Graphic Design Business Plan

Financial Plan

The following sections will outline important financial information.

The following table details important financial assumptions.

The Break-even Analysis indicates that approximately $7,000 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis


Monthly Revenue Break-even	$7,053

Assumptions:
Average Percent Variable Cost	3%
Estimated Monthly Fixed Cost	$6,841

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$69,397	$125,251	$145,392
Direct Cost of Sales	$2,082	$3,758	$4,362
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$2,082	$3,758	$4,362

Gross Margin	$67,316	$121,493	$141,030
Gross Margin %	97.00%	97.00%	97.00%


Expenses
Payroll	$59,280	$76,560	$76,560
Sales and Marketing and Other Expenses	$2,820	$2,820	$2,820
Depreciation	$2,400	$2,400	$2,400
Website maintenance	$600	$600	$600
Insurance	$900	$900	$900
Rent	$7,200	$7,200	$7,200
Payroll Taxes	$8,892	$11,484	$11,484
Other	$0	$0	$0

Total Operating Expenses	$82,092	$101,964	$101,964

Profit Before Interest and Taxes	($14,776)	$19,529	$39,066
EBITDA	($12,376)	$21,929	$41,466
Interest Expense	$0	$0	$0
Taxes Incurred	$0	$5,859	$11,720

Net Profit	($14,776)	$13,670	$27,347
Net Profit/Sales	-21.29%	10.91%	18.81%

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$69,397	$125,251	$145,392
Subtotal Cash from Operations	$69,397	$125,251	$145,392

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	$69,397	$125,251	$145,392

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$59,280	$76,560	$76,560
Bill Payments	$20,322	$32,111	$38,554
Subtotal Spent on Operations	$79,602	$108,671	$115,114

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	$79,602	$108,671	$115,114

Net Cash Flow	($10,205)	$16,580	$30,278
Cash Balance	$11,995	$28,575	$58,853

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$11,995	$28,575	$58,853
Other Current Assets	$0	$0	$0
Total Current Assets	$11,995	$28,575	$58,853

Long-term Assets
Long-term Assets	$19,800	$19,800	$19,800
Accumulated Depreciation	$2,400	$4,800	$7,200
Total Long-term Assets	$17,400	$15,000	$12,600
Total Assets	$29,395	$43,575	$71,453

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$2,172	$2,681	$3,213
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$2,172	$2,681	$3,213

Long-term Liabilities	$0	$0	$0
Total Liabilities	$2,172	$2,681	$3,213

Paid-in Capital	$43,000	$43,000	$43,000
Retained Earnings	($1,000)	($15,776)	($2,106)
Earnings	($14,776)	$13,670	$27,347
Total Capital	$27,224	$40,894	$68,240
Total Liabilities and Capital	$29,395	$43,575	$71,453

Net Worth	$27,224	$40,894	$68,240

The following table compares standard business ratios with the Standard Industry Code #7336, Graphic Design Services.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	80.48%	16.08%	9.02%

Percent of Total Assets
Other Current Assets	0.00%	0.00%	0.00%	52.57%
Total Current Assets	40.81%	65.58%	82.37%	76.45%
Long-term Assets	59.19%	34.42%	17.63%	23.55%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	7.39%	6.15%	4.50%	34.45%
Long-term Liabilities	0.00%	0.00%	0.00%	23.62%
Total Liabilities	7.39%	6.15%	4.50%	58.07%
Net Worth	92.61%	93.85%	95.50%	41.93%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	97.00%	97.00%	97.00%	100.00%
Selling, General & Administrative Expenses	118.29%	86.09%	78.19%	77.05%
Advertising Expenses	1.47%	0.81%	0.70%	1.42%
Profit Before Interest and Taxes	-21.29%	15.59%	26.87%	0.83%

Main Ratios
Current	5.52	10.66	18.32	1.51
Quick	5.52	10.66	18.32	1.13
Total Debt to Total Assets	7.39%	6.15%	4.50%	66.33%
Pre-tax Return on Net Worth	-54.28%	47.76%	57.25%	2.06%
Pre-tax Return on Assets	-50.27%	44.82%	54.67%	6.12%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-21.29%	10.91%	18.81%	n.a
Return on Equity	-54.28%	33.43%	40.07%	n.a

Activity Ratios
Accounts Payable Turnover	10.36	12.17	12.17	n.a
Payment Days	27	27	28	n.a
Total Asset Turnover	2.36	2.87	2.03	n.a

Debt Ratios
Debt to Net Worth	0.08	0.07	0.05	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$9,824	$25,894	$55,640	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.42	0.35	0.49	n.a
Current Debt/Total Assets	7%	6%	4%	n.a
Acid Test	5.52	10.66	18.32	n.a
Sales/Net Worth	2.55	3.06	2.13	n.a
Dividend Payout	0.00	0.00	0.00	n.a