54 & Cloudy
Financial Plan
Forecast
Key Assumptions
54 & Cloudy developed the following financials utilizing their extensive industry knowledge and relevant historic financial performance.
At launch, 54 & Cloudy will operate across four main service categories all focused on digital marketing services for clients. The main categories are outlined below as well as their revenue assumptions used in the financial projections.
- Search Engine Optimization
- SEO marketing services include SEO strategy development, technical SEO, keyword targeting, content marketing, and link building
- Customers will pay a monthly recurring charge that averages out to $3,000
- Given the long-term nature of SEO, the churn rate is 5%
- Paid Advertising
- Includes full-service PPC marketing efforts, including search engine advertising, paid shopping ads, display ads, paid social media ads, retargeting, and more
- Customers pay the agency a fee of 15% of the client’s advertising budget, which was assumed to be an average of $10,000 per month
- Churn rate is slightly higher than SEO at 7.5%
- Conversion Rate Optimization
- eCommerce CRO services will run thousands of AB tests across a variety of eCommerce platforms with the goal of driving sales. Through targeted user research, a team of UX analysts, and psychological experts, 54 & Cloudy will grow not only transactions but average order and customer lifetime value for clients
- Customers will pay a monthly recurring charge that is tiered based on the number of tests and campaigns run per month but will average out to $4,000
- Churn rate is high at 20% due to the nature of the service line
- Copywriting & Design Services
- Industry-focused content writers and designers who excel in translating the voice and tone of a client’s business into conversion-driving copy or rich and engaging designs
- This is an ancillary service within 54 & Cloudy’s paid and optimization offerings but can be expanded to help clients develop all onsite and paid messaging
- Customers will be charged per hour for design and writing services at an average rate of $100 per hour
The financial projections assume an SBA loan for $300,000 at 8% over 10 years and those funds will be sufficient to cover all growth and hiring projections outlined in the business plan.
54 & Cloudy believes that the introduction of proprietary reporting and marketing forecast dashboards will help accelerate new customer acquisition and allow churn rates to remain low for existing customers. This will be an integral selling point in 54 & Cloudy’s service packages as a way to visualize audits, changes, and provide instant access/feedback to the user. In the future, 54 & Cloudy may look to offer the reporting and forecasting dashboard as a separate stand-alone service offering.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Sources of Funds
Given the management team’s long-standing success in the industry, 54 & Cloudy will be looking to secure an SBA loan in the amount of $300,000 to finance the acquisition of initial startup technology costs, as well as cover initial cash flow, needs as they ramp up customer acquisition and operates at a loss in Year 1.
Use of Funds
54 & Cloudy is securing an SBA loan for $300,000 that will be used to fund initial technology asset purchases of $65,000, startup costs including licensing, legal, and other marketing costs of $50,000, as well as cover cash flow needs during Year 1 as 54 & Cloudy, grows from negative operating income to cash flow positive by year-end.
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