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Table of Contents

1.0 Executive Summary....................................................................................................................................1


Chart: Highlights.......................................................................................................................................2
1.1 Mission....................................................................................................................................................2
1.2 Keys to Success.......................................................................................................................................3
2.0 Company Summary.....................................................................................................................................3
2.1 Company Ownership..............................................................................................................................3
3.0 Start-up Summary.......................................................................................................................................3
Table: Start-up...........................................................................................................................................3
Chart: Start-up...........................................................................................................................................4
Table: Start-up Funding............................................................................................................................5
4.0 Service Description.....................................................................................................................................5
5.0 Market Analysis Summary.........................................................................................................................6
Chart: Market Analysis (Pie)....................................................................................................................6
Table: Market Analysis.............................................................................................................................6
.......................................................................................................................................................................6
5.2 Target Market Segment Strategy............................................................................................................7
5.3 Market Needs..........................................................................................................................................7
5.4 Service Business Analysis......................................................................................................................7
5.5 Competition and Buying Patterns...........................................................................................................8
6.0 Strategy and Implementation Summary.....................................................................................................8
6.1 Sales Strategy..........................................................................................................................................9
Chart: Sales by Year.................................................................................................................................9
Table: Sales Forecast..............................................................................................................................10
Chart: Sales Monthly..............................................................................................................................11
6.2 Competitive Edge..................................................................................................................................11
7.0 Management Team....................................................................................................................................11
7.1 Personnel Plan.......................................................................................................................................11
Table: Personnel......................................................................................................................................11
.........................................................................................................................................................................11
8.0 Financial Plan............................................................................................................................................12
8.1 Break-even Analysis.............................................................................................................................12
Chart: Break-even Analysis....................................................................................................................12
Table: Break-even Analysis....................................................................................................................12
.....................................................................................................................................................................12
8.2 Projected Profit and Loss......................................................................................................................13
Chart: Gross Margin Yearly...................................................................................................................13
Chart: Profit Monthly..............................................................................................................................14
Chart: Profit Yearly.................................................................................................................................14
Table: Profit and Loss.............................................................................................................................15
Chart: Gross Margin Monthly................................................................................................................15
8.3 Projected Cash Flow.............................................................................................................................16
Chart: Cash..............................................................................................................................................16
Table: Cash Flow....................................................................................................................................17
Page 1

Table of Contents

.....................................................................................................................................................................17
8.4 Projected Balance Sheet........................................................................................................................18
Table: Balance Sheet...............................................................................................................................18
.....................................................................................................................................................................18
8.5 Business Ratios.....................................................................................................................................19
Table: Ratios...........................................................................................................................................19
Table: Sales Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table: General Assumptions.............................................................................................................................2
...........................................................................................................................................................................2
Table: Profit and Loss.......................................................................................................................................3
...........................................................................................................................................................................3
Table: Cash Flow..............................................................................................................................................4
...........................................................................................................................................................................5
Table: Personnel................................................................................................................................................6
...........................................................................................................................................................................6
Table: Balance Sheet.........................................................................................................................................7

Page 2

Business Solutions Consulting

1.0 Executive Summary


Introduction
Business Solutions Consulting (BSC) is a start-up consulting firm focused on serving the
comprehensive needs of businesses in the full range of the business cycle. With a core staff of
experienced professionals and a team approach to most consulting projects, BSC will be able to
offer a more balanced quality service than many of its competitors.
The Company
Business Solutions Consulting is a team of six business consultants. Each consultant specializes
in a particular discipline, including finance, sales and marketing, technology, management,
operations, and human resources.
BSC offers a list of services for business owners to choose from, depending on their particular
business needs. This includes; business and marketing plan preparation, financial search and
procurement, IT consulting services, management development, human resources advising,
and etc.
BSC will have a focus on start-up businesses, preferably in the earlier stages of operation.
Small and mid-sized businesses make up a sizable majority of U.S. and international markets.
BSC prefers to establish a relationship with a younger operation and continue to nurture that
relationship over the long term.
BSC will be established as an Oregon based LLC with two principal partners, each of whom
owns a 50% share in the company. Mr. Andrew B. Christiansen has extensive experience in
business planning and finance, including CFO positions with ABC Conglomerate and DEF
International. Mr. David E. Fields brings in experience in the area of marketing, advertising, and
communications.
The Market
The business consulting industry is very fragmented. Several large multinational companies
dominate the industry while many smaller (and often more specialized) firms occupy their
market niches. Major management consulting companies, such as McKinsey, Bain, and Boston
Consulting Group, have established their dominant position by providing services to the leading
companies in various industries. Consulting practices of the major accounting firms (a.k.a. the
Big Five) have established worldwide presence and sell their packaged services to companies of
different sizes and industries. At the same time, numerous firms and individual business
consultants prosper in the market niches that bigger players consider unprofitable to enter.
Start-up companies are the target market of this firm. BSC intends to stay on the pulse of new
business activity within the local area. Additionally, business contacts, referrals from among the
group, and Internet marketing efforts will be made in pursuit of new clients. Start-up
companies are attractive because owners often lack the broad range of knowledge and
expertise required to launch a new business. There is a serious need in the marketplace, and
certainly a significant demand for, these types of start-up consulting services.
Competitors in the forefront of the marketplace typically offer many of the services that BSC
has. These services include information-based consulting, integration and management
services. Services are designed to increase clients' operations effectiveness through reduced
cost, improved customer service, enhanced quality of current product lines and services, and a
more rapid introduction of new products and services. Competitors also offer industry-specific

Page 1

Business Solutions Consulting

expertise to objectively evaluate, select, develop, implement, and manage information systems,
networks, and applications.
Consulting firms BSC is competing with include regional and specialty consulting firms, as well
as the consulting groups of international accounting forms such as KPMG LLP, Ernst & Young
LLP, Deloitte & Touche LLP, PricewaterhouseCoopers LLP, and Andersen Consulting. In its
management and IT consulting services, BSC competes with information system vendors such
as HBO & Company, Inc., Integrated Systems Solution Corporation, Electronic Data Systems
Corporation, Perot Systems Corporation, SAIC, CAP Gemini America, Inc., and Computer
Sciences Corporation. In e-commerce-related services, BSC competes with the traditional
competitors, as well as newer, Internet product and service companies such as Razorfish,
Scient, TriZetto, and Viant.
Financial
BSC's co-owners, Andrew B. Christiansen and David E. Fields, will each provide $50,000 that
will cover the bulk of the start-up expenses. The rest of the required financing will come from
the Small Business Administration (SBA) 10-year loan in the amount of $100,000. Combined,
these funds will be sufficient to cover the company's expenses throughout the first year of
operations, which is the most critical from the cash flow standpoint.
BSC's Break-even Analysis is based on the average of the first-year figures for total sales by
salaries, bonuses costs, and all other operating expenses. Such analysis shows that BSC will
break-even by the tenth month of operations.

Chart: Highlights

Highlights
$4,500,000
$4,000,000
$3,500,000
$3,000,000

Sales

$2,500,000

Gross Margin

$2,000,000

Net Profit

$1,500,000
$1,000,000
$500,000
$0
Year 1

Year 2

Year 3

1.1 Mission
Business Solutions Consulting aims to offer comprehensive consulting services. BSC will focus
on providing personal and specialized services to meet each client's specific needs.

Page 2

Business Solutions Consulting

1.2 Keys to Success


BSC's keys to success include:
1.
2.
3.
4.

A group of professionals with a broad range of specialty areas that complement each other.
A high level of experience in these specialty areas.
A team approach on most consulting projects.
Many business contacts among the consultant group.

2.0 Company Summary


Business Solutions Consulting is a startup firm, which will focus on providing a wide range of
business consulting services to other startups and companies in early stages of their
operations. Business Solutions Consulting is a team of six Business Consultants. Each
consultant specializes in a particular discipline, including finance, sales and marketing,
technology, management, operations, and human resources.
2.1 Company Ownership
Business Solutions Consulting was registered as an Oregon LLC, equally owned by Andrew B.
Christiansen and David E. Fields.
3.0 Start-up Summary
BSC's co-owners, Andrew B. Christiansen and David E. Fields, will each provide $49,750 in
investment that will cover the bulk of the start-up expenses. The rest of the required financing
will come from the Small Business Administration (SBA) 10-year loan in the amount of
$100,000. Combined, these funds will be sufficient to cover the company's expenses
throughout the first year of operations, which is the most critical from the cash flow standpoint.
The following chart and table contain projected initial start-up cost data.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Office Supplies
Other
Total Start-up Expenses

$2,500
$2,000
$1,000
$5,500

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$150,000
$20,000
$25,000
$195,000

Total Requirements

$200,500

Page 3

Business Solutions Consulting

Chart: Start-up

Start-up
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Expenses

Assets

Investment

Loans

Page 4

Business Solutions Consulting

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$5,500
$195,000
$200,500

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$45,000
$150,000
$0
$150,000
$195,000

Liabilities and Capital


Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$100,000
$1,000
$0
$101,000

Capital
Planned Investment
Investor 1
Investor 2
Additional Investment Requirement
Total Planned Investment

$49,750
$49,750
$0
$99,500

Loss at Start-up (Start-up Expenses)


Total Capital

($5,500)
$94,000

Total Capital and Liabilities

$195,000

Total Funding

$200,500

4.0 Service Description


BSC offers a list of services for business owners to choose from, depending on their particular
business needs.
Start-up services include business plan preparation, marketing plan preparation, and financing
search and procurement. Ongoing services include business plan updates, marketing plan
updates, search and procurement of additional rounds of financing, management development,
IT consulting services, e-commerce consulting services, operational advising, and human
resources advising.
BSC is flexible, working with its clients in the fashion preferred by the client, be it on-site,
remotely, or a combination of both. BSC typically works on a project in a team fashion to assist
the client in all areas of the business simultaneously. This allows for all parties involved to be in
sync in terms of understanding the interconnections of all functional areas of the business.

Page 5

Business Solutions Consulting

5.0 Market Analysis Summary


BSC will have a focus on start-up businesses, preferably in the earlier stages of operation.
Small and mid-sized businesses make up a sizable majority of U.S. and international markets.
BSC prefers to establish a relationship with a younger operation and continue to nurture that
relationship for the long term. The following chart and table show BSC's projected target
markets and their growth for the first three years of this plan.

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Start-Up Companies
1-3 Year Old Companies
3 + Year Old Companies
Other

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Start-Up Companies
1-3 Year Old Companies
3 + Year Old Companies
Other
Total

10%
8%
6%
0%
8.96%

Year 1

Year 2

Year 3

Year 4

Year 5

1,900,000
900,000
400,000
0
3,200,000

2,090,000
972,000
424,000
0
3,486,000

2,299,000
1,049,760
449,440
0
3,798,200

2,528,900
1,133,741
476,406
0
4,139,047

2,781,790
1,224,440
504,990
0
4,511,220

CAGR
10.00%
8.00%
6.00%
0.00%
8.96%

Page 6

Business Solutions Consulting

5.1 Market Segmentation


Start-Ups
Start-up companies often are in need of expert advice and planning in initiating a successful
start-up. It is believed that a majority of start-ups actually seek out consulting
assistance. Those that do typically are searching for a comprehensive area of services.
1-3 Year Old Companies
Young companies, between 1 and 3 years old are less likely to be searching for expert business
consulting services. Typically, they have already secured financing and have developed a
satisfactory level of security. However, these businesses are still in the beginnings of their
overall cycle and in most cases need the broad expertise of a team of expert consultants.
3 + Year-Old Companies
Established companies make up the final segment, and is significantly smaller than the start-up
segment. The established company segment typically has a need for a less comprehensive
range of services. These entities are in need of specialized services in one or two disciplines,
e.g., operational planning or human resources.
5.2 Target Market Segment Strategy
Start-up companies are the target market of this firm. BSC intends to stay on the pulse of new
business activity within the local area. Additionally, business contacts, referrals from among the
group, and Internet marketing efforts will be made in pursuit of new clients.
5.3 Market Needs
Start-up company owners often lack the broad range of knowledge and expertise required to
launch a new business. There is a serious need in the marketplace, and certainly a significant
demand for, these types of start-up consulting services.
5.4 Service Business Analysis
The business consulting industry is very fragmented. Several large multi-national companies
dominate the industry while many smaller (and often more specialized) firms occupy their
market niches. Major management consulting companies, such as McKinsey, Bain, and Boston
Consulting Group, have established their dominant position by providing services to the leading
companies in various industries. Consulting practices of the major accounting firms (a.k.a. the
Big Five) have established worldwide presence and sell their packaged services to companies of
different sizes and industries. At the same time, numerous firms and individual business
consultants prosper in the market niches that bigger players consider unprofitable to enter.

Page 7

Business Solutions Consulting

5.5 Competition and Buying Patterns


Competitors in the forefront of the marketplace typically offer information-based consulting,
integration and management services. Services are designed to increase clients' operations
effectiveness through reduced cost, improved customer service, enhanced quality of current
product lines and services, and a more rapid introduction of new products and services.
Competitors also offer industry-specific expertise to objectively evaluate, select, develop,
implement, and manage information systems, networks, and applications.
Consulting services are becoming more focused on technology-based solutions to help clients
improve cost management, quality, service, and research and development to obtain
differentiation and competitive advantage. E-strategy services are being provided to business
and IT executives with education, insights, and strategies to utilize the power of the Internet to
improve their performance. E-strategy services include executive visioning, business strategy,
planning for e-business initiatives, user design, and intellectual capital formation. IT strategy
consulting services are focusing on the use of IT to support business goals, and to leverage the
power of the Internet to transform the way products and services are distributed and retailed.
Strategic planning consulting services typically consist of strategic alignment (which includes IT
strategic planning and governance, alignment of IT and process, and future focus and
regulatory requirements), IT department operational excellence (which includes fiscal
responsibility, infrastructure, IT department processes, data center operations, and IT human
resources management), and IT value realization (which consists of performance measurement,
business integration (people, process and technology), change management and application
investment). Performance improvement services consist of process redesigning to reducing
administrative costs, improving financial performance, engaging and retaining customers, and
improving accountability and reporting.
Other commonly found services among competitors include long-term IT management
expertise, as well as a wide range of management services including assessment/due diligence,
program management, discrete outsourcing, and full IT outsourcing services.
Consulting firms BSC is competing with include regional and specialty consulting firms, as well
as the consulting groups of international accounting forms such as KPMG LLP, Ernst & Young
LLP, Deloitte & Touche LLP, PricewaterhouseCoopers LLP, and Andersen Consulting. In its
management and IT consulting services, BSC competes with information system vendors such
as HBO & Company, Inc., Integrated Systems Solution Corporation, Electronic Data Systems
Corporation, Perot Systems Corporation, SAIC, CAP Gemini America, Inc., and Computer
Sciences Corporation. In e-commerce-related services, BSC competes with the traditional
competitors, as well as newer, Internet product and service companies such as Razorfish,
Scient, TriZetto, and Viant.
6.0 Strategy and Implementation Summary
BSC intends to succeed by offering companies a comprehensive range of multi-cycle business
planning solutions.

Page 8

Business Solutions Consulting

6.1 Sales Strategy


BSC intends to succeed by offering companies a comprehensive range of multi-cycle business
planning solutions. The company will strive to optimize its billing hours. The following table
outlines the sales forecast for the next three years.

Chart: Sales by Year

Sales by Year
$4,500,000
$4,000,000
$3,500,000

Business Plans

$3,000,000

Start-Up Consulting

$2,500,000

Annual Reviews

$2,000,000

Other Ongoing Business Consulting

$1,500,000
$1,000,000
$500,000
$0
Year 1

Year 2

Year 3

Page 9

Business Solutions Consulting

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business Consulting
Total Unit Sales

191
175
223
223
812

397
364
464
464
1,688

763
699
890
890
3,242

Unit Prices
Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business Consulting

Year 1
$1,500.00
$1,500.00
$1,000.00
$1,500.00

Year 2
$1,500.00
$1,500.00
$1,000.00
$1,500.00

Year 3
$1,500.00
$1,500.00
$1,000.00
$1,500.00

Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business Consulting
Total Sales

$286,508
$262,633
$222,840
$334,260
$1,106,240

$595,937
$546,276
$463,507
$695,260
$2,300,980

$1,144,199
$1,048,850
$889,933
$1,334,899
$4,417,881

Direct Unit Costs


Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business Consulting

Year 1
$0.00
$0.00
$0.00
$0.00

Year 2
$0.00
$0.00
$0.00
$0.00

Year 3
$0.00
$0.00
$0.00
$0.00

$0
$0
$0
$0
$0

$0
$0
$0
$0
$0

$0
$0
$0
$0
$0

Unit Sales

Sales

Direct Cost of Sales


Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business Consulting
Subtotal Direct Cost of Sales

Page 10

Business Solutions Consulting

Chart: Sales Monthly

Sales Monthly
$120,000
$100,000

Business Plans

$80,000

Start-Up Consulting
$60,000

Annual Reviews
Other Ongoing Business Consulting

$40,000
$20,000
$0
Month 2

Month 6
Month 4

Month 8

Month 10
Month 12

6.2 Competitive Edge


Our competitive edge is the team approach of consultants who are each focused in one or two
business disciplines.
7.0 Management Team
Andrew B. Christiansen has extensive experience in business planning and finance, including
CFO positions with ABC Conglomerate and DEF International. David E. Fields brings in
experience in the area of marketing, advertising, and communications.
7.1 Personnel Plan
The following table illustrates the personnel plan for the next three years. No major changes in
headcount are planned.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Owner / Consultants
Other
Total People

$600,000
$0
6

$660,000
$0
7

$726,000
$0
8

Total Payroll

$600,000

$660,000

$726,000

Page 11

Business Solutions Consulting

8.0 Financial Plan


BSC expects to raise $100,000 as its own capital, and to borrow $100,000 guaranteed by the
SBA as a 10-year loan. This provides the bulk of the current financing required.
8.1 Break-even Analysis
BSC's Break-even Analysis is based on the average of the first-year figures for total sales by
salaries, bonuses costs, and all other operating expenses. These are presented as per-unit
revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more
accurate estimate of real risk. Such analysis shows that BSC will break-even by the tenth
month of operations.

Chart: Break-even Analysis

Break-even Analysis
$80,000
$60,000
$40,000
$20,000
$0
($20,000)
($40,000)
($60,000)

10

20

30

40

50

60

70

80

90

100

110

Table: Break-even Analysis

Break-even Analysis
Monthly Units Break-even
Monthly Revenue Break-even

56
$76,150

Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost

$1,362.36
$0.00
$76,150

Page 12

Business Solutions Consulting

8.2 Projected Profit and Loss


As the profit and loss table shows, BSC expects to continue its steady growth in profitability
over the next three years of operations.

Chart: Gross Margin Yearly

Gross Margin Yearly

$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
Year 1

Year 2

Year 3

Page 13

Business Solutions Consulting

Chart: Profit Monthly

Profit Monthly
$32,000
$28,000
$24,000
$20,000
$16,000
$12,000
$8,000
$4,000
$0
($4,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Chart: Profit Yearly

Profit Yearly

$2,400,000
$2,100,000
$1,800,000
$1,500,000
$1,200,000
$900,000
$600,000
$300,000
$0
Year 1

Year 2

Year 3

Page 14

Business Solutions Consulting

Table: Profit and Loss

Pro Forma Profit and Loss


Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other
Total Cost of Sales

$1,106,240
$0
$0
$0

$2,300,980
$0
$0
$0

$4,417,881
$0
$0
$0

Gross Margin
Gross Margin %

$1,106,240
100.00%

$2,300,980
100.00%

$4,417,881
100.00%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Utilities
Payroll Taxes
Other

$600,000
$216,600
$6,000
$1,200
$90,000
$0

$660,000
$227,430
$6,300
$1,266
$99,000
$0

$726,000
$238,802
$6,615
$1,336
$108,900
$0

Total Operating Expenses

$913,800

$993,996

$1,081,652

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$192,440
$198,440
$8,050
$45,725

$1,306,984
$1,313,284
$6,065
$325,230

$3,336,229
$3,342,844
$5,356
$846,597

Net Profit
Net Profit/Sales

$138,666
12.53%

$975,689
42.40%

$2,484,276
56.23%

Expenses

Chart: Gross Margin Monthly

Gross Margin Monthly


$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Page 15

Business Solutions Consulting

8.3 Projected Cash Flow


As the cash flow statement illustrates, BSC expects to maintain a steady rate of cash flow over
the next three years of operations.

Chart: Cash

Cash
$280,000
$240,000
$200,000

Net Cash Flow

$160,000

Cash Balance

$120,000
$80,000
$40,000

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

Page 16

Business Solutions Consulting

Table: Cash Flow

Pro Forma Cash Flow


Year 1

Year 2

Year 3

$1,106,240
$1,106,240

$2,300,980
$2,300,980

$4,417,881
$4,417,881

$0
$0
$0
$0
$0
$0
$0
$1,106,240

$0
$0
$0
$0
$0
$0
$0
$2,300,980

$0
$0
$0
$0
$0
$0
$0
$4,417,881

Year 1

Year 2

Year 3

$600,000
$327,069
$927,069

$660,000
$640,332
$1,300,332

$726,000
$1,156,442
$1,882,442

Sales Tax, VAT, HST/GST Paid Out


Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$0
$0
$0
$36,000
$0
$0
$0
$963,069

$0
$0
$0
$6,700
$0
$45,000
$0
$1,352,032

$0
$0
$0
$7,486
$0
$55,000
$0
$1,944,928

Net Cash Flow


Cash Balance

$143,171
$293,171

$948,947
$1,242,118

$2,472,953
$3,715,072

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Page 17

Business Solutions Consulting

8.4 Projected Balance Sheet


Following is a copy of the company's projected balance sheet.
Table: Balance Sheet

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

$293,171
$20,000
$313,171

$1,242,118
$20,000
$1,262,118

$3,715,072
$20,000
$3,735,072

$25,000
$6,000
$19,000
$332,171

$70,000
$12,300
$57,700
$1,319,818

$125,000
$18,915
$106,085
$3,841,157

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$35,505
$0
$0
$35,505

$54,164
$0
$0
$54,164

$98,711
$0
$0
$98,711

Long-term Liabilities
Total Liabilities

$64,000
$99,505

$57,300
$111,464

$49,814
$148,525

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$99,500
($5,500)
$138,666
$232,666
$332,171

$99,500
$133,166
$975,689
$1,208,355
$1,319,818

$99,500
$1,108,855
$2,484,276
$3,692,631
$3,841,157

Net Worth

$232,666

$1,208,355

$3,692,631

Assets
Current Assets
Cash
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Page 18

Business Solutions Consulting

8.5 Business Ratios


The following table outlines the important business ratios for Business Solutions Consulting, as
determined by the Standard Industry Classification (SIC) Index. Ratios for the Business
Consulting services industry (SIC 8748) are used as a benchmark in this table.
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

108.00%

92.00%

12.40%

Other Current Assets


Total Current Assets
Long-term Assets
Total Assets

6.02%
94.28%
5.72%
100.00%

1.52%
95.63%
4.37%
100.00%

0.52%
97.24%
2.76%
100.00%

44.70%
74.50%
25.50%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

10.69%
19.27%
29.96%
70.04%

4.10%
4.34%
8.45%
91.55%

2.57%
1.30%
3.87%
96.13%

44.30%
16.00%
60.30%
39.70%

100.00%
100.00%
87.63%
10.85%
17.40%

100.00%
100.00%
57.71%
5.48%
56.80%

100.00%
100.00%
43.51%
2.99%
75.52%

100.00%
0.00%
80.80%
1.30%
2.20%

8.82
8.82
29.96%
79.25%
55.51%

23.30
23.30
8.45%
107.66%
98.57%

37.84
37.84
3.87%
90.20%
86.72%

1.75
1.38
60.30%
3.80%
9.70%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin


Return on Equity

12.53%
59.60%

42.40%
80.75%

56.23%
67.28%

n.a
n.a

10.18
27
3.33

12.17
25
1.74

12.17
23
1.15

n.a
n.a
n.a

0.43
0.36

0.09
0.49

0.04
0.66

n.a
n.a

$277,666
23.91

$1,207,955
215.50

$3,636,360
622.93

n.a
n.a

0.30
11%
8.82
4.75
0.00

0.57
4%
23.30
1.90
0.00

0.87
3%
37.84
1.20
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 19

Business Solutions Consulting

Page 20

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

12
11
14
14

13
12
15
15

13
12
15
15

14
13
16
16

15
13
17
17

15
14
18
18

16
15
19
19

17
15
20
20

18
16
21
21

19
17
22
22

20
18
23
23

21
19
24
24

51

54

56

59

62

65

68

72

75

79

83

87

Unit Sales
Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business
Consulting
Total Unit Sales

0%
0%
0%
0%

Unit Prices

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Business Plans

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

Start-Up Consulting

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

Annual Reviews

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

$1,000.00

Other Ongoing Business


Consulting

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

$1,500.00

Business Plans

$18,000

$18,900

$19,845

$20,837

$21,879

$22,973

$24,122

$25,328

$26,594

$27,924

$29,320

$30,786

Start-Up Consulting

$16,500

$17,325

$18,191

$19,101

$20,056

$21,059

$22,112

$23,217

$24,378

$25,597

$26,877

$28,221

Annual Reviews

$14,000

$14,700

$15,435

$16,207

$17,017

$17,868

$18,761

$19,699

$20,684

$21,719

$22,805

$23,945

Other Ongoing Business


Consulting
Total Sales

$21,000

$22,050

$23,153

$24,310

$25,526

$26,802

$28,142

$29,549

$31,027

$32,578

$34,207

$35,917

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

Sales

Direct Unit Costs

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00

Business Plans

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Start-Up Consulting

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Annual Reviews

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Ongoing Business


Consulting
Subtotal Direct Cost of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Business Plans
Start-Up Consulting
Annual Reviews
Other Ongoing Business
Consulting

0.00%
0.00%
0.00%
0.00%

Month 10

Month 11

Month 12

Direct Cost of Sales

Page 1

Appendix
Table: General Assumptions

General Assumptions
Plan Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest
Rate
Tax Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other

Page 2

Appendix
Table: Profit and Loss

Pro Forma Profit and


Loss
Month 1
Sales

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

Direct Cost of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Gross Margin

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

Gross Margin %

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Payroll

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

Sales and Marketing and


Other Expenses
Depreciation
Utilities
Payroll Taxes
Other

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$18,050

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

$500
$100
$7,500
$0

Total Operating
Expenses

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

$76,150

Profit Before Interest and


Taxes
EBITDA

($6,650)

($3,175)

$474

$4,305

$8,328

$12,552

$16,987

$21,643

$26,533

$31,667

$37,058

$42,719

($6,150)

($2,675)

$974

$4,805

$8,828

$13,052

$17,487

$22,143

$27,033

$32,167

$37,558

$43,219

$808

$783

$758

$733

$708

$683

$658

$633

$608

$583

$558

$533

($2,238)

($990)

($71)

$893

$1,905

$2,967

$4,082

$5,253

$6,481

$7,771

$9,125

$10,546

($5,221)

($2,969)

($213)

$2,679

$5,715

$8,901

$12,246

$15,758

$19,444

$23,313

$27,375

$31,639

-7.51%

-4.07%

-0.28%

3.33%

6.76%

10.03%

13.15%

16.11%

18.94%

21.62%

24.18%

26.62%

Expenses

Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

5%
6%
15%

Page 3

Appendix
Table: Cash Flow

Pro Forma Cash Flow


Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

Subtotal Cash from Operations

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interestfree)


New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$69,500

$72,975

$76,624

$80,455

$84,478

$88,702

$93,137

$97,793

$102,683

$107,817

$113,208

$118,869

Additional Cash Received


Sales Tax, VAT, HST/GST Received
New Current Borrowing

Subtotal Cash Received


Expenditures

0.00%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations


Cash Spending

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$1,807

$24,262

$25,474

$26,368

$27,309

$28,298

$29,337

$30,429

$31,576

$32,782

$34,049

$35,380

$51,807

$74,262

$75,474

$76,368

$77,309

$78,298

$79,337

$80,429

$81,576

$82,782

$84,049

$85,380

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current


Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$54,807

$77,262

$78,474

$79,368

$80,309

$81,298

$82,337

$83,429

$84,576

$85,782

$87,049

$88,380

Subtotal Cash Spent

Page 4

Appendix
Net Cash Flow
Cash Balance

$14,693
$164,693

($4,287)
$160,406

($1,850)
$158,556

$1,086

$4,169

$7,404

$10,800

$14,365

$18,107

$22,036

$26,160

$30,489

$159,643

$163,811

$171,215

$182,015

$196,380

$214,487

$236,523

$262,682

$293,171

Page 5

Appendix
Table: Personnel

Personnel Plan
Month 1
Owner / Consultants
Other
Total People
Total Payroll

0%
0%

Month 10

Month 11

Month 12

$50,000
$0
6

$50,000
$0
6

Month 2

$50,000
$0
6

Month 3

$50,000
$0
6

Month 4

$50,000
$0
6

Month 5

$50,000
$0
6

Month 6

$50,000
$0
6

Month 7

$50,000
$0
6

Month 8

$50,000
$0
6

Month 9

$50,000
$0
6

$50,000
$0
6

$50,000
$0
6

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

Page 6

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet


Month 1
Assets

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting
Balances

Current Assets
Cash
Other Current Assets
Total Current Assets

$150,000
$20,000
$170,000

$164,693
$20,000
$184,693

$160,406
$20,000
$180,406

$158,556
$20,000
$178,556

$159,643
$20,000
$179,643

$163,811
$20,000
$183,811

$171,215
$20,000
$191,215

$182,015
$20,000
$202,015

$196,380
$20,000
$216,380

$214,487
$20,000
$234,487

$236,523
$20,000
$256,523

$262,682
$20,000
$282,682

$293,171
$20,000
$313,171

$25,000
$0
$25,000
$195,000

$25,000
$500
$24,500
$209,193

$25,000
$1,000
$24,000
$204,406

$25,000
$1,500
$23,500
$202,056

$25,000
$2,000
$23,000
$202,643

$25,000
$2,500
$22,500
$206,311

$25,000
$3,000
$22,000
$213,215

$25,000
$3,500
$21,500
$223,515

$25,000
$4,000
$21,000
$237,380

$25,000
$4,500
$20,500
$254,987

$25,000
$5,000
$20,000
$276,523

$25,000
$5,500
$19,500
$302,182

$25,000
$6,000
$19,000
$332,171

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$1,000
$0
$0
$1,000

$23,413
$0
$0
$23,413

$24,596
$0
$0
$24,596

$25,459
$0
$0
$25,459

$26,367
$0
$0
$26,367

$27,321
$0
$0
$27,321

$28,324
$0
$0
$28,324

$29,377
$0
$0
$29,377

$30,485
$0
$0
$30,485

$31,648
$0
$0
$31,648

$32,871
$0
$0
$32,871

$34,156
$0
$0
$34,156

$35,505
$0
$0
$35,505

Long-term Liabilities
Total Liabilities

$100,000
$101,000

$97,000
$120,413

$94,000
$118,596

$91,000
$116,459

$88,000
$114,367

$85,000
$112,321

$82,000
$110,324

$79,000
$108,377

$76,000
$106,485

$73,000
$104,648

$70,000
$102,871

$67,000
$101,156

$64,000
$99,505

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$99,500
($5,500)
$0
$94,000
$195,000

$99,500
($5,500)
($5,221)
$88,779
$209,193

$99,500
($5,500)
($8,190)
$85,810
$204,406

$99,500
($5,500)
($8,403)
$85,597
$202,056

$99,500
($5,500)
($5,724)
$88,276
$202,643

$99,500
($5,500)
($10)
$93,990
$206,311

$99,500
($5,500)
$8,891
$102,891
$213,215

$99,500
($5,500)
$21,138
$115,138
$223,515

$99,500
($5,500)
$36,895
$130,895
$237,380

$99,500
($5,500)
$56,339
$150,339
$254,987

$99,500
($5,500)
$79,652
$173,652
$276,523

$99,500
($5,500)
$107,027
$201,027
$302,182

$99,500
($5,500)
$138,666
$232,666
$332,171

$94,000

$88,779

$85,810

$85,597

$88,276

$93,990

$102,891

$115,138

$130,895

$150,339

$173,652

$201,027

$232,666

Net Worth

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