MyHaystack.com
Financial Plan
MyHaystack.com generates revenue through a combination of market communications and market intelligence services. These services are sold to MyHaystack.com clients in a business-to-business transaction. Complete financial statements are presented in Appendix A of this business plan.
This financial projection assumes a conservative scenario where early partnerships are not directly resulting in shared users. Adverse market conditions or a failure to execute on the MyHaystack.com business plan could limit the number of client subscriptions, effectively reducing the forecasted revenue. Alternatively, better than anticipated market reception of the MyHaystack.com service, along with a rapid consumer adoption rate, could substantially increase annual revenue.
Revenue is driven by a combination of MyHaystack.com services that include Individual Filings, Dynamic Posting, Online Research Subscriptions, and Market Research Report Subscriptions. This analysis does not include the potential for additional revenue based on third party licensing agreements, commission generated through the sale of products and services to consumers, or other revenue that is not a core focus of the MyHaystack.com business model.
**Appendices not available for this sample plan.
7.1 Important Assumptions
The following table shows some of our important financial 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
Preliminary financial forecasts project a break-even point beyond year 3 of operations, the limit of the detailed financial forecast. Assuming consistent growth, break-even will occur during Q3 of year 4 of operations. However, market fluctuations, changes in the competitive environment, or a failure to effectively execute on the MyHaystack.com business strategy could further delay the break-even point.
An alternative, and more likely, scenario is that rapid expansion of the industry and rapid growth of MyHaystack.com will drive additional expenditures on customer acquisition, marketing, and product development. While these expenditures have the potential to substantially increase revenue and solidify MyHaystack.com as a leader in the online market research industry, they may also serve to further delay the break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $359,608 |
| Assumptions: | |
| Average Percent Variable Cost | 70% |
| Estimated Monthly Fixed Cost | $107,882 |
7.3 Business Ratios
The following table contains important business ratios. The Industry Profile column presents ratios as described by the Standard Industry Classification (SIC) Index code 8732, Marketing Research and Public Opinion Polling.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 6580.14% | 515.86% | 8.26% |
| Percent of Total Assets | ||||
| Accounts Receivable | 0.14% | 2.56% | 5.01% | 23.16% |
| Other Current Assets | 0.36% | 0.10% | 0.03% | 50.04% |
| Total Current Assets | 96.91% | 98.56% | 99.57% | 76.51% |
| Long-term Assets | 3.09% | 1.44% | 0.43% | 23.49% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.75% | 1.42% | 1.29% | 36.68% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 20.02% |
| Total Liabilities | 4.75% | 1.42% | 1.29% | 56.70% |
| Net Worth | 95.25% | 98.58% | 98.71% | 43.30% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 30.00% | 45.21% | 55.57% | 100.00% |
| Selling, General & Administrative Expenses | 9059.77% | 477.51% | 125.12% | 76.67% |
| Advertising Expenses | 3706.18% | 297.17% | 75.76% | 1.56% |
| Profit Before Interest and Taxes | -6853.18% | -106.97% | 23.77% | 1.30% |
| Main Ratios | ||||
| Current | 20.41 | 69.29 | 77.22 | 1.48 |
| Quick | 20.41 | 69.29 | 77.22 | 1.13 |
| Total Debt to Total Assets | 4.75% | 1.42% | 1.29% | 63.55% |
| Pre-tax Return on Net Worth | -48.20% | -13.53% | 5.88% | 3.70% |
| Pre-tax Return on Assets | -45.91% | -13.34% | 5.80% | 10.14% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -6853.18% | -106.97% | 17.73% | n.a |
| Return on Equity | -48.20% | -13.53% | 4.38% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.87 | 4.87 | 4.87 | n.a |
| Collection Days | 57 | 38 | 44 | n.a |
| Accounts Payable Turnover | 6.83 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 29 | 20 | n.a |
| Total Asset Turnover | 0.01 | 0.12 | 0.24 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.05 | 0.01 | 0.01 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $2,587,443 | $9,784,986 | $31,166,841 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 149.26 | 8.02 | 4.10 | n.a |
| Current Debt/Total Assets | 5% | 1% | 1% | n.a |
| Acid Test | 20.38 | 67.49 | 73.33 | n.a |
| Sales/Net Worth | 0.01 | 0.13 | 0.25 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
7.4 Projected Profit and Loss
MyHaystack.com is positioned as an early entrant into the rapidly growing market for online consumer research. As such, MyHaystack.com expects to enjoy significant first-mover advantages. However, the company expects to incur substantive losses during the first three years of operations. These losses reflect the initial investment necessary to establish a strong market position. This market position will serve as a strategic advantage and a potential barrier to entry as the industry expands. Once the industry matures, the company has the ability to garner additional revenue from the MyHaystack.com client base.
The following table shows our projected Profit and Loss for the next three years.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $18,808 | $1,256,400 | $7,737,661 |
| Direct Cost of Sales | $13,166 | $688,349 | $3,437,650 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $13,166 | $688,349 | $3,437,650 |
| Gross Margin | $5,642 | $568,051 | $4,300,011 |
| Gross Margin % | 30.00% | 45.21% | 55.57% |
| Expenses | |||
| Payroll | $385,476 | $798,508 | $1,288,210 |
| Marketing/Promotion | $855,223 | $1,000,000 | $1,000,000 |
| Depreciation | $11,889 | $58,542 | $102,667 |
| Utilities | $6,000 | $10,000 | $15,000 |
| Insurance | $18,000 | $20,000 | $25,000 |
| Rent | $18,000 | $25,000 | $30,000 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $1,294,588 | $1,912,050 | $2,460,877 |
| Profit Before Interest and Taxes | ($1,288,946) | ($1,343,999) | $1,839,134 |
| EBITDA | ($1,277,057) | ($1,285,457) | $1,941,801 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $0 | $467,447 |
| Net Profit | ($1,288,946) | ($1,343,999) | $1,371,687 |
| Net Profit/Sales | -6853.18% | -106.97% | 17.73% |
7.5 Cash Flow
The following chart and table outline anticipated cash flow for MyHaystack.com. The table contains yearly projections; for a monthly analysis, please see table appendix at the end of this plan.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $0 | $0 | $0 |
| Cash from Receivables | $14,944 | $1,002,122 | $6,406,007 |
| Subtotal Cash from Operations | $14,944 | $1,002,122 | $6,406,007 |
| 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 | $3,500,000 | $8,600,000 | $20,000,000 |
| Subtotal Cash Received | $3,514,944 | $9,602,122 | $26,406,007 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $385,476 | $798,508 | $1,288,210 |
| Bill Payments | $777,073 | $1,733,376 | $4,709,473 |
| Subtotal Spent on Operations | $1,162,549 | $2,531,884 | $5,997,683 |
| 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 | $98,500 | $117,000 | $92,500 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $1,261,049 | $2,648,884 | $6,090,183 |
| Net Cash Flow | $2,253,895 | $6,953,238 | $20,315,823 |
| Cash Balance | $2,706,895 | $9,660,133 | $29,975,956 |
7.6 Balance Sheet
The following table presents the Balance Sheet for MyHaystack.com.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $2,706,895 | $9,660,133 | $29,975,956 |
| Accounts Receivable | $3,864 | $258,143 | $1,589,797 |
| Other Current Assets | $10,000 | $10,000 | $10,000 |
| Total Current Assets | $2,720,759 | $9,928,275 | $31,575,753 |
| Long-term Assets | |||
| Long-term Assets | $98,500 | $215,500 | $308,000 |
| Accumulated Depreciation | $11,889 | $70,431 | $173,098 |
| Total Long-term Assets | $86,611 | $145,069 | $134,902 |
| Total Assets | $2,807,370 | $10,073,344 | $31,710,655 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $133,316 | $143,289 | $408,912 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $133,316 | $143,289 | $408,912 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $133,316 | $143,289 | $408,912 |
| Paid-in Capital | $4,000,000 | $12,600,000 | $32,600,000 |
| Retained Earnings | ($37,000) | ($1,325,946) | ($2,669,945) |
| Earnings | ($1,288,946) | ($1,343,999) | $1,371,687 |
| Total Capital | $2,674,054 | $9,930,055 | $31,301,743 |
| Total Liabilities and Capital | $2,807,370 | $10,073,344 | $31,710,655 |
| Net Worth | $2,674,054 | $9,930,055 | $31,301,743 |
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