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Pioneer Consulting

Financial Plan

The following sections will present the break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Break-even Analysis

The Break-even Analysis is laid out in the following table and chart.

Advertising marketing consulting business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $1,190
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $1,190

7.2 Projected Profit and Loss

The following table will indicate projected profit and loss for three years.

Advertising marketing consulting business plan, financial plan chart image

Advertising marketing consulting business plan, financial plan chart image

Advertising marketing consulting business plan, financial plan chart image

Advertising marketing consulting business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $23,850 $35,000 $52,000
Direct Cost of Sales $0 $0 $0
Other Production Expenses $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $23,850 $35,000 $52,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $12,000 $24,000 $35,000
Sales and Marketing and Other Expenses $0 $500 $500
Depreciation $0 $0 $0
Cell Phone $480 $480 $480
Utilities $0 $0 $0
Insurance $0 $0 $0
Rent $0 $0 $0
Payroll Taxes $1,800 $3,600 $5,250
Other $0 $0 $0
Total Operating Expenses $14,280 $28,580 $41,230
Profit Before Interest and Taxes $9,570 $6,420 $10,770
EBITDA $9,570 $6,420 $10,770
Interest Expense $0 $0 $0
Taxes Incurred $2,871 $1,926 $3,231
Net Profit $6,699 $4,494 $7,539
Net Profit/Sales 28.09% 12.84% 14.50%

7.3 Projected Cash Flow

The following chart and table indicates projected cash flow.

Advertising marketing consulting business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $5,963 $8,750 $13,000
Cash from Receivables $14,643 $24,733 $36,687
Subtotal Cash from Operations $20,605 $33,483 $49,687
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $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 $20,605 $33,483 $49,687
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $12,000 $24,000 $35,000
Bill Payments $4,863 $6,259 $9,218
Subtotal Spent on Operations $16,863 $30,259 $44,218
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 $16,863 $30,259 $44,218
Net Cash Flow $3,742 $3,224 $5,469
Cash Balance $4,092 $7,316 $12,785

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $4,092 $7,316 $12,785
Accounts Receivable $3,245 $4,762 $7,075
Other Current Assets $0 $0 $0
Total Current Assets $7,337 $12,078 $19,860
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $7,337 $12,078 $19,860
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $288 $535 $778
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $288 $535 $778
Long-term Liabilities $0 $0 $0
Total Liabilities $288 $535 $778
Paid-in Capital $1,000 $1,000 $1,000
Retained Earnings ($650) $6,049 $10,543
Earnings $6,699 $4,494 $7,539
Total Capital $7,049 $11,543 $19,082
Total Liabilities and Capital $7,337 $12,078 $19,860
Net Worth $7,049 $11,543 $19,082

7.5 Business Ratios

The following table provides important ratios for the real estate industry, as determined by the Standard Industry Classification (SIC) Index, 7319, Advertising, nec.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 46.75% 48.57% 8.50%
Percent of Total Assets
Accounts Receivable 44.23% 39.43% 35.63% 36.10%
Other Current Assets 0.00% 0.00% 0.00% 42.70%
Total Current Assets 100.00% 100.00% 100.00% 80.20%
Long-term Assets 0.00% 0.00% 0.00% 19.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 3.93% 4.43% 3.92% 46.70%
Long-term Liabilities 0.00% 0.00% 0.00% 9.80%
Total Liabilities 3.93% 4.43% 3.92% 56.50%
Net Worth 96.07% 95.57% 96.08% 43.50%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 71.91% 87.16% 85.50% 79.10%
Advertising Expenses 0.00% 1.43% 0.96% 4.20%
Profit Before Interest and Taxes 40.13% 18.34% 20.71% 1.60%
Main Ratios
Current 25.47 22.59 25.54 1.70
Quick 25.47 22.59 25.54 1.43
Total Debt to Total Assets 3.93% 4.43% 3.92% 56.50%
Pre-tax Return on Net Worth 135.76% 55.62% 56.44% 4.60%
Pre-tax Return on Assets 130.43% 53.16% 54.23% 10.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 28.09% 12.84% 14.50% n.a
Return on Equity 95.03% 38.93% 39.51% n.a
Activity Ratios
Accounts Receivable Turnover 5.51 5.51 5.51 n.a
Collection Days 57 56 55 n.a
Accounts Payable Turnover 17.88 12.17 12.17 n.a
Payment Days 27 23 25 n.a
Total Asset Turnover 3.25 2.90 2.62 n.a
Debt Ratios
Debt to Net Worth 0.04 0.05 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $7,049 $11,543 $19,082 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.31 0.35 0.38 n.a
Current Debt/Total Assets 4% 4% 4% n.a
Acid Test 14.21 13.68 16.44 n.a
Sales/Net Worth 3.38 3.03 2.73 n.a
Dividend Payout 0.00 0.00 0.00 n.a