Carpet and Upholstery Cleaning Services

Like New Carpet Cleaners is a local carpet-cleaning service in Fairfield County, Connecticut. Established in June 2009 as an LLC, Like New Carpet Cleaners was founded by Fred and Rebecca Smith, who operate the business from their home office in Danbury, CT.

Company Ownership

Fred and Rebecca Smith founded Like New Carpet Cleaners as an LLC in June 2009. Each owns 50% of the company.

Start-up Summary

The startup expenses for the business primarily involve three strategic areas:

  1. Website: Developing and testing a website with functionality for online ordering, scheduling, rescheduling, and customer support. ($30,000 estimate)
  2. Delivery Van: Purchasing a van to transport cleaning staff and equipment to customer homes. One van will be used to transport multiple cleaning crews initially. ($15,000 estimate)
  3. Cleaning Equipment: Acquiring 3 portable extractors and additional specialized equipment for cleanings. ($15,000 estimate)

The business will be based in a home office, which will limit initial rent and overhead costs.

Carpet and Upholstery Cleaning Services Web Plan Summary

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 include:

– Regular Carpet Cleaning

– Spot Treatment for Carpets

– Furniture Cleaning

– Leather Furniture Cleaning

– Area Rugs

– Gift Certificates

The company focuses on cleaning carpets, rugs, and upholstered items and seeks to build and maintain expertise in this area. It does not offer hardwood floor or other home-cleaning services.

Through its website, the company offers easy scheduling and automated recurring appointments for 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 divided 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, starting with a five-mile radius of Danbury, CT. Fairfield County has a population of 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 the five-mile radius. These 40,000 owners spend around $4 million per year on carpet, upholstery, and other floor-cleaning services. We have chosen this as our initial market for that reason.

Market Segmentation

Customers for this industry are divided 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 provide 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 that can repeat the same tasks without much room for upselling.

Carpet and Upholstery Cleaning Services Web Plan Summary

Market Analysis:

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth 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, rather than businesses, because it believes this market is more likely to accept technological advances and Internet customer service. Like New has divided the market into these segments:

  • Large homes (over 5,000 square feet) – Generally have many rooms needing regular service as well as the need for upholstery and spot treatments. Service may require a full day of cleaning.
  • Medium homes (2000 to 5000 square feet) – Generally have a couple of rooms needing regular service and may require service as often or more often than large homes as each room is given more wear and tear by families. Service may require half a day (four hours) of cleaning.
  • Small homes and condos (under 2000 square feet) – Generally have at least one carpeted room requiring regular service. Service may often be completed in two hours or less.

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 from ten to twenty businesses.

Cleaning services are generally managed out of a central office. Delivery vans are used to transport equipment and cleaning crews from the central office to customer homes.

Services are generally ordered by phone. For large homes, on-site consultations are given to develop a more accurate quote for cleaning service, rather than quoting a price site unseen. Some online ordering is done, but most small businesses rely on phone conversations to gather the information needed to quote a price to customers.

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. Although some large franchised organizations exist, the top ten franchises make up only 22% of the market. These top competitors include Sears, Stanley Steemer, Chem-Dry, ServiceMaster Clean, ServPro, Duraclean, Heaven’s Best, Rainbow Intl., MilliCare Commercial Carpet Care, and Professional Carpet Systems.

Customers choose between these competitors based on brand name, positive references from trusted sources (friends, family and colleagues, and customer-review websites, such as www.yelp.com), and price. Most cleaning services do not compete specifically on price, although franchises sometimes use this lever. While brand name is important for some customers, many realize that small businesses use the same equipment and hire the same basic labor as the known brands and, therefore, that 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 because of the simplicity of the process, customization of services, and the ability of the online system to red flag inquiries which require additional attention.

For new customers, the site will include:

  • Graphics and tutorials to go through the booking and scheduling process
  • Client testimonials
  • Explanations of how pricing is determined
  • A list of services
  • “Frequently-asked questions” page to answer common questions and to explain how the service works, what the time frame is to complete the work, etc.
  • “About us” page – details on the founders and mission of the company

For current customers, the website will also be an account management tool, allowing them to:

  • Schedule and reschedule cleanings
  • Set up automated, recurring appointments

The website will have the functionality to provide quotes to most customers, based on their entries about the services needed, size of their space, furniture, carpets, etc. For certain specifications (determined by the founders) the system will be unable to provide a quote and will refer the inquiry to the sales department for further investigation. Clients will pay by credit card (using a security protocol connection for sending credit card information over the Internet) and can have their credit card saved on file for easier booking in the future.

Website Marketing Strategy:

The website will be marketed through search engine marketing and search engine optimization. Search engine marketing will require bidding on keywords relevant to carpet cleaning for the local market, with Google Adwords. Like New Carpet Cleaners will retain the services of a search engine marketing firm to set up and optimize its Google Adwords account.

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Search engine optimization will be based on the initial design of the website to make it search-engine friendly, and on building links over time from other related websites to increase its Google ranking. Content will also be added to the website, including informative articles about carpet cleaning, written by the company founders and other experts, in order to increase the website’s standing on the Internet as a resource for information on carpet cleaning.

Development Requirements:

The front end of the website will require the pages previously discussed in the summary as well as the standard contact page and legal disclaimers.

The back end of the website will require:

Ability for managers to adjust pricing and service options.

Automatic integration of scheduling and orders from the website to accounting and calendar systems, with alerts sent by email to relevant staff.

The website will be built over two months. A quote of $30,000 has been given for the needed functionality and has been verified by advisors with web development expertise as an appropriate rate. The two-month period will allow three weeks for testing and debugging at the end of the period.

The website will require ongoing maintenance which is shown on the profit and loss statement as an operating expense. Either the same firm that created the site will be retained for ongoing maintenance and updates, or a new firm will be selected.

Strategy and Implementation Summary:

The strategy of Like New Carpet Cleaning is to expand rapidly within Fairfield County, CT, targeting residential customers only, with an eye towards proving its model as scalable on a statewide level. To that end, it will seek funding for its initial five years of growth and then an additional round of funding to support that growth after five years. The strategy includes the following priorities:

  • Ensure high-quality, moderately-priced service using a web-based model of sales and customer support.
  • Keep overhead low by operating out of one office and keeping full-time staff at a minimum.
  • Build its brand around the fact that carpets will look “like new” after cleanings, saving customers worry and expense.

Competitive Edge:

The website of Like New Carpet Cleaning will offer complete sales, service, and scheduling applications online. This allows the business to reduce its operating costs, establish a business that can scale up quickly, and still provide a good customer experience. This online scheduling approach lets customers sign up for carpet cleaning services any time, day or night. This is a convenience that will be appreciated by the customer. It is an asset which it will be difficult for competitors to imitate because of the high cost of implementation.

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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 (more than 5,000 sq. ft). This group spends a higher amount on carpet cleaning per home than the other target markets, and they are more likely to create positive word-of-mouth about the service.

Poster advertising built around the simplicity with which the company can make customer carpets look “like new.” Locations will include bus stops, public parks, the sides of buses and taxi cabs, and movie theater advertising.

The marketing campaign will then move to web advertising via search engine marketing (Google Adwords) and search engine optimization to capitalize on converting those searching for carpet cleaning services locally into sales.

Sales Strategy:

Like New Carpet Cleaners will automate its sales on its website. In the first year a target of 75% of sales will be conducted entirely on its website with minimal need for interaction with a salesperson. By its fifth year of operation, 90% of sales will be conducted entirely on its website. This includes the customer entry of details on their needs, the quoting of prices, client acceptance of the price and entry of a credit card, and scheduling of the services. The back-end of the website will store customer data and allow the owners to change pricing and services offered.

The owners, Rebecca and Fred Smith, will answer client queries which cannot be handled by the website service, based on specific emails that come in or website inquiries which are flagged as requiring personal attention. They will serve these clients with home estimates when necessary, using this experience to develop a stronger web-based model going forward. No commissioned salespeople will be hired, as the intention is to create a web-based model.

Sales Forecast:

The primary revenue streams for Like New Carpet Cleaners will be carpet cleaning and intensive spot treatments. As the company will brand itself as the leader in making carpets look “like new,” these will be the drivers of growth. Additional services will be sold primarily to customers who seek out Like New for its carpet treatments.

Average services are defined as the following, for the purpose of the sales forecast:

Average carpet cleaning is two rooms (a small, semi-carpeted apartment)

Average furniture cleaning is one large couch

Average intensive spot treatment is one carpet

Average area rug cleaning is one area rug

Cost of sales is expected to be 35% for the labor of cleaning staff. The remaining 4-10%, depending on the service, is for cleaning supplies and gasoline applied to the job to transport crew and equipment.

Over the first year, rapid growth is anticipated month over month as customer reviews come in and the simplicity and assurance of the web model is tested by the customer. A 25% annual growth is estimated as the business expands to cover all of Fairfield County, with additional bases of operation throughout the county. Growth will be primarily through the company’s geographic expansion and secondarily through deeper penetration in each town as word-of-mouth grows.

The main impediment to this rapid growth would be the reluctance of customers to switch from their current carpet cleaning services. This risk will be mitigated by offering incentives to customers who switch and no-commitment trial prices. Competitors are unlikely to offer the same web-based model as their entire infrastructures are built around the use of salespeople, customer service reps, and in-person sales appointments.

Carpet and Upholstery Cleaning Services Web Plan Summary

Carpet and Upholstery Cleaning Services Web Plan Summary

Sales Forecast

Year 1 Year 2 Year 3 Year 4 Year 5

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

Year 1 Year 2 Year 3 Year 4 Year 5

Carpet Cleaning $100.00 $100.00 $100.00 $100.00 $100.00

Furniture Cleaning $25.00 $25.00 $25.00 $25.00 $25.00

Intensive Spot Treatment $50.00 $50.00 $50.00 $50.00 $50.00

Area Rugs $25.00 $25.00 $25.00 $25.00 $25.00

Other Services $25.00 $25.00 $25.00 $25.00 $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

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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

Year 1 Year 2 Year 3 Year 4 Year 5

Carpet Cleaning $30.00 $30.00 $30.00 $30.00 $30.00

Furniture Cleaning $7.50 $7.50 $7.50 $7.50 $7.50

Intensive Spot Treatment $22.50 $22.50 $22.50 $22.50 $22.50

Area Rugs $9.75 $9.75 $9.75 $9.75 $9.75

Other Services $11.25 $11.25 $11.25 $11.25 $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 the key marketing tasks. Before any public marketing can begin, the website service must be well tested. This will happen over a two-month period. Upon completion of this work, direct mail and poster/movie screen advertising will begin concurrently with the goal of making thousands of local residents aware of the new business and its value proposition. Web advertising will follow with the goal of converting those locals searching for carpet cleaning to sales.

Carpet and Upholstery Cleaning Services Web Plan Summary

Milestones:

– Milestone: Website Build

– Start Date: 8/1/2009

– End Date: 10/3/2009

– Budget: $30,000

– Manager: RS

– Department: Operations

– Milestone: Direct Mail Campaign

– Start Date: 10/3/2009

– End Date: 12/31/2009

– Budget: $10,000

– Manager: FS

– Department: Marketing

– Milestone: Public Advertising

– Start Date: 11/23/2009

– End Date: 12/31/2009

– Budget: $20,000

– Manager: FS

– Department: Marketing

– Milestone: Search Engine Advertising

– Start Date: 11/3/2009

– End Date: 12/31/2009

– Budget: $10,000

– Manager: FS

– Department: Marketing

– Totals: $70,000

Management Summary:

The business will be managed by the owners, Fred and Rebecca Smith.

Fred Smith, CEO, will be head of sales and marketing. He will make client appointments, when needed, and will orchestrate all marketing activities.

Rebecca Smith, COO, will be in charge of operations and finances. She will manage all financial aspects of the business, including bookkeeping, accounting, and financing. She will project manage the development of the Web service (working with temporary programming help to program the service). She will do sales work as necessary, under the direction of Fred Smith. She will be responsible for establishing operations systems, including hiring cleaning crews, purchasing equipment, and ensuring quality.

In the fourth year of operation, experienced business managers will be hired to take over the positions of CEO and COO with the goal of preparing the company for franchising. At this point, Fred and Rebecca Smith will transition to entirely strategic roles.

Personnel Plan:

A full-time administrative assistant will be hired after six months of operation to take over bookkeeping, accounts payable, and support of sales and marketing activities. This will allow Fred and Rebecca Smith to concentrate their time on strategic endeavors, including expansion opportunities beyond their initial target area. This individual will transition into the role of administrative manager, or be replaced by someone else who can handle management. After two years of operation, an additional administrative assistant will be hired.

– Year 1:

– CEO: $60,000

– COO: $60,000

– Administrative Assistant/Manager: $18,000

– Administrative Assistant 2: $0

– Total People: 3

– Total Payroll: $138,000

– Year 2:

– CEO: $60,000

– COO: $60,000

– Administrative Assistant/Manager: $40,000

– Administrative Assistant 2: $0

– Total People: 3

– Total Payroll: $160,000

– Year 3:

– CEO: $60,000

– COO: $60,000

– Administrative Assistant/Manager: $50,000

– Administrative Assistant 2: $40,000

– Total People: 4

– Total Payroll: $210,000

– Year 4:

– CEO: $70,000

– COO: $70,000

– Administrative Assistant/Manager: $55,000

– Administrative Assistant 2: $42,000

– Total People: 4

– Total Payroll: $237,000

– Year 5:

– CEO: $75,000

– COO: $75,000

– Administrative Assistant/Manager: $60,000

– Administrative Assistant 2: $45,000

– Total People: 4

– Total Payroll: $255,000

Financial Plan:

Like New Carpet Cleaning will add at least one new local base each year, consisting of parking for the company van and storage for cleaning equipment and supplies. This future growth will be financed by cash generated from existing locations and debt to finance vehicle and cleaning equipment purchases.

Start-up Funding:

Start-up funding will be provided by a combination of owner investment and investor funding, with a small amount of debt. The owners will contribute $20,000 of initial funding to develop a prototype of the website. 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 assigning most costs directly to the cleaning service (gasoline, cleaning crew labor, and cleaning products) and leveraging Like New’s website, which will reduce administrative costs.

Carpet and Upholstery Cleaning Services Web Plan Summary

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, as the operations will be scaled up over a larger geographic region. In the fourth and fifth years, this will pay off with healthy profits, proving the viability of the business model for franchise or statewide expansion.

Direct labor is estimated at 35% of sales revenue (with the actual cleaning cost representing about a 280% markup of the labor). Direct labor is included in the cost of sales.

Carpet and Upholstery Cleaning Services Web Plan Summary

Carpet and Upholstery Cleaning Services Web Plan Summary

Carpet and Upholstery Cleaning Services Web Plan Summary

Carpet and Upholstery Cleaning Services Web Plan Summary

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.

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Carpet and Upholstery Cleaning Services Web Plan Summary

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 will increase due to the growth of the business and the need to purchase 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 expansion of the business.

Pro Forma Balance Sheet
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
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

Business Ratios

The business will have higher SGA expenses as a ratio of sales compared to the carpet and upholstery cleaning industry as it requires a more professional, senior-level staff during its first years of operation. These years are key to establishing the systems and procedures which can be scaled for expansion. SGA as a percentage of sales will drop to lower than the industry average after this expansion due to the reduction in staff and office overhead allowed by its Web-based sales model. Savings from this will be put into advertising to support the rapid growth of the business.

Sales Forecast

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%, $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

This is a Pro Forma Profit and Loss statement, detailing the financial projections for a business over a twelve-month period. It provides information on sales, direct costs of sales, other costs of sales, gross margin, expenses, profit before interest and taxes, EBITDA, interest expense, taxes incurred, net profit, and net profit/sales. The table is divided into different months.

Furthermore, there is also a Pro Forma Cash Flow statement, which displays the projected cash inflows and outflows for the business over the same twelve-month period. It includes information on cash received, cash from operations, cash sales, additional cash received, expenditures, expenditures from operations, cash spending, bill payments, additional cash spent, sales tax, VAT, HST/GST paid out, principal repayment of current borrowing, other liabilities principal repayment, long-term liabilities principal repayment, purchase of other current assets, purchase of long-term assets, dividends, net cash flow, and cash balance. The table is, again, divided into different months.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 25.00% 25.00% 25.00% 25.00% -0.71%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 53.59%
Total Current Assets 77.00% 73.53% 77.04% 83.50% 89.33% 70.11%
Long-term Assets 23.00% 26.47% 22.96% 16.50% 10.67% 29.89%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities
Accounts Payable 74.30% 39.60% 48.90% 57.30%

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