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Gaming Futures, LLC

Executive Summary

Gaming Futures, LLC, provides Windows® application development/support, PlayStation2® development, XBox® development, 2D and 3D art and visual effects, and project guidance. Gaming Futures is a game development studio formed by veterans of Modicum On-Line and Axiomatic InterRational. As developers of the best-selling and critically acclaimed “DreæmWhyrks” series, Gaming Futures’ talented core team members have produced five titles together, and have individual experience with dozens more. Gaming Futures is committed to creating high-quality, innovative, successful games and software.

We offer the following:

  • Game concepts and development for PC, PS2®, XBox®, Pocket PC®.
  • Game platform ports: PC/PS2/XBox/Game Boy®.
  • 2D and 3D art, programming, libraries to spec.
  • Interface design and software enhancement.
  • Cohesive, talented development team with years of experience shipping products together.
  • Proven track record: DreæmWhyrks series has over 3 million units sold to date.
  • On time and on budget shipping.

The company is forming out of the ashes of Axiomatic InterRational which shut down last June. Gaming Futures is the core group of the last DreæmWhyrks project at Axiomatic. The DreæmWhyrks line has shipped over 3 million units. The production team has four years of successful product development as a team. Individually, the group has over 30 years of experience and has contributed to over 40 software products.

Bill Kerl, Project Manager for Gaming Futures, believes the company is well positioned to be a valuable resource to gaming companies that are seeking cost-effective ways to implement a gaming design mission that will meet projected completion dates. One of the greatest obstacles is the ability of the production team to perform without wasted effort and resources. Gaming Futures has a documented history of completing its projects under budget and on time.

Currently, the company has been successful in acquiring three contracts with the following companies:

  • Clear Mountain Productions
  • Weaver Farm, Inc.

Note: Windows®, PlayStation2®, PS2®, Xbox®, Pocket PC® , and Game Boy® are registered trademarks of their respective corporations.

Computer programming business plan, executive summary chart image

1.1 Objectives

Gaming Futures’ objectives are as follows:

  • Achieve sales goal of $200,000 during first year of operation.
  • Achieve a customer base of 40 companies.
  • Increase sales by 15% during the second year of operation.

1.2 Mission

The mission of Gaming Futures is to provide the highest quality service through the development of innovative, exciting products to the interactive entertainment industry.

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Company Summary

Gaming Futures, LLC, is a game development studio providing Windows application development/support, PS2 development, XBox development, 2D and 3D art and visual effects, and project guidance. The company will be organized as a Limited Liability Corporation.

2.1 Company Ownership

Gaming Futures, LLC is owned by its team of developers:

  • Bill Kerl
  • Diane Huber
  • Marcus Hathcock
  • Jillian Daley
  • Jeremy Lang

2.2 Company Locations and Facilities

Gaming Futures is located in a 3,000 square foot office space in the Northwest Industrial Park in northwest Madison.

2.3 Start-up Summary

The start-up expense for the Gaming Futures is focused primarily on equipment and office space. William, Diane, Marcus, Jillian, and Jeremy will each invest $35,000. In addition, Gaming Futures will secure a $100,000 long term loan.

Computer programming business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $124,300
Start-up Assets to Fund $150,700
Total Funding Required $275,000
Assets
Non-cash Assets from Start-up $90,000
Cash Requirements from Start-up $60,700
Additional Cash Raised $0
Cash Balance on Starting Date $60,700
Total Assets $150,700
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $100,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $100,000
Capital
Planned Investment
Bill Kerl $35,000
Diane Huber $35,000
Marcus Hathcock $35,000
Jillian Daley $35,000
Jeremy Lang $35,000
Additional Investment Requirement $0
Total Planned Investment $175,000
Loss at Start-up (Start-up Expenses) ($124,300)
Total Capital $50,700
Total Capital and Liabilities $150,700
Total Funding $275,000
Start-up
Requirements
Start-up Expenses
Legal $1,000
Stationery etc. $400
Brochures $400
Insurance $1,000
Rent $1,500
Expensed Equipment $120,000
Total Start-up Expenses $124,300
Start-up Assets
Cash Required $60,700
Other Current Assets $20,000
Long-term Assets $70,000
Total Assets $150,700
Total Requirements $275,000

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Services

Gaming Futures’ cohesive, talented development team offer their clients:

  • Game concepts and development for PC, PS2, Xbox, Pocket PC
  • Game platform ports: PC/PS2/Xbox/Game Boy
  • 2D and 3D art, programming, libraries to spec.
  • Interface design and software enhancement.
  • On time and on budget shipping.
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Market Analysis Summary

According to a new report from DFC Intelligence, recent sales indicate that the video game market is poised for impressive growth. The report forecasts that annual unit sales of video games and PC games in the U.S. is expected to grow over 40% from 2001 to 2006. The successful introduction of four new game systems in 2000 and 2001 meant that the industry was able to avoid the major downturn in sales that has occurred in past platform transitions. According to DFC Intelligence, the industry should experience another year of record sales in 2002.

The interactive games industry is a major economic force. With an estimated global value of some $10 to $20 billion, the industry rivals Hollywood in revenues and is now recognized as a propulsive force behind the creation of markets for information and communication technologies. Games account for nearly one-third of consumer software sales in North America.

4.1 Target Market Segment Strategy

Not only was the video game market not slowed by a softening economy or the terrorist attacks, but 2001 turned out to be the best year ever for the U.S. video game industry. The total U.S. video game industry grew from $6.6 billion in 2000 to $9.4 billion in 2001. The previous all-time record was $6.9 billion in 1999.

DFC estimates that by 2006 the three leading games systems, the Sony PlayStation2, the Microsoft Xbox and the Nintendo GameCube, should have combined U.S. sales of over 60 million units. The report forecasts strong sales for all three systems. There are currently 3,000 gaming companies that are producing games for one or more of the leading gaming systems. While strong market growth is predicted, there are also many challenges facing the interactive entertainment industry.

Sales of the total U.S. interactive entertainment software market, which includes PC entertainment and video game software, approached $6 billion in 2001 versus $5.4 billion in 2000, DFC found. Console and portable software sales rose 8.3 percent in unit sales, compared to 2000, while PC entertainment software experienced a unit increase of 3.8 percent. The main challenge is that while unit sales are expected to rise rapidly, development and marketing costs are also soaring.

4.2 Service Business Analysis

Companies are combating development costs by outsourcing segments of the development project. Currently, it is estimated that 30% of project work is outsourced. There are a number of advantages to this strategy.

By outsourcing, companies can take advantage of a tremendous gaming experience base without paying the personnel price tag to retain the talent on payroll. By negotiating a price for the outsourcing, companies can also cap development cost. More importantly, as few larger companies compete in the marketplace for dominance, a number of service firms will emerge to fill the demand for quality developers that are necessary for specific projects, much like the rest of software industry. It is estimated that product development in the software industry can save upwards to 30% of development costs by outsourcing key elements of the development process.

4.2.1 Competition and Buying Patterns

The interactive game industry is based on the hype that is created by core players. The ability to create product that satisfies the gaming demands of core players is a critical consideration when outsourcing opportunities emerge. This unique cultural aspect of the industry influences how companies outsource. Technological expertise is secondary to the ability to create a product that the target group will immediately be comfortable with. Companies are looking for production track records with products with similar play devices that were focused on similar target users. Typically, a selected group of firms are asked to submit proposals for the outsourcing assignment much like an ad campaign. The firm with the best ideas and the best talent to implement the idea gets the contract. Over 80% of the interactive game companies have outsourced segments of game development. This represents a client base of 400 companies.

Currently there are 100+ firms that compete for outsourcing contracts in the interactive game industry. Because of the unique cultural aspect of the interactive gaming community, companies specialize in gaming devices or user groups in order to gain advantage in the proposal process.

The team’s track record is the most important pivotal issue when competing for outsourcing contracts. A firm that has an intact team that has achieved past project goals has an advantage in the bidding process. Production companies are looking for assurances that deadlines will be met and the quality will be there. The production of a game is on a tight schedule and any missed deadline will ripple effect over the entire project, and could result in missed revenues and increased expenses.

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Strategy and Implementation Summary

Gaming Futures’ developers, William Kerl and Diane Huber, have extensive connections throughout the gaming industry. They will be responsible for marketing the company’s services to potential customers.

5.1 Competitive Edge

The competitive advantage of Gaming Futures is always bringing in a project before the projected deadline. As noted in the Market Analysis Summary, one of the greatest challenges will be production costs. Nowhere is this more critical than with outsourced projects. If a company can produce by deadline, they will get more work.

5.2 Marketing Strategy

William Kerl and Diane Huber will approach the 120 production companies that are currently producing video games. A marketing CD has been created for these presentations.

William and Diane have begun the process of presenting their company’s services to gaming production companies. The team has created a presentation program that will be the centerpiece of the marketing program.

Currently, the company has been successful in acquiring three contracts with the following companies:

  • Clear Mountain Productions
  • Weaver Farm, Inc.

The company will continue to aggressively pursue new contracts.

5.3 Sales Strategy

Gaming Futures anticipates that sales will start during the third month. The first two months of operation will have flat sales. After that point, sales will increase.

5.3.1 Sales Forecast

The following is the sales forecast for three years. The owners have agreed not to take a salary for the first three months of the operation, and during this phase all five owners will be involved in sales.

Computer programming business plan, strategy and implementation summary chart image

Computer programming business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Projects $279,000 $380,000 $644,000
Other $0 $0 $0
Total Sales $279,000 $380,000 $644,000
Direct Cost of Sales Year 1 Year 2 Year 3
Projects $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

5.4 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

What the table doesn’t show is the commitment behind it. Our business plan includes complete provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings to discuss the variance and course corrections.

Computer programming business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Office Setup 5/1/2002 5/20/2002 $5,000 William Kerl Admin
Equipment/Network Setup 5/1/2002 5/20/2002 $100,000 Jeremy Lang Admin
Marketing CD 3/1/2002 4/1/2002 $2,000 Diane Huber Web
Face to Face Selling 4/1/2001 6/1/2002 $2,000 All Web
Totals $109,000

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Personnel Plan

Gaming Futures staff is as follows:

Bill Kerl- Producer/New Business
Starting out with games in 1993 programming on the 3DO, then programming and producing DreæmWhyrks games since 1995, Bill is driven to get things out. Planning for success is the most important part of any project.

Diane Huber – Lead Engineer
Diane has been programming computers for over 25 years and has been making great games for the last 15 years, including DreæmWhyrks, Mighty Quinn, and Fire Mountain.

Marcus Hathcock- Programmer/GamePlay
Marcus is a software engineer who has 5 years experience implementing interfaces and gameplay; most of this time was spent working on the DreæmWhyrks series at Axiomatic.

Jillian Daley- Senior Software Engineer
With 11 years programming experience building games, tools, and technologies, she’s been involved in all aspects of several full 3D sims including Penthesilea and the DreæmWhyrks series.

Jeremy Lang- Software Engineer
Jeremy has specialized in using artificial intelligence to simulate physical events. For the past six years Jeremy’s projects at Axiomatic have included the DreæmWhyrks series, Mighty Quinn, Fire Mountain, and Storm Warnings.

Personnel Plan
Year 1 Year 2 Year 3
Bill Kerl $27,000 $42,000 $50,000
Diane Huber $27,000 $42,000 $50,000
Marcus Hathcock $27,000 $42,000 $50,000
Jillian Daley $27,000 $42,000 $50,000
Jeremy Lang $27,000 $42,000 $50,000
President $0 $0 $120,000
Total People 5 5 6
Total Payroll $135,000 $210,000 $370,000

6.1 Management Team Gaps

Currently, the firm doesn’t have a corporate leader to manage the anticipated growth of the company during its third year of operation and beyond. As sales grow, the focus will be on production. The management of the company’s resources and decisions on how to effectively grow the firm will demand an individual with extensive management expertise as well as experience in the interactive gaming industry. This is critical vacancy will be addressed during the third year. The firm will hire a President to fill this role.

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Financial Plan

The following is the financial plan for Gaming Futures. The various topic tables display annual figures for the first three years. Monthly figures for the first year are presented in the appendix.

7.1 Break-even Analysis

The following table and chart show our Break-even Analysis.

Computer programming business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $16,971
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $16,971

7.2 Projected Profit and Loss

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

Computer programming business plan, financial plan chart image

Computer programming business plan, financial plan chart image

Computer programming business plan, financial plan chart image

Computer programming business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $279,000 $380,000 $644,000
Direct Cost of Sales $0 $0 $0
Other Production Expenses $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $279,000 $380,000 $644,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $135,000 $210,000 $370,000
Sales and Marketing and Other Expenses $12,000 $15,000 $20,000
Depreciation $9,996 $10,000 $10,000
Leased Equipment $0 $0 $0
Utilities $4,800 $4,800 $4,800
Insurance $3,600 $3,600 $3,600
Rent $18,000 $18,000 $18,000
Payroll Taxes $20,250 $31,500 $55,500
Other $0 $0 $0
Total Operating Expenses $203,646 $292,900 $481,900
Profit Before Interest and Taxes $75,354 $87,100 $162,100
EBITDA $85,350 $97,100 $172,100
Interest Expense $8,960 $7,080 $5,080
Taxes Incurred $19,918 $24,006 $47,106
Net Profit $46,476 $56,014 $109,914
Net Profit/Sales 16.66% 14.74% 17.07%

7.3 Projected Cash Flow

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

Computer programming business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $69,750 $95,000 $161,000
Cash from Receivables $142,750 $260,927 $420,075
Subtotal Cash from Operations $212,500 $355,927 $581,075
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 $212,500 $355,927 $581,075
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $135,000 $210,000 $370,000
Bill Payments $73,476 $109,491 $149,968
Subtotal Spent on Operations $208,476 $319,491 $519,968
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 $19,200 $20,000 $20,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $227,676 $339,491 $539,968
Net Cash Flow ($15,176) $16,435 $41,107
Cash Balance $45,524 $61,959 $103,066

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 $45,524 $61,959 $103,066
Accounts Receivable $66,500 $90,573 $153,498
Other Current Assets $20,000 $20,000 $20,000
Total Current Assets $132,024 $172,533 $276,564
Long-term Assets
Long-term Assets $70,000 $70,000 $70,000
Accumulated Depreciation $9,996 $19,996 $29,996
Total Long-term Assets $60,004 $50,004 $40,004
Total Assets $192,028 $222,537 $316,568
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $14,052 $8,547 $12,665
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $14,052 $8,547 $12,665
Long-term Liabilities $80,800 $60,800 $40,800
Total Liabilities $94,852 $69,347 $53,465
Paid-in Capital $175,000 $175,000 $175,000
Retained Earnings ($124,300) ($77,824) ($21,810)
Earnings $46,476 $56,014 $109,914
Total Capital $97,176 $153,190 $263,104
Total Liabilities and Capital $192,028 $222,537 $316,568
Net Worth $97,176 $153,190 $263,104

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 7371, Computer Programming Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 36.20% 69.47% 10.40%
Percent of Total Assets
Accounts Receivable 34.63% 40.70% 48.49% 24.10%
Other Current Assets 10.42% 8.99% 6.32% 42.90%
Total Current Assets 68.75% 77.53% 87.36% 71.10%
Long-term Assets 31.25% 22.47% 12.64% 28.90%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.32% 3.84% 4.00% 47.80%
Long-term Liabilities 42.08% 27.32% 12.89% 19.10%
Total Liabilities 49.39% 31.16% 16.89% 66.90%
Net Worth 50.61% 68.84% 83.11% 33.10%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 83.34% 85.26% 82.93% 82.10%
Advertising Expenses 4.30% 3.95% 3.11% 1.20%
Profit Before Interest and Taxes 27.01% 22.92% 25.17% 2.00%
Main Ratios
Current 9.40 20.19 21.84 1.30
Quick 9.40 20.19 21.84 1.03
Total Debt to Total Assets 49.39% 31.16% 16.89% 66.90%
Pre-tax Return on Net Worth 68.32% 52.24% 59.68% 3.10%
Pre-tax Return on Assets 34.58% 35.96% 49.60% 9.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 16.66% 14.74% 17.07% n.a
Return on Equity 47.83% 36.57% 41.78% n.a
Activity Ratios
Accounts Receivable Turnover 3.15 3.15 3.15 n.a
Collection Days 55 101 92 n.a
Accounts Payable Turnover 6.23 12.17 12.17 n.a
Payment Days 27 40 25 n.a
Total Asset Turnover 1.45 1.71 2.03 n.a
Debt Ratios
Debt to Net Worth 0.98 0.45 0.20 n.a
Current Liab. to Liab. 0.15 0.12 0.24 n.a
Liquidity Ratios
Net Working Capital $117,972 $163,986 $263,900 n.a
Interest Coverage 8.41 12.30 31.91 n.a
Additional Ratios
Assets to Sales 0.69 0.59 0.49 n.a
Current Debt/Total Assets 7% 4% 4% n.a
Acid Test 4.66 9.59 9.72 n.a
Sales/Net Worth 2.87 2.48 2.45 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
Projects 0% $0 $0 $10,000 $15,000 $17,000 $24,000 $28,000 $30,000 $30,000 $35,000 $40,000 $50,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $0 $10,000 $15,000 $17,000 $24,000 $28,000 $30,000 $30,000 $35,000 $40,000 $50,000
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
Projects $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
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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
Bill Kerl 0% $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Diane Huber 0% $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Marcus Hathcock 0% $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Jillian Daley 0% $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Jeremy Lang 0% $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
President 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 5 5 5 5 5 5 5 5 5 5 5 5
Total Payroll $0 $0 $0 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

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%
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 $0 $0 $10,000 $15,000 $17,000 $24,000 $28,000 $30,000 $30,000 $35,000 $40,000 $50,000
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gross Margin $0 $0 $10,000 $15,000 $17,000 $24,000 $28,000 $30,000 $30,000 $35,000 $40,000 $50,000
Gross Margin % 0.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Expenses
Payroll $0 $0 $0 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Sales and Marketing and Other Expenses $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Depreciation $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Payroll Taxes 15% $0 $0 $0 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $4,033 $4,033 $4,033 $21,283 $21,283 $21,283 $21,283 $21,283 $21,283 $21,283 $21,283 $21,283
Profit Before Interest and Taxes ($4,033) ($4,033) $5,967 ($6,283) ($4,283) $2,717 $6,717 $8,717 $8,717 $13,717 $18,717 $28,717
EBITDA ($3,200) ($3,200) $6,800 ($5,450) ($3,450) $3,550 $7,550 $9,550 $9,550 $14,550 $19,550 $29,550
Interest Expense $820 $807 $793 $780 $767 $753 $740 $727 $713 $700 $687 $673
Taxes Incurred ($1,456) ($1,452) $1,552 ($2,119) ($1,515) $589 $1,793 $2,397 $2,401 $3,905 $5,409 $8,413
Net Profit ($3,397) ($3,388) $3,622 ($4,944) ($3,535) $1,375 $4,184 $5,593 $5,603 $9,112 $12,621 $19,631
Net Profit/Sales 0.00% 0.00% 36.22% -32.96% -20.79% 5.73% 14.94% 18.64% 18.68% 26.03% 31.55% 39.26%

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 $0 $0 $2,500 $3,750 $4,250 $6,000 $7,000 $7,500 $7,500 $8,750 $10,000 $12,500
Cash from Receivables $0 $0 $0 $250 $7,625 $11,300 $12,925 $18,100 $21,050 $22,500 $22,625 $26,375
Subtotal Cash from Operations $0 $0 $2,500 $4,000 $11,875 $17,300 $19,925 $25,600 $28,550 $31,250 $32,625 $38,875
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 $0
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 $0 $0 $2,500 $4,000 $11,875 $17,300 $19,925 $25,600 $28,550 $31,250 $32,625 $38,875
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 $0 $0 $0 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Bill Payments $85 $2,564 $2,654 $5,498 $4,131 $4,771 $6,832 $8,003 $8,573 $8,614 $10,105 $11,645
Subtotal Spent on Operations $85 $2,564 $2,654 $20,498 $19,131 $19,771 $21,832 $23,003 $23,573 $23,614 $25,105 $26,645
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 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
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 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $1,685 $4,164 $4,254 $22,098 $20,731 $21,371 $23,432 $24,603 $25,173 $25,214 $26,705 $28,245
Net Cash Flow ($1,685) ($4,164) ($1,754) ($18,098) ($8,856) ($4,071) ($3,507) $997 $3,377 $6,036 $5,920 $10,630
Cash Balance $59,015 $54,851 $53,096 $34,999 $26,143 $22,071 $18,564 $19,562 $22,938 $28,974 $34,894 $45,524
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 $60,700 $59,015 $54,851 $53,096 $34,999 $26,143 $22,071 $18,564 $19,562 $22,938 $28,974 $34,894 $45,524
Accounts Receivable $0 $0 $0 $7,500 $18,500 $23,625 $30,325 $38,400 $42,800 $44,250 $48,000 $55,375 $66,500
Other Current Assets $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Total Current Assets $80,700 $79,015 $74,851 $80,596 $73,499 $69,768 $72,396 $76,964 $82,362 $87,188 $96,974 $110,269 $132,024
Long-term Assets
Long-term Assets $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000
Accumulated Depreciation $0 $833 $1,666 $2,499 $3,332 $4,165 $4,998 $5,831 $6,664 $7,497 $8,330 $9,163 $9,996
Total Long-term Assets $70,000 $69,167 $68,334 $67,501 $66,668 $65,835 $65,002 $64,169 $63,336 $62,503 $61,670 $60,837 $60,004
Total Assets $150,700 $148,182 $143,185 $148,097 $140,167 $135,603 $137,398 $141,133 $145,698 $149,691 $158,644 $171,106 $192,028
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 $2,479 $2,470 $5,361 $3,974 $4,545 $6,566 $7,717 $8,288 $8,279 $9,720 $11,161 $14,052
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 $2,479 $2,470 $5,361 $3,974 $4,545 $6,566 $7,717 $8,288 $8,279 $9,720 $11,161 $14,052
Long-term Liabilities $100,000 $98,400 $96,800 $95,200 $93,600 $92,000 $90,400 $88,800 $87,200 $85,600 $84,000 $82,400 $80,800
Total Liabilities $100,000 $100,879 $99,270 $100,561 $97,574 $96,545 $96,966 $96,517 $95,488 $93,879 $93,720 $93,561 $94,852
Paid-in Capital $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000 $175,000
Retained Earnings ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300) ($124,300)
Earnings $0 ($3,397) ($6,785) ($3,163) ($8,107) ($11,642) ($10,268) ($6,084) ($490) $5,112 $14,224 $26,845 $46,476
Total Capital $50,700 $47,303 $43,915 $47,537 $42,593 $39,058 $40,432 $44,616 $50,210 $55,812 $64,924 $77,545 $97,176
Total Liabilities and Capital $150,700 $148,182 $143,185 $148,097 $140,167 $135,603 $137,398 $141,133 $145,698 $149,691 $158,644 $171,106 $192,028
Net Worth $50,700 $47,303 $43,915 $47,537 $42,593 $39,058 $40,432 $44,616 $50,210 $55,812 $64,924 $77,545 $97,176

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