Document Storage Business Plan

Shaw's Records Management and Data Storage

Financial Plan

The following is the financial plan for Shaw’s Records Management and Data Storage.

7.1 Break-even Analysis

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

Document storage business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$51,695

Assumptions:
Average Percent Variable Cost	9%
Estimated Monthly Fixed Cost	$46,915

7.2 Projected Profit and Loss

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

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$644,000	$760,000	$900,000
Direct Cost of Sales	$59,550	$85,000	$100,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$59,550	$85,000	$100,000

Gross Margin	$584,450	$675,000	$800,000
Gross Margin %	90.75%	88.82%	88.89%


Expenses
Payroll	$385,200	$404,000	$426,000
Sales and Marketing and Other Expenses	$36,000	$40,000	$50,000
Depreciation	$0	$0	$0
Leased Equipment	$0	$0	$0
Utilities	$12,000	$12,000	$12,000
Insurance	$12,000	$12,000	$12,000
Rent	$60,000	$60,000	$60,000
Payroll Taxes	$57,780	$60,600	$63,900
Other	$0	$0	$0

Total Operating Expenses	$562,980	$588,600	$623,900

Profit Before Interest and Taxes	$21,470	$86,400	$176,100
EBITDA	$21,470	$86,400	$176,100
Interest Expense	$13,375	$10,500	$7,500
Taxes Incurred	$2,428	$22,770	$50,580

Net Profit	$5,666	$53,130	$118,020
Net Profit/Sales	0.88%	6.99%	13.11%

7.3 Projected Cash Flow

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

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

Cash from Operations
Cash Sales	$161,000	$190,000	$225,000
Cash from Receivables	$347,325	$545,562	$645,505
Subtotal Cash from Operations	$508,325	$735,562	$870,505

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	$15,000	$0	$0
Subtotal Cash Received	$523,325	$735,562	$870,505

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$385,200	$404,000	$426,000
Bill Payments	$224,641	$306,470	$351,615
Subtotal Spent on Operations	$609,841	$710,470	$777,615

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	$30,000	$30,000	$30,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$639,841	$740,470	$807,615

Net Cash Flow	($116,516)	($4,908)	$62,891
Cash Balance	$40,884	$35,977	$98,867

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	$40,884	$35,977	$98,867
Accounts Receivable	$135,675	$160,113	$189,608
Other Current Assets	$0	$0	$0
Total Current Assets	$176,559	$196,090	$288,475

Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$176,559	$196,090	$288,475

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$28,493	$24,893	$29,259
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$28,493	$24,893	$29,259

Long-term Liabilities	$120,000	$90,000	$60,000
Total Liabilities	$148,493	$114,893	$89,259

Paid-in Capital	$365,000	$365,000	$365,000
Retained Earnings	($342,600)	($336,934)	($283,804)
Earnings	$5,666	$53,130	$118,020
Total Capital	$28,066	$81,197	$199,217
Total Liabilities and Capital	$176,559	$196,090	$288,475

Net Worth	$28,067	$81,197	$199,217

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 4226, Special Warehouse and Storage, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	18.01%	18.42%	1.00%

Percent of Total Assets
Accounts Receivable	76.84%	81.65%	65.73%	23.10%
Other Current Assets	0.00%	0.00%	0.00%	22.30%
Total Current Assets	100.00%	100.00%	100.00%	46.50%
Long-term Assets	0.00%	0.00%	0.00%	53.50%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	16.14%	12.69%	10.14%	31.00%
Long-term Liabilities	67.97%	45.90%	20.80%	25.60%
Total Liabilities	84.10%	58.59%	30.94%	56.60%
Net Worth	15.90%	41.41%	69.06%	43.40%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	90.75%	88.82%	88.89%	100.00%
Selling, General & Administrative Expenses	89.87%	81.83%	75.78%	79.70%
Advertising Expenses	5.59%	5.26%	5.56%	0.30%
Profit Before Interest and Taxes	3.33%	11.37%	19.57%	1.50%

Main Ratios
Current	6.20	7.88	9.86	1.50
Quick	6.20	7.88	9.86	1.22
Total Debt to Total Assets	84.10%	58.59%	30.94%	56.60%
Pre-tax Return on Net Worth	28.84%	93.48%	84.63%	3.10%
Pre-tax Return on Assets	4.58%	38.71%	58.45%	7.20%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	0.88%	6.99%	13.11%	n.a
Return on Equity	20.19%	65.43%	59.24%	n.a

Activity Ratios
Accounts Receivable Turnover	3.56	3.56	3.56	n.a
Collection Days	56	95	95	n.a
Accounts Payable Turnover	8.88	12.17	12.17	n.a
Payment Days	27	32	28	n.a
Total Asset Turnover	3.65	3.88	3.12	n.a

Debt Ratios
Debt to Net Worth	5.29	1.42	0.45	n.a
Current Liab. to Liab.	0.19	0.22	0.33	n.a

Liquidity Ratios
Net Working Capital	$148,067	$171,197	$259,217	n.a
Interest Coverage	1.61	8.23	23.48	n.a

Additional Ratios
Assets to Sales	0.27	0.26	0.32	n.a
Current Debt/Total Assets	16%	13%	10%	n.a
Acid Test	1.43	1.45	3.38	n.a
Sales/Net Worth	22.95	9.36	4.52	n.a
Dividend Payout	0.00	0.00	0.00	n.a