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Printing Services Broker Business Plan

Financial Plan

We want to finance growth through increasing sales and enlarging our customer base.

Initial funding for the marketing effort will be crucial to long-term success.

The most important factor in our case is our low overhead and high margin.

We will attempt to maintain our pre-paid and COD business to further strengthen our cash position in the long run.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

We assume an immediate increase in sales.

We assume there are no dramatic changes in business printing needs.

We assume a constant growth in our long-term customer base.

We assume continued influx of new customers with our aggressive marketing and sales strategies.

We assume that the printing industry will continue to show a resilience against global economic factors as a non-discretionary commodity.

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 8.00% 8.00% 8.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The break-even analysis shows what Copriso requires in sales per month to break even. Our sales forecast is in line with this projection and exceeds it rapidly. Furthermore, we anticipate an ability to regularly acquire 2 to 3 new customers per month.

Break-even Analysis
Monthly Revenue Break-even $21,907
Assumptions:
Average Percent Variable Cost 55%
Estimated Monthly Fixed Cost $9,858

7.3 Projected Profit and Loss

We expect to ramp up the sales conservatively in order to achieve our desired long-term profit estimates.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $275,000 $357,500 $464,750
Direct Cost of Sales $151,250 $196,625 $255,613
Other Production Expenses $0 $0 $0
Total Cost of Sales $151,250 $196,625 $255,613
Gross Margin $123,750 $160,875 $209,138
Gross Margin % 45.00% 45.00% 45.00%
Expenses
Payroll $90,000 $90,000 $90,000
Sales and Marketing and Other Expenses $8,948 $10,804 $13,217
Depreciation $0 $0 $0
Entertainment $750 $1,125 $1,688
Telephone/Fax $1,800 $1,800 $1,800
Liability Insurance $600 $600 $600
Rent $0 $0 $0
Payroll Taxes $16,200 $16,200 $16,200
Other $0 $0 $0
Total Operating Expenses $118,298 $120,529 $123,504
Profit Before Interest and Taxes $5,453 $40,346 $85,633
EBITDA $5,453 $40,346 $85,633
Interest Expense $3,780 $3,160 $2,360
Taxes Incurred $502 $11,156 $24,982
Net Profit $1,171 $26,030 $58,291
Net Profit/Sales 0.43% 7.28% 12.54%

7.4 Projected Cash Flow

With the current projections, lack of overhead, and expected margins, we project no additional need for future investment or borrowing. Cash flow and cash balance should both increase steadily through the lifecycle of the business eliminating the need for further or ongoing funding.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $110,000 $143,000 $185,900
Cash from Receivables $141,400 $207,420 $269,646
Subtotal Cash from Operations $251,400 $350,420 $455,546
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 $251,400 $350,420 $455,546
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $90,000 $90,000 $90,000
Bill Payments $171,000 $234,452 $310,295
Subtotal Spent on Operations $261,000 $324,452 $400,295
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 $5,500 $10,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $266,500 $334,452 $410,295
Net Cash Flow ($15,100) $15,968 $45,251
Cash Balance $34,900 $50,868 $96,119

7.5 Projected Balance Sheet

The following table shows our projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $34,900 $50,868 $96,119
Accounts Receivable $23,600 $30,680 $39,884
Other Current Assets $0 $0 $0
Total Current Assets $58,500 $81,548 $136,003
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $58,500 $81,548 $136,003
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $12,829 $19,847 $26,010
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $12,829 $19,847 $26,010
Long-term Liabilities $44,500 $34,500 $24,500
Total Liabilities $57,329 $54,347 $50,510
Paid-in Capital $43,000 $43,000 $43,000
Retained Earnings ($43,000) ($41,829) ($15,799)
Earnings $1,171 $26,030 $58,291
Total Capital $1,171 $27,201 $85,492
Total Liabilities and Capital $58,500 $81,548 $136,003
Net Worth $1,171 $27,201 $85,492

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7389.1706, Printing Brokers, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 30.00% 30.00% 8.77%
Percent of Total Assets
Accounts Receivable 40.34% 37.62% 29.33% 25.04%
Other Current Assets 0.00% 0.00% 0.00% 48.34%
Total Current Assets 100.00% 100.00% 100.00% 76.80%
Long-term Assets 0.00% 0.00% 0.00% 23.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 21.93% 24.34% 19.12% 37.98%
Long-term Liabilities 76.07% 42.31% 18.01% 13.86%
Total Liabilities 98.00% 66.64% 37.14% 51.84%
Net Worth 2.00% 33.36% 62.86% 48.16%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 45.00% 45.00% 45.00% 100.00%
Selling, General & Administrative Expenses 45.74% 38.57% 33.23% 82.52%
Advertising Expenses 2.00% 2.00% 2.00% 1.54%
Profit Before Interest and Taxes 1.98% 11.29% 18.43% 1.73%
Main Ratios
Current 4.56 4.11 5.23 1.60
Quick 4.56 4.11 5.23 1.26
Total Debt to Total Assets 98.00% 66.64% 37.14% 60.73%
Pre-tax Return on Net Worth 142.86% 136.71% 97.40% 2.33%
Pre-tax Return on Assets 2.86% 45.60% 61.23% 5.94%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.43% 7.28% 12.54% n.a
Return on Equity 100.00% 95.70% 68.18% n.a
Activity Ratios
Accounts Receivable Turnover 6.99 6.99 6.99 n.a
Collection Days 58 46 46 n.a
Accounts Payable Turnover 14.33 12.17 12.17 n.a
Payment Days 27 25 26 n.a
Total Asset Turnover 4.70 4.38 3.42 n.a
Debt Ratios
Debt to Net Worth 48.97 2.00 0.59 n.a
Current Liab. to Liab. 0.22 0.37 0.51 n.a
Liquidity Ratios
Net Working Capital $45,671 $61,701 $109,992 n.a
Interest Coverage 1.44 12.77 36.29 n.a
Additional Ratios
Assets to Sales 0.21 0.23 0.29 n.a
Current Debt/Total Assets 22% 24% 19% n.a
Acid Test 2.72 2.56 3.70 n.a
Sales/Net Worth 234.89 13.14 5.44 n.a
Dividend Payout 0.00 0.00 0.00 n.a