• Sales
  • Pricing
  • Cost of Goods Sold
  • Income Statement
  • Balance Sheet
  • Sample Business Plan Private Communications Corporation (pcc)




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    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




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