Financial Attachments - Sample Business Plan Private Communications Corporation (pcc)

Financial Attachments
Table A Financial Model: Assumptions
The sales model assumes service begins on March 1, with two weeks of beta testing, followed by product launch. It is calculated based on estimated market size and market share for each time period.
Sales:
Customer sign-ups are projected as follows (the average life of a customer is assumed to be 3 months):
Subscriptions
|
1997
|
1998
|
1999
|
2000
|
2001
|
Registration only
|
17,834
|
8,804
|
8,650
|
9,515
|
7,642
|
Basic subscription
|
39,748
|
68,740
|
67,533
|
74,287
|
83,292
|
Premium subscription
|
15,898
|
27,495
|
27,012
|
29,713
|
33,315
|
Additional minutes
|
11,180,327
|
38,478,201
|
47,205,971
|
51,926,590
|
57,024,067
| Pricing:
Average monthly pricing is projected as follows (per month, except price for add. minutes, which is per minute):
Price
|
1997
|
1998
|
1999
|
2000
|
2001
|
Registration only
|
$6.95
|
$6.95
|
$6.95
|
$6.95
|
$6.95
|
Basic subscription
|
14.95
|
14.95
|
14.95
|
14.95
|
14.95
|
Premium subscription
|
29.95
|
29.95
|
29.95
|
29.95
|
29.95
|
Additional minutes (Avg.)
|
0.73
|
0.73
|
0.72
|
0.72
|
0.72
| Cost of Goods Sold:
Average costs per subscriber are anticipated as follows (includes cost of minutes included in package):
Cost
|
1997
|
1998
|
1999
|
2000
|
2001
|
Registration only
|
$0.00
|
$0.00
|
$0.00
|
$0.00
|
$0.00
|
Basic subscription
|
3.80
|
3.80
|
3.80
|
3.80
|
3.80
|
Premium subscription
|
8.55
|
8.55
|
8.55
|
8.55
|
8.55
|
Additional minutes (Avg.)
|
0.20
|
0.19
|
0.19
|
0.19
|
0.19
|
Expected cost of collection on revenues are 12% of revenue.
Income Statement:
Year end headcount is anticipated as follows:
Staff
|
1997
|
1998
|
1999
|
2000
|
2001
|
Operations
|
2
|
2
|
2
|
2
|
2
|
Sales/marketing
|
1
|
4
|
4
|
4
|
4
|
Administration
|
7
|
7
|
7
|
7
|
7
|
Total
|
10
|
13
|
13
|
13
|
13
|
Salaries are based on competitive compensation.
Benefits are assumed at 25% of salaries and other compensation.
Salaries increase at 5% annually.
Advertising expenses are budgeted at 5%, trade shows at 0%, and collateral at 2% of total revenue per period.
Consultants and contractors are employed at market rates as needed.
Operating expenses are assumed at the following monthly rates per person as follows:
Expenses
|
Supplies
|
Travel and Meals
|
Phone/Postage
|
Operations
|
$250
|
$1,200
|
$250
|
Sales/marketing
|
250
|
3,000
|
250
|
Administration
|
250
|
500
|
250
|
Business insurance is considered to be 0.1% of total revenue.
Professional services (legal and accounting) are indicated as needed.
Office rent is assumed at $1.30 per square foot. The company starts with 0 square feet and increases in July.
Interest rates are fixed over the projected period and are estimated based on current rates:
Interest revenue is 5% of cash balance.
Interest expense on credit lines are 12% of outstanding balance.
Interest expense on capital equipment leases are 12% of outstanding balance.
Interest expense on long-term debt is 8% of outstanding balance.
Balance Sheet:
Cash is the amount remaining after all revenue, expenses, the purchase of assets, and the financing of these decisions has been accounted for.
Accounts receivable is considered to be 15 days of sales. Accounts receivable at the start of projections equal $0.
Fixed assets include computer hardware, computer software, and furniture and fixtures. Equipment purchases are tied to projected staffing plans.
The company begins operations with the following capital assets:
Equipment
|
Hardware
|
Software
|
Furniture and Fixtures
|
Operations
|
$0
|
$0
|
$0
|
Sales/marketing
|
0
|
0
|
0
|
Administration
|
0
|
0
|
0
|
Per person equipment costs are as follows:
Equipment
|
Hardware
|
Software
|
Furniture and Fixtures
|
Operations
|
$3,000
|
$5,000
|
$1,000
|
Sales/marketing
|
3,000
|
500
|
1,000
|
Administration
|
1,250
|
250
|
500
|
Capital acquisitions are depreciated as follows:
Equipment
|
Hardware
|
Software
|
Furniture and Fixtures
|
Operations
|
5 years
|
5 years
|
5 years
|
Sales/marketing
|
5 years
|
5 years
|
5 years
|
Administration
|
5 years
|
5 years
|
5 years
|
Accounts payable is equal to the sum of all month's expenses except insurance, rent, benefits, and payroll taxes and is paid within 30 days time (fixed). Accounts payable equal $0 at the start of the projected period.
Salaries payable is based on 1/2 of month's salary. Salaries payable equals $0 at the start of the projected project.
Capital equipment leases are paid off over five years. The company begins operations with $0 in total outstanding leases and adds as indicated in the Capital Purchases Forecast.
The company begins operations with $0 in common stock, $0 in preferred stock, and $0 in retained earnings. Company stock is issued as shown on the balance sheet.
Table B Revenue Build-up
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
Subscribers
|
|
|
|
|
|
|
Registration only
|
|
17,834
|
8,804
|
8,650
|
9,515
|
7,642
|
Basic
|
|
39,748
|
68,740
|
67,533
|
74,287
|
83,292
|
Premium
|
|
15,898
|
27,495
|
27,012
|
29,713
|
33,315
|
Average duration of subscriber membership (months)
|
|
3
|
3
|
3
|
3
|
3
|
Total Subscriber Months
|
|
|
|
|
|
|
Registration only
|
|
53,501
|
26,413
|
25,950
|
28,545
|
22,927
|
Basic
|
|
119,245
|
206,221
|
202,600
|
222,860
|
249,876
|
Premium
|
|
47,694
|
82,485
|
81,036
|
89,139
|
99,946
|
Subscription Revenue
|
Price
|
|
|
|
|
|
Registration only
|
$6.95
|
$ 371,835
|
$ 183,572
|
$ 180,350
|
$ 198,385
|
$ 159,345
|
Basic
|
14.95
|
1,782,718
|
3,083,003
|
3,028,873
|
3,331,754
|
3,735,648
|
Premium
|
29.95
|
1,428,438
|
2,470,414
|
2,427,039
|
2,669,721
|
2,993,385
|
Total subscription revenue
|
|
$3,582,990
|
$5,736,989
|
$5,636,262
|
$6,199,860
|
$6,888,378
|
Additional Minutes
|
% of Add'l Min.a
|
|
|
|
|
|
Registration
|
50%
|
5,590,164
|
19,239,101
|
18,882,388
|
20,770,636
|
22,809,627
|
Basic
|
40%
|
4,472,131
|
15,391,280
|
23,602,986
|
25,963,295
|
28,512,034
|
Premium
|
10%
|
1,118,033
|
3,847,820
|
4,720,597
|
5,192,659
|
5,702,407
|
Total additional minutes
|
|
11,180,327
|
38,478,201
|
47,205,971
|
51,926,590
|
57,024,067
|
Additional Minute Revenue
|
Price/Minute
|
|
|
|
|
|
Registration
|
0.79
|
$4,416,229
|
$15,198,889
|
$14,917,087
|
$16,408,802
|
$18,019,605
|
Basic
|
0.69
|
3,085,770
|
10,619,983
|
16,286,060
|
17,914,674
|
19,673,303
|
Premium
|
0.59
|
659,639
|
2,270,214
|
2,785,152
|
3,063,669
|
3,364,420
|
Average additional minute price
|
|
0.73
|
0.73
|
0.72
|
0.72
|
0.72
|
Total additional minute revenue
|
|
$8,161,639
|
$28,089,087
|
$33,988,299
|
$37,387,145
|
$41,057,328
|
Total Revenue
|
|
|
|
|
|
|
Registration
|
|
$4,788,064
|
$15,382,462
|
$15,097,437
|
$16,607,188
|
$18,178,950
|
Basic
|
|
4,868,488
|
13,702,987
|
19,314,933
|
21,246,427
|
23,408,951
|
Premium
|
|
2,088,077
|
4,740,627
|
5,212,191
|
5,733,390
|
6,357,805
|
Total revenue
|
|
$11,744,629
|
$33,826,076
|
$39,624,561
|
$43,587,005
|
$47,945,706
|
Revenue
|
|
$11,744,629
|
$33,826,076
|
$39,624,561
|
$43,587,005
|
$47,945,706
|
Cost of Goods Sold
|
|
4,506,338
|
12,858,870
|
15,186,823
|
16,705,501
|
18,392,126
|
Gross Margin
|
|
$ 7,238,291
|
$20,967,206
|
$24,437,738
|
$26,881,504
|
$29,553,580
|
% of Revenue
|
|
62%
|
62%
|
62%
|
62%
|
62%
|
Operating Expenses
|
|
|
|
|
|
|
Marketing and sales
|
|
$2,086,502
|
$5,987,541
|
$7,028,593
|
$7,694,321
|
$8,411,941
|
% of Revenue
|
|
18%
|
18%
|
18%
|
18%
|
18%
|
Administrative
|
|
227,968
|
429,946
|
447,557
|
463,923
|
481,305
|
% of Revenue
|
|
2%
|
1%
|
1%
|
1%
|
1%
|
Total Operating Expenses
|
|
$2,314,470
|
$6,417,487
|
$7,476,150
|
$8,158,244
|
$8,893,246
|
% of Revenue
|
|
20%
|
19%
|
19%
|
19%
|
19%
|
Income Before Interest and Taxes
|
|
$4,923,821
|
$14,549,719
|
$16,961,588
|
$18,723,260
|
$20,660,334
|
% of Revenue
|
|
42%
|
43%
|
43%
|
43%
|
43%
|
Interest expense
|
|
1,041
|
1,965
|
127
|
81
|
34
|
Interest revenue
|
|
—
|
—
|
—
|
—
|
—
|
Income Before Taxes
|
|
$4,922,780
|
$14,547,754
|
$16,961,461
|
$18,723,179
|
$20,660,300
|
Tax expense
|
|
—
|
—
|
—
|
—
|
—
|
Net Income
|
|
$4,922,780
|
$14,547,754
|
$16,961,461
|
$18,723,179
|
$20,660,300
|
% of Revenue
|
|
42%
|
43%
|
43%
|
43%
|
43%
|
aPercentage of Additional Minutes changes in 1999 to 40% Registration, 50% Basic, and 10% Premium.
Table C Balance Sheet ($)
|
1997
|
1998
|
1999
|
2000
|
2001
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash
|
$4,683,408
|
$18,970,094
|
$36,008,945
|
$54,680,803
|
$75,284,348
|
Net accounts receivable
|
1,003,969
|
1,832,918
|
1,651,023
|
1,816,125
|
1,997,738
|
Inventory
|
0
|
0
|
0
|
0
|
0
|
Total current assets
|
$5,687,377
|
$20,803,012
|
$37,659,968
|
$56,496,928
|
$77,282,085
|
Gross fixed assets
|
$ 28,500
|
$ 42,000
|
$ 42,000
|
$ 42,000
|
$ 42,000
|
Less accumulated depreciation
|
4,100
|
11,675
|
20,075
|
28,475
|
36,875
|
Net fixed assets
|
$24,400
|
$30,325
|
$21,925
|
$13,525
|
$5,125
|
Total Assets
|
$5,711,777
|
$20,833,337
|
$ 37,681,893
|
$56,510,453
|
$77,287,210
|
LIABILITIES
|
|
|
|
|
|
Short-term liabilities
|
|
|
|
|
|
Accounts payable
|
$ 677,285
|
$ 1,238,973
|
$ 1,129,025
|
$ 1,239,306
|
$ 1,360,615
|
Salaries payable
|
12,833
|
18,069
|
18,972
|
19,921
|
20,917
|
Taxes payable
|
0
|
0
|
0
|
0
|
0
|
Line of credit
|
0
|
0
|
0
|
0
|
0
|
Current portion of capital equipment
|
2,976
|
4,353
|
3,183
|
2,013
|
843
|
Current portion of long-term debt
|
0
|
0
|
0
|
0
|
0
|
Total short-term liabilities
|
$ 693,094
|
$ 1,261,394
|
$ 1,151,179
|
$ 1,261,239
|
$ 1,382,375
|
Long-term liabilities
|
|
|
|
|
|
Capital equipment lease
|
$ 11,903
|
$ 17,410
|
$ 12,730
|
$ 8,050
|
$ 3,370
|
Long-term debt
|
0
|
0
|
0
|
0
|
0
|
Total long-term liabilities
|
11,903
|
17,410
|
12,730
|
8,050
|
3,370
|
Total Liabilities
|
$ 704,998
|
$ 1,278,804
|
$ 1,163,909
|
$ 1,269,289
|
$ 1,385,745
|
EQUITY
|
|
|
|
|
|
Preferred stock
|
0
|
0
|
0
|
0
|
0
|
Common stock
|
84,000
|
84,000
|
84,000
|
84,000
|
84,000
|
Retained earnings
|
4,922,779
|
19,470,533
|
36,433,983
|
55,157,164
|
75,817,465
|
Total Equity
|
$5,006,779
|
$19,554,533
|
$36,517,983
|
$55,241,164
|
$75,901,465
|
Liabilities and Equity
|
$5,711,777
|
$20,833,337
|
$37,681,893
|
$56,510,453
|
$77,287,210
|
Table D Statement of Sources and Uses ($)
|
1997
|
1998
|
1999
|
2000
|
2001
|
BEGINNING CASH
|
$ 0
|
$ 4,683,408
|
$18,970,094
|
$36,008,945
|
$54,680,803
|
Sources of cash
|
|
|
|
|
|
Net income
|
$ 4,922,780
|
$14,547,754
|
$16,963,461
|
$18,723,179
|
$20,660,300
|
Additional depreciation/amortization
|
4,100
|
7,575
|
8,400
|
8,400
|
8,400
|
Issuance of preferred stock
|
0
|
0
|
0
|
0
|
0
|
Issuance of common stock
|
84,000
|
0
|
0
|
0
|
0
|
Plus changes in:
|
|
|
|
|
|
Accounts payable
|
677,285
|
561,688
|
(109,948)
|
110,281
|
121,310
|
Salaries payable
|
12,833
|
5,235
|
903
|
949
|
996
|
Taxes payable
|
0
|
0
|
0
|
0
|
0
|
Additions to line of credit
|
0
|
0
|
0
|
0
|
0
|
Additions to capital equipment lease
|
17,250
|
12,000
|
0
|
0
|
0
|
Additions to long-term debt
|
0
|
0
|
0
|
0
|
0
|
Total sources of cash
|
$ 5,718,249
|
$15,134,252
|
$16,862,818
|
$18,842,809
|
$20,791,009
|
Uses of cash
|
|
|
|
|
|
Less changes in:
|
|
|
|
|
|
Net accounts receivable
|
$ 1,003,969
|
$ 828,949
|
$(181,895)
|
$ 165,102
|
$ 181,613
|
Gross fixed assets
|
28,500
|
13,500
|
0
|
0
|
0
|
Line of credit payments
|
0
|
0
|
0
|
0
|
0
|
Capital equipment lease payments
|
2,371
|
5,117
|
5,850
|
5,850
|
5,850
|
Long-term debt payments
|
0
|
0
|
0
|
0
|
0
|
Total uses
|
$ 1,034,839
|
$ 847,566
|
$ (176,045)
|
$ 170,952
|
$ 187,463
|
CHANGES IN CASH
|
4,683,409
|
14,286,685
|
17,038,861
|
18,671,857
|
20,603,547
|
ENDING CASH
|
$4,683,409
|
$18,970,094
|
$36,008,955
|
$54,680,802
|
$75,284,350
|
Straxecute ConsultingPage
|