Personal Shopping Services Business Plan

Buy The Time

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Financial Plan

Growth will occur according to the number of clients and cash flow.

With approximately half of our services provided on credit, collection will be essential. With this still being a service that is not essential to everyday living, we will show that payments are necessary immediately. With a concrete system for cash flow, we will be able to keep debt to a minimum, while still providing a high level of sales.

7.1 Important Assumptions

The following assumptions are made responding to growth, and are based on economic trends from the preceding two years.

  • A strong economy is expected to continue in the future.
  • Many people have annual dates on which purchases are made.
  • It is assumed that people are willing to pay for a service if it is an agreeable and convenient experience.

The table below outlines some business assumptions that are the basis for Buy The Time's growth, including tax rate and payment days.

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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

Our break-even analysis is shown in further detail in the following chart and table.

This is a conservative figure since contacts have been made, and have already generated many orders for our services. Buy the Time's goal is to generate twice as much as the break-even point for a monthly standard.

Break-even Analysis
Monthly Revenue Break-even $1,916
Assumptions:
Average Percent Variable Cost 35%
Estimated Monthly Fixed Cost $1,250

7.3 Projected Profit and Loss

Buy the Time's projected profit and loss is indicated in the following table. Gross margin should remain between 50-70% the first year, with highest profits due near the end of the year. This should prove to be accurate, since that is a time when many clients increase their spending.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $32,365 $66,000 $83,000
Direct Cost of Sales $11,250 $27,750 $37,500
Other $0 $0 $0
Total Cost of Sales $11,250 $27,750 $37,500
Gross Margin $21,115 $38,250 $45,500
Gross Margin % 65.24% 57.95% 54.82%
Expenses
Payroll $15,000 $30,000 $37,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $0 $0 $0
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $15,000 $30,000 $37,000
Profit Before Interest and Taxes $6,115 $8,250 $8,500
EBITDA $6,115 $8,250 $8,500
Interest Expense $0 $0 $0
Taxes Incurred $1,528 $2,063 $2,160
Net Profit $4,587 $6,188 $6,340
Net Profit/Sales 14.17% 9.38% 7.64%

7.4 Projected Cash Flow

The following chart and table outline the cash flow for fiscal years 2002, 2003, and 2004. For a monthly analysis, please see the attached appendix.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $17,801 $36,300 $45,650
Cash from Receivables $11,759 $26,785 $35,877
Subtotal Cash from Operations $29,560 $63,085 $81,527
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 $29,560 $63,085 $81,527
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $15,000 $30,000 $37,000
Bill Payments $11,630 $28,509 $38,851
Subtotal Spent on Operations $26,630 $58,509 $75,851
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 $26,630 $58,509 $75,851
Net Cash Flow $2,929 $4,575 $5,676
Cash Balance $4,179 $8,755 $14,430

7.5 Projected Balance Sheet

The Balance Sheet table for fiscal years 2002, 2003, and 2004 follows. For a monthly analysis, please see the attached appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $4,179 $8,755 $14,430
Accounts Receivable $2,805 $5,721 $7,194
Other Current Assets $400 $400 $400
Total Current Assets $7,385 $14,875 $22,024
Long-term Assets
Long-term Assets $2,000 $2,000 $2,000
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $2,000 $2,000 $2,000
Total Assets $9,385 $16,875 $24,024
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $1,147 $2,450 $3,260
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $1,147 $2,450 $3,260
Long-term Liabilities $0 $0 $0
Total Liabilities $1,147 $2,450 $3,260
Paid-in Capital $4,900 $4,900 $4,900
Retained Earnings ($1,250) $3,337 $9,525
Earnings $4,587 $6,188 $6,340
Total Capital $8,237 $14,425 $20,764
Total Liabilities and Capital $9,385 $16,875 $24,024
Net Worth $8,237 $14,425 $20,764

7.6 Business Ratios

The following table provides significant ratios for the personal services industry. The final column, Industry Profile, shows ratios for this industry as it is determined by the Standard Industrial Classification (SIC) Index 7299, "miscellaneous personal services."

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 103.92% 25.76% -8.50%
Percent of Total Assets
Accounts Receivable 29.89% 33.90% 29.95% 6.70%
Other Current Assets 4.26% 2.37% 1.66% 26.40%
Total Current Assets 78.69% 88.15% 91.68% 43.50%
Long-term Assets 21.31% 11.85% 8.32% 56.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.23% 14.52% 13.57% 19.50%
Long-term Liabilities 0.00% 0.00% 0.00% 21.40%
Total Liabilities 12.23% 14.52% 13.57% 40.90%
Net Worth 87.77% 85.48% 86.43% 59.10%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.24% 57.95% 54.82% 50.80%
Selling, General & Administrative Expenses 51.07% 54.26% 47.14% 34.40%
Advertising Expenses 0.00% 0.00% 0.00% 0.20%
Profit Before Interest and Taxes 18.89% 12.50% 10.24% 1.50%
Main Ratios
Current 6.44 6.07 6.76 2.09
Quick 6.44 6.07 6.76 1.03
Total Debt to Total Assets 12.23% 14.52% 13.57% 40.90%
Pre-tax Return on Net Worth 74.24% 57.19% 40.94% 1.10%
Pre-tax Return on Assets 65.16% 48.89% 35.38% 1.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 14.17% 9.38% 7.64% n.a
Return on Equity 55.69% 42.90% 30.53% n.a
Activity Ratios
Accounts Receivable Turnover 5.19 5.19 5.19 n.a
Collection Days 57 52 63 n.a
Accounts Payable Turnover 11.14 12.17 12.17 n.a
Payment Days 27 22 26 n.a
Total Asset Turnover 3.45 3.91 3.45 n.a
Debt Ratios
Debt to Net Worth 0.14 0.17 0.16 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $6,237 $12,425 $18,764 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.29 0.26 0.29 n.a
Current Debt/Total Assets 12% 15% 14% n.a
Acid Test 3.99 3.74 4.55 n.a
Sales/Net Worth 3.93 4.58 4.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 25.42% 25.00% 25.42%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $1,916
Assumptions:
Average Percent Variable Cost 35%
Estimated Monthly Fixed Cost $1,250
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $32,365 $66,000 $83,000
Direct Cost of Sales $11,250 $27,750 $37,500
Other $0 $0 $0
Total Cost of Sales $11,250 $27,750 $37,500
Gross Margin $21,115 $38,250 $45,500
Gross Margin % 65.24% 57.95% 54.82%
Expenses
Payroll $15,000 $30,000 $37,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $0 $0 $0
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $15,000 $30,000 $37,000
Profit Before Interest and Taxes $6,115 $8,250 $8,500
EBITDA $6,115 $8,250 $8,500
Interest Expense $0 $0 $0
Taxes Incurred $1,528 $2,063 $2,160
Net Profit $4,587 $6,188 $6,340
Net Profit/Sales 14.17% 9.38% 7.64%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $17,801 $36,300 $45,650
Cash from Receivables $11,759 $26,785 $35,877
Subtotal Cash from Operations $29,560 $63,085 $81,527
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 $29,560 $63,085 $81,527
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $15,000 $30,000 $37,000
Bill Payments $11,630 $28,509 $38,851
Subtotal Spent on Operations $26,630 $58,509 $75,851
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 $26,630 $58,509 $75,851
Net Cash Flow $2,929 $4,575 $5,676
Cash Balance $4,179 $8,755 $14,430
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $4,179 $8,755 $14,430
Accounts Receivable $2,805 $5,721 $7,194
Other Current Assets $400 $400 $400
Total Current Assets $7,385 $14,875 $22,024
Long-term Assets
Long-term Assets $2,000 $2,000 $2,000
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $2,000 $2,000 $2,000
Total Assets $9,385 $16,875 $24,024
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $1,147 $2,450 $3,260
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $1,147 $2,450 $3,260
Long-term Liabilities $0 $0 $0
Total Liabilities $1,147 $2,450 $3,260
Paid-in Capital $4,900 $4,900 $4,900
Retained Earnings ($1,250) $3,337 $9,525
Earnings $4,587 $6,188 $6,340
Total Capital $8,237 $14,425 $20,764
Total Liabilities and Capital $9,385 $16,875 $24,024
Net Worth $8,237 $14,425 $20,764
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 103.92% 25.76% -8.50%
Percent of Total Assets
Accounts Receivable 29.89% 33.90% 29.95% 6.70%
Other Current Assets 4.26% 2.37% 1.66% 26.40%
Total Current Assets 78.69% 88.15% 91.68% 43.50%
Long-term Assets 21.31% 11.85% 8.32% 56.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.23% 14.52% 13.57% 19.50%
Long-term Liabilities 0.00% 0.00% 0.00% 21.40%
Total Liabilities 12.23% 14.52% 13.57% 40.90%
Net Worth 87.77% 85.48% 86.43% 59.10%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.24% 57.95% 54.82% 50.80%
Selling, General & Administrative Expenses 51.07% 54.26% 47.14% 34.40%
Advertising Expenses 0.00% 0.00% 0.00% 0.20%
Profit Before Interest and Taxes 18.89% 12.50% 10.24% 1.50%
Main Ratios
Current 6.44 6.07 6.76 2.09
Quick 6.44 6.07 6.76 1.03
Total Debt to Total Assets 12.23% 14.52% 13.57% 40.90%
Pre-tax Return on Net Worth 74.24% 57.19% 40.94% 1.10%
Pre-tax Return on Assets 65.16% 48.89% 35.38% 1.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 14.17% 9.38% 7.64% n.a
Return on Equity 55.69% 42.90% 30.53% n.a
Activity Ratios
Accounts Receivable Turnover 5.19 5.19 5.19 n.a
Collection Days 57 52 63 n.a
Accounts Payable Turnover 11.14 12.17 12.17 n.a
Payment Days 27 22 26 n.a
Total Asset Turnover 3.45 3.91 3.45 n.a
Debt Ratios
Debt to Net Worth 0.14 0.17 0.16 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $6,237 $12,425 $18,764 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.29 0.26 0.29 n.a
Current Debt/Total Assets 12% 15% 14% n.a
Acid Test 3.99 3.74 4.55 n.a
Sales/Net Worth 3.93 4.58 4.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a