EcoAquatics
Financial Plan
The main financial problem is working capital for the first few months before business clients pay, and I support that by not paying myself. I don’t foresee the kind of client relationships that will cause long-term problems getting paid, but I also have to be able to support their occasional delays because this won’t be important to them.
7.1 Important Assumptions
The following table outlines the general assumptions for EcoAquatics.
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 is based on a very realistic assessment of the present hobbyist nature of this business.

Break-even Analysis | |
Monthly Revenue Break-even | $201 |
Assumptions: | |
Average Percent Variable Cost | 2% |
Estimated Monthly Fixed Cost | $197 |
7.3 Projected Profit and Loss
As the Profit and Loss table shows, we have a small hobbyist business here with very few expenses. The website hosting is an estimate, because it may actually be free.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $2,400 | $7,200 | $9,000 |
Direct Cost of Sales | $48 | $144 | $180 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $48 | $144 | $180 |
Gross Margin | $2,352 | $7,056 | $8,820 |
Gross Margin % | 98.00% | 98.00% | 98.00% |
Expenses | |||
Payroll | $1,800 | $5,400 | $6,750 |
Sales and Marketing and Other Expenses | $200 | $300 | $300 |
Depreciation | $0 | $0 | $0 |
Website hosting | $360 | $400 | $500 |
Utilities | $0 | $0 | $0 |
Insurance | $0 | $0 | $0 |
Payroll Taxes | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $2,360 | $6,100 | $7,550 |
Profit Before Interest and Taxes | ($8) | $956 | $1,270 |
EBITDA | ($8) | $956 | $1,270 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $287 | $381 |
Net Profit | ($8) | $669 | $889 |
Net Profit/Sales | -0.33% | 9.29% | 9.88% |
7.4 Projected Cash Flow
The cash flow involves a loan from founders, which is essentially equivalent to not paying myself for the first two months plus a smaller loan from parents, to support the working capital requirements. Otherwise I would show a negative balance.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $2,007 | $6,413 | $8,705 |
Subtotal Cash from Operations | $2,007 | $6,413 | $8,705 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $500 | $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 | $2,507 | $6,413 | $8,705 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $1,800 | $5,400 | $6,750 |
Bill Payments | $478 | $1,167 | $1,342 |
Subtotal Spent on Operations | $2,278 | $6,567 | $8,092 |
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 | $500 |
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 | $2,278 | $6,567 | $8,592 |
Net Cash Flow | $228 | ($154) | $113 |
Cash Balance | $228 | $74 | $187 |
7.5 Projected Balance Sheet
The balance sheet seems acceptable for a low-key hobbyist business. The loans carried are mainly the first two months of sacrificed compensation to myself.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $228 | $74 | $187 |
Accounts Receivable | $393 | $1,180 | $1,475 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $622 | $1,254 | $1,662 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $622 | $1,254 | $1,662 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $130 | $93 | $112 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $500 | $500 | $0 |
Subtotal Current Liabilities | $630 | $593 | $112 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $630 | $593 | $112 |
Paid-in Capital | $50 | $50 | $50 |
Retained Earnings | ($50) | ($58) | $611 |
Earnings | ($8) | $669 | $889 |
Total Capital | ($8) | $661 | $1,550 |
Total Liabilities and Capital | $622 | $1,254 | $1,662 |
Net Worth | ($8) | $661 | $1,550 |
7.6 Business Ratios
My guess is that what I am doing is not going to be equivalent to the kinds of real businesses whose numbers were contained in the financial databases shown in the rightmost column here. Furthermore, I am not intending to seek bank loan or investment.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 200.00% | 25.00% | 8.79% |
Percent of Total Assets | ||||
Accounts Receivable | 63.28% | 94.09% | 88.75% | 28.12% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 44.18% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 76.27% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 23.73% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 101.29% | 47.28% | 6.73% | 38.61% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 13.60% |
Total Liabilities | 101.29% | 47.28% | 6.73% | 52.21% |
Net Worth | -1.29% | 52.72% | 93.27% | 47.79% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 98.00% | 98.00% | 98.00% | 100.00% |
Selling, General & Administrative Expenses | 98.33% | 88.71% | 88.12% | 82.68% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.66% |
Profit Before Interest and Taxes | -0.33% | 13.28% | 14.11% | 1.37% |
Main Ratios | ||||
Current | 0.99 | 2.12 | 14.86 | 1.59 |
Quick | 0.99 | 2.12 | 14.86 | 1.22 |
Total Debt to Total Assets | 101.29% | 47.28% | 6.73% | 60.22% |
Pre-tax Return on Net Worth | 100.00% | 144.59% | 81.92% | 3.09% |
Pre-tax Return on Assets | -1.29% | 76.23% | 76.41% | 7.76% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -0.33% | 9.29% | 9.88% | n.a |
Return on Equity | 0.00% | 101.21% | 57.35% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 6.10 | 6.10 | 6.10 | n.a |
Collection Days | 57 | 40 | 54 | n.a |
Accounts Payable Turnover | 4.69 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 36 | 27 | n.a |
Total Asset Turnover | 3.86 | 5.74 | 5.41 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.90 | 0.07 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | ($8) | $661 | $1,550 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.26 | 0.17 | 0.18 | n.a |
Current Debt/Total Assets | 101% | 47% | 7% | n.a |
Acid Test | 0.36 | 0.13 | 1.67 | n.a |
Sales/Net Worth | 0.00 | 10.89 | 5.81 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |