Mother's House Cleaning Service

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Cleaning Service Business Plan

Financial Plan

The following subtopics will provide more financial information.

Important Assumptions

See following table for MHCS' general assumptions.

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 17.08% 25.00% 17.08%
Other 0 0 0

Break-even Analysis

The break-even analysis is based on an average billing unit. The calculations are based on a $1.00 unit of revenue and costs of sales as a percentage of $1.00. 

Break-even Analysis
Monthly Revenue Break-even $11,140
Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $10,797

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 $178,970 $181,491 $186,598
Direct Cost of Sales $5,508 $5,903 $6,150
Other $0 $0 $0
Total Cost of Sales $5,508 $5,903 $6,150
Gross Margin $173,462 $175,588 $180,448
Gross Margin % 96.92% 96.75% 96.70%
Expenses
Payroll $110,889 $118,200 $128,460
Sales and Marketing and Other Expenses $6,013 $5,968 $5,968
Depreciation $0 $0 $0
Additional Payroll Burden $9,058 $10,841 $10,942
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $2,400 $2,400 $2,400
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $129,560 $138,609 $148,970
Profit Before Interest and Taxes $43,902 $36,979 $31,478
EBITDA $43,902 $36,979 $31,478
Interest Expense $0 $0 $0
Taxes Incurred $12,108 $9,245 $5,378
Net Profit $31,794 $27,734 $26,101
Net Profit/Sales 17.76% 15.28% 13.99%

Projected Cash Flow

The following table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $178,970 $181,491 $186,598
Subtotal Cash from Operations $178,970 $181,491 $186,598
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $5,000 $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 $183,970 $181,491 $186,598
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $110,889 $118,200 $128,460
Bill Payments $32,586 $37,444 $32,305
Subtotal Spent on Operations $143,475 $155,644 $160,765
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 $5,000 $0 $0
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 $148,475 $155,644 $160,765
Net Cash Flow $35,495 $25,847 $25,833
Cash Balance $44,570 $70,417 $96,250

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 $44,570 $70,417 $96,250
Inventory $1,492 $1,074 $1,088
Other Current Assets $0 $0 $0
Total Current Assets $46,062 $71,491 $97,338
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $46,062 $71,491 $97,338
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,193 $2,888 $2,634
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,193 $2,888 $2,634
Long-term Liabilities $0 $0 $0
Total Liabilities $5,193 $2,888 $2,634
Paid-in Capital $13,000 $13,000 $13,000
Retained Earnings ($3,925) $27,869 $55,603
Earnings $31,794 $27,734 $26,101
Total Capital $40,869 $68,603 $94,704
Total Liabilities and Capital $46,062 $71,491 $97,338
Net Worth $40,869 $68,603 $94,704

Business Ratios

The following table contains important business ratios from the building maintenance services industry, as determined by the Standard Industry Classification (SIC) Index code 7349.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 1.41% 2.81% 7.30%
Percent of Total Assets
Inventory 3.24% 1.50% 1.12% 3.80%
Other Current Assets 0.00% 0.00% 0.00% 44.90%
Total Current Assets 100.00% 100.00% 100.00% 73.40%
Long-term Assets 0.00% 0.00% 0.00% 26.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 11.27% 4.04% 2.71% 44.40%
Long-term Liabilities 0.00% 0.00% 0.00% 16.40%
Total Liabilities 11.27% 4.04% 2.71% 60.80%
Net Worth 88.73% 95.96% 97.29% 39.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 96.92% 96.75% 96.70% 0.00%
Selling, General & Administrative Expenses 94.22% 93.58% 91.63% 81.70%
Advertising Expenses 0.93% 1.06% 1.03% 1.30%
Profit Before Interest and Taxes 24.53% 20.38% 16.87% 2.00%
Main Ratios
Current 8.87 24.75 36.95 1.67
Quick 8.58 24.38 36.54 1.33
Total Debt to Total Assets 11.27% 4.04% 2.71% 60.80%
Pre-tax Return on Net Worth 107.42% 53.90% 33.24% 3.50%
Pre-tax Return on Assets 95.31% 51.73% 32.34% 9.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.76% 15.28% 13.99% n.a
Return on Equity 77.79% 40.43% 27.56% n.a
Activity Ratios
Inventory Turnover 5.89 4.60 5.69 n.a
Accounts Payable Turnover 7.28 12.17 12.17 n.a
Payment Days 27 42 31 n.a
Total Asset Turnover 3.89 2.54 1.92 n.a
Debt Ratios
Debt to Net Worth 0.13 0.04 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $40,869 $68,603 $94,704 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.26 0.39 0.52 n.a
Current Debt/Total Assets 11% 4% 3% n.a
Acid Test 8.58 24.38 36.54 n.a
Sales/Net Worth 4.38 2.65 1.97 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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