Professional Documents
Culture Documents
Table of Contents
Page 2
Chart: Highlights
Highlights
$400,000
$360,000
$320,000
$280,000
Sales
$240,000
Gross Margin
$200,000
Net Profit
$160,000
$120,000
$80,000
$40,000
$0
2010
2011
2012
Page 1
1.1 Objectives
The Sorcerer's Accountant seeks to launch a new line of services - small
business bookkeeping - which will be offered to the same ongoing clients as
Sorcerer's Accounting currently seeks.
Sorcerer's Accounting has set the following objectives:
1.2 Mission
The Sorcerer's Accountant seeks to provide a full suite of tax and management
accounting services for small businesses in Chicago, Illinois, allowing business
owners to not only save money over in-house accounting and ensure their
compliance with tax laws, but to make valuable management decisions from
their numbers.
1.3 Keys to Success
The keys to success for the accounting business include:
Page 2
2007
$100,000
$75,000
75.00%
$55,000
30
2008
$150,000
$112,500
75.00%
$67,500
25
2009
$175,000
$131,250
75.00%
$82,750
28
2007
2008
2009
Balance Sheet
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
$15,000
$4,167
$5,000
$24,167
$17,500
$6,250
$5,000
$28,750
$20,000
$7,292
$5,000
$32,292
$0
$0
$0
Page 3
Accumulated Depreciation
Total Long-term Assets
Total Assets
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities (interest
free)
Total Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
$0
$0
$0
$0
$0
$0
$24,167
$28,750
$32,292
$4,583
$0
$0
$5,625
$0
$0
$6,896
$0
$0
$4,583
$5,625
$6,896
$0
$4,583
$0
$5,625
$0
$6,896
$10,000
($10,417)
$20,000
$19,583
$10,000
($51,875)
$65,000
$23,125
$10,000
($83,554)
$98,950
$25,396
$24,167
$28,750
$32,292
Other Inputs
Payment Days
Sales on Credit
Receivables Turnover
30
$50,000
12.00
30
$75,000
12.00
30
$87,500
12.00
Page 4
Sales
$100,000
Gross
$80,000
Net
$60,000
$40,000
$20,000
$0
2007
2008
2009
3.0 Services
Current services offered by The Sorcerer's Accountant include:
Tax Services:
Tax preparation
Tax planning
Addressing tax problems (audit representation, back taxes owed, payroll tax
problems, IRS issues, bankruptcy)
Audits
Cost and Margin Analysis
Financial Projection
Setup for credit card processing
QuickBooks Services
QuickBooks
QuickBooks
QuickBooks
QuickBooks
Payroll processing
Accounts payable (entry, bill paying)
Accounts receivable (entry, invoicing, deposits, collection)
Sales tax processing
Bank reconciliations
Inventory management
Financial statement preparation
Other financial reporting
These bookkeeping services will be at a rate of $30 per hour/per bookkeeper for
clients. Clients would pay $20 -$25, once benefits and taxes are factored in, for
an in-house, part-time bookkeeper, and would still be responsible for training,
oversight, and management in that case. The Sorcerer's Accountant's rate is
very economical once this is taken into account.
The new services will be performed by part-time student bookkeepers who are
current undergraduate accounting majors with up to 20 hours per week free to
work. Each business will have a consistent bookkeeper assigned to it. The
bookkeepers will be trained by Max Greenwood directly in proper techniques.
They will all be students in the top 20% of their class with at least one
professional recommendation and one educational (professor) recommendation.
This is a business model which has been successful in other cities where there
is ample student labor, such as New York City.
To add additional value, the bookkeeping manager, a graduate student
pursuing an MBA in accounting, will supervise and audit the work of the
bookkeepers, answering their questions when questions arise, and providing
quality assurance. The bookkeeping manager will review the QuickBooks files
and reports created by the bookkeepers to ensure that they follow proper
formats and are prepared correctly.
4.0 Market Analysis Summary
The small business accounting market consists of virtually every small business
in the United States. As businesses grow larger than one person sole
proprietorships, they generally require expert help with at least their tax
preparation, and often with additional bookkeeping and accounting services.
Even many non-employer sole proprietorships will use accounting help at some
Page 6
point. While some small businesses hire bookkeepers or CFOs directly, many
successfully outsource these types of services.
The accounting service market as a whole includes the following:
The National Society of Accountants states that it represents more than 30,000
independent practitioners who provide services to 19 million individuals and
businesses. The continuing evolution of U.S. tax laws guarantees work for tax
accountants on an ongoing basis. The market is somewhat recession-proof, as
businesses which are contracting use accountants to help cut spending and
limit tax liability just as growing businesses will use accountants to launch and
prepare financials for expansion, mergers and acquisitions.
4.1 Market Segmentation
The market of small businesses in Chicago for The Sorcerer's Accountant
represents approximately 85,000 businesses in 2010. It has been divided into
three groups:
Non-employer firms: Without employees, these firms do not have many of
the concerns of larger businesses. However, the owners must be vigilant to
protect their own tax liability and sort out how their personal and business tax
returns intersect. These firms are generally buyers of QuickBooks services and
tax preparation services. As they grow, this group becomes ripe for outsourced
bookkeeping services before they can hire an full-time in-house bookkeeper.
Very small businesses: Made up of businesses that are designed to stay
small and those which are growing through a phase, these businesses require
payroll services, bookkeeping, and tax preparation. They are concerned about
losing control, but can generally be convinced of using outsourced accounting
and bookkeeping with cost analysis. With the stakes higher, these businesses
can make greater use of management accounting services, especially as most
cannot afford a dedicated CFO. Many do not need a full-time bookkeeper, but
can make do with part-time help, which limits their hiring options.
Other small businesses: Many of these businesses will have some in-house
financial management and bookkeeping help. However, they may be able to
save money by outsourcing these services, as they are not generally core to
what the business seeks to do. These businesses may be comfortable with their
Page 7
2011
2012
2013
2014
Growth
CAGR
4%
50,000
52,000
54,080
56,243
58,493
4.00%
4%
25,000
26,000
27,040
28,122
29,247
4.00%
4%
10,000
10,400
10,816
11,249
11,699
4.00%
4.00%
85,000
88,400
91,936
95,614
99,439
4.00%
Non-employer Firms
Very Small Businesses (2 to 10 employees)
Other Small Businesses (11 to 99 employees)
Page 8
For bookkeeping services, the business also must compete indirectly against
the prospect of businesses hiring their own part-time bookkeepers. This gives
businesses the advantage of greater control and perhaps development of a
future full-time employee. If the hire works out, the cost can be lower for a
business than an outside service. However, this can lead to employees who are
not as well-educated or experienced as bookkeepers through a bookkeeping
service who have worked with a range of businesses. Generally, the cost is
lower in the long run with a bookkeeping service, as training is done more
systematically and supervisors are more regimented and experienced.
To choose between competitors, factors considered by clients include:
Page 9
Expanding Google Adwords with $1,000 per month devoted to bookkeepingrelated keywords for the Chicago market
Listing the website on databases and other websites for small business
services and bookkeeping services in Chicago
Promoting the service to small business blogs and posting to blogs directly
wherever possible
Referencing the website in print ads and the brochure
website. All copy will be written by Max Greenwood. Graphics and design
elements will be added by the marketing partner. There is not a need for ecommerce, a back-end, or other functionality for the website.
6.0 Strategy and Implementation Summary
To promote the business to its target of businesses with 2 to 10 employees, The
Sorcerer's Accountant will:
The marketing messages will focus on the economics of the decision to use
outsourced bookkeepers from The Sorcerer's Accountant and the advantage of
CPA oversight with Greenwood's experience and track record.
Page 11
Marketing also encompasses the search for student bookkeepers. Job listings
will be posted at local universities and promote the learning involved in the
position and the "leg up" it can give students for accounting positions upon
graduation. We will recruit the best student bookkeepers possible. The costs
associated with this hiring are only the time of Max Greenwood.
6.3 Sales Strategy
The sales strategy for The Sorcerer's Accountant's new bookkeeping services is
to attempt to sell the service predominantly to existing clients, especially at
first before marketing pays off with new inquiries. This will require Max
Greenwood to inform all existing clients by phone about the idea, once he has
determined that they are qualified to use the service. Whenever possible,
clients will be approached during regularly scheduled calls and meetings so as
to not require a great deal of additional prospecting time.
Greenwood will then ask clients directly for referrals to other businesses and
business owners they know who may be right for the bookkeeping services.
Greenwood will seek to contact two referrals per day. When and if existing
clients and referrals are exhausted, Greenwood will engage in cold calling to
likely prospects he has heard about from other businesses.
The result of this initiative of direct selling is expected to be at least five clients
within the first couple of months, as many current Sorcerer's Accounting clients
appear extremely ready for this service and trusting of Max Greenwood.
6.3.1 Sales Forecast
Unit prices represent the average project cost for tax services ($750), cost
accounting projects ($1,000), and QuickBooks services ($300). Bookkeeping
services are set at $30 per hour. Direct unit costs are very low for all of these
services as they are primarily labor services. Tax projects incur a 5% cost for
printing and travel, cost accounting projects incur 3% cost, primarily for travel.
QuickBooks services are generally given remotely and sales of QuickBooks are
done directly to the vendor (Greenwood Accounting receives a commission on
software sold). Bookkeeping services incur a 50% cost of sales as the
bookkeepers are paid at $15 per hour.
Total sales are expected to rise significantly with the success of the
bookkeeping services revenue stream. The existing revenue streams are
projected to grow at slow rates, as Max Greenwood cannot take on much
additional work. They are not projected to grow at all in 2010, as Greenwood
will spend additional time on the establishment of the bookkeeping services.
Furthermore, these revenues will drop by 20% in the first quarter as additional
time is spent by Greenwood on hiring, training and launching this revenue
stream.
Page 12
The sales forecast assumes part-time bookkeepers working 20 hours per week.
These will grow from 2 bookkeepers working below capacity at the start of 2010
to 3 by the end of 2010, to 4 in 2011 and 8 by the end of 2012. Revenues will
begin in the second month after training in the first month of 2010. This growth
rate is made possible by the intention to do everything possible to retain clients
and grow with them, as well as to actively seek referrals to other businesses
from each client. Two levels of oversight (Greenwood's oversight over the
Bookkeeping Manager, and the Bookkeeping Manager's oversight over all
bookkeepers) will improve quality assurance and the chances of a high level of
client retention and satisfaction.
Direct cost of sales are very low for the business as most costs are fixed. Travel
to client sites, printing and paper, and other direct supplies for clients are the
only direct costs for services provided directly by Greenwood. The direct labor
of student bookkeepers for the bookkeeping services is $15 per hour, or 50%.
Wages for non-billable hours (training periods) for new bookkeepers are listed in
the Personnel table.
Table: Sales Forecast
Sales Forecast
2010
Unit Sales
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Total Unit Sales
125
60
57
1,570
1,812
2011
2012
130
63
59
3925
4,177
135
65
62
7850
8,112
Unit Prices
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
2010
$750.00
$1,000.00
$300.00
$30.00
2011
$750.00
$1,000.00
$300.00
$30.00
2012
$750.00
$1,000.00
$300.00
$30.00
Sales
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Total Sales
$93,600
$60,300
$17,100
$47,100
$218,100
$97,500
$63,000
$17,700
$117,750
$295,950
$101,250
$65,000
$18,600
$235,500
$420,350
2010
$37.50
$30.00
$0.00
2011
$37.50
$30.00
$0.00
2012
$37.50
$30.00
$0.00
Page 13
Bookkeeping Hours
Direct Cost of Sales
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Subtotal Direct Cost of Sales
$15.00
$15.00
$15.00
$4,680
$1,809
$0
$23,550
$30,039
$4,875
$1,890
$0
$58,875
$65,640
$5,063
$1,950
$0
$117,750
$124,763
Tax Preparations
$15,000
$12,000
QuickBooks Services
$9,000
Bookkeeping Hours
$6,000
$3,000
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
$0
Page 14
$400,000
$350,000
Tax Preparations
$300,000
$250,000
QuickBooks Services
$200,000
Bookkeeping Hours
$150,000
$100,000
$50,000
$0
2010
2011
2012
Page 15
6.4 Milestones
To execute the milestones listed, Max Greenwood will make liberal use of an
outside marketing service firm (OF denotes outside firm on the table) which will
manage the execution of the marketing activities listed. Greenwood will directly
execute the sales activities listed through his work with clients.
$4,000 of these costs will be incurred at the end of 2009 and are included in
operating costs on the past performance table.
Table: Milestones
Milestones
Milestone
Start Date
End Date
Budget
Manager
Redevelop
Website
List Website on
Databases
Change Yellow
Pages ads
Search Engine
Marketing
Expand Website
Best Practices
Section
Redevelop
Brochure
Print New
Brochures
Promotion to
Clients
Promotion to
Client Referrals
Develop Print Ad
Run first print
ads
Totals
12/1/2009
1/1/2010
$2,500
MG (OF)
Departme
nt
Marketing
1/1/2010
1/15/2010
$500
MG (OF)
Marketing
1/1/2010
1/15/2010
$500
MG (OF)
Marketing
1/1/2010
12/31/2010
$12,000
MG (OF)
Marketing
12/1/2009
2/28/2010
$0
MG
Marketing
12/1/2009
1/1/2010
$1,000
MG (OF)
Marketing
1/1/2010
1/15/2010
$3,000
MG (OF)
Marketing
1/1/2010
1/31/2010
$0
MG
Sales
2/1/2010
2/28/2010
$0
MG
Sales
12/1/2009
2/1/2010
12/15/2009
2/15/2010
$500
$5,000
MG (OF)
MG (OF)
Marketing
Marketing
$25,000
Page 16
Chart: Milestones
Milestones
Redevelop Website
List Website on Databases
Change Yellow Pages ads
Search Engine Marketing
Expand Website Best Practices Section
Redevelop Brochure
Print New Brochures
Promotion to Clients
Promotion to Client Referrals
Develop Print Ad
Run first print ads
DecJan `10Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Page 17
2010
$1,200
$60,000
$24,000
$8,400
5
Total Payroll
$93,600
2011
$400
$65,000
$28,800
$9,380
6
$103,580
2012
$1,600
$70,000
$48,000
$11,800
10
$131,400
Page 18
141
$16,926
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost
$120.36
$16.58
$14,595
Page 19
20
40
60
80
100
120
140
160
180
200
220
Page 20
2010
$218,100
$30,039
$0
$30,039
2011
$295,950
$65,640
$0
$65,640
2012
$420,350
$124,763
$0
$124,763
Gross Margin
Gross Margin %
$188,061
86.23%
$230,310
77.82%
$295,588
70.32%
$93,600
$38,500
$0
$18,000
$2,400
$5,000
$14,040
$3,600
$103,580
$20,000
$0
$18,720
$2,496
$7,000
$15,537
$4,000
$131,400
$20,000
$0
$19,469
$2,596
$8,000
$19,710
$6,000
$175,140
$171,333
$207,175
$12,921
$12,921
$0
$3,876
$58,977
$58,977
$0
$17,693
$88,413
$88,413
$0
$26,524
$9,045
4.15%
$41,284
13.95%
$61,889
14.72%
Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Software and Computer
Expenses
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
Page 21
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2010
2011
2012
Page 22
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$280,000
$240,000
$200,000
$160,000
$120,000
$80,000
$40,000
$0
2010
2011
2012
Page 23
2011
2012
Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
$109,050
$105,612
$214,662
$147,975
$144,145
$292,120
$210,175
$204,055
$414,230
$0
$0
$0
$0
$0
$0
$0
$214,662
$0
$0
$0
$0
$0
$0
$0
$292,120
$0
$0
$0
$0
$0
$0
$0
$414,230
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
2010
2011
2012
$93,600
$111,643
$205,243
$103,580
$149,376
$252,956
$131,400
$220,816
$352,216
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Page 24
Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
$0
$0
$0
$205,243
$0
$0
$20,000
$272,956
$0
$0
$60,000
$412,216
$9,418
$29,418
$19,164
$48,582
$2,013
$50,596
Chart: Cash
Cash
$28,000
$24,000
$20,000
$16,000
$12,000
$8,000
Cash Balance
$4,000
$0
($4,000)
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
($8,000)
Page 25
2011
2012
Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
$29,418
$10,730
$5,000
$45,148
$48,582
$14,560
$5,000
$68,142
$50,596
$20,680
$5,000
$76,276
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$0
$0
$0
$45,148
$0
$0
$0
$68,142
$0
$0
$0
$76,276
2010
2011
2012
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$10,708
$0
$0
$10,708
$12,418
$0
$0
$12,418
$18,663
$0
$0
$18,663
Long-term Liabilities
Total Liabilities
$0
$10,708
$0
$12,418
$0
$18,663
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
$10,000
$15,396
$9,045
$34,441
$45,148
$10,000
$4,441
$41,284
$55,724
$68,142
$10,000
($14,276)
$61,889
$57,613
$76,276
Net Worth
$34,441
$55,724
$57,613
Page 27
Table: Ratios
Ratio Analysis
2010
Sales Growth
2011
2012
Industry
Profile
3.34%
24.63%
35.69%
42.03%
23.77%
11.07%
100.00%
0.00%
100.00%
21.37%
7.34%
100.00%
0.00%
100.00%
27.11%
6.56%
100.00%
0.00%
100.00%
14.34%
53.58%
70.11%
29.89%
100.00%
23.72%
0.00%
23.72%
76.28%
18.22%
0.00%
18.22%
81.78%
24.47%
0.00%
24.47%
75.53%
37.94%
54.53%
92.47%
7.53%
100.00%
86.23%
82.08%
100.00%
77.82%
63.87%
100.00%
70.32%
55.60%
100.00%
59.56%
28.35%
17.65%
5.92%
6.76%
19.93%
4.76%
21.03%
1.21%
8.19%
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
4.22
4.22
23.72%
37.52%
28.62%
5.49
5.49
18.22%
105.84%
86.55%
4.09
4.09
24.47%
153.46%
115.91%
1.24
1.18
92.47%
696.33%
52.41%
Additional Ratios
Net Profit Margin
Return on Equity
2010
4.15%
26.26%
Activity Ratios
Accounts Receivable
Turnover
Collection Days
Accounts Payable Turnover
Payment Days
2011
13.95%
74.09%
2012
14.72%
107.42%
n.a
n.a
10.16
10.16
10.16
n.a
29
10.78
29
31
12.17
28
31
12.17
25
n.a
n.a
n.a
Page 28
4.83
4.34
5.51
n.a
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
0.31
1.00
0.22
1.00
0.32
1.00
n.a
n.a
$34,441
0.00
$55,724
0.00
$57,613
0.00
n.a
n.a
0.21
24%
3.21
6.33
0.00
0.23
18%
4.31
5.31
0.48
0.18
24%
2.98
7.30
0.97
n.a
n.a
n.a
n.a
n.a
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Page 29
Appendix
Table: Sales Forecast
Sales
Forecast
Unit Sales
Tax
Preparati
ons
Cost
Accountin
g Analysis
QuickBoo
ks
Services
Bookkeep
ing Hours
Total Unit
Sales
Unit
Prices
Tax
Preparati
ons
Cost
Accountin
g Analysis
QuickBoo
ks
Services
Bookkeep
ing Hours
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
10
11
16
10
10
10
10
10
10
50
70
90
100
120
140
160
180
200
17
67
88
113
121
141
161
181
201
221
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$1,000.
00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
Page 1
Appendix
Sales
Tax
Preparati
ons
Cost
Accountin
g Analysis
QuickBoo
ks
Services
Bookkeep
ing Hours
Total
Sales
Direct
Unit Costs
Tax
Preparati
ons
Cost
Accountin
g Analysis
QuickBoo
ks
Services
Bookkeep
ing Hours
Direct
Cost of
Sales
Tax
Preparati
ons
$6,000
$7,200
$8,400
$12,000
$7,500
$7,500
$7,500
$7,500
$7,500
$7,500
$4,800
$3,600
$2,400
$1,500
$6,000
$6,000
$6,000
$6,000
$6,000
$6,000
$1,200
$1,200
$1,200
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$0
$1,500
$2,100
$2,700
$3,000
$3,600
$4,200
$4,800
$5,400
$6,000
$12,000
$13,500
$14,100
$17,700
$18,000
$18,600
$19,200
$19,800
$20,400
$21,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
5.00%
$37.50
$37.50
$37.50
$37.50
$37.50
$37.50
$37.50
$37.50
$37.50
$37.50
3.00%
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
0.00%
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
50.00
%
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$300
$360
$420
$600
$375
$375
$375
$375
$375
$375
Page 2
Appendix
Cost
Accountin
g Analysis
QuickBoo
ks
Services
Bookkeep
ing Hours
Subtotal
Direct
Cost of
Sales
$144
$108
$72
$45
$180
$180
$180
$180
$180
$180
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$750
$1,050
$1,350
$1,500
$1,800
$2,100
$2,400
$2,700
$3,000
$444
$1,218
$1,542
$1,995
$2,055
$2,355
$2,655
$2,955
$3,255
$3,555
Page 3
Appendix
Table: Personnel
Personnel Plan
Bookkeeper
training-period
wages
Max Greenwood
Bookkeeper
Manager
Benefits
Total People
Total Payroll
10%
Jan
$800
Feb
$0
Mar
$0
Apr
$0
May
$0
Jun
$0
Jul
$400
Aug
$0
Sep
$0
Oct
$0
Nov
$0
Dec
$0
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
4
$5,00
0
$2,00
0
$700
5
$5,00
0
$2,00
0
$700
5
$5,00
0
$2,00
0
$700
5
$5,00
0
$2,00
0
$700
5
$5,00
0
$2,00
0
$700
5
$5,00
0
$2,00
0
$700
5
$8,50
0
$7,70
0
$7,70
0
$7,70
0
$7,70
0
$7,70
0
$8,10
0
$7,70
0
$7,70
0
$7,70
0
$7,70
0
$7,70
0
Page 4
Appendix
Table: Profit and Loss
Pro Forma Profit
and Loss
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
$12,00 $13,50 $14,10 $17,70 $18,00 $18,60 $19,20 $19,80 $20,40 $21,00 $21,60 $22
0
0
0
0
0
0
0
0
0
0
0
$444 $1,218 $1,542 $1,995 $2,055 $2,355 $2,655 $2,955 $3,255 $3,555 $3,855 $4,
Sales
Direct Cost of
Sales
Other Cost of
Sales
Total Cost of
Sales
$0
$444
Gross Margin
Software and
Computer
Expenses
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,218 $1,542 $1,995 $2,055 $2,355 $2,655 $2,955 $3,255 $3,555 $3,855 $4,
$11,55 $12,28 $12,55 $15,70 $15,94 $16,24 $16,54 $16,84 $17,14 $17,44 $17,74 $18
6
2
8
5
5
5
5
5
5
5
5
96.30%
90.98
89.06
88.73
88.58
87.34
86.17
85.08
84.04
83.07
82.15
81
%
%
%
%
%
%
%
%
%
%
Gross Margin %
Expenses
Payroll
Marketing/Prom
otion
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
$0
15
%
$8,500
$10,00
0
$0
$1,500
$200
$5,000
$1,275
$2,500
$7,700 $7,700 $7,700 $7,700 $7,700 $8,100 $7,700 $7,700 $7,700 $7,700 $7,
$3,000 $3,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$2
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,155 $1,155 $1,155 $1,155 $1,155 $1,215 $1,155 $1,155 $1,155 $1,155 $1,
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
Page 5
$1
Appendix
Total Operating
Expenses
Profit Before
Interest and
Taxes
EBITDA
Interest
Expense
Taxes Incurred
Net Profit
Net
Profit/Sales
$28,97 $13,65 $13,65 $13,15 $13,15 $13,15 $13,61 $13,15 $13,15 $13,15 $13,15 $13
5
5
5
5
5
5
5
5
5
5
5
($17,41
9)
($1,37
3)
($1,09 $2,550 $2,790 $3,090 $2,930 $3,690 $3,990 $4,290 $4,590 $4,
7)
($17,41
9)
$0
($1,37
3)
$0
($1,09 $2,550 $2,790 $3,090 $2,930 $3,690 $3,990 $4,290 $4,590 $4,
7)
$0
$0
$0
$0
$0
$0
$0
$0
$0
($5,226
)
($412)
($329)
$765
$837
$927
$879
($12,19 ($961) ($768) $1,785 $1,953 $2,163 $2,051 $2,583 $2,793 $3,003 $3,213 $3,
3)
10.08
10.85
11.63
10.68
13.05
13.69
14.30
14.88
15
101.61 7.12% 5.45%
%
%
%
%
%
%
%
%
%
Page 6
Appendix
Table: Cash Flow
Pro
Forma
Cash
Flow
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cash
Received
Cash
from
Operation
s
Cash
Sales
Cash
from
Receivabl
es
Subtotal
Cash
from
Operation
s
Additional
Cash
Received
Sales
Tax, VAT,
HST/GST
Received
New
$6,000
$6,750
$7,492
$6,025
$13,49
2
0.00
%
$7,050 $8,850 $9,000 $9,300 $9,600 $9,900 $10,20 $10,50 $10,80 $11,10
0
0
0
0
$6,760 $7,110 $8,855 $9,010 $9,310 $9,610 $9,910 $10,21 $10,51 $10,81
0
0
0
$12,77 $13,81 $15,96 $17,85 $18,31 $18,91 $19,51 $20,11 $20,71 $21,31 $21,91
5
0
0
5
0
0
0
0
0
0
0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Page 7
Appendix
Current
Borrowin
g
New
Other
Liabilities
(interestfree)
New
Longterm
Liabilities
Sales of
Other
Current
Assets
Sales of
Longterm
Assets
New
Investme
nt
Received
Subtotal
Cash
Received
Expenditu
res
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$13,49
2
Jan
$12,77 $13,81 $15,96 $17,85 $18,31 $18,91 $19,51 $20,11 $20,71 $21,31 $21,91
5
0
0
5
0
0
0
0
0
0
0
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Expenditu
res from
Operation
s
Page 8
Dec
Appendix
Cash
Spending
Bill
Payments
Subtotal
Spent on
Operation
s
Additional
Cash
Spent
Sales
Tax, VAT,
HST/GST
Paid Out
Principal
Repayme
nt of
Current
Borrowin
g
Other
Liabilities
Principal
Repayme
nt
Longterm
Liabilities
Principal
Repayme
nt
Purchase
Other
$8,500
$7,419
$15,91
9
$7,700
$7,700 $7,700 $7,700 $7,700 $8,100 $7,700 $7,700 $7,700 $7,700 $7,700
$15,39 $6,775 $7,203 $8,219 $8,360 $8,747 $9,065 $9,530 $9,920 $10,31 $10,70
6
0
0
$23,09 $14,47 $14,90 $15,91 $16,06 $16,84 $16,76 $17,23 $17,62 $18,01 $18,40
6
5
3
9
0
7
5
0
0
0
0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Page 9
Appendix
Current
Assets
Purchase
Longterm
Assets
Dividends
Subtotal
Cash
Spent
Net Cash
Flow
Cash
Balance
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$15,91
9
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$23,09 $14,47 $14,90 $15,91 $16,06 $16,84 $16,76 $17,23 $17,62 $18,01 $18,40
6
5
3
9
0
7
5
0
0
0
0
($2,42
7)
$17,57
3
($10,32 ($665) $1,057 $1,936 $2,250 $2,063 $2,745 $2,880 $3,090 $3,300 $3,510
1)
$7,252 $6,588 $7,645 $9,580 $11,83 $13,89 $16,63 $19,51 $22,60 $25,90 $29,41
0
3
8
8
8
8
8
Current
Assets
Cash
Accounts
Receivabl
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Starting
Balance
s
$20,00
0
$7,292
$17,57
3
$5,800
$7,252
$6,588
$7,645
$9,580
$6,525
$6,815
$8,555
$8,700
Appendix
e
Other
Current
Assets
Total
Current
Assets
Longterm
Assets
Longterm
Assets
Accumula
ted
Depreciat
ion
Total
Longterm
Assets
Total
Assets
$5,000
$32,29
2
$28,37
3
$5,000
$18,77
7
$5,000
$18,40
3
$5,000
$21,20
0
$5,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$32,29
2
Liabilities
and
Capital
Current
Liabilities
Accounts
Payable
Current
Borrowin
$5,000
$6,896
$0
$28,37
3
$18,77
7
$18,40
3
$21,20
0
Jan
Feb
Mar
Apr
$15,17
0
$0
$6,536
$6,929
$7,941
$8,069
$0
$0
$0
$0
Jun
Jul
Aug
Sep
Oct
Nov
Appendix
g
Other
Current
Liabilities
Subtotal
Current
Liabilities
Longterm
Liabilities
Total
Liabilities
Paid-in
Capital
Retained
Earnings
Earnings
Total
Capital
Total
Liabilities
and
Capital
Net
Worth
$0
$6,896
$0
$0
$15,17
0
$0
$0
$0
$0
$0
$6,536
$6,929
$7,941
$8,069
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$6,896
$15,17
0
$6,536
$6,929
$7,941
$8,069
$10,00
0
($83,55
4)
$98,95
0
$25,39
6
$32,29
2
$10,00
0
$15,39
6
($12,19
3)
$13,20
3
$28,37
3
$10,00
0
$15,39
6
($13,15
4)
$12,24
1
$18,77
7
$10,00
0
$15,39
6
($13,92
2)
$11,47
4
$18,40
3
$10,00
0
$15,39
6
($12,13
7)
$13,25
9
$21,20
0
$10,00
0
$15,39
6
($10,18
4)
$15,21
2
$23,28
0
$10,00
0
$15,39
6
($8,02
1)
$17,37
5
$25,82
0
$25,39
6
$13,20
3
$12,24
1
$11,47
4
$13,25
9
$10,00
0
$15,39
6
($5,97
0)
$19,42
6
$28,17
3
$10,00
0
$15,39
6
($3,38
7)
$22,00
9
$31,20
8
Page 12