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Miles Garden Carpentry

Financial Plan

The following is the financial plan for Miles Garden Carpentry.

7.1 Break-even Analysis

The monthly break-even point is calculated in the table and chart below.

Construction carpenter business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $20,211
Assumptions:
Average Percent Variable Cost 28%
Estimated Monthly Fixed Cost $14,557

7.2 Projected Profit and Loss

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

Construction carpenter business plan, financial plan chart image

Construction carpenter business plan, financial plan chart image

Construction carpenter business plan, financial plan chart image

Construction carpenter business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $311,000 $370,000 $428,000
Direct Cost of Sales $87,000 $110,000 $125,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $87,000 $110,000 $125,000
Gross Margin $224,000 $260,000 $303,000
Gross Margin % 72.03% 70.27% 70.79%
Expenses
Payroll $120,000 $136,000 $166,000
Sales and Marketing and Other Expenses $18,000 $23,000 $28,000
Depreciation $4,284 $4,284 $4,284
Leased Equipment $0 $0 $0
Utilities $2,400 $2,400 $2,400
Insurance $0 $0 $0
Rent $12,000 $12,000 $12,000
Payroll Taxes $18,000 $20,400 $24,900
Other $0 $0 $0
Total Operating Expenses $174,684 $198,084 $237,584
Profit Before Interest and Taxes $49,316 $61,916 $65,416
EBITDA $53,600 $66,200 $69,700
Interest Expense $4,459 $3,501 $2,501
Taxes Incurred $13,457 $17,525 $18,875
Net Profit $31,400 $40,891 $44,041
Net Profit/Sales 10.10% 11.05% 10.29%

7.3 Projected Cash Flow

The following is the projected cash flow for three years.

Construction carpenter business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $311,000 $370,000 $428,000
Subtotal Cash from Operations $311,000 $370,000 $428,000
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 $311,000 $370,000 $428,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $120,000 $136,000 $166,000
Bill Payments $145,527 $183,094 $211,633
Subtotal Spent on Operations $265,527 $319,094 $377,633
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 $9,996 $9,996 $9,996
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $275,523 $329,090 $387,629
Net Cash Flow $35,477 $40,910 $40,371
Cash Balance $48,177 $89,087 $129,458

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $48,177 $89,087 $129,458
Other Current Assets $0 $0 $0
Total Current Assets $48,177 $89,087 $129,458
Long-term Assets
Long-term Assets $35,000 $35,000 $35,000
Accumulated Depreciation $4,284 $8,568 $12,852
Total Long-term Assets $30,716 $26,432 $22,148
Total Assets $78,893 $115,519 $151,606
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,789 $15,520 $17,562
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $9,789 $15,520 $17,562
Long-term Liabilities $40,004 $30,008 $20,012
Total Liabilities $49,793 $45,528 $37,574
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($62,300) ($30,900) $9,991
Earnings $31,400 $40,891 $44,041
Total Capital $29,100 $69,991 $114,031
Total Liabilities and Capital $78,893 $115,519 $151,606
Net Worth $29,100 $69,991 $114,031

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 1751, Carpentry Work, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 18.97% 15.68% 7.90%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 30.30%
Total Current Assets 61.07% 77.12% 85.39% 71.50%
Long-term Assets 38.93% 22.88% 14.61% 28.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.41% 13.43% 11.58% 42.70%
Long-term Liabilities 50.71% 25.98% 13.20% 14.30%
Total Liabilities 63.11% 39.41% 24.78% 57.00%
Net Worth 36.89% 60.59% 75.22% 43.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 72.03% 70.27% 70.79% 31.60%
Selling, General & Administrative Expenses 61.93% 59.22% 60.50% 16.70%
Advertising Expenses 3.86% 4.05% 4.21% 0.50%
Profit Before Interest and Taxes 15.86% 16.73% 15.28% 3.40%
Main Ratios
Current 4.92 5.74 7.37 1.64
Quick 4.92 5.74 7.37 1.28
Total Debt to Total Assets 63.11% 39.41% 24.78% 57.00%
Pre-tax Return on Net Worth 154.15% 83.46% 55.17% 7.50%
Pre-tax Return on Assets 56.86% 50.57% 41.50% 17.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.10% 11.05% 10.29% n.a
Return on Equity 107.90% 58.42% 38.62% n.a
Activity Ratios
Accounts Payable Turnover 15.87 12.17 12.17 n.a
Payment Days 27 24 28 n.a
Total Asset Turnover 3.94 3.20 2.82 n.a
Debt Ratios
Debt to Net Worth 1.71 0.65 0.33 n.a
Current Liab. to Liab. 0.20 0.34 0.47 n.a
Liquidity Ratios
Net Working Capital $38,388 $73,567 $111,895 n.a
Interest Coverage 11.06 17.69 26.16 n.a
Additional Ratios
Assets to Sales 0.25 0.31 0.35 n.a
Current Debt/Total Assets 12% 13% 12% n.a
Acid Test 4.92 5.74 7.37 n.a
Sales/Net Worth 10.69 5.29 3.75 n.a
Dividend Payout 0.00 0.00 0.00 n.a