By 
Our biggest savings of the year
Phoebe's Photo Studio
Financial Plan
Forecast
Key Assumptions
We assume a stable economy with reasonable growth and a steady rise in interest rates. We also assume that our competitors won’t adopt our strategy within the first two years. After that, our approach is likely to make a change in what our competitors charge for digital files, because they’ll see it’s effective in bringing in repeat business as well as new business.
The expenses show the impact of close to $30K startup expenses, which we put into the first month. Those expenses are listed below in the Use of Funds chapter.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Start-up Expenses
- Rent $480
- Insurance $300
- Filing Fees $50
- Utilities and Deposits $500
- Paper $200
- Website Development $2,000
- Marketing Consultant: Ad design, etc. $20,000
- Personnel Costs for December $3,500
- Software $1,500
- Office Expense $200
TOTAL START-UP EXPENSES $28,730
Start-up Assets: $13,000 in computer and photographic equipment
Sources of Funds
We will be using the $10,000 cash from my savings, plus a $50,000 interest-free loan from family, and a $20,000 5-year loan co-signed by family. The plan calls for funds to service the bank loan and repay most of the family loan by the end of the third year.
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $146,825 | $169,500 | $192,650 |
| Direct Costs | $27,336 | $31,680 | $36,336 |
| Gross Margin | $119,489 | $137,820 | $156,314 |
| Gross Margin % | 81% | 81% | 81% |
| Operating Expenses | |||
| Salaries & Wages | $79,200 | $86,720 | $97,454 |
| Employee Related Expenses | $15,840 | $17,344 | $19,491 |
| Utilities | $1,200 | $1,200 | $1,200 |
| Insurance | $300 | $300 | $300 |
| Rent | $9,600 | $9,600 | $9,600 |
| Sales and Marketing | $7,800 | $8,000 | $8,000 |
| Startup Expense listed in Use of Funds | $28,730 | ||
| Maintenance of Cameras | $600 | $600 | $600 |
| Offsite File Backup | $720 | $720 | $720 |
| Total Operating Expenses | $143,990 | $124,484 | $137,365 |
| Operating Income | ($24,501) | $13,336 | $18,949 |
| Interest Incurred | $678 | $596 | $440 |
| Depreciation and Amortization | $2,600 | $2,817 | $3,216 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $0 |
| Total Expenses | $174,604 | $159,576 | $177,357 |
| Net Profit | ($27,779) | $9,924 | $15,293 |
| Net Profit/Sales | (19%) | 6% | 8% |
Projected Balance Sheet
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Cash | $24,428 | $17,306 | $14,196 |
| Accounts Receivable | $6,563 | $5,284 | $6,119 |
| Inventory | |||
| Other Current Assets | |||
| Total Current Assets | $30,991 | $22,590 | $20,315 |
| Long-Term Assets | $13,000 | $15,000 | $17,000 |
| Accumulated Depreciation | ($2,600) | ($5,417) | ($8,633) |
| Total Long-Term Assets | $10,400 | $9,583 | $8,367 |
| Total Assets | $41,391 | $32,173 | $28,682 |
| Accounts Payable | $2,540 | $2,219 | $2,411 |
| Income Taxes Payable | $0 | $0 | $0 |
| Sales Taxes Payable | $0 | $0 | $0 |
| Short-Term Debt | $43,820 | $28,976 | $14,138 |
| Prepaid Revenue | |||
| Total Current Liabilities | $46,360 | $31,195 | $16,549 |
| Long-Term Debt | $12,809 | $8,833 | $4,695 |
| Long-Term Liabilities | $12,809 | $8,833 | $4,695 |
| Total Liabilities | $59,169 | $40,028 | $21,244 |
| Paid-In Capital | $10,000 | $10,000 | $10,000 |
| Retained Earnings | ($27,779) | ($17,855) | |
| Earnings | ($27,779) | $9,924 | $15,293 |
| Total Owner’s Equity | ($17,779) | ($7,855) | $7,438 |
| Total Liabilities & Equity | $41,391 | $32,173 | $28,682 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | ($27,779) | $9,924 | $15,293 |
| Depreciation & Amortization | $2,600 | $2,817 | $3,217 |
| Change in Accounts Receivable | ($6,563) | $1,278 | ($834) |
| Change in Inventory | |||
| Change in Accounts Payable | $2,540 | ($321) | $192 |
| Change in Income Tax Payable | $0 | $0 | $0 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | ($29,202) | $13,698 | $17,867 |
| Investing & Financing | |||
| Assets Purchased or Sold | ($13,000) | ($2,000) | ($2,000) |
| Net Cash from Investing | ($13,000) | ($2,000) | ($2,000) |
| Investments Received | $10,000 | ||
| Dividends & Distributions | |||
| Change in Short-Term Debt | $43,820 | ($14,844) | ($14,838) |
| Change in Long-Term Debt | $12,809 | ($3,976) | ($4,138) |
| Net Cash from Financing | $66,630 | ($18,820) | ($18,976) |
| Cash at Beginning of Period | $0 | $24,428 | $17,306 |
| Net Change in Cash | $24,428 | ($7,122) | ($3,109) |
| Cash at End of Period | $24,428 | $17,306 | $14,196 |