% 12.85% 1.70%
Profit Before Interest and Taxes -1053.00% -6.14% 66.46% 2.10%
Main Ratios
Current 4.57 8.29 18.51 1.49
Quick 4.57 8.29 18.51 1.17
Total Debt to Total Assets 21.86% 12.06% 5.40% 62.80%
Pre-tax Return on Net Worth -439.53% -11.26% 103.77% 4.20%
Pre-tax Return on Assets -343.43% -9.91% 98.16% 11.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -1053.00% -6.14% 49.57% n.a
Return on Equity -439.53% -11.26% 77.40% n.a
Activity Ratios
Accounts Receivable Turnover 1.76 1.76 1.76 n.a
Collection Days 51 106 131 n.a
Accounts Payable Turnover 12.42 12.17 12.17 n.a
Payment Days 27 18 23 n.a
Total Asset Turnover 0.33 1.61 1.48 n.a
Debt Ratios
Debt to Net Worth 0.28 0.14 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $1,037,939 $11,268,566 $49,850,214 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 3.07 0.62 0.68 n.a
Current Debt/Total Assets 22% 12% 5% n.a
Acid Test 3.73 0.70 3.00 n.a
Sales/Net Worth 0.42 1.83 1.56 n.a
Dividend Payout 0.00 0.00 0.00 n.a