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Flash Commercial Photography
Financial Plan
The launch of the business will be financed by the founder’s investment and credit and by investments from limited partners. In exchange for $53,000 investment in the business at startup, limited partners will receive 49% ownership shares. The initial funding requirements are modest for the business.
The growth of the business, beyond the first year, will be financed by the free cash flows generated by the business. This will allow for the expansion of staff to include additional photographers, the ramping up of marketing expenditures, and the resulting increase in sales. Only one photographer will be added per year in order to make sure that there is time for adequate training of new staff.
Start-up Funding
Funding for the business is in part from personal loans, credit cards, and cash investment by the owner, Matte Flash. The remainder of funding will be from one to three limited partners in the form of equity investment.
Start-up Funding | |
Start-up Expenses to Fund | $24,500 |
Start-up Assets to Fund | $46,000 |
Total Funding Required | $70,500 |
Assets | |
Non-cash Assets from Start-up | $31,000 |
Cash Requirements from Start-up | $15,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $15,000 |
Total Assets | $46,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $5,000 |
Long-term Liabilities | $5,000 |
Accounts Payable (Outstanding Bills) | $2,500 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $12,500 |
Capital | |
Planned Investment | |
Owner | $5,000 |
Limited Partners | $53,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $58,000 |
Loss at Start-up (Start-up Expenses) | ($24,500) |
Total Capital | $33,500 |
Total Capital and Liabilities | $46,000 |
Total Funding | $70,500 |
Break-even Analysis
The break even for the business is high, as the salaries of staff are relatively fixed.

Break-even Analysis | |
Monthly Revenue Break-even | $22,228 |
Assumptions: | |
Average Percent Variable Cost | 20% |
Estimated Monthly Fixed Cost | $17,804 |
Projected Profit and Loss
Gross margins are expected to remain consistent, as most costs of the business are not direct costs of sales. The greatest cost of the service is labor, which is part of salaries and not cost of sales, for example.
In year 2, profit is expected to drop as capacity is increased to prepare for growth. This will rectify in future years as sales come in line with the payroll expenses.




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $356,636 | $392,124 | $476,000 | $600,000 | $750,000 |
Direct Cost of Sales | $70,986 | $80,562 | $108,900 | $142,500 | $187,500 |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $70,986 | $80,562 | $108,900 | $142,500 | $187,500 |
Gross Margin | $285,650 | $311,562 | $367,100 | $457,500 | $562,500 |
Gross Margin % | 80.10% | 79.46% | 77.12% | 76.25% | 75.00% |
Expenses | |||||
Payroll | $112,755 | $150,286 | $164,920 | $201,921 | $245,193 |
Marketing/Promotion | $36,000 | $36,000 | $50,000 | $60,000 | $70,000 |
Depreciation | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 |
Rent | $24,000 | $25,200 | $26,460 | $27,783 | $29,172 |
Utilities | $2,400 | $3,000 | $3,500 | $3,800 | $4,200 |
Insurance | $2,400 | $3,000 | $3,500 | $4,000 | $4,500 |
Payroll Taxes | $18,091 | $22,543 | $24,738 | $30,288 | $36,779 |
Other | $12,000 | $14,400 | $17,000 | $20,000 | $25,000 |
Total Operating Expenses | $213,646 | $260,429 | $296,118 | $353,792 | $420,845 |
Profit Before Interest and Taxes | $72,004 | $51,134 | $70,982 | $103,708 | $141,655 |
EBITDA | $78,004 | $57,134 | $76,982 | $109,708 | $147,655 |
Interest Expense | $458 | $0 | $0 | $0 | $0 |
Taxes Incurred | $21,464 | $15,340 | $21,295 | $31,112 | $42,497 |
Net Profit | $50,082 | $35,793 | $49,687 | $72,596 | $99,159 |
Net Profit/Sales | 14.04% | 9.13% | 10.44% | 12.10% | 13.22% |
Projected Cash Flow
Cash flow is expected to be positive after the first month of operations. This is due to the fact that Matte Flash has a proven track record and can hit the ground running with continued work for existing clients. Cash reserves in the company will be increased over the first year to prepare for additional expansion in year two.

Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $71,327 | $78,425 | $95,200 | $120,000 | $150,000 |
Cash from Receivables | $261,059 | $310,351 | $374,897 | $471,273 | $589,443 |
Subtotal Cash from Operations | $332,387 | $388,775 | $470,097 | $591,273 | $739,443 |
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 | $332,387 | $388,775 | $470,097 | $591,273 | $739,443 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $112,755 | $150,286 | $164,920 | $201,921 | $245,193 |
Bill Payments | $174,582 | $198,957 | $251,206 | $314,216 | $393,059 |
Subtotal Spent on Operations | $287,337 | $349,243 | $416,126 | $516,137 | $638,252 |
Additional Cash Spent | |||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $5,000 | $0 | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $5,000 | $0 | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $0 | $21,588 | $30,054 | $40,476 |
Subtotal Cash Spent | $297,337 | $349,243 | $437,714 | $546,191 | $678,729 |
Net Cash Flow | $35,049 | $39,533 | $32,383 | $45,082 | $60,714 |
Cash Balance | $50,049 | $89,582 | $121,964 | $167,046 | $227,760 |
Projected Balance Sheet
The business is projected to show growth in retained earnings (which allow for dividends to be paid) as there are not substantial additional capital expenditures needed after the launch. There will be healthy growth in net worth over the first five years of operation, as additional debt is not required to fund the business.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $50,049 | $89,582 | $121,964 | $167,046 | $227,760 |
Accounts Receivable | $24,249 | $27,598 | $33,501 | $42,228 | $52,785 |
Other Current Assets | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 |
Total Current Assets | $75,299 | $118,180 | $156,466 | $210,274 | $281,546 |
Long-term Assets | |||||
Long-term Assets | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Accumulated Depreciation | $6,000 | $12,000 | $18,000 | $24,000 | $30,000 |
Total Long-term Assets | $24,000 | $18,000 | $12,000 | $6,000 | $0 |
Total Assets | $99,299 | $136,180 | $168,466 | $216,274 | $281,546 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $15,717 | $16,804 | $20,991 | $26,259 | $32,848 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $15,717 | $16,804 | $20,991 | $26,259 | $32,848 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $15,717 | $16,804 | $20,991 | $26,259 | $32,848 |
Paid-in Capital | $58,000 | $58,000 | $58,000 | $58,000 | $58,000 |
Retained Earnings | ($24,500) | $25,582 | $39,787 | $59,420 | $91,539 |
Earnings | $50,082 | $35,793 | $49,687 | $72,596 | $99,159 |
Total Capital | $83,582 | $119,375 | $147,474 | $190,015 | $248,698 |
Total Liabilities and Capital | $99,299 | $136,180 | $168,466 | $216,274 | $281,546 |
Net Worth | $83,582 | $119,375 | $147,474 | $190,015 | $248,698 |
Business Ratios
The business will spend more than the industry average on advertising, for example, in order to promote the competitive advantage of the company on the Web. The overhead reflected by Selling, General & Administrative expense is lower than the industry, as the business will make use of digital tools, reducing the costs of equipment and supplies.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | n.a. | 9.95% | 21.39% | 26.05% | 25.00% | -1.13% |
Percent of Total Assets | ||||||
Accounts Receivable | 24.42% | 20.27% | 19.89% | 19.53% | 18.75% | 20.28% |
Other Current Assets | 1.01% | 0.73% | 0.59% | 0.46% | 0.36% | 59.10% |
Total Current Assets | 75.83% | 86.78% | 92.88% | 97.23% | 100.00% | 83.86% |
Long-term Assets | 24.17% | 13.22% | 7.12% | 2.77% | 0.00% | 16.14% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 15.83% | 12.34% | 12.46% | 12.14% | 11.67% | 40.82% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 36.82% |
Total Liabilities | 15.83% | 12.34% | 12.46% | 12.14% | 11.67% | 77.65% |
Net Worth | 84.17% | 87.66% | 87.54% | 87.86% | 88.33% | 22.35% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 80.10% | 79.46% | 77.12% | 76.25% | 75.00% | 75.47% |
Selling, General & Administrative Expenses | 66.05% | 70.33% | 66.68% | 64.15% | 61.78% | 36.59% |
Advertising Expenses | 10.09% | 9.18% | 10.50% | 10.00% | 9.33% | 0.94% |
Profit Before Interest and Taxes | 20.19% | 13.04% | 14.91% | 17.28% | 18.89% | 6.66% |
Main Ratios | ||||||
Current | 4.79 | 7.03 | 7.45 | 8.01 | 8.57 | 1.49 |
Quick | 4.79 | 7.03 | 7.45 | 8.01 | 8.57 | 1.38 |
Total Debt to Total Assets | 15.83% | 12.34% | 12.46% | 12.14% | 11.67% | 77.65% |
Pre-tax Return on Net Worth | 85.60% | 42.83% | 48.13% | 54.58% | 56.96% | 104.64% |
Pre-tax Return on Assets | 72.05% | 37.55% | 42.13% | 47.95% | 50.31% | 23.39% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 14.04% | 9.13% | 10.44% | 12.10% | 13.22% | n.a |
Return on Equity | 59.92% | 29.98% | 33.69% | 38.21% | 39.87% | n.a |
Activity Ratios | ||||||
Accounts Receivable Turnover | 11.77 | 11.37 | 11.37 | 11.37 | 11.37 | n.a |
Collection Days | 29 | 30 | 29 | 29 | 29 | n.a |
Accounts Payable Turnover | 11.95 | 11.90 | 12.17 | 12.17 | 12.17 | n.a |
Payment Days | 28 | 30 | 27 | 27 | 27 | n.a |
Total Asset Turnover | 3.59 | 2.88 | 2.83 | 2.77 | 2.66 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 0.19 | 0.14 | 0.14 | 0.14 | 0.13 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $59,582 | $101,375 | $135,474 | $184,015 | $248,698 | n.a |
Interest Coverage | 157.10 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||||
Assets to Sales | 0.28 | 0.35 | 0.35 | 0.36 | 0.38 | n.a |
Current Debt/Total Assets | 16% | 12% | 12% | 12% | 12% | n.a |
Acid Test | 3.25 | 5.39 | 5.86 | 6.40 | 6.96 | n.a |
Sales/Net Worth | 4.27 | 3.28 | 3.23 | 3.16 | 3.02 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.43 | 0.41 | 0.41 | n.a |
Long-term Plan
The profitability of the company will increase in absolute terms with growth. However, the gross margins and net profit margins will not increase dramatically over time as the additional growth in revenues requires additional direct labor. To maintain the reputation of the company, this labor cannot be performed by less skilled, lower-wage photographers.
As revenues grow and additional photographers are hired, the CEO will focus a greater percentage of time on sales and prospecting. This will allow for steady growth in revenues while the brand of Flash Commercial Photography becomes established in the market. A larger studio space with multiple rooms can be leased after a critical mass of utilization has been achieved with the current space. This will allow for continued growth.