Management Consulting Business Plan

manostaxx3

http://www.manostaxx.com

Executive Summary

Coaching Company will provide top-quality professional development and coaching services. The principal officer of Coaching Company believes that most small businesses and entrepreneurs suffer two major problems. They lack training or development resources and the depth of knowledge needed to focus on their businesses from a true “ownership” perspective. Both lead to lowered expectations, lack of business and personal growth and frequent owner burnout. Coaching Company believes that it can improve upon and exploit these weaknesses to gain local market share.

The objectives for Coaching Company over the next three years are:

  • Achieve sales revenues of approximately $81,000 by end of year one.
  • Achieve sales revenues of approximately $150,000 by year three.
  • Achieve a client mix of 60% small business/30% entrepreneurial/10% individual per year.
  • Move into small office space by the end of the first year.

The company will provide its professional development services in the most effective manner and with an ongoing comprehensive quality-control program to provide 100% client satisfaction. The company’s principal officer sees each contract as an agreement not between a business and its clients, but between partners who wish to create a close and mutually-beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.

Coaching Company will institute the following key procedures to reach its goals:

  • The creation of a unique, upscale, innovative environment that will differentiate Coaching Company from other coaching or professional development businesses.
  • Educating the business community on what business and strategic coaching has to offer.
  • The formation of a learning environment that will bring people with diverse interests and backgrounds together in a common forum to overcome challenges both professionally and personally.
  • Affordable access to the resources of business coaching and other consulting services.

Coaching Company is a start-up limited liability company (LLC) consisting of one principal officer with 15 years of industry experience. Frank Smith (principal) will be investing significant amounts of his own capital into the company to cover start-up costs and future growth. Coaching Company will partner with the national franchise, Coaching Company®, to provide services. Coaching Company will be limited in a home office in Anytown, MI. Workshop facilities will be contracted from various professional venues.

The company plans to use its existing contacts and customer base to generate both short and long-term coaching contracts. Its long-term profitability will rely on professional contracts obtained through strategic alliances, a comprehensive marketing program and a successful referral program.

Initially, the company will focus on professional development, strategic workshops, one-on-one coaching and special project relationships. Beginning in year two, Coaching Company will provide a separate and comprehensive career counseling service which will include resumé assistance, interviewing skills, job-seeking strategies and networking opportunities. The company has rigorously examined its financial projections and concluded that they are both conservative in profits and generous in expenditures. This was done deliberately to provide for unforeseeable events. The company’s principal believes that cash flow projections are realistic.

1.1 Objectives

Coaching Company’s objectives for the first three years of operation include:

  • The creation of a unique, upscale, innovative environment that will differentiate Coaching Company from other coaching or professional development businesses.
  • Educating the business community on what business and strategic coaching has to offer.
  • The formation of a learning environment that will bring people with diverse interests and backgrounds together in a common forum to overcome challenges, both professionally and personally.
  • Affordable access to the resources of business coaching and other development services.

The financial objectives for Coaching Company over the next three years are to:

  • Achieve sales revenues of approximately $81,000 by end of year one.
  • Achieve sales revenues of approximately $150,000 by year three.
  • Achieve a client mix of 60% small business/30% entrepreneurial/10% individual per year.
  • Move into small office space by end of first year.
  • Hire one salesperson / coach by end of second year.

1.2 Mission

Coaching Company offers small business owners, managers and entrepreneurs a reliable, high-quality resource for business coaching, and professional and management development on both a local and national scale. Its mission is to help clients develop the strategy, motivation and accountability required to succeed in their business and personal lives.  The company sees each contract as an agreement not between a business and its customers, but between partners who wish to create a close and mutually beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.  Coaching Company must also be able to maintain financial balance, charging a high value for its services, and delivering an even higher value to its clients.

1.3 Keys to Success

  1. Excellence in fulfilling the promise–completely confidential, reliable, trustworthy expertise and information
  2. Developing visibility to generate new business leads
  3. Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer coaching, project consulting, workshop facilitation and individual coaching
  4. Consistently developing productive and thought-provoking learning experiences to maintain growth and success with each client
  5. Our use of state-of-the-art technology
  6. Easy access to services
  7. Establishing a seasoned advisory team

Company Summary

The True Group LLC, doing business as Coaching Company, is a start-up limited liability company consisting of one principle officer with industry experience of 15 years in sales, professional development training and business operations. The company was formed to take advantage of the perceived weakness of existing professional development opportunities, in terms of quality and client satisfaction. Coaching Company will be owned and operated by Frank Smith.  Mr. Smith will be investing significant amounts of his own capital into the company and may also seek a loan to cover start-up costs and future growth.

Coaching Company will be located in a home office in Anytown, MI. The facilities required for workshops will be contracted with professional service firms, community facilities, colleges or universities or contract office facilities.

The company plans to use its existing contacts and the combined customer base of Mr. Smith to generate both short and long-term coaching contracts. Its long-term profitability will rely on focusing on professional contracts that will be obtained through strategic alliances, a comprehensive marketing program and a successful referral program.

2.1 Company Ownership

The True Group LLC is a privately owned limited liability company owned by Frank Smith.

2.2 Start-up Summary

Total start-up expenses (including legal costs, logo design, stationery and related expenses, and franchise fee) comes to $22,250. Start-up assets required include $2,500 in short-term assets (office furniture, etc.) and $8,000 in initial cash to handle the first few months of operations as sales play through the cash flow.

START-UP REQUIREMENTS
Start-up Expenses
Legal $1,000
Stationery etc. $450
Insurance $1,000
Rent $0
Computer $1,200
Franchise Fee $17,900
Phone $200
Travel $500
Other $0
TOTAL START-UP EXPENSES $22,250
Start-up Assets
Cash Required $8,000
Other Current Assets $2,500
Long-term Assets $0
TOTAL ASSETS $10,500
Total Requirements $32,750

Services

Coaching Company provides strategic coaching, professional development and counseling for small business owners, entrepreneurs and self-employed professionals.  The core services that will be offered from day one will be:

Two Year Strategic mindset Program: these quarterly workshops include strategic planning, peer advisory counseling, marketing/sales planning, accountability processes, business planning and work/life balance implementation.

One-on-One Coaching includes ongoing reinforcement to support Strategic Coaching program, professional development coaching, leadership, career or management coaching.

On Demand Coaching (for time restricted clients) includes but is not limited to, private and objective business or professional coaching, affordable and “on-demand,” access to coaching via phone/email.

Special Projects includes strategic business planning and implementation, marketing plans and implementation, leadership development, people management and systematizing businesses.

Beginning in year two (2006), Coaching Company will provide a separate and comprehensive career counseling service which will include but will not be limited to, resumé assistance, interviewing skills, job seeking strategies and networking opportunities.

Market Analysis Summary

Coaching Company will focus on small business owners, managers and entrepreneurs who are concerned that their businesses have not grown at the rate they want or need them to, frustrated that they are spending too much time in their businesses and may be burning out and worried that their business will not survive without them. These companies will have revenues of $10 million or less.

According to the July, 2002 census, there are approximately 81,600 small businesses in the 5 county Anytown Metropolitan area. Although the majority are manufacturing based, there are a significant number of service related companies. Coaching Company will not take a position of industry expert but of leadership and development expert; therefore industry will not have an impact on any prospective markets.

4.1 Market Segmentation

Coaching Company will focus on two markets within the Anytown Metro area, the small business segment (businesses with more than one employee/owner), and the entrepreneur segment, which includes home-based and one-person business operations. Although the company can handle larger organizations, the greatest benefit will come to businesses with under $10 million in annual sales. The majority of these companies are comprised of “technicians” who are gifted in the work of their business, but typically do not have the resources to have in-house staff dedicated to strategic planning, professional development and/or coaching.  Our goal is to eventually obtain approximately two-thirds of all our business from the small business segment, since this generates the greatest cash flow. Furthermore, this segment has the lowest percentage of variable costs. The small business segment is considered to be the company’s cash cow.

Initially the company will focus on the two segments in just the A County and B County area. However, by the end of the three-year projections, the company expects to be serving the entire Anytown Metropolitan area. The Market Analysis table and chart show the number of small businesses in each county.

MARKET ANALYSIS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Potential Customers Growth CAGR
County A 3% 31,424 32,367 33,338 34,338 35,368 3.00%
County B 2% 14,130 14,413 14,701 14,995 15,295 2.00%
County C 3% 6,189 6,375 6,566 6,763 6,966 3.00%
County D 2% 2,849 2,906 2,964 3,023 3,083 1.99%
County E 2% 27,008 27,548 28,099 28,661 29,234 2.00%
Total 2.46% 81,600 83,609 85,668 87,780 89,946 2.46%

4.2 Target Market Segment Strategy

The small business and entrepreneur markets are ideal targets for several reasons:

    1. As a small or entrepreneurial business, resources are often limited to core business functions such as production, administration, finance and distribution. Professional development, training, coaching or planning frequently goes unnoticed or even forgotten. As economic pressures increase and competition becomes more intense, these companies are always looking for effective ways to make themselves more prosperous.

 

  1. As a small or entrepreneurial business, the owner is typically an accountable technician which means he or she has everything on the line with regard to their business succeeding or not, and that their area of expertise is in the business they are “in.”  Frequently, a technician will be attracted to the “work” of the business and neglect the fundamental health of the business, which includes nurturing both themselves and the customer base.

4.3 Service Business Analysis

The United States spends more per capita on education than any other country. Training or professional development in America is a $210+ billion industry.

There are five basic groups that need training as follows:

    1. Government – Those employed in federal, state, and local governments, the military, post office personnel, school teachers and administrators. This group spends more than $23 billion in training funds annually.

 

    1. Large Businesses – These are firms with 100 or more employees. This group spends more than $28 billion in training, with the largest portion going to training managers and career personnel.

 

    1. Small Businesses – These are firms with fewer than 100 employees. There are more than 79 million small businesses in the U.S. This group spends more than $20 billion on training each year.

 

    1. Professional Service Firms – This group includes doctors, lawyers, accountants, engineers, consultants, etc. Continuing education requirements move this group to spend training dollars disproportionate to their size, more than $11 billion per year.

 

  1. Individuals – Those who buy training with their own money and on their own time. This group spends more than $2.5 billion on training and they tend to be highly motivated.

4.3.1 Competition and Buying Patterns

The key element in purchase decisions made at Coaching Company client level is trust in the professional reputation and reliability of the professional development firm. The professional development industry is pulverized and disorganized, with thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies.

Competitors range from major international name-brand consultants to tens of thousands of individuals. One of Coaching Company’s challenges will be establishing itself as a real professional development company, positioned as a relatively risk-free corporate purchase.

When dealing with the small or entrepreneurial business market, cost or price will be one of the greatest obstacles Coaching Company will face.  It will be up to Coaching Company to assist its clients in the discovery of how much it may cost them NOT to pursue professional development and establish Coaching Company as the most effective solution to their challenges.

With time, reputation and referrals will allow for a steady stream of new clients as well as regular price increases. This is not a business to build brand as much as it is to build reliability.

Strategy and Implementation Summary

Emphasize results
We will differentiate ourselves with results. We will establish our business offering as a clear and viable alternative for our target market, from the scores of unrefined, one-time seminar, consulting, and “feel good motivational” companies.

Build a relationship-oriented business
Build long-term relationships with clients, not single-visit deals. Become their advisor and partner of choice. Make them understand the value of long-term relationships.

Focus on target markets
We need to focus our offerings on small business owners and entrepreneurs who have a passion for their business and have the willingness to work for what they receive.  We do not want to compete for the buyers who seek “get rich quick” types of resources. We need to be able to sell to smart, quality-conscious clients.

5.1 Competitive Edge

The most unique benefit that Coaching Company offers to clients is the ability to experience ongoing, reinforcement development, versus a typical “one-time” seminar format. Coaching Company provides development and support for a year or more.  Since each Strategic Workshop client will be immediately qualified for one-on-one coaching, we will manage and monitor the specific progress of each client to ensure appropriate development.

5.2 Marketing Strategy

Coaching Company plans to reach their target companies by four methods which have been proven to be effective. They are:

Lead Generation Program: Coaching Company will do a direct mailing to 3,000 potential customers in the A and B county areas. Interested companies reply by mail or phone. In this industry, an average of 3% of the recipients typically respond.

Sample Previews: These are invitation-only workshops that Coaching Company will host for referral sources (i.e., accountants, attorneys, financial planners, insurance professionals) as well as owners of businesses in a target market. The previews will be the actual first year program offered to paying clients. The intent is to provide value and proof of the Strategic Workshop process so that clients will be comfortable making referrals. Coaching Company will be responsible for the generation of the lists to which these invitations will be sent. The franchiser, Coaching Company, recommends that one of these briefings be held monthly. Referral sources and business owners who attend and are interested will have a follow-up call made to them to further discuss what Coaching Company can do for their company.

Free Talks/Networking: These are talks given to Chambers of Commerce, trade councils, professional organizations, etc.  It has been industry experience that it is most beneficial to have at least two of these talks per month and attend two networking events per month.

Referrals: Referrals will not be a large part of Coaching Company’s business until late in the first year. In the second and third year they should account for as much as 50% of new business.

Other Income Generators: Special Project Assistance. This includes writing private programs for specific businesses, designing custom programs and retainer based coaching on an ongoing basis.

5.3 Sales Strategy

Coaching Company will make a significant profit through the delivery of top-of-the-line professional development services. The company will see profit within the first year due to beneficial word-of-mouth advertising and referral networking. The company expects to double its clientele every six months, for the first 18 months.

Pricing

Strategic Workshops (two year program) – $3000 for year one, $2500 for year two.  Includes 1 hour per month one-on-one coaching.

Platinum Package – $5000 for one year of Strategic Workshops, 1 hour per month of one-on-one coaching & membership to the On Demand Coaching.

Gold Package – $4000 for one year of Strategic Workshops, 1 hour per month of one-on-one coaching.

Silver Package – $3000 for one year of Strategic Workshops

Second year – $2500 per year for any client continuing with Strategic Workshops (applies to workshop only)

One-on-one Coaching – $125/hr for any personalized coaching for non-workshop clients.  $100/hr for workshop clients.

On Demand Coaching – $250 per month. minimum purchase of 3 months.

Special Projects – Priced as needed

5.3.1 Sales Forecast

Coaching Company expects a slow start to 2005, but a strong finish with referral marketing beginning to replace hard marketing dollars. The core business will be the Strategic Workshops, which have a second year tied to the initial purchase (two year program – $3,000 for year one, $2,500 for year two). Based on this, we should be able to obtain and manage a 25% increase in sales. Sales exceeding the 25% would place a tremendous burden on the acceptable delivery of service. Consistent efforts made by Coaching Company based on the marketing plan will drive enough opportunities to supply both initial and ongoing growth. At this growth rate, Coaching Company will be in a position to hire one more salesperson beginning year four (2008).

Potential obstacles to achieving these results:

  1. Prospecting/marketing plan not followed
  2. Poor delivery of service
  3. Any health problems of owner

SALES FORECAST
YEAR 1 YEAR 2 YEAR 3
Sales
Strategic Workshops $64,000 $95,000 $115,000
One On One Coaching $5,622 $6,844 $8,555
Coaching Club $8,760 $8,760 $8,760
Special Projects $3,085 $10,000 $15,000
TOTAL SALES $81,467 $120,604 $147,315
Direct Cost of Sales Year 1 Year 2 Year 3
Royalties $5,654 $7,236 $8,839
Marketing $5,000 $6,250 $7,500
Subtotal Direct Cost of Sales $10,654 $13,486 $16,339

5.4 Milestones

Coaching Company has a big year coming. In order to achieve the sales and marketing goals that have been outline in this business plan, the company has deadlines to meet and ideas to implement. Frank Smith is accountable for all items. Some of these are outlined below:

    • March 1, 2005 is the date Coaching Company must commence operations. This requires a trip to Anytown in January 2005 with final franchise agreements signed by February 1, 2005.  Frank Smith will be visiting Anytown on January 14, 2005 to take care of this.

 

    • March 1, 2005 is the date specified to begin the Lead Generation Program (direct marketing) which includes direct mail, email marketing, advertising and phone sales calls.

 

    • February 28, 2005 is the deadline for joining two chamber of commerces (Anytown and Pleasantville), and other networking groups; this is key to the marketing/networking effort. This will be effective immediately after submitting application and membership fee. Frank Smith will begin scheduling free talks immediately.

 

    • April 15, 2005 is the deadline for scheduling the first of monthly Sample Previews.

 

    • Marketing materials. Printing costs are involved in printing brochures, business cards, and developing website. This can’t be done until after the photo/logo design work (costing $1,000) has been completed.

 

    • February 28, 2005 is deadline for joining the Anytown Chamber of Commerce and a secondary Chamber.  Cost is $195-$225/year.  Benefits include networking, marketing and free talks.

 

  • February 28, 2005 is the deadline to join Local Business Network.  Cost is $360/year.  Benefits include networking, marketing and free talks.  May also be used to populate first workshops.

MILESTONES
Milestone Start Date End Date Budget Manager Department
Lead Generation Prgm 3/1/2005 3/15/2005 $1,000 ABC Marketing
Sample Previews 2/15/2005 3/15/2005 $300 ABC Marketing
Free Talks 3/1/2005 3/1/2007 $50 ABC Marketing
Start Business 2/1/2005 2/28/2005 $17,900 ABC Finance
Marketing Materials/Stationery 2/15/2005 2/28/2005 $500 ABC Marketing
Chamber of Commerce 2/1/2005 2/28/2005 $195 ABC Marketing
Networking Group 2/1/2005 2/28/2005 $360 ABC Marketing
Second Chamber 2/1/2005 2/28/2005 $200 ABC Department
Totals $20,505

Management Summary

The initial management team depends on the founder himself, with little back-up. As we grow, we will take on additional consulting, sales, and marketing help.

6.1 Personnel Plan

The following table is the personnel plan for Coaching Company. The table reflects the hiring of a second full-time salesperson / coach in year 2.

PERSONNEL PLAN
YEAR 1 YEAR 2 YEAR 3
President $27,000 $50,000 $50,000
Second salesperson/coach $0 $20,000 $42,000
TOTAL PEOPLE 1 2 2
Total Payroll $27,000 $70,000 $92,000

Financial Plan

Our financial plan is based on conservative estimates and assumptions. We will need initial investment to make the financials work, but the owner is prepared to contribute that funding.

We can minimize risk factors by:

  1. Obtaining initial capitalization of the company to sustain operations through year one
  2. Maintaining low overhead through the use of shared office space and home-based office through year one
  3. Developing a strong customer base through aggressive marketing
  4. Creating strong community ties and involvement
  5. Eliminating collection costs, by establishing cash/credit/debit card only facilities

7.1 Start-up Funding

The start-up costs are to be financed by the owners’ personal funds.

START-UP FUNDING
Start-up Expenses to Fund $22,250
Start-up Assets to Fund $10,500
TOTAL FUNDING REQUIRED $32,750
Assets
Non-cash Assets from Start-up $2,500
Cash Requirements from Start-up $8,000
Additional Cash Raised $950
Cash Balance on Starting Date $8,950
TOTAL ASSETS $11,450
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $0
Capital
Planned Investment
Owner $33,700
Investor $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $33,700
Loss at Start-up (Start-up Expenses) ($22,250)
TOTAL CAPITAL $11,450
TOTAL CAPITAL AND LIABILITIES $11,450
Total Funding $33,700

7.2 Projected Profit and Loss

The following table and chart shows the projected Profit and Loss for Coaching Company. The majority of our operating expenses are the owner’s payroll, benefits and taxes. This includes a standard PPO health plan, since the owner is sole provider of services; if he gets sick, sales stop. The second largest category is Marketing and Promotion, necessary for establishing brand recognition and generating new business, as a start-up.

The moving expenses in December and increased rent starting at the same time reflect the planned move into an office space, and out of the owner’s home.

PRO FORMA PROFIT AND LOSS
YEAR 1 YEAR 2 YEAR 3
Sales $81,467 $120,604 $147,315
Direct Cost of Sales $10,654 $13,486 $16,339
Other Costs of Sales $0 $0 $0
TOTAL COST OF SALES $10,654 $13,486 $16,339
Gross Margin $70,813 $107,118 $130,976
Gross Margin % 86.92% 88.82% 88.91%
Expenses
Payroll $27,000 $70,000 $92,000
Marketing/Promotion $4,800 $5,400 $6,400
Depreciation $0 $0 $0
Rent $2,335 $10,000 $10,000
Utilities $480 $528 $580
Insurance $972 $1,020 $1,072
Payroll Taxes $4,050 $10,500 $13,800
Moving Expenses $1,000 $0 $0
Other $0 $0 $0
Total Operating Expenses $40,637 $97,448 $123,852
Profit Before Interest and Taxes $30,176 $9,670 $7,124
EBITDA $30,176 $9,670 $7,124
Interest Expense $0 $0 $0
Taxes Incurred $9,053 $2,901 $2,137
Net Profit $21,123 $6,769 $4,987
Net Profit/Sales 25.93% 5.61% 3.39%

7.3 Break-even Analysis

Break-even data is presented in the chart and table below.

BREAK-EVEN ANALYSIS
Monthly Revenue Break-even $3,896
Assumptions:
Average Percent Variable Cost 13%
Estimated Monthly Fixed Cost $3,386

7.4 Projected Cash Flow

The following table and chart show the Cash Flow for Coaching Company. After the first six months, cash flow should be positive for all months. We expect an initial period of decreasing cash balance, until sales reach mid-year targets.

PRO FORMA CASH FLOW
YEAR 1 YEAR 2 YEAR 3
Cash Received
Cash from Operations
Cash Sales $81,467 $120,604 $147,315
SUBTOTAL CASH FROM OPERATIONS $81,467 $120,604 $147,315
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 $81,467 $120,604 $147,315
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $60,344 $113,835 $142,328
SUBTOTAL SPENT ON OPERATIONS $60,344 $113,835 $142,328
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 $60,344 $113,835 $142,328
Net Cash Flow $21,123 $6,769 $4,987
Cash Balance $30,073 $36,842 $41,829

7.5 Projected Balance Sheet

The following table presents the Balance Sheet for Coaching Company. It shows our projected steady increase in Net Worth over the next three years. As a consulting company, we do not need a great deal in the way of assets, so the largest factor in the Balance Sheet is our cash balance.

PRO FORMA BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets
Cash $30,073 $36,842 $41,829
Other Current Assets $2,500 $2,500 $2,500
TOTAL CURRENT ASSETS $32,573 $39,342 $44,329
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
TOTAL LONG-TERM ASSETS $0 $0 $0
TOTAL ASSETS $32,573 $39,342 $44,329
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $0 $0 $0
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $0 $0 $0
Paid-in Capital $33,700 $33,700 $33,700
Retained Earnings ($22,250) ($1,127) $5,642
Earnings $21,123 $6,769 $4,987
TOTAL CAPITAL $32,573 $39,342 $44,329
TOTAL LIABILITIES AND CAPITAL $32,573 $39,342 $44,329
Net Worth $32,573 $39,342 $44,329

7.6 Business Ratios

The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. The industry comparisons are for Management Consulting Services, SIC code 8742.

RATIO ANALYSIS
YEAR 1 YEAR 2 YEAR 3 INDUSTRY PROFILE
Sales Growth 0.00% 48.04% 22.15% 7.74%
Percent of Total Assets
Other Current Assets 7.68% 6.35% 5.64% 48.61%
Total Current Assets 100.00% 100.00% 100.00% 77.64%
Long-term Assets 0.00% 0.00% 0.00% 22.36%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 0.00% 0.00% 0.00% 31.75%
Long-term Liabilities 0.00% 0.00% 0.00% 18.72%
Total Liabilities 0.00% 0.00% 0.00% 50.47%
NET WORTH 100.00% 100.00% 100.00% 49.53%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 86.92% 88.82% 88.91% 100.00%
Selling, General & Administrative Expenses 60.99% 83.21% 85.52% 83.82%
Advertising Expenses 0.00% 0.00% 0.00% 1.12%
Profit Before Interest and Taxes 37.04% 8.02% 4.84% 2.69%
Main Ratios
Current 0.00 0.00 0.00 1.69
Quick 0.00 0.00 0.00 1.36
Total Debt to Total Assets 0.00% 0.00% 0.00% 56.50%
Pre-tax Return on Net Worth 92.64% 24.58% 16.07% 2.64%
Pre-tax Return on Assets 92.64% 24.58% 16.07% 6.07%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 25.93% 5.61% 3.39% n.a
Return on Equity 64.85% 17.21% 11.25% n.a
Activity Ratios
Accounts Payable Turnover 8.98 12.17 12.17 n.a
Total Asset Turnover 2.50 3.07 3.32 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 0.00 n.a
Current Liab. to Liab. 0.00 0.00 0.00 n.a
Liquidity Ratios
Net Working Capital $32,573 $39,342 $44,329 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.40 0.33 0.30 n.a
Current Debt/Total Assets 0% 0% 0% n.a
Acid Test 0.00 0.00 0.00 n.a
Sales/Net Worth 2.50 3.07 3.32 n.a
Dividend Payout 0.00 0.00 0.00 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
Sales
Strategic Workshops 0% $0 $0 $3,000 $3,500 $5,000 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500
One On One Coaching 0% $0 $0 $500 $500 $500 $562 $562 $562 $562 $625 $625 $624
Coaching Club 0% $0 $0 $800 $816 $832 $849 $866 $883 $901 $919 $937 $956
Special Projects 0% $235 $250 $150 $150 $250 $250 $300 $300 $300 $300 $300 $300
TOTAL SALES $235 $250 $4,450 $4,966 $6,582 $9,161 $9,228 $9,245 $9,263 $9,344 $9,362 $9,380
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Royalties $471 $471 $471 $471 $471 $471 $471 $471 $471 $471 $471 $471
Marketing $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417
Subtotal Direct Cost of Sales $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888
PERSONNEL PLAN
MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12
President 0% $0 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Second salesperson/coach 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL PEOPLE 0 1 1 1 1 1 1 1 1 1 1 1
Total Payroll $0 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
PRO FORMA PROFIT AND LOSS
MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12
Sales $235 $250 $4,450 $4,966 $6,582 $9,161 $9,228 $9,245 $9,263 $9,344 $9,362 $9,380
Direct Cost of Sales $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL COST OF SALES $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888 $888
Gross Margin ($653) ($638) $3,562 $4,078 $5,694 $8,273 $8,340 $8,357 $8,375 $8,456 $8,474 $8,492
Gross Margin % -277.87% -255.13% 80.05% 82.12% 86.51% 90.31% 90.38% 90.40% 90.42% 90.50% 90.52% 90.53%
Expenses
Payroll $0 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Marketing/Promotion $1,500 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $0 $75 $75 $75 $75 $75 $75 $75 $75 $75 $830 $830
Utilities $0 $38 $39 $40 $41 $42 $43 $45 $46 $48 $49 $50
Insurance $0 $84 $85 $86 $87 $87 $88 $89 $90 $91 $92 $93
Payroll Taxes 15% $0 $300 $375 $375 $375 $375 $375 $375 $375 $375 $375 $375
Moving Expenses 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,000 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $1,500 $2,797 $3,373 $3,375 $3,378 $3,380 $3,382 $3,384 $3,386 $3,388 $5,146 $4,148
Profit Before Interest and Taxes ($2,153) ($3,434) $189 $703 $2,317 $4,894 $4,958 $4,973 $4,989 $5,068 $3,329 $4,344
EBITDA ($2,153) ($3,434) $189 $703 $2,317 $4,894 $4,958 $4,973 $4,989 $5,068 $3,329 $4,344
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($646) ($1,030) $57 $211 $695 $1,468 $1,488 $1,492 $1,497 $1,520 $999 $1,303
Net Profit ($1,507) ($2,404) $132 $492 $1,622 $3,425 $3,471 $3,481 $3,492 $3,547 $2,330 $3,041
Net Profit/Sales -641.32% -961.61% 2.97% 9.91% 24.64% 37.39% 37.61% 37.66% 37.70% 37.96% 24.89% 32.42%
PRO FORMA CASH FLOW
MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12
Cash Received
Cash from Operations
Cash Sales $235 $250 $4,450 $4,966 $6,582 $9,161 $9,228 $9,245 $9,263 $9,344 $9,362 $9,380
SUBTOTAL CASH FROM OPERATIONS $235 $250 $4,450 $4,966 $6,582 $9,161 $9,228 $9,245 $9,263 $9,344 $9,362 $9,380
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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
SUBTOTAL CASH RECEIVED $235 $250 $4,450 $4,966 $6,582 $9,161 $9,228 $9,245 $9,263 $9,344 $9,362 $9,380
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $1,742 $2,654 $4,318 $4,474 $4,960 $5,736 $5,757 $5,764 $5,771 $5,797 $7,032 $6,339
SUBTOTAL SPENT ON OPERATIONS $1,742 $2,654 $4,318 $4,474 $4,960 $5,736 $5,757 $5,764 $5,771 $5,797 $7,032 $6,339
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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
SUBTOTAL CASH SPENT $1,742 $2,654 $4,318 $4,474 $4,960 $5,736 $5,757 $5,764 $5,771 $5,797 $7,032 $6,339
Net Cash Flow ($1,507) ($2,404) $132 $492 $1,622 $3,425 $3,471 $3,481 $3,492 $3,547 $2,330 $3,041
Cash Balance $7,443 $5,039 $5,171 $5,663 $7,285 $10,710 $14,181 $17,662 $21,155 $24,702 $27,032 $30,073
PRO FORMA BALANCE SHEET
MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12
Assets Starting Balances
Current Assets
Cash $8,950 $7,443 $5,039 $5,171 $5,663 $7,285 $10,710 $14,181 $17,662 $21,155 $24,702 $27,032 $30,073
Other Current Assets $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
TOTAL CURRENT ASSETS $11,450 $9,943 $7,539 $7,671 $8,163 $9,785 $13,210 $16,681 $20,162 $23,655 $27,202 $29,532 $32,573
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
TOTAL LONG-TERM ASSETS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL ASSETS $11,450 $9,943 $7,539 $7,671 $8,163 $9,785 $13,210 $16,681 $20,162 $23,655 $27,202 $29,532 $32,573
Liabilities and Capital 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 Liabilities
Current Borrowing $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
SUBTOTAL CURRENT LIABILITIES $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL LIABILITIES $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Paid-in Capital $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700 $33,700
Retained Earnings ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250) ($22,250)
Earnings $0 ($1,507) ($3,911) ($3,779) ($3,287) ($1,665) $1,760 $5,231 $8,712 $12,205 $15,752 $18,082 $21,123
TOTAL CAPITAL $11,450 $9,943 $7,539 $7,671 $8,163 $9,785 $13,210 $16,681 $20,162 $23,655 $27,202 $29,532 $32,573
TOTAL LIABILITIES AND CAPITAL $11,450 $9,943 $7,539 $7,671 $8,163 $9,785 $13,210 $16,681 $20,162 $23,655 $27,202 $29,532 $32,573
Net Worth $11,450 $9,943 $7,539 $7,671 $8,163 $9,785 $13,210 $16,681 $20,162 $23,655 $27,202 $29,532 $32,573

 

 

 

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