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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................2
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................3
2.1 Start-up Summary ......................................................................................................................4
Table: Start-up Funding ..........................................................................................................4
Chart: Start-up .........................................................................................................................5
Table: Start-up .........................................................................................................................5
2.2 Company Locations and Facilities ..........................................................................................5
2.3 Company Ownership .................................................................................................................6
3.0 Services................................................................................................................................................6
3.1 Service Description ...................................................................................................................6
3.2 Competitive Comparison..........................................................................................................6
3.3 Sales Literature ..........................................................................................................................7
3.4 Fulfillment ....................................................................................................................................7
3.5 Technology..................................................................................................................................7
3.6 Future Services ..........................................................................................................................7
4.0 Market Analysis Summary..................................................................................................................8
4.1 Market Segmentation ................................................................................................................8
Chart: Market Analysis (Pie) ..................................................................................................8
Table: Market Analysis ...........................................................................................................9
4.2 Target Market Segment Strategy.............................................................................................9
4.3 Service Business Analysis........................................................................................................9
4.3.1 Competition and Buying Patterns................................................................................9
4.3.2 Main Competitors..........................................................................................................9
4.3.3 Business Participants.................................................................................................10
4.3.4 Distributing a Service .................................................................................................10
5.0 Strategy and Implementation Summary..........................................................................................11
5.1 Pricing Strategy .......................................................................................................................11
5.2 Sales Strategy..........................................................................................................................11
Table: Sales Forecast ..........................................................................................................12
Chart: Sales Monthly.............................................................................................................12
Chart: Sales by Year.............................................................................................................13
5.3 Milestones ................................................................................................................................14
Table: Milestones..................................................................................................................14
Chart: Milestones ..................................................................................................................14
5.4 Strategic Alliances...................................................................................................................14
6.0 Management Summary ....................................................................................................................15
6.1 Organizational Structure..........................................................................................................15
6.2 Management Team .................................................................................................................15
6.3 Personnel Plan.........................................................................................................................16
Table: Personnel ...................................................................................................................16
7.0 Financial Plan ....................................................................................................................................17
7.1 Key Financial Indicators ..........................................................................................................17
Chart: Benchmarks ...............................................................................................................17
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Table of Contents
7.2 Important Assumptions............................................................................................................17
Table: General Assumptions ...............................................................................................18
7.3 Break-even Analysis................................................................................................................19
Table: Break-even Analysis .................................................................................................19
Chart: Break-even Analysis .................................................................................................19
7.4 Projected Profit and Loss .......................................................................................................20
Chart: Profit Yearly................................................................................................................20
Chart: Gross Margin Monthly ...............................................................................................21
Chart: Gross Margin Yearly..................................................................................................21
Table: Profit and Loss ..........................................................................................................22
Chart: Profit Monthly .............................................................................................................22
7.5 Projected Cash Flow...............................................................................................................23
Chart: Cash ...........................................................................................................................23
Table: Cash Flow..................................................................................................................24
7.6 Projected Balance Sheet ........................................................................................................25
Table: Balance Sheet ...........................................................................................................25
7.7 Business Ratios .......................................................................................................................26
Table: Ratios .........................................................................................................................27
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: Profit and Loss ...............................................................................................................................3
Table: Cash Flow .......................................................................................................................................4
Table: Balance Sheet ................................................................................................................................5

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Acme Consulting
1.0 Executive Summary
Ac me Consulting will be a consulting company specializing in marketing of high-technology
products in international markets. The company offers high-tech manufacturers a reliable, highquality alternative to in-house resources for business development, market development, and
channel development.
Ac me Consulting will be created as a California C corporation based in Santa Clara County,
owned by its principal investors and principal operators. The initial office will be established in
A-quality office spac e in the Santa Clara County "Silicon Valley" area of California, the heart of
the U.S. high tech industry.
Within the US and European high tech firms that Ac me plans to target,we will foc us on large
manufacturer corporations such as HP, IBM & Microsoft. Our secondary target will be the
medium-sized companies in high growth areas such as multimedia and software. One of Ac me's
challenges will be establishing itself as a real consulting company, positioned as a relatively riskfree corporate purchase.
Industry competition comes in several forms, the most significant being companies that choose
to do business development and market research in-house. There are also large, well known
management consulting firms such as Arthur Anderson, Boston Consulting Group, etc. These
companies are generalist in nature and do not foc us on a niche market. Furthermore, they are
often hampered by a flawed organizational structure that does not provide the most experienced
people for the client's projects. Another competitor is the various market research c ompanies,
such as Dataquest and Stanford Research Institute. Ac me Consulting's advantage over such
companies as these is that Ac me provides high level consulting to help integrate market research
data with the companies goals.
Ac me Consulting will be priced at the upper edge of what the market will bear, competing with
the name-brand consultants. The pricing fits with the general positioning of Ac me as providing
high-level expertise.
The company's founders are former marketers of consulting services, personal computers, and
market research, all in international markets. They are founding Ac me to formalize the
consulting services they offer. Ac me should be managed by working partners, in a structure
taken mainly from Smith Partners. In the beginning we assume 3-5 partners.
The firm estimates profits of approximately $65,000 by Year 3 with a net profit margin of 6%.
The company plans on taking on approximately $130,000 in c urrent debt and raise and
additional $50,000 in long-term debt to invest in long-term assets. The company does not
anticipate any cash flow problems arising.

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Acme Consulting

1.1 Objectives
1.
2.
3.

Sales of $550,000 in Year 1 and $1 million by Year 3.

Gross margin higher than 70%.
Net income more than 5% of sales by Year 3.

1.2 Mission
Ac me Consulting offers high-tech manufacturers a reliable, high-quality alternative to in-house
resources for business development, market development, and channel development on an
international sc ale. A true alternative to in-house resources offers a very high level of prac tical
experience, know-how, contac ts, and confidentiality. Clients must know that working with
Ac me is a more professional, less risky way to develop new areas even than working completely
in-house with their own people. Ac me must also be able to maintain financial balance, charging a
high value for its services, and delivering an even higher value to its clients. Initial foc us will be
development in the European and Latin American markets, or for European clients in the United
States market.

1.3 Keys to Success

1.
2.
3.

Excellence in fulfilling the promise--completely confidential, reliable, trustworthy expertise

and information.
Developing visibility to generate new business leads.
Leveraging from a single pool of expertise into multiple revenue generation opportunities:
retainer consulting, project consulting, market research, and market research published
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Acme Consulting
reports.

2.0 Company Summary

Ac me Consulting is a new company providing high-level expertise in international high-tech
business development, channel development, distribution strategies, and marketing of hightech products. It will foc us initially on providing two kinds of international triangles:

Providing United States clients with development for European and Latin American
markets.
Providing European clients with development for the United States and Latin American
markets.

As it grows it will take on people and consulting work in related markets, such as the rest of
Latin America, the Far East, and similar markets. It will also look for additional leverage by
taking brokerage positions and representation positions to create percentage holdings in
product results.

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2.1 Start-up Summary
Total start-up expense (including legal costs, logo design, stationery and related expenses)
comes to $18,350. Start-up assets required include $7,000 in short-term assets (office furniture,
etc.) and $25,000 in initial cash to handle the first few months of consulting operations as
sales and ac counts receivable play through the cash flow. The details are included below.

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$0
$0
$0

Assets
Non-cash Assets from Start-up

$0

Cash Requirements from Start-up

Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$0
$50,350
$50,350
$50,350

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)

$0
$0
$350

Other Current Liabilities (interest-free)

Total Liabilities

$0
$350

Capital
Planned Investment
Investor 1
Investor 2
Other

$20,000
$20,000
$10,000

Additional Investment Requirement

Total Planned Investment

$0
$50,000

Loss at Start-up (Start-up Expenses)

Total Capital

$0
$50,000

Total Capital and Liabilities

$50,350

Total Funding

$50,350

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Acme Consulting

Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance

$0
$0
$0
$0
$0

Expensed equipment
Other
Total Start-up Expenses

$0
$0
$0

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$0
$0
$0
$0

Total Requirements

$0

2.2 Company Locations and Facilities

The initial office will be established in A-quality office space in the Santa Clara County "Silicon
Valley" area of California, the heart of the U.S. high tech industry.

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Acme Consulting
2.3 Company Ownership
Ac me Consulting will be created as a California C corporation based in Santa Clara County,
owned by its principal investors and principal operators. As of this writing, it has not been
chartered yet and is still considering alternatives of legal formation.

3.0 Services
Ac me 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.

3.1 Service Description

1.

2.

3.

Retainer consulting: We represent a client company as an extension of its business

development and market development functions. This begins with c omplete 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.
Project consulting: Proposed and billed on a per-project and per-milestone basis,
project consulting offers a client company a way to harness our spec ific qualities and use
our expertise to solve spec ific problems, develop and/or implement plans, and develop
specific information.
Market research: Group studies available to selected clients at $5,000 per unit. A
group study is a pac kaged and published complete study of a spec ific market, channel, or
topic. Examples might be studies of developing consumer channels in Japan or Mexico, or
implications of changing margins in software.

3.2 Competitive Comparison

The competition comes in several forms:
1.

2.

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 c ompetition 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, Ac me can approach
alliances, vendors, and channels on a confidential basis, gathering information and making
initial contac ts in ways that the corporate managers can't.
The high-level prestige management consulting: Mc Kinsey, Bain, Arthur Anderson,
Boston Consulting Group, etc. These are essentially generalists who take their namebrand management consulting into specialty areas. Their other very important weakness
is the management structure that has the partners selling new jobs, and inexperienced
assoc iates delivering the work. We compete against them as experts in our spec ific fields,
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Acme Consulting
3.

4.
5.

and with the guarantee that our clients will have the top-level people doing the ac tual
work.
The third general kind of competitor is the international market research c ompany:
International Data Corporation (IDC), Dataquest, Stanford Research Institute, etc.
These companies are formidable competitors for published market research and market
forums, but cannot provide the kind of high-level consulting that Ac me will provide.
The fourth kind of competition is the market-spec ific smaller house. For example:
Nomura Research in Japan, 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 spec ific nature of eac h individual case.

3.3 Sales Literature

The business will begin with a general corporate broc hure establishing the positioning. This
broc hure will be developed as part of the start-up expenses.
Literature and mailings for the initial market forums will be very important.

3.4 Fulfillment
1.

2.

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).
We will turn to qualified professionals for freelance bac k-up in market research and
presentation and report development, which are areas that we can afford to subcontrac t without risking the core values provided to the clients.

3.5 Technology
Ac me Consulting will maintain the latest Windows and Macintosh c apabilities including:
1.
2.

3.

Complete e-mail fac ilities on the Internet, Compuserve, America- Online, and Applelink,
for working with c lients directly through e-mail delivery of drafts and information.
Complete presentation fac ilities for preparation and delivery of multimedia presentations
on Macintosh or Windows mac hines, in formats including on-disk presentation, live
presentation, or video presentation.
Complete desktop publishing fac ilities for delivery of regular retainer reports, project
output reports, marketing materials, and market research reports.

3.6 Future Services

In the future, Ac me will broaden the coverage by expanding into coverage of additional
markets (e.g., all of Latin America, Far East, Western Europe) and additional product areas (e.g.,
telecommunications and technology integration).
We are also studying the possibility of newsletter or electronic newsletter services, or perhaps
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Acme Consulting
special on-topic reports.

4.0 Market Analysis Summary

Ac me will be foc using on high-technology manufacturers of computer hardware and software,
services, and networking, who want to sell into markets in the United States, Europe, and
Latin America. These are mostly larger companies, and oc casionally 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
foc us and sometimes charged with market or even spec ific channel foc us. 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.

4.1 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 Ac me for development functions that are
better spun off than managed in-house, for market research, and for market forums.
Medium-sized growth c ompanies: particularly in software, multimedia, and some related highgrowth fields, Ac me will offer an attrac tive development alternative to the company that is
management constrained and unable to address opportunities in new markets and new market
segments.

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Acme Consulting
Table: Market Analysis
Market Analysis
Potential Customers
U.S. High Tech
European High Tech
Latin America
Other
Total

Growth
10%
15%
35%
2%
6.27%

Year 1

Year 2

Year 3

Year 4

Year 5

5,000
1,000
250
10,000
16,250

5,500
1,150
338
10,200
17,188

6,050
1,323
456
10,404
18,233

6,655
1,521
616
10,612
19,404

7,321
1,749
832
10,824
20,726

CAGR
10.00%
15.00%
35.07%
2.00%
6.27%

4.2 Target Market Segment Strategy

As indicated by the previous table and Illustration, we must foc us on a few thousand wellchosen potential customers in the United States, Europe, and Latin America. These few
thousand high-tech manufacturing companies are the key customers for Ac me.

4.3 Service Business Analysis

The consulting "industry" is pulverized and disorganized, with thousands of smaller consulting
organizations and individual consultants for every one of the few dozen well-known c ompanies.
Consulting participants range from major international name-brand consultants to tens of
thousands of individuals. One of Ac me's challenges will be establishing itself as a real
consulting company, positioned as a relatively risk-free corporate purchase.

4.3.1 Competition and Buying Patterns

The key element in purchase dec isions made at the Ac me client level is trust in the professional
reputation and reliability of the consulting firm.

4.3.2 Main Competitors

1. The high-level prestige management consulting:
Strengths: International loc ations managed by owner-partners with a high level of
presentation and understanding of general business. Enviable reputations which make purchase
of consulting an easy dec ision for a manager, despite the very high prices.
Weaknesses: General business knowledge doesn't substitute for the specific market, channel,
and distribution expertise of Ac me, foc using on high-technology markets and products only. Also,
fees are extremely expensive, and work is generally done by very junior-level consultants, even
though sold by high-level partners.
2. The international market research company:

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Acme Consulting
Strengths: International offices, spec ific market knowledge, permanent staff developing
market research information on permanent basis, good relationships with potential client
companies.
Weaknesses: Market numbers are not marketing, not channel development nor market
development. Although these companies compete for some of the business Ac me is after, they
cannot really offer the same level of business understanding at a high level.
3. Market specific or function specific experts:
Strengths: Expertise in market or functional areas. Ac me should not try to compete with Nomura
or Select in their markets with market research, or with ChannelCorp in c hannel management.
Weaknesses: The inability to spread beyond a spec ific foc us, or to rise above a spec ific
foc us, to provide ac tual management expertise, experience, and wisdom beyond the spec ifics.
4. Companies do in-house research and development:
Strengths: No incremental cost except travel; also, the general work is done by the people who
are entirely responsible, the planning is done by those who will implement it.
Weaknesses: Most managers are terribly overburdened already, unable to find incremental
resources in time and people to apply to incremental opportunities. Also, there is a lot of
additional risk in market and channel development done in-house from the ground up. Finally,
retainer-based antenna consultants can greatly enhance a company's reac h and extend its
position into conversations that might otherwise never have taken plac e.

4.3.3 Business Participants

At the highest level are the few well-established major names in management consulting. Most of
these are organized as partnerships established in major markets around the world, linked
together by interconnecting directors and sharing the name and corporate wisdom. Some
evolved from ac counting companies (e.g. Arthur Andersen, Touche Ross) and some from
management consulting (Mc Kinsey, Bain). These companies charge very high rates for
consulting, and maintain relatively high overhead structures and fulfillment structures based on
partners selling and junior associates fulfilling.
At the intermediate level are some function-specific or market-specific consultants, such as
the market research firms (IDC, Dataquest) or channel development firms (ChannelCorp,
Channel Strategies, ChannelMark).
Some kinds of consulting are little more than c ontrac t expertise provided by somebody who,
while temporarily out of work, offers consulting services.

4.3.4 Distributing a Service

Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and
previous experience being, by far, the most important fac tor.
The major name-brand houses have loc ations in major cities and major markets, and executivePage 10

Acme Consulting
level managers or partners develop new business through industry associations, business
assoc iations, chambers of commerce and industry, etc., and in some cases soc ial assoc iations
such as country clubs.
The medium-level houses are generally area spec ific or function spec ific, and are not easily
able to leverage their business through distribution.

5.0 Strategy and Implementation Summary

Ac me will foc us on three geographical markets, the United States, Europe, and Latin America,
and in limited product segments: personal computers, software, networks, telecommunications,
personal organizers, and technology integration products.
The target customer is usually a manager in a larger corporation, and oc casionally an owner or
president of a medium-sized corporation in a high-growth period.

5.1 Pricing Strategy

Ac me Consulting will be priced at the upper edge of what the market will bear, competing with
the name-brand consultants. The pricing fits with the general positioning of Ac me as providing
high-level expertise.
Consulting should be based on $5,000 per day for project consulting, $2,000 per day for market
research, and $10,000 per month and up for retainer consulting. Market research reports
should be priced at $5,000 per report, which will, of course, require that reports be very well
planned, foc used on very important topics, and very well presented.

5.2 Sales Strategy

The sales forecast monthly summary is included in the appendix. The annual sales projections are
included here in Table 5.2.

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Table: Sales Forecast
Sales Forecast
Year 1

Year 2

Year 3

Sales
Retainer Consulting
Project Consulting
Market Research
Strategic Reports
Total Sales

$200,000
$270,000
$122,000
$0
$592,000

$350,000
$325,000
$150,000
$50,000
$875,000

$425,000
$350,000
$200,000
$125,000
$1,100,000

Direct Cost of Sales

Retainer Consulting
Project Consulting
Market Research
Strategic Reports
Subtotal Direct Cost of Sales

Year 1
$30,000
$45,000
$84,000
$0
$159,000

Year 2
$38,000
$56,000
$105,000
$20,000
$219,000

Year 3
$48,000
$70,000
$131,000
$40,000
$289,000

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5.3 Milestones
Our detailed milestones are shown in the following table and chart. The related budgets are
included with the expenses shown in the projected Profit and Loss statement, which is in the
financial analysis that comes in Chapter 7 of this plan.

Table: Milestones
Milestones
Milestone
Business plan
Logo design
Retainer contracts
Stationary
Brochures
Financial backing presentation
Initial mailing
Office location
Office equipment
Other
Totals

Start Date
10/1/1995
1/1/1996
2/1/1996
3/1/1996
3/1/1996
4/1/1996
6/1/1996
1/15/1996
1/15/1996
1/1/1996

End Date
11/19/1995
2/1/1996
12/31/1996
4/15/1996
4/15/1996
9/15/1996
7/1/1996
2/9/1996
2/19/1996
12/31/1996

Budget
$5,000
$2,000
$10,000
$500
$2,500
$10,000
$5,000
$5,000
$12,500
$10,000
$62,500

Manager
HM
TAJ
HM
JD
TAJ
HM
HM
JD
JD
ABC

Department
Devpt
Marketing
Sales
G&A
Marketing
Devpt
Sales
G&A
G&A
Department

5.4 Strategic Alliances

At this writing, strategic alliances with Smith and Jones are possibilities, given the content of
existing disc ussions. Given the bac kground of prospec tive partners, we might also be talking to
European companies including Siemens, Olivetti, and others, and to United States companies
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Acme Consulting
related to Apple Computer. In Latin America we would be looking at the key loc al hightechnology vendors, beginning with Printaform.

6.0 Management Summary

The initial management team depends on the founders themselves, with little bac k-up. As we
grow, we will take on additional consulting help, plus graphic/editorial, sales, and marketing.

6.1 Organizational Structure

Ac me should be managed by working partners, in a structure taken mainly from Smith Partners.
In the beginning we assume 3-5 partners:

Ralph Sampson.
At least one, probably two, partners from Smith and Jones.
One strong European partner, based in Paris.
The organization has to be very flat in the beginning, with eac h of the founders
responsible for his or her own work and management.
One other strong partner.

6.2 Management Team

The Ac me business requires a very high level of international experience and expertise, which
means that it will not be easily leverageable in the common consulting company mode in which
partners run the business and make sales, while assoc iates fulfill. Partners will nec essarily be
involved in the fulfillment of the core business proposition, providing the expertise to the
clients. The initial personnel plan is still tentative. It should involve 3-5 partners, 1-3
consultants, one strong editorial/graphic person with good staff support, one strong marketing
person, an office manager, and a secretary. Later, we add more partners, consultants, and sales
staff. Founders' resumes are included as an attac hment to this plan.

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6.3 Personnel Plan
The detailed monthly personnel plan for the first year is included in the appendix. The annual
personnel estimates are included here.

Table: Personnel
Personnel Plan
Partners
Consultants
Editorial/graphic
VP Marketing
Sales people
Office Manager
Secretarial
Total People
Total Payroll

Year 1
$144,000
$0
$18,000

Year 2
$175,000
$50,000
$22,000

Year 3
$200,000
$63,000
$26,000

$20,000
$0
$7,500
$5,250
7

$50,000
$30,000
$30,000
$20,000
14

$55,000
$33,000
$33,000
$22,000
20

$194,750

$377,000

$432,000

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Acme Consulting
7.0 Financial Plan
Our financial plan is based on conservative estimates and assumptions. We will need to plan on
initial investment to make the financials work.

7.1 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years.
We foresee major growth in sales and operating expenses, and a bump in our collection days
as we spread the business during expansion.

7.2 Important Assumptions

Table 7.1 summarizes key financial assumptions. In addition, we plan for 45-day average
collection days, sales entirely on invoice basis, expenses mainly on net 30 basis, and presentday interest rates.

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Acme Consulting
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate

Year 1
1
10.00%

Year 2
2
10.00%

Year 3
3
10.00%

Long-term Interest Rate

Tax Rate
Other

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

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Acme Consulting
7.3 Break-even Analysis
Table 7.3 summarizes the break-even analysis, including monthly sales break-even points.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$45,158

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

27%
$33,029

Page 19

Acme Consulting
7.4 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.

Page 20

Acme Consulting

Page 21

Acme Consulting
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales

Year 1
$592,000
$159,000

Year 2
$875,000
$219,000

Year 3
$1,100,000
$289,000

Other Costs of Sales

Total Cost of Sales

$0
$159,000

$0
$219,000

$0
$289,000

Gross Margin
Gross Margin %

$433,000
73.14%

$656,000
74.97%

$811,000
73.73%

Expenses
Payroll
Marketing/Promotion
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

$194,750
$162,000
$0
$6,000
$12,000
$3,600
$18,000
$0
$0

$377,000
$137,000
$0
$7,000
$12,000
$2,000
$52,780
$0
$0

$432,000
$195,000
$0
$7,000
$12,000
$2,000
$60,480
$0
$0

Total Operating Expenses

$396,350

$587,780

$708,480

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$36,650
$36,650
$7,222
$8,828

$68,220
$68,220
$10,940
$17,184

$102,520
$102,520
$10,940
$27,474

Net Profit
Net Profit/Sales

$20,600
3.48%

$40,096
4.58%

$64,106
5.83%

Page 22

Acme Consulting
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 here as Table 7.5. Detailed monthly
numbers are included in the appendix.

Page 23

Acme Consulting
Table: Cash Flow
Pro Forma Cash Flow
Year 1

Year 2

Year 3

Cash from Operations

Cash Sales
Cash from Receivables
Subtotal Cash from Operations

$0
$495,000
$495,000

$0
$828,630
$828,630

$0
$1,063,133
$1,063,133

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

$0
$30,000
$0
$50,000
$0
$0
$8,000
$583,000

$0
$100,000
$0
$0
$0
$0
$0
$928,630

$0
$0
$0
$0
$0
$0
$0
$1,063,133

Year 1

Year 2

Year 3

$194,750
$344,281
$539,031

$377,000
$452,988
$829,988

$432,000
$591,895
$1,023,895

$0
$0
$0
$600

$0
$30,000
$0
$10,000

$0
$50,000
$0
$10,000

$0
$0
$0

$0
$0
$0

$0
$0
$0

$539,631

$869,988

$1,083,895

$43,369
$93,719

$58,642
$152,362

($20,761)
$131,600

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

Page 24

Acme Consulting
7.6 Projected Balance Sheet
The balance sheet shows healthy growth of net worth, and strong financial position. The
monthly estimates are included in the appendix.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1

Year 2

Year 3

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

$93,719
$97,000
$0
$190,719

$152,362
$143,370
$0
$295,731

$131,600
$180,236
$0
$311,837

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$0
$0
$0
$190,719

$0
$0
$0
$295,731

$0
$0
$0
$311,837

Year 1

Year 2

Year 3

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities

$32,720
$30,000
$0

$37,636
$100,000
$0

$49,635
$50,000
$0

Subtotal Current Liabilities

$62,720

$137,636

$99,635

$49,400
$112,120

$39,400
$177,036

$29,400
$129,035

Paid-in Capital

$58,000

$58,000

$58,000

Retained Earnings
Earnings
Total Capital

$0
$20,600
$78,600

$20,600
$40,096
$118,696

$60,696
$64,106
$182,802

$190,719

$295,731

$311,837

$78,600

$118,696

$182,802

Assets

Liabilities and Capital

Long-term Liabilities
Total Liabilities

Total Liabilities and Capital

Net Worth

Page 25

Acme Consulting
7.7 Business Ratios
The following table shows the projected business ratios. We expec t to maintain healthy ratios for
profitability, risk, and return. The industry comparisons are for SIC 8742, management consulting
services.

Page 26

Acme Consulting
Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
47.80%

Year 3
25.71%

Industry Profile
6.98%

50.86%
0.00%
100.00%
0.00%
100.00%

48.48%
0.00%
100.00%
0.00%
100.00%

57.80%
0.00%
100.00%
0.00%
100.00%

26.80%
48.96%
75.76%
24.24%
100.00%

32.89%
25.90%
58.79%
41.21%

46.54%
13.32%
59.86%
40.14%

31.95%
9.43%
41.38%
58.62%

31.78%
17.26%
49.04%
50.96%

100.00%
73.14%
69.66%
0.00%
6.19%

100.00%
74.97%
70.39%
0.00%
7.80%

100.00%
73.73%
67.90%
0.00%
9.32%

100.00%
100.00%
85.31%
1.02%
1.90%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth

3.04
3.04
58.79%
37.44%

2.15
2.15
59.86%
48.26%

3.13
3.13
41.38%
50.10%

1.88
1.48
3.41%
55.78%

Pre-tax Return on Assets

15.43%

19.37%

29.37%

7.72%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

3.48%
26.21%

4.58%
33.78%

5.83%
35.07%

n.a
n.a

6.10
43

6.10
50

6.10
54

n.a
n.a

11.51
27
3.10

12.17
28
2.96

12.17
26
3.53

n.a
n.a
n.a

Debt Ratios
Debt to Net Worth

1.43

1.49

0.71

n.a

Current Liab. to Liab.

0.56

0.78

0.77

n.a

$128,000
5.07

$158,096
6.24

$212,202
9.37

n.a
n.a

Additional Ratios
Assets to Sales
Current Debt/Total Assets

0.32
33%

0.34
47%

0.28
32%

n.a
n.a

Acid Test
Sales/Net Worth
Dividend Payout

1.49
7.53
0.00

1.11
7.37
0.00

1.32
6.02
0.00

n.a
n.a
n.a

Sales Growth
Percent of Total Assets
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover

Liquidity Ratios
Net Working Capital
Interest Coverage

Page 27

Appendix
Table: Sales Forecast
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

0%

$10,000

$10,000

$10,000

$10,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

0%
0%
0%

$0
$0
$0

$0
$0
$0

$10,000
$0
$0

$20,000
$4,000
$0

$30,000
$8,000
$0

$40,000
$15,000
$0

$20,000
$10,000
$0

$10,000
$5,000
$0

$30,000
$20,000
$0

$45,000
$20,000
$0

$50,000
$20,000
$0

$15,000
$20,000
$0

Total Sales

$10,000

$10,000

$20,000

$34,000

$58,000

$75,000

$50,000

$35,000

$70,000

$85,000

$90,000

$55,000

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

Retainer Consulting

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

Project Consulting
Market Research
Strategic Reports
Subtotal Direct Cost of Sales

$0
$0
$0
$2,500

$0
$0
$0
$2,500

$1,500
$0
$0
$4,000

$3,500
$2,000
$0
$8,000

$5,000
$6,000
$0
$13,500

$6,500
$10,000
$0
$19,000

$3,500
$6,000
$0
$12,000

$1,500
$4,000
$0
$8,000

$5,000
$14,000
$0
$21,500

$7,500
$14,000
$0
$24,000

$8,500
$14,000
$0
$25,000

$2,500
$14,000
$0
$19,000

Sales
Retainer Consulting
Project Consulting
Market Research
Strategic Reports

Page 1

Appendix
Table: Personnel
Personnel Plan
Partners
Consultants
Editorial/graphic

140%
125%
120%

Month 1
$12,000
$0
$0

Month 2
$12,000
$0
$0

Month 3
$12,000
$0
$0

Month 4
$12,000
$0
$0

Month 5
$12,000
$0
$0

Month 6
$12,000
$0
$0

Month 7
$12,000
$0
$0

Month 8
$12,000
$0
$0

Month 9
$12,000
$0
$0

Month 10
$12,000
$0
$6,000

Month 11
$12,000
$0
$6,000

Month 12
$12,000
$0
$6,000

VP Marketing
Sales people
Office Manager
Secretarial

110%
110%
110%
110%

$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

$5,000
$0
$0
$0

$5,000
$0
$2,500
$1,750

$5,000
$0
$2,500
$1,750

$5,000
$0
$2,500
$1,750

Total People

Total Payroll

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$17,000

$27,250

$27,250

$27,250

Page 2

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$10,000
$2,500

Sales
Direct Cost of Sales
Other Costs of Sales

Month 2
$10,000
$2,500

Month 3
$20,000
$4,000

Month 4
$34,000
$8,000

Month 5
$58,000
$13,500

Month 6
$75,000
$19,000

Month 7
$50,000
$12,000

Month 8
$35,000
$8,000

Month 9
$70,000
$21,500

Month 10
$85,000
$24,000

Month 11
$90,000
$25,000

Month 12
$55,000
$19,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,500

$2,500

$4,000

$8,000

$13,500

$19,000

$12,000

$8,000

$21,500

$24,000

$25,000

$19,000

$7,500
75.00%

$7,500
75.00%

$16,000
80.00%

$26,000
76.47%

$44,500
76.72%

$56,000
74.67%

$38,000
76.00%

$27,000
77.14%

$48,500
69.29%

$61,000
71.76%

$65,000
72.22%

$36,000
65.45%

Payroll

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$17,000

$27,250

$27,250

$27,250

Marketing/Promotion
Depreciation
Leased Equipment

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

$13,500
$0
$500

0%

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

$1,000
$300
$1,500

14%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$28,800

$28,800

$28,800

$28,800

$28,800

$28,800

$28,800

$28,800

$33,800

$44,050

$44,050

$44,050

Profit Before Interest and Taxes

($21,300)

($21,300)

($12,800)

($2,800)

$15,700

$27,200

$9,200

($1,800)

$14,700

$16,950

$20,950

($8,050)

EBITDA
Interest Expense

($21,300)
$417

($21,300)
$416

($12,800)
$583

($2,800)
$582

$15,700
$582

$27,200
$665

$9,200
$664

($1,800)
$664

$14,700
$663

$16,950
$663

$20,950
$663

($8,050)
$662

Taxes Incurred

($6,515)

($6,515)

($4,015)

($1,015)

$4,536

$7,961

$2,561

($739)

$4,211

$4,886

$6,086

($2,613)

($15,202)
-152.02%

($15,201)
-152.01%

($9,368)
-46.84%

($2,367)
-6.96%

$10,583
18.25%

$18,575
24.77%

$5,975
11.95%

($1,725)
-4.93%

$9,826
14.04%

$11,401
13.41%

$14,201
15.78%

($6,098)
-11.09%

Total Cost of Sales

Gross Margin
Gross Margin %

Expenses

Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Net Profit
Net Profit/Sales

Page 3

Appendix
Table: Cash Flow
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 from Operations

Cash Sales
Cash from Receivables

$0
$0

$0
$5,333

$0
$10,000

$0
$15,333

$0
$27,467

$0
$46,800

$0
$67,067

$0
$61,667

$0
$42,000

$0
$53,667

$0
$78,000

$0
$87,667

Subtotal Cash from Operations

$0

$5,333

$10,000

$15,333

$27,467

$46,800

$67,067

$61,667

$42,000

$53,667

$78,000

$87,667

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0

$0
$0

$20,000
$0

$0
$0

$0
$0

$10,000
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$50,000
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$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

Subtotal Cash Received

$0
$50,000

$0
$5,333

$0
$30,000

$0
$15,333

$8,000
$35,467

$0
$56,800

$0
$67,067

$0
$61,667

$0
$42,000

$0
$53,667

$0
$78,000

$0
$87,667

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

Cash Spending
Bill Payments

$12,000
$790

$12,000
$13,202

$12,000
$13,340

$12,000
$17,601

$12,000
$24,736

$12,000
$35,717

$12,000
$44,012

$12,000
$31,782

$17,000
$25,340

$27,250
$43,280

$27,250
$46,422

$27,250
$48,059

Subtotal Spent on Operations

$12,790

$25,202

$25,340

$29,601

$36,736

$47,717

$56,012

$43,782

$42,340

$70,530

$73,672

$75,309

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

Other Liabilities Principal Repayment

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Long-term Liabilities Principal Repayment

$0

$50

$50

$50

$50

$50

$50

$50

$50

$50

$50

$100

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

Dividends

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Subtotal Cash Spent

$12,790

$25,252

$25,390

$29,651

$36,786

$47,767

$56,062

$43,832

$42,390

$70,580

$73,722

$75,409

Net Cash Flow

$37,210

($19,918)

$4,610

($14,318)

($1,319)

$9,033

$11,005

$17,835

($390)

($16,913)

$4,278

$12,258

Cash Balance

$87,560

$67,642

$72,251

$57,934

$56,615

$65,647

$76,652

$94,487

$94,097

$77,184

$81,462

$93,719

Cash Received

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

0.00%

Expenditures from Operations

Page 4

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Accounts Receivable

$50,350
$0

$87,560
$10,000

$67,642
$14,667

$72,251
$24,667

$57,934
$43,333

$56,615
$73,867

$65,647
$102,067

$76,652
$85,000

$94,487
$58,333

$94,097
$86,333

$77,184
$117,667

$81,462
$129,667

$93,719
$97,000

Other Current Assets

Total Current Assets

$0
$50,350

$0
$97,560

$0
$82,308

$0
$96,918

$0
$101,267

$0
$130,481

$0
$167,714

$0
$161,652

$0
$152,820

$0
$180,431

$0
$194,851

$0
$211,128

$0
$190,719

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

$0
$50,350

$0
$97,560

$0
$82,308

$0
$96,918

$0
$101,267

$0
$130,481

$0
$167,714

$0
$161,652

$0
$152,820

$0
$180,431

$0
$194,851

$0
$211,128

$0
$190,719

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$350

$12,762

$12,761

$16,789

$23,555

$34,237

$42,944

$30,957

$23,900

$41,735

$44,804

$46,930

$32,720

$0
$0

$0
$0

$0
$0

$20,000
$0

$20,000
$0

$20,000
$0

$30,000
$0

$30,000
$0

$30,000
$0

$30,000
$0

$30,000
$0

$30,000
$0

$30,000
$0

$350

$12,762

$12,761

$36,789

$43,555

$54,237

$72,944

$60,957

$53,900

$71,735

$74,804

$76,930

$62,720

Total Long-term Assets

Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities

$0

$50,000

$49,950

$49,900

$49,850

$49,800

$49,750

$49,700

$49,650

$49,600

$49,550

$49,500

$49,400

Total Liabilities

$350

$62,762

$62,711

$86,689

$93,405

$104,037

$122,694

$110,657

$103,550

$121,335

$124,354

$126,430

$112,120

Paid-in Capital

$50,000

$50,000

$50,000

$50,000

$50,000

$58,000

$58,000

$58,000

$58,000

$58,000

$58,000

$58,000

$58,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Earnings
Total Capital

$0
$50,000

($15,202)
$34,798

($30,403)
$19,597

($39,771)
$10,229

($42,138)
$7,862

($31,555)
$26,445

($12,981)
$45,019

($7,006)
$50,994

($8,730)
$49,270

$1,095
$59,096

$12,496
$70,496

$26,698
$84,698

$20,600
$78,600

Total Liabilities and Capital

$50,350

$97,560

$82,308

$96,918

$101,267

$130,481

$167,714

$161,652

$152,820

$180,431

$194,851

$211,128

$190,719

Net Worth

$50,000

$34,798

$19,597

$10,229

$7,862

$26,445

$45,019

$50,994

$49,270

$59,096

$70,496

$84,698

$78,600

Retained Earnings

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