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Carpet and Upholstery Cleaning Services
Like New Carpet Cleaners is a local carpet-cleaning service in Fairfield County, Connecticut. Established in June 2009, Like New Carpet Cleaners was founded by Fred and Rebecca Smith and operates out of their home office in Danbury, CT.
Company Ownership
Fred and Rebecca Smith founded Like New Carpet Cleaners in June 2009 as an LLC. Each owns 50% of the company.
Start-up Summary
The startup expenses for the business primarily include:
- Website: Development and testing of a website with functionality for online ordering, scheduling, rescheduling, and customer support. ($30,000 estimate)
- Delivery Van: Purchase of a delivery van for transporting cleaning staff and equipment to customer homes. One van will be used to transport multiple cleaning crews during initial operations. ($15,000 estimate)
- Cleaning Equipment: 3 portable extractors and additional specialized equipment for cleanings. ($15,000 estimate)
The business will operate out of a home office, minimizing initial rent and overhead costs.
Start-up Requirements
——————
Legal: $1,500
Stationery etc.: $1,000
Insurance: $2,000
Rent: $1,000
Website: $30,000
Other: $2,000
Total Start-up Expenses: $37,500
Start-up Assets
——————
Cash Required: $30,000
Other Current Assets: $0
Long-term Assets: $30,000
Total Assets: $60,000
Total Requirements: $97,500
Services
——–
Like New Carpet Cleaners services and products will include:
– Regular Carpet Cleaning
– Spot Treatment for Carpets
– Furniture Cleaning
– Leather Furniture Cleaning
– Area Rugs
– Gift Certificates
The company will focus on cleaning carpets, rugs, and upholstered items and will seek to build and maintain its expertise in this area; its services will not include hardwood floors or other home-cleaning services.
Through its website, the company will offer the service of easy scheduling and the set-up of automated recurring appointments for its regular customers.
Market Analysis Summary
———————-
The U.S. carpet and upholstery cleaning service sector was estimated at $5.3 billion in 2006 by Marketdata Enterprises. The market is broken into residential and commercial services. While only moderate growth is estimated for the next five years, the national market is highly competitive.
The initial market for Like New Carpet Cleaners is residential services in Fairfield County, CT, beginning with a five-mile radius of Danbury, CT. The population of Fairfield County is approximately 895,000 with 225,000 owner-occupied condos and homes. It is estimated that 40,000 of these owner-occupied homes and condos are within that five-mile radius. These 40,000 owners spend an estimated $4 million per year on carpet, upholstery, and other floor-cleaning services. For that reason, we have chosen this as our initial market.
Market Segmentation
——————-
Customers for this industry are broken into the following targets:
– Residences (including individuals, families, and landlords)
– Businesses (including small businesses, larger businesses, insurance companies, and commercial landlords)
Residences require a higher level of customer support, pay higher rates on average, and often include additional opportunities to sell related services to homeowners.
Businesses require less customer support and service, pay lower rates on average, and generally seek ongoing services which can repeat the same tasks without much room for upselling.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth
Large Homes 25% 10,000 12,500 15,625 19,531 24,414 25.00%
Medium Homes 25% 20,000 25,000 31,250 39,063 48,829 25.00%
Condos and Small Homes 25% 10,000 12,500 15,625 19,531 24,414 25.00%
Total 25.00% 40,000 50,000 62,500 78,125 97,657 25.00%
Target Market Segment Strategy
Like New Carpet Cleaners will focus on residential cleaning services instead of businesses. Residential customers are more likely to embrace technological advances and internet customer service. The market is divided into:
-Large homes (over 5,000 square feet) have many rooms needing regular service and upholstery and spot treatments.
-Medium homes (2,000 to 5,000 square feet) have a couple of rooms needing regular service and may require service as often or more often than large homes.
-Small homes and condos (under 2,000 square feet) generally have at least one carpeted room requiring regular service.
Service Business Analysis
The carpet-cleaning business consists of multiple local businesses and some national franchises serving towns. Each town can have from 10 to 20 businesses. Services are mostly managed from a central office, and delivery vans are used to transport equipment and cleaning crews. Large homes require on-site consultations for accurate quotes, while small businesses rely on phone conversations for pricing information.
Competition and Buying Patterns
The carpet and upholstery industry in the U.S. is comprised of 40,000 mostly small companies. Although large franchised organizations exist, they make up only 22% of the market. Customers choose between competitors based on brand name, positive references from trusted sources, and price. Small businesses are perceived to offer the same quality as known brands, making positive word-of-mouth more important.
Web Plan Summary
The website for Like New Carpet Cleaners will simplify the process of ordering cleaning services and offer customization options. It will include graphics and tutorials for booking and scheduling, client testimonials, explanations on pricing, a list of services, and an "About us" page. Current customers will have account management tools to schedule and reschedule cleanings and set up recurring appointments.
Website Marketing Strategy
The website will be marketed through search engine marketing and optimization. Like New Carpet Cleaners will use Google Adwords for local carpet cleaning keywords and retain a search engine marketing firm for optimization. Content, including informative articles, will be added to establish the website as a resource for carpet cleaning information.
Development Requirements
The website will require front-end pages for sales, service, scheduling, contact, and legal disclaimers. The back-end will allow managers to adjust pricing and service options and integrate scheduling and orders with accounting and calendar systems.
Strategy and Implementation Summary
Like New Carpet Cleaning aims to expand rapidly within Fairfield County, CT, focusing on residential customers and proving scalability. The priorities include ensuring high-quality service, keeping overhead low by operating from one office, and building the brand around the promise of making carpets look "like new."
Competitive Edge
The online platform of Like New Carpet Cleaning offers complete sales, service, and scheduling applications, providing convenience for customers and reducing operating costs. Competitors will find it difficult to imitate due to the high cost of implementation.
Marketing Strategy
The marketing strategy is to build a base of residential customers within a five-mile radius of Danbury, CT. A direct mail campaign will target homeowners with large homes, and poster advertising will highlight how the company can make carpets look "like new." Web advertising through search engine marketing and optimization will convert local searches into sales.
Sales Strategy
Like New Carpet Cleaners will automate sales on its website, with target goals of conducting 75% of sales online in the first year and 90% by the fifth year. Owners will handle client queries that require personal attention, and no commissioned salespeople will be hired.
Revenue streams will come from carpet cleaning and intensive spot treatments. Rapid growth is anticipated as customer reviews come in, with a 25% annual growth rate. The main impediment to growth is customer reluctance to switch from existing services, which will be mitigated through incentives and trial prices. Competitors’ reliance on traditional sales models makes it unlikely for them to offer a similar web-based alternative.
(Source: Original text has been edited for clarity and conciseness.)
Sales Forecast
Unit Sales
– Carpet Cleaning: 3,054, 3,817, 4,772, 5,965, 7,456
– Furniture Cleaning: 2,310, 2,888, 3,609, 4,512, 5,640
– Intensive Spot Treatment: 3,054, 3,817, 4,772, 5,964, 7,456
– Area Rugs: 1,486, 1,857, 2,322, 2,902, 3,628
– Other Services: 1,486, 1,857, 2,322, 2,902, 3,628
– Total Unit Sales: 11,390, 14,237, 17,796, 22,245, 27,806
Unit Prices
– Carpet Cleaning: $100.00
– Furniture Cleaning: $25.00
– Intensive Spot Treatment: $50.00
– Area Rugs: $25.00
– Other Services: $25.00
Sales
– Carpet Cleaning: $305,395, $381,744, $477,180, $596,475, $745,593
– Furniture Cleaning: $57,750, $72,188, $90,234, $112,793, $140,991
– Intensive Spot Treatment: $152,691, $190,864, $238,580, $298,225, $372,781
– Area Rugs: $37,147, $46,434, $58,042, $72,553, $90,691
– Other Services: $37,147, $46,434, $58,042, $72,553, $90,691
– Total Sales: $590,130, $737,663, $922,078, $1,152,598, $1,440,747
Direct Unit Costs
– Carpet Cleaning: $30.00
– Furniture Cleaning: $7.50
– Intensive Spot Treatment: $22.50
– Area Rugs: $9.75
– Other Services: $11.25
Direct Cost of Sales
– Carpet Cleaning: $91,619, $114,523, $143,154, $178,942, $223,678
– Furniture Cleaning: $17,325, $21,656, $27,070, $33,838, $42,297
– Intensive Spot Treatment: $68,711, $85,889, $107,361, $134,201, $167,751
– Area Rugs: $14,487, $18,109, $22,636, $28,296, $35,369
– Other Services: $16,716, $20,895, $26,119, $32,649, $40,811
– Subtotal Direct Cost of Sales: $208,858, $261,072, $326,341, $407,926, $509,907
Milestones
The marketing program depends on timely completion of key tasks. Before public marketing begins, the website service must be well tested. This will take two months. Once completed, direct mail and poster/movie screen advertising will begin, aiming to inform local residents about the new business and its value proposition. Web advertising will follow, targeting locals searching for carpet cleaning to drive sales.
Milestones:
Website Build: 8/1/2009 – 10/3/2009, $30,000 budget, RS as Manager, Operations Department.
Direct Mail Campaign: 10/3/2009 – 12/31/2009, $10,000 budget, FS as Manager, Marketing Department.
Public Advertising: 11/23/2009 – 12/31/2009, $20,000 budget, FS as Manager, Marketing Department.
Search Engine Advertising: 11/3/2009 – 12/31/2009, $10,000 budget, FS as Manager, Marketing Department.
Totals: $70,000 budget.
Management Summary:
Fred and Rebecca Smith will manage the business.
Fred Smith, CEO, will handle sales and marketing, make client appointments, and orchestrate all marketing activities.
Rebecca Smith, COO, will manage operations and finances, including bookkeeping, accounting, and financing. She will oversee the development of the Web service and handle sales work as necessary. She will also establish operations systems, hire cleaning crews, purchase equipment, and ensure quality assurance.
In the fourth year, experienced business managers will be hired to replace Fred and Rebecca Smith, preparing the company for franchising.
Personnel Plan:
After six months, a full-time administrative assistant will be hired to handle bookkeeping, accounts payable, and support sales and marketing. This will allow Fred and Rebecca Smith to focus on strategic endeavors. The assistant may transition into the role of administrative manager or be replaced by someone capable of management. After two years, an additional administrative assistant will be hired.
Personnel Plan:
Year 1, Year 2, Year 3, Year 4, Year 5
CEO: $60,000, $60,000, $60,000, $70,000, $75,000
COO: $60,000, $60,000, $60,000, $70,000, $75,000
Administrative Assistant/Manager: $18,000, $40,000, $50,000, $55,000, $60,000
Administrative Assistant 2: $0, $0, $40,000, $42,000, $45,000
Total People: 3, 3, 4, 4, 4
Total Payroll: $138,000, $160,000, $210,000, $237,000, $255,000
Like New Carpet Cleaning will add one new local base each year, financed by cash from existing locations and debt for vehicle and cleaning equipment purchases.
Start-up Funding:
Owner investment, investor funding, and a small amount of debt will be used for start-up funding. Owners will contribute $20,000 for website development, and investors will contribute $57,500 for a 30% share of the company.
Start-up Funding:
Start-up Expenses to Fund: $37,500
Start-up Assets to Fund: $60,000
Total Funding Required: $97,500
Assets:
Non-cash Assets from Start-up: $30,000
Cash Requirements from Start-up: $30,000
Additional Cash Raised: $0
Cash Balance on Starting Date: $30,000
Total Assets: $60,000
Liabilities and Capital:
Liabilities:
Current Borrowing: $0
Long-term Liabilities: $15,000
Accounts Payable (Outstanding Bills): $5,000
Other Current Liabilities (interest-free): $0
Total Liabilities: $20,000
Capital:
Planned Investment:
Owners: $20,000
Investor: $57,500
Additional Investment Requirement: $0
Total Planned Investment: $77,500
Loss at Startup (Start-up Expenses): ($37,500)
Total Capital: $40,000
Total Capital and Liabilities: $60,000
Total Funding: $97,500
Break-even Analysis:
The business will benefit from a low monthly break-even point due to assigning most costs directly to the cleaning service and leveraging the website to reduce administrative costs.
| Break-even Analysis | |
| Monthly Units Break-even | 705 |
| Monthly Revenue Break-even | $36,506 |
| Assumptions: | |
| Average Per-Unit Revenue | $51.81 |
| Average Per-Unit Variable Cost | $18.34 |
| Estimated Monthly Fixed Cost | $23,586 |
Projected Profit and Loss
The business will experience modest profits for its first three years of operation. This is due to building operations that can scale over a larger geographic region. In the fourth and fifth years, it will start to have healthy profits, proving the viability of the business model for franchise or statewide expansion.
Direct labor is estimated at 35% of sales revenue (the actual cleaning represents about a 280% markup of the labor). Direct labor is included in the cost of sales.
Pro Forma Profit and Loss
Sales:
Year 1: $590,130
Year 2: $737,663
Year 3: $922,078
Year 4: $1,152,598
Year 5: $1,440,747
Direct Cost of Sales:
Year 1: $208,858
Year 2: $261,072
Year 3: $326,341
Year 4: $407,926
Year 5: $509,907
Other Costs of Sales:
Year 1-5: $0
Total Cost of Sales:
Year 1: $208,858
Year 2: $261,072
Year 3: $326,341
Year 4: $407,926
Year 5: $509,907
Gross Margin:
Year 1: $381,272
Year 2: $476,590
Year 3: $595,738
Year 4: $744,672
Year 5: $930,840
Gross Margin %:
Year 1-5: 64.61%
Expenses:
Payroll:
Year 1: $138,000
Year 2: $160,000
Year 3: $210,000
Year 4: $237,000
Year 5: $255,000
Marketing/Promotion:
Year 1: $60,000
Year 2: $70,000
Year 3: $80,000
Year 4: $90,000
Year 5: $100,000
Depreciation:
Year 1: $6,000
Year 2: $10,000
Year 3: $12,000
Year 4: $18,000
Year 5: $30,000
Rent:
Year 1: $10,200
Year 2: $30,000
Year 3: $40,000
Year 4: $50,000
Year 5: $60,000
Utilities:
Year 1: $1,200
Year 2: $2,000
Year 3: $2,500
Year 4: $3,000
Year 5: $3,500
Insurance:
Year 1: $3,600
Year 2: $4,000
Year 3: $5,000
Year 4: $6,500
Year 5: $8,000
Payroll Taxes:
Year 1: $52,029
Year 2: $63,161
Year 3: $80,451
Year 4: $35,550
Year 5: $38,250
Website Maintenance/Hosting:
Year 1: $6,000
Year 2: $7,000
Year 3: $8,000
Year 4: $9,000
Year 5: $10,000
Other:
Year 1-5: $6,000
Total Operating Expenses:
Year 1: $283,029
Year 2: $353,161
Year 3: $445,951
Year 4: $458,050
Year 5: $514,750
Profit Before Interest and Taxes:
Year 1: $98,243
Year 2: $123,429
Year 3: $149,787
Year 4: $286,622
Year 5: $416,090
EBITDA:
Year 1: $104,243
Year 2: $133,429
Year 3: $161,787
Year 4: $304,622
Year 5: $446,090
Interest Expense:
Year 1: $688
Year 2-5: $0
Taxes Incurred:
Year 1: $29,267
Year 2: $37,029
Year 3: $44,936
Year 4: $85,987
Year 5: $124,827
Net Profit:
Year 1: $68,289
Year 2: $86,400
Year 3: $104,851
Year 4: $200,635
Year 5: $291,263
Net Profit/Sales:
Year 1: 11.57%
Year 2: 11.71%
Year 3: 11.37%
Year 4: 17.41%
Year 5: 20.22%
Projected Cash Flow
In the first year, cash flow will be supported by start-up funding and full customer payment in advance. Company vans will be purchased with auto loans. When expanding to new offices, additional vans and cleaning equipment must be purchased, which will be financed through debt, including a company credit line.
Pro Forma Cash Flow:
| Pro Forma Cash Flow | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
| Subtotal Cash from Operations | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
| Additional Cash Received | |||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Received | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
| Expenditures | |||||
| Expenditures from Operations | |||||
| Cash Spending | $138,000 | $160,000 | $210,000 | $237,000 | $255,000 |
| Bill Payments | $308,546 | $516,001 | $585,861 | $688,600 | $850,715 |
| Subtotal Spent on Operations | $446,546 | $676,001 | $795,861 | $925,600 | $1,105,715 |
| Additional Cash Spent | |||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $15,000 | $0 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $18,000 | $30,000 | $30,000 | $30,000 | $30,000 |
| Dividends | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Spent | $479,546 | $706,001 | $825,861 | $955,600 | $1,135,715 |
| Net Cash Flow | $110,584 | $31,662 | $96,218 | $196,997 | $305,032 |
| Cash Balance | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
Projected Balance Sheet:
The net worth of the business will show healthy growth, even while liabilities increase due to the growth of the business and the need to purchase additional assets. Liabilities will decrease in the second year as accounts payable from the first large expansion are paid off. After that point, growth will be more even. A cash balance will be built up with the plan of financing expansion.
| Pro Forma Balance Sheet | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Cash | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $140,584 | $172,245 | $268,463 | $465,460 | $770,492 |
| Long-term Assets | |||||
| Long-term Assets | $48,000 | $78,000 | $108,000 | $138,000 | $168,000 |
| Accumulated Depreciation | $6,000 | $16,000 | $28,000 | $46,000 | $76,000 |
| Total Long-term Assets | $42,000 | $62,000 | $80,000 | $92,000 | $92,000 |
| Total Assets | $182,584 | $234,245 | $348,463 | $557,460 | $862,492 |
| Liabilities and Capital | |||||
| Current Liabilities | |||||
| Accounts Payable | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
| Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
| Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
| Paid-in Capital | $77,500 | $77,500 | $77,500 | $77,500 | $77,500 |
| Retained Earnings | ($37,500) | $30,789 | $117,190 | $222,040 | $422,676 |
| Earnings | $68,289 | $86,400 | $104,851 | $200,635 | $291,263 |
| Total Capital | $108,289 | $194,690 | $299,540 | $500,176 | $791,439 |
| Total Liabilities and Capital | $182,584 | $234,245 | $348,463 | $557,460 | $862,492 |
| Net Worth | $108,289 | $194,690 | $299,540 | $500,176 | $791,439 |
Business Ratios:
The business will have higher SGA expenses as a ratio of sales compared to the carpet and upholstery cleaning industry due to the need for a more professional, senior-level staff during its first years. These years are crucial for establishing scalable systems and procedures. SGA as a percentage of sales will decrease below the industry average after this expansion, as the business can reduce staff and office overhead thanks to its web-based sales model. This savings will be invested in advertising to support rapid growth.
| Ratio Analysis | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
| Sales Growth |
Unit Sales Carpet Cleaning: 60, 74, 92, 114, 142, 176, 218, 270, 335, 416, 516, 639 Furniture Cleaning: 40, 50, 64, 80, 101, 127, 160, 202, 254, 320, 404, 508 Intensive Spot Treatment: 60, 74, 92, 114, 142, 176, 218, 270, 335, 416, 516, 639 Area Rugs: 20, 26, 34, 44, 57, 74, 96, 125, 163, 212, 276, 358 Other Services: 20, 26, 34, 44, 57, 74, 96, 125, 163, 212, 276, 358 Total Unit Sales: 200, 251, 316, 397, 499, 627, 789, 994, 1,251, 1,576, 1,986, 2,504 Unit Prices Carpet Cleaning: $100.00 Furniture Cleaning: $25.00 Intensive Spot Treatment: $50.00 Area Rugs: $25.00 Other Services: $25.00 Sales Carpet Cleaning: $6,000, $7,440, $9,226, $11,440, $14,186, $17,591, $21,813, $27,048, $33,540, $41,590, $51,572, $63,949 Furniture Cleaning: $1,000, $1,260, $1,588, $2,001, $2,521, $3,176, $4,002, $5,043, $6,354, $8,006, $10,088, $12,711 Intensive Spot Treatment: $3,000, $3,720, $4,613, $5,720, $7,093, $8,795, $10,906, $13,523, $16,769, $20,794, $25,785, $31,973 Area Rugs: $500, $650, $845, $1,098, $1,427, $1,855, $2,412, $3,136, $4,077, $5,300, $6,890, $8,957 Other Services: $500, $650, $845, $1,098, $1,427, $1,855, $2,412, $3,136, $4,077, $5,300, $6,890, $8,957 Total Sales: $11,000, $13,720, $17,117, $21,357, $26,654, $33,272, $41,545, $51,886, $64,817, $80,990, $101,225, $126,547 Direct Unit Costs Carpet Cleaning: 30.00% Furniture Cleaning: 30.00% Intensive Spot Treatment: 45.00% Area Rugs: 39.00% Other Services: 45.00% Direct Cost of Sales Carpet Cleaning: $1,800, $2,232, $2,768, $3,432, $4,256, $5,277, $6,544, $8,114, $10,062, $12,477, $15,472, $19,185 Furniture Cleaning: $300, $378, $476, $600, $756, $953, $1,201, $1,513, $1,906, $2,402, $3,026, $3,813 Intensive Spot Treatment: $1,350, $1,674, $2,076, $2,574, $3,192, $3,958, $4,908, $6,085, $7,546, $9,357, $11,603, $14,388 Area Rugs: $195, $254, $330, $428, $557, $723, $941, $1,223, $1,590, $2,067, $2,687, $3,493 Other Services: $225, $293, $380, $494, $642, $835, $1,085, $1,411, $1,835, $2,385, $3,101, $4,031 Subtotal Direct Cost of Sales: $3,870, $4,830, $6,030, $7,529, $9,403, $11,746, $14,678, $18,347, $22,939, $28,688, $35,889, $44,910 Personnel Plan CEO: $5,000 COO: $5,000 Administrative Assistant/ Manager: $0, $0, $0, $0, $0, $0, $3,000, $3,000, $3,000, $3,000, $3,000, $3,000 Administrative Assistant 2: $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0 Total People: 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3 Total Payroll: $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $13,000, $13,000, $13,000, $13,000, $13,000, $13,000 Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales $11,000 $13,720 $17,117 $21,357 $26,654 $33,272 $41,545 $51,886 $64,817 $80,990 $101,225 $126,547 Direct Cost of Sales $3,870 $4,830 $6,030 $7,529 $9,403 $11,746 $14,678 $18,347 $22,939 $28,688 $35,889 $44,910 Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cost of Sales $3,870 $4,830 $6,030 $7,529 $9,403 $11,746 $14,678 $18,347 $22,939 $28,688 $35,889 $44,910 Gross Margin $7,130 $8,890 $11,087 $13,828 $17,251 $21,526 $26,867 $33,539 $41,878 $52,302 $65,336 $81,637 Gross Margin % 64.82% 64.80% 64.77% 64.75% 64.72% 64.70% 64.67% 64.64% 64.61% 64.58% 64.55% 64.51% Expenses Payroll $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 Marketing/Promotion $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 Depreciation $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Rent $500 $500 $500 $500 $500 $500 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Utilities $50 $50 $50 $50 $50 $50 $150 $150 $150 $150 $150 $150 Insurance $200 $200 $200 $200 $200 $200 $400 $400 $400 $400 $400 $400 Payroll Taxes 15% $2,081 $2,225 $2,404 $2,629 $2,910 $3,262 $4,152 $4,702 $5,391 $6,253 $7,333 $8,686 Website Maintenance/Hosting 15% $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Other $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Total Operating Expenses $19,331 $19,475 $19,654 $19,879 $20,160 $20,512 $25,402 $25,952 $26,641 $27,503 $28,583 $29,936 Profit Before Interest and Taxes ($12,201) ($10,585) ($8,567) ($6,051) ($2,909) $1,014 $1,465 $7,587 $15,237 $24,799 $36,753 $51,701 EBITDA ($11,701) ($10,085) ($8,067) ($5,551) ($2,409) $1,514 $1,965 $8,087 $15,737 $25,299 $37,253 $52,201 Interest Expense $115 $104 $94 $83 $73 $63 $52 $42 $31 $21 $10 $0 Taxes Incurred ($3,695) ($3,207) ($2,598) ($1,840) ($895) $285 $424 $2,264 $4,562 $7,433 $11,023 $15,510 Net Profit ($8,621) ($7,482) ($6,063) ($4,294) ($2,087) $666 $989 $5,282 $10,644 $17,344 $25,720 $36,191 Net Profit/Sales -78.37% -54.53% -35.42% -20.11% -7.83% 2.00% 2.38% 10.18% 16.42% 21.42% 25.41% 28.60% 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 $11,000 $13,720 $17,117 $21,357 $26,654 $33,272 $41,545 $51,886 $64,817 $80,990 $101,225 $126,547 Subtotal Cash from Operations $11,000 $13,720 $17,117 $21,357 $26,654 $33,272 $41,545 $51,886 $64,817 $80,990 $101,225 $126,547 Additional Cash Received Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Long-term Liabilities $0 $0 $ |
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