Our financial plan is based on conservative estimates and assumptions. We will need to plan on initial investment to make the financials work.
7.1 Key Financial Indicators
The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales and operating expenses, and a bump in our collection days as we spread the business during expansion.
7.2 Important Assumptions
Table 7.1 summarizes key financial assumptions. In addition, we plan for 45-day average collection days, sales entirely on invoice basis, expenses mainly on net 30 basis, and present-day interest rates.
7.3 Break-even Analysis
Table 7.3 summarizes the break-even analysis, including monthly sales break-even points.
7.4 Projected Profit and Loss
The detailed monthly pro-forma income statement for the first year is included in the appendix. The annual estimates are included here.
7.5 Projected Cash Flow
Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here as Table 7.5. Detailed monthly numbers are included in the appendix.
7.6 Projected Balance Sheet
The balance sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the appendix.
7.7 Business Ratios
The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. The industry comparisons are for SIC 8742, management consulting services.