Office Space Solutions

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Office Consulting Business Plan

Financial Plan

The following sections will outline the important financial assumptions, key financial indicators, break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions for Office Space Solutions.

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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis table and chart below indicate the monthly revenue needed to break even.

Break-even Analysis
Monthly Revenue Break-even $3,576
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $3,576

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $57,770 $80,000 $100,000
Direct Cost of Sales $0 $0 $0
Other Production Expenses $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $57,770 $80,000 $100,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $35,000 $56,000 $65,000
Sales and Marketing and Other Expenses $2,660 $3,200 $4,150
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $0 $0 $0
Rent $0 $0 $0
Payroll Taxes $5,250 $8,400 $9,750
Other $0 $0 $0
Total Operating Expenses $42,910 $67,600 $78,900
Profit Before Interest and Taxes $14,860 $12,400 $21,100
EBITDA $14,860 $12,400 $21,100
Interest Expense $0 $0 $0
Taxes Incurred $4,458 $3,720 $6,330
Net Profit $10,402 $8,680 $14,770
Net Profit/Sales 18.01% 10.85% 14.77%

7.4 Projected Cash Flow

The following chart and table indicates projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $31,774 $44,000 $55,000
Cash from Receivables $18,069 $32,950 $42,256
Subtotal Cash from Operations $49,843 $76,950 $97,256
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 $49,843 $76,950 $97,256
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $35,000 $56,000 $65,000
Bill Payments $10,257 $16,172 $19,826
Subtotal Spent on Operations $45,257 $72,172 $84,826
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 $45,257 $72,172 $84,826
Net Cash Flow $4,586 $4,778 $12,429
Cash Balance $11,286 $16,064 $28,493

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $11,286 $16,064 $28,493
Accounts Receivable $7,927 $10,977 $13,722
Other Current Assets $2,000 $2,000 $2,000
Total Current Assets $21,213 $29,041 $44,215
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $21,213 $29,041 $44,215
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,111 $1,259 $1,663
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,111 $1,259 $1,663
Long-term Liabilities $0 $0 $0
Total Liabilities $2,111 $1,259 $1,663
Paid-in Capital $12,000 $12,000 $12,000
Retained Earnings ($3,300) $7,102 $15,782
Earnings $10,402 $8,680 $14,770
Total Capital $19,102 $27,782 $42,552
Total Liabilities and Capital $21,213 $29,041 $44,215
Net Worth $19,102 $27,782 $42,552

7.6 Business Ratios

The following table outlines some of the more important ratios from the Management Consulting Services industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the NAICS code, 541618.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 38.48% 25.00% 12.40%
Percent of Total Assets
Accounts Receivable 37.37% 37.80% 31.03% 26.10%
Other Current Assets 9.43% 6.89% 4.52% 44.70%
Total Current Assets 100.00% 100.00% 100.00% 74.50%
Long-term Assets 0.00% 0.00% 0.00% 25.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.95% 4.34% 3.76% 44.30%
Long-term Liabilities 0.00% 0.00% 0.00% 16.00%
Total Liabilities 9.95% 4.34% 3.76% 60.30%
Net Worth 90.05% 95.66% 96.24% 39.70%
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 81.99% 89.15% 85.23% 80.80%
Advertising Expenses 2.42% 1.88% 2.00% 1.30%
Profit Before Interest and Taxes 25.72% 15.50% 21.10% 2.20%
Main Ratios
Current 10.05 23.06 26.59 1.75
Quick 10.05 23.06 26.59 1.38
Total Debt to Total Assets 9.95% 4.34% 3.76% 60.30%
Pre-tax Return on Net Worth 77.79% 44.63% 49.59% 3.80%
Pre-tax Return on Assets 70.05% 42.70% 47.72% 9.70%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 18.01% 10.85% 14.77% n.a
Return on Equity 54.46% 31.24% 34.71% n.a
Activity Ratios
Accounts Receivable Turnover 3.28 3.28 3.28 n.a
Collection Days 55 96 100 n.a
Accounts Payable Turnover 5.86 12.17 12.17 n.a
Payment Days 27 40 26 n.a
Total Asset Turnover 2.72 2.75 2.26 n.a
Debt Ratios
Debt to Net Worth 0.11 0.05 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $19,102 $27,782 $42,552 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.37 0.36 0.44 n.a
Current Debt/Total Assets 10% 4% 4% n.a
Acid Test 6.29 14.35 18.34 n.a
Sales/Net Worth 3.02 2.88 2.35 n.a
Dividend Payout 0.00 0.00 0.00 n.a