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Infotext Strategy Letter

Executive Summary

The Infotext Strategy Letter is the core element of a monthly subscription service including the newsletter and website privileges. This is an expansion project for us. It will serve our business in several ways:

  1. Establish and validate the expertise.
  2. Generate visibility, leads, additional consulting clients.
  3. Offer an additional source of revenue.

This business plan focuses on the newsletter as if it were a separate entity. It is confidential, to be used internally as a guide to this new business expansion within our existing business.

Newsletter publishing business plan, executive summary chart image

1.1 Objectives

  1. 300 subscribers by the end of the first year, 1,000 by the end of the third year.
  2. 65% renewals.
  3. Cancellations of no more than 10%.

1.2 Keys to Success

  1. Excellence in fulfilling the promise – completely confidential, reliable, trustworthy expertise and information.
  2. Developing visibility to generate new business leads.
  3. Leveraging from a single pool of expertise into multiple revenue generation opportunities – the newsletter and subscription website, retainer consulting, project consulting, market research, and market research published reports.

1.3 Mission

The Infotext Strategy Letter provides high-tech marketers with important news, insights, advance notice of trends, case studies, and pragmatic real world advice about developments related to the worldwide marketing of high-tech products. It includes a monthly newsletter delivered electronically and an information archive delivered on the World Wide Web as a password-protected secure site.

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Company Summary

For this internal expansion plan the details of our company are not relevant. We do intend to develop this new business, if approved, using a balance of one in-house salary and outside vendors for editing and some significant production work.

2.1 Start-up Summary

What’s important to understand is that this expansion requires some internal investment. We will need some legal work, some computer equipment, and office space. We also have to support the cash flow involved in hiring our main person, and the working capital involved in getting this business rolling.

Newsletter publishing business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $500
Hiring manager $1,000
Initial layout design $3,000
Website vendors $17,500
Initial mailing $5,000
Other $1,000
Total Start-up Expenses $28,000
Start-up Assets
Cash Required $15,000
Other Current Assets $7,000
Long-term Assets $0
Total Assets $22,000
Total Requirements $50,000
Start-up Funding
Start-up Expenses to Fund $28,000
Start-up Assets to Fund $22,000
Total Funding Required $50,000
Assets
Non-cash Assets from Start-up $7,000
Cash Requirements from Start-up $15,000
Additional Cash Raised $0
Cash Balance on Starting Date $15,000
Total Assets $22,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Internal investment $50,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $50,000
Loss at Start-up (Start-up Expenses) ($28,000)
Total Capital $22,000
Total Capital and Liabilities $22,000
Total Funding $50,000

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Services

The related services include the Infotext Strategy Letter, to be delivered monthly, and the Infotext website, which is available to subscribers.

3.1 Service Description

  1. The Newsletter: Our target subscriber wants timely information about new developments in high-tech channel marketing including technology changes, economic trends, ideas and innovations, case studies, and interviews with industry leaders. We need to find the news that’s useful and relevant, but buried. Our subscriber is paying us $500 per year to find what’s important, and streamline their work of staying up to date with what’s going on and what’s new. The time function is a critical selling point – our subscriber saves time, but has the reassurance of knowing what’s going on.
  2. The Website: The website contains archives of past articles, reports gathered from the rest of Acme Consulting, audio with interviews, and compilation of links, related information, etc. It is a valuable resource that contributes to the value of the subscription.

3.2 Competitive Comparison

The competition comes in several forms:

  1. [Name omitted] – The quintessential high-tech newsletter, the one that others imitate. We won’t go straight up against this, because we have a different focus, narrowed more on the channels and marketing of high technology. This one should have a website attached to the subscription, but doesn’t.
  2. [Name omitted] – Like us, with a direct link to management consulting. They have built the website add-on very much like what we propose, but the newsletter is too general and fails to provide vital, focused information.
  3. The third general kind of competitor is the international market research company: International Data Corporation (IDC), Dataquest, Stanford Research Institute, etc. These companies are formidable competitors for published market research and market forums, and most of them also provide website information and newsletter subscriptions.
  4. The fourth kind of competition is the market-focus specific smaller house. For example: ChannelCorp in Vancouver BC, Channel Marketing in the US.

3.3 Fulfillment

  1. The key fulfillment and delivery will be provided by a newsletter and website editor-in-chief who will be responsible for the content. The newsletter will be delivered monthly. The subscribers can choose whether they want email delivery or hard copy delivery or both. The hard copy must be very well produced, edited, and always on time.
  2. We will turn to qualified vendors for freelance back-up in editing and production.

3.4 Technology

  1. The website will be built on Cold Fusion structure, to facilitate content management. Our editor will be qualified to manage the website through work with third-party vendors.
  2. The newsletter will be developed in Windows using Adobe products and delivered as an html newsletter, Adobe Acrobat document, or hard-copy newsletter.
  3. Complete desktop publishing facilities are an obvious necessity.
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Market Analysis Summary

The Infotext Strategy Letter will be focusing on high-technology manufacturers of computer hardware and software, services, and networking, who want to sell into markets in the United States, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies.

Our most important group of potential customers are executives in larger corporations. These are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company’s name and reputation.

4.1 Market Segmentation

Large manufacturer corporations – Our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett-Packard, IBM, Microsoft, Siemens, or Olivetti. These companies will be calling on Acme for development functions that are better spun off than managed in-house, for market research, and for market forums.

Medium-sized growth companies – Particularly in software, multimedia, and some related high-growth fields, Acme will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.

Newsletter publishing business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
U.S. High Tech 10% 5,000 5,500 6,050 6,655 7,321 10.00%
European High Tech 15% 1,000 1,150 1,323 1,521 1,749 15.00%
Latin America 35% 250 338 456 616 832 35.07%
Other 2% 10,000 10,200 10,404 10,612 10,824 2.00%
Total 6.27% 16,250 17,188 18,233 19,404 20,726 6.27%

4.2 Service Business Analysis

The newsletter “industry” is pulverized and disorganized, with thousands of smaller information vendors for every one of the few dozen well-known companies.

Newsletter publishers range from major international name-brand consulting and marketing research companies to dozens of  individual experts.

4.2.1 Business Participants

There are some newsletters published by well-established major names in management consulting. Some of these are by accounting companies (e.g. Deloitte Touche Tohmatsu, PricewaterhouseCoopers) and some from management consulting (McKinsey, Bain). These newsletters tend to exist as marketing programs related to developing consulting leads. < P>

At the intermediate level are some function-specific or market-specific newsletters, many of them published by the market research firms (IDC, Dataquest) or channel development firms (ChannelCorp, Channel Strategies, ChannelMark).

Some newsletters are little more than adventuring by experts who want to market their expertise while temporarily out of work. There are however some long-term expertise-based newsletters put out by individuals, that nonetheless manage to earn long-term branding as high quality publications.

4.2.2 Distributing a Service

Newsletters, like consulting, will be sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor.

The major name-brand newsletters have developed marketing programs involving direct mail, email, etc. They also work hard at searcher placement for their websites, and distribute in some cases  through industry associations, business associations, Chambers of Commerce and industry, etc.

One of our advantages, we believe, will be the distribution through hard copy and/or email, at the subscriber’s option.

4.2.3 Competition and Buying Patterns

The key element in purchase decisions made at the Acme client level is trust in the professional reputation and reliability of the consulting firm behind the newsletter. Reliable delivery, on-time delivery, and valuable content are all vital. Our make or break will be whether or not the subscribers read the newsletter and/or use the website.

4.2.4 Main Competitors

The high-level prestige newsletters:

Strengths: International locations managed by owner-partners with a high level of presentation and understanding of general business. Enviable reputations which make purchase of newsletters an easy decision for a manager, often without regard to prices.

Weaknesses: General business knowledge doesn’t substitute for the specific market, channel, and distribution expertise of our newsletter, focusing on high-technology markets and products only.

The international market research companies’ newsletters:

Strengths: International offices, specific market knowledge, permanent staff developing market research information on permanent basis, good relationships with potential subscriber companies.

Weaknesses: Market numbers are not marketing, not channel development nor market development. Although these companies compete for some of the business our newsletter is after, they cannot really offer the same level of business understanding at a high level.

Market specific or function specific newsletters:

Strengths: Expertise in market or functional areas. Acme should not try to compete with [name omitted] or [name omitted] in their markets with market research, or with ChannelCorp in channel management.

Weaknesses: The inability to spread beyond a specific focus, or to rise above a specific focus, to provide actual management expertise, experience, and wisdom beyond the specifics.

4.3 Target Market Segment Strategy

As indicated by the previous table and chart, we must focus on a few thousand well-chosen potential subscribers in the United States, Europe, and Latin America. These few thousand high-tech manufacturing companies are the key customers for Acme.

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Strategy and Implementation Summary

The Infotext Strategy Letter will focus on three geographical markets – the United States, Europe, and Latin America; and in limited product segments – personal computers, software, networks, telecommunications, personal organizers, and technology integration products.

The target subscriber is usually a manager in a larger corporation, and occasionally an owner or president of a medium-sized corporation in a high-growth period.

5.1 Sales Strategy

The sales forecast monthly summary is included in the appendix. The annual sales projections are included here. Subscribers, renewals, and cancellations, as well as sales units, are detailed in the General Assumptions table in the Financial Chapter.

For purposes of planning, we assume  that a cancellation costs $300 on average. Cancellations will come at various times during the year, but on average a cancellation in the third month is a good guess.

Newsletter publishing business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Newsletter subscriptions $151,206 $211,720 $296,250 $414,750 $580,650
Cancellations ($1,800) ($2,700) ($4,800) ($8,100) ($12,300)
Total Sales $149,406 $209,020 $291,450 $406,650 $568,350
Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5
Outside editing $7,959 $0 $0 $0 $0
Outside Production $7,959 $0 $0 $0 $0
Physical Production $11,938 $13,000 $14,000 $15,000 $17,000
Other $9,700 $10,000 $10,000 $10,000 $10,000
Subtotal Direct Cost of Sales $37,555 $23,000 $24,000 $25,000 $27,000

5.2 Milestones

Our detailed milestones are shown in the following table and chart. The related budgets are included with the expenses shown in the projected Profit and Loss statement, which is in the financial analysis that comes in Chapter 7 of this plan; or in the direct cost of sales portion of the sales forecast, for outside vendors.

Newsletter publishing business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan 6/1/2002 7/19/2002 $0 Hattusa M Devpt
Hiring main manager 7/19/2002 8/31/2002 $1,000 Hattusa M Devpt
Initial layout design 9/1/2002 9/30/2002 $3,000 TBD Newsletter
Website prototype 9/1/2002 11/15/2002 $10,000 TBD Newsletter
Coverage plan, first year 10/1/2002 12/15/2002 $0 TBD Newsletter
Initial mailing 11/15/2002 12/15/2002 $5,000 Arcadia F Marketing
Website launch 11/15/2002 12/15/2002 $7,500 TBD Newsletter
Newsletter launch 12/31/2002 1/10/2003 $7,500 Arcadia F Marketing
Initial marketing 1/10/2003 3/31/2003 $10,000 Arcadia F Marketing
Initial content, first issue 10/1/2002 11/31/2002 $0 TBD Newsletter
Totals $44,000

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Management Summary

The initial management team depends on a single well-chosen main content editor, who is responsible for the newsletter and website content. Editing and production work will be provided by third-party vendors.

6.1 Personnel Plan

The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are included here.

Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Newsletter manager $66,000 $69,000 $72,000 $76,000 $80,000
Editorial $0 $50,000 $50,000 $120,000 $120,000
Secretarial $5,250 $10,000 $11,000 $12,000 $13,000
Other $0 $5,000 $15,000 $16,000 $17,000
Total People 2 2 2 2 2
Total Payroll $71,250 $134,000 $148,000 $224,000 $230,000

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Financial Plan

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 Important Assumptions

The following table summarizes key financial assumptions including sales entirely on invoice basis, and present-day interest rates. The annual numbers are shown here, monthlies in the appendix.

Additional assumptions include 45-day average collection days, expenses mainly on net 30 basis, and 35 days on average for payment of invoices.

General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 8.00% 8.00% 8.00% 8.00% 8.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42% 25.00% 25.42%
New subscriptions 383 37 383 37 383
Renewals 0 0 0 0 0
Cancellations 6 1 6 1 6
Subscribers 377 377 377 377 377

7.2 Break-even Analysis

The following table and chart summarize the break-even analysis, including monthly units and sales break-even points.

Newsletter publishing business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $10,889
Assumptions:
Average Percent Variable Cost 25%
Estimated Monthly Fixed Cost $8,152

7.3 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.

Newsletter publishing business plan, financial plan chart image

Newsletter publishing business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $149,406 $209,020 $291,450 $406,650 $568,350
Direct Cost of Sales $37,555 $23,000 $24,000 $25,000 $27,000
Other $0 $0 $0 $0 $0
Total Cost of Sales $37,555 $23,000 $24,000 $25,000 $27,000
Gross Margin $111,851 $186,020 $267,450 $381,650 $541,350
Gross Margin % 74.86% 89.00% 91.77% 93.85% 95.25%
Expenses
Payroll $71,250 $134,000 $148,000 $224,000 $230,000
Marketing $14,500 $22,000 $33,000 $50,000 $75,000
Depreciation $0 $0 $0 $0 $0
Leased Equipment $1,200 $1,000 $1,000 $1,000 $1,000
Insurance $900 $1,000 $1,000 $1,000 $1,000
Payroll Taxes $9,975 $18,760 $20,720 $31,360 $32,200
Other $0 $0 $0 $0 $0
Total Operating Expenses $97,825 $176,760 $203,720 $307,360 $339,200
Profit Before Interest and Taxes $14,026 $9,260 $63,730 $74,290 $202,150
EBITDA $14,026 $9,260 $63,730 $74,290 $202,150
Interest Expense $1,067 $4,200 $4,200 $400 $400
Taxes Incurred $2,944 $1,265 $15,131 $18,473 $51,278
Net Profit $10,015 $3,795 $44,399 $55,418 $150,472
Net Profit/Sales 6.70% 1.82% 15.23% 13.63% 26.48%

7.4 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 in the following table. Detailed monthly numbers are included in the appendix, and show as well in the following chart.

Newsletter publishing business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $0 $0
Cash from Receivables $128,058 $200,502 $279,672 $390,190 $545,245
Subtotal Cash from Operations $128,058 $200,502 $279,672 $390,190 $545,245
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $15,000 $100,000 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $143,058 $300,502 $279,672 $390,190 $545,245
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $71,250 $134,000 $148,000 $224,000 $230,000
Bill Payments $61,961 $70,575 $96,382 $124,530 $182,063
Subtotal Spent on Operations $133,211 $204,575 $244,382 $348,530 $412,063
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $10,000 $5,000 $95,000 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0
Subtotal Cash Spent $143,211 $209,575 $339,382 $348,530 $412,063
Net Cash Flow ($153) $90,927 ($59,710) $41,659 $133,183
Cash Balance $14,847 $105,774 $46,064 $87,723 $220,906

7.5 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $14,847 $105,774 $46,064 $87,723 $220,906
Accounts Receivable $21,348 $29,866 $41,644 $58,104 $81,209
Other Current Assets $7,000 $7,000 $7,000 $7,000 $7,000
Total Current Assets $43,195 $142,640 $94,708 $152,828 $309,115
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0
Total Assets $43,195 $142,640 $94,708 $152,828 $309,115
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $6,180 $6,830 $9,498 $12,200 $18,016
Current Borrowing $5,000 $100,000 $5,000 $5,000 $5,000
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $11,180 $106,830 $14,498 $17,200 $23,016
Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $11,180 $106,830 $14,498 $17,200 $23,016
Paid-in Capital $50,000 $50,000 $50,000 $50,000 $50,000
Retained Earnings ($28,000) ($17,985) ($14,190) $30,210 $85,627
Earnings $10,015 $3,795 $44,399 $55,418 $150,472
Total Capital $32,015 $35,810 $80,210 $135,627 $286,099
Total Liabilities and Capital $43,195 $142,640 $94,708 $152,828 $309,115
Net Worth $32,015 $35,810 $80,210 $135,627 $286,099

7.6 Business Ratios

The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2741, Newsletter Publishing, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth 0.00% 39.90% 39.44% 39.53% 39.76% 11.27%
Percent of Total Assets
Accounts Receivable 49.42% 20.94% 43.97% 38.02% 26.27% 36.32%
Other Current Assets 16.21% 4.91% 7.39% 4.58% 2.26% 31.17%
Total Current Assets 100.00% 100.00% 100.00% 100.00% 100.00% 83.20%
Long-term Assets 0.00% 0.00% 0.00% 0.00% 0.00% 16.80%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 25.88% 74.89% 15.31% 11.25% 7.45% 31.26%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 20.58%
Total Liabilities 25.88% 74.89% 15.31% 11.25% 7.45% 51.84%
Net Worth 74.12% 25.11% 84.69% 88.75% 92.55% 48.16%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 74.86% 89.00% 91.77% 93.85% 95.25% 51.42%
Selling, General & Administrative Expenses 69.36% 87.90% 77.94% 81.99% 69.89% 34.28%
Advertising Expenses 24.10% 19.14% 15.10% 0.00% 0.00% 2.77%
Profit Before Interest and Taxes 9.39% 4.43% 21.87% 18.27% 35.57% 2.19%
Main Ratios
Current 3.86 1.34 6.53 8.89 13.43 2.32
Quick 3.86 1.34 6.53 8.89 13.43 1.50
Total Debt to Total Assets 25.88% 74.89% 15.31% 11.25% 7.45% 56.90%
Pre-tax Return on Net Worth 40.48% 14.13% 74.22% 54.48% 70.52% 3.39%
Pre-tax Return on Assets 30.00% 3.55% 62.86% 48.35% 65.27% 7.88%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 6.70% 1.82% 15.23% 13.63% 26.48% n.a
Return on Equity 31.28% 10.60% 55.35% 40.86% 52.59% n.a
Activity Ratios
Accounts Receivable Turnover 7.00 7.00 7.00 7.00 7.00 n.a
Collection Days 43 45 45 45 45 n.a
Accounts Payable Turnover 11.03 10.43 10.43 10.43 10.43 n.a
Payment Days 32 33 30 31 29 n.a
Total Asset Turnover 3.46 1.47 3.08 2.66 1.84 n.a
Debt Ratios
Debt to Net Worth 0.35 2.98 0.18 0.13 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $32,015 $35,810 $80,210 $135,627 $286,099 n.a
Interest Coverage 13.15 2.20 15.17 185.73 505.38 n.a
Additional Ratios
Assets to Sales 0.29 0.68 0.32 0.38 0.54 n.a
Current Debt/Total Assets 26% 75% 15% 11% 7% n.a
Acid Test 1.95 1.06 3.66 5.51 9.90 n.a
Sales/Net Worth 4.67 5.84 3.63 3.00 1.99 n.a
Dividend Payout 0.00 0.00 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
Newsletter subscriptions 39500% $13,312 $12,522 $8,611 $8,769 $10,566 $11,870 $12,522 $13,173 $14,477 $15,283 $15,591 $14,512
Cancellations -30000% $0 $0 $0 $0 $0 $0 ($300) ($300) ($300) ($300) ($300) ($300)
Total Sales $13,312 $12,522 $8,611 $8,769 $10,566 $11,870 $12,222 $12,873 $14,177 $14,983 $15,291 $14,212
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
Outside editing 10% $500 $525 $551 $579 $608 $638 $670 $704 $739 $776 $814 $855
Outside Production 10% $500 $525 $551 $579 $608 $638 $670 $704 $739 $776 $814 $855
Physical Production 10% $750 $788 $827 $868 $912 $957 $1,005 $1,055 $1,108 $1,163 $1,222 $1,283
Other 2% $7,500 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Subtotal Direct Cost of Sales $9,250 $2,038 $2,129 $2,226 $2,327 $2,433 $2,545 $2,662 $2,786 $2,915 $3,051 $3,193
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
Newsletter manager 5% $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500
Editorial 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Secretarial 5% $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,750 $1,750 $1,750
Other 5% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 1 1 1 1 1 1 1 1 1 2 2 2
Total Payroll $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $7,250 $7,250 $7,250

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 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
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 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
New subscriptions 0 34 32 22 22 27 30 32 33 37 39 39 37
Renewals 1 0 0 0 0 0 0 0 0 0 0 0 0
Cancellations 0 0 0 0 0 0 0 1 1 1 1 1 1
Subscribers 34 65 87 109 136 166 197 229 265 303 341 377

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 $13,312 $12,522 $8,611 $8,769 $10,566 $11,870 $12,222 $12,873 $14,177 $14,983 $15,291 $14,212
Direct Cost of Sales $9,250 $2,038 $2,129 $2,226 $2,327 $2,433 $2,545 $2,662 $2,786 $2,915 $3,051 $3,193
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $9,250 $2,038 $2,129 $2,226 $2,327 $2,433 $2,545 $2,662 $2,786 $2,915 $3,051 $3,193
Gross Margin $4,062 $10,484 $6,482 $6,543 $8,239 $9,436 $9,676 $10,211 $11,391 $12,068 $12,240 $11,019
Gross Margin % 30.51% 83.73% 75.27% 74.62% 77.98% 79.50% 79.17% 79.32% 80.35% 80.55% 80.05% 77.53%
Expenses
Payroll $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $7,250 $7,250 $7,250
Marketing 50% $3,500 $3,500 $3,000 $500 $500 $500 $500 $500 $500 $500 $500 $500
Depreciation 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment 5% $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Insurance 5% $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75
Payroll Taxes 14% $770 $770 $770 $770 $770 $770 $770 $770 $770 $1,015 $1,015 $1,015
Other 5% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $9,945 $9,945 $9,445 $6,945 $6,945 $6,945 $6,945 $6,945 $6,945 $8,940 $8,940 $8,940
Profit Before Interest and Taxes ($5,884) $539 ($2,963) ($402) $1,294 $2,491 $2,731 $3,266 $4,446 $3,128 $3,300 $2,079
EBITDA ($5,884) $539 ($2,963) ($402) $1,294 $2,491 $2,731 $3,266 $4,446 $3,128 $3,300 $2,079
Interest Expense $33 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $33
Taxes Incurred ($1,775) $110 ($766) ($125) $299 $598 $658 $791 $1,087 $757 $800 $511
Net Profit ($4,142) $329 ($2,298) ($376) $896 $1,793 $1,973 $2,374 $3,260 $2,271 $2,400 $1,534
Net Profit/Sales -31.11% 2.63% -26.68% -4.29% 8.48% 15.11% 16.15% 18.44% 22.99% 15.16% 15.70% 10.80%

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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Receivables $0 $7,099 $12,890 $10,436 $8,695 $9,728 $11,261 $12,057 $12,569 $13,568 $14,607 $15,147
Subtotal Cash from Operations $0 $7,099 $12,890 $10,436 $8,695 $9,728 $11,261 $12,057 $12,569 $13,568 $14,607 $15,147
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 $5,000 $10,000 $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 $5,000 $17,099 $12,890 $10,436 $8,695 $9,728 $11,261 $12,057 $12,569 $13,568 $14,607 $15,147
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 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $7,250 $7,250 $7,250
Bill Payments $0 $10,360 $7,394 $5,580 $3,880 $4,101 $4,522 $4,725 $4,965 $5,361 $5,456 $5,617
Subtotal Spent on Operations $5,500 $15,860 $12,894 $11,080 $9,380 $9,601 $10,022 $10,225 $10,465 $12,611 $12,706 $12,867
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 $10,000
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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 $5,500 $15,860 $12,894 $11,080 $9,380 $9,601 $10,022 $10,225 $10,465 $12,611 $12,706 $22,867
Net Cash Flow ($500) $1,240 ($4) ($644) ($685) $127 $1,239 $1,832 $2,104 $957 $1,901 ($7,720)
Cash Balance $14,500 $15,740 $15,736 $15,093 $14,407 $14,534 $15,774 $17,606 $19,709 $20,667 $22,567 $14,847
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 $15,000 $14,500 $15,740 $15,736 $15,093 $14,407 $14,534 $15,774 $17,606 $19,709 $20,667 $22,567 $14,847
Accounts Receivable $0 $13,312 $18,734 $14,454 $12,787 $14,658 $16,801 $17,761 $18,577 $20,184 $21,598 $22,283 $21,348
Other Current Assets $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Total Current Assets $22,000 $34,812 $41,473 $37,191 $34,880 $36,066 $38,335 $40,534 $43,182 $46,894 $49,265 $51,850 $43,195
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $22,000 $34,812 $41,473 $37,191 $34,880 $36,066 $38,335 $40,534 $43,182 $46,894 $49,265 $51,850 $43,195
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 $11,953 $8,286 $6,301 $4,367 $4,657 $5,132 $5,358 $5,632 $6,084 $6,184 $6,369 $6,180
Current Borrowing $0 $5,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $5,000
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $16,953 $23,286 $21,301 $19,367 $19,657 $20,132 $20,358 $20,632 $21,084 $21,184 $21,369 $11,180
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $16,953 $23,286 $21,301 $19,367 $19,657 $20,132 $20,358 $20,632 $21,084 $21,184 $21,369 $11,180
Paid-in Capital $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Retained Earnings ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000) ($28,000)
Earnings $0 ($4,142) ($3,813) ($6,110) ($6,486) ($5,591) ($3,797) ($1,824) $550 $3,810 $6,081 $8,481 $10,015
Total Capital $22,000 $17,858 $18,187 $15,890 $15,514 $16,409 $18,203 $20,176 $22,550 $25,810 $28,081 $30,481 $32,015
Total Liabilities and Capital $22,000 $34,812 $41,473 $37,191 $34,880 $36,066 $38,335 $40,534 $43,182 $46,894 $49,265 $51,850 $43,195
Net Worth $22,000 $17,858 $18,187 $15,890 $15,514 $16,409 $18,203 $20,176 $22,550 $25,810 $28,081 $30,481 $32,015

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