MarketCamp will finance growth mainly through cash flow. We recognize that this means we will have to grow more slowly than we might like.
The most important factor to our success is collection days. We can't push our clients hard on collection days, because they are in larger companies and will normally have marketing authority, not financial authority. Therefore, we need to develop a permanent system of receivables financing, using one of the established financial companies in that business.
We are also assuming start-up capital which will be more than enough to cover salaries, artwork and other expenses while the business begins to produce more cash.
We may take more financing than we originally planned to be able to bring in some very key investors as equity partners, more for their connections to potential clients in Mexico City than for the investment itself.
The Financial Plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize that collection days are critical, but are not a factor we can influence easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:
The Benchmarks chart shows our projections on an index basis for key financial indicators.
The following chart and table summarize our Break-even Analysis showing fixed costs in U.S. dollars per month at the outset (a bare minimum), and what we need to bill to cover our costs. We don't really expect to reach break-even until a few months into the business operation.
Projected Profit and Loss is presented in the following table and charts.
Cash flow is going to rely on the time to collect from account receivables. Carlos Silva, Raul Garcia and others who have more experience working with Mexican businesses will be able to help us estimate both the collection and payment times. We are working on an assumption of 30 days to collect. Clients will pay at the beginning of each month except when this is impossible for them.
The present cash flow projection assumes sacrificed salaries taken as equity contribution for the first few months. The inputs for capital input are actually "sweat equity" contributions from the founder.
The Balance Sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
Business Ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8742, Management Consulting Services, are shown for comparison.