Cleaning Products Business Plan

ChemSafe

Financial Plan

The following is the financial plan for ChemSafe.

7.1 Break-even Analysis

The monthly break-even point is approximately $26,200.

Cleaning products business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$26,291

Assumptions:
Average Percent Variable Cost	23%
Estimated Monthly Fixed Cost	$20,155

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$362,500	$422,000	$504,000
Direct Cost of Sales	$84,600	$104,000	$119,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$84,600	$104,000	$119,000

Gross Margin	$277,900	$318,000	$385,000
Gross Margin %	76.66%	75.36%	76.39%


Expenses
Payroll	$147,600	$162,000	$174,000
Sales and Marketing and Other Expenses	$18,000	$36,000	$46,000
Depreciation	$2,880	$2,880	$2,880
Leased Equipment	$0	$0	$0
Utilities	$6,000	$6,000	$6,000
Insurance	$6,000	$6,000	$6,000
Rent	$36,000	$36,000	$36,000
Payroll Taxes	$25,380	$27,000	$28,800
Other	$0	$0	$0

Total Operating Expenses	$241,860	$275,880	$299,680

Profit Before Interest and Taxes	$36,040	$42,120	$85,320
EBITDA	$38,920	$45,000	$88,200
Interest Expense	$9,589	$8,176	$6,535
Taxes Incurred	$7,935	$10,183	$23,636

Net Profit	$18,516	$23,761	$55,150
Net Profit/Sales	5.11%	5.63%	10.94%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

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

Cash from Operations
Cash Sales	$181,250	$211,000	$252,000
Cash from Receivables	$140,433	$204,300	$242,767
Subtotal Cash from Operations	$321,683	$415,300	$494,767

Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$6,000	$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	$327,683	$415,300	$494,767

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$147,600	$162,000	$174,000
Bill Payments	$178,786	$238,011	$270,914
Subtotal Spent on Operations	$326,386	$400,011	$444,914

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$1,500	$3,000	$1,500
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$14,160	$14,160	$14,160
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$342,046	$417,171	$460,574

Net Cash Flow	($14,363)	($1,871)	$34,193
Cash Balance	$25,837	$23,966	$58,159

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$25,837	$23,966	$58,159
Accounts Receivable	$40,817	$47,516	$56,749
Inventory	$11,660	$14,334	$16,401
Other Current Assets	$0	$0	$0
Total Current Assets	$78,314	$85,816	$131,309

Long-term Assets
Long-term Assets	$50,000	$50,000	$50,000
Accumulated Depreciation	$2,880	$5,760	$8,640
Total Long-term Assets	$47,120	$44,240	$41,360
Total Assets	$125,434	$130,056	$172,669

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$21,378	$19,400	$22,524
Current Borrowing	$4,500	$1,500	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$25,878	$20,900	$22,524

Long-term Liabilities	$85,840	$71,680	$57,520
Total Liabilities	$111,718	$92,580	$80,044

Paid-in Capital	$163,000	$163,000	$163,000
Retained Earnings	($167,800)	($149,284)	($125,524)
Earnings	$18,516	$23,761	$55,150
Total Capital	$13,716	$37,476	$92,626
Total Liabilities and Capital	$125,434	$130,056	$172,669

Net Worth	$13,716	$37,476	$92,626

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2842, Polishes and Sanitation Goods, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	16.41%	19.43%	1.10%

Percent of Total Assets
Accounts Receivable	32.54%	36.54%	32.87%	25.90%
Inventory	9.30%	11.02%	9.50%	17.80%
Other Current Assets	0.00%	0.00%	0.00%	39.70%
Total Current Assets	62.43%	65.98%	76.05%	83.40%
Long-term Assets	37.57%	34.02%	23.95%	16.60%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	20.63%	16.07%	13.04%	29.10%
Long-term Liabilities	68.43%	55.11%	33.31%	23.60%
Total Liabilities	89.07%	71.18%	46.36%	52.70%
Net Worth	10.93%	28.82%	53.64%	47.30%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	76.66%	75.36%	76.39%	41.60%
Selling, General & Administrative Expenses	75.66%	72.66%	67.94%	23.00%
Advertising Expenses	3.31%	7.11%	7.94%	2.80%
Profit Before Interest and Taxes	9.94%	9.98%	16.93%	5.00%

Main Ratios
Current	3.03	4.11	5.83	2.51
Quick	2.58	3.42	5.10	1.51
Total Debt to Total Assets	89.07%	71.18%	46.36%	52.70%
Pre-tax Return on Net Worth	192.85%	90.57%	85.06%	7.20%
Pre-tax Return on Assets	21.09%	26.10%	45.63%	15.30%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	5.11%	5.63%	10.94%	n.a
Return on Equity	135.00%	63.40%	59.54%	n.a

Activity Ratios
Accounts Receivable Turnover	4.44	4.44	4.44	n.a
Collection Days	56	76	76	n.a
Inventory Turnover	10.35	8.00	7.74	n.a
Accounts Payable Turnover	9.36	12.17	12.17	n.a
Payment Days	27	32	28	n.a
Total Asset Turnover	2.89	3.24	2.92	n.a

Debt Ratios
Debt to Net Worth	8.15	2.47	0.86	n.a
Current Liab. to Liab.	0.23	0.23	0.28	n.a

Liquidity Ratios
Net Working Capital	$52,436	$64,916	$108,786	n.a
Interest Coverage	3.76	5.15	13.06	n.a

Additional Ratios
Assets to Sales	0.35	0.31	0.34	n.a
Current Debt/Total Assets	21%	16%	13%	n.a
Acid Test	1.00	1.15	2.58	n.a
Sales/Net Worth	26.43	11.26	5.44	n.a
Dividend Payout	0.00	0.00	0.00	n.a