MarketCamp
Financial Plan
MarketCamp will finance growth mainly through cash flow. We recognize that this means we will have to grow more slowly than we might like.
The most important factor to our success is collection days. We can’t push our clients hard on collection days, because they are in larger companies and will normally have marketing authority, not financial authority. Therefore, we need to develop a permanent system of receivables financing, using one of the established financial companies in that business.
We are also assuming start-up capital which will be more than enough to cover salaries, artwork and other expenses while the business begins to produce more cash.
We may take more financing than we originally planned to be able to bring in some very key investors as equity partners, more for their connections to potential clients in Mexico City than for the investment itself.
7.1 Important Assumptions
The Financial Plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize that collection days are critical, but are not a factor we can influence easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:
- We assume an economy slightly crippled by the George W. Bush administration in the U.S. and by the skepticism caused by the fall of the dot-coms with terrible business models.
- We assume that we can communicate the service to Mexican business owners.
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 | 10.00% | 10.00% | 10.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The Benchmarks chart shows our projections on an index basis for key financial indicators.

7.3 Break-even Analysis
The following chart and table summarize our Break-even Analysis showing fixed costs in U.S. dollars per month at the outset (a bare minimum), and what we need to bill to cover our costs. We don’t really expect to reach break-even until a few months into the business operation.

Break-even Analysis | |
Monthly Revenue Break-even | $17,510 |
Assumptions: | |
Average Percent Variable Cost | 19% |
Estimated Monthly Fixed Cost | $14,142 |
7.4 Projected Profit and Loss
Projected Profit and Loss is presented in the following table and charts.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $297,310 | $420,000 | $610,000 |
Direct Cost of Sales | $57,183 | $80,860 | $117,561 |
Other | $39,581 | $44,000 | $48,000 |
Total Cost of Sales | $96,763 | $124,860 | $165,561 |
Gross Margin | $200,547 | $295,140 | $444,439 |
Gross Margin % | 67.45% | 70.27% | 72.86% |
Expenses | |||
Payroll | $80,252 | $113,000 | $158,000 |
Sales and Marketing and Other Expenses | $41,372 | $48,000 | $61,000 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $15,832 | $17,000 | $19,000 |
Utilities | $1,800 | $2,000 | $2,000 |
Insurance | $2,400 | $3,000 | $3,000 |
Rent | $12,000 | $24,000 | $26,000 |
Payroll Taxes | $16,050 | $22,600 | $31,600 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $169,707 | $229,600 | $300,600 |
Profit Before Interest and Taxes | $30,840 | $65,540 | $143,839 |
EBITDA | $30,840 | $65,540 | $143,839 |
Interest Expense | $667 | $3,000 | $3,500 |
Taxes Incurred | $7,420 | $15,635 | $35,669 |
Net Profit | $22,753 | $46,905 | $104,669 |
Net Profit/Sales | 7.65% | 11.17% | 17.16% |
7.5 Projected Cash Flow
Cash flow is going to rely on the time to collect from account receivables. Carlos Silva, Raul Garcia and others who have more experience working with Mexican businesses will be able to help us estimate both the collection and payment times. We are working on an assumption of 30 days to collect. Clients will pay at the beginning of each month except when this is impossible for them.
The present cash flow projection assumes sacrificed salaries taken as equity contribution for the first few months. The inputs for capital input are actually “sweat equity” contributions from the founder.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $197,360 | $378,754 | $546,126 |
Subtotal Cash from Operations | $197,360 | $378,754 | $546,126 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $20,000 | $40,000 | $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 | $14,000 | $0 | $0 |
Subtotal Cash Received | $231,360 | $418,754 | $546,126 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $80,252 | $113,000 | $158,000 |
Bill Payments | $159,263 | $273,759 | $340,161 |
Subtotal Spent on Operations | $239,515 | $386,759 | $498,161 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $20,000 | $10,000 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $239,515 | $406,759 | $508,161 |
Net Cash Flow | ($8,155) | $11,995 | $37,965 |
Cash Balance | $11,845 | $23,840 | $61,805 |
7.6 Projected Balance Sheet
The Balance Sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $11,845 | $23,840 | $61,805 |
Accounts Receivable | $99,950 | $141,196 | $205,070 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $111,795 | $165,036 | $266,875 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $111,795 | $165,036 | $266,875 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $35,041 | $21,378 | $28,548 |
Current Borrowing | $20,000 | $40,000 | $30,000 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $55,041 | $61,378 | $58,548 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $55,041 | $61,378 | $58,548 |
Paid-in Capital | $37,500 | $37,500 | $37,500 |
Retained Earnings | ($3,500) | $19,253 | $66,158 |
Earnings | $22,753 | $46,905 | $104,669 |
Total Capital | $56,753 | $103,658 | $208,327 |
Total Liabilities and Capital | $111,795 | $165,036 | $266,875 |
Net Worth | $56,753 | $103,658 | $208,327 |
7.7 Business Ratios
Business Ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8742, Management Consulting Services, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 41.27% | 45.24% | 8.60% |
Percent of Total Assets | ||||
Accounts Receivable | 89.40% | 85.55% | 76.84% | 24.40% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 46.70% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 74.90% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 25.10% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 49.23% | 37.19% | 21.94% | 42.80% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 17.20% |
Total Liabilities | 49.23% | 37.19% | 21.94% | 60.00% |
Net Worth | 50.77% | 62.81% | 78.06% | 40.00% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 67.45% | 70.27% | 72.86% | 0.00% |
Selling, General & Administrative Expenses | 59.84% | 59.10% | 55.60% | 83.50% |
Advertising Expenses | 1.01% | 1.43% | 2.46% | 1.20% |
Profit Before Interest and Taxes | 10.37% | 15.60% | 23.58% | 2.60% |
Main Ratios | ||||
Current | 2.03 | 2.69 | 4.56 | 1.59 |
Quick | 2.03 | 2.69 | 4.56 | 1.26 |
Total Debt to Total Assets | 49.23% | 37.19% | 21.94% | 60.00% |
Pre-tax Return on Net Worth | 53.17% | 60.33% | 67.36% | 4.40% |
Pre-tax Return on Assets | 26.99% | 37.89% | 52.59% | 10.90% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 7.65% | 11.17% | 17.16% | n.a |
Return on Equity | 40.09% | 45.25% | 50.24% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 2.97 | 2.97 | 2.97 | n.a |
Collection Days | 54 | 105 | 104 | n.a |
Accounts Payable Turnover | 5.55 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 40 | 26 | n.a |
Total Asset Turnover | 2.66 | 2.54 | 2.29 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.97 | 0.59 | 0.28 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $56,753 | $103,658 | $208,327 | n.a |
Interest Coverage | 46.26 | 21.85 | 41.10 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.38 | 0.39 | 0.44 | n.a |
Current Debt/Total Assets | 49% | 37% | 22% | n.a |
Acid Test | 0.22 | 0.39 | 1.06 | n.a |
Sales/Net Worth | 5.24 | 4.05 | 2.93 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |