Bicycle Courier Business Plan

The Two Wheeled Oracle

Financial Plan

The following sections will outline the important financial data.

7.1 Important Assumptions

The following table details important financial assumptions for The Oracle.

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

The Break-even Analysis indicates what The Oracle will need to achieve in monthly revenue to reach their break-even point.

Bicycle courier business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$19,155

Assumptions:
Average Percent Variable Cost	2%
Estimated Monthly Fixed Cost	$18,772

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$173,300	$285,712	$306,679
Direct Cost of Sales	$3,466	$5,714	$6,134
Other	$0	$0	$0
Total Cost of Sales	$3,466	$5,714	$6,134

Gross Margin	$169,834	$279,998	$300,545
Gross Margin %	98.00%	98.00%	98.00%


Expenses
Payroll	$177,360	$183,360	$189,360
Sales and Marketing and Other Expenses	$3,000	$3,000	$3,000
Depreciation	$1,500	$1,500	$1,500
Cellular service	$4,200	$4,200	$4,200
Utilities	$1,200	$1,200	$1,200
Insurance	$1,800	$1,800	$1,800
Rent	$9,600	$9,000	$9,000
Payroll Taxes	$26,604	$27,504	$28,404
Other	$0	$0	$0

Total Operating Expenses	$225,264	$231,564	$238,464

Profit Before Interest and Taxes	($55,430)	$48,434	$62,081
EBITDA	($53,930)	$49,934	$63,581
Interest Expense	$4,517	$3,596	$2,546
Taxes Incurred	$0	$11,210	$15,132

Net Profit	($59,947)	$33,629	$44,404
Net Profit/Sales	-34.59%	11.77%	14.48%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$43,325	$71,428	$76,670
Cash from Receivables	$96,883	$192,819	$226,006
Subtotal Cash from Operations	$140,208	$264,247	$302,675

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	$140,208	$264,247	$302,675

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$177,360	$183,360	$189,360
Bill Payments	$49,882	$66,203	$71,071
Subtotal Spent on Operations	$227,242	$249,563	$260,431

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	$9,055	$9,976	$11,026
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$236,297	$259,539	$271,457

Net Cash Flow	($96,089)	$4,707	$31,218
Cash Balance	$5,111	$9,818	$41,036

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$5,111	$9,818	$41,036
Accounts Receivable	$33,092	$54,557	$58,561
Other Current Assets	$0	$0	$0
Total Current Assets	$38,203	$64,375	$99,597

Long-term Assets
Long-term Assets	$7,500	$7,500	$7,500
Accumulated Depreciation	$1,500	$3,000	$4,500
Total Long-term Assets	$6,000	$4,500	$3,000
Total Assets	$44,203	$68,875	$102,597

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$4,505	$5,525	$5,870
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$4,505	$5,525	$5,870

Long-term Liabilities	$40,945	$30,969	$19,942
Total Liabilities	$45,450	$36,494	$25,812

Paid-in Capital	$60,000	$60,000	$60,000
Retained Earnings	($1,300)	($61,247)	($27,618)
Earnings	($59,947)	$33,629	$44,404
Total Capital	($1,247)	$32,382	$76,785
Total Liabilities and Capital	$44,203	$68,875	$102,597

Net Worth	($1,247)	$32,382	$76,785

7.6 Business Ratios

The following table contains important business ratios from the courier services industry, SIC 4513, as determined by the Standard Industry Classification (SIC) Index.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	64.87%	7.34%	4.50%

Percent of Total Assets
Accounts Receivable	74.86%	79.21%	57.08%	27.40%
Other Current Assets	0.00%	0.00%	0.00%	21.80%
Total Current Assets	86.43%	93.47%	97.08%	50.30%
Long-term Assets	13.57%	6.53%	2.92%	49.70%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	10.19%	8.02%	5.72%	29.80%
Long-term Liabilities	92.63%	44.96%	19.44%	27.90%
Total Liabilities	102.82%	52.99%	25.16%	57.70%
Net Worth	-2.82%	47.01%	74.84%	42.30%

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	132.59%	86.23%	83.44%	79.50%
Advertising Expenses	0.69%	0.42%	0.39%	0.20%
Profit Before Interest and Taxes	-31.98%	16.95%	20.24%	1.30%

Main Ratios
Current	8.48	11.65	16.97	1.64
Quick	8.48	11.65	16.97	1.43
Total Debt to Total Assets	102.82%	52.99%	25.16%	57.70%
Pre-tax Return on Net Worth	4807.12%	138.47%	77.54%	2.50%
Pre-tax Return on Assets	-135.62%	65.10%	58.03%	5.90%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-34.59%	11.77%	14.48%	n.a
Return on Equity	0.00%	103.85%	57.83%	n.a

Activity Ratios
Accounts Receivable Turnover	3.93	3.93	3.93	n.a
Collection Days	56	75	90	n.a
Accounts Payable Turnover	12.07	12.17	12.17	n.a
Payment Days	27	27	29	n.a
Total Asset Turnover	3.92	4.15	2.99	n.a

Debt Ratios
Debt to Net Worth	0.00	1.13	0.34	n.a
Current Liab. to Liab.	0.10	0.15	0.23	n.a

Liquidity Ratios
Net Working Capital	$33,698	$58,850	$93,728	n.a
Interest Coverage	-12.27	13.47	24.39	n.a

Additional Ratios
Assets to Sales	0.26	0.24	0.33	n.a
Current Debt/Total Assets	10%	8%	6%	n.a
Acid Test	1.13	1.78	6.99	n.a
Sales/Net Worth	0.00	8.82	3.99	n.a
Dividend Payout	0.00	0.00	0.00	n.a