Our biggest savings of the year
Seminars
Financial Plan
The financial plan depends on initial investment of $25K from the founder plus a five-year loan of $30K. Much as we’d like to bootstrap this business without initial investment, it just isn’t worth it. The rest of the plan is reasonably conservative, but there does have to be money at risk.
The bank loan will be secured with real estate owned by the founder.
8.1 Important Assumptions
Important general assumptions are shown in the following table.
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 | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
8.2 Key Financial Indicators
The benchmarks chart shows changes in sales, operating expenses, gross margin, and collection days. We think the chart speaks for itself, and what it says is that the numbers and assumptions are reasonable.

8.3 Break-even Analysis
Unfortunately, the break-even analysis shows that it takes more than $20,000 per month in sales to break even. That’s not an easy figure to make, especially not in the beginning before the marketing efforts begin to take effect.

Break-even Analysis | |
Monthly Units Break-even | 57 |
Monthly Revenue Break-even | $23,441 |
Assumptions: | |
Average Per-Unit Revenue | $409.64 |
Average Per-Unit Variable Cost | $154.50 |
Estimated Monthly Fixed Cost | $14,600 |
8.4 Projected Profit and Loss
As shown in the following table, the business doesn’t make money in the first year, but turns very profitable in the third.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $257,255 | $444,750 | $707,250 |
Direct Cost of Sales | $97,025 | $122,750 | $162,500 |
Other Production Expenses | $3,500 | $5,000 | $5,000 |
Total Cost of Sales | $100,525 | $127,750 | $167,500 |
Gross Margin | $156,730 | $317,000 | $539,750 |
Gross Margin % | 60.92% | 71.28% | 76.32% |
Expenses | |||
Payroll | $102,000 | $145,000 | $195,000 |
Sales and Marketing and Other Expenses | $49,000 | $62,500 | $86,000 |
Depreciation | $0 | $0 | $0 |
Utilities | $2,400 | $2,400 | $2,400 |
Insurance | $500 | $500 | $500 |
Rent | $6,000 | $6,600 | $7,200 |
Payroll Taxes | $15,300 | $21,750 | $29,250 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $175,200 | $238,750 | $320,350 |
Profit Before Interest and Taxes | ($18,470) | $78,250 | $219,400 |
EBITDA | ($18,470) | $78,250 | $219,400 |
Interest Expense | $3,678 | $1,257 | $0 |
Taxes Incurred | $0 | $23,098 | $65,820 |
Net Profit | ($22,148) | $53,895 | $153,580 |
Net Profit/Sales | -8.61% | 12.12% | 21.72% |
8.5 Projected Cash Flow
With the financing plan as projected, the business remains cash positive throughout the first three years. That does depend of course on investment capital and loans.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $257,255 | $444,750 | $707,250 |
Subtotal Cash from Operations | $257,255 | $444,750 | $707,250 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $15,000 | $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 | $272,255 | $444,750 | $707,250 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $102,000 | $145,000 | $195,000 |
Bill Payments | $167,195 | $235,855 | $349,398 |
Subtotal Spent on Operations | $269,195 | $380,855 | $544,398 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $19,868 | $25,132 | $0 |
Other Liabilities Principal Repayment | $10,000 | $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 | $299,063 | $405,987 | $544,398 |
Net Cash Flow | ($26,808) | $38,763 | $162,852 |
Cash Balance | $20,392 | $59,155 | $222,007 |
8.6 Projected Balance Sheet
The balance sheet shows that the negative net worth is gradually solved with profits later on. Debts are repaid ahead of schedule.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $20,392 | $59,155 | $222,007 |
Other Current Assets | $2,000 | $2,000 | $2,000 |
Total Current Assets | $22,392 | $61,155 | $224,007 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $22,392 | $61,155 | $224,007 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $10,207 | $20,207 | $29,480 |
Current Borrowing | $25,132 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $35,339 | $20,207 | $29,480 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $35,339 | $20,207 | $29,480 |
Paid-in Capital | $25,000 | $25,000 | $25,000 |
Retained Earnings | ($15,800) | ($37,948) | $15,948 |
Earnings | ($22,148) | $53,895 | $153,580 |
Total Capital | ($12,948) | $40,948 | $194,528 |
Total Liabilities and Capital | $22,392 | $61,155 | $224,007 |
Net Worth | ($12,948) | $40,948 | $194,528 |
8.7 Business Ratios
The following table outlines several important ratios. Standard industry ratios for business seminars are not readily available, but the final column, Industry Profile, details specific ratios based on the Business Start-up Consultancy Services industry as it is classified by the Standard Industry Classification (SIC) code, 8472. The annual ratios for Seminars show steadily improving financial results.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 72.88% | 59.02% | 8.60% |
Percent of Total Assets | ||||
Other Current Assets | 8.93% | 3.27% | 0.89% | 46.70% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 74.90% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 25.10% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 157.82% | 33.04% | 13.16% | 42.80% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 17.20% |
Total Liabilities | 157.82% | 33.04% | 13.16% | 60.00% |
Net Worth | -57.82% | 66.96% | 86.84% | 40.00% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 60.92% | 71.28% | 76.32% | 0.00% |
Selling, General & Administrative Expenses | 69.53% | 59.16% | 54.60% | 83.50% |
Advertising Expenses | 5.83% | 5.62% | 5.66% | 1.20% |
Profit Before Interest and Taxes | -7.18% | 17.59% | 31.02% | 2.60% |
Main Ratios | ||||
Current | 0.63 | 3.03 | 7.60 | 1.59 |
Quick | 0.63 | 3.03 | 7.60 | 1.26 |
Total Debt to Total Assets | 157.82% | 33.04% | 13.16% | 60.00% |
Pre-tax Return on Net Worth | 171.05% | 188.03% | 112.79% | 4.40% |
Pre-tax Return on Assets | -98.91% | 125.90% | 97.94% | 10.90% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -8.61% | 12.12% | 21.72% | n.a |
Return on Equity | 0.00% | 131.62% | 78.95% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 17.38 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 23 | 25 | n.a |
Total Asset Turnover | 11.49 | 7.27 | 3.16 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.49 | 0.15 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | ($12,948) | $40,948 | $194,528 | n.a |
Interest Coverage | -5.02 | 62.27 | 342,254,547.03 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.09 | 0.14 | 0.32 | n.a |
Current Debt/Total Assets | 158% | 33% | 13% | n.a |
Acid Test | 0.63 | 3.03 | 7.60 | n.a |
Sales/Net Worth | 0.00 | 10.86 | 3.64 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |