Bizcomm, Inc

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Online Print Shop Business Plan

Financial Plan

The following subtopics help present the financial plan for Bizcomm.

7.1 Break-even Analysis

The following table and chart show our Break-even Analysis.

Break-even Analysis
Monthly Units Break-even 146
Monthly Revenue Break-even $40,601
Assumptions:
Average Per-Unit Revenue $278.54
Average Per-Unit Variable Cost $73.71
Estimated Monthly Fixed Cost $29,857

7.2 Projected Profit and Loss

The Profit and Loss expenses are summed up below:

  • Rent: Rent in Bronxville is split between the factory area and the office area. For the factory, the lease amount is $1,688.80 plus an operations and maintenance fee of $475. For the office area, the lease amount is $1,520.51 plus an operations and maintenance fee of $259. Total comes to $3,943.31. The present lease is up at the end of August, 2000. Beginning September 1, 2000 a move is planned to Jefferson to a smaller facility costing no more than $2,500 per month.
  • Depreciation: Depreciation of printing equipment is straight-line over 7 years. Depreciation of computers is over five years. Total provision for depreciation comes to $37,250 annually, or $3,104 monthly. In addition, intangibles (Goodwill, Non-Compete, and some organization charges) are being amortized at an annual rate of $4,348 or $362 monthly. Added together these non-cash charges come to $3,466 monthly.
  • Contract Labor: One contract laborer works at $11/hour (30 hrs weekly) = $1430 per month, and another contract worker is putting in 25 hours weekly @ $15/hr = $1,625 monthly. Combined, contract labor equals $3,055.
  • Telemarketing Commissions: Only one telemarketer receives commissions of 10% on sales which she generates (12% if she convinces the customer to pay cash). These commissions have traditionally been running about $500 every two weeks ($1,000 per month).
  • Utilities: A security alarm system costing $25/month. Electricity averages $366/monthly. Poland Springs water $20/month. Total comes to $411 per month.
  • Telephone: There is one cell phone costing about $120 per month. The company's normal phone bill comes to approximately $850 per month. Total $970 monthly.
  • Medical and Dental: Single Blue Cross Blue Shield is $219, family plan runs $619. Company pays 60% for 4 singles, 100% for 1 single and 100% for 2 family plans. Total monthly is $1,982.60 for medical. Dental runs $23 for a single and $68 for the family plan. Company will pay 50% for 1 family plan and 4 singles and 100% for one family and one single. Total for dental comes to $171.
  • Insurance: Manager's life insurance is $140 per quarter. Workers' Compensation and liability comes to $200 monthly. Auto insurance comes to $250 monthly for the two vehicles. Total monthly is $496.66.
  • Leased Vehicles: The company leases two vehicles--one from Ford Credit @ $531.33 and one from Key Bank @ $453.70. Total monthly comes to $985.03.
  • Payroll Services: The company uses the services of PAYMEX. Cost is approximately $168 monthly.
  • Internet Services: The company pays $22.50 monthly to ShoreNet for Internet connection, $100/monthly to Yahoo! Store, and $75 monthly for Web hosting. Total monthly Internet services come to $197.50.
  • Postage: Normal postage (does not include special promotional mailings) will cost approximately $950 per month.
Pro Forma Profit and Loss
2000 2001 2002
Sales $795,790 $866,820 $937,850
Direct Cost of Sales $210,593 $221,040 $231,488
Production Payroll $49,920 $49,920 $49,920
Industrial rags $264 $264 $264
Total Cost of Sales $260,777 $271,224 $281,672
Gross Margin $535,014 $595,596 $656,179
Gross Margin % 67.23% 68.71% 69.97%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $31,524 $31,524 $31,524
Travel $0 $0 $0
Miscellaneous $0 $0 $0
Advertising/Promotion $25,000 $0 $0
Telemarketing commissions $12,000 $12,000 $12,000
Internet Services: $2,370 $2,370 $2,370
Total Sales and Marketing Expenses $70,894 $45,894 $45,894
Sales and Marketing % 8.91% 5.29% 4.89%
General and Administrative Expenses
General and Administrative Payroll $122,028 $122,028 $122,028
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $41,592 $41,592 $41,592
Leased Vehicles: $11,820 $11,820 $11,820
Utilities $4,932 $4,932 $4,932
Insurance $5,964 $5,964 $5,964
Medical and Dental: $25,848 $25,848 $25,848
Telephone $11,640 $12,000 $12,000
Retirement Acct (P. Vitale): $3,600 $3,600 $3,600
Payroll Services: $2,016 $2,016 $2,016
Postage $11,400 $11,400 $11,400
Rent $41,544 $30,000 $30,000
Payroll Taxes $0 $0 $0
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $282,384 $271,200 $271,200
General and Administrative % 35.48% 31.29% 28.92%
Other Expenses:
Other Payroll $0 $0 $0
Consultants $0 $0 $0
Contract/Consultants $5,000 $0 $0
Total Other Expenses $5,000 $0 $0
Other % 0.63% 0.00% 0.00%
Total Operating Expenses $358,278 $317,094 $317,094
Profit Before Interest and Taxes $176,736 $278,502 $339,085
EBITDA $218,328 $320,094 $380,677
Interest Expense $36,688 $19,185 $15,885
Taxes Incurred $34,978 $64,829 $82,146
Net Profit $105,070 $194,487 $241,053
Net Profit/Sales 13.20% 22.44% 25.70%

7.3 Projected Cash Flow

The Cash Flow table and chart are summarized below:

Long-term Debt Repayments: There are, at present, three loans at the Beverly National Bank that can be considered as "long-term" despite the maturity schedule:

  1. Note 200: This is a revolving line of credit. Outstandings as of year end 1999 come to $24,852.12. The rate is Wall Street Journal plus 2.5%. Presently the rate is 11%. Repayment is not included in cash flow projections 2000-2002.
  2. Note 201: This is a mortgage loan secured by all assets of the company as well as the owner's personal home in Jefferson. Originally, the loan amount was $153,000. Present outstandings as of year end 1999 are $141,147.40. Interest rate is fixed at 10.5%. This loan is being repaid monthly in payments of principle and interest of $2,064.51. This loan carries a final maturity of September 29, 2001, however, it is understood that borrower and lender would look at market rates at that time and decide how to restructure the mortgage. The principle portion of the payment for January 2000 is $825 and increases monthly by about $7.00. We will assume that this repayment schedule will continue unchanged (principle portion to increase $7.00 monthly) after rescheduling on September 29, 2000. Principle repayments on this mortgage total $10,362 in 2000, $10,446 in 2001, and $10,530 in 2002.
  3. Time Note: Originally this amounted to $35,250. Present outstandings are $20,500 due January 7, 2000 and bearing an interest rate of 11.25%. It is assumed that the owner will be successful in rolling over this note. Repayment is not included in the cashflow projections 2000-2002.

In addition to the bank debt, there is $12,500 in principle outstanding on an original $30,000 loan to the seller of Bizcomm, Inc. This is being repaid at the rate of $1,250 monthly and carries an interest rate of 8%.

Also included in reduction in long-term liabilities are repayments due monthly to EDIC. Original loan was $75,000 to be repaid at the rate of $2,083 in principle monthly plus 6% interest. Present outstandings in the EDIC loan include some accumulated interest due to back-due payments. We will assume that from the first of 2000, the monthly payments are met, but that the arrears payments are not caught up. Final maturity will be September, 2002.

The EDIC principle repayments each month added to the repayments to the previous owner of the company amount to $3,333 for the first ten months of 2000, after which the debt to the previous owner is fully repaid. Thereafter, $2,083 principle repayment monthly on the EDIC loan will continue through September of 2002.

Short-term Debt: It is expected that Bizcomm will secure a loan from 80% of outstanding accounts receivable in February. This $46,752 shows up as Short-term Debt which is repaid as soon as possible due to its high cost. Due to the high interest rate built in to these funds, they have been reduced as soon as cash flow permits. They are totally repaid by the end of year 2000.

Pro Forma Cash Flow
2000 2001 2002
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $712,449 $854,140 $925,170
Subtotal Cash from Operations $712,449 $854,140 $925,170
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $46,752 $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 $76,000 $0 $0
Subtotal Cash Received $835,201 $854,140 $925,170
Expenditures 2000 2001 2002
Expenditures from Operations
Cash Spending $203,472 $203,472 $203,472
Bill Payments $423,946 $427,570 $450,728
Subtotal Spent on Operations $627,418 $631,042 $654,200
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $46,752 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $47,858 $35,442 $35,526
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $722,028 $666,484 $689,726
Net Cash Flow $113,172 $187,656 $235,444
Cash Balance $129,359 $317,015 $552,460

7.4 Business Ratios

The following table outlines some of the more important ratios from the Other Commercial Printing industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 2759 (NAICS Code 323119).

Ratio Analysis
2000 2001 2002 Industry Profile
Sales Growth 22.33% 8.93% 8.19% 9.85%
Percent of Total Assets
Accounts Receivable 32.58% 25.97% 20.84% 26.60%
Inventory 4.65% 3.57% 2.77% 8.47%
Other Current Assets 0.46% 0.34% 0.25% 28.27%
Total Current Assets 67.35% 83.09% 92.63% 63.34%
Long-term Assets 32.65% 16.91% 7.37% 36.66%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.91% 5.91% 4.63% 25.65%
Long-term Liabilities 51.37% 31.65% 19.05% 21.72%
Total Liabilities 59.29% 37.56% 23.68% 47.37%
Net Worth 40.71% 62.44% 76.32% 52.63%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 67.23% 68.71% 69.97% 37.54%
Selling, General & Administrative Expenses 56.91% 48.91% 46.56% 11.38%
Advertising Expenses 0.00% 0.00% 0.00% 0.82%
Profit Before Interest and Taxes 22.21% 32.13% 36.16% 2.23%
Main Ratios
Current 8.51 14.06 20.00 2.03
Quick 7.93 13.46 19.40 1.56
Total Debt to Total Assets 59.29% 37.56% 23.68% 55.90%
Pre-tax Return on Net Worth 78.89% 69.71% 52.72% 4.93%
Pre-tax Return on Assets 32.12% 43.52% 40.23% 11.17%
Additional Ratios 2000 2001 2002
Net Profit Margin 13.20% 22.44% 25.70% n.a
Return on Equity 59.18% 52.28% 39.32% n.a
Activity Ratios
Accounts Receivable Turnover 5.60 5.60 5.60 n.a
Collection Days 58 62 63 n.a
Inventory Turnover 6.27 10.65 10.63 n.a
Accounts Payable Turnover 10.62 12.17 12.17 n.a
Payment Days 34 30 29 n.a
Total Asset Turnover 1.83 1.45 1.17 n.a
Debt Ratios
Debt to Net Worth 1.46 0.60 0.31 n.a
Current Liab. to Liab. 0.13 0.16 0.20 n.a
Liquidity Ratios
Net Working Capital $259,187 $459,824 $706,943 n.a
Interest Coverage 4.82 14.52 21.35 n.a
Additional Ratios
Assets to Sales 0.55 0.69 0.86 n.a
Current Debt/Total Assets 8% 6% 5% n.a
Acid Test 3.81 9.06 14.90 n.a
Sales/Net Worth 4.48 2.33 1.53 n.a
Dividend Payout 0.00 0.00 0.00 n.a