"Acme Consulting" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Services
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
7.0 Financial Plan
 7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Break-even Analysis
7.4 Projected Profit and Loss Important Assumptions
7.5 Projected Cash Flow
7.6 Projected Balance Sheet
 7.7 Business Ratios
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Fortune 100 TOP 10 companies to work for.
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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
Our financial plan is based on conservative estimates and
assumptions. We will need to plan on initial investment to make the financials
work.
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7.1 Important Assumptions
The accompanying table summarizes key financial assumptions, including 45-day average collection days,
sales entirely on invoice basis, expenses mainly on net 30 basis, 35 days on
average for payment of invoices, and present-day interest rates.
|
| General Assumptions |
| |
2001 |
2002 |
2003 |
| Plan Month |
1 |
2 |
3 |
| Current Interest Rate |
9.00% |
9.00% |
9.00% |
| Long-term Interest Rate |
9.00% |
9.00% |
9.00% |
| Tax Rate |
25.00% |
25.00% |
25.00% |
| Sales on Credit % |
100.00% |
100.00% |
100.00% |
| Other |
0 |
0 |
0 |
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7.2 Key Financial Indicators
The following benchmark chart indicates our key financial
indicators for the first three years. We foresee major growth in sales and
operating expenses, and a bump in our collection days as we spread the business
during expansion
Benchmarks
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7.3 Break-even Analysis
The table summarizes the break-even analysis, including monthly units and sales break-even
points.
Break-even Analysis
|
| Break-even Analysis: |
| Monthly Units Break-even |
$12,500 |
| Monthly Revenue Break-even |
$12,500 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$1.00 |
| Average Per-Unit Variable Cost |
$0.20 |
| Estimated Monthly Fixed Cost |
$37,053 |
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7.4 Projected Profit and Loss
The detailed monthly pro-forma income statement for the first year
is included in the appendix. The annual estimates are included here.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$592,000 |
$875,000 |
$1,100,000 |
| Direct Cost of Sales |
$159,000 |
$219,000 |
$289,000 |
| Other |
$0 |
$0 |
$0 |
|
|
------------ |
------------ |
------------ |
| Total Cost of Sales |
$159,000 |
$219,000 |
$289,000 |
|
Gross Margin |
$433,000 |
$656,000 |
$811,000 |
| Gross Margin % |
73.14% |
74.97% |
73.73% |
| Expenses: |
| Payroll |
$194,750 |
$377,000 |
$432,000 |
| Sales and Marketing and Other Expenses |
$162,000 |
$137,000 |
$432,000 |
| Depreciation |
$0 |
$0 |
$0 |
| Leased Equipment |
$6,000 |
$7,000 |
$7,000 |
| Utilities |
$12,000 |
$12,000 |
$12,000 |
| Insurance |
$3,600 |
$2,000 |
$3,000 |
| Office Rent |
$18,000 |
$0 |
$0 |
| Payroll Taxes |
$27,265 |
$52,780 |
$60,480 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$423,615 |
$587,780 |
$708,480 |
| Profit Before Interest and Taxes |
$9,385 |
$68,220 |
$102,520 |
| Interest Expense |
$6,800 |
$11,400 |
$15,400 |
| Taxes Incurred |
($524) |
$14,205 |
$22,143 |
| Net Profit |
$3,109 |
$42,615 |
$64,977 |
| Net Profit/Sales |
0.53% |
4.87% |
5.91% |
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7.5 Projected Cash Flow
Cash flow projections are critical to West Pacific Marketing
Consultants' success. The monthly cash flow is shown in the illustration, with
one bar representing the cash flow per month and the other representing the
monthly balance. The annual cash flow figures are included below in the
following chart and table. Detailed monthly numbers are included in the
appendix. Cash
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash from Receivables |
$495,000 |
$828,630 |
$1,063,133 |
| Subtotal Cash from Operations |
$495,000 |
$828,630 |
$1,063,133 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$30,000 |
$100,000 |
$0 |
| New Other Liabilities (interest-free) |
$0 |
$0 |
$0 |
| New Long-term Liabilities |
$50,000 |
$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 |
$575,000 |
$928,630 |
$1,063,133 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$92,012 |
$100,651 |
$135,545 |
| Payment of Accounts Payable |
$467,603 |
$728,952 |
$888,243 |
| Subtotal Spent on Operations |
$559,615 |
$829,603 |
$1,023,788 |
| |
| 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 |
$559,615 |
$829,603 |
$1,023,788 |
| |
| Net Cash Flow |
$15,385 |
$99,027 |
$39,346 |
| Cash Balance |
$40,385 |
$139,412 |
$178,758 |
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7.6 Projected Balance Sheet
The following balance sheet shows healthy growth of net worth,
and strong financial position. The monthly estimates are included in the
appendix.
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$40,385 |
$139,412 |
$178,758 |
| Accounts Receivable |
$97,000 |
$143,370 |
$180,236 |
| Other Current Assets |
$7,000 |
$7,000 |
$7,000 |
| Total Current Assets |
$144,385 |
$289,782 |
$365,995 |
| Long-term Assets |
| Long-term Assets |
$0 |
$0 |
$0 |
| Accumulated Depreciation |
$0 |
$0 |
$0 |
| Total Long-term Assets |
$0 |
$0 |
$0 |
| Total Assets |
$144,385 |
$289,782 |
$365,995 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$29,627 |
$32,409 |
$43,644 |
| Current Borrowing |
$30,000 |
$130,000 |
$130,000 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$59,627 |
$162,409 |
$173,644 |
| |
Long-term Liabilities |
$50,000 |
$50,000 |
$50,000 |
| Total Liabilities |
$109,627 |
$212,409 |
$223,644 |
| |
| Paid-in Capital |
$50,000 |
$50,000 |
$50,000 |
| Retained Earnings |
($18,350) |
($15,241) |
$27,374 |
| Earnings |
$3,109 |
$42,615 |
$64,977 |
| Total Capital |
$34,759 |
$77,374 |
$142,351 |
| Total Liabilities and Capital |
$144,385 |
$289,782 |
$365,995 |
| Net Worth |
$34,759 |
$77,374 |
$142,351 |
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7.7 Business Ratios
The following table shows the projected business ratios. We expect
to maintain healthy ratios for profitability, risk, and return. The industry
comparisons are for SIC 8742, management consulting services.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
0.00% |
47.80% |
25.71% |
6.98% |
| |
| Percent of Total Assets |
| Accounts Receivable |
67.18% |
49.48% |
49.25% |
26.80% |
| Inventory |
0.00% |
0.00% |
0.00% |
5.01% |
| Other Current Assets |
4.85% |
2.42% |
1.91% |
43.95% |
| Total Current Assets |
100.00% |
100.00% |
100.00% |
75.76% |
| Long-term Assets |
0% |
0% |
0% |
24.24% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
41.30% |
56.05% |
47.44% |
31.78% |
| Long-term Liabilities |
34.63% |
17.25% |
13.66 |
17.26% |
| Total Liabilities |
75.93% |
73.30% |
61.11% |
49.04% |
| Net Worth |
24.07% |
26.70% |
38.89% |
50.96% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
41.30% |
74.97% |
73.73% |
100.00% |
| Selling, General & Administrative Expenses |
72.81% |
70.10% |
67.79% |
85.31% |
| Advertising Expenses |
6.08% |
4.57% |
4.00 |
1.02% |
| Profit Before Interest and Taxes |
1.59% |
7.80% |
9.32% |
1.90% |
| |
| Main Ratios |
| Current |
2.42 |
1.78 |
2.11 |
1.88 |
| Quick |
2.42 |
1.78 |
2.11 |
1.88 |
| Total Debt to Total Assets |
75.93% |
73.30% |
61.11% |
3.41% |
| Pre-tax Return on Net Worth |
7.44% |
73.44% |
61.20% |
55.78% |
| Pre-tax Return on Assets |
1.79% |
19.61% |
23.80% |
7.72% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
0.53% |
4.87% |
5.91% |
n.a |
| Return on Equity |
8.94% |
55.08% |
45.65% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
6.10 |
6.10 |
6.10 |
n.a |
| Collection Days |
43 |
50 |
54 |
n.a |
| Inventory Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Accounts Payable Turnover |
16.77 |
22.58 |
20.61 |
n.a |
| Payment Days |
18 |
15 |
15 |
n.a |
| Total Asset Turnover |
4.10 |
3.02 |
3.01 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
3.15 |
2.75 |
1.57 |
n.a |
| Current Liab. to Liab. |
0.54 |
0.76 |
0.78 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$84,759 |
$127,374 |
$192,351 |
n.a |
| Interest Coverage |
1.38 |
5.98 |
6.66 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
0.24 |
0.33 |
0.33 |
n.a |
| Current Debt/Total Assets |
41% |
56% |
47% |
n.a |
| Acid Test |
0.79 |
0.90 |
1.07 |
n.a |
| Sales/Net Worth |
17.03 |
11.31 |
7.73 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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