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Water Tubes Plumbing

Executive Summary

Water Tubes Plumbing is a Eugene-based plumbing company that has chosen residential new homes as their niche. Water Tubes will be able to handle any service request for plumbing of volume home builds or custom new homes. By concentrating on a specific segment of the market, Water Tubes will be able to rapidly gain market share demonstrating their proficiency and professionalism in serving a specific market niche.

Water Tubes will leverage their competitive edges of professionalism and trim quality by properly training all of their employees and impress customers who are used to the lackadaisical attitude of most plumbers. Water Tubes will have a total of four employees and will reach profitability by month eight.

Plumbing business plan, executive summary chart image

1.1 Objectives

The objectives for the first three years of operation include:

  1. To develop a company whose primary goal is to exceed customer’s expectations.
  2. To increase sales so in four to five years Don can hire another master plumber.
  3. To create a sustainable business, surviving off its own cash flow.

1.2 Mission

Water Tubes Plumbing’s mission is to provide the finest new house plumbing installation. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

1.3 Keys to Success

The keys to success are to provide the customer with a fair price and outstanding service.

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Company Summary

Water Tubes Plumbing, soon to be located in Eugene, OR, will offer plumbing services for residential new houses as well as custom new houses. The business will be based out of Don Roto’s house. Water Tubes will have four employees by the end of the year.

2.1 Start-up Summary

Water Tubes will require the following equipment and materials:

  • Two trucks (used) fitted with a pipe rack on top.
  • Assorted pipes (different diameters and materials).
  • Assorted fittings.
  • A 30 gallon bucket to store fittings.
  • Pipe wrenches.
  • Reciprocating saw.
  • Circular saw.
  • Whole hog (high torque right angle drill).
  • Cordless screw gun.
  • Propane torch.
  • Cast iron pipe cutter.
  • Extension cords.
  • Pipe dope (Teflon tape in paste form).
  • Computer with CD-RW, printer, Microsoft Office, QuickBooks Pro.
  • Desk, chair, and filling cabinet, and assorted stationary.
  • Mobile phone.

Please note that the items which are considered assets to be used for more than a year will be labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciation method.

Start-up
Requirements
Start-up Expenses
Legal $200
Stationery etc. $150
Brochures $0
Consultants $0
Insurance $0
Rent $0
Research and Development $0
Expensed Equipment $0
Other $0
Total Start-up Expenses $350
Start-up Assets
Cash Required $19,650
Other Current Assets $0
Long-term Assets $24,000
Total Assets $43,650
Total Requirements $44,000
Start-up Funding
Start-up Expenses to Fund $350
Start-up Assets to Fund $43,650
Total Funding Required $44,000
Assets
Non-cash Assets from Start-up $24,000
Cash Requirements from Start-up $19,650
Additional Cash Raised $0
Cash Balance on Starting Date $19,650
Total Assets $43,650
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
Don $24,000
Friends and family $20,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $44,000
Loss at Start-up (Start-up Expenses) ($350)
Total Capital $43,650
Total Capital and Liabilities $43,650
Total Funding $44,000

2.2 Company Ownership

Water Tubes Plumbing is a sole proprietorship owned by Don Roto.

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Services

Water Tubes offers the finest in residential home plumbing construction as well as custom new home construction.  Residential construction is chosen because it is straight forward and clean.  Estimates are far more accurate and the company is dealing with a few contractors instead of many home owners.  Additionally, there is no need to be on call 24 hours a day, a major downside of being a  traditional plumber.

New construction will be typically bid at $1 per foot plus a multiple of $400 per fixture.  Fixtures include sinks, toilets, tubs, etc.

The two other elements of Water Tubes services are professionalism and trim quality.  Professionalism of Water Tubes is clearly a service offering that will be highlighted as well as trim quality which is the part of plumbing that is visible to the customer.

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Market Analysis Summary

Water Tubes  will be focusing on a specific niche in the plumbing market, new homes.  The company will target both volume builders of new homes as well as customer builders.

Through a combination of networking activities and advertisements, Water Tubes will increase their visibility among home builders allowing them to gain market share.

4.1 Market Segmentation

Water Tubes will target two distinct segments in the plumbing market:

  1. Volume residential home builders. These builders are creating many different homes, often at the same time, often on the same plot of land.  These builders are in need of a professional, well priced, reliable plumber for all of their residential new builds.  This is an attractive market niche because the plumbing jobs are clean, numerous, and reasonably easy to do.  Once a builder has found a plumbing company that they are happy with, a long-term relationship is often established, ensuring a constant flow of future jobs.
  2. Custom home builders. These builders are in need of a plumbing company for their custom projects.  This segment is attractive because the margins are better than typical build jobs and the projects can be fun to do because it requires creativity and thoughtfulness to accomplish the task within the established designed constraints.  This target market makes up a smaller percentage of Water Tubes forecasted sales.
Plumbing business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Volume home builder 7% 120 128 137 147 157 6.95%
Custom home builder 7% 45 48 51 55 59 7.01%
Total 6.97% 165 176 188 202 216 6.97%

4.2 Target Market Segment Strategy

The plumbing market (excluding direct to the consumer jobs) is a highly networked industry where everyone knows everyone and jobs are won or loss by who you know.  With this in mind, Don will work hard to establish himself as an experienced, professional plumber who is concentrating on the residential new builds market.  This will be done in part through networking with all home builders.  The networking will be an important method to increase visibility of Water Tubes because most home builders are always looking for professional, high-quality plumbers.  It is advantageous for Water Tubes to position themselves as solely working with the residental new build market because it is attractive to builders to form a relationship with a plumber that is specializing on the new build market and not trying to do a little of everything. Water Tubes will be marketing themselves with an advertising campaign in the local home builders journal. 

4.3 Service Business Analysis

The plumbing industry is state regulated.  The state regulates the industry through a licensing process based upon the Universal Building Code.  The code is state specific and is a comprehensive code for all building issues.  There are three skill levels of plumbers.  The first is the apprentice who is basically a skilled laborer.  In Eugene, apprentices earn from $8-$12 an hour depending on experience level.  The next level is a journeymen.  To achieve the journeymen license you must past the state journeymen test.  Journeymen in Eugene typically earn from approximately $18 an hour.  The last step in the plumbing hierarchy is a master plumber.  A master plumber is a journeymen with more than 10 years experience and their earning potential is from $35-$50 per hour. 

In order to do work in the state, it is required that a deposit is made into the workers compensation fund of $4,000 during the first year.  This is only for new companies that have no record of revenue, and no record of worker compensation history.  After one year of no claims, $1,000 is refunded per year and after five years the entire amount is refunded.  In essence, this is acting as a bond for newly formed companies.

The timetable for work in this niche is as follows:

  • Two people, one full day, rough-in (plumbing in the floors and concrete).
  • Two people, one full day, top-out (plumbing in the walls).
  • One person, one full day trim (sections visible to the end-user).

Please note that within the industry ratios’ the gross margin for the industry is significantly lower than what is forecasted for Water Tubes.  The variance can be explained by the fact that the industry ratios are for repair plumbing as well as new construction.  The repair work is more parts intensive and has skewed the gross margin ratio.

4.3.1 Competition and Buying Patterns

The plumbing market is quite competitive, and consequently in order to reap decent profits, large quantity of work must be done.  Competitors can be broken down into three groups:

  1. Chains: these plumbing companies are a franchise or a division of a larger chain.  The chains typically do repair work instead of new building construction, but sometimes they do work with new builds.
  2. Private companies: these companies are typically local.  In order to generate sufficient revenue, they will offer a wide range of services.
  3. Large commercial & residential companies: these are the local Starbucks of the plumbing world and will bid on any type of plumbing project, whether commercial or residential, repair or new builds.  The majority of jobs that this competitor will work on is the larger commercial projects, but a getting a contract with a volume home builder would be attractive.

The buying habits of the target segments is based primarily on networking.  Once a relationship is established, the builder will typically give the plumber one to two jobs to display their work before any type of long-term contract/relationship is developed.

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Strategy and Implementation Summary

Water Tubes will first increase visibility through networking activities.  Don will leverage his years as a local plumber working for a larger company.  Once Water Tubes has developed visibility, they will highlight their competitive advantages of professionalism and trim quality with a test project for the builder.  Generally, Water Tubes will be able to win over contracts after their initial display of workmanship.

5.1 Competitive Edge

Water Tubes has two competitive advantages that they will leverage to gain market share:

  • Professionalism. Fortunately for Water Tubes, professionalism seems to be absent among many plumbers skill sets.  Water Tubes will exhibit their professionalism in all aspects of customer interaction as well as job performance.  It is very common for plumbers to bid out for more items that they can handle at once.  This is done because the assumption is that they will not get all the jobs they bid for so it is likely that their job load will be balanced out in the long run.  Some times this works, other times it fails.  This is a common source of unprofessionalism that will not happen at Water Tubes.  Additionally, all employees will be indoctrinated into this customer-centric culture, ensuring that all interactions with anyone from Water Tubes will be a positive experience.
  • Trim Quality. This is the part of the job that is visible to the customer as opposed to the bulk of the work that is hidden behind cabinets and walls.  There are not a lot of plumbing companies that have consistently good trim quality.  This is one way that Water Tubes can easily stand out relative to the competitors.  Having high trim quality is also an easy way to impress home builders since they will have to fix any issues that are unsatisfying to home-buyers, so sloppy trim work will usually have to be remedied at some point, usually when it is inconvenient.

5.2 Marketing Strategy

As mentioned earlier in the Target Market Segment Strategy, Water Tubes marketing campaign will be based on both networking as well as advertising.

  • Networking. This will consist of meeting with builders that Don had worked with in the past, as well as others in the industry.  Don will chat with them and let them know about his current venture and request a trial build to prove himself.  Because the industry is so closely networked, whenever he runs into someone he will mention his new company.  This will spread the word rather fast as contractors tend to bump into each other all over town, both socially as well as professionally.
  • Advertising. Don will be running advertisements in the local home builders journal.  This publication is a printed resource that home builders will typically consult when they are in need of a contractor for a specific service in the construction of their house.  Because the readership is targeted and so closely interconnected, advertisements will be quite effective.  Don will also put an advertisement in the Yellow Pages, however Don believes that the advertisements in the trade journal will be more effective due to the closer demographics and behavior factors of the readership group.

5.3 Sales Strategy

Water Tubes sales strategy will be to get at least one job with the new builder to provide them with an example of Water Tubes work.  Based on the current competition, a display of Water Tubes competitive edges of professionalism and trim quality will likely be more than sufficient to turn a prospective customer into a long-term relationship.

5.3.1 Sales Forecast

The first month will be used to set up the business.  The second month will be used to train an employee as well as to undertake several jobs.  The third month will be used to train two more employees as well as do a few other jobs.  By the fourth month it is forecasted that Water Tubes will have a volume relationship with one builder.  Month four will also see a custom home built.  Month six will mark the development of another volume builder.  From month six on there should be a steady increase in sales activity.

Plumbing business plan, strategy and implementation summary chart image

Plumbing business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Non-custom homes $104,858 $151,987 $165,454
Custom homes $29,000 $38,765 $49,876
Total Sales $133,858 $190,752 $215,330
Direct Cost of Sales Year 1 Year 2 Year 3
Non-custom homes $10,486 $15,199 $16,545
Custom homes $2,900 $3,877 $4,988
Subtotal Direct Cost of Sales $13,386 $19,075 $21,533

5.4 Milestones

Water Tubes will have several milestones:

  1. Business plan completion.
  2. Office set-up.
  3. Training of all employees.
  4. The establishment of the second volume home builder.
  5. Profitability.
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 $0 ABC Marketing
Office set-up 1/1/2001 2/1/2001 $0 ABC Department
Training of all employees 1/1/2001 4/1/2001 $0 ABC Department
The establishment of the second volume home builder 1/1/2001 7/1/2001 $0 ABC Department
Profitability 1/1/2001 9/1/2001 $0 ABC Department
Totals $0

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Management Summary

Don Roto received his Bachelor of Arts from the University of Portland.  After college, Dan decided to learn more about plumbing, one of the odd jobs that he did in college.  After six months of inconsistent work Don landed a job with a larger plumbing company that did both residential and commercial work.  Don started as an apprentice, but within four months had passed his journeymen exam.  Don continued to work for this company for ten years, receiving his master plumbing designation right at the ten year mark.  At this point Don decided that he wanted to try operating his own company, leveraging skills learned in college as well as providing him the flexibility of being his own boss.  It was at this point that he started writing the business plan for Water Tubes and eventually quit his job.

6.1 Personnel Plan

Don will be the only employee for the first month.  Don will bring on board a second employee during month two, and two more employees on the third month.  It is forecasted that Water Tubes will stay at four employees for the foreseeable future.

Personnel Plan
Year 1 Year 2 Year 3
Don $36,000 $40,000 $50,000
Journeymen employee $28,800 $34,560 $34,560
Apprentice employee $17,600 $19,200 $19,200
Apprentice employee $16,000 $19,200 $19,200
Total People 4 4 4
Total Payroll $98,400 $112,960 $122,960

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Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Plumbing business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $11,520
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $10,368

7.3 Projected Profit and Loss

The following table and charts present the projected profit and loss.

Plumbing business plan, financial plan chart image

Plumbing business plan, financial plan chart image

Plumbing business plan, financial plan chart image

Plumbing business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $133,858 $190,752 $215,330
Direct Cost of Sales $13,386 $19,075 $21,533
Other Production Expenses $0 $0 $0
Total Cost of Sales $13,386 $19,075 $21,533
Gross Margin $120,472 $171,677 $193,797
Gross Margin % 90.00% 90.00% 90.00%
Expenses
Payroll $98,400 $112,960 $122,960
Sales and Marketing and Other Expenses $1,800 $1,800 $1,800
Depreciation $3,456 $3,456 $3,456
Insurance/ License/ Bonds $6,000 $5,000 $4,000
Rent $0 $0 $0
Payroll Taxes $14,760 $16,944 $18,444
Other $0 $0 $0
Total Operating Expenses $124,416 $140,160 $150,660
Profit Before Interest and Taxes ($3,944) $31,517 $43,137
EBITDA ($488) $34,973 $46,593
Interest Expense $0 $0 $0
Taxes Incurred $0 $9,455 $12,941
Net Profit ($3,944) $22,062 $30,196
Net Profit/Sales -2.95% 11.57% 14.02%

7.4 Projected Cash Flow

The following chart and table display the projected cash flow.

Plumbing business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $133,858 $190,752 $215,330
Subtotal Cash from Operations $133,858 $190,752 $215,330
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $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 $0 $0 $0
Subtotal Cash Received $133,858 $190,752 $215,330
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $98,400 $112,960 $122,960
Bill Payments $32,139 $51,785 $58,188
Subtotal Spent on Operations $130,539 $164,745 $181,148
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
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 $130,539 $164,745 $181,148
Net Cash Flow $3,319 $26,007 $34,182
Cash Balance $22,969 $48,976 $83,158

7.5 Projected Balance Sheet

The following table shows the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $22,969 $48,976 $83,158
Other Current Assets $0 $0 $0
Total Current Assets $22,969 $48,976 $83,158
Long-term Assets
Long-term Assets $24,000 $24,000 $24,000
Accumulated Depreciation $3,456 $6,912 $10,368
Total Long-term Assets $20,544 $17,088 $13,632
Total Assets $43,513 $66,064 $96,790
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,807 $4,297 $4,826
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,807 $4,297 $4,826
Long-term Liabilities $0 $0 $0
Total Liabilities $3,807 $4,297 $4,826
Paid-in Capital $44,000 $44,000 $44,000
Retained Earnings ($350) ($4,294) $17,768
Earnings ($3,944) $22,062 $30,196
Total Capital $39,706 $61,768 $91,964
Total Liabilities and Capital $43,513 $66,064 $96,790
Net Worth $39,706 $61,768 $91,964

7.6 Business Ratios

The company’s projected business ratios are provided in the table below.  The final column, Industry Profile, shows significant ratios for the Plumbing, Heating, Air-conditioning industry, as determined by the Standard Industry Classification (SIC) Index code 1711.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 42.50% 12.88% 6.60%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 29.30%
Total Current Assets 52.79% 74.13% 85.92% 84.40%
Long-term Assets 47.21% 25.87% 14.08% 15.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.75% 6.50% 4.99% 47.20%
Long-term Liabilities 0.00% 0.00% 0.00% 9.10%
Total Liabilities 8.75% 6.50% 4.99% 56.30%
Net Worth 91.25% 93.50% 95.01% 43.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 26.50%
Selling, General & Administrative Expenses 92.95% 78.43% 75.98% 14.60%
Advertising Expenses 0.45% 0.31% 0.28% 0.40%
Profit Before Interest and Taxes -2.95% 16.52% 20.03% 2.20%
Main Ratios
Current 6.03 11.40 17.23 1.87
Quick 6.03 11.40 17.23 1.47
Total Debt to Total Assets 8.75% 6.50% 4.99% 56.30%
Pre-tax Return on Net Worth -9.93% 51.02% 46.91% 6.80%
Pre-tax Return on Assets -9.06% 47.71% 44.57% 15.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -2.95% 11.57% 14.02% n.a
Return on Equity -9.93% 35.72% 32.83% n.a
Activity Ratios
Accounts Payable Turnover 9.44 12.17 12.17 n.a
Payment Days 27 28 28 n.a
Total Asset Turnover 3.08 2.89 2.22 n.a
Debt Ratios
Debt to Net Worth 0.10 0.07 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $19,162 $44,680 $78,332 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.33 0.35 0.45 n.a
Current Debt/Total Assets 9% 7% 5% n.a
Acid Test 6.03 11.40 17.23 n.a
Sales/Net Worth 3.37 3.09 2.34 n.a
Dividend Payout 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
Non-custom homes 0% $0 $4,000 $8,000 $5,000 $6,000 $6,545 $7,332 $9,876 $11,232 $14,454 $15,654 $16,765
Custom homes 0% $0 $0 $0 $7,000 $4,000 $3,000 $0 $3,500 $2,500 $3,000 $3,500 $2,500
Total Sales $0 $4,000 $8,000 $12,000 $10,000 $9,545 $7,332 $13,376 $13,732 $17,454 $19,154 $19,265
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
Non-custom homes $0 $400 $800 $500 $600 $655 $733 $988 $1,123 $1,445 $1,565 $1,677
Custom homes $0 $0 $0 $700 $400 $300 $0 $350 $250 $300 $350 $250
Subtotal Direct Cost of Sales $0 $400 $800 $1,200 $1,000 $955 $733 $1,338 $1,373 $1,745 $1,915 $1,927
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
Don 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Journeymen employee 0% $0 $0 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880
Apprentice employee 0% $0 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Apprentice employee 0% $0 $0 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Total People 1 2 4 4 4 4 4 4 4 4 4 4
Total Payroll $3,000 $4,600 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080

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 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
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% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 $0 $4,000 $8,000 $12,000 $10,000 $9,545 $7,332 $13,376 $13,732 $17,454 $19,154 $19,265
Direct Cost of Sales $0 $400 $800 $1,200 $1,000 $955 $733 $1,338 $1,373 $1,745 $1,915 $1,927
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $400 $800 $1,200 $1,000 $955 $733 $1,338 $1,373 $1,745 $1,915 $1,927
Gross Margin $0 $3,600 $7,200 $10,800 $9,000 $8,591 $6,599 $12,038 $12,359 $15,709 $17,239 $17,339
Gross Margin % 0.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Expenses
Payroll $3,000 $4,600 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080
Sales and Marketing and Other Expenses $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Depreciation $288 $288 $288 $288 $288 $288 $288 $288 $288 $288 $288 $288
Insurance/ License/ Bonds $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 15% $450 $690 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $4,388 $6,228 $11,380 $11,380 $11,380 $11,380 $11,380 $11,380 $11,380 $11,380 $11,380 $11,380
Profit Before Interest and Taxes ($4,388) ($2,628) ($4,180) ($580) ($2,380) ($2,790) ($4,781) $658 $979 $4,329 $5,859 $5,959
EBITDA ($4,100) ($2,340) ($3,892) ($292) ($2,092) ($2,502) ($4,493) $946 $1,267 $4,617 $6,147 $6,247
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($4,388) ($2,628) ($4,180) ($580) ($2,380) ($2,790) ($4,781) $658 $979 $4,329 $5,859 $5,959
Net Profit/Sales 0.00% -65.70% -52.25% -4.83% -23.80% -29.22% -65.21% 4.92% 7.13% 24.80% 30.59% 30.93%

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 $4,000 $8,000 $12,000 $10,000 $9,545 $7,332 $13,376 $13,732 $17,454 $19,154 $19,265
Subtotal Cash from Operations $0 $4,000 $8,000 $12,000 $10,000 $9,545 $7,332 $13,376 $13,732 $17,454 $19,154 $19,265
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 $0 $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 $0 $4,000 $8,000 $12,000 $10,000 $9,545 $7,332 $13,376 $13,732 $17,454 $19,154 $19,265
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 $3,000 $4,600 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080 $9,080
Bill Payments $37 $1,121 $1,776 $2,825 $3,205 $3,010 $2,959 $2,765 $3,351 $3,398 $3,763 $3,928
Subtotal Spent on Operations $3,037 $5,721 $10,856 $11,905 $12,285 $12,090 $12,039 $11,845 $12,431 $12,478 $12,843 $13,008
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 $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 $3,037 $5,721 $10,856 $11,905 $12,285 $12,090 $12,039 $11,845 $12,431 $12,478 $12,843 $13,008
Net Cash Flow ($3,037) ($1,721) ($2,856) $95 ($2,285) ($2,545) ($4,707) $1,531 $1,301 $4,976 $6,311 $6,257
Cash Balance $16,613 $14,892 $12,036 $12,131 $9,846 $7,300 $2,593 $4,124 $5,425 $10,401 $16,712 $22,969
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 $19,650 $16,613 $14,892 $12,036 $12,131 $9,846 $7,300 $2,593 $4,124 $5,425 $10,401 $16,712 $22,969
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $19,650 $16,613 $14,892 $12,036 $12,131 $9,846 $7,300 $2,593 $4,124 $5,425 $10,401 $16,712 $22,969
Long-term Assets
Long-term Assets $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000
Accumulated Depreciation $0 $288 $576 $864 $1,152 $1,440 $1,728 $2,016 $2,304 $2,592 $2,880 $3,168 $3,456
Total Long-term Assets $24,000 $23,712 $23,424 $23,136 $22,848 $22,560 $22,272 $21,984 $21,696 $21,408 $21,120 $20,832 $20,544
Total Assets $43,650 $40,325 $38,316 $35,172 $34,979 $32,406 $29,572 $24,577 $25,820 $26,833 $31,521 $37,544 $43,513
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 $1,063 $1,682 $2,718 $3,105 $2,912 $2,868 $2,654 $3,238 $3,272 $3,632 $3,796 $3,807
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,063 $1,682 $2,718 $3,105 $2,912 $2,868 $2,654 $3,238 $3,272 $3,632 $3,796 $3,807
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,063 $1,682 $2,718 $3,105 $2,912 $2,868 $2,654 $3,238 $3,272 $3,632 $3,796 $3,807
Paid-in Capital $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000 $44,000
Retained Earnings ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350) ($350)
Earnings $0 ($4,388) ($7,016) ($11,196) ($11,776) ($14,156) ($16,946) ($21,727) ($21,068) ($20,090) ($15,761) ($9,902) ($3,944)
Total Capital $43,650 $39,262 $36,634 $32,454 $31,874 $29,494 $26,705 $21,923 $22,582 $23,560 $27,889 $33,748 $39,706
Total Liabilities and Capital $43,650 $40,325 $38,316 $35,172 $34,979 $32,406 $29,572 $24,577 $25,820 $26,833 $31,521 $37,544 $43,513
Net Worth $43,650 $39,262 $36,634 $32,454 $31,874 $29,494 $26,705 $21,923 $22,582 $23,560 $27,889 $33,748 $39,706

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