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Table of Contents
1.0 2.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Past Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Future Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Product Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Product Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Future Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Market Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.2 Marketing Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 2 3 3 4 4 5 5 5 6 6 7 8 8 10 11 11
3.0
4.0
5.0
Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.1 Key Components of the Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.2 Strategic Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 General Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 17 18 19 20 22 22
Equipment Rental
1.0 Executive Summary
Equipment Rental, Inc. (ER) is a Breaux Bridge, Tennessee company that sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers as well as small home use and construction equipment such as tillers, augers, and chain saws. ER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, ProCut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment and Komatsu Forklifts. ER has a world-class management team with direct knowledge of the industry, extensive research experience, and unique administrative skills. Its team includes Mr. David James and Mrs. Sally James. Having lived in Denton Parish for six years, and worked throughout the state, as well as parts of Texas, Mississippi, Alabama, and Georgia, President/CEO, Mr. James has compiled an extensive list of customers/potential customers, vendors, and contacts for equipment consignment. The company plans to employ two people from the area, in positions within the shop. By employing local individuals, ER would be contributing toward the development of the area. Funds would remain in the area thereby boosting the economy and contributing to the community as a whole. Loyal customers help to expand the company's business area by wordof-mouth and a pocketful of ER's business cards. A key component of the company's strategy is to continue to add to its ever-increasing product line which currently includes homeowner equipment from Echo and Interstate Batteries, commercial, equipment from Ramrod, Compact S/I Technology, and industrial equipment from Komatsu. The company is seeking a loan/credit line in the amount of $300,000 for the purpose of expanding the business. Expansion plans include the purchase of additional land and construction of a larger shop/service area, increase rental inventory, purchase of delivery truck, and the hiring of additional personnel including a mechanic and delivery driver. Projected revenues for 2000 to 2002 are $210,000, $420,000, and $840,000, respectively.
Highlights
$900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2000 2001 2002
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Equipment Rental
1.1 Mission
ER's mission is to become THE exclusive full-service equipment rental, sales, and service company in upper and lower Denton Parish with the ability to service the surrounding parishes of Memphis, Knoxville, Grand Prairie, Plano, Garland, Irvine, and Riverside. Therefore the company's strategy is to create a limited geographical niche for itself where there are no potential competitors. ER's vision is to continue to expand its service to other areas. The company's coverage area is constantly increasing, as the areas are becoming aware of the company's presence.
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Equipment Rental
2.3 Past Performance
The following is the company's past three years of performance since start-up.
Table: Past Performance Past Performance Sales Gross Margin Gross Margin % Operating Expenses Collection Period (days) Inventory Turnover Balance Sheet Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Capital Assets Accumulated Depreciation Total Long-term Assets Total Assets Capital and Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Capital and Liabilities Other Inputs Payment Days Sales on Credit Receivables Turnover 1997 $5,500 $8,000 $4,000 $17,500 $10,000 $27,500 $0 ($2,300) $0 ($2,300) $25,200 1997 60 $0 0.00 1998 $7,000 $9,000 $3,400 $19,400 $12,000 $31,400 $0 $2,500 $0 $2,500 $33,900 1998 45 $0 0.00 1999 $9,000 $9,500 $3,700 $22,200 $10,000 $32,200 $0 $12,300 $0 $12,300 $44,500 1999 45 $0 0.00 1997 $49,000 $32,830 67.00% $33,810 0 4.00 1997 $3,500 $6,000 $8,000 $2,500 $20,000 $5,200 $0 $5,200 $25,200 1998 $57,000 $42,351 74.30% $39,330 0 4.00 1998 $1,500 $7,000 $14,000 $5,000 $27,500 $6,400 $0 $6,400 $33,900 1999 $100,000 $86,500 86.50% $69,000 0 4.00 1999 $2,500 $9,000 $19,000 $6,000 $36,500 $8,000 $0 $8,000 $44,500
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Equipment Rental
3.0 Products
ER sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers, as well as small home use, and construction equipment such as tillers, augers, and chain saws. ER takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products. ER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, ProCut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment and Komatsu Forklifts.
Komatsu ER carries gasoline, diesel, LPG, and electric forklifts from Komatsu. The benefits of Komatsu products include: Low noise designs reduce operator fatigue; Non-asbestos brakes; Open mast designs for excellent visibility; Heavy-duty air filtration systems with high air intake for extended engine life; Easy access to mechanical components.
Ramrod ER carries a series of Ramrod Taskmaster products that are designed for any task. They include: The post hole auger (9" and 12") - can dig up to 60 holes in one hour; 32" forks - mini fork lift; Leveller - for back landscaping; The trencher - the attachment of choice for digging trenches; Hay and mower fork - horse and cattle stall cleanup; Scattrack. ER carries a series of mini excavators and skid steer loaders with various attachments; Hydraulic breakers - for breaking concrete, rock, or other hard surfaces; Trenchers - for installing electric lines and underground cables; Pallet fork - for handling heavy palletized material; Grapples - for clean up of loose, bulky, or baled materials; Page 4
Equipment Rental
Augers - for digging holes and wide trenches in tight areas; Angle blade - for grading; Mini excavator - for construction, landscaping, and utility applications; Trimmers and bushcutters and accessories; Tiller/Cultivator; Power blowers and accessories; Hedge clippers; Power pruners and accessories; Chain saws; Safety accessories.
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Equipment Rental
4.1 Target Market Segment Strategy
ER currently has customers in the industrial and commercial fields, petro-chemical plants, contractors, sub-contractors, oil fields, and municipalities, with expansion potential in other areas. The Market Analysis table below gives the total potential number of businesses that could rent or buy our equipment in the local area.
Table: Market Analysis Market Analysis Potential Customers Petro-chemical clients Contractors and subcontractors Municipalities Farmers Industrial clients Other Total Growth 1% 10% 1% 3% 4% 2% 5.86% 2000 5 160 8 127 86 40 426 2001 5 176 8 131 89 41 450 2002 5 194 8 135 93 42 477 2003 5 213 8 139 97 43 505 2004 5 234 8 143 101 44 535 CAGR 0.00% 9.97% 0.00% 3.01% 4.10% 2.41% 5.86%
Petro-chemical clients Contractors and subcontractors Municipalities Farmers Industrial clients Other
Equipment Rental
4.3 Industry Analysis
Industry Description (information provided by imarketinc.com) Market size statistics - Industrial trucks and tractors Establishments primarily engaged in manufacturing industrial trucks, tractors, trailers, stackers (truck type), and related equipment used for handling materials on floors and paved surfaces in and around industrial and commercial plants, depots, docks, airports, and terminals.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 1,004 37,854 $13,004 million 38 $16 million
Market size statistics - Farm machinery and equipment Establishments primarily engaged in manufacturing farm machinery and equipment including soil preparation machinery, for use in the preparation and maintenance of the soil, planting and harvesting of the crop, preparing crops for market on the farm, or for use in performing other farm operations and processes.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 2,594 79,978 $30,474 million 31 $13.3 million
Market size statistics - Construction machinery Establishments primarily engaged in manufacturing heavy machinery and equipment, such as bulldozers, concrete mixers, cranes.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 2,266 125,081 $58,196 million 57 $34.3 million
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Equipment Rental
4.3.1 Competition and Buying Patterns
ER's closest competitors are located in Memphis Parish. They include the following five companies: CBC Equipment; Northern Equipment; Jones Rental Service; Rental Service Center; Memphis Rental.
Being located in or near Memphis, they charge a drop off and/or pick up fee. ER can, in most cases, wave this fee which will allow the customer more funds to purchase/rent additional equipment.
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Equipment Rental
Market size statistics - Residential construction, nec General contractors primarily engaged in construction (including new work additions, alterations, remodeling, and repair) of residential buildings other than single-family houses. This includes hotels, motels, apartments, and multi-family homes.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 25,201 114,523 $25,545 million 5 $1.1 million
Market size statistics - Heavy construction, nec General and special trade contractors primarily engaged in the construction of heavy projects not elsewhere classified. This includes canal, drainage system, athletic and recreation facilities, land preparation, rock removal, waste water and sewage treatment plant, and trenching construction.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 16,914 211,440 $50,637 million 13 $3.2 million
Market size statistics - Bridge, tunnel, and elevated highway construction General contractors primarily engaged in the construction of bridges, viaducts, elevated highways, and pedestrian and railway tunnels.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 1,414 43,889 $14,047 million 34 $12.9 million
Market size statistics - Highway and street construction General and special trade contractors primarily engaged in the construction of roads, streets, alleys, public sidewalks, guardrails, parkways, and airports.
Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment 19,694 302,944 $66,045 million 16 $13.3 million
Market size statistics - Nonresidential construction, nec General contractors primarily engaged in the construction (including new work additions, alterations, remodeling, and repair) of nonresidential buildings other than industrial buildings and warehouses. This includes commercial, institutional, religious, and amusement and recreational buildings.
Estimated number of U.S. establishments Total people employed in this industry 44,505 540,550
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Equipment Rental
Total annual sales in this industry Average employees per establishment Average sales per establishment $205,214 million 12 $4.9 million
4.4 Marketing
The overall marketing plan for ER's products and services is based on the following fundamentals: The segment of the market(s) planned to reach. Distribution channels planned to be used to reach market segments: television, radio, sales associates, and mailings. Share of the market expected to capture over a fixed period of time. Market Responsibilities ER is committed to an extensive promotional campaign. This will be done aggressively and on a broad scale. To accomplish initial sales goals, the company will require an extremely effective promotional campaign to accomplish two primary objectives: 1. 2. Attract quality sales/service personnel that have a desire to be successful. Attract customers that will constantly look to ER for their projects.
In addition, ER plans to advertise in magazines, newspapers, television, radio, and on billboards throughout the state. Promotion In addition to standard advertisement practices, ER will gain considerable recognition through these additional promotional mediums: Press releases sent to major radio stations, newspapers, and magazines. Radio advertising on secondary stations. Incentives. As an extra incentive for customers and potential customers to ER's name, the company plans to distribute coffee mugs, T-shirts, pens, and other advertising specialties with the company logo. This will be an ongoing program for the company, when appropriate and where it is identified as beneficial. Brochures. The objective of brochures is to portray ERs' goals and products as an attractive functionality. It is also to show customers how to use the latest in technology as it relates to construction and building services. ER will develop three brochures: one to be used to promote sales, one to use to announce the product in a new market, and the other to recruit sales associates. Investment in Advertising and Promotion For the first year of operation, advertising, and promotion is budgeted at a combined total of $14,000. A fixed amount of sales revenues will go toward the state ER advertisement campaign. On an ongoing basis, ER feels that it can budget advertising expenses at less than 10% of revenues to ER.
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Equipment Rental
4.4.1 Pricing
Currently, ER maintains a commercial credit department for business customers with a 1% net 30-day limit. This loan will enable the company to establish its lending ability but will be structured so as not to hamper its ability to assist other customers (due on receipt with approved credit references). Most of ER's customers choose to deal with their own financial sources, however ER does have several financial sources to choose from, thereby giving them references should it become necessary to do so. The company offers competitive prices, which are subject to review when necessary. ER has done sufficient work in this area to know that it can place a markup on merchandise and still retain sufficient funds to be competitive. Knowledge of market and competitor prices gives ER the advantage of pricing in-line with competitors. ER suppliers have and will continue to supply products that enable the company to meet the customers price range. Most companies have a 15-20% markup on their merchandise. Having worked for most of the larger companies in the area, Mr. James has an advantage of knowing which companies are firm with the prices and how much others will decrease their prices. Several companies do not have a working list of rental prices and change with the market thereby causing a delay of several hours or even days to allow for a check of existing rental rates. At ER, pricing is derived from an American Rental Association (ARA) formula used to price sales and rental items in relation to cost and resale/use value.
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Equipment Rental
The company's goal in the next two to five years is to hire additional employees, concentrate on customer service, and promote the company and the environment that has allowed for this increase in service by way of discounts and promotional specials that will benefit the company and the customer.
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Equipment Rental
6.0 Sales Forecast
The following table and charts show the Projected Sales Forecast for Equipment Rental.
Table: Sales Forecast Sales Forecast Sales Sales and Rentals Other Total Sales Direct Cost of Sales Sales and Rentals Other Subtotal Direct Cost of Sales 2000 $210,000 $0 $210,000 2000 $31,500 $3,000 $34,500 2001 $420,000 $0 $420,000 2001 $60,000 $6,000 $66,000 2002 $840,000 $0 $840,000 2002 $150,000 $12,000 $162,000
Sales Monthly
$30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Equipment Rental
Sales by Year
$900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2000 2001 2002
Equipment Rental
payable, meets with a bookkeeper for end of year tax return, keeps all office needs running smoothly, filing, typing, copies, and is majority stock holder in the company (45%). Future plans call for the hiring of a mechanic and shopman with hopes of adding a truck and delivery driver shortly there after from the area, with additional office/shop personnel to be added as needed. On occasion part-time personnel will be used and job training provided through the area schools for those interested in this area of the job market.
Table: Personnel Personnel Plan Sales/Rental Associate Sales/Rental Associate Sales/Rental Associate Maintenance/Technician Maintenance Technician Total People Total Payroll 2000 $19,200 $19,200 $19,200 $0 $0 5 $57,600 2001 $19,200 $19,200 $19,200 $5,010 $0 6 $62,610 2002 $19,200 $19,200 $19,200 $9,500 $6,000 7 $73,100
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Equipment Rental
Balance for working capital, employee training, office equipment modernization, maintenance inventory (i.e.: oil, air, and hydraulic filters), unforeseen building/maintenance expense $152,000
Shop equipment to include: air compressor, air tools and accessories, blow torch, welding machine and accessories, 1 1/2 ton chain hoist, oil/water separator, holding tank, assorted hand tools, washing vat, chain saw sharpener and repair accessories. Rental inventory to include: Trash and diaphragm pumps 2 ea. 2" and 3", 3/4" submersible pump and accessories, 3 hp. concrete vibrator, 2-48" concrete power trowels, Case 580L or JD 310 Backhoe, small trailer and larger trailer, 1-ton Ford F350 or F450 Diesel delivery truck, air compressor, 90 lb. air hammer and accessories, rotovator for tractor, 1 push mower, 1 lawn tractor.
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Equipment Rental
8.2 Key Financial Indicators
The following chart shows the important benchmarks for Equipment Rental.
Benchmarks
10.0 8.0 6.0 4.0 2.0 0.0
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Equipment Rental
8.3 Break-even Analysis
The table and chart below contain the Break-even Analysis for Equipment Rental.
Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 3 $19,714 $6,000.00 $2,500.00 $11,500
Break-even Analysis
$30,000 $20,000 $10,000 $0 ($10,000) ($20,000) $0 $12,000 $24,000 $36,000 $48,000 $60,000
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Equipment Rental
8.4 Projected Profit and Loss
The Projected Profit and Loss can be seen in the following table and charts.
Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other Production Expenses Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Supplies and equipment Utilities Telephone Insurance Repairs and Maintenance Services Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes 2000 $210,000 $34,500 $3,000 -----------$37,500 $172,500 82.14% $57,600 $14,000 $0 $9,924 $1,602 $7,812 $14,448 $10,932 $2,832 $12,420 $8,640 $0 -----------$140,210 $32,290 $29,938 $706 $1,646 0.78% TRUE TRUE 2001 $420,000 $66,000 $42,000 -----------$108,000 $312,000 74.29% $62,610 $31,000 $0 $19,851 $2,403 $7,810 $21,688 $20,397 $2,833 $12,420 $9,392 $0 -----------$190,404 $121,597 $23,065 $29,559 $68,972 16.42% TRUE 2002 $840,000 $162,000 $126,000 -----------$288,000 $552,000 65.71% $73,100 $82,598 $0 $39,702 $3,604 $7,810 $32,533 $30,596 $2,833 $12,420 $10,965 $0 -----------$296,161 $255,839 $18,365 $71,242 $166,232 19.79%
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Equipment Rental
Profit Yearly
$180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2000 2001 2002
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Equipment Rental
Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income 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 Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense 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 2000 2001 2002
$42,000 $157,400 $199,400 $0 $0 $149,000 $0 $151,000 $0 $0 $0 $499,400 2000 $27,716 $170,423 $198,139 $0 $0 $45,248 $0 $29,100 $58,000 $91,000 $65,000 $486,487 $12,913 $15,413
$84,000 $316,400 $400,400 $0 $0 $20,000 $0 $0 $0 $0 $0 $420,400 2001 $28,862 $326,213 $355,075 $0 $0 $30,000 $0 $19,000 $2,000 $4,000 $10,000 $420,075 $325 $15,738
$168,000 $632,800 $800,800 $0 $0 $20,000 $0 $0 $0 $0 $0 $820,800 2002 $63,461 $617,470 $680,931 $0 $0 $60,000 $0 $25,000 $22,000 $9,000 $20,000 $816,931 $3,869 $19,606
Cash
$300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 ($50,000) ($100,000) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Equipment Rental
8.6 Projected Balance Sheet
ER's projected balance sheets for 2000-2002.
Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 2000 $5,964 $113,252 $3,700 $122,916 $131,900 $254,816 $0 ($52,700) $1,646 ($51,054) $203,763 ($51,054) 2001 $6,211 $103,252 $3,700 $113,163 $112,900 $226,063 $0 ($61,054) $68,972 $7,918 $233,981 $7,918 2002 $13,656 $63,252 $3,700 $80,608 $87,900 $168,508 $0 ($12,082) $166,232 $154,150 $322,658 $154,150 2000 $15,413 $19,600 $5,750 $64,000 $104,763 $99,000 $0 $99,000 $203,763 2001 $15,738 $39,200 $10,043 $66,000 $130,981 $103,000 $0 $103,000 $233,981 2002 $19,606 $78,400 $24,652 $88,000 $210,658 $112,000 $0 $112,000 $322,658
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Equipment Rental
Table: Ratios Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory 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 Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Business Vitality Profile Sales per Employee Survival Rate Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 2000 110.00% 9.62% 2.82% 31.41% 51.41% 48.59% 100.00% 1.82% 64.73% 64.73% 35.27% 100.00% 82.14% 81.03% 3.33% 15.38% 0.85 0.81 125.06% -4.61% 1.15% 2000 $42,000 2000 0.78% 0.00% 8.57 60 2.99 28.06 42 1.03 0.00 0.48 ($18,154) 1.08 0.97 60% 0.65 0.00 39.49 2001 100.00% 16.75% 4.29% 28.21% 55.98% 44.02% 100.00% 1.58% 48.25% 48.25% 51.75% 100.00% 74.29% 57.70% 5.71% 28.95% 1.16 1.07 96.62% 1244.37% 42.11% 2001 $70,000 2001 16.42% 871.06% 8.57 32 8.36 52.56 82 1.80 28.55 0.50 $17,818 5.27 0.56 48% 0.72 53.04 0.14 2002 100.00% 24.30% 7.64% 27.27% 65.29% 34.71% 100.00% 1.15% 27.24% 27.24% 72.76% 100.00% 65.71% 45.84% 6.90% 30.46% 2.61 2.31 52.23% 154.05% 73.60% 2002 $120,000 2002 19.79% 107.84% 8.57 32 9.34 45.76 70 2.60 1.09 0.48 $130,050 13.93 0.38 25% 1.33 5.45 0.12 Industry Profile 6.96% 5.39% 3.90% 28.39% 37.68% 62.32% 100.00% 19.17% 29.21% 48.38% 51.62% 100.00% 59.31% 39.09% 2.75% 1.59% 1.26 0.87 54.38% 3.27% 7.17% Industry $156,054 67.68% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a
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Appendix
Appendix Table: Sales Forecast Sales Forecast Sales Sales and Rentals Other Total Sales Direct Cost of Sales Sales and Rentals Other Subtotal Direct Cost of Sales Jan $10,000 $0 $10,000 Jan $1,500 $250 $1,750 Feb $10,000 $0 $10,000 Feb $1,500 $250 $1,750 Mar $11,200 $0 $11,200 Mar $1,680 $250 $1,930 Apr $14,400 $0 $14,400 Apr $2,160 $250 $2,410 May $17,500 $0 $17,500 May $2,625 $250 $2,875 Jun $20,400 $0 $20,400 Jun $3,060 $250 $3,310 Jul $28,000 $0 $28,000 Jul $4,200 $250 $4,450 Aug $29,000 $0 $29,000 Aug $4,350 $250 $4,600 Sep $26,000 $0 $26,000 Sep $3,900 $250 $4,150 Oct $18,500 $0 $18,500 Oct $2,775 $250 $3,025 Nov $15,000 $0 $15,000 Nov $2,250 $250 $2,500 Dec $10,000 $0 $10,000 Dec $1,500 $250 $1,750
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Appendix
Appendix Table: Personnel Personnel Plan Sales/Rental Associate Sales/Rental Associate Sales/Rental Associate Maintenance/Technician Maintenance Technician Total People Total Payroll Jan $1,600 $1,600 $1,600 $0 $0 5 $4,800 Feb $1,600 $1,600 $1,600 $0 $0 5 $4,800 Mar $1,600 $1,600 $1,600 $0 $0 5 $4,800 Apr $1,600 $1,600 $1,600 $0 $0 5 $4,800 May $1,600 $1,600 $1,600 $0 $0 5 $4,800 Jun $1,600 $1,600 $1,600 $0 $0 5 $4,800 Jul $1,600 $1,600 $1,600 $0 $0 5 $4,800 Aug $1,600 $1,600 $1,600 $0 $0 5 $4,800 Sep $1,600 $1,600 $1,600 $0 $0 5 $4,800 Oct $1,600 $1,600 $1,600 $0 $0 5 $4,800 Nov $1,600 $1,600 $1,600 $0 $0 5 $4,800 Dec $1,600 $1,600 $1,600 $0 $0 5 $4,800
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Appendix
Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other Production Expenses Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Supplies and equipment Utilities Telephone Insurance Repairs and Maintenance Services Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes Jan $10,000 $1,750 $0 -----------$1,750 $8,250 82.50% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,184) $2,663 ($1,754) ($4,093) -40.93% Feb $10,000 $1,750 $0 -----------$1,750 $8,250 82.50% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,184) $2,663 ($1,754) ($4,093) -40.93% Mar $11,200 $1,930 $0 -----------$1,930 $9,270 82.77% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($2,164) $2,663 ($1,448) ($3,379) -30.17% Apr $14,400 $2,410 $0 -----------$2,410 $11,990 83.26% $4,800 $2,417 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$12,934 ($944) $2,643 ($1,076) ($2,511) -17.44% May $17,500 $2,875 $0 -----------$2,875 $14,625 83.57% $4,800 $2,417 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$12,934 $1,691 $2,623 ($280) ($653) -3.73% Jun $20,400 $3,310 $0 -----------$3,310 $17,090 83.77% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $5,656 $2,604 $916 $2,136 10.47% Jul $28,000 $4,450 $0 -----------$4,450 $23,550 84.11% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $12,116 $2,584 $2,860 $6,672 23.83% Aug $29,000 $4,600 $0 -----------$4,600 $24,400 84.14% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $12,966 $2,565 $3,120 $7,281 25.11% Sep $26,000 $4,150 $1,000 -----------$5,150 $20,850 80.19% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $9,416 $2,442 $2,092 $4,882 18.78% Oct $18,500 $3,025 $750 -----------$3,775 $14,725 79.59% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $3,291 $2,296 $298 $696 3.76% Nov $15,000 $2,500 $500 -----------$3,000 $12,000 80.00% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $566 $2,151 ($476) ($1,110) -7.40% Dec $10,000 $1,750 $750 -----------$2,500 $7,500 75.00% $4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,934) $2,043 ($1,793) ($4,184) -41.84%
15%
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Appendix
Appendix Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income 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 Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense 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 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$2,000 $4,500 $6,500 $0 $0 $149,000 $0 $151,000 $0 $0 $0 $306,500 Jan $1,676 $5,081 $6,758 $0 $0 $0 $0 $0 $10,000 $0 $5,417 $22,174 $284,326 $286,826
$2,000 $2,517 $4,517 $0 $0 $0 $0 $0 $0 $0 $0 $4,517 Feb $4,876 ($20,374) ($15,497) $0 $0 $0 $0 $0 $12,000 $30,000 $5,417 $31,919 ($27,403) $259,423
$2,240 $10,250 $12,490 $0 $0 $0 $0 $0 $0 $0 $0 $12,490 Mar $5,907 ($2,225) $3,682 $0 $0 $0 $0 $0 $25,000 $27,000 $5,417 $61,099 ($48,609) $210,814
$2,880 $8,032 $10,912 $0 $0 $0 $0 $0 $0 $0 $0 $10,912 Apr $4,692 $20,377 $25,069 $0 $0 $0 $0 $2,350 $4,000 $34,000 $5,417 $70,836 ($59,924) $150,890
$3,500 $9,045 $12,545 $0 $0 $0 $0 $0 $0 $0 $0 $12,545 May $1,704 $39,912 $41,616 $0 $0 $0 $0 $2,350 $7,000 $0 $5,417 $56,383 ($43,837) $107,052
$4,080 $11,603 $15,683 $0 $0 $0 $0 $0 $0 $0 $0 $15,683 Jun $1,399 $20,822 $22,221 $0 $0 $0 $0 $2,350 $0 $0 $5,417 $29,988 ($14,305) $92,747
$5,600 $14,077 $19,677 $0 $0 $0 $0 $0 $0 $0 $0 $19,677 Jul $1,917 $18,325 $20,242 $0 $0 $0 $0 $2,350 $0 $0 $5,417 $28,009 ($8,331) $84,416
$5,800 $16,523 $22,323 $0 $0 $0 $0 $0 $0 $0 $0 $22,323 Aug $1,659 $22,754 $24,413 $0 $0 $0 $0 $2,350 $0 $0 $5,417 $32,179 ($9,857) $74,559
$5,200 $22,427 $27,627 $0 $0 $0 $0 $0 $0 $0 $0 $27,627 Sep $1,419 $20,438 $21,857 $0 $0 $12,416 $0 $2,350 $0 $0 $5,417 $42,040 ($14,413) $60,146
$3,700 $23,120 $26,820 $0 $0 $0 $0 $0 $0 $0 $0 $26,820 Oct $920 $18,199 $19,119 $0 $0 $12,416 $0 $5,000 $0 $0 $5,417 $41,952 ($15,132) $45,014
$3,000 $20,600 $23,600 $0 $0 $0 $0 $0 $0 $0 $0 $23,600 Nov $861 $13,841 $14,702 $0 $0 $12,416 $0 $5,000 $0 $0 $5,417 $37,534 ($13,934) $31,080
$2,000 $14,707 $16,707 $0 $0 $0 $0 $0 $0 $0 $0 $16,707 Dec $686 $13,272 $13,957 $0 $0 $8,000 $0 $5,000 $0 $0 $5,417 $32,374 ($15,667) $15,413
0.00%
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Appendix
Appendix Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other Calculated Totals Payroll Expense Sales on Credit New Accounts Payable Inventory Purchase Jan 1 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $8,000 $10,666 $0 Feb 2 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $8,000 $7,466 $0 Mar 3 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $8,960 $6,742 $0 Apr 4 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $11,520 $9,809 $0 May 5 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $14,000 $13,914 $340 Jun 6 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $16,320 $18,170 $4,615 Jul 7 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $22,400 $22,831 $7,870 Aug 8 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $23,200 $20,510 $5,050 Sep 9 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $20,800 $18,349 $2,800 Oct 10 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $14,800 $13,859 $0 Nov 11 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $12,000 $13,324 $575 Dec 12 10.00% 10.00% 30.00% 80.00% 0.00% $4,800 $8,000 $11,748 $0
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Appendix
Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $9,000 $9,500 $3,700 $22,200 $10,000 $32,200 $0 $12,300 $0 $12,300 $44,500 $12,300 Jan $14,585 $158,500 $3,700 $176,785 $161,000 $337,785 $0 $6,883 ($4,093) $2,791 $340,576 $2,791 Feb $42,425 $158,500 $3,700 $204,625 $161,000 $365,625 $0 $1,467 ($8,185) ($6,719) $358,906 ($6,719) Mar $51,391 $158,500 $3,700 $213,591 $161,000 $374,591 $0 ($3,950) ($11,564) ($15,514) $359,077 ($15,514) Apr $40,823 $158,500 $3,700 $203,023 $158,650 $361,673 $0 ($9,367) ($14,075) ($23,442) $338,231 ($23,442) May $14,824 $158,500 $3,700 $177,024 $156,300 $333,324 $0 ($14,783) ($14,728) ($29,511) $303,813 ($29,511) Jun $12,171 $158,500 $3,700 $174,371 $153,950 $328,321 $0 ($20,200) ($12,591) ($32,791) $295,530 ($32,791) Jul $16,677 $158,500 $3,700 $178,877 $151,600 $330,477 $0 ($25,617) ($5,919) ($31,536) $298,942 ($31,536) Aug $14,434 $158,500 $3,700 $176,634 $149,250 $325,884 $0 ($31,033) $1,362 ($29,671) $296,213 ($29,671) Sep $12,345 $146,084 $3,700 $162,129 $146,900 $309,029 $0 ($36,450) $6,244 ($30,206) $278,823 ($30,206) Oct $8,004 $133,668 $3,700 $145,372 $141,900 $287,272 $0 ($41,867) $6,940 ($34,927) $252,346 ($34,927) Nov $7,488 $121,252 $3,700 $132,440 $136,900 $269,340 $0 ($47,283) $5,830 ($41,453) $227,887 ($41,453) Dec $5,964 $113,252 $3,700 $122,916 $131,900 $254,816 $0 ($52,700) $1,646 ($51,054) $203,763 ($51,054) Starting Balances $2,500 $9,000 $19,000 $6,000 $36,500 $8,000 $0 $8,000 $44,500 Jan $286,826 $12,500 $17,250 $16,000 $332,576 $8,000 $0 $8,000 $340,576 Feb $259,423 $17,983 $15,500 $28,000 $320,906 $38,000 $0 $38,000 $358,906 Mar $210,814 $16,693 $13,570 $53,000 $294,077 $65,000 $0 $65,000 $359,077 Apr $150,890 $20,181 $11,160 $57,000 $239,231 $99,000 $0 $99,000 $338,231 May $107,052 $25,136 $8,625 $64,000 $204,813 $99,000 $0 $99,000 $303,813 Jun $92,747 $29,853 $9,930 $64,000 $196,530 $99,000 $0 $99,000 $295,530 Jul $84,416 $38,176 $13,350 $64,000 $199,942 $99,000 $0 $99,000 $298,942 Aug $74,559 $44,853 $13,800 $64,000 $197,213 $99,000 $0 $99,000 $296,213 Sep $60,146 $43,227 $12,450 $64,000 $179,823 $99,000 $0 $99,000 $278,823 Oct $45,014 $34,907 $9,425 $64,000 $153,346 $99,000 $0 $99,000 $252,346 Nov $31,080 $26,307 $7,500 $64,000 $128,887 $99,000 $0 $99,000 $227,887 Dec $15,413 $19,600 $5,750 $64,000 $104,763 $99,000 $0 $99,000 $203,763
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