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Sample Business Plan
Following is a business plan written by The Business Plan Store.
It is posted here with the express permission of the client
(Executive names are fictitious)
Financial Plan
The following financial projections are based on conservative sales forecasts by month for the next twelve months,
and by year for the four years thereafter. We will continue to sell the DOS-based MDS 2.0 product until January
2002 at which time we expect to have programming completed in the Windows environment for the Enterprise
Software Solution. License fees for the DOS-based product will continue to average $500 with monthly
maintenance averaging $125. Beginning in January 2002 we will sell the Enterprise Software Solution for an
average $1,000 license fee and average $500 monthly maintenance fee. We will convert our DOS-based
customers to the Enterprise Software Solution at the average rate of 25 customers per month. The conversion fee
will be $500 and monthly maintenance thereafter will be $500. We expect to have all of our customers converted
by June 2002. Details of projected sales and conversions are included under the heading Revenue Assumptions.
The cost to upgrade the OBRA e-z DOS-based program to windows is estimated at $120,000 that will be spread
over the first twelve months. Maintenance will require approximately $24,000 per year thereafter. The cost to
upgrade and integrate the MasterLink software is estimated at $204,000 (spread over the first twelve months) with
annual maintenance of about $12,000 thereafter. Details of estimated costs are included under the heading
Expense Assumptions.
OBRA e-z will generate negative income from July 2001 until April 2002 while absorbing the expense to upgrade
software and jump start its sales and marketing activities. We expect to be generating profits beginning May 2002
and every month thereafter.
We will require an initial investment of $750,000, all of which will have been recovered by the end of year two in
cash (approximately $700,000) and accounts receivable (approximately $200,000). By the end of year five, we
expect to have cash and accounts receivable aggregating more than $7,000,000.
Break-even Analysis
The break-even analysis assumes running costs of approximately $91,700 per month that includes full payroll
(compensation and benefits), rent, utilities, supplies, sales and marketing, training, and other miscellaneous costs.
Variable costs include only those directly attributable to packaging and delivering the software product and are
estimated to average only about 10% of the license revenue.
The chart shows the break-even revenue is about $94,500 per month. Conservatively, we estimate that by May
2002 we will be servicing a minimum of 165 customers of $73,125 and license fees of $22,500. We will have
crossed the break-even point in May and project profitability thereafter.
Pro forma financial statements follow.
Pro Forma Income Statements – Year 1 by Month
Licenses
Jul
Aug
Sep
Oct
Nov
$5,000
$5,000
$5,000
$5,000
$5,000
$5
Maintenance
Sales
Cost of Goods Sold
Gross Profit
Software Development - OBRA e-z
Software Development - MasterLink
Salaries
Selling Expense
Office Expense
Other
Total SG & A Expense
Operating Profit
Interest Income
Earnings Before Taxes
Income Taxes
Extraord. Item: Tax Refund
Net Income
8,125
13,125
500
12,625
9,375
14,375
500
13,875
10,625
15,625
500
15,125
11,875
16,875
500
16,375
13,125
18,125
500
17,625
14
19
10,000
17,000
48,500
10,000
5,200
1,000
91,700
(79,075)
10,000
17,000
48,500
10,000
5,200
1,000
91,700
(77,825)
10,000
17,000
48,500
10,000
5,200
1,000
91,700
(76,575)
10,000
17,000
48,500
10,000
5,200
1,000
91,700
(75,325)
10,000
17,000
48,500
10,000
5,200
1,000
91,700
(74,075)
10
17
48
10
5
1
91
(72
0
(79,075)
0
0
($79,075)
2,361
(75,464)
0
0
($75,464)
2,077
(74,498)
0
0
($74,498)
1,796
(73,529)
0
0
($73,529)
1,515
(72,560)
0
0
($72,560)
1
(71
Pro Forma Income Statements – Years 1 through 5
Licenses
Total Y1
Y2
Y3
Y4
Y5
$152,500
$150,000
$200,000
$250,000
$250,000
Maintenance
376,875 1,500,000 2,550,000 3,900,000 5,400,000
Sales
529,375 1,650,000 2,750,000 4,150,000 5,650,000
Cost of Goods Sold
15,250
15,000
20,000
25,000
25,000
Gross Profit
514,125 1,635,000 2,730,000 4,125,000 5,625,000
Software Development - OBRA
e-z
120,000
24,000
24,000
24,000
24,000
Software Development MasterLink
204,000
12,000
12,000
12,000
12,000
Salaries
Selling Expense
582,000
120,000
611,100
120,000
641,655
126,000
673,738
132,300
707,425
138,915
18
($71
Office Expense
62,400
62,400
65,520
68,796
72,236
Other
12,000
12,000
12,600
13,230
13,892
Total SG & A Expense
1,100,400
841,500
881,775
924,064
968,468
Operating Profit
(586,275)
793,500 1,848,225 3,200,936 4,656,532
Interest Income
11,787
Earnings Before Taxes
(574,488)
1,981
2,393
278,418
Extraord. Item: Tax Refund
2,393
201,071
($574,488)
79,228
167,624
795,481 1,878,438 3,280,164 4,824,157
Income Taxes
Net Income
30,213
657,453 1,148,058 1,688,455
0
0
0
$718,133 $1,220,985 $2,132,107 $3,135,702
Pro Forma Balance Sheets – Year 1 by Month
Jul
Aug
Sep
Oct
Nov
Dec
$25,000
629,695
16,480
671,175
$25,000
553,911
16,800
595,711
$25,000
479,026
17,188
521,214
$25,000
404,122
18,563
447,685
$25,000
330,188
19,938
375,125
$25,000
257,226
21,313
303,539
$671,175
$595,711
$521,214
$447,685
$375,125
$303,539
Accounts Payable
Total Current Liabilities
250
250
250
250
250
250
250
250
250
250
250
250
Total Liabilities
250
250
250
250
250
250
(79,075)
750,000
$671,175
(154,539)
750,000
$595,711
(229,036)
750,000
$521,214
(302,565)
750,000
$447,685
(375,125)
750,000
$375,125
(446,711)
750,000
$303,539
Cash
Marketable Securities
Accounts Receivable
Total Current Assets
Total Assets
Retained Earnings
Other Equity
Total Liabilities and Equity
$
(5
$
Pro Forma Balance Sheets – Years 0 Through 5
Y0
Cash
Marketable Securities
Accounts Receivable
Total Current Assets
Y1
Y2
Y3
$25,000
44,012
107,250
176,262
$671,175
$176,262
Accounts Payable
Total Current Liabilities
250
250
750
750
750
750
1,000
1,000
1,250
1,250
1,250
1,250
Total Liabilities
250
750
750
1,000
1,250
1,250
(79,075) (574,488)
750,000
750,000
143,645
750,000
1,364,630
750,000
3,496,736
750,000
6,632,438
750,000
Retained Earnings
Other Equity
Total Liabilities and Equity $671,175
$176,262
$25,000
1,760,630
330,000
2,115,630
Y5
$25,000
629,695
16,480
671,175
Total Assets
$25,000
671,395
198,000
894,395
Y4
$25,000
3,724,986
498,000
4,247,986
$25,000
6,680,688
678,000
7,383,688
$894,395 $2,115,630 $4,247,986 $7,383,688
$894,395 $2,115,630 $4,247,986 $7,383,688
Pro Forma Cash Flow Statements – Year 1 by Month
Jul
Aug
Sep
Oct
Nov
De
Operating Profit
($79,075)
Cash Income Taxes
0
Funds From Opers. After Tax
(79,075)
Increm. Working Capital Invest.
41,230
Cash Flow From Operations
($120,305)
($77,825)
0
(77,825)
320
($78,145)
($76,575)
0
(76,575)
388
($76,963)
($75,325)
0
(75,325)
1,375
($76,700)
($74,075)
0
(74,075)
1,375
($75,450)
($72,825
2,361
0
($75,784)
2,077
0
($74,885)
1,796
0
($74,904)
1,515
0
($73,935)
1,23
Non Op Inc. (after tax)
Investor(s)
Net Cash Flow
-1)
0
750,000
$629,695
(1- After-tax interest income
Pro Forma Cash Flow Statements – Years 1 through 5
Total Y1
Operating Profit
($586,275)
Y2
Y3
Y4
Y5
$793,500 $1,848,225 $3,200,936 $4,656,532
(72,825
1,37
($74,200
($72,962
Cash Income Taxes
Funds From Opers. After Tax
Increm. Working Capital
Invest.
Cash Flow From Operations
Non Op Inc. (after tax)
Investor(s)
Net Cash Flow
-1)
0
(586,275)
77,155
716,345
646,879
1,201,346
1,629,786
3,026,746
131,500
($717,775)
90,750
131,750
167,750
180,000
$625,595 $1,069,596 $1,912,858 $2,846,744
11,787
750,000
$44,012
1,788
19,638
51,498
108,956
0
0
0
0
$627,383 $1,089,235 $1,964,357 $2,955,702
(1- After-tax interest income
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Harleysville, PA 19438
Call Us: 215-256-0663
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