Overture
Financial Plan
Forecast
Key Assumptions
- We leave an unrealistically high projected cash balance in the fourth and fifth year as a buffer. That’s not going to happen. If things were to go that well, we’d be reinvesting in higher growth instead of leaving that much cash.
- We have placeholders for major expenses in the further-out years. We don’t know the details but we do know we can’t have both high growth and high profits, so we choose growth. We cannot be profitable and grow at the rate we want. That’s why we intend to bring in almost $2 million in investment — to finance the deficits.
Financial Highlights by Year
Revenue by Year
Net Profit (or Loss) by Year
Financing
Use of Funds
Use of funds is available in detail in monthly projections in the appendices. It’s essentially financing deficit spending in product development salaries and marketing expenses as we push growth way beyond the levels that revenue alone could support.
Sources of Funds
Sources and funding
- Founders: Founders expect to put in a total of $240K including $200K in the first year and another $40K to get through some thin months during the second year.
- Angel round: A combination of $750K from two regional angel groups.
- Series A VC: Projected $1.5 million.
Ongoing valuation
By the time we get the angel group funding we plan a valuation of $8 million based on a successful launch, testimonials, funds already raised, traction, and buzz in the market.
For the $1.5 million second angel round we will go for a valuation of $20 million. That will be based on all of the above plus demonstrable traction and pull.
Statements
Projected Profit & Loss
2020 | 2021 | 2022 | 2023 | 2024 | |
Revenue | $50,683 | $1,492,955 | $5,190,137 | $10,978,578 | $19,085,024 |
Direct Costs | $5,068 | $149,296 | $519,013 | $1,097,858 | $1,908,503 |
Gross Margin | $45,615 | $1,343,659 | $4,671,123 | $9,880,720 | $17,176,522 |
Gross Margin % | 90% | 90% | 90% | 90% | 90% |
Operating Expenses | |||||
Salaries & Wages | $570,150 | $1,466,900 | $2,482,784 | $4,051,100 | $6,266,240 |
Employee Related Expenses | $114,030 | $293,380 | $496,557 | $810,220 | $1,253,248 |
Web Marketing | $71,000 | $225,000 | $1,200,000 | $2,200,000 | $3,200,000 |
Other Marketing | $24,000 | $36,000 | $600,000 | $2,400,000 | |
Rent | $36,000 | $72,000 | $96,000 | $120,000 | $140,000 |
Sales Commission | $1,520 | $44,789 | $155,704 | $329,358 | $572,550 |
Burden on Commissions | $253 | $7,465 | $25,951 | $54,893 | $95,425 |
Office equipment | $30,000 | $60,000 | $60,000 | $90,000 | $120,000 |
Other Expenses | $7,000 | $43,700 | $147,300 | $1,500,000 | $2,500,000 |
Total Operating Expenses | $829,954 | $2,237,233 | $4,700,296 | $9,755,570 | $16,547,464 |
Operating Income | ($784,339) | ($893,574) | ($29,173) | $125,150 | $629,059 |
Interest Incurred | $5,812 | $5,667 | $4,200 | $2,688 | |
Depreciation and Amortization | $7,306 | $16,111 | $29,444 | $36,722 | $53,611 |
Gain or Loss from Sale of Assets | |||||
Income Taxes | $0 | $0 | $0 | $0 | $0 |
Total Expenses | $842,328 | $2,408,452 | $5,254,421 | $10,894,350 | $18,512,265 |
Net Profit | ($791,645) | ($915,497) | ($64,284) | $84,228 | $572,759 |
Net Profit / Sales | (1,562%) | (61%) | (1%) | 1% | 3% |
Projected Balance Sheet
2020 | 2021 | 2022 | 2023 | 2024 | |
Revenue | $50,683 | $1,492,955 | $5,190,137 | $10,978,578 | $19,085,024 |
Direct Costs | $5,068 | $149,296 | $519,013 | $1,097,858 | $1,908,503 |
Gross Margin | $45,615 | $1,343,659 | $4,671,123 | $9,880,720 | $17,176,522 |
Gross Margin % | 90% | 90% | 90% | 90% | 90% |
Operating Expenses | |||||
Salaries & Wages | $570,150 | $1,466,900 | $2,482,784 | $4,051,100 | $6,266,240 |
Employee Related Expenses | $114,030 | $293,380 | $496,557 | $810,220 | $1,253,248 |
Web Marketing | $71,000 | $225,000 | $1,200,000 | $2,200,000 | $3,200,000 |
Other Marketing | $24,000 | $36,000 | $600,000 | $2,400,000 | |
Rent | $36,000 | $72,000 | $96,000 | $120,000 | $140,000 |
Sales Commission | $1,520 | $44,789 | $155,704 | $329,358 | $572,550 |
Burden on Commissions | $253 | $7,465 | $25,951 | $54,893 | $95,425 |
Office equipment | $30,000 | $60,000 | $60,000 | $90,000 | $120,000 |
Other Expenses | $7,000 | $43,700 | $147,300 | $1,500,000 | $2,500,000 |
Total Operating Expenses | $829,954 | $2,237,233 | $4,700,296 | $9,755,570 | $16,547,464 |
Operating Income | ($784,339) | ($893,574) | ($29,173) | $125,150 | $629,059 |
Interest Incurred | $5,812 | $5,667 | $4,200 | $2,688 | |
Depreciation and Amortization | $7,306 | $16,111 | $29,444 | $36,722 | $53,611 |
Gain or Loss from Sale of Assets | |||||
Income Taxes | $0 | $0 | $0 | $0 | $0 |
Total Expenses | $842,328 | $2,408,452 | $5,254,421 | $10,894,350 | $18,512,265 |
Net Profit | ($791,645) | ($915,497) | ($64,284) | $84,228 | $572,759 |
Net Profit / Sales | (1,562%) | (61%) | (1%) | 1% | 3% |
Projected Cash Flow Statement
2020 | 2021 | 2022 | 2023 | 2024 | |
Net Cash Flow from Operations | |||||
Net Profit | ($791,645) | ($915,497) | ($64,284) | $84,228 | $572,759 |
Depreciation & Amortization | $7,306 | $16,111 | $29,444 | $36,722 | $53,611 |
Change in Accounts Receivable | $0 | $0 | $0 | $0 | $0 |
Change in Inventory | |||||
Change in Accounts Payable | $28,964 | $73,738 | $205,784 | $483,718 | $624,266 |
Change in Income Tax Payable | $0 | $0 | $0 | $0 | $0 |
Change in Sales Tax Payable | $3,188 | $48,169 | $77,916 | $135,279 | $168,614 |
Change in Prepaid Revenue | $0 | $0 | $0 | $0 | $0 |
Net Cash Flow from Operations | ($752,187) | ($777,479) | $248,861 | $739,947 | $1,419,250 |
Investing & Financing | |||||
Assets Purchased or Sold | ($25,000) | ($40,000) | ($40,000) | ($50,000) | ($100,000) |
Net Cash from Investing | ($25,000) | ($40,000) | ($40,000) | ($50,000) | ($100,000) |
Investments Received | $990,000 | $1,500,000 | |||
Dividends & Distributions | |||||
Change in Short-Term Debt | $48,237 | $1,467 | $1,512 | $1,558 | |
Change in Long-Term Debt | $162,655 | ($49,704) | ($51,216) | ($52,774) | |
Net Cash from Financing | $990,000 | $1,710,892 | ($48,237) | ($49,704) | ($51,216) |
Cash at Beginning of Period | $0 | $212,813 | $1,106,226 | $1,266,850 | $1,907,093 |
Net Change in Cash | $212,813 | $893,413 | $160,624 | $640,243 | $1,268,034 |
Cash at End of Period | $212,813 | $1,106,226 | $1,266,850 | $1,907,093 | $3,175,127 |