Like New Carpet Cleaners
Financial Plan
Like New Carpet Cleaning will add at least one new local base each year, consisting of parking for the company van and storage for cleaning equipment and supplies. This future growth will be financed by cash generated from existing locations and debt to finance vehicle and cleaning equipment purchases.
Start-up Funding
Start-up funding will be provided by a combination of owner investment and investor funding, with a small amount of debt. The owners will contribute $20,000 of initial funding to develop a prototype of the website. Investors will contribute $57,500 for a 30% share of the company.
Start-up Funding | |
Start-up Expenses to Fund | $37,500 |
Start-up Assets to Fund | $60,000 |
Total Funding Required | $97,500 |
Assets | |
Non-cash Assets from Start-up | $30,000 |
Cash Requirements from Start-up | $30,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $30,000 |
Total Assets | $60,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $15,000 |
Accounts Payable (Outstanding Bills) | $5,000 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $20,000 |
Capital | |
Planned Investment | |
Owners | $20,000 |
Investor | $57,500 |
Additional Investment Requirement | $0 |
Total Planned Investment | $77,500 |
Loss at Start-up (Start-up Expenses) | ($37,500) |
Total Capital | $40,000 |
Total Capital and Liabilities | $60,000 |
Total Funding | $97,500 |
Break-even Analysis
The business will benefit from a low monthly break-even point due to the assignment of most costs directly to the cleaning service (gasoline, cleaning crew labor, and cleaning products) and the low payroll that is achieved by leveraging Like New’s website, which will reduce administrative costs.

Break-even Analysis | |
Monthly Units Break-even | 705 |
Monthly Revenue Break-even | $36,506 |
Assumptions: | |
Average Per-Unit Revenue | $51.81 |
Average Per-Unit Variable Cost | $18.34 |
Estimated Monthly Fixed Cost | $23,586 |
Projected Profit and Loss
The business will experience modest profits for its first three years of operation. This is due to the fact that the operations of the organization will be built to scale up over a larger geographic region. In the fourth and fifth years of operation, this will begin to pay off with healthy profits.This will prove the viability of the business model for a franchise or statewide expansion.
Direct labor is estimated at 35% of sales revenue (the actual cleaning representing about a 280% markup of the labor). Direct labor is included in the cost of sales.




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
Direct Cost of Sales | $208,858 | $261,072 | $326,341 | $407,926 | $509,907 |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $208,858 | $261,072 | $326,341 | $407,926 | $509,907 |
Gross Margin | $381,272 | $476,590 | $595,738 | $744,672 | $930,840 |
Gross Margin % | 64.61% | 64.61% | 64.61% | 64.61% | 64.61% |
Expenses | |||||
Payroll | $138,000 | $160,000 | $210,000 | $237,000 | $255,000 |
Marketing/Promotion | $60,000 | $70,000 | $80,000 | $90,000 | $100,000 |
Depreciation | $6,000 | $10,000 | $12,000 | $18,000 | $30,000 |
Rent | $10,200 | $30,000 | $40,000 | $50,000 | $60,000 |
Utilities | $1,200 | $2,000 | $2,500 | $3,000 | $3,500 |
Insurance | $3,600 | $4,000 | $5,000 | $6,500 | $8,000 |
Payroll Taxes | $52,029 | $63,161 | $80,451 | $35,550 | $38,250 |
Website Maintenance/Hosting | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 |
Other | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 |
Total Operating Expenses | $283,029 | $353,161 | $445,951 | $458,050 | $514,750 |
Profit Before Interest and Taxes | $98,243 | $123,429 | $149,787 | $286,622 | $416,090 |
EBITDA | $104,243 | $133,429 | $161,787 | $304,622 | $446,090 |
Interest Expense | $688 | $0 | $0 | $0 | $0 |
Taxes Incurred | $29,267 | $37,029 | $44,936 | $85,987 | $124,827 |
Net Profit | $68,289 | $86,400 | $104,851 | $200,635 | $291,263 |
Net Profit/Sales | 11.57% | 11.71% | 11.37% | 17.41% | 20.22% |
Projected Cash Flow
In the first year, cash flow will be supported by start-up funding and full payment by customers in advance Company vans will be purchased with auto loans. When the business expands to new offices across the county, additional vans and cleaning equipment must be purchased. These will be financed through debt, including a company credit line.

Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
Subtotal Cash from Operations | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
Additional Cash Received | |||||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Received | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $138,000 | $160,000 | $210,000 | $237,000 | $255,000 |
Bill Payments | $308,546 | $516,001 | $585,861 | $688,600 | $850,715 |
Subtotal Spent on Operations | $446,546 | $676,001 | $795,861 | $925,600 | $1,105,715 |
Additional Cash Spent | |||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $15,000 | $0 | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $18,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Dividends | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Spent | $479,546 | $706,001 | $825,861 | $955,600 | $1,135,715 |
Net Cash Flow | $110,584 | $31,662 | $96,218 | $196,997 | $305,032 |
Cash Balance | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
Projected Balance Sheet
The net worth of the business will show healthy growth, even while liabilities will increase due to the growth of the business and the need to purchase additional assets. Liabilities will initially decrease in the second year as accounts payable from the first large expansion are paid off. After that point, growth will be more even. A cash balance will be built up with the plan of financing expansion of the business.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
Long-term Assets | |||||
Long-term Assets | $48,000 | $78,000 | $108,000 | $138,000 | $168,000 |
Accumulated Depreciation | $6,000 | $16,000 | $28,000 | $46,000 | $76,000 |
Total Long-term Assets | $42,000 | $62,000 | $80,000 | $92,000 | $92,000 |
Total Assets | $182,584 | $234,245 | $348,463 | $557,460 | $862,492 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
Paid-in Capital | $77,500 | $77,500 | $77,500 | $77,500 | $77,500 |
Retained Earnings | ($37,500) | $30,789 | $117,190 | $222,040 | $422,676 |
Earnings | $68,289 | $86,400 | $104,851 | $200,635 | $291,263 |
Total Capital | $108,289 | $194,690 | $299,540 | $500,176 | $791,439 |
Total Liabilities and Capital | $182,584 | $234,245 | $348,463 | $557,460 | $862,492 |
Net Worth | $108,289 | $194,690 | $299,540 | $500,176 | $791,439 |
Business Ratios
The business will have higher SGA expenses as a ratio of sales compared to the carpet and upholstery cleaning industry as it requires a more professional, senior-level staff during its first years of operation. These years are key to establishing the systems and procedures which can be scaled for expansion. SGA as a percentage of sales will drop to lower than the industry average after this expansion due to the reduction in staff and office overhead allowed by its Web-based sales model. Savings from this will be put into advertising to support the rapid growth of the business.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | n.a. | 25.00% | 25.00% | 25.00% | 25.00% | -0.71% |
Percent of Total Assets | ||||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 53.59% |
Total Current Assets | 77.00% | 73.53% | 77.04% | 83.50% | 89.33% | 70.11% |
Long-term Assets | 23.00% | 26.47% | 22.96% | 16.50% | 10.67% | 29.89% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 40.69% | 16.89% | 14.04% | 10.28% | 8.24% | 37.94% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 54.53% |
Total Liabilities | 40.69% | 16.89% | 14.04% | 10.28% | 8.24% | 92.47% |
Net Worth | 59.31% | 83.11% | 85.96% | 89.72% | 91.76% | 7.53% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 64.61% | 64.61% | 64.61% | 64.61% | 64.61% | 59.56% |
Selling, General & Administrative Expenses | 53.04% | 52.90% | 53.24% | 47.20% | 44.39% | 28.35% |
Advertising Expenses | 10.17% | 9.49% | 8.68% | 7.81% | 6.94% | 1.21% |
Profit Before Interest and Taxes | 16.65% | 16.73% | 16.24% | 24.87% | 28.88% | 8.19% |
Main Ratios | ||||||
Current | 1.89 | 4.35 | 5.49 | 8.13 | 10.84 | 1.24 |
Quick | 1.89 | 4.35 | 5.49 | 8.13 | 10.84 | 1.18 |
Total Debt to Total Assets | 40.69% | 16.89% | 14.04% | 10.28% | 8.24% | 92.47% |
Pre-tax Return on Net Worth | 90.09% | 63.40% | 50.01% | 57.30% | 52.57% | 696.24% |
Pre-tax Return on Assets | 53.43% | 52.69% | 42.98% | 51.42% | 48.24% | 52.41% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 11.57% | 11.71% | 11.37% | 17.41% | 20.22% | n.a |
Return on Equity | 63.06% | 44.38% | 35.00% | 40.11% | 36.80% | n.a |
Activity Ratios | ||||||
Accounts Payable Turnover | 5.09 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
Payment Days | 28 | 43 | 27 | 28 | 27 | n.a |
Total Asset Turnover | 3.23 | 3.15 | 2.65 | 2.07 | 1.67 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 0.69 | 0.20 | 0.16 | 0.11 | 0.09 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $66,289 | $132,690 | $219,540 | $408,176 | $699,439 | n.a |
Interest Coverage | 142.90 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||||
Assets to Sales | 0.31 | 0.32 | 0.38 | 0.48 | 0.60 | n.a |
Current Debt/Total Assets | 41% | 17% | 14% | 10% | 8% | n.a |
Acid Test | 1.89 | 4.35 | 5.49 | 8.13 | 10.84 | n.a |
Sales/Net Worth | 5.45 | 3.79 | 3.08 | 2.30 | 1.82 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
Long-term Plan
The business’s financial strategy is to grow rapidly to the point where its investment in its website and infrastructure can be shown to provide much greater revenue than that of the competition’s more traditional approach of working with salaried salespeople. At this point, the business will present a viable model for a second round of equity financing to move towards a regional and then statewide franchise. At this point there will be the potential for initial investors to cash out of the business.