Direct Mail and Shipping Business Plan

The Shipping Centre

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table highlights important assumptions.

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	25.42%	25.00%	25.42%
Other	0	0	0

7.2 Break-even Analysis

The Break-even Analysis indicates what The Shipping Centre must achieve in monthly sales to break even.

Direct mail and shipping business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$16,314

Assumptions:
Average Percent Variable Cost	42%
Estimated Monthly Fixed Cost	$9,418

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$239,854	$424,470	$458,091
Direct Cost of Sales	$101,383	$185,217	$200,821
Other	$0	$0	$0
Total Cost of Sales	$101,383	$185,217	$200,821

Gross Margin	$138,471	$239,253	$257,270
Gross Margin %	57.73%	56.37%	56.16%


Expenses
Payroll	$66,720	$77,400	$80,700
Sales and Marketing and Other Expenses	$3,900	$3,900	$3,900
Depreciation	$350	$4,200	$4,200
Leased Equipment	$0	$0	$0
Utilities	$1,500	$1,500	$1,500
DSL	$540	$540	$540
Rent	$30,000	$30,000	$30,000
Payroll Taxes	$10,008	$11,610	$12,105
Other	$0	$0	$0

Total Operating Expenses	$113,018	$129,150	$132,945

Profit Before Interest and Taxes	$25,453	$110,103	$124,325
EBITDA	$25,803	$114,303	$128,525
Interest Expense	$0	$0	$0
Taxes Incurred	$6,052	$27,526	$31,599

Net Profit	$19,401	$82,577	$92,726
Net Profit/Sales	8.09%	19.45%	20.24%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$239,854	$424,470	$458,091
Subtotal Cash from Operations	$239,854	$424,470	$458,091

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	$239,854	$424,470	$458,091

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$66,720	$77,400	$80,700
Bill Payments	$132,722	$259,560	$278,807
Subtotal Spent on Operations	$199,442	$336,960	$359,507

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	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$199,442	$336,960	$359,507

Net Cash Flow	$40,412	$87,510	$98,584
Cash Balance	$54,412	$141,922	$240,506

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$54,412	$141,922	$240,506
Other Current Assets	$0	$0	$0
Total Current Assets	$54,412	$141,922	$240,506

Long-term Assets
Long-term Assets	$14,200	$14,200	$14,200
Accumulated Depreciation	$350	$4,550	$8,750
Total Long-term Assets	$13,850	$9,650	$5,450
Total Assets	$68,262	$151,572	$245,956

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$20,661	$21,394	$23,052
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$20,661	$21,394	$23,052

Long-term Liabilities	$0	$0	$0
Total Liabilities	$20,661	$21,394	$23,052

Paid-in Capital	$30,000	$30,000	$30,000
Retained Earnings	($1,800)	$17,601	$100,178
Earnings	$19,401	$82,577	$92,726
Total Capital	$47,601	$130,178	$222,904
Total Liabilities and Capital	$68,262	$151,572	$245,956

Net Worth	$47,601	$130,178	$222,904

7.6 Business Ratios

The following table compares the standard business ratios for the Private Mail Centers industry, NAICS code 561431 against the ratios calculated for the financial forecasts of this plan.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	76.97%	7.92%	10.93%

Percent of Total Assets
Other Current Assets	0.00%	0.00%	0.00%	46.15%
Total Current Assets	79.71%	93.63%	97.78%	76.67%
Long-term Assets	20.29%	6.37%	2.22%	23.33%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	30.27%	14.11%	9.37%	40.41%
Long-term Liabilities	0.00%	0.00%	0.00%	17.31%
Total Liabilities	30.27%	14.11%	9.37%	57.72%
Net Worth	69.73%	85.89%	90.63%	42.28%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	57.73%	56.37%	56.16%	100.00%
Selling, General & Administrative Expenses	59.50%	41.48%	40.04%	76.26%
Advertising Expenses	0.50%	0.28%	0.26%	2.58%
Profit Before Interest and Taxes	10.61%	25.94%	27.14%	1.39%

Main Ratios
Current	2.63	6.63	10.43	1.42
Quick	2.63	6.63	10.43	1.14
Total Debt to Total Assets	30.27%	14.11%	9.37%	67.09%
Pre-tax Return on Net Worth	53.47%	84.58%	55.78%	3.47%
Pre-tax Return on Assets	37.29%	72.64%	50.55%	10.56%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	8.09%	19.45%	20.24%	n.a
Return on Equity	40.76%	63.43%	41.60%	n.a

Activity Ratios
Accounts Payable Turnover	7.42	12.17	12.17	n.a
Payment Days	27	29	29	n.a
Total Asset Turnover	3.51	2.80	1.86	n.a

Debt Ratios
Debt to Net Worth	0.43	0.16	0.10	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$33,751	$120,528	$217,454	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.28	0.36	0.54	n.a
Current Debt/Total Assets	30%	14%	9%	n.a
Acid Test	2.63	6.63	10.43	n.a
Sales/Net Worth	5.04	3.26	2.06	n.a
Dividend Payout	0.00	0.00	0.00	n.a