Bryan's Tutoring Service

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Tutoring Service Business Plan

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important Financial Assumptions.

General Assumptions
2004 2005 2006
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 real opportunity of this business is that there are barely any costs associated with operations. Costs include gas and transportation to meet with students away from his home and occasional handouts. Bryan has reserved a room in his house and an office/meeting room for his business. Additionally, Bryan incurs Internet service provider fees, and every two years a new computer. The hourly fee charged to clients more than covers any variable costs associated with the service. Fixed costs are similarly limited.

Break-even Analysis
Monthly Revenue Break-even $1,529
Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $1,483

7.3 Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Pro Forma Profit and Loss
2004 2005 2006
Sales $19,922 $21,700 $25,550
Direct Cost of Sales $598 $651 $767
Other Costs of Sales $0 $0 $0
Total Cost of Sales $598 $651 $767
Gross Margin $19,324 $21,049 $24,784
Gross Margin % 97.00% 97.00% 97.00%
Expenses
Payroll $12,000 $13,000 $14,000
Sales and Marketing and Other Expenses $600 $600 $600
Depreciation $400 $400 $400
Rent $1,800 $1,800 $1,800
Utilities $600 $600 $600
Insurance $600 $600 $600
Payroll Taxes $1,800 $1,950 $2,100
Other $0 $0 $0
Total Operating Expenses $17,800 $18,950 $20,100
Profit Before Interest and Taxes $1,524 $2,099 $4,684
EBITDA $1,924 $2,499 $5,084
Interest Expense $0 $0 $0
Taxes Incurred $457 $630 $1,405
Net Profit $1,067 $1,469 $3,278
Net Profit/Sales 5.36% 6.77% 12.83%

7.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

Pro Forma Cash Flow
2004 2005 2006
Cash Received
Cash from Operations
Cash Sales $19,922 $21,700 $25,550
Subtotal Cash from Operations $19,922 $21,700 $25,550
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 $19,922 $21,700 $25,550
Expenditures 2004 2005 2006
Expenditures from Operations
Cash Spending $12,000 $13,000 $14,000
Bill Payments $5,689 $7,170 $7,786
Subtotal Spent on Operations $17,689 $20,170 $21,786
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 $2,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $19,689 $20,170 $21,786
Net Cash Flow $232 $1,530 $3,764
Cash Balance $4,444 $5,974 $9,738

7.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Pro Forma Balance Sheet
2004 2005 2006
Assets
Current Assets
Cash $4,444 $5,974 $9,738
Other Current Assets $300 $300 $300
Total Current Assets $4,744 $6,274 $10,038
Long-term Assets
Long-term Assets $2,000 $2,000 $2,000
Accumulated Depreciation $400 $800 $1,200
Total Long-term Assets $1,600 $1,200 $800
Total Assets $6,345 $7,475 $10,839
Liabilities and Capital 2004 2005 2006
Current Liabilities
Accounts Payable $901 $561 $647
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $901 $561 $647
Long-term Liabilities $0 $0 $0
Total Liabilities $901 $561 $647
Paid-in Capital $0 $0 $0
Retained Earnings $4,377 $5,444 $6,913
Earnings $1,067 $1,469 $3,278
Total Capital $5,444 $6,913 $10,192
Total Liabilities and Capital $6,345 $7,475 $10,839
Net Worth $5,444 $6,913 $10,192

7.6 Business Ratios

The following table provides important Business Ratios for Bryan's Tutoring as well as industry ratios, NAICS code 611691, Exam Preparation and Tutoring.

Ratio Analysis
2004 2005 2006 Industry Profile
Sales Growth 73.91% 8.93% 17.74% 6.98%
Percent of Total Assets
Other Current Assets 4.73% 4.01% 2.77% 41.76%
Total Current Assets 74.78% 83.94% 92.62% 64.41%
Long-term Assets 25.22% 16.06% 7.38% 35.59%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.20% 7.51% 5.97% 29.19%
Long-term Liabilities 0.00% 0.00% 0.00% 23.84%
Total Liabilities 14.20% 7.51% 5.97% 53.03%
Net Worth 85.80% 92.49% 94.03% 46.97%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.00% 97.00% 97.00% 100.00%
Selling, General & Administrative Expenses 91.64% 90.23% 84.17% 79.74%
Advertising Expenses 0.00% 0.00% 0.00% 1.09%
Profit Before Interest and Taxes 7.65% 9.67% 18.33% 1.31%
Main Ratios
Current 5.27 11.18 15.52 1.70
Quick 5.27 11.18 15.52 1.35
Total Debt to Total Assets 14.20% 7.51% 5.97% 3.63%
Pre-tax Return on Net Worth 28.00% 30.36% 45.95% 63.27%
Pre-tax Return on Assets 24.02% 28.08% 43.21% 9.88%
Additional Ratios 2004 2005 2006
Net Profit Margin 5.36% 6.77% 12.83% n.a
Return on Equity 19.60% 21.25% 32.17% n.a
Activity Ratios
Accounts Payable Turnover 7.17 12.17 12.17 n.a
Payment Days 28 39 28 n.a
Total Asset Turnover 3.14 2.90 2.36 n.a
Debt Ratios
Debt to Net Worth 0.17 0.08 0.06 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $3,844 $5,713 $9,391 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.32 0.34 0.42 n.a
Current Debt/Total Assets 14% 8% 6% n.a
Acid Test 5.27 11.18 15.52 n.a
Sales/Net Worth 3.66 3.14 2.51 n.a
Dividend Payout 0.00 0.00 0.00 n.a