ER was capitalized with $5,000 when it was formed in May 1997. A strong knowledge of the area and supply and demand needs led to the formation of the company. Most items purchased to this date (truck, trailer, computer, office supplies, envelopes, and stationery) have been financed through personal funds, and a $4,000 line of credit with Hibernia Bank.
ER's first sales placed $5,145 into the business account, most of which was used to pay off initial purchases with the balance being used for office and truck expenses such as telephone bill, postage, and fuel. As of April 1, 2000, the truck has been paid in full along with several of the smaller home use items. The company has generated sales in the amount of $52,490 with cost being $38,870 and a profit of $13,620 (97-98 Income Tax Return).
Funding Requirements and Uses
The company is seeking a loan/credit line in the amount of $300,000 for the purpose of expanding the business. Expansion plans include the purchase of additional land and construction of a larger shop/service area, increase rental inventory, and hiring of additional personnel including a mechanic and delivery driver. The table below provides a breakdown of the use of funds.
Use of Funds
Purchase land 25' X 175' on the north side of existing building
Erect shop area 25' X 32' on land w/concrete slab, office area
Consolidate regions loan, Hibernia L. O. C., current equipment purchases Bosch electric breaker, 3.0 KW generator, shop items
Balance for working capital, employee training, office equipment modernization, maintenance inventory (i.e.: oil, air, and hydraulic filters), unforeseen building/maintenance expense
Shop equipment to include: air compressor, air tools and accessories, blow torch, welding machine and accessories, 1 1/2 ton chain hoist, oil/water separator, holding tank, assorted hand tools, washing vat, chain saw sharpener and repair accessories.
Rental inventory to include: Trash and diaphragm pumps 2 ea. 2" and 3", 3/4" submersible pump and accessories, 3 hp. concrete vibrator, 2-48" concrete power trowels, Case 580L or JD 310 Backhoe, small trailer and larger trailer, 1-ton Ford F350 or F450 Diesel delivery truck, air compressor, 90 lb. air hammer and accessories, rotovator for tractor, 1 push mower, 1 lawn tractor.
8.1 General Assumptions
The following table lists the general assumptions.
8.2 Key Financial Indicators
The following chart shows the important benchmarks for Equipment Rental.
8.3 Break-even Analysis
The table and chart below contain the Break-even Analysis for Equipment Rental.
8.4 Projected Profit and Loss
The Projected Profit and Loss can be seen in the following table and charts.
8.5 Cash Flow
The following table and chart are the Projected Cash Flow figures for Equipment Rental.
8.6 Projected Balance Sheet
ER's projected balance sheets for 2000-2002.
8.7 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7359, [Equipment Rental and Leasing, nec], are shown for comparison.