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Durango Gravel

Executive Summary

Durango Gravel, Inc. produces and sells types and grades of gravel to public and private customers in the Four Corners Region, concentrating on the area around Durango, Colorado.  In just five months of operation, we operated at a profit, recording $250,000 in sales and selling almost 49,000 tons of gravel products.

Our goal for this year is to penetrate the asphalt market, with its high profitability and limited competition.  By adding an asphalt plant, and meeting our minimum goals of 45,500 tons of asphalt, we plan to sell over 191,000 tons of gravel products to municipalities, contractors and end-users, with sales of over $2,696,000 and net profits of $854,000.

We have experienced significant success penetrating the local market by offering superior products and customer service.

Our keys to continued success are:

  1. Expanding into the asphalt market.
  2. Establishing and maintaining working relationships with major institutional users.
  3. Exploiting the coming void in gravel supplies to establish a market niche.
  4. Developing a net profit margin above 30%.
  5. Effectively communicating to our existing and potential customers, through targeted efforts, our position as a differentiated provider of the highest-quality gravel and asphalt products.
Gravel rock products business plan, executive summary chart image

1.1 Objectives

The objectives of Durango Gravel, Inc. for the coming year:

ASPHALT

  1. Establish strategic working relationships with the major asphalt users in the area.
  2. Develop initial sales of 45.5K tons of asphalt, resulting in first-year sales of $1,638,000.
  3. Increase Sales over a three-year period to 77K tons per year.

GRAVEL

  1. Continue to develop strategic working relationships with the 10-15 major institutional users.
  2. Hit target gravel sales levels of 145.5K tons of both road base and screened rock, resulting in gravel sales of $1,064,000.
  3. Continue to exploit the weaknesses inherent in the major area competitors to increase our presence in the local market area.

1.2 Mission

Durango Gravel, Inc. serves municipalities, construction companies and individual users by providing superior-quality products manufactured to the highest standards at competitive prices.

Our principals have a history of valuing relationships with their customers.  We communicate our commitment to quality and customer appreciation through outstanding product quality, personal service and efficient delivery.  Our commitment to our customers is reflected through honest and responsible business practices.

1.3 Keys to Success

The keys to success for Durango Gravel, Inc.:

  1. Establishing and maintaining working relationships and contractual agreements with municipality and business sector clients.
  2. Increasing our facility to maximum production within the next three years.
  3. Continuing our position as a customer-service-oriented company with competitive pricing.
  4. Increasing our profit margins and decreasing our production costs.
  5. Developing a presence in the asphalt market with area users.
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Company Summary

Durango Gravel manufactures numerous types of gravel products from base rock.  These products are 3/4″ and 3″ ABC, 3/8″, 1/2″, 3/4″ 1-11/2″ screened and washed rock, 1″-3″ cobble, and 4″-6″ cobble. In addition, we provide, pre-washed sand, fill dirt, topsoil, bedding materials and crusher fines, along with various sizes of boulders.  These products are sold to municipalities, business entities and end users in the Four Corners Region, with a concentration around Durango, Colorado.

The pit site has been the location of Durango, a locally owned gravel pit, for over 15 years.  We have greatly expanded the base of customers in the last six months.

2.1 Company Ownership

Durango Gravel, Inc. is incorporated as a “S” Corporation under the laws of Colorado, and Colorado laws shall govern and take precedence.

Two classes of stock shares have been issued as follows:

1000 Class “A” Stock Shares – Voting Rights Only – No Dividend Rights

Justin McCarty – 510 Shares

Chad Hughes – 490 Shares

1000 Class “B” Stock Shares – Dividend Shares Only – No Voting Rights

Justin McCarty – 450 Shares

Chad Hughes – 450 Shares

Not Issued – 100 Shares

Net profits are distributed in the form of dividends on a basis which shall be determined from time to time. Corporate officers are as follows:

Justin McCarty: president, treasurer, chief executive officer and chief financial officer. Justin McCarty designs and directs the overall corporate strategy.

Chad Hughes: vice president, secretary, chief operating officer and chief financial officer. Chad Hughes directs the day-to-day operations of the corporation.

At the end of each year, a meeting of the directors decides the management responsibilities for the following year.

2.2 Company History

Durango Gravel, Inc. was formed in June, 2000.  The principals of the corporation are as follows:

Justin McCarty, Bayfield, Colorado – Owner of an excavating, landscaping, trucking and road grading business, Mr. McCarty has extensive experience in all phases of gravel and rock hauling, production and industry practices.  Mr. McCarty oversees operations of the corporation, and additionally, is a major consumer of plant products.  He also will be a consumer of asphalt products.

Chad Hughes, Durango, Colorado – Educated in natural resources management, and with extensive customer-service experience, Mr. Hughes focuses on developing public accounts and day-to-day operations.

In June, 2000 the corporation entered into a five-year lease agreement with Durango Gravel, a locally-owned gravel pit, giving the mineral rights for a five-year period, renewable for additional five-year periods.  With no advertising, marketing or crushing operations, the pit had been selling approximately 24,000 tons of gravel per year. In addition, options were obtained on a number of other parcels suitable for gravel pits.

The corporation invested approximately $700,000 in crushing and production equipment, and began operations on July 24, 2000.  In the five months of operation in year 2000, sales of 47,000 tons of material were recorded, mostly in road base material, with an average of 9,000 tons per month.

Our goal of penetrating the local market and taking advantage of the niche available was met, with a number of the major area contractors utilizing our products. Our customer service policies have met with near universal praise and acceptance.  We are developing a reputation as an honest, customer-service oriented company with superior products.

We have made substantial inroads into the institutional market, receiving gravel awards from municipalities, county, state and institutional entities. We had an operating profit for year 2000, despite an unanticipated additional $40,000 in equipment maintenance costs. We are poised to make more major inroads in the local market, with the spring and summer season for higher-profit screened rock fast approaching.

Past Performance
1998 1999 2000
Sales $0 $0 $250,065
Gross Margin $0 $0 $250,065
Gross Margin % 0.00% 0.00% 100.00%
Operating Expenses $0 $0 $244,981
Collection Period (days) 0 0 64
Inventory Turnover 0.00 0.00 1.00
Balance Sheet
1998 1999 2000
Current Assets
Cash $0 $0 $1,379
Accounts Receivable $0 $0 $83,354
Inventory $0 $0 $657,640
Other Current Assets $0 $0 $0
Total Current Assets $0 $0 $742,373
Long-term Assets
Long-term Assets $0 $0 $1,056,350
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $1,056,350
Total Assets $0 $0 $1,798,723
Current Liabilities
Accounts Payable $0 $0 $18,888
Current Borrowing $0 $0 $0
Other Current Liabilities (interest free) $0 $0 $10,835
Total Current Liabilities $0 $0 $29,723
Long-term Liabilities $0 $0 $673,936
Total Liabilities $0 $0 $703,659
Paid-in Capital $0 $0 $1,084,896
Retained Earnings $0 $0 $5,084
Earnings $0 $0 $5,084
Total Capital $0 $0 $1,095,064
Total Capital and Liabilities $0 $0 $1,798,723
Other Inputs
Payment Days 0 0 60
Sales on Credit $0 $0 $237,000
Receivables Turnover 0.00 0.00 2.84

2.3 Company Locations and Facilities

Our pit is located in Durango, Colorado, the hub of the southwest Colorado Region and the major city in La Plata County.  The gravel pit has a primary and secondary crusher, generator, a number of loaders and excavators, and an electronic scale. 

Our scale is located approximately 1/4 mile from the highway – the shortest distance of any pit in the area.  The pit has a reserve of approximately 6,000,000 tons, by far the most in the area.  There are approximately 60 acres, a 150 sq. ft. scale house, tool trailer and pit office.  We are planning to add an additional 980 sq. ft. office this Spring.

Our corporate office is in Bayfield, Colorado – approximately 1 acre with 1,500 sq. ft. building, a 250 sq. ft. office, fence and storage area.

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Products and Services

Durango Gravel Inc. deals exclusively in providing gravel and gravel-related products, including but not limited to the following:

  • 3/4″ ABC
  • 3″ ABC
  • 3/8″ screened and washed rock
  • 1/2″ screened and washed rock
  • 3/4″ screened and washed rock
  • 1-11/2″ screened and washed rock
  • 1″-3″ cobble
  • 4″-6″ cobble
  • Pre-washed sand
  • Fill dirt
  • Topsoil
  • Bedding materials
  • Crusher fines
  • Boulders–various sizes

The company provides consulting and products.  Customers can either provide their own trucks for products, or the company will deliver for a fee.  Our standard average delivery fee is $65.00, with maximum related expenses of $40.00.  The only product costs will be associated with production.  Company trucks delivered 416% of the loads in year 2000.  Trucking was subcontracted to independent trucking companies, including Justin McCarty Trucking and Excavation.

In addition, we plan to provide SX grade asphalt.

3.1 Product and Service Description

Royalty Costs are $2.00/Ton.  Manufacturing Costs are budgeted at $1.15/ton (a high figure).  Starred items have no manufacturing costs.

Asphalt Roads and driveways, $20.90/ton Used by everyone
3″ ABC – 3/4″ ABC Base material for roads, driveways and site fill Used by everyone
3/8″ Screened and Washed Rock (Pea Gravel) Driveway and walkway topping, winter snow maintenance Used by everyone
1/2″ Screened and Washed Rock Asphalt base Used by everyone
3/4″ Screened and Washed Rock Driveways, walkways, pipe bedding, french drains Used by everyone
1-11/2″ Screened and Washed Rock French drains and driveways Used by everyone
1″-3″ Cobble Decoration and fill Used by everyone
4″-6″ Cobble  Decoration and large fill Preferred by landscaping contractors
Pre-Washed Sand* Pipe bedding, fill, horse arenas Used by everyone
Fill Dirt* Used by everyone
Topsoil* Landscaping
Bedding Material*
Boulders* various sizes  Landscaping – wall construction

3.2 Competitive Comparison

Within our niche we have two significant competitors, Oldcastle (Four Corners) and LaFarge, which are both multi-national corporations headquartered outside the United States.  While these are both well-run companies, the local perception is that the money they earn goes directly overseas to their headquarters, as opposed to reinvesting their profits in the local economy.  In addition, many of their policies are set at the corporate level, resulting in less customer-service orientation then is the norm for this region.  A number of general contractors have started to utilize our products because of our ownership and policies. 

There is one other significant competitor, C & J Gravel.  Their reserves are limited, and offer a limited product line.  A number of their major users have started to utilize our products.  We expect more in the next year.

The way we compete is on the fact that we offer a larger selection of products, superior quality, and better customer service in terms of information on our product line.  We compete on our road base products in terms of price and availability, with fast delivery.

3.3 Sales Literature

This year we will be producing a company catalog, which would include asphalt products for targeted customers.

3.4 Fulfillment

We produce almost all of our product line at our site, with effectively no need to outsource any materials.

3.5 Technology

The technology for the production of gravel, gravel-related products and asphalt is well established.  We have developed effective and revolutionary marketing techniques for: convenient and time-saving loading of client trucks, and saving our institutional customers substantial amounts on their trucking expenses.

3.6 Future Products and Services

Our major addition this year will be asphalt, of which there is only one area producer at present.  A number of contractors have expressed interest in using our asphalt. 

Our long-range plan includes the opening of a second pit, in order to compete with producers in the more remote county areas.

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Market Analysis Summary

Asphalt products are required for road and driveway construction.  There are a significant number of roads and driveways which need to be paved each year.  There is at present only one area source for asphalt.  The high prices charged are a reflection of their monopoly.  Thus, there is a significant niche to be filled.

Gravel and rock-related products are a necessary ingredient to road building in the area.  There are a significantly large percentage of roads which need to be re-graveled each year.  In addition, there is a significant percentage of the population who have “retired” to the area, and are engaged in remodeling and making their new homes more accessible.

Also, the previously-described “window of opportunity” and the vulnerability of competitors to a customer-oriented operation are significant.  The average end-user is more concerned with customer service than with price. 

4.1 Market Segmentation

The major customer groups for Durango Gravel, Inc. are:

Municipalities, Schools and State Agencies. There are 12 municipalities in the immediate area who are using, or have needs for, our products and are in our target market.  They are able to utilize our products and the quantities we could manufacture.  As of this date, five are using us as one of their sources.

Larger Construction Companies. Many of the larger construction companies bid on state, county, city and large private construction projects,  We have bid on their gravel products and received 12 awards in the past six months.  We plan to bid on their asphalt needs as well this year.

Construction and Private Companies. The area is filled with smaller contractors who either purchase concrete, gravel and asphalt products directly, or arrange for them for a fee.  Many of the smaller contractors are not compensated to a significant degree, and have been eager to utilize a company such as ours.

Gravel rock products business plan, market analysis summary chart image

Market Analysis
2001 2002 2003 2004 2005
Potential Customers Growth CAGR
Public 15% 10 12 14 16 18 15.83%
Private 15% 65 75 86 99 114 15.08%
End User 20% 60 72 86 103 124 19.90%
Other 0% 0 0 0 0 0 0.00%
Total 17.35% 135 159 186 218 256 17.35%

4.2 Target Market Segment Strategy

The population of the Four Corners Area has increased dramatically in the last 10 years and is still increasing, creating a greater demand for houses and roads.  A large percentage of this increase is attributed to both retirees, and those with substantial incomes who have purchased a second home.  Many people belonging to these groups have come from areas where good customer service is expected, and had been unhappy with the quality of customer service available before we began operations.

4.2.1 Market Needs

We understand that our target market needs more than just asphalt and gravel products. This need has grown out of increased population growth, the influx of a segmented customer base with significant disposable income, and the lack of change of our competitors to increased customer service requirements.

The market for asphalt, gravel and gravel-related products has grown at a steady rate for the past seven years, and shows no signs of abating. There are trends toward both more institutional and private road development and more private end-user interest in quality and customer service.

4.2.3 Market Growth

According to the three major suppliers in the region, as well as the La Plata Area Chamber of Commerce, the market in construction products has grown at 12% per year for the past three years, and is projected to increase.  More important is the increased need for road-related products.  With an almost 45% population increase in the county in the last 10 years, it is estimated that over 35% of existing county roads will require maintenance in the next four years. In addition, the extensive winters in the region are particularly difficult on gravel roads.  After two mild winters, this winter of normal snow will result in an increase in road maintenance.

4.3 Service Business Analysis

The last decade has shown a consolidation of suppliers by nationwide corporations. In numerous instances, these companies have policies which are set on a national level and are not “user-friendly” or responsive to the particular needs of this region.

The area asphalt market has but one producer at present, with predictable non-competitive pricing and customer service policies.

4.3.1 Competition and Buying Patterns

The Durango area is a region where “Word-of-Mouth” endorsements are unusually important. Most private end-user customers seem to choose their provider based on quick delivery, friendliness and customer service. Business and construction-related users choose based on the establishment of a mutually beneficial and trustworthy relationship.

4.3.2 Main Competitors

Oldcastle (Four Corners Materials)

Strengths – long-term relationships, 30 years in business, long-term employees, decent quality.

Weaknesses –  product, price and credit flexibility, foreign ownership, product reserves, travel and loading time, monopolistic practices in regards to asphalt.

C & J

Strengths – established, local ownership.

Weaknesses – limited products, limited reserves, location.

4.3.3 Business Participants

The main sales volume in this area is now concentrated in the following companies:

Asphalt: Oldcastle (Four Corners Materials).

Gravel (Durango): Oldcastle (Four Corners Materials), Durango Gravel, Inc., C & J, Sandco.

(Outlying Areas):  LaFarge, Gosney & Sons, Hocker.

All of these other companies compete with similar limited products and unchanging company policies. Products are similar, costs are important, but customer service and perception of honesty is critical. Our company has increased its participation in the local gravel market by 400% in just five months.

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Strategy and Implementation Summary

Durango Gravel, Inc.’s strategy is as follows:

  1. Add an asphalt plant as quickly as possible to penetrate the asphalt market.
  2. Continue to expand gravel sales.
  3. Continue our uniquely designed service for those customers with their own delivery trucks.
  4. Continue the establishment of long-term, mutually-beneficial relationships with commercial accounts.
  5. Continue our revolutionary program to cut delivery costs for municipalities and industry end-users.
  6. Aggressively market our “Consumer-Oriented” focus.

We intend to maximize product sales through aggressive marketing, penetrate the asphalt market, and increase our targeted marketing efforts.

5.1 Strategy Pyramid

Our main strategy at Durango Gravel, Inc. is to position ourselves at the top of the quality scale, featuring our combination of fine quality products and the best customer service in the region. 

We are committed to communicating our “Quality” position to the market.  Programs are mainly those listed in the Milestones Table, including the continued acquisition of public-sector accounts.

5.2 Value Proposition

We offer our target customer, who cares about personal service, as well as product quality, a vendor who acts as a strategic ally, with the highest quality asphalt and gravel products at a premium price that reflects the value of reassurance that systems will work.

5.3 Marketing Strategy

The marketing strategy is the core of the main strategy, and is multi-faceted:

  1. Penetrate the asphalt market.
  2. Emphasize personal service and support.
  3. Foster a long-term relationship business.
  4. Focus on the public-sector, major contractor and high-end homeowner as key target markets.
  5. Induce more companies to utilize our revolutionary delivery and loading strategies.

5.3.1 Pricing Strategy

With regard to products carried by our competitors, our pricing strategy will be to either match their prices, or to be marginally lower. We expect that our superior service will be a major factor.

5.4 Competitive Edge

Our competitive edge is our quality product, location, emphasis on customer service, and our long-term availability of products.

5.5 Sales Strategy

We need to sell our company, not just the products. We have to sell our service and support.

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase from $250,000 last year to approximately $2.7 million next year. The marketing strategy is the core of the main strategy, and is multi-faceted.

Gravel rock products business plan, strategy and implementation summary chart image

5.5.1 Sales Forecast

Sales forecasts are based on the following information:

  1. The acquisition of an asphalt plant, in place by April, 2001.
  2. A minimum 45.5K ton asphalt sales in year one.
  3. Our gravel sales total reflects 45.5K tons “sold” to our asphalt plant.
Gravel rock products business plan, strategy and implementation summary chart image

Sales Forecast
2001 2002 2003
Unit Sales
Asphalt 45,500 61,000 77,000
Crusher Fines – for Asphalt 18,200 24,400 30,800
3/4 in. ABC – for Asphalt 18,200 24,400 30,800
1/2 in. Screened Rock – for Asphalt 9,100 12,200 15,400
3 in. ABC 23,800 25,000 26,500
3/4 in. ABC 31,200 33,000 35,000
Other Screened Rock 10,000 11,000 12,500
Sand 10,500 12,500 15,000
Cobble 6,100 6,500 7,000
Boulders 2,100 2,300 2,500
Topsoil 6,500 7,000 7,500
Other Dirt Products 10,000 11,000 12,000
Total Unit Sales 191,200 230,300 272,000
Unit Prices 2001 2002 2003
Asphalt $36.00 $38.00 $40.00
Crusher Fines – for Asphalt $10.50 $11.25 $12.00
3/4 in. ABC – for Asphalt $5.50 $5.75 $6.00
1/2 in. Screened Rock – for Asphalt $8.00 $8.40 $8.75
3 in. ABC $4.50 $4.65 $4.90
3/4 in. ABC $5.50 $5.75 $5.90
Other Screened Rock $9.00 $9.50 $10.00
Sand $10.00 $11.00 $12.00
Cobble $13.00 $14.00 $15.00
Boulders $9.00 $9.50 $10.00
Topsoil $15.00 $15.50 $16.00
Other Dirt Products $2.50 $2.65 $2.80
Sales
Asphalt $1,638,000 $2,318,000 $3,080,000
Crusher Fines – for Asphalt $191,100 $274,500 $369,600
3/4 in. ABC – for Asphalt $100,100 $140,300 $184,800
1/2 in. Screened Rock – for Asphalt $72,800 $102,480 $134,750
3 in. ABC $107,100 $116,250 $129,850
3/4 in. ABC $171,600 $189,750 $206,500
Other Screened Rock $90,000 $104,500 $125,000
Sand $105,000 $137,500 $180,000
Cobble $79,300 $91,000 $105,000
Boulders $18,900 $21,850 $25,000
Topsoil $97,500 $108,500 $120,000
Other Dirt Products $25,000 $29,150 $33,600
Total Sales $2,696,400 $3,633,780 $4,694,100
Direct Unit Costs 2001 2002 2003
Asphalt $0.00 $0.00 $0.00
Crusher Fines – for Asphalt $5.50 $5.50 $5.50
3/4 in. ABC – for Asphalt $10.50 $10.50 $10.50
1/2 in. Screened Rock – for Asphalt $8.00 $8.00 $8.00
3 in. ABC $0.00 $0.00 $0.00
3/4 in. ABC $0.00 $0.00 $0.00
Other Screened Rock $0.00 $0.00 $0.00
Sand $0.00 $0.00 $0.00
Cobble $0.00 $0.00 $0.00
Boulders $0.00 $0.00 $0.00
Topsoil $0.00 $0.00 $0.00
Other Dirt Products $0.00 $0.00 $0.00
Direct Cost of Sales
Asphalt $0 $0 $0
Crusher Fines – for Asphalt $100,100 $134,200 $169,400
3/4 in. ABC – for Asphalt $191,100 $256,200 $323,400
1/2 in. Screened Rock – for Asphalt $72,800 $97,600 $123,200
3 in. ABC $0 $0 $0
3/4 in. ABC $0 $0 $0
Other Screened Rock $0 $0 $0
Sand $0 $0 $0
Cobble $0 $0 $0
Boulders $0 $0 $0
Topsoil $0 $0 $0
Other Dirt Products $0 $0 $0
Subtotal Direct Cost of Sales $364,000 $488,000 $616,000

5.6 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Milestones
Milestone Start Date End Date Budget Manager Department
Asphalt Plant 1/1/2001 4/1/2001 $500 McCarty Admin.
State Gravel Awards 1/1/2001 5/1/2001 $0 Mazur Admin.
County Asphalt Awards 1/1/2001 6/1/2001 $0 Hughes S & M
Add Five Major Contractors to Customers 1/1/2001 7/1/2001 $500 McCarty Admin.
Reputation and Name Recognition 1/1/2001 12/31/2001 $1,000 Mazur Admin.
Totals $2,000

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Management Summary

Our management philosophy is based on responsibility and mutual respect. At present, including our trucking and excavating personnel, we number 11. We expect to grow to 17 with the addition of the asphalt plant, and to 20 by next year.

6.1 Organizational Structure

The team includes 11 employees, under our president. Our main management divisions are sales and marketing, production, delivery, and administration. Service is handled by all divisions, with direction from administration.

6.2 Management Team

Justin McCarty, Bayfield, Colorado – President, owner of an excavating, landscaping, trucking and road grading business, Mr. McCarty has extensive experience in all phases of gravel and rock hauling, production and industry practices. Mr. McCarty oversees operations of the corporation, and additionally, is a major consumer of plant products.  He also will be a consumer of asphalt products.

Chad Hughes, Durango, Colorado – Vice-president, sales and marketing, educated in natural resources management, and with extensive customer-service experience, Mr. Hughes focuses on developing public accounts.

Gary Small, Mancos, Colorado – Production, Mr. Small has many years of crusher and asphalt-related experience.

Baylin Berg, Durango Colorado – Delivery, Mr. Berg has been instrumental in developing a revolutionary delivery plan to save money for our customers, as well as increase revenues for our trucking division.

Bill Mazur, Durango, Colorado – Administration, Bill is responsible for the day-to-day company operation, as well as coordinating all the departments.

6.3 Personnel Plan

The following table shows the Personnel Plan for Durango Gravel.

Personnel Plan
2001 2002 2003
Production Personnel
Production Manager $26,300 $27,500 $28,800
Crusher 1 $24,000 $25,000 $26,000
Crusher 2 $21,600 $22,000 $22,500
Crusher 3 $21,600 $22,000 $22,500
Asphalt 1 $12,600 $17,000 $18,000
Asphalt 2 $12,600 $17,000 $18,000
Asphalt 3 $9,000 $17,000 $18,000
Asphalt Loader $12,600 $22,700 $24,000
Loader $21,600 $22,700 $24,000
Subtotal $161,900 $192,900 $201,800
Sales and Marketing Personnel
Sales/Marketing 1 $21,000 $23,000 $25,000
Other $0 $0 $0
Subtotal $21,000 $23,000 $25,000
General and Administrative Personnel
Administrator $28,000 $32,000 $37,000
Other $0 $0 $0
Subtotal $28,000 $32,000 $37,000
Other Personnel
Name or title $0 $0 $0
Other $0 $0 $0
Subtotal $0 $0 $0
Total People 9 12 15
Total Payroll $210,900 $247,900 $263,800

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Financial Plan

The most important element in the financial plan is the critical need for improving several of the key factors that impact cash flow:

  • We plan to finance our growth through a combination of long-term debt and cash flow. Purchase of the new asphalt plant and related equipment will require debt financing.
  • Additional technology and equipment will be financed with cash flow.
  • Inventory turnover is not a critical element to ensure profitability.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.
  • We assume, of course, that there are no unforeseen changes in technology to make products immediately obsolete.
  • We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
General Assumptions
2001 2002 2003
Plan Month 1 2 3
Current Interest Rate 13.00% 13.00% 13.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00%
Other 0 0 0

7.2 Key Financial Indicators

The most important factor to Durango Gravel, Inc.’s anticipated growth is the procurement of necessary financing for our asphalt plant. The following chart shows projected changes in key financial indicators:

  • Sales
  • Gross Margin
  • Operating Expenses
  • Collection Days
  • Inventory Turnover
Gravel rock products business plan, financial plan chart image

7.3 Break-even Analysis

The following table and chart describe our estimated monthly break-even point. Based on our estimated sales and expenses, our monthly break-even point is shown below.

Gravel rock products business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 3,170
Monthly Revenue Break-even $44,704
Assumptions:
Average Per-Unit Revenue $14.10
Average Per-Unit Variable Cost $1.90
Estimated Monthly Fixed Cost $38,670

7.4 Projected Profit and Loss

We expect to close year 2001 with excellent sales and very respectable profits.

Gravel rock products business plan, financial plan chart image

Gravel rock products business plan, financial plan chart image

Gravel rock products business plan, financial plan chart image

Gravel rock products business plan, financial plan chart image

Pro Forma Profit and Loss
2001 2002 2003
Sales $2,696,400 $3,633,780 $4,694,100
Direct Cost of Sales $364,000 $488,000 $616,000
Production Payroll $161,900 $192,900 $201,800
Asphalt Plant Maintenance $226,590 $303,780 $383,460
Asphalt By-Product Additives $273,000 $36,600 $46,200
Other $0 $0 $0
Total Cost of Sales $1,025,490 $1,021,280 $1,247,460
Gross Margin $1,670,910 $2,612,500 $3,446,640
Gross Margin % 61.97% 71.89% 73.42%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $21,000 $23,000 $25,000
Advertising/Promotion $6,000 $6,600 $7,200
Travel $1,200 $1,500 $1,800
Miscellaneous $2,400 $3,000 $3,600
Total Sales and Marketing Expenses $30,600 $34,100 $37,600
Sales and Marketing % 1.13% 0.94% 0.80%
General and Administrative Expenses
General and Administrative Payroll $28,000 $32,000 $37,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $18,000 $24,000 $30,000
Leased Equipment $124,800 $145,000 $145,000
Equipment Expense $18,000 $21,000 $25,000
Equipment Fuel $21,600 $33,500 $48,000
Utilities $9,000 $12,000 $15,000
Insurance $21,600 $24,000 $30,000
Office Expense $4,800 $6,000 $6,500
Miscellaneous $36,000 $42,000 $48,000
Pit Lease $120,000 $150,000 $180,000
Payroll Taxes $31,635 $37,185 $39,570
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $433,435 $526,685 $604,070
General and Administrative % 16.07% 14.49% 12.87%
Other Expenses:
Other Payroll $0 $0 $0
Consultants $0 $0 $0
Contract/Consultants $0 $0 $0
Total Other Expenses $0 $0 $0
Other % 0.00% 0.00% 0.00%
Total Operating Expenses $464,035 $560,785 $641,670
Profit Before Interest and Taxes $1,206,875 $2,051,715 $2,804,970
EBITDA $1,224,875 $2,075,715 $2,834,970
Interest Expense $68,669 $61,994 $58,394
Taxes Incurred $284,552 $497,430 $686,644
Net Profit $853,655 $1,492,291 $2,059,932
Net Profit/Sales 31.66% 41.07% 43.88%

7.5 Projected Cash Flow

The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected 60-day collection days is critical, and it is also reasonable. We need $110,000 in new financing (current borrowing and additional investment) in March to get through a cash flow dip as we build up for mid-year sales.

Gravel rock products business plan, financial plan chart image

Pro Forma Cash Flow
2001 2002 2003
Cash Received
Cash from Operations
Cash Sales $134,820 $181,689 $234,705
Cash from Receivables $2,589,881 $3,432,952 $4,437,746
Subtotal Cash from Operations $2,724,701 $3,614,641 $4,672,451
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $60,000 $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 $50,000 $0 $0
Subtotal Cash Received $2,834,701 $3,614,641 $4,672,451
Expenditures 2001 2002 2003
Expenditures from Operations
Cash Spending $210,900 $247,900 $263,800
Bill Payments $1,238,771 $1,545,801 $2,301,964
Subtotal Spent on Operations $1,449,671 $1,793,701 $2,565,764
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $60,000 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $36,000 $36,000 $36,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,545,671 $1,829,701 $2,601,764
Net Cash Flow $1,289,031 $1,784,941 $2,070,688
Cash Balance $1,290,410 $3,075,351 $5,146,039

7.6 Projected Balance Sheet

The Projected Balance Sheet is quite positive. We do not project any real trouble meeting our debt obligations–as long as we can achieve our specific objectives.

Pro Forma Balance Sheet
2001 2002 2003
Assets
Current Assets
Cash $1,290,410 $3,075,351 $5,146,039
Accounts Receivable $55,052 $74,191 $95,840
Inventory $293,640 $75,636 $95,475
Other Current Assets $0 $0 $0
Total Current Assets $1,639,102 $3,225,178 $5,337,353
Long-term Assets
Long-term Assets $1,056,350 $1,056,350 $1,056,350
Accumulated Depreciation $18,000 $42,000 $72,000
Total Long-term Assets $1,038,350 $1,014,350 $984,350
Total Assets $2,677,452 $4,239,528 $6,321,703
Liabilities and Capital 2001 2002 2003
Current Liabilities
Accounts Payable $29,963 $135,747 $193,990
Current Borrowing $0 $0 $0
Other Current Liabilities $10,835 $10,835 $10,835
Subtotal Current Liabilities $40,798 $146,582 $204,825
Long-term Liabilities $637,936 $601,936 $565,936
Total Liabilities $678,734 $748,518 $770,761
Paid-in Capital $1,134,896 $1,134,896 $1,134,896
Retained Earnings $10,168 $863,823 $2,356,114
Earnings $853,655 $1,492,291 $2,059,932
Total Capital $1,998,719 $3,491,010 $5,550,942
Total Liabilities and Capital $2,677,452 $4,239,528 $6,321,703
Net Worth $1,998,719 $3,491,010 $5,550,942

7.7 Business Ratios

The table follows with our main business ratios. We do intend to improve gross margin and collection days. Industry profile ratios based on the Standard Industrial Classification (SIC) code 1442, Construction Sand and Gravel, are shown for comparison.

Ratio Analysis
2001 2002 2003 Industry Profile
Sales Growth 978.28% 34.76% 29.18% 11.10%
Percent of Total Assets
Accounts Receivable 2.06% 1.75% 1.52% 14.30%
Inventory 10.97% 1.78% 1.51% 6.70%
Other Current Assets 0.00% 0.00% 0.00% 32.60%
Total Current Assets 61.22% 76.07% 84.43% 53.60%
Long-term Assets 38.78% 23.93% 15.57% 46.40%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.52% 3.46% 3.24% 31.90%
Long-term Liabilities 23.83% 14.20% 8.95% 26.20%
Total Liabilities 25.35% 17.66% 12.19% 58.10%
Net Worth 74.65% 82.34% 87.81% 41.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 61.97% 71.89% 73.42% 39.10%
Selling, General & Administrative Expenses 30.36% 30.94% 29.69% 19.60%
Advertising Expenses 0.22% 0.18% 0.15% 0.10%
Profit Before Interest and Taxes 44.76% 56.46% 59.76% 3.70%
Main Ratios
Current 40.18 22.00 26.06 1.68
Quick 32.98 21.49 25.59 1.22
Total Debt to Total Assets 25.35% 17.66% 12.19% 58.10%
Pre-tax Return on Net Worth 56.95% 57.00% 49.48% 3.70%
Pre-tax Return on Assets 42.51% 46.93% 43.45% 8.80%
Additional Ratios 2001 2002 2003
Net Profit Margin 31.66% 41.07% 43.88% n.a
Return on Equity 42.71% 42.75% 37.11% n.a
Activity Ratios
Accounts Receivable Turnover 46.53 46.53 46.53 n.a
Collection Days 60 7 7 n.a
Inventory Turnover 0.77 2.64 7.20 n.a
Accounts Payable Turnover 41.71 12.17 12.17 n.a
Payment Days 28 18 25 n.a
Total Asset Turnover 1.01 0.86 0.74 n.a
Debt Ratios
Debt to Net Worth 0.34 0.21 0.14 n.a
Current Liab. to Liab. 0.06 0.20 0.27 n.a
Liquidity Ratios
Net Working Capital $1,598,305 $3,078,596 $5,132,528 n.a
Interest Coverage 17.58 33.10 48.04 n.a
Additional Ratios
Assets to Sales 0.99 1.17 1.35 n.a
Current Debt/Total Assets 2% 3% 3% n.a
Acid Test 31.63 20.98 25.12 n.a
Sales/Net Worth 1.35 1.04 0.85 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Unit Sales
Asphalt 0% 0 0 0 4,000 6,000 9,000 9,000 9,000 4,500 4,000 0 0
Crusher Fines – for Asphalt 0% 0 0 0 1,600 2,400 3,600 3,600 3,600 1,800 1,600 0 0
3/4 in. ABC – for Asphalt 0% 0 0 0 1,600 2,400 3,600 3,600 3,600 1,800 1,600 0 0
1/2 in. Screened Rock – for Asphalt 0% 0 0 0 800 1,200 1,800 1,800 1,800 900 800 0 0
3 in. ABC 0% 1,000 1,300 1,500 2,000 2,000 2,500 3,500 3,000 2,500 2,000 1,500 1,000
3/4 in. ABC 0% 1,200 1,600 2,000 2,600 2,800 3,500 4,500 3,800 3,000 2,700 2,000 1,500
Other Screened Rock 0% 300 500 700 800 800 1,000 1,000 1,500 1,300 1,100 500 500
Sand 0% 100 300 500 1,000 1,000 1,500 1,500 2,000 1,500 500 300 300
Cobble 0% 100 100 500 1,000 1,500 1,000 500 500 300 200 200 200
Boulders 0% 50 100 150 200 250 250 250 250 250 200 100 50
Topsoil 0% 0 0 200 700 1,000 1,500 1,500 500 500 300 200 100
Other Dirt Products 0% 300 500 700 800 800 1,000 1,000 1,500 1,300 1,100 500 500
Total Unit Sales 3,050 4,400 6,250 17,100 22,150 30,250 31,750 31,050 19,650 16,100 5,300 4,150
Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Asphalt $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00
Crusher Fines – for Asphalt $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50
3/4 in. ABC – for Asphalt $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
1/2 in. Screened Rock – for Asphalt $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
3 in. ABC $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50
3/4 in. ABC $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
Other Screened Rock $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
Sand $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Cobble $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00
Boulders $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
Topsoil $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00
Other Dirt Products $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50
Sales
Asphalt $0 $0 $0 $144,000 $216,000 $324,000 $324,000 $324,000 $162,000 $144,000 $0 $0
Crusher Fines – for Asphalt $0 $0 $0 $16,800 $25,200 $37,800 $37,800 $37,800 $18,900 $16,800 $0 $0
3/4 in. ABC – for Asphalt $0 $0 $0 $8,800 $13,200 $19,800 $19,800 $19,800 $9,900 $8,800 $0 $0
1/2 in. Screened Rock – for Asphalt $0 $0 $0 $6,400 $9,600 $14,400 $14,400 $14,400 $7,200 $6,400 $0 $0
3 in. ABC $4,500 $5,850 $6,750 $9,000 $9,000 $11,250 $15,750 $13,500 $11,250 $9,000 $6,750 $4,500
3/4 in. ABC $6,600 $8,800 $11,000 $14,300 $15,400 $19,250 $24,750 $20,900 $16,500 $14,850 $11,000 $8,250
Other Screened Rock $2,700 $4,500 $6,300 $7,200 $7,200 $9,000 $9,000 $13,500 $11,700 $9,900 $4,500 $4,500
Sand $1,000 $3,000 $5,000 $10,000 $10,000 $15,000 $15,000 $20,000 $15,000 $5,000 $3,000 $3,000
Cobble $1,300 $1,300 $6,500 $13,000 $19,500 $13,000 $6,500 $6,500 $3,900 $2,600 $2,600 $2,600
Boulders $450 $900 $1,350 $1,800 $2,250 $2,250 $2,250 $2,250 $2,250 $1,800 $900 $450
Topsoil $0 $0 $3,000 $10,500 $15,000 $22,500 $22,500 $7,500 $7,500 $4,500 $3,000 $1,500
Other Dirt Products $750 $1,250 $1,750 $2,000 $2,000 $2,500 $2,500 $3,750 $3,250 $2,750 $1,250 $1,250
Total Sales $17,300 $25,600 $41,650 $243,800 $344,350 $490,750 $494,250 $483,900 $269,350 $226,400 $33,000 $26,050
Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Asphalt 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Crusher Fines – for Asphalt 0.00% $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
3/4 in. ABC – for Asphalt 0.00% $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50
1/2 in. Screened Rock – for Asphalt 0.00% $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
3 in. ABC 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
3/4 in. ABC 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Other Screened Rock 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Sand 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cobble 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Boulders 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Topsoil 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Other Dirt Products 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Direct Cost of Sales
Asphalt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Crusher Fines – for Asphalt $0 $0 $0 $8,800 $13,200 $19,800 $19,800 $19,800 $9,900 $8,800 $0 $0
3/4 in. ABC – for Asphalt $0 $0 $0 $16,800 $25,200 $37,800 $37,800 $37,800 $18,900 $16,800 $0 $0
1/2 in. Screened Rock – for Asphalt $0 $0 $0 $6,400 $9,600 $14,400 $14,400 $14,400 $7,200 $6,400 $0 $0
3 in. ABC $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
3/4 in. ABC $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Screened Rock $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sand $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cobble $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Boulders $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Topsoil $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Dirt Products $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $32,000 $48,000 $72,000 $72,000 $72,000 $36,000 $32,000 $0 $0
Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Production Personnel
Production Manager $1,800 $2,000 $2,000 $2,100 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300
Crusher 1 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Crusher 2 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Crusher 3 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Asphalt 1 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Asphalt 2 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Asphalt 3 $0 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0 $0
Asphalt Loader $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Loader $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Subtotal $9,200 $9,400 $9,400 $14,900 $16,900 $16,900 $16,900 $16,900 $16,900 $15,100 $9,700 $9,700
Sales and Marketing Personnel
Sales/Marketing 1 $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
General and Administrative Personnel
Administrator $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other Personnel
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 6 6 7 10 11 11 11 11 11 10 9 9
Total Payroll $11,200 $11,400 $14,000 $19,000 $21,000 $21,500 $21,500 $21,500 $21,500 $19,700 $14,300 $14,300

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $17,300 $25,600 $41,650 $243,800 $344,350 $490,750 $494,250 $483,900 $269,350 $226,400 $33,000 $26,050
Direct Cost of Sales $0 $0 $0 $32,000 $48,000 $72,000 $72,000 $72,000 $36,000 $32,000 $0 $0
Production Payroll $9,200 $9,400 $9,400 $14,900 $16,900 $16,900 $16,900 $16,900 $16,900 $15,100 $9,700 $9,700
Asphalt Plant Maintenance $0 $0 $0 $19,920 $29,880 $44,820 $44,820 $44,820 $22,410 $19,920 $0 $0
Asphalt By-Product Additives $0 $0 $0 $24,000 $36,000 $54,000 $54,000 $54,000 $27,000 $24,000 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $9,200 $9,400 $9,400 $90,820 $130,780 $187,720 $187,720 $187,720 $102,310 $91,020 $9,700 $9,700
Gross Margin $8,100 $16,200 $32,250 $152,980 $213,570 $303,030 $306,530 $296,180 $167,040 $135,380 $23,300 $16,350
Gross Margin % 46.82% 63.28% 77.43% 62.75% 62.02% 61.75% 62.02% 61.21% 62.02% 59.80% 70.61% 62.76%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
Advertising/Promotion $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Travel $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Miscellaneous $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Total Sales and Marketing Expenses $800 $800 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900
Sales and Marketing % 4.62% 3.13% 6.96% 1.19% 0.84% 0.59% 0.59% 0.60% 1.08% 1.28% 8.79% 11.13%
General and Administrative Expenses
General and Administrative Payroll $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Sales and Marketing and Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Leased Equipment $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400
Equipment Expense $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Equipment Fuel $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Utilities $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Insurance $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Office Expense $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Miscellaneous $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Pit Lease $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Payroll Taxes 15% $1,680 $1,710 $2,100 $2,850 $3,150 $3,225 $3,225 $3,225 $3,225 $2,955 $2,145 $2,145
Other General and Administrative Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total General and Administrative Expenses $34,830 $34,860 $35,750 $36,000 $36,300 $36,875 $36,875 $36,875 $36,875 $36,605 $35,795 $35,795
General and Administrative % 201.33% 136.17% 85.83% 14.77% 10.54% 7.51% 7.46% 7.62% 13.69% 16.17% 108.47% 137.41%
Other Expenses:
Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Operating Expenses $35,630 $35,660 $38,650 $38,900 $39,200 $39,775 $39,775 $39,775 $39,775 $39,505 $38,695 $38,695
Profit Before Interest and Taxes ($27,530) ($19,460) ($6,400) $114,080 $174,370 $263,255 $266,755 $256,405 $127,265 $95,875 ($15,395) ($22,345)
EBITDA ($26,030) ($17,960) ($4,900) $115,580 $175,870 $264,755 $268,255 $257,905 $128,765 $97,375 ($13,895) ($20,845)
Interest Expense $5,616 $5,616 $6,191 $6,191 $6,191 $5,791 $5,791 $5,791 $5,391 $5,391 $5,391 $5,316
Taxes Incurred ($8,287) ($6,269) ($3,148) $26,972 $42,045 $64,366 $65,241 $62,653 $30,468 $22,621 ($5,197) ($6,915)
Net Profit ($24,860) ($18,807) ($9,443) $80,917 $126,134 $193,098 $195,723 $187,960 $91,405 $67,863 ($15,590) ($20,746)
Net Profit/Sales -143.70% -73.47% -22.67% 33.19% 36.63% 39.35% 39.60% 38.84% 33.94% 29.97% -47.24% -79.64%

Pro Forma Cash Flow
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash Received
Cash from Operations
Cash Sales $865 $1,280 $2,083 $12,190 $17,218 $24,538 $24,713 $24,195 $13,468 $11,320 $1,650 $1,303
Cash from Receivables $41,677 $42,225 $16,698 $24,828 $45,969 $234,794 $331,769 $466,323 $469,210 $452,911 $254,522 $208,956
Subtotal Cash from Operations $42,542 $43,505 $18,780 $37,018 $63,186 $259,332 $356,481 $490,518 $482,677 $464,231 $256,172 $210,258
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $60,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $50,000 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $42,542 $43,505 $78,780 $37,018 $113,186 $259,332 $356,481 $490,518 $482,677 $464,231 $256,172 $210,258
Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Expenditures from Operations
Cash Spending $11,200 $11,400 $14,000 $19,000 $21,000 $21,500 $21,500 $21,500 $21,500 $19,700 $14,300 $14,300
Bill Payments $19,870 $29,528 $31,643 $38,086 $111,628 $149,547 $202,681 $203,441 $198,206 $118,491 $102,919 $32,730
Subtotal Spent on Operations $31,070 $40,928 $45,643 $57,086 $132,628 $171,047 $224,181 $224,941 $219,706 $138,191 $117,219 $47,030
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $30,000 $0 $0 $30,000 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $9,000 $0 $0 $9,000 $0 $0 $9,000 $0 $0 $9,000
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $31,070 $40,928 $54,643 $57,086 $132,628 $210,047 $224,181 $224,941 $258,706 $138,191 $117,219 $56,030
Net Cash Flow $11,472 $2,577 $24,137 ($20,068) ($19,441) $49,285 $132,300 $265,577 $223,971 $326,040 $138,954 $154,228
Cash Balance $12,851 $15,428 $39,565 $19,497 $56 $49,340 $181,640 $447,217 $671,188 $997,228 $1,136,182 $1,290,410
Pro Forma Balance Sheet
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Assets Starting Balances
Current Assets
Cash $1,379 $12,851 $15,428 $39,565 $19,497 $56 $49,340 $181,640 $447,217 $671,188 $997,228 $1,136,182 $1,290,410
Accounts Receivable $83,354 $58,112 $40,207 $63,077 $269,859 $551,022 $782,441 $920,210 $913,591 $700,264 $462,433 $239,261 $55,052
Inventory $657,640 $657,640 $657,640 $657,640 $625,640 $577,640 $505,640 $433,640 $361,640 $325,640 $293,640 $293,640 $293,640
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $742,373 $728,603 $713,275 $760,282 $914,996 $1,128,718 $1,337,421 $1,535,489 $1,722,449 $1,697,092 $1,753,301 $1,669,082 $1,639,102
Long-term Assets
Long-term Assets $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350
Accumulated Depreciation $0 $1,500 $3,000 $4,500 $6,000 $7,500 $9,000 $10,500 $12,000 $13,500 $15,000 $16,500 $18,000
Total Long-term Assets $1,056,350 $1,054,850 $1,053,350 $1,051,850 $1,050,350 $1,048,850 $1,047,350 $1,045,850 $1,044,350 $1,042,850 $1,041,350 $1,039,850 $1,038,350
Total Assets $1,798,723 $1,783,453 $1,766,625 $1,812,132 $1,965,346 $2,177,568 $2,384,771 $2,581,339 $2,766,799 $2,739,942 $2,794,651 $2,708,932 $2,677,452
Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Current Liabilities
Accounts Payable $18,888 $28,478 $30,457 $34,407 $106,704 $142,792 $195,897 $196,743 $194,242 $114,980 $101,826 $31,697 $29,963
Current Borrowing $0 $0 $0 $60,000 $60,000 $60,000 $30,000 $30,000 $30,000 $0 $0 $0 $0
Other Current Liabilities $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835
Subtotal Current Liabilities $29,723 $39,313 $41,292 $105,242 $177,539 $213,627 $236,732 $237,578 $235,077 $125,815 $112,661 $42,532 $40,798
Long-term Liabilities $673,936 $673,936 $673,936 $664,936 $664,936 $664,936 $655,936 $655,936 $655,936 $646,936 $646,936 $646,936 $637,936
Total Liabilities $703,659 $713,249 $715,228 $770,178 $842,475 $878,563 $892,668 $893,514 $891,013 $772,751 $759,597 $689,468 $678,734
Paid-in Capital $1,084,896 $1,084,896 $1,084,896 $1,084,896 $1,084,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896
Retained Earnings $5,084 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168
Earnings $5,084 ($24,860) ($43,667) ($53,110) $27,807 $153,941 $347,039 $542,762 $730,722 $822,127 $889,990 $874,401 $853,655
Total Capital $1,095,064 $1,070,204 $1,051,397 $1,041,954 $1,122,871 $1,299,005 $1,492,103 $1,687,826 $1,875,786 $1,967,191 $2,035,054 $2,019,465 $1,998,719
Total Liabilities and Capital $1,798,723 $1,783,453 $1,766,625 $1,812,132 $1,965,346 $2,177,568 $2,384,771 $2,581,339 $2,766,799 $2,739,942 $2,794,651 $2,708,932 $2,677,452
Net Worth $1,095,064 $1,070,204 $1,051,397 $1,041,954 $1,122,871 $1,299,005 $1,492,103 $1,687,826 $1,875,786 $1,967,191 $2,035,054 $2,019,465 $1,998,719

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