Shipment Monitoring Business Plan

Our financial plan is based on raising substantial seed capital by way of private equity to create the electronic tag, develop the central database, and establish the customer base.

We will achieve profitability in just over two years and due to the nature of the exponential growth of access charges, we will realize a respectable net profit on sales by year three.

[Confidential and proprietary information has, in some text and tables, been omitted or disguised in this sample plan.]

7.1 Important Assumptions

The table below presents the assumptions used in the financial calculations of this business plan.

7.2 Break-even Analysis

NaviTag Technologies revenues are generated from NaviTag unit sales (a one time expense) and access charges (a monthly recurring fee). Given this, the break-even formula must be adjusted to reflect both one time and recurring revenue activities. Using the sales forecast as a guide, and based on estimates made for fixed cost, average revenue per NaviTag unit and access charges, variable cost for unit manufacturing and service fees, the break-even volume was established to be 700 units per month with a subscription base of 6,800. We anticipate achieving break even at month 24 as detailed in the graph below.

Table: Break-even Analysis

7.3 Projected Profit and Loss

Based on the realistic sales projections and efficient cost control measures in place, NaviTag Technologies will achieve profitability in just over two years. Company profits in subsequent years will increase to the first million in 2005, and a five-fold increase in 2007 due largely to the exponential growth of the access charges. Gross margins reveal dramatic growth, again because of the growth in revenues from access charges.

[Confidential and proprietary information has, in some text and tables, been omitted or disguised in this sample plan.]

7.4 Projected Cash Flow

Cash flow is projected to decline for the first two years of operation based on the reasonable assumption of 45-day credit collections. NaviTag Technologies has calculated its financial plan so that it will have enough cash from investors and debt to survive until a positive cash flow is realized in 2005.

7.5 Projected Balance Sheet

The table below presents the balance sheet for NaviTag Technologies. This table reflects a positive cash position throughout the period of this financial plan and dramatic growth in net worth in 2007.

7.6 Business Ratios

The table below presents common business ratios as a reference. Since the business of “cargo tracking” does not fall underneath any predefined Industry dataset, for Industry Profile comparisons in this table we chose, NAICS 488390 Other Support Activities for Water Transportation (SIC 3731), as the closest option.

7.7 Long-term Plan

We anticipate that the percentage of ocean cargo deemed time sensitive, of high value, or of a hazardous nature will continue to increase faster than the average increase in cargo in general. Further, we believe that the concerns over ship, port, and national security risks will balloon. With only 2% of the imports being inspected today, the concern of dangerous cargoes compromising the port operations has created opportunities for a cargo tracking/security alert device such as ours.

Our cargo tracking efforts will be focused on those shippers with high value, time sensitive, or hazardous cargo. Our security focus will be directed to those government agencies seeking to improve security of the U.S. ports involved in processing the 600,000 containers entering weekly.

We will achieve profitability in just over two years and due to the nature of the exponential growth of access charges, we will realize a respectable net profit on sales by year three. The success of our implementation and sales efforts will have a strong affect on our year three through year five operations and fiscal position. If slower than planned, we risk a negative cash balance, even though we might have already reached profitability. Additional rounds of investment may be needed, or acquiring long-term business loans.

Ironically, a faster than planned industry acceptance of NaviTag could push us into a period of risky increased expansion, which would also drain our operating capital reserve, again requiring us to seek another round of investment or loans. 

Alternatively, early-on proof-of-concept and feasibility analyses, could spark high demand from governmental agencies and/or the military establishment could lead to substantial financial and operational grants, subsidies, contracts, etc.