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Twin Brothers Construction

Executive Summary

Twin Brothers Construction (TBC) plans to become a leading provider of construction and renovation services in the local area. The company’s overall strategy will be based on a continuing improvement process of setting objectives, measuring results, and providing feedback to facilitate further growth and progress.

TBC is a company, with principal offices located in the local area. The company’s management is highly experienced and qualified: the brothers who will lead the management team have each accumulated over twenty five years of experience in the construction industry.

Products/Services
Through their years of experience, TBC’s owners have developed sophisticated bidding, scheduling and materials solutions for some of the most complex construction projects being done today. The company will use versatile and completely adaptable methods for a variety of building configurations.

Owners, developers, construction managers, general contractors, and sub-contractors are expected to realize substantial savings in labor and material costs by using the company’s construction methods and systems. Applications include commercial and residential structures.

The Market
The housing industry has been growing at a fast pace for several years. An all-time record was set in 1998, when 886,000 new-site single family homes were sold. That represented a 10% gain from the robust total of 804,000 homes sold in 1997. Although there was a slight drop in the number from 2003, this makes for an excellent opportunity for future expansion of the industry.

Twin Brothers Construction plans to rapidly develop marketing alliances with industry leaders and pursue new sales of its services to residential and commercial builders. The marketing strategy will focus on securing city, county, and state and federal government contracts.

TBC plans to use a direct sales force, relationship selling, and sub-contractors to reach its target markets. These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels.

Financial Considerations
We expect to pass the break-even point in the second half of the first year. Despite initial large outlays in cash to promote sales, the company’s cash account is expected to remain healthy. The company expects approximately $772,000 in sales revenue and reasonable net profits by Year 3.

Commercial contractor business plan, executive summary chart image

1.1 Mission

Our mission is to be the best partner for our customers, suppliers and employees. To realize our vision, we will strive for profitable growth, operational excellence, customer satisfaction and strong brand positioning.

1.2 Objectives

  1. To have up to three construction projects established within the first year.
  2. To have two building renovation projects in progress by the end of the first year.
  3. To locate and purchase our first rental building by the end of the first year.
  4. To achieve at least 7% profit by the second year.

1.3 Keys to Success

We believe our keys to success will be:

  • Using the most updated materials and equipment to assure quality construction projects for ourselves and our customers.
  • Educating the customers and providing valuable advice during the construction planning stages.
  • Helping to confirm customer’s research about targeting markets and specific sectors.
  • Overseeing the logistics associated with a project, which can include arranging local transportation, booking meetings etc.
  • Assigning the actual work to an experienced and qualified third-party contractors and sub-contractors.
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Company Summary

The brothers will invest a total of $90,000 combined ($55,000 and $35,000) in the start-up of the company. Initial cash requirements will total $50,000. Start-up assets total $55,000.

2.1 Start-up Summary

The following table describes our start-up requirements. One of our biggest start-up expenses involves the creation of a website. Ongoing maintenance expenses for the website are included in our Profit and Loss expenses section.

Commercial contractor business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $35,000
Start-up Assets to Fund $55,000
Total Funding Required $90,000
Assets
Non-cash Assets from Start-up $25,000
Cash Requirements from Start-up $50,000
Additional Cash Raised $0
Cash Balance on Starting Date $50,000
Total Assets $75,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner 1 $55,000
Owner 2 $35,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $90,000
Loss at Start-up (Start-up Expenses) ($35,000)
Total Capital $55,000
Total Capital and Liabilities $55,000
Total Funding $90,000
Start-up
Requirements
Start-up Expenses
Legal $2,000
Stationery etc. $100
Brochures $500
Consultants $2,000
Insurance $10,000
Rent (Deposit and 1st Month) $3,000
Work Equipment $6,000
Website Development $10,000
Other $1,400
Total Start-up Expenses $35,000
Start-up Assets
Cash Required $50,000
Other Current Assets $5,000
Long-term Assets $0
Total Assets $55,000
Total Requirements $90,000

2.2 Company Ownership

The company ownership will be shared by the Chairman and Chief Executive Officer in the following percentage amounts:

Chairman = 60%

Chief Executive Officer = 40%

Both owners are veterans in the building industry, each with over 25 years experience.

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Products and Services

TBC will sell its services to clients in the area of commercial construction and renovation. The company’s staff will design specialized construction drawings that outline the schedule, work sequence and the materials needed for building and renovation construction projects. Owners, developers and general contractors will realize substantial savings in labor and material costs by using TBC’s customized performance methods. TBC’s methods will offer complete adaptability at cost-effective prices. The drawings that the company will furnish to the contractor will specify the order of assembly and erection, including the location of the strongbacks and joists, the location and actual loading of the ties, location of accessories and advise clients of the maximum allowable rate of concrete placement.

A longer-term service will be commercial building rental management. This will include the purchase of commercial building sites or existing buildings that need renovation, coordinating the construction/renovation, then managing the rental of the property. The company will also be looking for existing property owners whose properties need renovation to update and increase its income potential, with TBC eventually taking over the management of these properties on behalf of the owner. 

To enter the market with minimum overhead costs, TBC plans to utilize in the first year of operation mainly sub-contractors and independent experts for its building and renovation projects.

Accident prevention will be the cornerstone of TBC’s safety commitment. The company will strive to eliminate foreseeable hazards which could result in personal injury or illness; at TBC, health and safety will not be compromised. 

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Market Analysis Summary

There were about 792,000 construction companies in the United States in 2002: 237,000 were building construction contractors; 60,000 were heavy and civil engineering construction or highway contractors; and 496,000 were specialty trade contractors. Most of these establishments tend to be small, the majority employing fewer than 10 workers. About 4 out of 5 workers are employed by small contractors.

Construction offers more opportunities than most other industries for individuals who want to own and run their own business. The 1.6 million self-employed and unpaid family workers in 2002 performed work directly for property owners or acted as contractors on small jobs, such as additions, remodeling, and maintenance projects. The rate of self-employment varies greatly by individual occupation in the construction trades.

The local area is booming at this time, with many development projects running both by public and by private sources. Overall business growth over the past seven years has averaged approximately 9.5% and is expected to continue for at least the next several years. This constitutes an attractive market for TBC. The company will be concentrating on office building construction. This is the fastest growing segment of all the commercial clients requiring our services. The other categories to serve will include building renovation along with a segment it calls the general category, to serve other potential commercial clients.

One longer-term field of operation for the company will be the selling of building material and components to contractors. By slowly establishing itself as a first-rate material provider, the company expects to broaden and strengthen its stance in the local building industry. Initially it will focus on purchasing supplies for its own construction and renovation projects, then use those completed projects as marketing examples to showcase the quality of materials used and the customized approach used to design and construct them.

The company plans to develop marketing alliances with industry leaders and pursue new sales of its services to commercial builders. The market strategy is to capitalize on the company’s future alliances by securing city, county, and state government contracts.

TBC also plans to use a direct sales force, relationship selling, and sub-contractors to reach its markets. These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels.

4.1 Market Segmentation

The overall Construction Industry was segmented in 2002 as follows (employment in thousands):

Industry

Employment

Percent

Total, all industries

6,731.7

100.0

Construction of Buildings

1,583.8

23.5

Residential building

807.4

12.0

Nonresidential building construction

776.4

11.5

Special trade contractors

4,217.9

62.7

Building equipment contractors

1,842.5

27.4

Foundation, structure, & building exterior contractors

915.4

13.6

Building finishing contractors

879.5

13.1

Other specialty trade contractors

580.5

8.6

Highway, street, and bridge construction

344.4

5.1

Land subdivision

86.1

1.3

Other heavy and civil engineering construction

119.0

1.8

Special trade contractors

4,217.9

62.7

Building equipment contractors

1,842.5

27.4

Foundation, structure, & building exterior contractors

915.4

13.6

Building finishing contractors

879.5

13.1

Other specialty trade contractors

580.5

8.6

Source: U.S. Department of Labor, Bureau of Labor Statistics (March 9, 2004)

For the purpose of this paper we shall segment our initial targeted market as follows:

  • Office Building Construction
  • Building Facilities Renovation
  • General Construction
Commercial contractor business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Office building construction 6% 2,517 4,027 4,268 4,524 4,795 17.48%
Building facilities renovation 3% 2,750 2,833 2,917 3,005 3,095 3.00%
General construction 3% 3,264 3,362 3,462 3,567 3,674 3.00%
Total 7.90% 8,531 10,222 10,647 11,096 11,564 7.90%

4.2 Service Business Analysis

The construction industry is divided into three major segments. Construction of buildings contractors, or general contractors, who build residential, industrial, commercial, and other buildings. Heavy and civil engineering construction contractors who build sewers, roads, highways, bridges, tunnels, and other projects. Specialty trade contractors who are engaged in specialized activities such as carpentry, painting, plumbing, and electrical work.

Construction usually is done or coordinated by general contractors, who specialize in one type of construction, such as residential or commercial building. They take full responsibility for the complete job, except for specified portions of the work that may be omitted from the general contract. Although general contractors may do a portion of the work with their own crews, they often sub-contract most of the work to heavy construction or specialty trade contractors.

Specialty trade contractors usually do the work of only one trade, such as painting, carpentry, or electrical work, or of two or more closely-related trades, such as plumbing and heating. Beyond fitting their work to that of the other trades, specialty trade contractors have no responsibility for the structure as a whole. They obtain orders for their work from general contractors, architects, or property owners. Repair work is almost always done on direct order from owners, occupants, architects, or rental agents.

Twin Brothers Construction will concentrate its activity in the following areas:

  • Commercial Building Construction
  • Commercial Building Renovation
  • Buildings Management and Rental
  • Building Materials Supplies
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Strategy and Implementation Summary

TBC plans to use a direct sales force, relationship selling, and sub-contractors to reach its target markets. These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels. The owners of TBC want to emphasize to their potential customers that they are more than general contractors, they are complete construction coordinators.

TBC plans to advertise in magazines, newspapers, and radio. Initially a website with information on the company owners, their construction background, and contact information will be available online. References to the website will be mentioned in all other forms of advertising. Channels used to reach market segments include: sales associates, the Internet and direct mail.

In addition, The table and chart below outline the company’s sales forecast for FY2005-2007. In our sales forecasts, the cost of sales includes only direct labor costs.

5.1 Competitive Edge

The company plans to become a leading provider of construction services in the local area. To achieve this, TBC will invest in many ways that will pay off in competitive advantages for its customers, for example:

  • Pre-job conferencing upon request
  • Assist in technical or conceptual design
  • Assist in supervision when other contractors are employed
  • Organize project supervision facilities and staff
  • Organize delivery of purchased materials
  • Furnishing after-market products

5.2 Marketing Strategy

Our marketing strategy is the key to our success:

  1. Emphasize our name and unique services through advertising, including a Web page of contact information. An amount of $10,000 for the design of the website has been included in the Start-up expenses with ongoing maintenance costs estimated monthly.
  2. Focus on commercial building and renovation projects as our initial and primary target markets.
  3. Use completed projects to showcase our customized construction project management to prospective clients.  

5.3 Sales Strategy

Sales success requires planning. The company will formulate its sales strategy and tactics to achieve sales success by following these steps: 

Step 1 – Analyzing The Company’s Potential: Step through a structured process to help us develop a sales strategy.

Step 2 – Strategize Around Strengths: The description of sales activity will be analyzed to produce a report on factors impacting sales potential and ways to strengthen this potential.

Step 3 – Develop Tactics: Receive guidance to develop a comprehensive tactical plan to achieve success.

Step 4 – Measure Our Past Success: Develop key measurements that mark the progress of financial estimates that guide our growth.

Final Step – Employ An Action Plan for Success: Provide sales force with a tactical plan that is aligned with management’s strategic objectives.

5.3.1 Sales Forecast

The company will start its operation in the first year by focusing on two areas:

  1. Direct construction work
  2. Renovation of existing buildings

Starting later in the second year and continuing into the third year the following areas of operation will be added:

  • Renting of Industrial Spaces
  • Sale of components and other building materials and components

The following table details the forecasts.

Commercial contractor business plan, strategy and implementation summary chart image

Commercial contractor business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Direct Construction Projects $135,000 $175,000 $218,750
Building Renovations $123,000 $153,750 $192,188
Building Rentals $0 $75,000 $200,000
Sale of Components and Goods $0 $75,000 $150,000
Other $9,000 $10,000 $12,000
Total Sales $267,000 $488,750 $772,938
Direct Cost of Sales Year 1 Year 2 Year 3
All construction work $54,000 $70,000 $87,500
Renovations $49,200 $61,500 $76,875
Rentals $0 $15,000 $40,000
Sale of Components and Goods $0 $30,000 $60,000
Other $9,000 $1,000 $1,200
Subtotal Direct Cost of Sales $112,200 $177,500 $265,575

5.4 Milestones

The milestones table describes the steps required for the beginning of operations. Steps might take longer than estimated, however the owners and the staff will do their utmost to adhere to this timetable.

Commercial contractor business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Establishing Permits 1/1/2005 1/15/2005 $500 Chairman Department
Establishing office 1/15/2005 1/20/2005 $500 CEO Department
Preparing Web Site 1/15/2005 2/15/2005 $1,000 Consultant Department
Purchasing work equipment 1/15/2005 2/25/2005 $6,000 CEO Department
Hiring staff 2/1/2005 3/1/2005 $0 Chairman@CEO Department
Purcase Initial Inventory 2/15/2005 3/25/2005 $20,000 Chairman&CEO Department
Receive Stock 3/1/2005 4/1/2005 $500 Staff Department
Start Operation 4/1/2005 4/30/2005 $0 Everybody Department
Totals $28,500

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Web Plan Summary

Although TBC plans to use traditional advertising methods to reach potential customers, the owners feel that the Internet has become a valuable resource for customers to find out about the company and for the company to promote its services to prospective customers. The construction industry was slower to join the Internet bandwagon compared to other types of businesses. But now, many local contractors and building suppliers have websites.

The cost to create a website has been included in start-up costs, with website maintenance costs included in our ongoing expenses. The initial website will have basic contact information and background about the company owners. Later, it will show information about current projects as well as completed projects as examples of what the company can do. Once the building materials portion of the business is well established, the website will expand to include an online store. At this point in the business plan, there are no estimates for the cost of this expansion and it will need to be researched and planned for more thoroughly at a later point.

It will take time before the initial cost outlay for the website will pay for itself in potential customers, but once established, it will provide a cost-effective way to communicate to new and existing customers.

We will mention our website address as part of our other advertising media.

6.1 Website Marketing Strategy

We hope to be able to secure links to our website from the local city and chamber of commerce websites as well as local construction-related websites that we can affiliate with.

6.2 Development Requirements

We will contract with a Website developer to initially design the look and information provided on the website. Our initial cost for this design also includes the first six months of website maintenance by the website developer. In October, we plan to hire a technician with experience in website maintenance to troubleshoot and maintain the Website internally.

Once the business has progressed, we will either increase this person’s hours from temporary to a full-time position, or we will hire a second temporary technical position to assist in the re-design and expansion of the website. Our long-term goal is to have an online store for the sale of building materials and components.

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Management Summary

The company’s management philosophy will be based on responsibility and mutual respect. Twin Brothers Construction will maintain an environment and structure that will encourage productivity and respect for customers and fellow employees.

TBC will be responsible to its employees and sub-contractors, the men and women who will work with the company throughout the state. At TBC everyone will be considered as an individual and the company will respect their dignity and recognize their merit. Employees will be encouraged to have a sense of security and pride in their jobs. Additionally, employees will be free to make suggestions and complaints. The company will afford equal opportunity for employment, development, and advancement for those qualified.

TBC employees will be committed to:

  • Providing a safe work environment to protect employees, the employees of customers and sub-contractors, and the public.
  • Supplying safe products for customers.
  • Continuously improving the company’s safety program to reduce the risk of accidents and occupational illness in a changing work environment.
  • Encouraging employees to participate in accident prevention programs and take personal responsibility for their own and their co-workers’ health and safety.
  • Regulatory compliance and contribution to high safety standards for our industry.
  • Monitoring workplaces, enforcing safe work practices, and communicating the company’s safety performance to employees and other stakeholders.
  • Making safety a value-added service that the company provides to its customers.

The company is planning to expand its personnel to add more job superintendents as soon as the number of projects increases. These superintendents will have the following duties:

Direct supervision of all work at the job sites:

  • Quality Control
  • Scheduling sub-contractors and material deliveries  
  • Verifying and insuring that all work is done in accordance with plans
  • Insuring that all work is performed in accordance with all OSHA guidelines

7.1 Personnel Plan

The personnel plan is based on the two owners to guide and oversee the operations that will be managed by themselves. Having been in business for over 25 years, they have agreed to draw very low salaries for the first two years to offset some of the initial expenses in starting the business. 

For the first year, the company will hire temporary and part-time employees and sub-contract with consultants and construction professionals to perform the variety of tasks needed. Also, our contracted construction personnel expenses are reflected in our Sales Forecast as cost of sales, not part of our personnel table, since they will not be regular employees of the business.

Personnel Plan
Year 1 Year 2 Year 3
Chairman (Principal Owner) $18,000 $25,000 $60,000
CEO (Secondary Owner) $18,000 $25,000 $60,000
Office Clerk (Temporary Hire) $17,250 $32,000 $32,000
Foreman (Temporary Hire) $21,600 $42,000 $42,000
Technical Employee (Part-time) $9,000 $25,000 $25,000
Total People 5 7 8
Total Payroll $83,850 $149,000 $219,000

7.2 Safety

TBC will be committed to conducting business in a manner that protects the health and safety of all employees, customers, and persons living in the community where it operates. To accomplish this, the company will ensure that it complies with current Health Administration and Occupational Health and Safety laws and will maintain its operations, procedures, technologies, and policies accordingly.

Each employee will have the responsibility to fully comply with established safety rules and to perform work in such a manner as to prevent injuries to themselves and others. TBC will be very concerned about job-site safety and plans to set up a comprehensive safety program.

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Financial Plan

The brothers have long-term experience in the local construction industry. They are willing to invest heavily in this new company and their accumulated experience will insure success for the new venture. It will be important to watch closely the salaries and regular expenses to assure that the company will not suffer from lack of sufficient cash to fund its operations.

  1. We assume a conservative entrance and steady growth in the market.
  2. We assume a slow financial progress based on initially conservative sales against highest expenses.
  3. We assume there will not be an economic crash that would greatly hinder our target market’s access to their personal luxury finds.

The following sections describe the financials for TBC:

8.1 Projected Profit and Loss

Twin Brothers Construction is in the early stage of development, thus initial projections have only been made based on the sales projections and efficient cost control measures in place. Our first year monthly net profits will become positive by October, but we will still close the year with negative profit. This is primarily because of personnel expenses, which include salaries and the cost of sales for sub-contractors.

Commercial contractor business plan, financial plan chart image

Commercial contractor business plan, financial plan chart image

Commercial contractor business plan, financial plan chart image

Commercial contractor business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $267,000 $488,750 $772,938
Direct Cost of Sales $112,200 $177,500 $265,575
Other $0 $0 $0
Total Cost of Sales $112,200 $177,500 $265,575
Gross Margin $154,800 $311,250 $507,363
Gross Margin % 57.98% 63.68% 65.64%
Expenses
Payroll $83,850 $149,000 $219,000
Sales and Marketing and Other Expenses $7,500 $10,000 $0
Depreciation $0 $0 $0
Gasoline and oil $3,600 $3,750 $4,800
Telephone $1,500 $2,400 $3,500
Utilities $4,800 $11,250 $10,282
Insurance $9,000 $8,226 $24,000
Rent $7,478 $20,000 $25,000
Payroll Taxes $6,522 $0 $0
Website Maintenance & Support $4,200 $6,000 $9,375
Consultants $6,000 $7,500 $9,000
Advertising $6,000 $1,980 $3,500
Misc. Other Expenses $1,800 $2,500 $267,127
Total Operating Expenses $142,250 $222,606 $575,584
Profit Before Interest and Taxes $12,550 $88,644 ($68,222)
EBITDA $12,550 $88,644 ($68,222)
Interest Expense $625 $7,500 $11,250
Taxes Incurred $3,578 $24,343 $0
Net Profit $8,348 $56,801 ($79,472)
Net Profit/Sales 3.13% 11.62% -10.28%

8.2 Break-even Analysis

During the first year of operations, the break-even monthly sales volume is estimated as shown below. Our average percent variable reflects our cost of sales which covers contracted construction payroll costs.

Commercial contractor business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $20,446
Assumptions:
Average Percent Variable Cost 42%
Estimated Monthly Fixed Cost $11,854

8.3 Projected Cash Flow

We have set our initial Cash at $50,000 so that we have flexibility in handling any unexpected changes in cash flow in the early months to cover expenses. The following table outlines are cash flow estimates.

Commercial contractor business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $267,000 $488,750 $772,938
Subtotal Cash from Operations $267,000 $488,750 $772,938
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 $75,000 $0 $75,000
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 $342,000 $488,750 $847,938
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $83,850 $149,000 $219,000
Bill Payments $152,974 $281,521 $604,604
Subtotal Spent on Operations $236,824 $430,521 $823,604
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $100,000 $0 $100,000
Dividends $0 $0 $0
Subtotal Cash Spent $336,824 $430,521 $923,604
Net Cash Flow $5,176 $58,229 ($75,667)
Cash Balance $55,176 $113,405 $37,738

8.4 Projected Balance Sheet

The following table outlines our Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $55,176 $113,405 $37,738
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $60,176 $118,405 $42,738
Long-term Assets
Long-term Assets $100,000 $100,000 $200,000
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $100,000 $100,000 $200,000
Total Assets $160,176 $218,405 $242,738
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,828 $23,256 $52,061
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $21,828 $23,256 $52,061
Long-term Liabilities $75,000 $75,000 $150,000
Total Liabilities $96,828 $98,256 $202,061
Paid-in Capital $90,000 $90,000 $90,000
Retained Earnings ($35,000) ($26,652) $30,149
Earnings $8,348 $56,801 ($79,472)
Total Capital $63,348 $120,149 $40,677
Total Liabilities and Capital $160,176 $218,405 $242,738
Net Worth $63,348 $120,149 $40,677

8.5 Business Ratios

The following Ratios table includes industry profile comparison ratios for Commercial and Office Building Contractors (Standard Industry Code #1542).

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 83.05% 58.15% -3.57%
Percent of Total Assets
Other Current Assets 3.12% 2.29% 2.06% 39.87%
Total Current Assets 37.57% 54.21% 17.61% 91.45%
Long-term Assets 62.43% 45.79% 82.39% 8.55%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 13.63% 10.65% 21.45% 34.87%
Long-term Liabilities 46.82% 34.34% 61.79% 15.42%
Total Liabilities 60.45% 44.99% 83.24% 50.29%
Net Worth 39.55% 55.01% 16.76% 49.71%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 57.98% 63.68% 65.64% 17.83%
Selling, General & Administrative Expenses 50.39% 31.80% 27.73% 7.07%
Advertising Expenses 4.95% 6.32% 5.54% 0.25%
Profit Before Interest and Taxes 4.70% 18.14% -8.83% 1.85%
Main Ratios
Current 2.76 5.09 0.82 2.34
Quick 2.76 5.09 0.82 1.12
Total Debt to Total Assets 60.45% 44.99% 83.24% 57.63%
Pre-tax Return on Net Worth 18.83% 67.54% -195.37% 4.01%
Pre-tax Return on Assets 7.45% 37.15% -32.74% 9.46%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 3.13% 11.62% -10.28% n.a
Return on Equity 13.18% 47.28% -195.37% n.a
Activity Ratios
Accounts Payable Turnover 8.01 12.17 12.17 n.a
Payment Days 27 29 22 n.a
Total Asset Turnover 1.67 2.24 3.18 n.a
Debt Ratios
Debt to Net Worth 1.53 0.82 4.97 n.a
Current Liab. to Liab. 0.23 0.24 0.26 n.a
Liquidity Ratios
Net Working Capital $38,348 $95,149 ($9,323) n.a
Interest Coverage 20.08 11.82 -6.06 n.a
Additional Ratios
Assets to Sales 0.60 0.45 0.31 n.a
Current Debt/Total Assets 14% 11% 21% n.a
Acid Test 2.76 5.09 0.82 n.a
Sales/Net Worth 4.21 4.07 19.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Direct Construction Projects 0% $0 $0 $0 $10,000 $10,000 $10,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000
Building Renovations 0% $7,500 $7,500 $8,000 $8,000 $9,000 $9,000 $10,000 $10,000 $12,000 $12,000 $15,000 $15,000
Building Rentals 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sale of Components and Goods 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other 0% $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Total Sales $7,500 $7,500 $8,000 $19,000 $20,000 $20,000 $26,000 $26,000 $28,000 $33,000 $36,000 $36,000
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
All construction work 40% $0 $0 $0 $4,000 $4,000 $4,000 $6,000 $6,000 $6,000 $8,000 $8,000 $8,000
Renovations 40% $3,000 $3,000 $3,200 $3,200 $3,600 $3,600 $4,000 $4,000 $4,800 $4,800 $6,000 $6,000
Rentals 20% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sale of Components and Goods 20% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other 10% $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Subtotal Direct Cost of Sales $3,000 $3,000 $3,200 $8,200 $8,600 $8,600 $11,000 $11,000 $11,800 $13,800 $15,000 $15,000
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Chairman (Principal Owner) 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
CEO (Secondary Owner) 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Office Clerk (Temporary Hire) 0% $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,500 $1,500 $1,500 $1,750 $1,750 $1,750
Foreman (Temporary Hire) 0% $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Technical Employee (Part-time) 0% $0 $0 $0 $0 $0 $0 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Total People 3 3 3 4 4 4 5 5 5 5 5 5
Total Payroll $4,250 $4,250 $4,250 $6,650 $6,650 $6,650 $8,400 $8,400 $8,400 $8,650 $8,650 $8,650

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Sales on Credit 0 0 0 0 0 0 0 0 0 0 0 0
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $7,500 $7,500 $8,000 $19,000 $20,000 $20,000 $26,000 $26,000 $28,000 $33,000 $36,000 $36,000
Direct Cost of Sales $3,000 $3,000 $3,200 $8,200 $8,600 $8,600 $11,000 $11,000 $11,800 $13,800 $15,000 $15,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $3,000 $3,000 $3,200 $8,200 $8,600 $8,600 $11,000 $11,000 $11,800 $13,800 $15,000 $15,000
Gross Margin $4,500 $4,500 $4,800 $10,800 $11,400 $11,400 $15,000 $15,000 $16,200 $19,200 $21,000 $21,000
Gross Margin % 60.00% 60.00% 60.00% 56.84% 57.00% 57.00% 57.69% 57.69% 57.86% 58.18% 58.33% 58.33%
Expenses
Payroll $4,250 $4,250 $4,250 $6,650 $6,650 $6,650 $8,400 $8,400 $8,400 $8,650 $8,650 $8,650
Sales and Marketing and Other Expenses $500 $500 $500 $500 $500 $500 $750 $750 $750 $750 $750 $750
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gasoline and oil $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Telephone $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125
Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Rent $1,500 $543 $543 $543 $543 $543 $543 $543 $543 $543 $543 $543
Payroll Taxes 15% $543 $543 $543 $543 $543 $543 $543 $543 $543 $543 $543 $544
Website Maintenance & Support $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350
Consultants $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Advertising 15% $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Misc. Other Expenses $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Total Operating Expenses $9,868 $8,912 $8,912 $11,312 $11,312 $11,312 $13,312 $13,312 $13,312 $13,562 $13,562 $13,562
Profit Before Interest and Taxes ($5,368) ($4,412) ($4,112) ($512) $88 $88 $1,688 $1,688 $2,888 $5,638 $7,438 $7,438
EBITDA ($5,368) ($4,412) ($4,112) ($512) $88 $88 $1,688 $1,688 $2,888 $5,638 $7,438 $7,438
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $625
Taxes Incurred ($1,611) ($1,324) ($1,234) ($154) $26 $26 $506 $506 $866 $1,691 $2,231 $2,044
Net Profit ($3,758) ($3,088) ($2,878) ($358) $62 $62 $1,182 $1,182 $2,022 $3,947 $5,207 $4,769
Net Profit/Sales -50.11% -41.18% -35.98% -1.89% 0.31% 0.31% 4.54% 4.54% 7.22% 11.96% 14.46% 13.25%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $7,500 $7,500 $8,000 $19,000 $20,000 $20,000 $26,000 $26,000 $28,000 $33,000 $36,000 $36,000
Subtotal Cash from Operations $7,500 $7,500 $8,000 $19,000 $20,000 $20,000 $26,000 $26,000 $28,000 $33,000 $36,000 $36,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $75,000
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $7,500 $7,500 $8,000 $19,000 $20,000 $20,000 $26,000 $26,000 $28,000 $33,000 $36,000 $111,000
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $4,250 $4,250 $4,250 $6,650 $6,650 $6,650 $8,400 $8,400 $8,400 $8,650 $8,650 $8,650
Bill Payments $234 $6,986 $6,348 $6,831 $12,728 $13,288 $13,393 $16,418 $16,457 $17,672 $20,461 $22,158
Subtotal Spent on Operations $4,484 $11,236 $10,598 $13,481 $19,378 $19,938 $21,793 $24,818 $24,857 $26,322 $29,111 $30,808
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $4,484 $11,236 $10,598 $13,481 $19,378 $19,938 $21,793 $24,818 $24,857 $26,322 $29,111 $130,808
Net Cash Flow $3,016 ($3,736) ($2,598) $5,519 $622 $62 $4,207 $1,182 $3,143 $6,678 $6,889 ($19,808)
Cash Balance $53,016 $49,281 $46,683 $52,202 $52,824 $52,886 $57,093 $58,275 $61,418 $68,095 $74,984 $55,176
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $50,000 $53,016 $49,281 $46,683 $52,202 $52,824 $52,886 $57,093 $58,275 $61,418 $68,095 $74,984 $55,176
Other Current Assets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Current Assets $55,000 $58,016 $54,281 $51,683 $57,202 $57,824 $57,886 $62,093 $63,275 $66,418 $73,095 $79,984 $60,176
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000
Total Assets $55,000 $58,016 $54,281 $51,683 $57,202 $57,824 $57,886 $62,093 $63,275 $66,418 $73,095 $79,984 $160,176
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $6,774 $6,127 $6,407 $12,285 $12,845 $12,845 $15,871 $15,871 $16,992 $19,723 $21,405 $21,828
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $6,774 $6,127 $6,407 $12,285 $12,845 $12,845 $15,871 $15,871 $16,992 $19,723 $21,405 $21,828
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $75,000
Total Liabilities $0 $6,774 $6,127 $6,407 $12,285 $12,845 $12,845 $15,871 $15,871 $16,992 $19,723 $21,405 $96,828
Paid-in Capital $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000 $90,000
Retained Earnings ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000) ($35,000)
Earnings $0 ($3,758) ($6,846) ($9,725) ($10,083) ($10,021) ($9,960) ($8,778) ($7,596) ($5,575) ($1,628) $3,579 $8,348
Total Capital $55,000 $51,242 $48,154 $45,275 $44,917 $44,979 $45,040 $46,222 $47,404 $49,425 $53,372 $58,579 $63,348
Total Liabilities and Capital $55,000 $58,016 $54,281 $51,683 $57,202 $57,824 $57,886 $62,093 $63,275 $66,418 $73,095 $79,984 $160,176
Net Worth $55,000 $51,242 $48,154 $45,275 $44,917 $44,979 $45,040 $46,222 $47,404 $49,425 $53,372 $58,579 $63,348

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