Accurate Chiropractic
Financial Plan
- We want to finance growth mainly through cash flow. We recognize that this means we will have to grow more slowly than we might like.
- The most important factor in our situation is maintaining or growing our case average (i.e., the amount of revenue per case per year). This is the area that will account for exponential growth. While the goal of our external sales and marketing plan is to bring new patients to the practice, the focus of our internal program will be to increase the value of the service provided.
- We are also assuming start-up capital of $43,575 (provided by the owner), and an initial long-term loan from a reputable funding source of another $164,000.
8.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendices. From the beginning, we recognize that collection days are critical. Interest rates, tax rates, and personnel burden are based on worst case scenario assumptions.
Three of the more important underlying assumptions are:
- We assume that there are no unforeseen changes in automobile insurance provisions regarding personal injury protection coverage.
- We assume that motor vehicle accidents and injuries will continue at a rate commensurate with that of the last 10-year period.
- We assume that work place injuries continue at a rate commensurate with that of the last 10 years as well.
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 |
8.2 Break-even Analysis
- Fixed costs are calculated as day-to-day running expenses and are averaged out over the course of 12 months to develop the one month figure.
- Fixed costs include owner’s salary, rent, payroll, utilities, commonly used supplies and forms, necessary insurance, legal and technical support, professional memberships, continuing education, and employee benefits.
- Variable Cost includes our costs for inventory sold, and direct costs per patient of chiropractic care.

Break-even Analysis | |
Monthly Revenue Break-even | $14,694 |
Assumptions: | |
Average Percent Variable Cost | 3% |
Estimated Monthly Fixed Cost | $14,216 |
8.3 Projected Profit and Loss
Our projected profit and loss is shown in the following table, with sales increasing from just under $450K the first year to more than $1.2 million the third. Due in part to the nature of our business (service oriented, without the need of expensive production cost or inventory), we expect modest profits for the first year. Although our location is somewhat subject to seasonal shifts, particularly in the senior citizen population, or main target group is year round residents; therefore, we can expect linear growth as opposed to cyclical growth. In other words, our year two earnings are based on growth from the average sales of month 12 in year one, rather than the twelve month average of year one. We anticipate this growth will level out somewhat near the end of year 3, as we reach maximum capacity in terms of case load for our present staff size. Prior to that point, we will review our business plan and determine if space additions are necessary and viable for our present office location, or if we should consider developing an office in a neighboring town.
Marketing/Promotion expenses are estimated at $300 per client for the first year, decreasing over the next two years as word of mouth and corporate affiliations generate sales without extra advertising.
Depreciation of long-term assets is as follows: X-ray equipment over a thirty year period, chiropractic tables over a twenty year period, and computerized diagnostic equipment over a seven year period.
As with the break-even, we are projecting very conservatively regarding fixed cost, cost of sales, and gross margin. Our fixed cost and cost of sales should be slightly lower in reality, and gross margin higher, than in this projection. In determining insurance, printing, and advertising expenses, we purposely projected higher than average costs. We prefer to project conservatively so that we ensure adequate cash flow.
The detailed monthly projections are included in the appendices.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $449,055 | $1,040,256 | $1,248,739 |
Direct Cost of Sales | $14,603 | $24,846 | $30,014 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $14,603 | $24,846 | $30,014 |
Gross Margin | $434,452 | $1,015,410 | $1,218,725 |
Gross Margin % | 96.75% | 97.61% | 97.60% |
Expenses | |||
Payroll | $109,166 | $448,544 | $753,692 |
Marketing/Promotion | $20,000 | $20,000 | $20,000 |
Depreciation | $4,248 | $4,634 | $4,634 |
Rent | $15,100 | $22,335 | $25,455 |
Utilities | $5,500 | $9,000 | $11,500 |
Insurance | $925 | $2,965 | $3,575 |
Payroll Taxes | $0 | $0 | $0 |
Office Supplies | $4,763 | $11,353 | $14,205 |
Legal Fees | $0 | $2,500 | $2,500 |
Accounting Fees | $1,100 | $2,500 | $2,500 |
Computer Technical Support | $660 | $792 | $872 |
XRay Film and Processor Maintenance | $1,925 | $3,890 | $5,980 |
Professional Organization Membership | $770 | $966 | $1,110 |
Employee Benefits Package | $6,435 | $21,060 | $42,120 |
Total Operating Expenses | $170,592 | $550,539 | $888,143 |
Profit Before Interest and Taxes | $263,860 | $464,871 | $330,582 |
EBITDA | $268,108 | $469,505 | $335,216 |
Interest Expense | $14,910 | $12,275 | $9,525 |
Taxes Incurred | $74,685 | $135,779 | $96,317 |
Net Profit | $174,265 | $316,817 | $224,740 |
Net Profit/Sales | 38.81% | 30.46% | 18.00% |
8.4 Projected Cash Flow
Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $112,264 | $260,064 | $312,185 |
Cash from Receivables | $234,790 | $645,903 | $889,198 |
Subtotal Cash from Operations | $347,054 | $905,967 | $1,201,383 |
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 | $347,054 | $905,967 | $1,201,383 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $109,166 | $448,544 | $753,692 |
Bill Payments | $139,334 | $270,089 | $266,050 |
Subtotal Spent on Operations | $248,500 | $718,633 | $1,019,742 |
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 | $27,504 | $27,500 | $27,500 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $276,004 | $746,133 | $1,047,242 |
Net Cash Flow | $71,050 | $159,834 | $154,141 |
Cash Balance | $140,050 | $299,884 | $454,024 |
8.5 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a healthy financial position.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $140,050 | $299,884 | $454,024 |
Accounts Receivable | $102,001 | $236,290 | $283,646 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $242,051 | $536,173 | $737,670 |
Long-term Assets | |||
Long-term Assets | $104,000 | $104,000 | $104,000 |
Accumulated Depreciation | $4,248 | $8,882 | $13,516 |
Total Long-term Assets | $99,752 | $95,118 | $90,484 |
Total Assets | $341,803 | $631,292 | $828,155 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $22,042 | $22,213 | $21,836 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $22,042 | $22,213 | $21,836 |
Long-term Liabilities | $136,496 | $108,996 | $81,496 |
Total Liabilities | $158,538 | $131,209 | $103,332 |
Paid-in Capital | $43,575 | $43,575 | $43,575 |
Retained Earnings | ($34,575) | $139,690 | $456,507 |
Earnings | $174,265 | $316,817 | $224,740 |
Total Capital | $183,265 | $500,082 | $724,823 |
Total Liabilities and Capital | $341,803 | $631,292 | $828,155 |
Net Worth | $183,265 | $500,082 | $724,823 |
8.6 Business Ratios
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return.
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8041, [Offices and Clinics of Chiropractors], are shown for comparison.
The following table outlines some of the more important ratios from the chiropractic industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8041.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 131.65% | 20.04% | 5.93% |
Percent of Total Assets | ||||
Accounts Receivable | 29.84% | 37.43% | 34.25% | 21.14% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 45.36% |
Total Current Assets | 70.82% | 84.93% | 89.07% | 71.11% |
Long-term Assets | 29.18% | 15.07% | 10.93% | 28.89% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 6.45% | 3.52% | 2.64% | 29.10% |
Long-term Liabilities | 39.93% | 17.27% | 9.84% | 19.50% |
Total Liabilities | 46.38% | 20.78% | 12.48% | 48.60% |
Net Worth | 53.62% | 79.22% | 87.52% | 51.40% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 96.75% | 97.61% | 97.60% | 100.00% |
Selling, General & Administrative Expenses | 58.41% | 58.00% | 52.82% | 75.10% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.61% |
Profit Before Interest and Taxes | 58.76% | 44.69% | 26.47% | 3.98% |
Main Ratios | ||||
Current | 10.98 | 24.14 | 33.78 | 1.86 |
Quick | 10.98 | 24.14 | 33.78 | 1.38 |
Total Debt to Total Assets | 46.38% | 20.78% | 12.48% | 10.80% |
Pre-tax Return on Net Worth | 135.84% | 90.50% | 44.29% | 60.83% |
Pre-tax Return on Assets | 72.83% | 71.69% | 38.77% | 27.59% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 38.81% | 30.46% | 18.00% | n.a |
Return on Equity | 95.09% | 63.35% | 31.01% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 3.30 | 3.30 | 3.30 | n.a |
Collection Days | 55 | 79 | 101 | n.a |
Accounts Payable Turnover | 7.32 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 30 | n.a |
Total Asset Turnover | 1.31 | 1.65 | 1.51 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.87 | 0.26 | 0.14 | n.a |
Current Liab. to Liab. | 0.14 | 0.17 | 0.21 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $220,009 | $513,960 | $715,834 | n.a |
Interest Coverage | 17.70 | 37.87 | 34.71 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.76 | 0.61 | 0.66 | n.a |
Current Debt/Total Assets | 6% | 4% | 3% | n.a |
Acid Test | 6.35 | 13.50 | 20.79 | n.a |
Sales/Net Worth | 2.45 | 2.08 | 1.72 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |