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Wooderful Floors

Executive Summary

Wooderful Floors is a start-up company that offers wood floor refinishing to the Pittsburgh, Pennsylvania area. The company was formed as a L.L.C. by Logan Madison.

Keys to Success
Wooderful Floors has identified several keys of success that will be instrumental in its progression to profitability within the first year.

  1. Attention to detail: Every floor worked on must be done to precise, caring standards.
  2. 100% customer satisfaction: Every customer must be happy with the work.
  3. Business efficiency: All processes and activities in the business must be analyzed and determined if the most efficient process is being used.

Competitive Edge
Wooderful Floors will focus on environmentalism and trusted experience to gain market share. Wooderful Floors exclusively uses a water-based finishing product. This relatively new product is just as durable as the polyurethane alternatives, is non-toxic, and does not release toxic fumes into the air. The alternative products often force the home owner to vacate the home for several days due to the toxicity of the fumes. Wooderful Floors has extensive experience with this water-based product. Logan is the most experienced service provider for water-based products.

Management
Logan Madison received his Bachelor of Arts from Allegheny College. He worked as a floor refinisher for the last several years with a general contractor. From the first month that the water-based products entered the market, Logan was using them and learning more and more about the proper application of these breakthrough products.

Through a combination of skill and experience, Logan will lead Wooderful Floors to profitability with the first year. Wooderful Floors is forecasted to achieve steady growth in sales for years two and three, and corresponding increases in net profit.

Hardwood floor refinisher business plan, executive summary chart image

1.1 Mission

It is Wooderful Floors’ mission to offer the highest-quality environmentally-sound wood floor refinishing service in Pittsburgh. Through fair pricing, careful craftsmen-like work and 100% customer satisfaction, Wooderful Floors will quickly gain a base of loyal customers.

1.2 Keys to Success

  • Attention to detail, every floor must be refinished to perfection.
  • Customers must be 100% satisfied will all of Wooderful Floors’ work.
  • Although floor refinishing is a labor of love, attention to detail regarding business efficiency must be applied in order for Wooderful Floors to be a sustainable company.

1.3 Objectives

  • To become the premier environmentally-sound wood floor refinisher.
  • Become profitable within year one.
  • Achieve significant gains in market penetration.
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Company Summary

Wooderful Floors is a newly formed Pennsylvania-based L.L.C. that offers customers environmentally-sound wood floor refinishing options. The company has been founded by Logan Madison as a start up in January.

2.1 Start-up Summary

Wooderful Floors will require the following start-up equipment:

  • Used van
  • Drum sanders
  • Floor edgers
  • Buffers
  • Circular/palm sanders
  • Putty knives and scrapers
  • Shop vacuum cleaners
  • Ear protection, dust masks, safety goggles
  • Lamb’s wool and natural bristle brushes
  • Foam applicators
  • Air compressor
  • Various hand tools
  • Pneumatic nail finisher
  • Computer with Microsoft Office, QuickBooks Pro, a printer, and an Internet connection
Hardwood floor refinisher business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $500
Brochures $250
Assorted tools $10,000
Insurance $500
Van $8,000
Website design $650
Total Start-up Expenses $19,900
Start-up Assets
Cash Required $10,100
Other Current Assets $0
Long-term Assets $8,000
Total Assets $18,100
Total Requirements $38,000

2.2 Company Ownership

Wooderful Floors is wholly owned by Logan Madison. The business has been financed by owner investment and a long-term bank loan.

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Services

Wooderful Floors offers the Pittsburgh community an environmentally safe wood floor refinishing service.

The services begin with a floor assessment. Whole boards may need to be replaced, but usually only small cracks need to be filled. The next step of refinishing is the sanding of the floor. This is always done layer by layer in a uniform manner. Throughout the sanding process cracks are checked for and fixed as needed. Three grades of sanding occur: rough, medium, and fine.

Once the floor has been sanded and vacuumed, the floor is now buffed using a super fine abrasive screen. The buffing helps tighten the wood grain to prepare it for accepting the stain. After the stain has been applied, the finish is applied and left to dry. Wooderful Floors provides every customer with a brief tutorial and documentation for care and maintenance of their refinished wood surface.

Wooderful Floors exclusively uses a water-based, environmentally sound finishing treatment. Within the last four years there has been a technological breakthrough in hard wood floor treatments that allows the industry to offer an extremely durable water-based solution.

The competing products on the market are:

  • Polyurethane: This is a popular and durable finish that comes in satin, semi-gloss, and high-gloss. While this finish is durable, it leaves a plastic sheen that decreases its attractiveness, is not dog nail resistant, and the chemicals that make up the liquid are quite toxic.
  • Swedish finish: This alternative is durable but has toxic fumes. Home owners must vacate the home for 2-3 days to allow the fumes to pass.

Wooderful Floors water-based finish has the same or superior durability characteristics as the competing brands and is not toxic. Wooderful Floors’ prices will be slightly higher than competitors due to the high cost of the water-based finish product. The company will use superior service and market the environmental benefits of products used to justify the higher service cost.

The pricing schedule is based on square footage and other features that may impact the time to refinish such as ornate trims, etc.

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Market Analysis Summary

Wooderful Floors has identified two market segments that it will target: remodelers and restorers. Remodelers are redecorating one or more rooms within a house, restorers are refinishing their wood floor to the original shine. These two segments are targeted due to their willingness to do a complete, refinishing job to their floor and to their environmental commitment.

Wooderful Floors operates within the wood floor refinishing service business. There are many different competitors in this niche that are described in detail in the Service Business Analysis, and Competition and Buying Patterns sections.

4.1 Market Segmentation

Two distinct market segments will be targeted for Wooderful Floors’ marketing and sales campaign.

Remodelers
Home owners who are remodeling one or more rooms of a house. The remodeling is likely to include both floor work, wall coverings/movement, and possibly ceiling work. Each project is fairly extensive. Demographic data for this group includes:

  • 1st or 2nd time home buyers
  • >$60,000 in household income
  • Single family
  • Have lived in their home for at least 1.7 years
  • 65% have an undergraduate degree
  • 27% have a graduate degree
  • Are environmentally conscious
  • 17% buy organic produce
  • 52% participate in some sort of human powered activity such as hiking or cycling at least twice a week
  • 17% had a SUV but sold it out of environmental concerns

Restorers
Home owners refinishing the surface of their wood floor.

  • 1st time home buyer
  • Median household income is $51,000
  • Single family
  • Have lived in the home for 2.3 years
  • 57% have an undergraduate degree
  • Are environmentally conscious
  • 44% participate in a human powered activity twice a week
Hardwood floor refinisher business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Remodelers 6% 98,747 104,672 110,952 117,609 124,666 6.00%
Restorers 7% 103,225 110,451 118,183 126,456 135,308 7.00%
Total 6.51% 201,972 215,123 229,135 244,065 259,974 6.51%

4.2 Target Market Segment Strategy

The two market segments were chosen as a way of identifying customers that would use wood floor refinishing services. The difference between the target segments is the extent of the project. Remodelers may be harder to reach than the restorers, since the remodelers have more demands on their time dealing with multiple decisions for the whole project.

As the demographic data in the Market Segmentation section indicates, both groups of customers have environmental tendencies. This is an important characteristic for Wooderful Floors because its water-based floor finishing treatment offers the most value to those that have environmental concerns.

4.3 Service Business Analysis

Wooderful Floors operates within the wood floor refinishing service business. This industry is primarily residential base since 90% of wood floors are found in private residences. This industry is primarily made up of refinishers who can make small repairs. A smaller segment are installers who also offer refinishing. The industry was valued at $588 million in 2002 in the USA.

The industry has many competitors. Some competitors have a minimum square footage requirement, most offer all types of finishing products, but others like Wooderful Floors may only offer one type of finishing product. Some companies compete on price, some on speed, some on service, some on finished product quality. Companies within the industry indicate that 19% of their business is from word-of-mouth referrals.

4.3.1 Competition and Buying Patterns

A search in the Yellow Pages finds twelve companies that offer wood floor refinishing. Four offer the water based-finishing product, but Wooderful Floors is the only company that exclusively offers the water-based product. Four popular competitors include:

  • Spotless Floors: This company installs wood floors as well as refinishes them. Customers must wait 4-6 weeks before a service appointment can be made.
  • Touch of Class Wood Floor Refinishing: They offer all types of floor refinishing, competing on price. Quality of work is average.
  • Nicolusi Brothers Wood Floor Refinishing: They only offer QuickBooks refinishing, claiming it is the only type of finish that they can recommend.
  • Floor Finishes: A high end, full service floor contractor, offering work in wood, tile, and carpet.
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Strategy and Implementation Summary

Wooderful Floors will steadily gain market share by leveraging its competitive edge of an environmental focus and being the most experienced refinisher with the new water-based finishing product.

Wooderful Floors’ marketing strategy will develop awareness regarding the non-toxic wood floor refinishing. Several different communication methods will be used. Recognizing influence of word-of-mouth recommendations in this industry, Wooderful Floors will use customer referral coupons to create economic incentives for referrals.

The sales effort for the wood floor refinishing will focus on Wooderful Floors’ competitive edge regarding specialization on environmentally-sound refinishes and offering the community the most experience with this new technology.

5.1 Competitive Edge

Wooderful Floors has a significant competitive advantage of being the only service provider that specializes on water-based products:

  • Environmental focus: By only offering a water-based solution, Wooderful Floors is signalling to the market that they have environmental considerations.
  • Experience: Wooderful Floors will be the service provider with the most experience with the water-based product since that is the only style of finishes that they work at.

5.2 Marketing Strategy

The marketing strategy will communicate that Wooderful Floors offers a new type of wood floor refinishing that is safe for home owners and the environment. This message will be distributed by:

Advertisements:

  • The Pittsburgh Herald: The main daily paper. Once a week there is a home improvement section in which Wooderful Floors will advertise.
  • The Pittsburgh Weekly: A popular weekly entertainment guide. This publication is pro-environment so the readership demographic are similar to Wooderful Floors’ targeted customers.
  • Yellow Pages.

Customer referral coupons: These coupons will be distributed as an economic incentive for customers. The customer receives cash back if the coupon is used by the person they give it to.

5.3 Sales Strategy

The sales strategy focuses on emphasizing Wooderful Floors’ competitive edge of being environmentally conscious and having the greatest amount of experience in the industry. Wooderful Floors will stand out from its competitors as a company that cares about the environment and the safety of its clients.

5.3.1 Sales Forecast

Wooderful Floors has adopted a conservative sales forecast as a method for predicting future sales as well as benchmarking progress.

Because the business is being funded by debt, a conservative forecast was chosen to better ensure that future obligations will be met. Please review the following table and charts which offer graphical presentations of the future sales.

Hardwood floor refinisher business plan, strategy and implementation summary chart image

Hardwood floor refinisher business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Remodelers $30,123 $45,445 $55,454
Restorers $20,785 $31,357 $38,263
Total Sales $50,908 $76,802 $93,717
Direct Cost of Sales Year 1 Year 2 Year 3
Remodelers $6,025 $9,089 $11,091
Restorers $4,157 $6,271 $7,653
Subtotal Direct Cost of Sales $10,182 $15,360 $18,743

5.4 Milestones

Wooderful Floors has chosen several milestones which will act as achievable goals for the company to reach within the first two years of operation. The milestones will be quantifiable goals so that it will be easy to discern when they are reached.

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 6/1/2003 6/30/2003 $0 Logan Business Formation
Final equipment purchased 1/1/2004 2/20/2004 $0 Logan Operations
First large job 3/15/2004 3/15/2004 $0 Logan Sales
Profitability 1/1/2004 1/1/2004 $0 Logan Operations
Totals $0

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Web Plan Summary

A simple website will be used as a marketing tool for the organization. The focus will be on the environmental concerns that Wooderful Floors has and the way it has met those concerns.

Logan’s experience, both as a floor refinisher and a pioneer of the use of water-based finishing products will be emphasized. General contact information and details regarding the environmentally-friendly products will be highlighted on the site.

6.1 Website Marketing Strategy

Wooderful Floors will submit the website to various search engines.

It is important that the website has been submitted to search engines so that it comes up high on the lists of hits when a specific customer is seeking out information regarding wood floor refinishing.

6.2 Development Requirements

Logan will employ a friend who will design and develop the website for the bargain price of $650.

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Management Summary

Wooderful Floors has been founded and will be lead by Logan Madison. Logan received his Bachelor of Arts degree from Allegheny College. He worked for a general contractor performing wood floor refinishing for seven years before starting Wooderful Floors.

7.1 Personnel Plan

Logan will be the primary employee. He will use QuickBooks Pro for accounting and invoicing. For large jobs Logan will employ an additional laborer.

Personnel Plan
Year 1 Year 2 Year 3
Logan $24,000 $25,000 $30,000
Additional employee $4,200 $833 $1,000
Total People 2 2 2
Total Payroll $28,200 $25,833 $31,000

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Financial Plan

The following sections will outline important financial information.

8.1 Start-up Funding

Funds for start up will be a combination of owner investment and a long-term bank loan, with an interest rate of not more than 7% for seven years.

Start-up Funding
Start-up Expenses to Fund $19,900
Start-up Assets to Fund $18,100
Total Funding Required $38,000
Assets
Non-cash Assets from Start-up $8,000
Cash Requirements from Start-up $10,100
Additional Cash Raised $0
Cash Balance on Starting Date $10,100
Total Assets $18,100
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $15,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $15,000
Capital
Planned Investment
Owner $15,000
Other $0
Additional Investment Requirement $8,000
Total Planned Investment $23,000
Loss at Start-up (Start-up Expenses) ($19,900)
Total Capital $3,100
Total Capital and Liabilities $18,100
Total Funding $38,000

8.2 Important Assumptions

The following table details 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 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.3 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Hardwood floor refinisher business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $4,156
Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $3,325

8.4 Projected Profit and Loss

The following table and charts presents Projected Profit and Loss.

Hardwood floor refinisher business plan, financial plan chart image

Hardwood floor refinisher business plan, financial plan chart image

Hardwood floor refinisher business plan, financial plan chart image

Hardwood floor refinisher business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $50,908 $76,802 $93,717
Direct Cost of Sales $10,182 $15,360 $18,743
Other Costs of Sales $0 $0 $0
Total Cost of Sales $10,182 $15,360 $18,743
Gross Margin $40,726 $61,442 $74,974
Gross Margin % 80.00% 80.00% 80.00%
Expenses
Payroll $28,200 $25,833 $31,000
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $2,664 $2,666 $2,666
Utilities $1,200 $1,200 $1,200
Payroll Taxes $4,230 $0 $0
Insurance $2,400 $2,400 $2,400
Total Operating Expenses $39,894 $33,299 $38,466
Profit Before Interest and Taxes $832 $28,142 $36,508
EBITDA $3,496 $30,808 $39,174
Interest Expense $963 $803 $624
Taxes Incurred $0 $8,202 $10,765
Net Profit ($130) $19,138 $25,119
Net Profit/Sales -0.26% 24.92% 26.80%

8.5 Projected Cash Flow

The following table and chart displays the Projected Cash Flow.

Hardwood floor refinisher business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $50,908 $76,802 $93,717
Subtotal Cash from Operations $50,908 $76,802 $93,717
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 $50,908 $76,802 $93,717
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $28,200 $25,833 $31,000
Bill Payments $17,963 $28,979 $34,459
Subtotal Spent on Operations $46,163 $54,813 $65,459
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 $2,304 $2,460 $2,639
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $48,467 $57,273 $68,098
Net Cash Flow $2,441 $19,529 $25,620
Cash Balance $12,541 $32,071 $57,690

8.6 Projected Balance Sheet

The following table shows the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $12,541 $32,071 $57,690
Other Current Assets $0 $0 $0
Total Current Assets $12,541 $32,071 $57,690
Long-term Assets
Long-term Assets $8,000 $8,000 $8,000
Accumulated Depreciation $2,664 $5,330 $7,996
Total Long-term Assets $5,336 $2,670 $4
Total Assets $17,877 $34,741 $57,694
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,211 $2,397 $2,871
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,211 $2,397 $2,871
Long-term Liabilities $12,696 $10,236 $7,597
Total Liabilities $14,907 $12,633 $10,468
Paid-in Capital $23,000 $23,000 $23,000
Retained Earnings ($19,900) ($20,030) ($893)
Earnings ($130) $19,138 $25,119
Total Capital $2,970 $22,107 $47,226
Total Liabilities and Capital $17,877 $34,741 $57,694
Net Worth $2,970 $22,107 $47,226

8.7 Business Ratios

The following table displays common business ratios relevant to Wooderful Floors as well as the wood floor industry. Please note that there are some variances between Wooderful’s ratios and the industry. Industry profile ratios are based on the Standard Industrial Classification (SIC) code 1752.

This can be explained by the fact that Wooderful is a small operation, with few employees and little capital expenses. Having the operation small helps them achieve above industry margins.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 50.86% 22.02% 5.11%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 32.94%
Total Current Assets 70.15% 92.31% 99.99% 75.88%
Long-term Assets 29.85% 7.69% 0.01% 24.12%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.37% 6.90% 4.98% 38.68%
Long-term Liabilities 71.02% 29.46% 13.17% 13.31%
Total Liabilities 83.39% 36.36% 18.14% 51.99%
Net Worth 16.61% 63.64% 81.86% 48.01%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.00% 80.00% 80.00% 29.46%
Selling, General & Administrative Expenses 88.28% 37.26% 34.91% 14.86%
Advertising Expenses 0.00% 0.00% 0.00% 0.47%
Profit Before Interest and Taxes 1.63% 36.64% 38.96% 2.37%
Main Ratios
Current 5.67 13.38 20.09 1.74
Quick 5.67 13.38 20.09 1.38
Total Debt to Total Assets 83.39% 36.36% 18.14% 6.96%
Pre-tax Return on Net Worth -4.39% 123.67% 75.98% 57.15%
Pre-tax Return on Assets -0.73% 78.70% 62.20% 16.25%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.26% 24.92% 26.80% n.a
Return on Equity -4.39% 86.57% 53.19% n.a
Activity Ratios
Accounts Payable Turnover 9.12 12.17 12.17 n.a
Payment Days 27 29 28 n.a
Total Asset Turnover 2.85 2.21 1.62 n.a
Debt Ratios
Debt to Net Worth 5.02 0.57 0.22 n.a
Current Liab. to Liab. 0.15 0.19 0.27 n.a
Liquidity Ratios
Net Working Capital $10,330 $29,673 $54,819 n.a
Interest Coverage 0.86 35.06 58.49 n.a
Additional Ratios
Assets to Sales 0.35 0.45 0.62 n.a
Current Debt/Total Assets 12% 7% 5% n.a
Acid Test 5.67 13.38 20.09 n.a
Sales/Net Worth 17.14 3.47 1.98 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Remodelers 0% $250 $325 $622 $1,545 $2,121 $2,654 $3,232 $3,545 $3,754 $3,858 $4,005 $4,212
Restorers 0% $173 $224 $429 $1,066 $1,463 $1,831 $2,230 $2,446 $2,590 $2,662 $2,763 $2,906
Total Sales $423 $549 $1,051 $2,611 $3,584 $4,485 $5,462 $5,991 $6,344 $6,520 $6,768 $7,118
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Remodelers $50 $65 $124 $309 $424 $531 $646 $709 $751 $772 $801 $842
Restorers $35 $45 $86 $213 $293 $366 $446 $489 $518 $532 $553 $581
Subtotal Direct Cost of Sales $85 $110 $210 $522 $717 $897 $1,092 $1,198 $1,269 $1,304 $1,354 $1,424
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Logan 0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Additional employee 0% $0 $0 $0 $0 $500 $500 $500 $500 $500 $500 $600 $600
Total People 1 1 1 1 2 2 2 2 2 2 2 2
Total Payroll $2,000 $2,000 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,600 $2,600

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current 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%
Long-term Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $423 $549 $1,051 $2,611 $3,584 $4,485 $5,462 $5,991 $6,344 $6,520 $6,768 $7,118
Direct Cost of Sales $85 $110 $210 $522 $717 $897 $1,092 $1,198 $1,269 $1,304 $1,354 $1,424
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $85 $110 $210 $522 $717 $897 $1,092 $1,198 $1,269 $1,304 $1,354 $1,424
Gross Margin $338 $439 $841 $2,089 $2,868 $3,588 $4,370 $4,793 $5,075 $5,216 $5,415 $5,695
Gross Margin % 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00%
Expenses
Payroll $2,000 $2,000 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,600 $2,600
Sales and Marketing and Other Expenses $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Depreciation $222 $222 $222 $222 $222 $222 $222 $222 $222 $222 $222 $222
Utilities $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Payroll Taxes 15% $300 $300 $300 $300 $375 $375 $375 $375 $375 $375 $390 $390
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Total Operating Expenses $2,922 $2,922 $2,922 $2,922 $3,497 $3,497 $3,497 $3,497 $3,497 $3,497 $3,612 $3,612
Profit Before Interest and Taxes ($2,584) ($2,483) ($2,081) ($833) ($629) $91 $873 $1,296 $1,578 $1,719 $1,803 $2,083
EBITDA ($2,362) ($2,261) ($1,859) ($611) ($407) $313 $1,095 $1,518 $1,800 $1,941 $2,025 $2,305
Interest Expense $86 $85 $84 $83 $82 $81 $80 $79 $77 $76 $75 $74
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($2,670) ($2,568) ($2,165) ($916) ($711) $10 $793 $1,217 $1,501 $1,643 $1,728 $2,009
Net Profit/Sales -632.04% -467.52% -205.98% -35.09% -19.84% 0.23% 14.52% 20.32% 23.66% 25.19% 25.52% 28.22%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $423 $549 $1,051 $2,611 $3,584 $4,485 $5,462 $5,991 $6,344 $6,520 $6,768 $7,118
Subtotal Cash from Operations $423 $549 $1,051 $2,611 $3,584 $4,485 $5,462 $5,991 $6,344 $6,520 $6,768 $7,118
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 $0 $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 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $423 $549 $1,051 $2,611 $3,584 $4,485 $5,462 $5,991 $6,344 $6,520 $6,768 $7,118
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $2,000 $2,000 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,600 $2,600
Bill Payments $29 $872 $898 $1,005 $1,314 $1,580 $1,759 $1,951 $2,054 $2,122 $2,157 $2,221
Subtotal Spent on Operations $2,029 $2,872 $2,898 $3,005 $3,814 $4,080 $4,259 $4,451 $4,554 $4,622 $4,757 $4,821
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 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $192 $192 $192 $192 $192 $192 $192 $192 $192 $192 $192 $192
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 $2,221 $3,064 $3,090 $3,197 $4,006 $4,272 $4,451 $4,643 $4,746 $4,814 $4,949 $5,013
Net Cash Flow ($1,799) ($2,514) ($2,039) ($586) ($422) $213 $1,011 $1,348 $1,598 $1,706 $1,819 $2,105
Cash Balance $8,301 $5,787 $3,748 $3,162 $2,740 $2,954 $3,965 $5,313 $6,911 $8,617 $10,436 $12,541
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $10,100 $8,301 $5,787 $3,748 $3,162 $2,740 $2,954 $3,965 $5,313 $6,911 $8,617 $10,436 $12,541
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $10,100 $8,301 $5,787 $3,748 $3,162 $2,740 $2,954 $3,965 $5,313 $6,911 $8,617 $10,436 $12,541
Long-term Assets
Long-term Assets $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Accumulated Depreciation $0 $222 $444 $666 $888 $1,110 $1,332 $1,554 $1,776 $1,998 $2,220 $2,442 $2,664
Total Long-term Assets $8,000 $7,778 $7,556 $7,334 $7,112 $6,890 $6,668 $6,446 $6,224 $6,002 $5,780 $5,558 $5,336
Total Assets $18,100 $16,079 $13,343 $11,082 $10,274 $9,630 $9,622 $10,411 $11,537 $12,913 $14,397 $15,994 $17,877
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $842 $865 $961 $1,262 $1,521 $1,694 $1,882 $1,983 $2,051 $2,083 $2,145 $2,211
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $842 $865 $961 $1,262 $1,521 $1,694 $1,882 $1,983 $2,051 $2,083 $2,145 $2,211
Long-term Liabilities $15,000 $14,808 $14,616 $14,424 $14,232 $14,040 $13,848 $13,656 $13,464 $13,272 $13,080 $12,888 $12,696
Total Liabilities $15,000 $15,650 $15,481 $15,385 $15,494 $15,561 $15,542 $15,538 $15,447 $15,323 $15,163 $15,033 $14,907
Paid-in Capital $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000
Retained Earnings ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900) ($19,900)
Earnings $0 ($2,670) ($5,238) ($7,403) ($8,320) ($9,031) ($9,020) ($8,227) ($7,010) ($5,509) ($3,866) ($2,139) ($130)
Total Capital $3,100 $430 ($2,138) ($4,303) ($5,220) ($5,931) ($5,920) ($5,127) ($3,910) ($2,409) ($766) $961 $2,970
Total Liabilities and Capital $18,100 $16,079 $13,343 $11,082 $10,274 $9,630 $9,622 $10,411 $11,537 $12,913 $14,397 $15,994 $17,877
Net Worth $3,100 $430 ($2,138) ($4,303) ($5,220) ($5,931) ($5,920) ($5,127) ($3,910) ($2,409) ($766) $961 $2,970

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