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Tricky Widgets Manufacturing

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
Unit Sales
Widget Basic 0% 22 22 23 23 24 24 25 25 26 26 27 27
Widget Deluxe 0% 25 26 26 27 27 28 28 29 29 30 30 31
Widget Premium 0% 27 28 28 29 29 30 30 31 32 32 33 34
Other 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 74 75 77 79 80 82 83 85 87 88 90 92
Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Widget Basic $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00 $35,000.00
Widget Deluxe $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00
Widget Premium $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00 $75,000.00
Other $0.00 $0.00 $0.00 $0.00 $0.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Sales
Widget Basic $770,000 $785,400 $801,108 $817,130 $833,473 $850,142 $867,145 $884,488 $902,178 $920,221 $938,626 $957,398
Widget Deluxe $1,250,000 $1,275,000 $1,300,500 $1,326,510 $1,353,040 $1,380,101 $1,407,703 $1,435,857 $1,464,574 $1,493,866 $1,523,743 $1,554,218
Widget Premium $2,025,000 $2,065,500 $2,106,810 $2,148,946 $2,191,925 $2,235,764 $2,280,479 $2,326,088 $2,372,610 $2,420,062 $2,468,464 $2,517,833
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $4,045,000 $4,125,900 $4,208,418 $4,292,586 $4,378,438 $4,466,007 $4,555,327 $4,646,434 $4,739,362 $4,834,149 $4,930,832 $5,029,449
Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Widget Basic 0.00% $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00 $28,000.00
Widget Deluxe 0.00% $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00
Widget Premium 0.00% $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00 $60,000.00
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 $0.00
Direct Cost of Sales
Widget Basic $616,000 $628,320 $640,886 $653,704 $666,778 $680,114 $693,716 $707,590 $721,742 $736,177 $750,901 $765,919
Widget Deluxe $1,000,000 $1,020,000 $1,040,400 $1,061,208 $1,082,432 $1,104,081 $1,126,162 $1,148,686 $1,171,659 $1,195,093 $1,218,994 $1,243,374
Widget Premium $1,620,000 $1,652,400 $1,685,448 $1,719,157 $1,753,540 $1,788,611 $1,824,383 $1,860,871 $1,898,088 $1,936,050 $1,974,771 $2,014,266
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $3,236,000 $3,300,720 $3,366,734 $3,434,069 $3,502,750 $3,572,805 $3,644,262 $3,717,147 $3,791,490 $3,867,320 $3,944,666 $4,023,559
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
Executives 0% $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Managers 0% $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000
Manufacturing Process Workers 0% $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Engineering 0% $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000
Total People 75 75 75 75 85 85 85 100 100 100 100 115
Total Payroll $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000

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 $4,045,000 $4,125,900 $4,208,418 $4,292,586 $4,378,438 $4,466,007 $4,555,327 $4,646,434 $4,739,362 $4,834,149 $4,930,832 $5,029,449
Direct Cost of Sales $3,236,000 $3,300,720 $3,366,734 $3,434,069 $3,502,750 $3,572,805 $3,644,262 $3,717,147 $3,791,490 $3,867,320 $3,944,666 $4,023,559
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $3,236,000 $3,300,720 $3,366,734 $3,434,069 $3,502,750 $3,572,805 $3,644,262 $3,717,147 $3,791,490 $3,867,320 $3,944,666 $4,023,559
Gross Margin $809,000 $825,180 $841,684 $858,517 $875,688 $893,201 $911,065 $929,287 $947,872 $966,830 $986,166 $1,005,890
Gross Margin % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
Expenses
Payroll $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000
Sales and Marketing and Other Expenses $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200 $20,200
Depreciation $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Utilities $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Payroll Taxes 15% $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
Total Operating Expenses $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200 $476,200
Profit Before Interest and Taxes $332,800 $348,980 $365,484 $382,317 $399,488 $417,001 $434,865 $453,087 $471,672 $490,630 $509,966 $529,690
EBITDA $357,800 $373,980 $390,484 $407,317 $424,488 $442,001 $459,865 $478,087 $496,672 $515,630 $534,966 $554,690
Interest Expense $37,308 $58,783 $58,592 $58,400 $58,208 $58,017 $57,825 $57,633 $57,441 $57,250 $57,058 $56,866
Taxes Incurred $88,648 $87,059 $92,068 $97,175 $102,384 $107,695 $113,112 $118,636 $124,269 $130,014 $135,873 $141,847
Net Profit $206,844 $203,138 $214,824 $226,742 $238,896 $251,289 $263,928 $276,818 $289,962 $303,366 $317,036 $330,976
Net Profit/Sales 5.11% 4.92% 5.10% 5.28% 5.46% 5.63% 5.79% 5.96% 6.12% 6.28% 6.43% 6.58%

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 $2,022,500 $2,062,950 $2,104,209 $2,146,293 $2,189,219 $2,233,003 $2,277,663 $2,323,217 $2,369,681 $2,417,075 $2,465,416 $2,514,725
Cash from Receivables $0 $67,417 $2,023,848 $2,064,325 $2,105,612 $2,147,724 $2,190,679 $2,234,492 $2,279,182 $2,324,766 $2,371,261 $2,418,686
Subtotal Cash from Operations $2,022,500 $2,130,367 $4,128,057 $4,210,618 $4,294,831 $4,380,727 $4,468,342 $4,557,709 $4,648,863 $4,741,840 $4,836,677 $4,933,411
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 $2,600,000 $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 $2,022,500 $4,730,367 $4,128,057 $4,210,618 $4,294,831 $4,380,727 $4,468,342 $4,557,709 $4,648,863 $4,741,840 $4,836,677 $4,933,411
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 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000 $430,000
Bill Payments $238,092 $6,732,629 $3,541,363 $3,613,666 $3,687,418 $3,762,648 $3,839,385 $3,917,660 $3,997,503 $4,078,945 $4,162,019 $4,246,757
Subtotal Spent on Operations $668,092 $7,162,629 $3,971,363 $4,043,666 $4,117,418 $4,192,648 $4,269,385 $4,347,660 $4,427,503 $4,508,945 $4,592,019 $4,676,757
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 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003 $23,003
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 $691,095 $7,185,632 $3,994,366 $4,066,669 $4,140,421 $4,215,651 $4,292,388 $4,370,663 $4,450,506 $4,531,948 $4,615,022 $4,699,760
Net Cash Flow $1,331,405 ($2,455,265) $133,692 $143,949 $154,410 $165,076 $175,954 $187,046 $198,357 $209,892 $221,655 $233,651
Cash Balance $3,331,405 $876,140 $1,009,831 $1,153,781 $1,308,190 $1,473,266 $1,649,220 $1,836,266 $2,034,623 $2,244,515 $2,466,171 $2,699,822

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 $2,000,000 $3,331,405 $876,140 $1,009,831 $1,153,781 $1,308,190 $1,473,266 $1,649,220 $1,836,266 $2,034,623 $2,244,515 $2,466,171 $2,699,822
Accounts Receivable $0 $2,022,500 $4,018,033 $4,098,394 $4,180,362 $4,263,969 $4,349,248 $4,436,233 $4,524,958 $4,615,457 $4,707,766 $4,801,922 $4,897,960
Inventory $100,000 $3,559,600 $3,630,792 $3,703,408 $3,777,476 $3,853,026 $3,930,086 $4,008,688 $4,088,862 $4,170,639 $4,254,052 $4,339,133 $4,425,915
Other Current Assets $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Total Current Assets $2,200,000 $9,013,505 $8,624,965 $8,911,633 $9,211,618 $9,525,185 $9,852,601 $10,194,141 $10,550,085 $10,920,719 $11,306,333 $11,707,225 $12,123,697
Long-term Assets
Long-term Assets $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Accumulated Depreciation $0 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000 $300,000
Total Long-term Assets $2,500,000 $2,475,000 $2,450,000 $2,425,000 $2,400,000 $2,375,000 $2,350,000 $2,325,000 $2,300,000 $2,275,000 $2,250,000 $2,225,000 $2,200,000
Total Assets $4,700,000 $11,488,505 $11,074,965 $11,336,633 $11,611,618 $11,900,185 $12,202,601 $12,519,141 $12,850,085 $13,195,719 $13,556,333 $13,932,225 $14,323,697
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 $10,000 $6,614,664 $3,420,989 $3,490,836 $3,562,082 $3,634,756 $3,708,885 $3,784,500 $3,861,630 $3,940,305 $4,020,556 $4,102,415 $4,185,913
Current Borrowing $0 $0 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000 $2,600,000
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $10,000 $6,614,664 $6,020,989 $6,090,836 $6,162,082 $6,234,756 $6,308,885 $6,384,500 $6,461,630 $6,540,305 $6,620,556 $6,702,415 $6,785,913
Long-term Liabilities $4,500,000 $4,476,997 $4,453,994 $4,430,991 $4,407,988 $4,384,985 $4,361,982 $4,338,979 $4,315,976 $4,292,973 $4,269,970 $4,246,967 $4,223,964
Total Liabilities $4,510,000 $11,091,661 $10,474,983 $10,521,827 $10,570,070 $10,619,741 $10,670,867 $10,723,479 $10,777,606 $10,833,278 $10,890,526 $10,949,382 $11,009,877
Paid-in Capital $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000 $508,000
Retained Earnings ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000) ($318,000)
Earnings $0 $206,844 $409,982 $624,806 $851,548 $1,090,444 $1,341,733 $1,605,662 $1,882,479 $2,172,441 $2,475,807 $2,792,843 $3,123,819
Total Capital $190,000 $396,844 $599,982 $814,806 $1,041,548 $1,280,444 $1,531,733 $1,795,662 $2,072,479 $2,362,441 $2,665,807 $2,982,843 $3,313,819
Total Liabilities and Capital $4,700,000 $11,488,505 $11,074,965 $11,336,633 $11,611,618 $11,900,185 $12,202,601 $12,519,141 $12,850,085 $13,195,719 $13,556,333 $13,932,225 $14,323,697
Net Worth $190,000 $396,844 $599,982 $814,806 $1,041,548 $1,280,444 $1,531,733 $1,795,662 $2,072,479 $2,362,441 $2,665,807 $2,982,843 $3,313,819