UK High Tech Consulting Business Plan
Acme Consulting is a marketing consulting company focused on high-tech product promotion in international markets. Our founders possess extensive experience in international marketing, consulting services, personal computers, and market research. They have come together to establish Acme Consulting and provide formalized consulting services.
1.1 Objectives:
– Achieve sales of £550,000 in Year 1 and £1 million by Year 3.
– Maintain a gross margin higher than 70%.
– Ensure that net income remains more than 5% of sales through Year 3.
1.2 Mission:
Acme Consulting offers high-tech manufacturers a reliable and high-quality alternative to in-house resources for business development, market development, and channel development on an international scale. Acme provides practical experience, know-how, contacts, and confidentiality. Clients perceive working with Acme as more professional and less risky than developing new areas in-house. Acme charges a high value for its services and delivers an even higher value to its clients. The initial focus is on developing the European and Latin American markets, or serving European clients in the United Kingdom market.
1.3 Keys to Success:
– Excel in fulfilling promises by offering completely confidential, reliable, trustworthy expertise, and information.
– Generate new business leads through increased visibility.
– Leverage expertise to create multiple revenue generation opportunities, including retainer consulting, project consulting, market research, and published reports.
Acme Consulting is a new company specializing in international high-tech business development, channel development, distribution strategies, and marketing of high-tech products. Initially, it will cater to United Kingdom clients seeking development opportunities in the European and Latin American markets, as well as European and United Kingdom clients targeting the United States and Latin American markets. As the company grows, it will expand its focus to other markets such as the rest of Latin America, the Far East, and similar markets. Acme Consulting will also explore brokerage positions and representation positions to acquire percentage holdings in product results.
2.1 Company Ownership:
Acme Consulting will be established as a Limited Company based in London, England, owned by its principal investors and operators. At present, it is not registered with Companies House, and alternative legal formations are still under consideration.
2.2 Start-up Summary:
Total start-up expenses, including legal costs, logo design, stationery, and related expenses, amount to £18,350. The required start-up assets consist of £32,000 in current assets (office furniture, etc.) and £25,000 in initial cash to cover the first few months of consulting operations as sales and accounts receivable generate cash flow. Details are provided below.
Start-up Funding:
Start-up Expenses: £18,350
Start-up Assets: £32,000
Total Funding Required: £50,350
Assets:
Non-cash Assets from Start-up: £7,000
Cash Requirements from Start-up: £25,000
Additional Cash Raised: £0
Cash Balance on Starting Date: £25,000
Total Assets: £32,000
Liabilities and Capital:
Liabilities:
Current Borrowing: £0
Long-term Liabilities: £0
Accounts Payable (Outstanding Bills): £350
Other Current Liabilities (interest-free): £0
Total Liabilities: £350
Capital:
Planned Investment:
Investor 1: £20,000
Investor 2: £20,000
Other: £10,000
Additional Investment Requirement: £0
Total Planned Investment: £50,000
Loss at Start-up (Start-up Expenses): (£18,350)
Total Capital: £31,650
Total Capital and Liabilities: £32,000
Total Funding: £50,350
Start-up:
Requirements:
Start-up Expenses:
Legal: £1,000
Stationery etc.: £3,000
Brochures: £5,000
Consultants: £5,000
Insurance: £350
Expensed equipment: £3,000
Other: £1,000
Total Start-up Expenses: £18,350
Start-up Assets:
Cash Required: £25,000
Other Current Assets: £7,000
Long-term Assets: £0
Total Assets: £32,000
Total Requirements: £50,350
Company Locations and Facilities:
The initial office will be established in top quality office space in London’s Canary Wharf, as there are high quality office spaces with security and lobby areas. It is important for a high tech consulting company to spend money on high quality centrally located office space.
Services:
Acme offers the expertise a high-technology company needs to develop new product distribution and new market segments in new markets. This can be taken as high-level retainer consulting, market research reports, or project-based consulting.
Service Description:
1. Retainer consulting: We represent a client company as an extension of its business development and market development functions. This begins with complete understanding of the client company’s situation, objectives, and constraints. We then represent the client company quietly and confidentially, sifting through new market developments and new opportunities as is appropriate to the client, representing the client in initial talks with possible allies, vendors, and channels.
Competitive Comparison:
The competition comes in several forms:
1. The most significant competition is no consulting at all, companies choosing to do business development, channel development and market research in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they don’t have time for additional responsibilities in new market development or new channel development. Also, Acme can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can’t.
2. The high-level prestige management consulting: McKinsey, Bain, Accenture, etc. These are essentially generalists who take their name-brand management consulting into specialty areas. Most of these are US firms that have expanded to the UK and have offices in London and all over continental Europe. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work.
3. The third general kind of competitor is the international market research company: International Data Corporation (IDC), Dataquest, etc. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level consulting that Acme will provide.
4. The fourth kind of competition is the market-specific smaller house. For example: Gloucestershire Research in the United Kingdom, Select S.A. de C.V. in Mexico (now affiliated with IDC).
Sales representation, brokering, and deal catalysts are an ad-hoc business form that will be defined in detail by the specific nature of each individual case.
Sales Literature:
The business will begin with a general corporate brochure establishing the positioning. This brochure will be developed as part of the start-up expenses. Literature and mailings for the initial market forums will be very important.
Fulfillment:
The key fulfillment and delivery will be provided by the principals of the business. The real core value is professional expertise, provided by a combination of experience, hard work, and education (in that order).
Technology:
Acme Consulting will maintain the latest Windows and Macintosh capabilities, including complete e-mail facilities on the Internet, CompuServe, Applelink, and others for working with clients directly through e-mail delivery of drafts and information.
Future Services:
In the future, Acme will broaden the coverage by expanding into coverage of additional markets (e.g., all of Latin America, Far East) and additional product areas (e.g., telecommunications and technology integration). We are also studying the possibility of newsletter or electronic newsletter services, or perhaps special on-topic reports.
Market Analysis Summary:
Acme will be focusing on high-technology manufacturers of computer hardware and software, services, and networking, who want to sell into markets in the United Kingdom, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies.
Our most important group of potential customers are executives in larger corporations. These are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company’s name and reputation.
Market Segmentation:
Large manufacturer corporations: Our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett-Packard, IBM, Microsoft, Siemens, or Olivetti. These companies will be calling on Acme for development functions that are better spun off than managed in-house, for market research, and for market forums.
Medium-sized growth companies: Particularly in software, multimedia, and some related high-growth fields, Acme will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
U.K. High Tech 10% 5,000 5,500 6,050 6,655 7,321 10.00%
European High Tech 15% 1,000 1,150 1,323 1,521 1,749 15.00%
Latin America 35% 250 338 456 616 832 35.07%
Other 2% 10,000 10,200 10,404 10,612 10,824 2.00%
Total 6.27% 16,250 17,188 18,233 19,404 20,726 6.27%
4.2 Target Market Segment Strategy
As shown by the previous table and Illustration, we must focus on a few thousand potential customers in Europe and Latin America, while also offering services to UK and US firms expanding into European markets. These high-tech manufacturing companies are the key customers for Acme.
4.3 Service Business Analysis
The consulting industry is pulverised and disorganised, with numerous smaller consulting organizations and individual consultants for every well-known company.
Consulting participants range from major international name-brand consultants to tens of thousands of individuals. Acme’s challenge will be establishing itself as a real consulting company, positioned as a relatively risk-free corporate purchase.
4.3.1 Distributing a Service
Consulting is primarily sold and purchased through word-of-mouth, with relationships and previous experience being the most important factor.
The major name-brand houses have locations in major cities and markets, and executive-level managers or partners develop new business through industry associations, chambers of commerce, and social associations.
The medium-level houses are generally area or function specific and cannot easily leverage their business through distribution.
4.3.2 Competition and Buying Patterns
The key element in purchase decisions made by Acme’s clients is trust in the professional reputation and reliability of the consulting firm.
4.3.3 Main Competitors
1. The high-level prestige management consulting firms:
Strengths: International locations, presentation and understanding of general business.
Weaknesses: Lack of specific market, channel, and distribution expertise, high fees, work done by junior-level consultants.
2. The international market research company:
Strengths: International offices, specific market knowledge, good relationships with potential clients.
Weaknesses: Cannot offer the same level of business understanding at a high level.
3. Market or function-specific experts:
Strengths: Expertise in specific areas.
Weaknesses: Unable to provide management expertise beyond their focus.
4. Companies do in-house research and development:
Strengths: No incremental cost, work done by responsible people.
Weaknesses: Overburdened managers, additional risk in market and channel development.
4.3.4 Business Participants
At the highest level are the few well-established major names in management consulting. Some evolved from accounting companies and some from management consulting. These companies charge high rates and maintain relatively high overhead and fulfillment structures.
At the intermediate level are function-specific or market-specific consultants, such as market research and channel development firms.
Some types of consulting are little more than contract expertise provided by individuals offering consulting services.
Strategy and Implementation Summary
Acme will focus on three geographical markets: Europe, Latin America, and the United Kingdom, and limited product segments. The target customer is usually a manager in a larger corporation, occasionally an owner or president of a medium-sized corporation.
Acme Consulting will be priced competitively with name-brand consultants, providing high-level expertise.
Consulting prices: £3,000 per day for project consulting, £1,500 per day for market research, and £7,000 per month for retainer consulting. Market research reports will be priced at £3,000 per report, requiring careful planning and focus.
5.2 Sales Strategy
The sales forecast monthly summary is included in the appendix. The annual sales projections are included below.
Sales Forecast
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Retainer Consulting | £140,000 | £350,000 | £425,000 |
| Project Consulting | £270,000 | £325,000 | £350,000 |
| Market Research | £122,000 | £150,000 | £200,000 |
| Strategic Reports | £0 | £50,000 | £125,000 |
| Other | £0 | £0 | £0 |
| Total Sales | £532,000 | £875,000 | £1,100,000 |
5.3 Strategic Alliances
At this writing, strategic alliances with Smith and Jones are possibilities, given the content of existing discussions. We might also be talking to European companies including Siemens, Olivetti, and others, and to United States companies related to Apple Computer. In Latin America, we would be looking at key local high-technology vendors, starting with Printaform.
5.4 Milestones
Our detailed milestones are shown in the following table and chart. The related budgets are included in the projected Profit and Loss statement, which is in the financial analysis in Chapter 7 of this plan.
Milestones
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Business plan | 10/1/2005 | 11/19/2005 | £3,500 | HM | Devpt |
| Logo design | 1/1/2006 | 2/1/2006 | £1,500 | TAJ | Marketing |
| Retainer contracts | 2/1/2006 | 12/31/2006 | £7,000 | HM | Sales |
| Stationery | 3/1/2006 | 4/15/2006 | £300 | JD | G&A |
| Brochures | 3/1/2006 | 4/15/2006 | £1,700 | TAJ | Marketing |
| Financial backing presentations | 4/1/2006 | 9/15/2006 | £7,000 | HM | Devpt |
| Initial mailing | 6/1/2006 | 7/1/2006 | £3,000 | HM | Sales |
| Office location | 1/15/2006 | 2/9/2006 | £3,000 | JD | G&A |
| Office equipment | 1/15/2006 | 2/19/2006 | £8,000 | JD | G&A |
| Other | 1/1/2006 | 12/31/2006 | £7,000 | ABC | Department |
| Totals | £42,000 | ||||
Management Summary
The initial management team relies on the founders themselves with little backup. As we grow, we will bring in additional consulting help, as well as graphic/editorial, sales, and marketing personnel.
6.1 Organizational Structure
Acme should be managed by working partners in a structure based on Smith Partners. Initially, we assume 3-5 partners:
– Ralph Sampson
– At least one, possibly two, partners from Smith and Jones
– One strong United States partner based in San Francisco
– The organization should have a flat structure in the beginning, with each founder responsible for their own work and management
– One other strong partner
6.2 Management Team
The Acme business requires a high level of international experience and expertise, which means it will not follow the traditional consulting company model where partners run the business and make sales while associates handle fulfillment. Partners will be involved in fulfilling the core business proposition and providing expertise to clients. The initial personnel plan is tentative and includes 3-5 partners, 1-3 consultants, an editorial/graphic person with good staff support, a marketing person, an office manager, and a secretary. More partners, consultants, and sales staff will be added later. Founders’ resumes are attached to this plan.
6.3 Personnel Plan
The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are as follows:
Personnel Plan
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Partners | £96,000 | £175,000 | £200,000 |
| Consultants | £0 | £50,000 | £63,000 |
| Editorial/graphic | £12,000 | £14,000 | £17,000 |
| VP Marketing | £14,000 | £50,000 | £55,000 |
| Sales people | £0 | £30,000 | £33,000 |
| Office Manager | £5,250 | £30,000 | £33,000 |
| Secretarial | £5,250 | £20,000 | £22,000 |
| Other | £0 | £0 | £0 |
| Other | £0 | £0 | £0 |
| Total People | 7 | 14 | 20 |
| Total Payroll | £132,500 | £369,000 | £423,000 |
Our financial plan is based on conservative estimates and assumptions. We will need initial investment to make the financials work.
7.1 Important Assumptions
The General Assumptions table summarizes key financial assumptions, including sales on invoice basis, payroll burden, and present-day interest and tax rates. We also assume 45-day average collection days, expenses on net 30 basis, and 35 days on average for payment of invoices.
General Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.00% | 8.00% | 8.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
The following benchmark chart shows our key financial indicators for the first three years. We anticipate significant growth in sales and operating expenses, as well as an increase in collection days during expansion.
The table and chart below summarize the break-even analysis, including monthly units and sales break-even points.
Break-even Analysis
Monthly Revenue Break-even: £30,098
Assumptions:
– Average Percent Variable Cost: 20%
– Estimated Monthly Fixed Cost: £23,988
Projected Profit and Loss
The detailed monthly pro-forma income statement for the first year is included in the appendix. The annual estimates are included here.
Pro Forma Profit and Loss
Sales: £532,000 | £875,000 | £1,100,000
Direct Cost of Sales: £108,000 | £219,000 | £289,000
Other: £0 | £0 | £0
Total Cost of Sales: £108,000 | £219,000 | £289,000
Gross Margin: £424,000 | £656,000 | £811,000
Gross Margin %: 79.70% | 74.97% | 73.73%
Expenses:
Payroll: £132,500 | £369,000 | £423,000
Sales and Marketing and Other Expenses: £108,600 | £137,000 | £195,000
Depreciation: £0 | £0 | £0
Leased Equipment: £3,600 | £7,000 | £7,000
Utilities: £9,000 | £12,000 | £12,000
Insurance: £3,600 | £2,000 | £2,000
Rent: £12,000 | £0 | £0
Other: £0 | £0 | £0
Payroll Taxes (National Insurance, etc): £18,550 | £51,660 | £59,220
Other: £0 | £0 | £0
Total Operating Expenses: £287,850 | £578,660 | £698,220
Profit Before Interest and Taxes: £136,150 | £77,340 | £112,780
EBITDA: £136,150 | £77,340 | £112,780
Interest Expense: £6,800 | £11,400 | £15,400
Taxes Incurred: £31,516 | £16,485 | £24,751
Net Profit: £97,834 | £49,455 | £72,629
Net Profit/Sales: 18.39% | 5.65% | 6.60%
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 representing the monthly balance. The annual cash flow figures are included below. Detailed monthly numbers are included in the appendix.
Pro Forma Cash Flow
Cash Received
Cash from Operations
– Cash Sales: £399,000, £656,250, £825,000
– Cash from Receivables: £100,450, £197,764, £261,234
– Subtotal Cash from Operations: £499,450, £854,014, £1,086,234
Additional Cash Received
– Sales Tax, VAT, HST/GST Received: £0, £0, £0
– New Current Borrowing: £30,000, £100,000, £0
– New Other Liabilities (interest-free): £0, £0, £0
– New Long-term Liabilities: £50,000, £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: £579,450, £954,014, £1,086,234
Expenditures
Expenditures from Operations
Cash Spending: £132,500, £369,000, £423,000
Bill Payments: £274,773, £446,264, £592,221
Subtotal Spent on Operations: £407,273, £815,264, £1,015,221
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: £407,273, £815,264, £1,015,221
Net Cash Flow: £172,177, £138,750, £71,013
Cash Balance: £197,177, £335,927, £406,940
Projected Balance Sheet
The balance sheet shows healthy growth of net worth and a strong financial position. Monthly estimates are included in the appendix.
Pro Forma Balance Sheet
Assets
Current Assets
– Cash: £197,177, £335,927, £406,940
– Accounts Receivable: £32,550, £53,536, £67,303
– Other Current Assets: £7,000, £7,000, £7,000
– Total Current Assets: £236,727, £396,464, £481,243
Long-term Assets
– Long-term Assets: £0, £0, £0
– Accumulated Depreciation: £0, £0, £0
– Total Long-term Assets: £0, £0, £0
Total Assets: £236,727, £396,464, £481,243
Liabilities and Capital
Current Liabilities
– Accounts Payable: £27,243, £37,524, £49,674
– Current Borrowing: £30,000, £130,000, £130,000
– Other Current Liabilities: £0, £0, £0
– Subtotal Current Liabilities: £57,243, £167,524, £179,674
Long-term Liabilities
– Long-term Liabilities: £50,000, £50,000, £50,000
Total Liabilities: £107,243, £217,524, £229,674
Paid-in Capital: £50,000, £50,000, £50,000
Retained Earnings: (£18,350), £79,484, £128,939
Earnings: £97,834, £49,455, £72,629
Total Capital: £129,484, £178,939, £251,569
Total Liabilities and Capital: £236,727, £396,464, £481,243
Net Worth: £129,484, £178,939, £251,569
The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. Industry profile comparisons are for the Management Consulting Services.
Ratio Analysis
Sales Growth: 0.00%, 64.47%, 25.71%, Industry Profile: 8.52%
Percent of Total Assets
– Accounts Receivable: 13.75%, 13.50%, 13.99%, Industry Profile: 21.99%
– Other Current Assets: 2.96%, 1.77%, 1.45%, Industry Profile: 50.95%
– Total Current Assets: 100.00%, 100.00%, 100.00%, Industry Profile: 75.87%
– Long-term Assets: 0.00%, 0.00%, 0.00%, Industry Profile: 24.13%
– Total Assets: 100.00%, 100.00%, 100.00%, Industry Profile: 100.00%
Current Liabilities
– Accounts Payable: 24.18%, 42.25%, 37.34%, Industry Profile: 34.32%
– Long-term Liabilities: 21.12%, 12.61%, 10.39%, Industry Profile: 17.09%
– Total Liabilities: 45.30%, 54.87%, 47.73%, Industry Profile: 51.41%
– Net Worth: 54.70%, 45.13%, 52.27%, Industry Profile: 48.59%
Percent of Sales
– Sales: 100.00%, 100.00%, 100.00%, Industry Profile: 100.00%
– Gross Margin: 79.70%, 74.97%, 73.73%, Industry Profile: 100.00%
– Selling, General & Administrative Expenses: 61.46%, 69.32%, 67.09%, Industry Profile: 80.54%
– Advertising Expenses: 4.51%, 4.57%, 4.00%, Industry Profile: 1.54%
– Profit Before Interest and Taxes: 25.59%, 8.84%, 10.25%, Industry Profile: 2.69%
Main Ratios
Current: 4.14, 2.37, 2.68, Industry Profile: 1.63
Quick: 4.14, 2.37, 2.68, Industry Profile: 1.31
Total Debt to Total Assets: 45.30%, 54.87%, 47.73%, Industry Profile: 60.47%
Pre-tax Return on Net Worth: 99.90%, 36.85%, 38.71%, Industry Profile: 4.80%
Pre-tax Return on Assets: 54.64%, 16.63%, 20.24%, Industry Profile: 12.14%
Additional Ratios
Net Profit Margin: 18.39%, 5.65%, 6.60%, Industry Profile: n.a
Return on Equity: 75.56%, 27.64%, 28.87%, Industry Profile: n.a
Activity Ratios
Accounts Receivable Turnover: 4.09, 4.09, 4.09, Industry Profile: n.a
Collection Days: 57, 72, 80, Industry Profile: n.a
Accounts Payable Turnover: 11.07, 12.17, 12.17, Industry Profile: n.a
Payment Days: 27, 26, 26, Industry Profile: n.a
Total Asset Turnover: 2.25, 2.21, 2.29, Industry Profile: n.a
Debt Ratios
Debt to Net Worth: 0.83, 1.22, 0.91, Industry Profile: n.a
Current Liabilities to Liabilities: 0.53, 0.77, 0.78, Industry Profile: n.a
Liquidity Ratios
Net Working Capital: £179,484, £228,939, £301,569, Industry Profile: n.a
Interest Coverage: 20.02, 6.78, 7.32, Industry Profile: n.a
Additional Ratios
Assets to Sales: 0.44, 0.45, 0.44, Industry Profile: n.a
Current Debt/Total Assets: 24%, 42%, 37%, Industry Profile: n.a
Acid Test: 3.57, 2.05, 2.30, Industry Profile: n.a
Sales/Net Worth: 4.11, 4.89, 4.37, Industry Profile: n.a
Dividend Payout: 0.00, 0.00, 0.00, Industry Profile: n.a
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
Retainer Consulting: £7,000, £7,000, £7,000, £7,000, £14,000, £14,000, £14,000, £14,000, £14,000, £14,000, £14,000, £14,000, £14,000
Project Consulting: £0, £0, £10,000, £20,000, £30,000, £40,000, £20,000, £10,000, £30,000, £45,000, £50,000, £15,000
Market Research: £0, £0, £0, £4,000, £8,000, £15,000, £10,000, £5,000, £20,000, £20,000, £20,000, £20,000
Strategic Reports: £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0
Other: £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0
Total Sales: £7,000, £7,000, £17,000, £31,000, £52,000, £69,000, £44,000, £29,000, £64,000, £79,000, £84,000, £49,000
Direct Cost of Sales
Retainer Consulting: £2,500, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700, £1,700
Project Consulting: £0, £0, £700, £2,700, £3,000, £4,250, £2,250, £700, £3,000, £5,000, £6,250, £1,700
Market Research: £0, £0, £0, £1,500, £4,000, £7,000, £4,000, £2,750, £9,500, £9,500, £9,500, £9,500
Strategic Reports: £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0
Other: £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0, £0
Subtotal Direct Cost of Sales: £2,500, £1,700, £2,400, £5,900, £8,700, £12,950, £7,950, £5,150, £14,200, £16,200, £17,450, £12,900
Personnel Plan:
Partners: 140% – £8,000 for months 1-12.
Consultants: 125% – £0 for months 1-12.
Editorial/graphic: 120% – £0 for months 1-6, £4,000 for months 10-12.
VP Marketing: 110% – £0 for months 1-6, £3,500 for months 9-12.
Sales people: 110% – £0 for months 1-12.
Office Manager: 110% – £0 for months 1-6, £1,750 for months 10-12.
Secretarial: 110% – £0 for months 1-6, £1,750 for months 10-12.
Other: 110% – £0 for months 1-12.
Total People: 3 for months 1-3, 5 for months 9-12.
Total Payroll: £8,000 for months 1-12.
General Assumptions:
Plan Month: 1 for months 1-12.
Current Interest Rate: 8.00% for months 1-12.
Long-term Interest Rate: 10.00% for months 1-12.
Tax Rate: 30.00% for month 1, 25.00% for months 2-12.
Other: 0 for months 1-12.
Pro Forma Profit and Loss:
Sales: £7,000 for months 1-2, £17,000 for month 3, £31,000 for month 4, £52,000 for month 5, £69,000 for month 6, £44,000 for month 7, £29,000 for month 8, £64,000 for month 9, £79,000 for month 10, £84,000 for month 11, £49,000 for month 12.
Direct Cost of Sales: £2,500 for months 1-2, £2,400 for month 3, £5,900 for month 4, £8,700 for month 5, £12,950 for month 6, £7,950 for month 7, £5,150 for month 8, £14,200 for month 9, £16,200 for month 10, £17,450 for month 11, £12,900 for month 12.
Other: £0 for months 1-12.
Total Cost of Sales: £2,500 for months 1-2, £2,400 for month 3, £5,900 for month 4, £8,700 for month 5, £12,950 for month 6, £7,950 for month 7, £5,150 for month 8, £14,200 for month 9, £16,200 for month 10, £17,450 for month 11, £12,900 for month 12.
Gross Margin: £4,500 for months 1-2, £5,300 for month 3, £14,600 for month 4, £25,100 for month 5, £43,300 for month 6, £56,050 for month 7, £36,050 for month 8, £23,850 for month 9, £49,800 for month 10, £62,800 for month 11, £66,550 for month 12, £36,100 for month 13.
Gross Margin %: 64.29% for months 1-2, 85.88% for month 3, 80.97% for month 4, 83.27% for month 5, 81.23% for month 6, 81.93% for month 7, 82.24% for month 8, 77.81% for month 9, 79.49% for month 10, 79.23% for month 11, 73.67% for month 12.
Expenses:
Payroll: £8,000 for months 1-12.
Sales and Marketing and Other Expenses: £9,050 for months 1-12.
Depreciation: £0 for months 1-12.
Leased Equipment: £300 for months 1-12.
Utilities: £750 for months 1-12.
Insurance: £300 for months 1-12.
Rent: £1,000 for months 1-12.
Other: £0 for months 1-12.
Payroll Taxes (National Insurance, etc): 15% – £1,120 for months 1-12.
Other: £0 for months 1-12.
Total Operating Expenses: £20,520 for months 1-12.
Profit Before Interest and Taxes: (£16,020) for month 1, (£15,220) for month 2, (£5,920) for month 3, £4,580 for month 4, £22,780 for month 5, £35,530 for month 6, £15,530 for month 7, £3,330 for month 8, £25,290 for month 9, £29,740 for month 10, £33,490 for month 11, £3,040 for month 12.
EBITDA: (£16,020) for month 1, (£15,220) for month 2, (£5,920) for month 3, £4,580 for month 4, £22,780 for month 5, £35,530 for month 6, £15,530 for month 7, £3,330 for month 8, £25,290 for month 9, £29,740 for month 10, £33,490 for month 11, £3,040 for month 12.
Interest Expense: £417 for months 1-12.
Taxes Incurred: (£4,931) for month 1, (£3,909) for month 2, (£1,618) for month 3, £1,008 for month 4, £5,558 for month 5, £8,728 for month 6, £3,728 for month 7, £678 for month 8, £6,168 for month 9, £7,281 for month 10, £8,218 for month 11, £606 for month 12.
Net Profit: (£11,506) for month 1, (£11,728) for month 2, (£4,853) for month 3, £3,023 for month 4, £16,673 for month 5, £26,185 for month 6, £11,185 for month 7, £2,035 for month 8, £18,505 for month 9, £21,843 for month 10, £24,655 for month 11, £1,818 for month 12.
Net Profit/Sales: -164.37% for month 1, -167.54% for month 2, -28.54% for month 3, 9.75% for month 4, 32.06% for month 5, 37.95% for month 6, 25.42% for month 7, 7.02% for month 8, 28.91% for month 9, 27.65% for month 10, 29.35% for month 11, 3.71% for month 12.
Pro Forma Cash Flow
Pro Forma Cash Flow is a table that shows the cash flow for each month. It includes cash received and expenditures.
Cash Received:
– Cash from Operations
– Cash Sales
– Cash from Receivables
– Subtotal Cash from Operations
– Additional Cash Received
– Sales Tax, VAT, HST/GST Received
– New Current Borrowing
– New Other Liabilities (interest-free)
– New Long-term Liabilities
– Sales of Other Current Assets
– Sales of Long-term Assets
– New Investment Received
– Subtotal Cash Received
Expenditures:
– Expenditures from Operations
– Cash Spending
– Bill Payments
– Subtotal Spent on Operations
– Additional Cash Spent
– Sales Tax, VAT, HST/GST Paid Out
– Principal Repayment of Current Borrowing
– Other Liabilities Principal Repayment
– Long-term Liabilities Principal Repayment
– Purchase Other Current Assets
– Purchase Long-term Assets
– Dividends
– Subtotal Cash Spent
Net Cash Flow
Cash Balance
The table provides a detailed breakdown of cash inflows and outflows for each month, allowing for better financial planning and analysis.
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