"Formwork Construction" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Products
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
7.0 Financial Plan
 7.1 Projected Profit and Loss
7.2 Projected Cash Flow
7.3 Projected Balance Sheet
 7.4 Business Ratios
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This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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7.0 Financial Plan
Summary of three-year projections
Financial projections are based on sales volume at the levels
described in the revenue section; it presents, to the best of management's
knowledge and belief, the company's expected assets, liabilities, capital,
revenues, and expenses. Further, the projections reflect management's judgement
of the expected conditions and its expected course of action, given the
hypothetical assumptions.
- Financial notes and assumptions
Revenues will be derived from sales of services for the
installation of reinforced-concrete utilizing formwork, reinforcing steel,
embedded items, concrete placement, and engineering. Concrete Fabricators plans
to bid and receive contracts for commercial concrete projects at all levels
throughout the state. Management also expects to achieve a small percentage of
revenues resulting from consulting services arising out of training.
- Annual Growth
The company expects annual growth to increase by 110%, on the
basis that the company will be stepping up its sales efforts, as well as
initiating new partnerships and alliances that will foster growth and extensions
of our existing markets. These strategies are designed to build momentum and
critical mass within the company and its overall sales
results.
- Cost of Goods
Concrete Fabricators expects that its services will bear a
reasonably high markup, which translates to a relatively low cost of goods. Cost
of goods includes consideration for cost of equipment, cost of products, bank
charges due to credit card transactions (not passed along to the consumer), and
labor.
- Operating Expenses
Concrete Fabricators groups sales and marketing expenses, and
general and administrative expense items under this category.
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7.1 Projected Profit and Loss
We expect a profit of $10,000 in year one; $23,000 in year two; and
$37,000 in year three of operation.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$277,692 |
$416,539 |
$624,807 |
| Direct Cost of Goods |
$10,000 |
$20,000 |
$40,000 |
| Other |
$3,000 |
$6,000 |
$40,000 |
|
|
------------ |
------------ |
------------ |
| Cost of Goods Sold |
$13,000 |
$26,000 |
$52,000 |
| Gross Margin |
$264,692 |
$390,539 |
572,807 |
| Gross Margin % |
95.32% |
93.76% |
91.68% |
| Expenses: |
| Payroll |
$66,213 |
$72,000 |
$84,000 |
| Sales and Marketing and Other Expenses |
$34,344 |
$47,610 |
$71,010 |
| Depreciation |
$47,997 |
$50,333 |
$52,668 |
| Rent |
$12,420 |
$12,420 |
$12,420 |
| Supplies and Equipment |
$9,926 |
$19,851 |
$39,702 |
| Insurance |
$14,459 |
$21,688 |
$32,533 |
| Services |
$2,833 |
$2,833 |
$2,833 |
| Payroll Taxes |
$9,947 |
$10,800 |
$12,600 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$198,237 |
$237,536 |
$307,766 |
| Profit Before Interest and Taxes |
$66,455 |
$153,003 |
$265,041 |
| Interest Expense |
($499) |
($4,888) |
($9,693) |
| Taxes Incurred |
$16,652 |
$39,473 |
$69,828 |
| Net Profit |
$50,302 |
$118,419 |
$204,906 |
| Net Profit/Sales |
18.11% |
28.43% |
32.80% |
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7.2 Projected Cash Flow
The following chart and table show our estimated cash flow for this
plan
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$69,423 |
$104,135 |
$156,202 |
| Cash from Receivables |
$203,755 |
$298,484 |
$447,725 |
| Subtotal Cash from Operations |
$273,178 |
$402,619 |
$603,927 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$2,000 |
$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 |
$275,178 |
$402,619 |
$603,927 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$10,322 |
$16,499 |
$26,949 |
| Payment of Accounts Payable |
$201,843 |
$226,607 |
$332,364 |
| Subtotal Spent on Operations |
$212,165 |
$243,106 |
$359,313 |
| |
| Additional Cash Spent |
| Sales Tax, VAT, HST/GST Paid Out |
$0 |
$0 |
$0 |
| Principal Repayment of Current Borrowing |
$26,501 |
$26,250 |
$28,000 |
| Other Liabilities Principal Repayment |
$0 |
$0 |
$0 |
| Long-term Liabilities Principal Repayment |
$18,900 |
$20,250 |
$21,600 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$0 |
$0 |
$0 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$257,566 |
$289,606 |
$408,913 |
| |
| Net Cash Flow |
$17,612 |
$113,013 |
$195,014 |
| Cash Balance |
$47,920 |
$160,933 |
$355,947 |
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7.3 Projected Balance Sheet
The following table provides Concrete Fabricator's projected
balance sheets for 2001-2003.
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$47,920 |
$160,933 |
$355,947 |
| Inventory |
$27,840 |
$41,760 |
$62,640 |
| Other Current Assets |
$8,830 |
$8,830 |
$8,830 |
| Total Current Assets |
$84,590 |
$211,523 |
$427,417 |
| Long-term Assets |
| Long-term Assets |
$507,687 |
$507,687 |
$507,687 |
| Accumulated Depreciation |
$93,688 |
$144,021 |
$196,689 |
| Total Long-term Assets |
$413,999 |
$363,667 |
$310,999 |
| Total Assets |
$498,589 |
$575,190 |
$738,416 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$7,823 |
$12,505 |
$20,425 |
| Current Borrowing |
($24,501) |
($50,751) |
($78,751) |
| Other Current Liabilities |
$22,785 |
$22,785 |
$22,785 |
| Subtotal Current Liabilities |
$6,108 |
($15,461) |
($35,540) |
| |
Long-term Liabilities |
($1,134) |
($21,384) |
($42,984) |
| Total Liabilities |
$4,976 |
($36,845 |
($78,524) |
| |
| Paid-in Capital |
$0 |
$0 |
$0 |
| Retained Earnings |
$443,313 |
$493,615 |
$612,034 |
| Earnings |
$50,302 |
$118,419 |
$204,906 |
| Total Capital |
$493,615 |
$612,034 |
$816,940 |
| Total Liabilities and Capital |
$498,589 |
$575,190 |
$738,416 |
| Net Worth |
$493,615 |
$612,034 |
$816,940 |
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7.4 Business Ratios
The following table includes Industry Profile statistics for the concrete work
industry, as determined by the Standard Industrial Classifications (SIC) Index
code 1799. These statistics show a comparison of industry standards and the key
ratios for this plan.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
42.86% |
50.00% |
50.00% |
7.50% |
| |
| Percent of Total Assets |
| Accounts Receivable |
5.58% |
7.26% |
8.48% |
34.20% |
| Inventory |
0.00% |
0.00% |
0.00% |
5.60% |
| Other Current Assets |
1.77% |
1.54% |
1.20% |
27.20% |
| Total Current Assets |
16.97% |
36.77% |
57.88% |
67.00% |
| Long-term Assets |
83.03% |
63.23% |
42.12% |
33.00% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
1.23% |
-2.69% |
-4.91% |
42.20% |
| Long-term Liabilities |
-0.23% |
-3.72% |
-5.82% |
12.30% |
| Total Liabilities |
1.00% |
-6.41% |
10.63% |
54.50% |
| Net Worth |
99.00% |
106.41% |
-110.63% |
44.50% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
95.32% |
93.76% |
91.68% |
33.10% |
| Selling, General & Administrative Expenses |
77.24% |
65.33% |
58.70% |
18.10% |
| Advertising Expenses |
2.52% |
3.36% |
4.48% |
0.30% |
| Profit Before Interest and Taxes |
23.93% |
36.73% |
42.42% |
3.20% |
| |
| Main Ratios |
| Current |
13.85 |
-13.68 |
-12.03 |
1.63 |
| Quick |
13.85 |
-13.68 |
-12.03 |
1.30 |
| Total Debt to Total Assets |
1.00% |
-6.41% |
-10.63% |
54.50% |
| Pre-tax Return on Net Worth |
13.56% |
25.80% |
33.63% |
8.60% |
| Pre-tax Return on Assets |
13.42% |
27.45% |
37.21% |
12.80% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
18.11% |
28.43% |
32.80% |
n.a |
| Return on Equity |
10.19% |
19.35% |
25.08% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
7.48 |
7.48 |
7.48 |
n.a |
| Collection Days |
45 |
41 |
41 |
n.a |
| Inventory Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Accounts Payable Turnover |
21.61 |
18.50 |
16.66 |
n.a |
| Payment Days |
22 |
16 |
18 |
n.a |
| Total Asset Turnover |
0.56 |
0.72 |
0.85 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
0.01 |
-0.06 |
-0.10 |
n.a |
| Current Liab. to Liab. |
1.23 |
0.00 |
0.00 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$78,482 |
$226,984 |
$462,958 |
n.a |
| Interest Coverage |
0.00 |
0.00 |
0.00 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
1.80 |
1.38 |
1.18 |
n.a |
| Current Debt/Total Assets |
1% |
-3% |
-5% |
n.a |
| Acid Test |
9.29 |
0.00 |
0.00 |
n.a |
| Sales/Net Worth |
0.56 |
0.68 |
0.76 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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