Computer Consulting Business Plan
Calico Computer Consulting is being formed as a sole proprietorship owned and operated by Doug Burham. This plan is a guide for starting and managing the business and will also serve as the basis for a separate marketing plan. Here is a summary of the main points:
– The objectives of CCC are to generate a profit, grow at a manageable rate, and be a good citizen.
– The mission of CCC is to provide fast and reliable technical assistance to small office computer users.
– The keys to success for CCC are marketing, networking, responsiveness, quality, and generating repeat customers.
– The primary service offered initially will be hourly technical aid, with consideration for retainer contracts and projects in the future.
– The local market for this business is wide open for new and expanding consulting firms.
– An initial financial analysis shows outstanding promise for this venture. The computer consulting business is easy to start, requires little upfront capital, and has the potential to be lucrative in today’s high tech world.
In summary, this plan projects rapid growth and high net profits over the next three years. Implementing this plan, along with a comprehensive marketing plan, will ensure that Calico Computer Consulting becomes a profitable venture for the owner.
1.1 Objectives
The objectives of this business plan are:
1. To provide a guide for starting and managing this computer consulting business; a framework for developing a marketing plan.
2. The intended audience is the owner of this business only; this plan is not intended to obtain financing.
3. The scope of this plan is to provide monthly projections for the current year and yearly summaries for the following two years.
The objectives of Calico Computer Consulting are:
1. Profit – To generate sufficient profit to finance future growth and achieve other company objectives. (Net profit of at least 45% of sales in the first year).
2. Growth – To grow the business at a challenging yet manageable rate, leading the market with innovation. (Grow from 24 billable hours/week at end of Year 1 to 35 hours/week in Year 3).
3. Citizenship – To be an intellectual and social asset to the community and environment. (Contribute 5 hours per week as a volunteer, contribute 5% of pretax profits to charity).
1.2 Mission
Calico Computer Consulting’s mission is:
– Purpose – To provide fast, reliable technical assistance to local business/small office/home office computer users. CCC sells solutions & results!
– Vision – By providing fast response, informed expertise, and high-quality solutions, CCC generates enough satisfied repeat customers to provide a stable retainer base. This generates sufficient profit to provide a comfortable living for the owner.
– Mission – The short-term objective is to start this company quickly and inexpensively, with minimal debt. The long-term objective is to grow the company into a stable and profitable entity that the owner can easily and comfortably manage.
– Marketing Slogan – “Calico Computer Consulting is your computer paramedic…”
1.3 Keys to Success
The keys to success for Calico Computer Consulting are:
– Marketing and Networking (getting the name out there).
– Responsiveness (being an on-call computer paramedic with fast response time).
– Quality (getting the job done right the first time, offering a 100% guarantee).
– Relationships (developing loyal repeat customers – retainers).
Calico Computer Consulting will be a start-up venture with the following characteristics:
– CCC will initially be a sole proprietorship.
– The goal will be to start the venture as inexpensively as possible, with no debt financing.
– CCC will be a home office start-up, utilizing one studio room in the owner’s home.
2.1 Start-up Summary
In line with the company philosophy of avoiding debt, the goal is to start-up as inexpensively as possible. This is in line with industry figures that show that computer consulting start-ups have very low start-up costs. Total start-up expenses for CCC come to $2,050, all financed through owner investment.
– Most expenses are typical start-up paperwork fees (legal, accounting, etc.).
– Cash requirements consist of one month’s rent as a reserve.
– $500 for expensed equipment will be used to purchase a new All-In-One printer, fax, and answering machine to replace an aging inkjet printer.
Start-up Requirements
Legal – $250
Stationery etc. – $100
Brochures – $125
Accountant – $75
Insurance – $150
Rent – $425
Expensed Equipment – $500
Total Start-up Expenses – $1,625
Start-up Assets
Cash Required – $0
Other Current Assets – $0
Long-term Assets – $0
Total Assets – $0
Total Requirements – $1,625
Start-up Funding
Start-up Expenses to Fund – $1,625
Start-up Assets to Fund – $0
Total Funding Required – $1,625
Assets
Non-cash Assets from Start-up – $0
Cash Requirements from Start-up – $0
Additional Cash Raised – $425
Cash Balance on Starting Date – $425
Total Assets – $425
Liabilities and Capital
Liabilities
Current Borrowing – $0
Long-term Liabilities – $0
Accounts Payable (Outstanding Bills) – $0
Other Current Liabilities (interest-free) – $0
Total Liabilities – $0
Capital
Planned Investment – $2,050
Owner Investment – $2,050
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $2,050
Loss at Start-up (Start-up Expenses) – ($1,625)
Total Capital – $425
Total Capital and Liabilities – $425
Total Funding – $2,050
2.2 Company Locations and Facilities
This is a home office venture, located in one studio of the owner’s home.
Computer facilities will initially consist of the owner’s existing system.
Telephone – one line currently serves the location. A second line for data use should be added soon.
Utilities are already provided, included in the space rent of $425.
2.3 Company Ownership
Calico Computer Consulting will be created initially as a sole proprietorship, owned and operated by Doug Burham. Incorporation, probably as a LLC, will be explored as a later option.
Services
Calico Computer Consulting will offer small office/home office business owners a quick-response, reliable source of technical help for their computers.
CCC will offer three main services – Hourly Technical Aid, Retainer contracts for specific skills or systems, and Project consulting.
There appear to be four main classes of competition, the largest of which consists of individual proprietors and smaller consulting firms such as CCC. The competitive edge for CCC will be to expand on already existing relationships.
CCC will start with some basic sales literature, including logo and stationary, a brochure, and a basic web page. These will be self-designed and computer generated, of course.
Fulfillment of services will be provided exclusively by CCC’s owner.
Technology is obviously a critical component of this business: It will be important to stay up to date on both equipment and knowledge to remain competitive in the future.
Detailed descriptions of these points are found in the sections below.
3.1 Service Description
Calico Computer Consulting will offer three main services, corresponding to what industry experts have identified as the primary opportunities in computer consulting:
1. Hourly (Temporary Technical Aid) – The less traditional sort of short term assignment helping a company solve a software or hardware related problem. Includes both emergency and non-emergency technical assistance.
2. Retainer (Specific Skill) – The more traditional form of consulting, including regular system maintenance, software and hardware upgrades, and network administration. The owner’s particular area of expertise is in management consulting with regard to MIS.
3. Project (Bail-out or Specific Skill) – This will include such things as consulting on major purchases, system/network installation and testing, and major disaster recovery.
3.2 Sales Literature
Calico Computer Consulting will start with some basic self-generated literature to establish initial positioning:
– Logo and theme – A national catalog sales paper goods company has a wonderful line of blank papers with a computer theme that will serve as the “look” for CCC. A graphic artist friend of the owner has already commenced work on a matching logo.
– Stationery – The theme paper is available in various formats for use as company stationery.
– Brochure – Likewise, pre-printed paper is available, along with software templates for generating brochures
– Web Presence – Eventually a website will be developed as an “electronic brochure” as well as a resource site for the owner’s established client base.
– Response Templates – As common problems/solutions are encountered and solved, a set of standardized templates for initial responses will be developed. This will shorten response time and eliminate confusion in providing quick solutions to routine issues.
3.3 Fulfillment
The fulfillment of services for CCC is provided by the owner. The ultimate deliverable is the owner’s expertise and problem solving ability, coupled with an open mind and ease of communication that will result in the customer’s complete confidence in immediate and lasting results.
3.4 Competitive Comparison
There seems to be four major classes of competition in the local computer consulting industry:
– In-house MIS consultants – Usually employed by larger companies that can afford the fixed cost of a salaried or hourly employee.
– Individual proprietors & smaller consulting firms – As noted elsewhere in this plan, the bulk of Yellow Page advertisements are comprised of this group.
– Larger network and telecommunications consulting firms – Large, known-name companies such as Network One that specialize in providing total MIS services to larger companies that choose to outsource.
– Computer and electronics stores offering consulting services.
Of course, Calico Computer Consulting fits into the largest group as a sole proprietorship. The primary reason that customers would buy from CCC rather than competitors is the existing relationships that exist. Customer loyalty and satisfaction are the way to success for small service businesses such as this.
3.5 Technology
Technology is, of course, vital to the success of Calico Computer Consulting. It is imperative that the owner stay up-to-date on the latest technological developments in the computer industry. In addition, it will be important to devote a reasonable portion of each year’s revenues toward upgrading the equipment and software used by CCC in its normal operations.
Market Analysis Summary
Calico Computer Consulting will adopt a fairly intently focused market strategy.
A logical segmentation breaks the market down into the following: Home Office Businesses, Small Businesses, Medium Businesses, and Large Businesses. Descriptions are provided below.
The largest and most logical target markets for CCC are the Home Office and Small Businesses. These businesses mostly have a need for temporary technical aid, usually billed at an hourly rate. Some opportunity does exist, however, for retainer and/or specific project contracts.
While there are a fair number of competitors in the local area, they seem to be widely specialized and widely sized, leaving ample opportunity for CCC to create and expand a niche in the chosen market segments.
Finally worth noting is the growth trend for this market, estimated at around 9 to 10 percent annually through the beginning of the next century.
4.1 Market Segmentation
The following chart and table reflect the market segmentation for this business. The size and growth numbers are based on US Census data for the local region.
– Home Office Businesses – The largest and fastest-growing segment, this segment is obviously defined as small businesses that are based primarily out of the owner’s home. This is not the same as simple home computer users, which sources warn are NOT a viable market segment for computer consulting.
– Small Businesses – Defined by the government as businesses with 1 to 99 employees, this is the second largest and fastest growing segment in Eugene and Lane County.
– Medium Businesses – 100 to 499 employees.
– Large Businesses – 500 or more employees.
As is obvious in the pie chart, the first two segments comprise the bulk of opportunity for Calico Computer Consulting.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Home Office Businesses 10% 4,259 4,685 5,154 5,669 6,236 10.00%
Small Businesses 9% 3,931 4,285 4,671 5,091 5,549 9.00%
Medium Businesses 9% 159 173 189 206 225 9.07%
Large Businesses 9% 192 209 228 249 271 9.00%
Total 9.50% 8,541 9,352 10,242 11,215 12,281 9.50%
4.2 Target Market Segment Strategy
Entrepreneur Magazine suggests six market segments as a starting point:
– Businesses not using computers
– Small entrepreneurial businesses using one or more computers
– Small to medium-sized corps using computers on networks
– Large corps seeking problem-solving assistance (troubleshooting) with specific projects
– Government agencies, corporations, and other organizations in search of computer training
– Businesses in search of custom computer programming services
Calico Computer Consulting will focus on the top market segments only – an intently focused marketing strategy.
4.2.1 Market Trends
Three primary market trends seem to be important in this industry:
– Trend #1 – rapid growth in technology, need for continuous upgrades in both hardware and software.
– Trend #2 – predicted continued growth in consulting/outsourcing – companies being unwilling to pay fixed costs of salaries, choosing instead to treat computer upgrades and repair as variable costs.
– Trend #3 – rapid growth in the ratio of SOHO businesses to traditional medium-sized businesses.
These trends are predicted to continue well into the next century.
4.2.2 Market Growth
As noted in the previous section, several factors are predicted to continue well into the next decades, including the growth rates for this market:
– Growth rate citation – Entrepreneur Magazine says that the consulting industry in general will continue to grow at an annual rate of 9.1%
– Growth rate citation – Census data for each identified segment in the Lane County area roughly parallel this growth rate.
– Growth rate citation – Eugene Chamber of Commerce published data supports the Federal Census data, predicting continued and rapid growth, particularly in the small office/home office market segment.
4.2.3 Market Needs
According to Entrepreneur Magazine, experts in the consulting industry have identified three different opportunities that exist for computer consultants:
– Temporary Technical Aid: Short-term assignments finding solutions for businesses – noted as the largest market
– Specific Skill: Software specialty, system setup & purchasing guidance, systems reengineering/optimization, network admin, training, repair, database/application development, data storage, disaster recovery, security/data protection, telecommunications
– Bail-Out (Troubleshooting)
According to Entrepreneur Magazine, private home computer users are NOT a viable market for computer consultants.
4.3 Service Business Analysis
The computer consulting business for the local area is already well established, yet still allows ample opportunity for entry and growth for new participants. This is supported by the following points:
– There is a wide range of sizes and specialties among the existing consultants.
– Customers in this industry tend to be loyal, relying on the same consultant for future needs.
– An analysis of CCC’s main competitors shows no overwhelming strengths that would be significant barriers to CCC’s success. Likewise, identifying competitors’ weaknesses has illuminated several areas that CCC can target as marketing strategies.
In short, the business arena, while no longer brand new, is far from exhausted as an opportunity for a new and aggressive company or sole proprietor. By utilizing a logical and comprehensive marketing approach, CCC should easily find success in the computer consulting business.
4.3.1 Business Participants
A search of the local Yellow Pages revealed the following:
– Under the heading "Consultants – Computer & Data Processing," there were a total of four listings.
– Under "Computers – Service & Repair," there were 51 total listings, the majority of which seemed to be stores or companies.
– Under "Computers – Software & Services," there were 88 total listings. Thirteen of those were large companies such as [name omitted], [name omitted], and [name omitted] (a Portland firm). Sixteen were specialists in accounting software.
– Under "Computers – System Designers & Consultants," there were 45 total listings. About half had larger listings and/or company names that implied a larger size. Throughout all the listings, only four were clearly listed as individual practitioners. The most unique name amongst all listings was “[name omitted].”
The conclusion is that while there are a fair number of competitors in the geographic area, they are widely specialized and sized. Many of the larger participants appear to cater to larger clients, leaving plenty of opportunity for Calico Computer Consulting to focus on its chosen market segments.
4.3.2 Main Competitors
Below are examples of a brief analysis of CCC’s main competitors.
1. Competitor 1 [name omitted]
– Top strength – A very memorable name.
– Primary weakness – Focus primarily on one operating system (not used by businesses).
2. Competitor 2 [name omitted]
– Top strength – Longevity and experience.
– Primary weakness – Slow response and an unwillingness to take on new customers.
A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.
4.3.3 Competition and Buying Patterns
The local computer consulting industry is fragmented, with a wide variety of sizes and specialties. Two general factors of competition show up in the analysis:
– Larger competitors provide network expertise to large companies or provide “consulting” service to products they sell.
– Smaller-sized companies favor larger businesses as their clients.
Customer buying patterns highlight the opportunity for Calico Computer Consulting. Home business/small business owners tend to favor the personal relationship that can develop with the smaller consulting firm. Several small business owners interviewed for this research admitted being intimidated and overwhelmed by the prospect of calling a larger firm for help.
Another important buying pattern is that customers who have established a relationship with a computer consultant tend to stay loyal as long as the service and results remain acceptable. This will be critical to the success of CCC.
Strategy and Implementation Summary
Calico Computer Consulting will focus on the following to establish and grow the business:
– Four main promotion strategies: networking and referrals, web-based promotion, traditional media advertising, and some non-traditional promotion methods.
– A value proposition of timely and practical solutions at a reasonable rate, coupled with a 100% guarantee.
– A competitive edge based on cultivating existing customer relationships.
– A comprehensive and detailed marketing and sales strategy, covered in depth in a separate marketing plan.
5.1 Strategy Pyramid
The following four marketing strategies are suited for a modern high-tech business like computer consulting:
– Strategy 1 – Networking & Referrals – Using existing contacts and clients to build a larger network of potential clients.
– Strategy 2 – Web Promotion – Using a web page to showcase the owner’s skills and knowledge, providing an “electronic brochure” as well as useful technical information free of charge.
– Strategy 3 – Advertising – Traditional methods such as Yellow Page ads, newspaper classified and display ads, local television cable access advertisements.
– Strategy 4 – Non-traditional – Creative and unique advertising such as door hangers, bumper stickers, etc.
A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.
5.2 Value Proposition
The value proposition offered by Calico Computer Consulting is quite simple: timely and practical solutions for clients’ computer problems and upgrades, at a reasonable and competitive rate. Most importantly, CCC offers a 100% satisfaction guarantee, building and retaining the client’s confidence.
5.3 Competitive Edge
CCC’s competitive edge is that the owner already has significant high-quality relationships with current and potential clients. In essence, CCC has already overcome the barriers to entry in the consulting field and is in the process of formalizing the business.
5.4 Marketing Strategy
The topics below briefly outline the marketing strategy for Calico Computer Consulting. A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.
5.4.1 Marketing Programs
The most important marketing program for CCC is to get the word out through a combination of the following:
– Sending a letter of announcement and brochure to all existing contacts and customers.
– Following the steps of a public relations campaign (press releases, announcements, etc.).
– Developing and purchasing "grand opening" announcements in the local news media.
A more comprehensive discussion of these programs is presented in the CCC Marketing Plan.
5.4.2 Positioning Statement
For the home business/small business owner who needs technical help with their business computers, Calico Computer Consulting provides fast and effective response that gets the business back up and running. Unlike [key competition], CCC offers a 100% satisfaction guarantee.
5.4.3 Pricing Strategy
Calico Computer Consulting will adopt a price matching strategy rather than entry pricing. A survey of local consulting businesses revealed the following:
– Hourly Rate Pricing – The average price charged was $75.00 per hour.
– Retainer Pricing – Based on the expected minimum number of hours per month, the average was $150.
– Project Pricing – Based on a daily rate (8 hours x $75.00/hour)
5.4.4 Promotion Strategy
The primary promotion strategy for CCC will focus on cultivating existing relationships, using known networking techniques to develop referrals and new customer leads. Additionally, a blend of web-based marketing and traditional public relations and media marketing will be utilized. Ultimately, customer satisfaction will be the key to generating repeat and new business.
5.5 Sales Strategy
The sales strategy for Calico Computer Consulting is simple and straightforward: customer satisfaction. Happy customers will be repeat customers and provide referrals to new customers.
Sales forecast figures are based on industry growth projections for a consulting startup and reflect repeat business generated through meeting customer needs. While some business can be generated by soliciting customers to upgrade their systems and software, the bulk of the business will be emergency technical aid.
A more comprehensive discussion of the sales strategy is presented in the CCC Marketing Plan.
5.5.1 Sales Forecast
The sales figures shown below include projections based solely on hourly rate consulting during the first year of business. Yearly figures for subsequent years include the growth of retainer and project consulting income as business grows.
Cost of sales for consulting services is the hourly payments earned by the owner.
Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Hourly Rate Consulting 660 1,152 1,152
Retainer Consulting 0 5 10
Project Consulting 0 6 12
Total Unit Sales 660 1,163 1,174
Unit Prices Year 1 Year 2 Year 3
Hourly Rate Consulting $75.00 $75.00 $75.00
Retainer Consulting $0.00 $150.00 $150.00
Project Consulting $0.00 $600.00 $600.00
Sales
Hourly Rate Consulting $49,500 $86,400 $86,400
Retainer Consulting $0 $750 $1,500
Project Consulting $0 $3,600 $7,200
Total Sales $49,500 $90,750 $95,100
Direct Unit Costs Year 1 Year 2 Year 3
Hourly Rate Consulting $10.00 $10.00 $10.00
Retainer Consulting $0.00 $20.00 $20.00
Project Consulting $0.00 $79.98 $79.98
Direct Cost of Sales
Hourly Rate Consulting $6,598 $11,517 $11,517
Retainer Consulting $0 $100 $200
Project Consulting $0 $480 $960
Subtotal Direct Cost of Sales $6,598 $12,097 $12,677
5.6 Strategic Alliances
Calico Computer Consulting needs to network with local computer stores and local business organizations, such as the Chamber of Commerce and local SBDC, to develop valuable strategic alliances. These organizations may not be customers themselves, but they can provide leads to new customers.
5.7 Milestones
The milestones listed below primarily outline the tasks required to develop this business plan and get the startup business up and running. The milestones table in the marketing plan will provide a more comprehensive listing of the tasks involved in promoting and sustaining CCC’s business.
Milestones
Milestone Start Date End Date Budget Manager Department
Research the right business 10/1/1998 5/1/1999 $0 Owner N/A
Test assumptions 10/1/1998 5/1/1999 $0 Owner N/A
Improve business mgmt. skills 10/1/1998 10/1/1999 $0 Owner N/A
Determine the right business 5/1/1999 6/1/1999 $0 Owner N/A
Prepare personal financials 5/1/1999 7/1/1999 $0 Owner N/A
Decide on target customers 5/1/1999 6/1/1999 $0 Owner N/A
Know the industry 5/1/1999 8/1/1999 $0 Owner N/A
Decide on location 5/1/1999 6/1/1999 $0 Owner N/A
Select business name 7/1/1999 8/1/1999 $0 Owner N/A
Secure location 7/1/1999 8/1/1999 $0 Owner N/A
Establish business contacts 7/1/1999 9/1/1999 $0 Owner N/A
Expand information base 7/1/1999 9/1/1999 $0 Owner N/A
Choose business form 7/1/1999 8/1/1999 $0 Owner N/A
Establish good information flow 7/1/1999 8/1/1999 $0 Owner N/A
Research demographic info 7/1/1999 7/15/1999 $0 Owner N/A
Establish financial objectives 8/1/1999 8/15/1999 $0 Owner N/A
Establish pricing strategy 8/1/1999 9/1/1999 $0 Owner N/A
Establish sales forecast 8/1/1999 8/15/1999 $0 Owner N/A
Determine capital needs 8/1/1999 9/1/1999 $0 Owner N/A
Prepare marketing plan 9/1/1999 9/15/1999 $0 Owner N/A
Prepare balance sheet 9/1/1999 10/1/1999 $0 Owner N/A
Establish bank relationship 9/1/1999 9/15/1999 $0 Owner N/A
Prepare for opening 9/1/1999 9/15/1999 $0 Owner N/A
Check all systems 9/15/1999 10/1/1999 $0 Owner N/A
Opening final prep 9/15/1999 10/1/1999 $0 Owner N/A
Totals $0
Management Summary
Since Calico Computer Consulting is a sole proprietorship and this is an internal plan, this topic is moot.
The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix.
7.1 Important Assumptions
This information is presented in the table below.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
7.2 Key Financial Indicators
This information is presented in the chart below.
The table and chart below summarize the break-even analysis for Calico Computer Consulting. Fixed costs are minimal and include only rent and utilities for the home office. Variable costs are assumed to be 13% of sales, an average figure from consulting sources.
Break-even Analysis:
Monthly Units Break-even: 14
Monthly Revenue Break-even: $1,046
Assumptions:
– Average Per-Unit Revenue: $75.00
– Average Per-Unit Variable Cost: $10.00
– Estimated Monthly Fixed Cost: $906
7.4 Projected Profit and Loss
This table presents the information. The owner’s salary is included in the Sales Forecast table as Direct Unit Cost and appears here as Direct Cost of Sales. Payroll Tax is calculated based on that figure.
Pro Forma Profit and Loss:
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $49,500 | $90,750 | $95,100 |
| Direct Cost of Sales | $6,598 | $12,097 | $12,677 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $6,598 | $12,097 | $12,677 |
| Gross Margin | $42,902 | $78,653 | $82,423 |
| Gross Margin % | 86.67% | 86.67% | 86.67% |
| Expenses | |||
| Payroll | $0 | $0 | $0 |
| Marketing/Promotion | $2,477 | $4,500 | $4,680 |
| Depreciation | $0 | $0 | $0 |
| Rent | $5,100 | $5,100 | $5,100 |
| Utilities | $1,500 | $1,500 | $1,500 |
| Insurance | $1,800 | $2,000 | $2,200 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $10,877 | $13,100 | $13,480 |
| Profit Before Interest and Taxes | $32,025 | $65,553 | $68,943 |
| EBITDA | $32,025 | $65,553 | $68,943 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $9,607 | $19,666 | $20,683 |
| Net Profit | $22,417 | $45,887 | $48,260 |
| Net Profit/Sales | 45.29% | 50.56% | 50.75% |
Projected Cash Flow:
7.5 Projected Cash Flow
The following chart and table present the projected cash flow information.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $12,375 | $22,688 | $23,775 |
| Cash from Receivables | $26,168 | $58,931 | $70,362 |
| Subtotal Cash from Operations | $38,543 | $81,619 | $94,137 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $38,543 | $81,619 | $94,137 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $0 | $0 | $0 |
| Bill Payments | $23,441 | $44,817 | $46,677 |
| Subtotal Spent on Operations | $23,441 | $44,817 | $46,677 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $23,441 | $44,817 | $46,677 |
| Net Cash Flow | $15,101 | $36,802 | $47,460 |
| Cash Balance | $15,526 | $52,328 | $99,788 |
7.6 Projected Balance Sheet
This information is presented in the table below.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $15,526 | $52,328 | $99,788 |
| Accounts Receivable | $10,958 | $20,089 | $21,052 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $26,484 | $72,417 | $120,839 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $26,484 | $72,417 | $120,839 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $3,641 | $3,687 | $3,850 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $3,641 | $3,687 | $3,850 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $3,641 | $3,687 | $3,850 |
| Paid-in Capital | $2,050 | $2,050 | $2,050 |
| Retained Earnings | ($1,625) | $20,792 | $66,679 |
| Earnings | $22,417 | $45,887 | $48,260 |
| Total Capital | $22,842 | $68,729 | $116,990 |
| Total Liabilities and Capital | $26,484 | $72,417 | $120,839 |
| Net Worth | $22,842 | $68,729 | $116,990 |
7.7 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379, Computer Related Services, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 83.33% | 4.79% | 7.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 41.37% | 27.74% | 17.42% | 21.70% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 50.20% |
| Total Current Assets |
Sales Forecast Unit Sales Hourly Rate Consulting: 0% 12 24 30 36 42 48 54 60 72 84 96 102 Retainer Consulting: 0% 0 0 0 0 0 0 0 0 0 0 0 0 Project Consulting: 0% 0 0 0 0 0 0 0 0 0 0 0 0 Total Unit Sales: 12 24 30 36 42 48 54 60 72 84 96 102 Unit Prices Hourly Rate Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 Retainer Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 Project Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 Sales Hourly Rate Consulting: $900 $1,800 $2,250 $2,700 $3,150 $3,600 $4,050 $4,500 $5,400 $6,300 $7,200 $7,650 Retainer Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Project Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Sales: $900 $1,800 $2,250 $2,700 $3,150 $3,600 $4,050 $4,500 $5,400 $6,300 $7,200 $7,650 Direct Unit Costs Hourly Rate Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 13.33% $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Retainer Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 13.33% $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 Project Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 13.33% $10.00 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 Direct Cost of Sales Hourly Rate Consulting: $120 $240 $300 $360 $420 $480 $540 $600 $720 $840 $960 $1,020 Retainer Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Project Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Direct Cost of Sales: $120 $240 $300 $360 $420 $480 $540 $600 $720 $840 $960 $1,020 Personnel Plan Name or Title or Group: 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Name or Title or Group: 0% $0 $0 $0 $0 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 Sales | $225 | $450 | $563 | $675 | $788 | $900 | $1,013 | $1,125 | $1,350 | $1,575 | $1,800 | $1,913 | |
| Cash from Receivables | $0 | $23 | $698 | $1,361 | $1,699 | $2,036 | $2,374 | $2,711 | $3,049 | $3,398 | $4,073 | $4,748 | |
| Subtotal Cash from Operations | $225 | $473 | $1,260 | $2,036 | $2,486 | $2,936 | $3,386 | $3,836 | $4,399 | $4,973 | $5,873 | $6,660 | |
| 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 | $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 | $0 |
| Sales of Long-term Assets | $0 | $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 | $0 |
| Subtotal Cash Received | $225 | $473 | $1,260 | $2,036 | $2,486 | $2,936 | $3,386 | $3,836 | $4,399 | $4,973 | $5,873 | $6,660 | |
| Expenditures | |||||||||||||
| Expenditures from Operations | |||||||||||||
| Cash Spending | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Bill Payments | $29 | $888 | $1,267 | $1,460 | $1,653 | $1,846 | $2,038 | $2,231 | $2,430 | $2,816 | $3,201 | $3,580 | |
| Subtotal Spent on Operations | $29 | $888 | $1,267 | $1,460 | $1,653 | $1,846 | $2,038 | $2,231 | $2,430 | $2,816 | $3,201 | $3,580 | |
| Additional Cash Spent | |||||||||||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Spent | $29 | $888 | $1,267 | $1,460 | $1,653 | $1,846 | $2,038 | $2,231 | $2,430 | $2,816 | $3,201 | $3,580 | |
| Net Cash Flow | $196 | ($416) | ($7) | $576 | $833 | $1,090 | $1,348 | $1,605 | $1,969 | $2,157 | $2,671 | $3,080 | |
| Cash Balance | $621 | $205 | $198 | $773 | $1,607 | $2,697 | $4,045 | $5,650 | $7,618 | $9,775 | $12,446 | $15,526 |
Pro Forma Balance Sheet
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |||
| Starting Balances | ||||||||||||||
| Current Assets | ||||||||||||||
| Cash | $425 | $621 | $205 | $198 | $773 | $1,607 | $2,697 | $4,045 | $5,650 | $7,618 | $9,775 | $12,446 | $15,526 | |
| Accounts Receivable | $0 | $675 | $2,003 | $2,993 | $3,656 | $4,320 | $4,984 | $5,648 | $6,311 | $7,313 | $8,640 | $9,968 | $10,958 | |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Current Assets | $425 | $1,296 | $2,207 | $3,190 | $4,430 | $5,927 | $7,681 | $9,692 | $11,961 | $14,931 | $18,415 | $22,414 | $26,484 | |
| Long-term Assets | ||||||||||||||
| Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $
Business Plan Outline
|
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!