Technology Investment Business Plan

Attached is CTI’s financial plan for review.

7.1 Important Assumptions

Below is a short list of some general assumptions:

• The rural economy is growing at 2.5%, much less than the 3-3.5% growth expected for urban areas.
• Due to the nonprofit status, no taxes are required.
• Short-term and long-term interest rates are based on Mr. Franklin’s credit score.

7.2 Break-even Analysis

The break-even numbers demonstrate that we will break-even at well below our minimum established for the retainer. Books and other materials are not included in the break-even analysis due to the lower margins, lower revenue projections for those materials, and the fact that the company will not remain a going concern unless it can attract a minimum number of clients on retainer.

7.3 Projected Balance Sheet

The attached balance sheet is very straightforward.

7.4 Projected Surplus or Deficit

We expect to have a surplus in each of the next three years. Bill Franklin requires only a modest salary, thereby pushing up Net Surplus to a range in which the money may be reinvested into additional technology services and products for clients. This might include workstation upgrades, communication tools, demo hardware, and outsourcing of other essential business functions.

7.5 Projected Cash Flow

Some short-term borrowing is necessary within the first three months of operations. This is simply borrowed off of the CEO’s credit card balances in order to maintain a positive cash flow balance in the first several months. After month three or four, sales will stabilize and grow fast enough to supply ample cash for CTI.

7.6 Standard Ratios

Net working capital is very healthy, and interest coverage easily argues that by year two CTI could leverage itself with more borrowing if expansion is necessary. See attached table.