Contents
Engineering Consulting Business Plan
StructureAll Ltd. is a consulting firm specializing in structural engineering services. A home office in Yellowknife, NT will be established in the first year to reduce start-up costs. The founder, Philip Nolan, is a professional engineer with eighteen years of experience.
Philip Nolan provided an initial investment for start-up costs. More than half will be for start-up expenses, and the rest will be placed in the company accounts as working capital.
The firm specializes in three-dimensional modeling and visualization for clients. State-of-the-art analysis and design tools are integral to the business plan. Implementing a quality control and assurance program will focus on production work.
1.1 Objectives
- Achieve modest revenues in the first year, followed by steady growth over the next two years.
- Attain 20% market value by the end of the third year of operation.
- Significantly increase gross margin by the third year of operations.
1.2 Mission
Our mission is to provide clients in Canada’s North with structural engineering services for all types of buildings, from concept planning to completion, with a highly skilled professional team using common sense and practical experience.
1.3 Keys to Success
- Deliver professional quality services on time and within budget.
- Develop a follow-up strategy to assess performance with clients.
- Implement and maintain a quality control and assurance policy.
Company Summary
StructureAll Ltd. is a new company that offers professional engineering design services for clients involved in the management, maintenance, and planning of residential, commercial, and industrial buildings. Our primary focus will be the public sector market in remote communities across Canada’s North.
2.1 Company Ownership
StructureAll Ltd. will operate as a limited liability company, privately owned by Philip D. Nolan. Leslie C. Goit will also serve as a Director.
2.2 Start-up Summary
Our start-up expenses include initial legal expenses, licenses, permits, stationary, specialty software, office equipment, and furniture. Additionally, an initial balance will be placed in the company accounts. The software purchases consist of $5,000 for AutoCADD® 2000, $1,800 for National Master Specifications, and $200 for QuickBooks® (accounting package).
Philip Nolan will contribute towards the overall start-up costs.
Start-up Funding
Start-up Expenses to Fund: $13,000
Start-up Assets to Fund: $12,000
Total Funding Required: $25,000
Assets
Non-cash Assets from Start-up: $0
Cash Requirements from Start-up: $12,000
Additional Cash Raised: $0
Cash Balance on Starting Date: $12,000
Total Assets: $12,000
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
Owner: $0
Investor: $0
Additional Investment Requirement: $25,000
Total Planned Investment: $25,000
Loss at Start-up (Start-up Expenses): ($13,000)
Total Capital: $12,000
Total Capital and Liabilities: $12,000
Total Funding: $25,000
Company Locations and Facilities
We will establish a home office in Yellowknife, NT to reduce start-up costs. The office space is estimated to be 150 square feet. We will install a dedicated fax line and high-speed Internet connection. An interactive website will also be developed as a marketing tool. The domain name "structureall.com" has been reserved.
Services
StructureAll Ltd. offers complete structural engineering services with a focus on residential, commercial, and industrial buildings. Our projects include renovations, rehabilitation, additions, and new construction. We provide innovative and economical design services using state-of-the-art technology. We cater to projects of all sizes and specialize in smaller, unique design projects.
Competitive Comparison
StructureAll Ltd. offers superior service and state-of-the-art analysis and design capabilities. We provide three-dimensional visualization services to minimize spatial conflicts. Our competitors mostly rely on two-dimensional models. We have a quality assurance and control program for all projects, implement an integrated database for easy access to structural elements, and follow the standards of the American Institute of Architects (AIA).
Sales Literature
We will develop a modular brochure system covering various target market segments. Our website will include a description of our services, areas of operation, contact information, project examples, and a biography of Philip D. Nolan. We will also create templates for project proposals.
Service Description
Project Consulting: Proposal-based consulting for planning and implementation.
Forensic Investigations: Troubleshooting and damage analysis services.
Project Management: Comprehensive project management services.
Dispute Resolution: Arbitration, mediation, and expert reports for litigation.
Restoration Engineering: Repair services for building structures.
Home Inspections: Assessment of residential systems with detailed reports.
Fulfillment
We will outsource CADD services, specialty connection designs, and analysis support services. We have alliances with suppliers of structural elements. In the future, we plan to secure a storefront presence in Yellowknife and offer work experience to engineering students.
Technology
We maintain comprehensive Windows-based analysis tools for structural design. Our website includes file transfer protocol capabilities.
Future Services
Quality Control and Assurance: Certification services for welding industry firms.
Fabrication and Detailing Drawings: Steel and concrete construction support.
Toll-Free Communications: 24/7 access for clients.
Market Analysis Summary
StructureAll Ltd. focuses on traditional Architect/Engineering (A/E) contracts. We primarily serve architectural/engineering firms and government departments. We also target law firms, contractors, municipal governments, private individuals, and realtors. The market is divided as follows: Architecture Design (65%), Structural Design (10%), Mechanical Design (15%), and Electrical Design (10%). Established architectural/engineering firms account for 65% of the market share.
Market Segmentation
1. Established Architectural and Engineering firms: We offer structural engineering services either as a complete process or as assistance to in-house staff.
2. Territorial and Federal Governmental Departments: We provide consulting, project management, forensic, and restoration engineering services.
3. Law Firms: We offer dispute resolution and forensic engineering services.
4. Contractors: We provide design/build services and sealed alternatives.
5. Municipal Governments: We offer consulting services, and train interested students in engineering.
6. Private Individuals: We focus on homeowners and offer home inspections.
7. Realtors: We promote our services, especially home inspections.
The Potential Market Chart and Market Analysis Table represent the percentage contribution of each group to our services. Established architectural/engineering firms hold the largest market share at 65%, while other participants have smaller proportions.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Architectural/Engineering Firms 0% 65 65 65 65 65 0.00%
Territorial/Federal Governments 0% 10 10 10 10 10 0.00%
Law Firms 0% 5 5 5 5 5 0.00%
Contractors 0% 5 5 5 5 5 0.00%
Municipal Governments 0% 5 5 5 5 5 0.00%
Private individuals 0% 5 5 5 5 5 0.00%
Realtors 0% 5 5 5 5 5 0.00%
Total 0.00% 100 100 100 100 100 0.00%
4.2 Service Business Analysis
The following sections describe these aspects of the service business environment:
– Business Participants
– Competition and Buying Patterns
– Main Competitors
4.2.1 Business Participants
The majority of consulting services cater to the needs of Territorial Governments. The Territorial Governments operate on a budget of approximately $1,170 million per year, based on the 1998/1999 Main Estimates. Of this, approximately $1,028 million is spent on Operating and Maintenance Expenditures while $142 million is allocated to Capital Expenditures.
Within the Capital Expenditures, "Buildings and Works" is a sub-category. This is the area of the annual operating budget from which all building design consultants must draw upon. Our analysis of the 1998/1999 Main Estimates indicates a total expenditure of $59,339,000. A typical A/E contract derives fee estimates from total budgets. For this analysis, we will apply 9% as a guideline for design fees. This yields about $5,340,000 in design fees available for distribution to the consulting industry.
The major clients within Territorial Governments include:
– Department of Education
– Department of Transportation
– Department of Municipal and Community Affairs
Our competition matrix indicates a total of 102 persons within the consulting field in the Territories. This total has been subdivided into the types of positions these people hold. Based on salary expectations, including 30% for administration burdens, the value is about $7,800,000. This figure represents an estimate of the revenues required to sustain engineering consultants in the Territories.
From this evaluation, Territorial Governments account for close to 70% of design fees while other participants in the building marketplace account for the balance. The Territorial Governments retain consultants for the following types of buildings:
– Schools
– Health Centres
– Community Halls
– Arenas
– Warehouses
– Firehalls
These types of buildings are constructed on a rotating basis across several communities in the NT. In addition to new construction, rehabilitation, renovations, and additions are also in demand.
Typically, the Territorial Governments issue a proposal call to consultants to service these needs. StructureAll will position itself as a Structural Sub-Consultant or resource to the Prime Consultant.
StructureAll Ltd. will also promote its services as structural specialists and project managers to the Territorial Governments.
4.2.2 Competition and Buying Patterns
Pricing of projects and billing rates are variable. In consulting at this level, it is easier to be priced too low than too high. Clients and potential clients expect to pay substantial fees for the best quality professional advice. The nature of the billing, however, is sensitive. Clients are much more likely to be offended when a job starts at $20K and ends up at $30K because of overruns, than if the same job started at $30K or even $35K.
Clients rarely compare consultants directly, looking for two or more possible providers of a proposed project or job. Usually, they follow word-of-mouth recommendations and either go for the job or not, rather than selecting from a menu of possible providers.
The most important element of general competition is what it takes to keep clients for repeat business. It is worth making concessions in any single project to maintain a client relationship that brings the client back for future projects.
4.2.3 Main Competitors
1. Ferguson Simek Clark (FSC Group): This architectural and multi-discipline engineering firm, with branch offices in Iqaluit, NT, and Whitehorse, YT, would be our main competitor. While they have strengths in undertaking a project from inception through to completion, their weakness lies in their understaffed structural engineering group. They underutilize programs for structural analysis and design.
2. A.D. Williams Engineering Ltd. (ADWEL): This multi-discipline engineering firm is well established in Yellowknife. Their head office is located in Edmonton, Alberta. They can draw on additional resources as required to meet project demands. At present, there is no resident structural engineer on staff in Yellowknife.
3. Girvan and Associates: This small architectural and engineering firm specializes in providing services for residential construction projects. It is our hope that we can form a strategic alliance to carry out consulting work jointly.
Strategy and Implementation Summary
StructureAll Ltd. will focus on the Western Arctic area initially. We believe the creation of Nunavut will still provide opportunities for structural engineering services; however, a separate Association of Professional Engineers for Nunavut is anticipated.
We are also licensed to practice in the Yukon Territories, although we have not planned for aggressive marketing in this area.
The target client is usually an Architect Manager.
5.1 Competitive Edge
StructureAll Ltd. offers the following competitive edge:
– State-of-the-art modeling, design, analysis, and drafting capabilities.
– Quality control and assurance program.
– An Internet website (http://www.structureall.com) and email ([email protected]).
To develop good business strategies, perform a SWOT analysis of your business.
The following sections describe our positioning statement, pricing, and promotion strategy.
5.2.1 Promotion Strategy
We will use the Internet extensively in our sales promotion. Together with a targeted direct mail and email campaign, we will make all major players in the marketplace aware of our presence.
We will focus our limited advertising budgets to promote community-sponsored events. We will also offer technical services at discount rates to non-profit organizations.
When traveling to remote communities, we will contact local principals in elementary and high schools offering them a speaker on structural engineering as a career choice.
StructureAll Ltd. will apply for the Northwest Territories Business Incentive Policy, which provides incentives to firms resident in the Northwest Territories.
5.2.2 Positioning Statement
For established engineering and architectural firms in Yellowknife who require structural engineering sub-consultant services, StructureAll Ltd. offers a competitive and economical option. Projects may be delegated to StructureAll Ltd. directly or arrangements can be made to supplement and assist their own in-house staff.
5.2.3 Pricing Strategy
Consulting work is billed on an hourly basis to pre-determined levels dictated by project schedule milestones. We have assigned rates of $80/hour for basic consulting services and $40/hour for drafting services.
5.3 Sales Strategy
Billing rates are not negotiated. One exception to this rule would be for not-for-profit organizations, where marketing can be traded for services in kind.
5.3.1 Sales Forecast
We expect sales to remain constant after three months of operation. The first two months will be slow, with limited revenues while a generic quality management plan is formulated and basic office administration tasks are completed.
Direct unit costs for the first year are set at less than one-third of unit revenues, yielding a high gross margin. In the third year of operations, we plan to increase gross margin by providing a more efficient service to our clients.
Our unit rate for basic consulting services is set at $80/hour, and $40/hour for CADD services.
Sales Forecast
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Unit Sales | |||
| Project Consulting | 690 | 750 | 800 |
| Project Management | 240 | 260 | 280 |
| Home Inspections | 96 | 110 | 120 |
| Computer Aided Drafting Services | 890 | 1,000 | 1,050 |
| Total Unit Sales | 1,916 | 2,120 | 2,250 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Project Consulting | $80.00 | $80.00 | $80.00 |
| Project Management | $80.00 | $80.00 | $80.00 |
| Home Inspections | $80.00 | $80.00 | $80.00 |
| Computer Aided Drafting Services | $40.00 | $40.00 | $80.00 |
| Sales | |||
| Project Consulting | $55,200 | $60,000 | $64,000 |
| Project Management | $19,200 | $20,800 | $22,400 |
| Home Inspections | $7,680 | $8,800 | $9,600 |
| Computer Aided Drafting Services | $35,600 | $40,000 | $84,000 |
| Total Sales | $117,680 | $129,600 | $180,000 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Project Consulting | $24.00 | $20.00 | $16.00 |
| Project Management | $24.00 | $20.00 | $16.00 |
| Home Inspections | $24.00 | $20.00 | $16.00 |
| Computer Aided Drafting Services | $12.00 | $10.00 | $8.00 |
| Direct Cost of Sales | |||
| Project Consulting | $16,560 | $15,000 | $12,800 |
| Project Management | $5,760 | $5,200 | $4,480 |
| Home Inspections | $2,304 | $2,200 | $1,920 |
| Computer Aided Drafting Services | $10,680 | $10,000 | $8,400 |
| Subtotal Direct Cost of Sales | $35,304 | $32,400 | $27,600 |
5.4 Milestones
The following table shows important program milestones, dates, managers in charge, and budgets. It reflects our focus on implementation planning.
The table doesn’t show the dedication behind it. Our business plan includes provisions for plan-vs.-actual analysis and monthly updates to compare variances and plan adjustments.
Milestones
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Complete Incorporation | 4/1/1999 | 4/15/1999 | $500 | PN | Administrative |
| Acquire Tradename for Internet Website | 3/6/1999 | 3/6/1999 | $400 | PN | Administrative |
| Submit Business License Application to City | 4/1/1999 | 4/16/1999 | $250 | PN | Administrative |
| Acquire WCB Coverage | 4/1/1999 | 4/16/1999 | $50 | PN | Administrative |
| Apply for Staad-Pro Core Financing | 4/1/1999 | 4/16/1999 | $0 | PN | Administrative |
| Acquire E&O Insurance | 4/1/1999 | 4/16/1999 | $1,200 | PN | Administrative |
| Totals | $2,400 | ||||
Management Summary
StructureAll Ltd. will initially have one employee who is also acting as general manager. Phil Nolan will be responsible for all daily operations in the firm.
6.1 Management Team
Philip Nolan, P. Eng. has eighteen years of progressive and responsible engineering experience. Phil will be responsible for client solicitation, marketing, promotion, and daily business operations. He graduated from McGill University in Montreal, Quebec in 1981 with a Bachelor of Engineering degree.
After graduating in 1981, Phil worked for consulting engineers in Toronto, Ontario on various transportation planning projects.
In 1982, Phil moved to Yellowknife where he worked for the GNWT as a Project Engineer. Phil gained experience working on community development and transportation projects, including Little Buffalo River Bridge, Bridge Inspections, and Bridge Rehabilitations. Phil was with the GNWT for six years.
From 1988 to 1991, Phil worked for Foundation Co. of Canada Ltd., a large multi-national contracting firm as a Project Engineer, gaining experience in explosives usage at the Magpie River Hydro Development and continued gaining experience on several bridge projects.
In 1992, Phil worked for Reid Crowther & Partners Ltd. out of Edmonton, Alberta on various bridge design and rehabilitation projects, including the Whitemud Ravine Pedestrian Bridges.
From 1993 to 1995, Phil was self-employed as a private consultant, offering quality control and assurance services for building construction. He gained considerable experience in Preserved Wood Foundations and their use in residential and commercial applications.
In May of 1995, Phil joined the Ferguson Simek Clark (FSC) team of professionals and was responsible for all structural design, including quality control and assurance services for schools, arenas, health centers, and other buildings.
Phil will be the principal designer of all projects at StructureAll Ltd., and he is currently working on a contract basis for Ferguson Simek Clark.
6.2 Management Team Gaps
StructureAll Ltd. will require administrative support to ensure timely billing of clients. We will seek external assistance to keep our books in order and up to date.
To achieve self-sufficiency in computer-aided drafting capabilities, Phil will need to become more familiar with AutoCADD 2000 as a drafting tool. We will invest in continuing education to fulfill this requirement, as outlined in the business plan.
6.3 Personnel Plan
The following table summarizes our personnel expenditures for the first three years, with compensation increasing from $50K the first year to $70K in the third. The detailed monthly personnel plan for the first year is included in the appendix.
Personnel Plan
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Owner | $50,000 | $60,000 | $70,000 |
| Name or Title or Group | $0 | $0 | $0 |
| Total People | 0 | 0 | 0 |
| Total Payroll | $50,000 | $60,000 | $70,000 |
The financial plan summarizes information regarding the following items:
Important Assumptions.
Key Financial Indicators.
Break-Even Analysis.
Projected Profit and Loss.
Projected Cash Flow.
Projected Balance Sheet.
Business Ratios.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix.
Some of the more important underlying assumptions are:
We assume a strong economy, without a major recession.
We assume the creation of Nunavut will not significantly impact the delivery of engineering services.
Interest rates, tax rates, and personnel burdens are based on conservative assumptions.
General Assumptions
| 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
The following benchmark chart indicates our key financial indicators for the first three years. We anticipate modest sales growth and a slight reduction in operating expenses for the presented years.
7.3 Break-even Analysis
The table and chart below summarize our break-even analysis. They show the number of billing targets per month needed to cover our costs, based on our estimated monthly fixed costs. We anticipate reaching break-even a few months into the business operation.
The break-even analysis assumes unit variable costs at 30 percent of unit revenue. The unit revenue value of $60/hour applies to all the types of services offered.
Break-even Analysis:
Monthly Units Break-even: 111
Monthly Revenue Break-even: $6,845
Assumptions:
Average Per-Unit Revenue: $61.42
Average Per-Unit Variable Cost: $18.43
Estimated Monthly Fixed Cost: $4,792
7.4 Projected Profit and Loss:
The gross margin for a service-based business reflects the efficiency of service delivery. In the first year of operations, we aim for a high gross margin, which is reasonable for a consulting business. In the second and third years, we expect slightly increased gross margins to demonstrate improved efficiency. Net Profit/Sales will be modest in the first year, with slight increases in the following years. To fulfill our mission statement and reduce start-up costs, we have arranged to purchase software on quarterly repayments:
– We will purchase Staad-Pro Core, a structural engineering design and drafting suite, from Research Engineers Ltd. This program meets our three-dimensional analysis and design requirements and supports Canadian codes and standards. We will acquire this tool through the authorized Canadian reseller, Detech Corporation Ltd., with four payments of $1,550 spread over the first year of operations.
– For all consultants working on behalf of the Territorial Governments, Errors and Omissions Insurance is mandatory. Falconair Insurance has provided a quotation of $1,200/year for this coverage. The start-up costs include the first year’s premium payments, with subsequent years requiring the same annual premium.
– Website hosting fees are included as quarterly payments to Internic.com, our Web host. This service also provides file transfer protocol capabilities, enabling us to share electronic media on the Internet with our clients and strategic allies.
Pro Forma Profit and Loss
Sales:
– Year 1: $117,680
– Year 2: $129,600
– Year 3: $180,000
Direct Cost of Sales:
– Year 1: $35,304
– Year 2: $32,400
– Year 3: $27,600
Other Costs of Sales:
– Year 1-3: $0
Total Cost of Sales:
– Year 1: $35,304
– Year 2: $32,400
– Year 3: $27,600
Gross Margin:
– Year 1: $82,376
– Year 2: $97,200
– Year 3: $152,400
Gross Margin %:
– Year 1: 70.00%
– Year 2: 75.00%
– Year 3: 84.67%
Expenses:
– Payroll:
– Year 1: $50,000
– Year 2: $60,000
– Year 3: $70,000
– Marketing/Promotion:
– Year 1-3: $0
– Depreciation:
– Year 1-3: $0
– Website Hosting Fees:
– Year 1-3: $0
– Engineering Assoc Annual Fees:
– Year 1-3: $0
– Continuing Education:
– Year 1-3: $0
– Yellow Pages/White Pages:
– Year 1-3: $0
– Telephone/Fax:
– Year 1-3: $0
– Software Purchases (Staad-Pro Core):
– Year 1-3: $0
– Utilities:
– Year 1-3: $0
– Errors and Omissions Insurance:
– Year 1-3: $0
– Rent:
– Year 1-3: $0
– Payroll Taxes:
– Year 1: $7,500
– Year 2: $9,000
– Year 3: $10,500
– Contract/Consultants:
– Year 1-3: $0
– Other:
– Year 1-3: $0
Total Operating Expenses:
– Year 1: $57,500
– Year 2: $69,000
– Year 3: $80,500
Profit Before Interest and Taxes:
– Year 1: $24,876
– Year 2: $28,200
– Year 3: $71,900
EBITDA:
– Year 1: $24,876
– Year 2: $28,200
– Year 3: $71,900
Interest Expense:
– Year 1-3: $0
Taxes Incurred:
– Year 1: $7,463
– Year 2: $8,460
– Year 3: $21,570
Net Profit:
– Year 1: $17,413
– Year 2: $19,740
– Year 3: $50,330
Net Profit/Sales:
– Year 1: 14.80%
– Year 2: 15.23%
– Year 3: 27.96%
7.5 Projected Cash Flow
Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly balance. The first few months are critical. It may be necessary to inject additional capital during this time if needed. The annual cash flow figures are included here, and the detailed monthly numbers are provided in the appendix.
Pro Forma Cash Flow:
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $0 | $0 | $0 |
| Subtotal Cash from Operations | $97,541 | $127,560 | $171,375 |
| 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 | $97,541 | $127,560 | $171,375 |
| Expenditures | |||
| Expenditures from Operations | |||
| Cash Spending | $50,000 | $60,000 | $70,000 |
| Bill Payments | $46,161 | $49,868 | $58,864 |
| Subtotal Spent on Operations | $96,161 | $109,868 | $128,864 |
| 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 | $96,161 | $109,868 | $128,864 |
| Net Cash Flow | $1,380 | $17,692 | $42,511 |
| Cash Balance | $13,380 | $31,073 | $73,584 |
Projected Balance Sheet:
7.6 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $13,380 | $31,073 | $73,584 |
| Accounts Receivable | $20,139 | $22,179 | $30,804 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $33,519 | $53,251 | $104,388 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $33,519 | $53,251 | $104,388 |
| Liabilities and Capital | |||
| Year 1 | Year 2 | Year 3 | |
| Current Liabilities | |||
| Accounts Payable | $4,106 | $4,098 | $4,904 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $4,106 | $4,098 | $4,904 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $4,106 | $4,098 | $4,904 |
| Paid-in Capital | $25,000 | $25,000 | $25,000 |
| Retained Earnings | ($13,000) | $4,413 | $24,153 |
| Earnings | $17,413 | $19,740 | $50,330 |
| Total Capital | $29,413 | $49,153 | $99,483 |
| Total Liabilities and Capital | $33,519 | $53,251 | $104,388 |
| Net Worth | $29,413 | $49,153 | $99,483 |
Business Ratios:
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 8711, Engineering Services, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 10.13% | 38.89% | 8.20% |
| Percent of Total Assets | ||||
| Accounts Receivable | 60.08% | 41.65% | 29.51% | 37.24% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 41.14% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 82.48% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 17.52% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | ||||
| Accounts Payable | 4.70% | 4.70% | 4.70% | 35.91% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 11.35% |
| Total Liabilities | 4.70% | 4.70% | 4.70% | 47.26% |
| Net Worth | 95.30% | 95.30% | 95.30% | 52.74% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 70.00% | 75.00% | 84.67% | 100.00% |
| Selling, General & Administrative Expenses | 55.20% | 59.77% | 56.71% | 73.63% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.42% |
| Profit Before Interest and Taxes | 39.94% | |||
| Main Ratios | ||||
| Current | 21.28% | |||
| Quick | 21.28% | |||
| Total Debt to Total Assets | 4.70% | |||
| Pre-tax Return on Net Worth | 72.27% | |||
| Pre-tax Return on Assets | 68.88% | |||
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 27.96% | |||
| Return on Equity | 50.59% | |||
| Activity Ratios | ||||
| Accounts Receivable Turnover | 5.84 | |||
| Collection Days | 54 | |||
| Accounts Payable Turnover | 12.17 | |||
| Payment Days | 28 | |||
| Total Asset Turnover | 1.72 | |||
| Debt Ratios | ||||
| Debt to Net Worth | 0.05 | |||
| Current Liab. to Liab. | 1.00 | |||
| Liquidity Ratios | ||||
| Net Working Capital | $99,483 | |||
| Interest Coverage | 0.00 | |||
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Assets to Sales | 0.58 | |||
| Current Debt/Total Assets | 5% | |||
| Acid Test | 15.00 | |||
| Sales/Net Worth | 1.81 | |||
| Dividend Payout | 0.00 | |||
Appendix.
| Sales Forecast | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Unit Sales | |||||||||||||
| Project Consulting | 0% | 50 | 50 | 50 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | |
| Project Management | 0% | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | |
| Home Inspections | 0% | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | |
| Computer Aided Drafting Services | 0% | 40 | 60 | 70 | 80 | 80 | 80 | 80 | 80 | 80 | 80 | 80 | 80 |
| Total Unit Sales | 118 | 138 | 148 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | |
| Unit Prices | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Project Consulting | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | |
| Project Management | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | |
| Home Inspections | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | $80.00 | |
| Computer Aided Drafting Services | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | $40.00 | |
| Sales | |||||||||||||
| Project Consulting | $4,000 | $4,000 | $4,000 | $4,800 | $4,800 | $4,800 | $4,800 | $4,800 | $4,800 | $4,800 | $4,800 | $4,800 | |
| Project Management | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | |
| Home Inspections | $640 | $640 | $640 | $640 | $640 | $640 | $640 | $640 | $640 | $640 | $640 | $640 | |
| Computer Aided Drafting Services | $1,600 | $2,400 | $2,800 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | |
| Total Sales | $7,840 | $8,640 | $9,040 | $10,240 | $10,240 | $10,240 | $10,240 | $10,240 | $10,240 | $10,240 | $10,240 | $10,240 | |
| Direct Unit Costs | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Project Consulting | 0.00% | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 |
| Project Management | 0.00% | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24.00 | $24
Pro Forma Profit and Loss: Sales: – Month 1: $7,840 – Month 2: $8,640 – Month 3: $9,040 – Month 4: $10,240 – Month 5: $10,240 – Month 6: $10,240 – Month 7: $10,240 – Month 8: $10,240 – Month 9: $10,240 – Month 10: $10,240 – Month 11: $10,240 – Month 12: $10,240 Direct Cost of Sales: – Month 1: $2,352 – Month 2: $2,592 – Month 3: $2,712 – Month 4: $3,072 – Month 5: $3,072 – Month 6: $3,072 – Month 7: $3,072 – Month 8: $3,072 – Month 9: $3,072 – Month 10: $3,072 – Month 11: $3,072 – Month 12: $3,072 Other Costs of Sales: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Total Cost of Sales: – Month 1: $2,352 – Month 2: $2,592 – Month 3: $2,712 – Month 4: $3,072 – Month 5: $3,072 – Month 6: $3,072 – Month 7: $3,072 – Month 8: $3,072 – Month 9: $3,072 – Month 10: $3,072 – Month 11: $3,072 – Month 12: $3,072 Gross Margin: – Month 1: $5,488 – Month 2: $6,048 – Month 3: $6,328 – Month 4: $7,168 – Month 5: $7,168 – Month 6: $7,168 – Month 7: $7,168 – Month 8: $7,168 – Month 9: $7,168 – Month 10: $7,168 – Month 11: $7,168 – Month 12: $7,168 Gross Margin %: – Month 1: 70.00% – Month 2: 70.00% – Month 3: 70.00% – Month 4: 70.00% – Month 5: 70.00% – Month 6: 70.00% – Month 7: 70.00% – Month 8: 70.00% – Month 9: 70.00% – Month 10: 70.00% – Month 11: 70.00% – Month 12: 70.00% Expenses: Payroll: – Month 1: $2,500 – Month 2: $2,500 – Month 3: $3,000 – Month 4: $4,000 – Month 5: $4,000 – Month 6: $4,000 – Month 7: $5,000 – Month 8: $5,000 – Month 9: $5,000 – Month 10: $5,000 – Month 11: $5,000 – Month 12: $5,000 Marketing/Promotion: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Depreciation: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Website Hosting Fees: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Engineering Assoc Annual Fees: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Continuing Education: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Yellow Pages/White Pages: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Telephone/Fax: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Software Purchases (Staad-Pro Core): – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Utilities: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Errors and Omissions Insurance: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Rent: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Payroll Taxes: – Month 1: 0% – Month 2: $375 – Month 3: $375 – Month 4: $450 – Month 5: $600 – Month 6: $600 – Month 7: $600 – Month 8: $750 – Month 9: $750 – Month 10: $750 – Month 11: $750 – Month 12: $750 Contract/Consultants: – Month 1: 15% – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Other: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Total Operating Expenses: – Month 1: $2,875 – Month 2: $2,875 – Month 3: $3,450 – Month 4: $4,600 – Month 5: $4,600 – Month 6: $4,600 – Month 7: $5,750 – Month 8: $5,750 – Month 9: $5,750 – Month 10: $5,750 – Month 11: $5,750 – Month 12: $5,750 Profit Before Interest and Taxes: – Month 1: $2,613 – Month 2: $3,173 – Month 3: $2,878 – Month 4: $2,568 – Month 5: $2,568 – Month 6: $2,568 – Month 7: $1,418 – Month 8: $1,418 – Month 9: $1,418 – Month 10: $1,418 – Month 11: $1,418 – Month 12: $1,418 EBITDA: – Month 1: $2,613 – Month 2: $3,173 – Month 3: $2,878 – Month 4: $2,568 – Month 5: $2,568 – Month 6: $2,568 – Month 7: $1,418 – Month 8: $1,418 – Month 9: $1,418 – Month 10: $1,418 – Month 11: $1,418 – Month 12: $1,418 Interest Expense: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Taxes Incurred: – Month 1: $784 – Month 2: $952 – Month 3: $863 – Month 4: $770 – Month 5: $770 – Month 6: $770 – Month 7: $425 – Month 8: $425 – Month 9: $425 – Month 10: $425 – Month 11: $425 – Month 12: $425 Net Profit: – Month 1: $1,829 – Month 2: $2,221 – Month 3: $2,015 – Month 4: $1,798 – Month 5: $1,798 – Month 6: $1,798 – Month 7: $993 – Month 8: $993 – Month 9: $993 – Month 10: $993 – Month 11: $993 – Month 12: $993 Net Profit/Sales: – Month 1: 23.33% – Month 2: 25.71% – Month 3: 22.29% – Month 4: 17.55% – Month 5: 17.55% – Month 6: 17.55% – Month 7: 9.69% – Month 8: 9.69% – Month 9: 9.69% – Month 10: 9.69% – Month 11: 9.69% – Month 12: 9.69% Pro Forma Cash Flow: Cash Received: – Month 1: $0 – Month 2: $261 – Month 3: $7,867 – Month 4: $8,653 – Month 5: $9,080 – Month 6: $10,240 – Month 7: $10,240 – Month 8: $10,240 – Month 9: $10,240 – Month 10: $10,240 – Month 11: $10,240 – Month 12: $10,240 Cash from Operations: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Cash Sales: – Month 1: $0 – Month 2: $0 – Month 3: $0 – Month 4: $0 – Month 5: $0 – Month 6: $0 – Month 7: $0 – Month 8: $0 – Month 9: $0 – Month 10: $0 – Month 11: $0 – Month 12: $0 Subtotal Cash from Operations: – Month 1: $0 – Month 2: $261 – Month 3: $7,867 – Month 4: $8,653 – Month 5: $9,080 – Month 6: $10,240 – Month 7: $10,240 – Month 8: $10,240 – Month 9: $10,240 – Month 10: $10,240 – Month Pro Forma Balance Sheet: Assets: Starting Balance Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Current Assets: Cash $12,000 $9,383 $3,620 $4,564 $5,178 $5,816 $7,613 $8,417 $9,410 $10,403 $11,395 $12,388 $13,380 Accounts Receivable $0 $7,840 $16,219 $17,392 $18,979 $20,139 $20,139 $20,139 $20,139 $20,139 $20,139 $20,139 $20,139 Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Current Assets $12,000 $17,223 $19,838 $21,956 $24,157 $25,954 $27,752 $28,556 $29,549 $30,541 $31,534 $32,526 $33,519 Long-term Assets Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Assets $12,000 $17,223 $19,838 $21,956 $24,157 $25,954 $27,752 $28,556 $29,549 $30,541 $31,534 $32,526 $33,519 Liabilities and Capital: Current Liabilities Accounts Payable $0 $3,394 $3,788 $3,891 $4,294 $4,294 $4,294 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $0 $3,394 $3,788 $3,891 $4,294 $4,294 $4,294 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $0 $3,394 $3,788 $3,891 $4,294 $4,294 $4,294 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 $4,106 Paid-in Capital $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Retained Earnings ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) ($13,000) Earnings $0 $1,829 $4,050 $6,065 $7,862 $9,660 $11,458 $12,450 $13,443 $14,435 $15,428 $16,421 $17,413 Total Capital $12,000 $13,829 $16,050 $18,065 $19,862 $21,660 $23,458 $24,450 $25,443 $26,435 $27,428 $28,421 $29,413 Total Liabilities and Capital $12,000 $17,223 $19,838 $21,956 $24,157 $25,954 $27,752 $28,556 $29,549 $30,541 $31,534 $32,526 $33,519 Net Worth $12,000 $13,829 $16,050 $18,065 $19,862 $21,660 $23,458 $24,450 $25,443 $26,435 $27,428 $28,421 $29,413
Business Plan Outline
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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!