Carpet and Upholstery Cleaning Services
Like New Carpet Cleaning, based in Danbury, CT, offers carpet and upholstery cleaning services to Fairfield County, CT homeowners and condominium owners. The company’s brand is centered around its ability to restore carpets to a "like new" condition. To achieve this, the business will raise $57,500 in external funding to acquire a delivery van, carpet-cleaning equipment, and develop a user-friendly website that minimizes administrative costs and enhances customer accessibility.
Initially, the target customer base will consist of homeowners within a 5-mile radius of Danbury, CT, who have a high percentage of carpeted floors. The company plans to expand its services to cover all of Fairfield County. As the business ventures into new markets, sales are projected to grow by 25% annually. Profitability will only be prioritized once the business achieves substantial growth and establishes itself as a major player in the local market. At that point, the business can benefit from reduced expenses and an infrastructure that facilitates future expansion.
Like New Carpet Cleaners aims to establish a strong presence in the carpet-cleaning industry in Fairfield County, CT, with the goal of expanding through company-run offices or franchising. Our objectives are as follows:
– Within one year of launch, achieve a 95% or four-star rating on customer review platforms like www.yelp.com and the Better Business Bureau.
– Within three years of launch, serve 10% of homes with carpets in Fairfield County.
– Within five years of launch, serve 25% of homes with carpets in Fairfield County.
Our mission at Like New Carpet Cleaners is to provide homeowners with a simple and automated carpet cleaning service that helps them maintain the beauty of their carpets and homes, while also saving them from the expenses of carpet replacement.
To ensure our success, we will focus on the following key strategies:
1. Utilize online technology to streamline the process of ordering, scheduling, and paying for carpet cleaning services.
2. Provide an excellent customer experience, employing well-trained cleaning crews and offering a 30-day money-back guarantee.
3. Use environmentally friendly cleaning products and stay informed about new advancements in safe and eco-friendly cleaning methods.
Company Summary:
Like New Carpet Cleaners is a local carpet-cleaning service operating in Fairfield County, Connecticut. Established in June 2009 as an LLC, it was founded by Fred and Rebecca Smith, who run the business from their home office in Danbury, CT.
Company Ownership:
Fred and Rebecca Smith each own 50% of Like New Carpet Cleaners, which they established as an LLC in June 2009.
Start-up Summary:
The start-up expenses for the business primarily include the following strategic areas:
– Website Development: A website will be created and tested, enabling online ordering, scheduling, rescheduling, and customer support (estimated cost: $30,000).
– Delivery Van: The purchase of a van is necessary to transport cleaning staff and equipment to customer homes. One van will be used initially to transport multiple cleaning crews (estimated cost: $15,000).
– Cleaning Equipment: The business will acquire 3 portable extractors and additional specialized equipment for cleaning purposes (estimated cost: $15,000).
By operating from a home office, we can minimize initial rent and overhead expenses.
Start-up
Requirements
Start-up Expenses
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
Potential Customers Growth CAGR
Large Homes 10,000 12,500 15,625 19,531 24,414 25.00%
Medium Homes 20,000 25,000 31,250 39,063 48,829 25.00%
Condos and Small Homes 10,000 12,500 15,625 19,531 24,414 25.00%
Total 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, because this market is more likely to accept technological advances and Internet customer service. Like New has divided the market into three segments: Large homes (over 5,000 square feet), Medium homes (2000 to 5000 square feet), and Small homes and condos (under 2000 square feet).
Service Business Analysis:
The carpet-cleaning business is characterized by multiple local businesses serving a town or a few towns, and some national franchises. Each town can have ten to twenty businesses. Cleaning services are generally managed out of a central office, with delivery vans transporting equipment and cleaning crews to customer homes. Services are generally ordered by phone, and on-site consultations are given for large homes to develop accurate quotes. Some online ordering is done, but most small businesses rely on phone conversations.
Competition and Buying Patterns:
Marketdata Enterprises reports that the carpet and upholstery industry for the U.S. is comprised of 40,000 mostly small companies and that the industry is relatively mature. Some large franchised organizations exist, but the top ten franchises make up only 22% of the market. Customers choose between competitors based on brand name, positive references, and price. While brand name is important for some customers, many realize that small businesses use the same equipment and hire the same basic labor as known brands, so positive word-of-mouth is more important.
Web Plan Summary:
The website for Like New Carpet Cleaners will convert Web users to ordering cleaning services due to the simplicity of the process, customization of services, and the ability to flag inquiries requiring attention. For new customers, the site will include graphics and tutorials for booking and scheduling, client testimonials, explanations of pricing, a list of services, a FAQ page, and an "About us" page. For current customers, the website will also allow scheduling and rescheduling of cleanings and automated, recurring appointments. The website will provide quotes based on customer entries and accept credit card payments.
Website Marketing Strategy:
The website will be marketed through search engine marketing and search engine optimization. As part of search engine marketing, Like New Carpet Cleaners will use Google Adwords to bid on keywords relevant to carpet cleaning for the local market. Search engine optimization will be based on the initial design of the website and building links from other related websites to increase its Google ranking. Informative articles about carpet cleaning will also be added to the website to increase its standing as a resource.
Development Requirements:
The front end of the website will require the previously discussed pages as well as a contact page and legal disclaimers. The back end of the website will require the ability for managers to adjust pricing and service options, automatic integration of scheduling and orders with accounting and calendar systems, and alerts sent by email to relevant staff. The website will be built over two months, with a quote of $30,000 for the needed functionality.
Strategy and Implementation Summary:
The strategy of Like New Carpet Cleaning is to expand rapidly within Fairfield County, CT, targeting residential customers only. The priorities include ensuring high-quality, moderately-priced service using a web-based model, keeping overhead low by operating out of one office and minimal full-time staff, and building its brand around making carpets look "like new."
Competitive Edge:
The website of Like New Carpet Cleaning will offer complete sales, service, and scheduling applications online, reducing operating costs and providing a good customer experience. This convenience of online scheduling will be difficult for competitors to imitate due to the high cost of implementation.
Marketing Strategy:
The marketing strategy is to promote and build a base of residential customers within a five-mile radius of Danbury, CT. This will include a direct mail campaign targeting homeowners with large homes, poster advertising highlighting the company’s ability to make carpets look "like new," and web advertising via search engine marketing and optimization.
Sales Strategy:
Like New Carpet Cleaners will automate sales on its website, with 75% of sales conducted online in the first year and 90% by the fifth year. The owners, Rebecca and Fred Smith, will handle client queries that require personal attention. No commissioned salespeople will be hired, as the company aims to create a web-based model.
The primary revenue streams will be carpet cleaning and intensive spot treatments. Rapid growth is anticipated as customer reviews come in and the web model is tested. A 25% annual growth is estimated as the business expands geographically. The main risk is customer reluctance to switch from current carpet cleaning services, but incentives and trial prices will help mitigate this risk.
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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. The website service must be well tested for two months before public marketing can begin. Direct mail and poster/movie screen advertising will start simultaneously to increase awareness among local residents. Web advertising will follow to convert local residents searching for carpet cleaning into sales.
Milestones:
Website Build:
Start Date: 8/1/2009
End Date: 10/3/2009
Budget: $30,000
Manager: RS
Department: Operations
Direct Mail Campaign:
Start Date: 10/3/2009
End Date: 12/31/2009
Budget: $10,000
Manager: FS
Department: Marketing
Public Advertising:
Start Date: 11/23/2009
End Date: 12/31/2009
Budget: $20,000
Manager: FS
Department: Marketing
Search Engine Advertising:
Start Date: 11/3/2009
End Date: 12/31/2009
Budget: $10,000
Manager: FS
Department: Marketing
Totals:
Budget: $70,000
Management Summary:
The business will be managed by the owners, Fred and Rebecca Smith.
Fred Smith, CEO, will head sales and marketing. He will make client appointments and orchestrate all marketing activities.
Rebecca Smith, COO, will handle operations and finances. She will manage all financial aspects, including bookkeeping, accounting, and financing. She will project manage the development of the Web service and assist with sales work. She will also establish operations systems, hire cleaning crews, purchase equipment, and ensure quality assurance.
Experienced business managers will be hired in the fourth year to prepare the company for franchising. Fred and Rebecca Smith will then assume strategic roles.
Personnel Plan:
A full-time administrative assistant will be hired after six months to handle bookkeeping, accounts payable, and support sales and marketing. This will allow Fred and Rebecca Smith to focus on strategic endeavors. After two years, an additional administrative assistant will be hired.
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, with financing from existing locations and debt.
Start-up Funding:
Start-up funding will come from owner investment, investor funding, and a small amount of debt. The owners will contribute $20,000 for website development, and investors will contribute $57,500 for a 30% share of the company.
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 Start-up (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 most costs being assigned 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 in its first three years of operation. The operations will be built to scale up over a larger geographic region, resulting in healthy profits during the fourth and fifth years. This will demonstrate the viability of the business model for franchise or statewide expansion.
Direct labor is estimated at 35% of sales revenue, with the actual cleaning representing approximately a 280% markup of the labor. It is included in the cost of sales.
Pro Forma Profit and Loss
| Pro Forma Profit and Loss | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | $590,130 | $737,663 | $922,078 | $1,152,598 | $1,440,747 |
| Direct Cost of Sales | $208,858 | $261,072 | $326,341 | $407,926 | $509,907 |
| Other Costs of Sales | $0 | $0 | $0 | $0 | $0 |
| Total Cost of Sales | $208,858 | $261,072 | $326,341 | $407,926 | $509,907 |
| Gross Margin | $381,272 | $476,590 | $595,738 | $744,672 | $930,840 |
| Gross Margin % | 64.61% | 64.61% | 64.61% | 64.61% | 64.61% |
| Expenses | |||||
| Payroll | $138,000 | $160,000 | $210,000 | $237,000 | $255,000 |
| Marketing/Promotion | $60,000 | $70,000 | $80,000 | $90,000 | $100,000 |
| Depreciation | $6,000 | $10,000 | $12,000 | $18,000 | $30,000 |
| Rent | $10,200 | $30,000 | $40,000 | $50,000 | $60,000 |
| Utilities | $1,200 | $2,000 | $2,500 | $3,000 | $3,500 |
| Insurance | $3,600 | $4,000 | $5,000 | $6,500 | $8,000 |
| Payroll Taxes | $52,029 | $63,161 | $80,451 | $35,550 | $38,250 |
| Website Maintenance/Hosting | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 |
| Other | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 |
| Total Operating Expenses | $283,029 | $353,161 | $445,951 | $458,050 | $514,750 |
| Profit Before Interest and Taxes | $98,243 | $123,429 | $149,787 | $286,622 | $416,090 |
| EBITDA | $104,243 | $133,429 | $161,787 | $304,622 | $446,090 |
| Interest Expense | $688 | $0 | $0 | $0 | $0 |
| Taxes Incurred | $29,267 | $37,029 | $44,936 | $85,987 | $124,827 |
| Net Profit | $68,289 | $86,400 | $104,851 | $200,635 | $291,263 |
| Net Profit/Sales | 11.57% | 11.71% | 11.37% | 17.41% | 20.22% |
Projected Cash Flow
In the first year, cash flow will be supported by start-up funding and full payment by customers in advance. Company vans will be purchased with auto loans. When the business expands to new offices across the county, additional vans and cleaning equipment must be purchased. These will be financed through debt, including a company credit line.
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 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| 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 business growth and the purchase of additional assets. Liabilities will initially 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 the expansion of the business.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Current 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 | |||||
| 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 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Current Liabilities | |||||
| Accounts Payable | $74,295 | $39,556 | $48,923 | $57,285 | $71,053 |
| Total 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 |
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 professional, senior-level staff in its early 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, thanks to reduced staff and office overhead enabled by the business’s web-based sales model. Cost savings will be reinvested in advertising to support rapid growth.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile |
| Sales Growth | n.a. | 25.00% | 25.00% | 25.00% | -0.71% |
| Other Current Assets | 0.00% |
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%, $30.00 Furniture Cleaning: 30.00%, $7.50 Intensive Spot Treatment: 45.00%, $22.50 Area Rugs: 39.00%, $9.75 Other Services: 45.00%, $11.25 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 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 |
| Pro Forma Profit and Loss | |||||||||||||
| 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 | |
| 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 | $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 | $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
| Pro Forma Cash Flow | |||||||||||||
| 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 | $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 | |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Long-term Liabilities | $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 | |
| Subtotal Cash Received | $11,000 | $13,720 | $17,117 | $21,357 | $26,654 | $33,272 | $41,545 | $51,886 | $64,817 | $80,990 | $101,225 | $126,547 | |
| Expenditures | |||||||||||||
| Expenditures from Operations | |||||||||||||
| Cash Spending | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | |
| Bill Payments | $5,304 | $9,173 | $10,768 | $12,762 | $15,254 | $18,370 | $22,271 | $27,258 | $33,356 | $40,989 | $50,541 | $62,500 | |
| Subtotal Spent on Operations | $15,304 | $19,173 | $20,768 | $22,762 | $25,254 | $28,370 | $ | ||||||
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I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
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