Internet Media Advertising Business Plan
Truckbay, LLC is a Limited Liability Company organized in Nebraska in October 2002 by co-founders Jim Bell and John Bell. The business model for Truckbay.com is to become a light equipment listing service on eBay Motors and build a network of linked websites that deliver increased sales and exposure. The goal is to become the leading classified listing service in the global light equipment market by providing the most views per listing.
Truckbay.com launched in February 2003 after a five-month software development period. The core business model consists of recurring monthly revenue from a membership fee charged to light duty truck dealers. This fee allows access to a private e-community of dealers who use the industry-specific software to buy and sell wholesale equipment online.
In September 2004, Truckbay discussed a proposed merger with Mr. Y and Mr. Z. Company X, founded by Mr. Y and Mr. Z, captured over 21% of eBay Motors’ total automotive listings and sold their company to eBay Corporation in January 2003. Company X will contribute capital, business and technical consulting, and a venture capital pool, in exchange for 15% ownership in Truckbay.
Truckbay will focus on selling online classified advertising solutions to four key markets:
- Light Truck Dealers
- Fleets
- Financial Institutions
- Individual Owners
Our most important customers are Dealer Principals and Sales Managers in the Light Truck organizations. They are open to new sources of lead generation but prioritize immediate return on investment. Truckbay will generate leads and sales by leveraging eBay Motors’ marketplace and other linked websites.
Financial Considerations
The marketing research and tailored strategy described in this business plan will result in after-tax profits of approximately $549,000 by 2007. We estimate a 20% market share of the eBay Motors light truck listing market by 2008. We accept pre-paid listings only and are seeking $475,000 in venture capital for 19% equity ownership of the company. We anticipate an IRR of 109% and an investor’s ending valuation of $1,043,100 in 2007. Our exit strategy is to sell Truckbay within 3-5 years to a larger related company (such as eBay).
Truckbay’s objective is to provide an online classified advertising solution for the global heavy truck and equipment market. Our goals include leveraging eBay Motor’s marketplace for market exposure, utilizing cutting-edge Search Engine technology to drive viewership, and providing an affordable eDealer suite of online services for long term loyalty.
Truckbay is a commercial enterprise that exists to generate sales and profits for its investors, owners, managers, and staff, while also serving its customers. We aim to provide the best online advertising solution for the global heavy truck and equipment market, partner with proven consultants and industry leaders, offer valuable services that utilize technological advances, and have a high-energy, results-oriented team.
The keys to success for Truckbay are utilizing key Search Engine technology and leveraging eBay Motors to drive traffic, fostering a positive team workplace environment, and having a seasoned management team. Risks will be minimized by maintaining a low overhead structure, hiring a draw-based Sales Team, and utilizing successful practices from a proven business model.
Truckbay was founded in October 2002 and launched its website in February 2003. The core business model involves recurring monthly revenue from a membership fee charged to heavy-duty truck and trailer dealers. However, the company did not meet revenue expectations in its first two years due to members not listing their equipment at wholesale prices.
To increase sales and exposure, Truckbay plans to become a heavy equipment listing service on eBay Motors and build a network of linked websites. The ultimate goal is to be the leading classified listing service in the global heavy equipment market. They will achieve this by providing the most views per listing through eBay, Google, MSN, and Yahoo search technology.
Truckbay is a Limited Liability Company established in October 2002 by co-founders Cab Trucker and John Speed. Cab Trucker is the President of Truckbay with strengths in Sales, Marketing, and Financials. John Speed is an investor with experience in entrepreneurial ventures. The company is also in discussions with Mr. Y and Mr. Z, founders of Company X, to provide capital, business and technical consulting, and a venture capital pool in exchange for ownership in Truckbay.
Truckbay has maintained profitability with low overhead costs. However, in order to achieve their financial goals, they will need to raise capital for technology enhancements, office infrastructure, personnel wages, and office rent. The company will continue to keep fixed costs down and avoid unnecessary debt.
Past Performance:
Sales:
– 2002: $0
– 2003: $31,000
– 2004: $43,000
Gross Margin:
– 2002: $0
– 2003: ($15,000)
– 2004: $10,000
Gross Margin %:
– 2002: 0.00%
– 2003: -48.39%
– 2004: 23.26%
Operating Expenses:
– 2002: $0
– 2003: $48,000
– 2004: $35,000
Balance Sheet:
Current Assets:
– Cash:
– 2002: $0
– 2003: $3,000
– 2004: $4,000
– Other Current Assets:
– 2002: $0
– 2003: $1
– 2004: $1
– Total Current Assets:
– 2002: $0
– 2003: $3,001
– 2004: $4,001
Long-term Assets:
– Long-term Assets:
– 2002: $0
– 2003: $26,000
– 2004: $26,000
– Accumulated Depreciation:
– 2002: $0
– 2003: $11,000
– 2004: $11,000
– Total Long-term Assets:
– 2002: $0
– 2003: $15,000
– 2004: $15,000
Total Assets:
– 2002: $0
– 2003: $18,001
– 2004: $19,001
Current Liabilities:
– Accounts Payable:
– 2002: $0
– 2003: $0
– 2004: $0
– Current Borrowing:
– 2002: $0
– 2003: $3,500
– 2004: $7,000
– Other Current Liabilities (interest free):
– 2002: $0
– 2003: $0
– 2004: $0
– Total Current Liabilities:
– 2002: $0
– 2003: $3,500
– 2004: $7,000
Long-term Liabilities:
– 2002: $0
– 2003: $0
– 2004: $0
Total Liabilities:
– 2002: $0
– 2003: $3,500
– 2004: $7,000
Paid-in Capital:
– 2002: $0
– 2003: $55,000
– 2004: $55,000
Retained Earnings:
– 2002: $0
– 2003: ($40,212)
– 2004: ($25,999)
Earnings:
– 2002: $0
– 2003: ($287)
– 2004: ($17,000)
Total Capital:
– 2002: $0
– 2003: $14,501
– 2004: $12,001
Total Capital and Liabilities:
– 2002: $0
– 2003: $18,001
– 2004: $19,001
Other Inputs:
– Payment Days:
– 2002: 1
– 2003: 1
– 2004: 1
Services:
Truckbay will provide the following core services:
– Premier listing service for eBay Motors to assist clients in advertising, selling, and making more profit with their equipment.
– Heavy-equipment search engine on multiple websites for the global Internet community.
– Private wholesale section for the dealer network to exchange equipment.
Market Analysis Summary:
Truckbay will focus on four key markets for our online classified advertising solutions:
1. Heavy Truck and Equipment Dealers
2. Fleets and Trucking Companies
3. Financial Institutions
4. Individual Owners of Equipment
Our most important customers are Dealer Principals and Sales Managers within the Heavy Truck and Equipment organizations. They are looking for immediate return on their investment, and Truckbay will provide immediate leads and sales through eBay Motors and other multi-channel linked websites.
Fleets, trucking companies, financial institutions, and individual owners of equipment also make up a substantial market. Truckbay will offer a unique online service that provides a less expensive and more efficient solution to advertising their trades, repossessions, and aged equipment.
Market Segmentation:
Truckbay will target markets with the highest volume of potential equipment listings in North America, including:
– Mid-to-large sized truck dealerships
– Mid-to-large sized heavy equipment dealerships
– Fleets operating 5 or more vehicles
– Trucking Companies operating 5 or more vehicles
Market Analysis
2005 2006 2007 2008 2009
Potential Customers Growth
Heavy Truck and Equipment Dealers 1% 5,000 5,050 5,101 5,152 5,204 1.00%
Fleets and Trucking Companies 1% 84,000 84,840 85,688 86,545 87,410 1.00%
Individual Owners of Equipment 1% 62,000 62,620 63,246 63,878 64,517 1.00%
Financial Institutions 1% 500 505 510 515 520 0.99%
Total 1.00% 151,500 153,015 154,545 156,090 157,651 1.00%
4.2 Target Market Segment Strategy
By focusing on specific markets, we will grow our inventory database faster compared to targeting the entire market segment. While not included in our financial plan, we aim to gain additional growth from individual owner-operator market through eBay Motors and search engine placement.
4.3 Service Business Analysis
The heavy truck and equipment industry has few online service providers. Truckbay, as the "first to market" with our unique classified listing service, is positioned to take advantage of this. The industry lags behind the automotive industry in adopting technology trends by 3-5 years. Dealers have started to allocate more of their advertising budgets for online services. We are in our early stages while eBay Motors already has a proven track record. Currently, no organization targets the heavy truck and equipment business like Truckbay. Our service fills that void and produces immediate results. Widespread acceptance is inevitable as long as we remain proactive.
Strategy and Implementation Summary
The sales and marketing strategy is to quickly enter the eBay Motors classified listing service for heavy trucks and equipment. This market is currently not actively pursued by competitors. We will maintain our lead and competitive advantage by:
Emphasizing service
We will exceed customers’ expectations in every aspect of our business.
Building a relationship-oriented business
We will establish long-term relationships with customers, rather than one-time deals.
Focusing on target markets
We will proactively target the most profitable customers.
5.1 Competitive Edge
Our competitive edge lies in the experience and approach of our management team. We will utilize a proven business model from the automobile industry and adapt it to the heavy truck and equipment industry. By being "first to market" and with the maturity of eBay Motors, we will experience exponential growth and fill a need in this market.
We will also stay up-to-date with the latest Search Engine Technology to maintain top ranking in our industry categories. Our commitment to the overall user experience and exceeding customer expectations will result in a loyal following, especially as new competitors enter the market.
To develop effective business strategies, perform a SWOT analysis. Learn how to perform a SWOT analysis with our free guide and template.
5.2 Sales Strategy
Our previously discussed marketing strategy will generate the desired sales leads. These leads will start with a phone call or email to Truckbay. Additionally, our Sales Team will proactively reach out to clients in their assigned regions. North America will be divided into eight regions (Northeast, Mid-Atlantic, Southeast, North Central, South Central, West, Canada, and Mexico). Team members will have access to a contact database of heavy truck and equipment dealers in their area, acquired from Polk, the industry’s leading list provider.
Our Sales Team will actively contact dealers, trucking companies, fleets, finance companies, and individual owners of heavy trucks and equipment. We will support customers with the level of service they require to get their listings in our database. We will even send a third-party inspector to their property to gather data and take pictures.
To protect the company’s long-term viability, team members will sign a limited non-compete agreement. We will invest in infrastructure to maintain the integrity of our sales database. Each team member will be provided with a networked PC for high-speed internet access. The company database will be maintained by Salesforce.com to deter information theft and keep data clean. Each PC will have limited software and the ability to print to a single laser printer.
To ensure a thorough, organized approach for each prospect, a consultative sales approach will be adopted. Detailed notes will be kept for each client. Follow-up and persistence will be key. This approach allows for flexibility in case of turnover, with new team members quickly trained and able to utilize the contact database with detailed notes.
The typical sales position will include the following responsibilities:
- Proactively call 40-50 prospects per day.
- Assist clients in listing a minimum of 15 classifieds per day for auction.
- Qualify and enroll 5 dealers to our full-service inventory management package.
- Match showroom inventory with successful eBay auctions using historical eBay Motors data and propose wording to clients.
The team member compensation package includes the following earning options. The goal is to provide salespersons with the ability to earn $37,000 annually and incentivize them to achieve unlimited income potential.
- Team members will receive a straight 10% commission from a standard $160 listing.
- Closing a full-service dealer will earn the team member 50% of the first month’s fee, along with a 5% per-listing commission.
- When a listing is sold on eBay Motors, the team member will earn an additional $25.
- When the sales team reaches their collective monthly goals, each member will receive a $200 bonus and the company will provide lunch in-house.
The draw/commission package aims to fairly compensate team members for their hard work and incentivize strong customer-centric ownership in order to maximize revenue from each potential client. It requires additional effort to listen to each client daily. While some clients may require more assistance than others, team members who go the extra mile to achieve the ultimate goal of a sold listing will be substantially rewarded.
Our customer experience will be different compared to other companies. If an assigned team member is not immediately available, the individual who answers the phone call before the end of the second ring will take ownership of the call. They will be trained and provided access to the client’s information to ensure a positive outcome. Even though the interim team member will not earn commission for "going the extra mile," they will expect the same treatment for their clients if they are unavailable. That is why we have a monthly team bonus structure. This positive office environment creates a win-win solution and customer satisfaction. If we don’t master these skills, someone else will.
To facilitate the hiring process, we will offer the best, qualified candidates a base salary of $2,500 per month. Each cubicle will be treated as a separate profit center. The office structure will be an open call center with cubicles to foster active energy and positive synergies among team members. Cab Trucker has a successful history in building and managing a team environment as a manager.
5.2.1 Sales Forecast
The projected sales for the first year are approximately $824,000, with $1,290,000 in the second year and $1,660,000 in the third year of plan implementation.
| Sales Forecast | |||
| Period | 2005 | 2006 | 2007 |
| Sales | |||
| eBay Motors Single Listing | $640,000 | $750,000 | $1,000,000 |
| eBay Motors Unlimited Listings | $138,080 | $480,000 | $600,000 |
| Affiliate Buyer’s Assistance Programs | $6,490 | $7,500 | $8,000 |
| Buyer Assistant Partnerships | $4,100 | $6,000 | $6,000 |
| Co-op Advertising | $1,500 | $2,000 | $2,000 |
| Dealers Single Listing | $4,700 | $6,000 | $6,000 |
| Dealer Wholesale Membership | $30,000 | $40,000 | $40,000 |
| Total Sales | $824,870 | $1,291,500 | $1,662,000 |
| Direct Cost of Sales | 2005 | 2006 | 2007 |
| Other | $0 | $0 | $0 |
| Technology | $120,000 | $150,000 | $250,000 |
| Subtotal Direct Cost of Sales | $120,000 | $150,000 | $250,000 |
5.3 Marketing Strategy
Truckbay will position itself as the premier online classified listing solution for the heavy truck and equipment industry in North America. By utilizing the latest Search Engine technology and purchasing specific ad words to secure top placement, we will establish ourselves as an industry leader. We also plan to dominate eBay Motors’ commercial vehicle listings. We will be consistently recognized as a leader, benefiting from the exposure eBay auctions, stores, and keyword searches provide within this leading marketplace.
eBay boasts over 62 Million registered users, 7 Million unique visitors each month, and eBay Motors is their most profitable division, contributing over 30% of their revenue. Last year, eBay Motors facilitated over 600,000 vehicle transactions, averaging 1,600 trades per day. eBay Motors sells approximately 1 car per minute, making them the top automotive seller in the world.
eBay has recently hired sales staff to actively contact used car dealers and promote the site. Truckbay will also have a Sales Team that proactively contacts the heavy truck and equipment market. Ford has reported that over 5% of vehicles are being sold sight-unseen prior to sale. Our goal is to be the first choice for trucks and offer the best service to this large niche market.
5.4 Milestones
Our first milestone is to secure $475,000 in capital from the private market. We are offering 19% of the business with a minimum investment of $25,000 for a 1% stake. We have allocated 2 months to gather these funds, although interest has already been expressed by outside investors, so this timeline may be accelerated.
After the holidays, we plan to begin building the technical infrastructure and integrating with the eBay Motors API. Concurrently, we will redesign the website to improve the existing structure. A main focus will be eliminating the password requirement to access the inventory. There will continue to be a private “Dealer-only” link with password protection and wholesale pricing.
Once the website is complete, we will clone the core search engine technology to the homepage of 10 new affiliate websites targeting smaller, popular niche markets. While these websites will have a different appearance, they will ultimately provide filtered search results from the main website database or answers to typical Search Engine queries from consumers. Additionally, there will be links to all other Truckbay websites on each homepage to navigate users to areas of interest. Visitors will not be aware of the connection between these websites.
We estimate the design and development phase will take no more than 3 months. If we stay on schedule, we will secure office space and begin recruiting and training a Sales Team for a March 1, 2005 launch date. The first month will be used to perfect the website functionality and training. In the 2nd quarter of 2005, we will aggressively target and sell to our desired markets. If our marketing survey results remain valid, we expect rapid acceptance. We will offer a 7-day money back guarantee to any prospects who are unsure.
The Company believes in fostering activity, and as such, we plan to initiate numerous advertising campaigns to drive high volumes in the first year. This includes selective pay-per-click ad words on Google, Yahoo, MSN, and Overture.
Milestones:
Review Business Plan: 10/15/2004 – 11/1/2004, $0 budget, ALL Manager, ALL Department.
Secure Private Capital: 11/1/2004 – 12/31/2004, $500 budget, RAS, LP Manager, N/A Department.
Repurposing website: 1/3/2005 – 2/1/2005, $3,000 budget, Dale Corley Manager, Marketing Department.
Build website: 1/3/2005 – 3/1/2005, $12,500 budget, Shane Rapp Manager, Technology Department.
Build eBAY API integration: 1/3/2005 – 3/1/2005, $12,500 budget, Shane Rapp Manager, Technology Department.
Create 10 HTML affiliate websites: 1/3/2005 – 3/1/2005, $10,000 budget, Shane Rapp Manager, Technology Department.
Recruit and Hire Sales Team: 3/1/2005 – 4/1/2005, $5,000 budget, Russ Chaney Manager, Sales Department.
Office Furniture & PCs: 3/1/2005 – 6/1/2005, $10,000 budget, Dale Corley Manager, GM Department.
Office Rent Factor: 2/1/2005 – 12/31/2005, $15,000 budget, Dale Corley Manager, GM Department.
Submit Search Engine Ad words: 3/1/2005 – 12/31/2005, $2,500 budget, Dale Corley Manager, Advertising Department.
Pay-Per-Click w/ Google & Overture: 3/1/2005 – 12/31/2005, $5,000 budget, Dale Corley Manager, Advertising Department.
Software Leasing – Salesforce.com: 3/1/2005 – 12/31/2005, $5,000 budget, Dale Corley Manager, Sales Department.
eBay Store and Ad words: 3/1/2005 – 12/31/2005, $2,500 budget, Dale Corley Manager, Advertising Department.
Total budget: $83,500.
Web Plan Summary:
Truckbay will consist of two core and ten affiliate websites, all driving listings and traffic to each other. The main website will be www.Truckbay.net, our eBay Motors listing service website, and www.Truckbay.com, our main classified advertising website. The ten affiliate websites will be described in the next section.
Website Marketing Strategy:
Customers have two choices. They can add a few listings and try out the auction service or add their entire inventory. Team members will ask for more inventory from their company website to add to their free showroom. This showroom will be built into our eBay template and provide additional exposure to all of the dealers’ inventory. Select inventory will also be placed in the Truckbay eBay Store, driving more views, traffic, and leads to our clients. Our proactive Sales Team will research matching equipment from the eBay Motors sold archives and make a follow-up call to close more listings. New listings will be added to the auction, showrooms, and stores, and then downloaded to the main website. The public website will hold our entire database of classified ads and have a simple search feature on the homepage. Visitors will find matching listings and have the ability to view dealer contact information. Our goal is to start with 10 linked websites that target a smaller niche market within the heavy truck and equipment industry. We will create new domain names based on popular keywords and phrases used by our customers when they visit search engines.
Development Requirements:
Mr. Z will lead our development team. We are in talks with a former employee of eBay Motors who is a Master Certified Developer to develop the integration between the existing website and our new eBay service website. We will hire a full-time employee with web author and designer experience to build our external websites. Mr. Z will assist in hiring this person and be responsible for keeping the project organized and on time. Mr. Z also has HTML experience that will be helpful in fine-tuning each individual website. We have allocated three months for development and one month for debugging. Cab will provide keyword and phrase market research for web domains and search engine ad words. Phase two of our plan includes continuing to build affiliate linked websites and enhancing the functionality and appearance of our existing network of sites. Our websites will be hosted externally at a hurricane-protected server facility in Miami, Florida, which Mr. Z will monitor to ensure our needs are met and our company is protected.
Management Summary:
Truckbay has consulting partners to complement our management team. The Management Team includes: Cab Trucker – President of Company focusing on Operations, Sales, Marketing, and Advertising; Mr. Y – Management Advisor focusing on Legal, Operations, and Sales; Mr. Z – Technical Advisor focusing on IT, Hosting, and technical aspects; John Speed – Entrepreneurial Consultant; Barry Stir – Legal Advisor.
Personnel Plan:
Truckbay plans to employ one full-time Web developer, one part-time Web developer/programmer, and 8-10 draw/commissioned salespeople. The full-time Web Developer will receive a salary of $78,000 per year, and the part-time Web developer (25-30 hours/week) will receive a salary of $30,000 – $35,000. Both will receive a performance bonus. Truckbay will offer all employees health care and dental care insurance, vacation time, up-sell incentive programs, and 401k retirement plans. The staff will consist of ten employees (plus the president) working from 8AM – 5PM. We will rotate two team members each week to work a 10AM – 7PM shift to support our west coast customers.
Total Payroll:
Sales Team Personnel: 2005 – $203,928, 2006 – $270,050, 2007 – $307,100.
Development Personnel: 2005 – $108,000, 2006 – $113,000, 2007 – $113,000.
General and Administrative Personnel: 2005 – $60,000, 2006 – $60,000, 2007 – $60,000.
Total Payroll: 2005 – $371,928, 2006 – $443,050, 2007 – $480,100.
Financial Plan:
Truckbay does not require substantial inventory and all sales are on a cash basis, so increases in sales will not result in initial cash-flow deficits. We expect rapid growth through proactive selling by our commissioned sales team once the new listing services are in place. Our financial plan is dependent upon switching from a dealer-based network to a retail one and increasing accessibility with a network of 10 related websites. With the advice of Mr. Y and Mr. Z, we are confident in creating a profitable business. Projections include an earnings-based valuation of $5,500,000 for Truckbay in 2007, with an ending valuation of $1,043,000 and an IRR of 109% for an investor contributing $475,000 now. Assumptions include finding affordable office space, recruiting a skilled web developer, completing website development by March 1, 2005, and the success of Mr. Y and Mr. Z’s involvement.
General Assumptions:
2005 2006 2007
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
8.3 Break-even Analysis:
The table below shows the break-even analysis for Truckbay’s new websites and sales strategy. We need to sell approximately $29,000 of listings each month to break even in the next year. Truckbay will reach its break-even point in April.
Break-even Analysis
Monthly Revenue Break-even: $23,478
Assumptions:
– Average Percent Variable Cost: 15%
– Estimated Monthly Fixed Cost: $20,063
8.4 Projected Profit and Loss
The table and charts below display our projected Profit and Loss for the next three years. Monthly details can be found in the Appendix. Our sales team salaries are included in the direct cost of sales to calculate our gross margin.
Pro Forma Profit and Loss table:
| Pro Forma Profit and Loss | |||
| Sales | $824,870 | $1,291,500 | $1,662,000 |
| Direct Cost of Sales | $120,000 | $150,000 | $250,000 |
| Sales Team Payroll | $203,928 | $270,050 | $307,100 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $323,928 | $420,050 | $557,100 |
| Gross Margin | $500,942 | $871,450 | $1,104,900 |
| Gross Margin % | 60.73% | 67.48% | 66.48% |
| Operating Expenses | |||
| Development Expenses | |||
| Development Payroll | $108,000 | $113,000 | $113,000 |
| Training | $4,000 | $6,000 | $6,000 |
| Other Development Expenses | $0 | $0 | $0 |
| Total Development Expenses | $112,000 | $119,000 | $119,000 |
| Development % | 13.58% | 9.21% | 7.16% |
| General and Administrative Expenses | |||
| General and Administrative Payroll | $60,000 | $60,000 | $60,000 |
| Marketing/Promotion | $5,000 | $5,000 | $5,000 |
| Depreciation | $2,400 | $2,400 | $2,400 |
| Rent | $19,200 | $19,200 | $19,200 |
| Utilities | $6,000 | $6,000 | $6,000 |
| Insurance | $3,000 | $3,000 | $3,000 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $12,000 | $12,000 | $12,000 |
| Total General and Administrative Expenses | $107,600 | $107,600 | $107,600 |
| General and Administrative % | 13.04% | 8.33% | 6.47% |
| Other Expenses: | |||
| Other Payroll | $0 | $0 | $0 |
| Meals and Entertainment | $4,000 | $6,000 | $6,000 |
| Trade Shows and Association Dues | $4,000 | $4,000 | $4,000 |
| Subscriptions | $150 | $150 | $150 |
| Business Travel | $13,000 | $12,000 | $12,000 |
| Total Other Expenses | $21,150 | $22,150 | $22,150 |
| Other % | 2.56% | 1.72% | 1.33% |
| Total Operating Expenses | $240,750 | $248,750 | $248,750 |
| Profit Before Interest and Taxes | $260,191 | $622,700 | $856,150 |
| EBITDA | $262,591 | $625,100 | $858,550 |
| Interest Expense | $510 | $175 | $0 |
| Taxes Incurred | $77,904 | $186,757 | $256,845 |
| Net Profit | $181,777 | $435,768 | $599,305 |
| Net Profit/Sales | 22.04% | 33.74% | 36.06% |
8.5 Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet the company’s needs as sufficient cash flow is generated to support operations. We will collect all fees up front and pay commissions monthly.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||
| 2005 | 2006 | 2007 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $824,870 | $1,291,500 | $1,662,000 |
| Subtotal Cash from Operations | $824,870 | $1,291,500 | $1,662,000 |
| 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 | $475,000 | $0 | $0 |
| Subtotal Cash Received | $1,299,870 | $1,291,500 | $1,662,000 |
Projected Balance Sheet
The following table shows our projected Balance Sheet. We plan to repay our current credit card debt within two years. With the help of Company X’s founders, we should increase the net worth of the business significantly over the next three years.
| Pro Forma Balance Sheet | |||
| 2005 | 2006 | 2007 | |
| Assets | |||
| Current Assets | |||
| Cash | $678,414 | $818,066 | $1,133,737 |
| Other Current Assets | $10,001 | $10,001 | $10,001 |
| Total Current Assets | $688,415 | $828,067 | $1,143,738 |
| Long-term Assets | |||
| Long-term Assets | $26,000 | $26,000 | $26,000 |
| Accumulated Depreciation | $13,400 | $15,800 | $18,200 |
| Total Long-term Assets | $12,600 | $10,200 | $7,800 |
| Total Assets | $701,015 | $838,267 | $1,151,538 |
| Liabilities and Capital | 2005 | 2006 | 2007 |
| Current Liabilities | |||
| Accounts Payable | $28,737 | $33,722 | $47,687 |
| Current Borrowing | $3,500 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $32,237 | $33,722 | $47,687 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $32,237 | $33,722 | $47,687 |
| Paid-in Capital | $530,000 | $530,000 | $530,000 |
| Retained Earnings | ($42,999) | ($161,222) | ($25,455) |
| Earnings | $181,777 | $435,768 | $599,305 |
| Total Capital | $668,778 | $804,545 | $1,103,850 |
| Total Liabilities and Capital | $701,015 | $838,267 | $1,151,538 |
| Net Worth | $668,778 | $804,545 | $1,103,850 |
Business Ratios
Truckbay’s ratios can be seen in the table below. For comparison, we have included standard business ratios for the Electronic media advertising representatives industry, SIC Code 7313.01.
| Ratio Analysis | |||||||||||||
| 2005 | 2006 | 2007 | Industry Profile | ||||||||||
| Sales Growth | 1818.30% | 56.57% | 28.69% | 2.79% | |||||||||
| Percent of Total Assets | |||||||||||||
| Other Current Assets | 1.43% | 1.19% | 0.87% | 42.87% | |||||||||
| Total Current Assets | 98.20% | 98.78% | 99.32% | 78.45% | |||||||||
| Long-term Assets | 1.80% | 1.22% | 0.68% | 21.55% | |||||||||
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||
| Current Liabilities | 4.60% | 4.02% | 4.14% | 34.05% | |||||||||
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 5.29% | |||||||||
| Total Liabilities | 4.60% | 4.02% | 4.14% | 39.34% | |||||||||
| Net Worth | 95.40% | 95.98% | 95.86% | 60.66% | |||||||||
| Percent of Sales | |||||||||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||
| Gross Margin | 60.73% | 67.48% | 66.48% | 100.00% | |||||||||
| Selling, General & Administrative Expenses | 38.69% | 33.73% | 30.42% | 77.34% | |||||||||
| Advertising Expenses | 0.29% | 0.19% | 0.14% | 5.22% | |||||||||
| Profit Before Interest and Taxes | 31.54% | 48.22% | 51.51% | 3.09% | |||||||||
| Main Ratios | |||||||||||||
| Current | 21.35 | 24.56 | 23.98 | 1.94 | |||||||||
| Quick | 21.35 | 24.56 | 23.98 | 1.52 | |||||||||
| Total Debt to Total Assets | 4.60% | 4.02% | 4.14% | 44.15% | |||||||||
| Pre-tax Return on Net Worth | 38.83% | 77.38% | 77.56% | 11.73% | |||||||||
| Pre-tax Return on Assets | 37.04% | 74.26% | 74.35% | 21.00% | |||||||||
| Additional Ratios | 2005 | 2006 | 2007 | ||||||||||
| Net Profit Margin | 22.04% | 33.74% | 36.06% | n.a | |||||||||
| Return on Equity | 27.18% | 54.16% | 54.29% | n.a | |||||||||
| Activity Ratios | |||||||||||||
| Accounts Payable Turnover | 9.35 | 12.17 | 12.17 | n.a | |||||||||
| Payment Days | 27 | 28 | 26 | n.a | |||||||||
| Total Asset Turnover | 1.18 | 1.54 | 1.44 | n.a | |||||||||
| Debt Ratios | |||||||||||||
| Debt to Net Worth | 0.05 | 0.04 | 0.04 | n.a | |||||||||
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a | |||||||||
| Liquidity Ratios | |||||||||||||
| Net Working Capital | $656,178 | $794,345 | $1,096,050 | n.a | |||||||||
| Interest Coverage | 509.95 | 3,558.29 | 0.00 | n.a | |||||||||
| Additional Ratios | |||||||||||||
| Assets to Sales | 0
Personnel Plan: Sales Team Personnel: – Base salary: $0, $7,500, $10,000, $12,500, $15,000, $17,500, $20,000 – Bonuses: $0, $1,200, $1,400, $1,600 – Commission on standard listing: $0, $7,543, $9,427, $9,687, $9,950, $10,215, $10,482, $10,754 – Commission on Dealer Single Listing: $0, $30, $40, $50 – Commission on Full-service Dealer Listing: $0, $300 – Subtotal: $0, $7,530, $7,540, $7,550, $17,893, $19,777, $22,537, $26,500, $29,465, $32,432, $32,704 Development Personnel: – Web Developer 1: $6,500 – Assistant Web Developer: $2,500 – Developer Bonus: $0 – Subtotal: $9,000 General and Administrative Personnel: – President: $5,000 – Name or Title or Group: $0 – Subtotal: $5,000 Other Personnel: – Name or Title or Group: $0 – Subtotal: $0 Total People: 0 Total Payroll: $14,000, $21,530, $21,540, $21,550, $31,893, $33,777, $36,537, $40,500, $43,465, $46,432, $46,704 Pro Forma Profit and Loss Sales: $80, $500, $22,150, $40,900, $59,660, $78,432, $97,268, $99,872, $102,496, $105,146, $107,825, $110,540 Direct Cost of Sales: $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000, $10,000 Sales Team Payroll: $0, $0, $7,530, $7,540, $7,550, $17,893, $19,777, $22,537, $26,500, $29,465, $32,432, $32,704 Other Costs of Sales: $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0 Total Cost of Sales: $10,000, $10,000, $17,530, $17,540, $17,550, $27,893, $29,777, $32,537, $36,500, $39,465, $42,432, $42,704 Gross Margin: ($9,920), ($9,500), $4,620, $23,360, $42,110, $50,539, $67,492, $67,335, $65,997, $65,681, $65,392, $67,836 Gross Margin %: -12400.00%, -1900.00%, 20.86%, 57.11%, 70.58%, 64.44%, 69.39%, 67.42%, 64.39%, 62.47%, 60.65%, 61.37% Operating Expenses: Development Expenses: Development Payroll: $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000, $9,000 Training: $1,500, $0, $0, $0, $0, $0, $2,500, $0, $0, $0, $0, $0 Other Development Expenses: $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0 Total Development Expenses: $10,500, $9,000, $9,000, $9,000, $9,000, $9,000, $11,500, $9,000, $9,000, $9,000, $9,000, $9,000 Development %: 13125.00%, 1800.00%, 40.63%, 22.00%, 15.09%, 11.47%, 11.82%, 9.01%, 8.78%, 8.56%, 8.35%, 8.14% General and Administrative Expenses: General and Administrative Payroll: $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000, $5,000 Marketing/Promotion: $417, $417, $417, $417, $417, $417, $417, $417, $417, $417, $417, $417 Depreciation: $200, $200, $200, $200, $200, $200, $200, $200, $200, $200, $200, $200 Rent: $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600, $1,600 Utilities: $500, $500, $500, $500, $500, $500, $500, $500, $500, $500, $500, $500 Insurance: $250, $250, $250, $250, $250, $250, $250, $250, $250, $250, $250, $250 Payroll Taxes: 15%, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0 Other: $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000, $1,000 Total General and Administrative Expenses: $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967, $8,967 General and Administrative %: 11208.75%, 1793.33%, 40.48%, 21.92%, 15.03%, 11.43%, 9.22%, 8.98%, 8.75%, 8.53%, 8.32%, 8.11% Other Expenses: Other Payroll: $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0, $0 Meals and Entertainment: $0, $0, $400, $400, $400, $400, $400, $400, $400, $400, $400, $400 Trade Shows and Association Dues: $0, $0, $0, Pro Forma Cash Flow |
||||||||||||
| Pro Forma Cash Flow | |||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
| Cash Received | |||||||||||||
| Cash from Operations | |||||||||||||
| Cash Sales | $80 | $500 | $22,150 | $40,900 | $59,660 | $78,432 | $97,268 | $99,872 | $102,496 | $105,146 | $107,825 | $110,540 | |
| Subtotal Cash from Operations | $80 | $500 | $22,150 | $40,900 | $59,660 | $78,432 | $97,268 | $99,872 | $102,496 | $105,146 | $107,825 | $110,540 | |
| 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 | |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Investment Received | $475,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Subtotal Cash Received | $475,080 | $500 | $22,150 | $40,900 | $59,660 | $78,432 | $97,268 | $99,872 | $102,496 | $105,146 | $107,825 | $110,540 | |
| Expenditures | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| Expenditures from Operations | |||||||||||||
| Cash Spending | $14,000 | $14,000 | $21,530 | $21,540 | $21,550 | $31,893 | $33,777 | $36,537 | $40,500 | $43,465 | $46,432 | $46,704 | |
| Bill Payments | $243 | $7,261 | $6,438 | $11,642 | $16,586 | $22,141 | $25,792 | $31,323 | $29,571 | $29,178 | $29,140 | $30,713 | |
| Subtotal Spent on Operations | $14,243 | $21,261 | $27,968 | $33,182 | $38,136 | $54,034 | $59,569 | $67,860 | $70,071 | $72,643 | $75,573 | $77,417 | |
| Additional Cash Spent | |||||||||||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Principal Repayment of Current Borrowing | $292 | $292 | $292 | $292 | $292 | $292 | $292 | $292 | $292 | $292 | $292 | $288 | |
| Other Liabilities Principal Repayment | $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 | |
| Purchase Other Current Assets | $0 | $0 | $10,000 | $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 | |
| Dividends | $0 | $0 | $0 | $0 | |||||||||
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