SAMPLE BUSINESS PLAN - Global Star Enterprises1.4 Financial Projections Profit and loss forecasts...

SAMPLE

BUSINESS PLAN

Written by Janet and John BROWN

i

Table of Contents PAGE

1. EXECUTIVE SUMMARY ..............................................................................................................2

1.1 Business Opportunities ....................................................................................................2

1.2 Business Owners ..............................................................................................................2

1.3 Capital Investment ...........................................................................................................2

1.4 Financial Projections ........................................................................................................2

2. BUSINESS PROFILE ....................................................................................................................3

2.1 Business Description ........................................................................................................3

3. MARKETING PLAN .....................................................................................................................4

3.1 Industry Analysis (SWOT) .................................................................................................4

3.2 Market Research ..............................................................................................................5

3.3 Marketing Strategies ........................................................................................................9

4.0 OPERATIONS PLAN..............................................................................................................11

4.1 Legal, Insurance and Regulatory Issues .........................................................................11

4.2 Human Resources ...........................................................................................................11

4.3 Physical Resources .........................................................................................................12

4.4 Process and/or Systems to Provide Goods and Services ..............................................13

5 FINANCIAL PLAN ......................................................................................................................15

5.1 Financial Summary .........................................................................................................15

5.2 Establishment Costs and Sources of Funds Table 1 ......................................................15

5.3 Personal Financial Statements .......................................................................................16

5.4 Costing and Pricing Table 4 ............................................................................................17

5.6 Cash Flow Forecasts Table 6 ..........................................................................................18

5.7 Projected Profit and Loss Statement Table 7 ................................................................18

5.8 Contingency Plans .........................................................................................................19

TABLES

4 Product Range and Pricing

5 Sales Forecasts

6 Cash Flow Forecasts

7 Projected Profit and Loss

APPENDICES

NAB confirmation of loan

Letter from landlord

Business name registration

Insurance quote

Work experience resumes

Promotional samples (flyer, business card)

Research Information

• Survey questions

• Statistics and reports

• Magazine articles

Business Plan for THE HOME SERVICES WORKSHOP

Page 2

1. EXECUTIVE SUMMARY

1.1 Business Opportunities

Tidy Towns has only 3 cleaning operators. One is intending to retire and is reducing his

client base. Another is focussing on commercial and the third has concentrated in new

areas on builders cleanups. This has left a gap in the market for home services, targeting

two income families. Market research and test market results have been very positive.

1.2 Business Owners

John and Janet Brown have relevant experience to operate the business. Both partners

have had several years experience in their relevant roles and Janet has worked in office

administration and is competent in bookkeeping. John managed 4 teams of ground

maintenance crews at the Tidy Towns Hospital and he has qualifications in horticulture

and small engine maintenance.

1.3 Capital Investment

Total establishment costs will be $ 33,000 which will be made up of owner’s

contributions, a bank overdraft of $5000, and savings of $3000. As we already

have the major plant and equipment remaining purchases will be $3000.

1.4 Financial Projections

Profit and loss forecasts predict a before tax profit of $21,780 in the first year.

Gross sales for the first year have been projected at $35,717 and are based on

analysis of the market research undertaken. Projected cash flows indicate a

positive cash balance each month after all overheads in year 1. In year 2 negative

cash flow in the first few months reflects the increased drawings and the

seasonal nature of the industry, but overall is positive for the year. Year 1

provides net cash funds of $45,810.

Predicted sales for year 2 are $66,409 with cash funds of $45,810 available at the

end of the year. Year 2 budget allocations include capital equipment purchases

of $900, proprietors’ drawings of $36,000 and loan repayments of $3,180.

Financial Summary Year1 Year2

Cash account increase (decrease) $11,923 $14,714

Add

Drawings (by Owners) 0 36000

Purchase of Fixed Assets 1600 1200

Loan Repayments 5571 3180

Tax Payments (Qtly PAYG) 3319 7881

Sub Total $10,490 $48,261

Less

Loans 5000 0

Owners Funds 2000 0

Net GST flows 1569 3647

Sub Total $8,569 $3,647

Total value generated $13,844 $29,900 116.0%


Page 3

2. BUSINESS PROFILE

2.1 Business Description

2.1.1 Business Type

THE HOME SERVICES WORKSHOP is primarily involved in the SERVICE industry, in

particular the HOME SERVICES sector of the industry. As the business expands we

intend to expand the range of services we will offer to include SMALL REPAIRS AND

MAINTENANCE as part of the product mix. The phased development will assist the

venture to grow within its funding limits. Our longer term objective is to open a SERVICE

CENTRE so consumers will have direct access to HOME SERVICES sales consultants.

2.1.2 Business Objectives

The initial objective of the business is to establish the HOME SERVICES side of the

operation in the LOCAL area in order to facilitate a cash flow. Initially, we will have 6

PRODUCTS which will be our core business operations. The target net profit for the first

year of operation of $20,530 is based on a turnover of approximately $3,000 per month.

Any profits will be used to pay off outstanding loans and to establish the next stage of

the business in year 2.

2.1.3 Business Name

THE HOME SERVICES WORKSHOP was chosen as the registered business name because

is clearly states the nature of our business. The name is also multi-functional – it allows

us to expand in the future to incorporate other home services.

2.1.4 Core Products or Services

Our core business will be to market the range of 6 home service products and to provide

access to trade services such as plumbing, carpentry and electrical.

2.1.5 Ownership and Business Structure

We have chosen a partnership for our business because there are only two of us

involved in the business operations. In this way we keep costs to a minimum and ensure

that both partners are equally motivated to succeed. As a partnership we compliment

each other in terms of our experiences and we have enough capital to finance the start-

up costs without having to go outside to additional investors. The simplicity of the

partnership agreement means that we can do most of the accounting and budgeting at

home on our personal computer using Quickbooks software. More importantly it

ensures that if one partner is sick or on vacation the other partner can fill in.

2.1.6 Personal Goals

Our primary goal is financial and business success. We believe we have the necessary

commitment, experience and motivation to make this project a success. We will be

working for ourselves rather than for other people and we will be working in an area of

business we both enjoy.

We intend to develop our business over 3 years and to stay in the market for the long

term to ensure we are able to plan and invest for our family and our retirement.

More importantly this business fits in with our lifestyle and philosophy of outdoor living

and sustainable eco-tourism which benefits the environment.


Page 4

3. MARKETING PLAN

3.1 Industry Analysis (SWOT)

3.1.1 External Environment

SWOT Analysis

Strengths Weaknesses Opportunities Threats

The Economy Strong economic

outlook

Unemployment

decreasing

Interest rates may rise,

GST & PAYG

implementation

Growth in retirees

and double income

households

GST may affect

home owners from

accessing services

The Industry Identified as a high

growth industry

sector

Highly variable

standards of service,

can affect industry

image

Household services

are

Low barriers to

entry

Social/Cultural Stable region with

high disposable

income

Double income

families want quality

time with family will

pay for home

services

Number of people

moving to the area

to semi retire will

generate greater

competition

Political and

Legal Trends

Strong federal govt

has created stable

political and

economic

environment

Rate of change in

technology and

consumer preferences

makes it difficult for

new business owners

Economic growth

and stability -

creates competitive

advantage for

motivated

entrepreneurs

Change in federal

govt and economic

outlook

Geographic

Factors

Mild climate.

Strong gardening

community

Low rainfall and access

to water in the region

limits flowering garden

development

Rock gardens and

styles that require

little water

Competitors New equipment New in business

Not known in the

market

Consumer

dissatisfaction with

competitors

Established

operators can

reduce prices to

keep customers

Technology Both computer

literate

Customers may not be

able to access the

internet

Can streamline and

improve efficiency

and costs

The rate of change

and the impact on

business

Physical

Resources

Range of new

equipment

Limited experience

with some equipment

Range of equipment

broadens market

and services offered

Financial

Resources

Virtually no debt Low risk profile


Page 5

3.1.2 Internal Environment

3.2 Market Research

3.2.1 Market Research Objectives

Research Objective Tools/Source of Information

(a) Establish demand for products/services Survey1 & Industry Profile2

(b) Determine product range Survey/Existing operator3

(c) Determine opening hours Survey

(d) Determine demand for services Survey

(e) Determine plant & equipment

requirements

Existing operator

(f) Determine stock holding Existing operator

(g) Determine price Existing operator/Industry benchmarks4

(h) Determine turnover and business

strategies

Survey/existing operator

Research Results (Sample format of research results -relates to objectives table above)

(a) 42% of those surveyed indicated that they would use the facility if established.

Action: Survey of 60 potential clients

Question: “Why would you use the facility?”

Responses:

• 41% indicated they were both working and too busy to manage to properly maintain

their home;

• 30% indicated that value for money was an important factor in buying decisions;

• 20% indicated that they were unable to manage many of the tasks due to age or

health;

• 9% indicated that they would like to have more spare time to enjoy activities/family;

In addition to customer survey we consulted the ABS Industry Profile Report through the

Office of State Development and undertook an analysis of competitors.

(b) In addition to the product range offered, respondents indicated demand for the

following:

• Pick-up and delivery of shopping (23 respondents)

• Small maintenance services (from replacing light bulbs to adjusting doors)

(c) Although no clear indication of opening hours was obtained from the survey, it would

be safe to say that respondents indicated that they preferred work to be carried

during the week, so that weekends would not be interrupted.

1 Copy of industry survey

2 ABS Industry Profile Report

3 Consultation with existing operator of Jack’s Services, TIDYTOWN

4 State Development industry growth reports – Appendix


Page 6

(d) 66% of respondents indicated that they use the internet.

(e) Refer 4.3.1 Plant & Equipment

(f) After consultation with an existing operator, and taking into consideration our core

product range, it was estimated that the initial hire stock holding would be

approximately $500 for items such as bulk cleaning products and spares.

(g) The average fee customers would pay was –

• $40 - $65 for regular services

• $60 - $120 for casual services

Question: “How often would you use the services and how much would spend?”

Responses:

• 40% once a month $55 - $70;

• 28% once every three months $160 - $180;

• 17% once a week $30 - $50;

• 15% once a fortnight $35 - $45.

(h) In addition to the survey, we also contacted the proprietor of a similar business in

another town (XYZ COMPANY, TIDYTOWN). From our research and discussion we

came to the following conclusions –

• In the first year, based on the population size and demographics, we could expect to

turnover between $55,000 to $70,000

• In addition to home services we should consider including services to businesses

(often double income households with limited free time)

• We need to establish a client base quickly by networking and being involved in

activities that keep us in touch with business owners, double income families and self

funded retirees

• We should use checklists to ensure we meet customer expectations

• Quotes should specify payment terms and conditions, the services that will be

provided and any services that will incur additional costs eg tip fees, equipment hire

• We should keep customer cards indicating regularity of service, particular instructions

(dos and don’ts) and have a system for following up clients

• We have also decided to investigate whether we should consider being an agent for

other products


Page 7

3.2.3 Market Segments

Our knowledge of the industry and our market research has indicated that our potential

customers can be broken up into four distinct segments:

• Business owners

• Double income households

• Retirees

• Real Estate Agents and absentee landlords

Geographical – As our business will be based in BEST TOWN, our target area can include

4 Shires – A, B, C and D.

Demographic – Our target customers will be double income households. In the target

area, the ABS demographic profile shows there are –

• 3,400 double income families

• 2, 500 retirees

• 5,780 businesses

Psychological – In terms of the double income household, they are concerned about

spending time with family and pursuing recreational activities. Retirees, particularly

single women are concerned with having access to a reliable, regular service at an

affordable price. Real Estate Agents and landlords also have similar concerns.

Market Segment Competitive Advantage

1. Business owners Well presented, organised, versatile, reliable, able to

respond quickly to enquires

New equipment

2. Double income households Range of services, reliability

3. Retirees Range of services, reliability, price

4. Real Estate Agents and absentee

landlords

Versatility and reliability

New equipment

Test Market Results

To test our research conclusions we undertook test marketing activities by delivering

flyers to targeted market segments – double income households and retirees. The

following table summarises the results.

Services Provided Name and Contact Details Amount

Regular Cleaning J Jones, 22 Sale St, ph 4766 6666 – weekly

S Green, 25 Century St ph 4777 7777 – weekly

B Black, 10 Tree St Ph 4888 8888 – weekly

C Carlton, 9 United St Ph 4999 9999 – weekly

K Bear, 19 Frog St, Ph 4233 3333 - weekly

$45

45

45

65

45

Major Casual Cleaning G Beard, 19 Tree St, Ph 4833 3333

R Jones, 22 Beetle St, ph 4166 6666

T Green, 25 Ant St ph 4277 7777

D Black, 10 Bud St Ph 4188 8888

E Carlton, 9 Flower St Ph 4199 9999

$65

120

95

160

180

Regular Ground Maintenance P Jones, 22 Jane St, ph 4111166 – 2 weekly

A Green, 25 Blue St ph 4222 7777 – 2 weekly

S Black, 10 Tory St Ph 4333 8888 – 2 weekly

M Carlton, 9 Fraser St Ph 4444 9999 – weekly

C Bear, 19 Leaf St, Ph 4555 3333 - weekly

$45

35

60

35

35


Page 8

Major Ground Maintenance G Cloud, 19 Truck St, Ph 4833 3333

R Rain, 22 Branch St, ph 4166 6666

T Drop, 25 Twig St ph 4277 7777

D Dark, 10 Case St Ph 4188 8888

E Early, 9 Suit St Ph 4199 9999

$180

220

150

160

320

Small Repairs & Maintenance A Beard, 19 Jennifer St, Ph 4999 3333

B Jones, 22 Jane St, ph 4999 6666

C Green, 25 JeanSt ph 4999 7777

L Black, 10 Joan St Ph 4999 8888

M Carlton, 9 Judy St Ph 4111 9999

$220

145

345

95

115

Window Cleaning N Beard, 10 Tree St, Ph 4633 3333

O Jones, 12 Beetle St, ph 4446 6666

P Green, 14 Ant St ph 4333 7777

Q Black, 16 Bud St Ph 4111 8888

R Carlton, 18 Flower St Ph 4222 9999

$60

80

60

120

80

Our test marketing achieved 22 regular customers, and the opportunity for many

referrals from some very satisfied customers.

3.2.4 Competitor Analysis

Competitor’s

Name

Location Market

Segment

Competitive

Advantage

Opportunity

Jack’s

Maintenance

Tidy Town Retired and

Pensioner

Well known and

trusted

In early 60’s wants to reduce client base

Dave Daveson

Home Services

Hicksville Homeowners Located in a

growing area

Out of main town area. Difficult to get

hold of and has a reputation for lateness

Reliable

Maintenance

Services

Tidy Town Home Owners

and

Commercial

Has commercial

equipment and

takes on larger jobs

Focus on home services


Page 9

3.3 Marketing Strategies

Utilising the 4 P’s of marketing – pricing, placement, promotion and product we have

developed a marketing strategy to assist us to successfully promote our services to our

target market.

3.3.1 Products and/or Services

The range of services offered initially will be restricted to those identified in our survey.

In addition we will network with local tradespeople to make it easy for customers to

access services which can only be provided by a tradesman. Our long term aim is to

provide a one stop shop. This is particularly important for retirees and householders.

Business people including real estate agents tend to already have their own contacts.

Product/Service Market Segment % of Sales

Regular Cleaning Business owners

Double income households

Real Estate Agents and absentee landlords

27%

Major Casual Cleaning

walls, ceilings etc

Retirees

Double income households 11%

Regular Ground Maintenance Double income households


Retirees

17%

Major Ground Maintenance

pruning

rubbish removal

Retirees


Small Repairs & Maintenance Retirees


Window Cleaning Retirees


Contracts Real Estate Agents and absentee landlords

Business owners 15%

100.00%

3.3.2 Price

To determine our prices we surveyed competitors, other businesses in similar locations

and consulted industry benchmarks. We also took into consideration –

• direct costs including consumable items (cleaning materials)

• what customers are prepared to pay for quality and reliability

• the time an average job would take

• industry gross profit margins

Product/Service Hours Sale Price

Regular Cleaning (1 hr x 2 people) 1 38.00

Major Casual Cleaning (2 hrs x 2 people) 1 45.00

Regular Ground Maintenance 1 42.00

Major Ground Maintenance (per hr) 1 42.00

Small Repairs & Maintenance (per hr + materials) 1 42.00

Window Cleaning (per hr) 1 35.00

Contracts Per Hr


Page 10

3.3.3 Place

As our business consists of services delivered on site, we do not require a location for

customers to visit, although eventually we will consider a shop front in 2 or 3 years. Our

home is centrally located however with easy access to all services and suppliers.

3.3.4 Promotion

Business Image – Our image will be based on the success of franchises in the small

business sector – professionalism. To achieve this we will use quality promotional

materials, paper work and uniforms.

Full colour brochures will be printed and distributed to all local real estate agents,

nurseries and hardware outlets. We will also use our brochures to promote our business

at home and garden shows. Where possible we will use photos of gardens and barbecue

areas we have developed.

Business cards will be printed and a web site constructed. We will become members of

2 or 3 clubs such as a garden club and business club. Ultimately we want to be able to

respond to emaill enquiries. We expect this to take 2 years to implement.

Uniforms – We will use a very dark green T shirt and trousers, with our logo and perhaps

a slogan.

News articles – From time to time we will try and arrange a media release, perhaps if a

client wins a garden show, or in conjunction with a supplier to promote a new product

or a new service.

Promotional products – To start with we will use fridge magnets, as they are the easiest

to find and keep. For businesses we will have coffee cups and pens.

PROMOTIONAL STRATEGY

Strategy Costs Market Segment

Flyers 400 Business owners


Business Cards 150 Double income households

Business owners


Retirees

Direct approach 0 Double income households

Business owners


Yellow Pages 300 Double income households

Business owners


Retirees

Web Page 300 Double income households

Business owners


Retirees

Fidge magnets 220 Double income households

Retirees

Coffee Cups 180 Business owners


Recreational clubs 0 Double income households

Retirees

Business clubs 250 Business owners


Total budget $1,800


Page 11

4.0 OPERATIONS PLAN

4.1 Legal, Insurance and Regulatory Issues

We contacted Smart Licence and each of the local Councils for the Shires we will be

offering services in. We found out the regulations for each council regarding tip fees,

rubbish removal, tree cutting and removal.

We have also obtained quotes form 2 insurance brokers for comprehensive business

insurance including public liability. Our survey identified that insurance is an issue for all

identified customer groups.

First aid certificate – while this is not an essential requirement but it is handy to have,

particularly if we get busy and need to hire casual labour.

REGULATORY ISSUES

Licence/Regulation Responsible Body Cost ($) Status

Business Name Registration Smart Licence 180.00 Registered

Insurance Sear & Associates 756.00 Quote TOTAL $ 936.00

4.2 Human Resources

There will be no staff employed initially. A brief description of our skills and roles in the

business are:

JOHN BROWN has a Certificate in Horticulture and has been a groundsman for the

TIDYTOWN HOSPITAL and TIDYTOWN BOWLS CLUB. He has also completed courses in –

• Small engine maintenance

• Customer Service

• Workplace health and safety

• Cleaning and disposal of garden chemicals

John will be responsible for quoting and for carrying out most of the heavy garden work.

JANE BROWN is an experienced businesswoman who has 10 years experience in office

administration functions including MYOB, customer service, staff training and staff

management. She has worked at XYZ Realty as Rental Property Manager with

responsibility for over 300 properties and 2 staff. She was the payroll and accounts

manager for WWW Building Group (one of the largest developers in the area) and is an

experienced hobby gardener. Jane will be responsible for the business administration

and accounting functions, but she will also be involved in cleaning and some of the

maintenance functions.

Between us, we have the skills to make a success of this business. In addition, we are

both good communicators and are computer literate.


Page 12

PERSONAL SWOT ANALYSIS

STRENGTHS

- Many years experience in the tourism industry in customer

service role, prior small business experience

- 12 months experience in the local tourism industry

- Tertiary qualifications, Diploma in Market Research

- Pedantic about documentation, great attention to detail

- Intuitive, creative, innovative

- Will to succeed

- Good communicator

- Motivated by the challenge of successfully starting a business

- Support from family and friends

- Partnership to minimize reliance of business on one person

WEAKNESSES

- Limited capital & resources

- Obsession with perfection can

lead to procrastination

- Can be plagued by indecision

-Unwillingness to take risks can

lead to inability to develop the

business’ potential

OPPORTUNITIES

- A number of business opportunities available to supplement the

core business

- Increase/gain further qualifications

- Membership to professional societies

THREATS

- Other people considering

starting a similar business in the

area

- May have to move from

current premises

- Limited income & financial

resources

4.3 Physical Resources

4.3.1 Plant & Equipment

Most of the plant and equipment is new or less than 12 months old. We also have

sufficient cash to cover additional equipment and we have been able to secure a $5000

overdraft from the NAB.

Item Value

Toyota Utility 11,000

Trailer 800

Ride-on mower 3,200

Self Propelled hand mower 1,600

Garden tools 1,800

Circular saw 300

Drop saw 900

Welder 600

Electric tools 1,200

Hand tools 2,000

Cleaning equipment 600

Wet/dry vacuum cleaner 500

Mobile phone 400

Computer and printer 1,200

Fax/phone 600

Owners Contribution $ 26,700


Page 13

4.3.2 Layout of Premises

One room in our home will be set up as a structured office environment. This will

comprise a desk, and bench work area, filing cabinet, computer, printer,

fax/phone/answering machine, filing system, shelving and storage cupboard. We have

also purchased a mobile phone which will allow one or both of us to deal with clients

while out working.

As we rent our home, we have obtained permission from the owner (see confirmation

letter in appendix).

Outside we have a large garage suitable for storing our utility, tools and equipment. It

has plenty of storage and shelving and fully lockable. There is a large concreted and

covered work area suitable for carrying out small repair jobs such as window glazing.

DIAGRAM OF OFFICE AND SHED LAYOUT

4.4 Process and/or Systems to Provide Goods and Services

The telephone/fax has been set up at the home office using a multiple number, which

allows us to separate business calls from residential calls. The phone/fax also has a

message facility and answer phone.

To ensure customers reach us we will use a combination of –

• call forwarding to mobile

• message bank

• answer phone

Our research also showed that customers call another service if they are not able to get

an answer immediately, rather than leave a message on an answer phone or with a

message service.


Page 14

The process to provide services :

Direct Phone Enquiry

• Full details regarding services available and prices will be clearly readable and

accessed by the person answering the phone

• For regular customers the next booking will be entered direct into our work diary at

the end of each job and a job sheets will be prepared each week detailing any

particular customer requests

• Casual bookings will be entered direct into the work diary and job sheets will be

prepared. These include prompts which will help us ensure that we meet customer

expectations, by asking questions

• Quotes will be logged for 1 morning and 1 evening per week and weekends

• Customer records will be entered into our MYOB customer card

• Follow up from casual bookings will be carried out regularly to maximise sales

potential

• Regular customers will be randomly surveyed to check – customer satisfaction

Fax/Email Service

We have prepared a fax sheet which will be given to business clients, so they can fax us

a request for a service or quote or email us.

Price lists

Refer to sample in the attachments.

Credit terms

Sales will be on a cash only basis for casual customers

All householder account customers will given 7 days and business will be given monthly

accounts

Credit terms will be clearly stated on the quote or job confirmation form

Suppliers

Most of our supplies can be purchased locally from :

Busy Bee Agencies Phone Scott Jones 4933 5566

� Cleaning products

� Disposable gloves, rubbish bags

Handy Hardware Ltd Phone John Toad 4339 5566

� Materials eg paint, timber etc

Trade creditors will be paid in 30 days and sundry creditors will be cash or 7 day

accounts.

Office Systems

� The accounting system will be managed using MYOB

� The accruals method will be used

� Creditors accounts will be filed in cheque number order

� Sales will be reconciled monthly

� Cash disbursements and petty cash will be reconciled monthly


Page 15

5 FINANCIAL PLAN

5.1 Financial Summary

Key features of the financial plan include :

� cash flow projection

� personal worth

� establishment costs

� costing of products and services

� budgets

� net profit

According to our budgeting analysis we need to borrow approximately $5,000 to set up

the business. This has already been organised with the NAB using a bank overdraft

facility. A letter of confirmation is attached.

Business Advisers:

National Australia Bank – local BEST TOWN Branch, manager – George Smith

Accountants - J P Green and Associates – Adviser Andrew Green

Legal Advice – Stuart Black of Black and Co

5.2 Establishment Costs and Sources of Funds Table 1

Particulars Cost Source of Funds

Toyota Hilux (1995) 11,000 Owners

Plant & Equipment (refer 4.3.1) 15,700 Owners

Stock 500 Owners

2000 quality A4 full colour brochures 600 Owners

Licences and fees (refer 4.1) 900 NAB loan (see confirmation

letter)

Promotional costs 1,250 NAB loan (see confirmation

letter)

Uniforms 320 Owners

Working capital 3000 NAB loan (see confirmation

letter)

Total $ 33,270


Page 16

5.3 Personal Financial Statements

5.3.1 Personal Assets and Liabilities Table 2

Assets $ Liabilities $

Cash 1,200 Bills unpaid 230

Value of home 305,400 Mortgage on home 200,100

Household Furniture 40,000 Balance of loans 4,000

Personal Belongings

(including sports, hobbies)

15,000 • Hire Purchase

• Car Loan

0

Motor Vehicle – Magna 9,000 Credit Cards 800

Other Real Estate 0 Store Credit Cards 0

Surrender Value of

Insurance Policies-

12,000 Leases 0

Other assets – boat &

caravan

7,000 Other liabilities 0

Total $ 389,600 Total $ 205,130

Net Assets $184,470

5.3.2 Personal Budget (Monthly Expenses) Table 3

Personal Income $

NEIS Allowance 1,350

Family Allowance 1,100

Other (eg. casual work) 1,200

Total $3,650

Personal Expenses $

House Loan Payments/Rent 620

Rates 100

Home Maintenance 100

Insurances (home, health) 160

Car (not business) fuel, repairs, regn, ins 180

Telephone 60

Electricity 65

Food 1000

Clothing 150

School and education 180

Entertainment & gifts 250

Misc 200

Savings 300

Total Expenses $3,365

Net Income/(Drawings) $ 285


Page 17

5.4 Costing and Pricing Table 4

Direct costs have been researched. Gross Profit exceeds 90% on all services. The average

markup is 6.3 times costs (total mark up 210.80 divided by total costs 33.20 = 6.34).

Product/Service Direct Costs Costs Sale Price MarkUp

$

MarkUp/

Costs

Gross

Profit$

Gross

Profit(%)

Regular Cleaning Cleaning materials

Gloves

Disposable bags

Total costs

1.80

.80

.60

3.20

38.00

34.80

11

34.80

92%

Major Casual Cleaning Cleaning materials

Gloves

Disposable bags

Total costs

3.20

.80

1.20

5.20

45.00

39.80

8

39.8

88%

Regular Ground Maint Sprays

Disposable bags

Council fees

Total costs

.2.80

.90

5.00

8.70

42.00

33.30

4

33.30

79%

Major Ground Maint

(perhr)

Materials

Sprays

Disposable bags

Council fees

Total costs

3.00

2.80

.90

5.00

11.70

42.00

30.30

3

30.30

72%

Small Repairs & Maint

(perhr+materials)

Replacements 2.00 42.00 40.00 20 42.00 95%

Window Cleaning

(perhr)

Sprays

Cleaning materials

Gloves

Disposable bags

Total costs

1.20

.90

.20

.10

2.40

35.00

32.60

14

32.60

93%

5.5 Sales Forecasts Table 5

Sales projections have been based on market research results (survey of the local

market, existing operator in another town, the economic outlook for the industry in the

state, IBIS report and industry benchmarks) which confirmed :

� That there are 5780 businesses and 3400 double income households in the area

� Existing operator (in another town) trades at about $ 110,000 annually – regular

customer base of 120; average hourly rate of $23

� Monthly sales variations are based on seasonal factors

A sales growth rate of 40 % has been budgeted for year two. Considering this will be a

new business in year 1 and that our focus on customer service will develop into repeat

business, this assumption would appear reasonable.

Trading Summary

Trading Summary 1stYear 2ndYear

Gross Sales $37,196 $64,857

COGS 4,160 7,948

Gross Profit $33,036 $56,909

Gross Profit $32,615 $64,865


Page 18

Break-even sales per month

FinancialAnalysis THEHOMESERVICESWORKSHOP

Year1 Year2

Total income $33,815 $58,961

Direct costs $3,781 $7,225

Gross Profit $30,033 $51,735

Gross Profit% 89% 88%

Other expenses $13,603 $14,955

Net profit $12,816 $28,689

Breakeven sales per year $21,588 $61,695

Breakeven sales per month $1,799 $5,141

5.6 Cash Flow Forecasts Table 6

Assumptions

� A bank overdraft of $ 5,000 has been approved

� The overdraft draw down will average $ 3,600 per month

� Repayments of $ 265 per month including 11% interest

� Credit terms will be met – regular households - payment in 7 days, casual – cash

Regular business customers – payment in 30 days; casual business customers – cash

Contract jobs – by arrangement

� Trade Creditors are paid in 30 days

� Sundry Creditors are paid in 7 – 14 days

� Initial stock required - $500

� Startup costs have been accurately budgeted at $ 33,000

� Plant & Equipment costs have been accurately budgeted at - $ 27,000

5.7 Projected Profit and Loss Statement Table 7

Overheads vary slightly from industry benchmarks but have been investigated

thoroughly for the location of this business.

Overhead Calculations

Accountancy Fees -

The fee of $ 840 will cover advice and information from our accountant. This will also

cover GST and PAYG implementation.

Advertising -

A total of $ 1,800 has been allowed in the first year of operation refer section 3.3.4.

Bank Charges -

The amount of $180 will cover account keeping fees and overdraft fees as advised by

our bank.

Depreciation -

The amount of $ 3,300 has been provided by our accountant as an estimate only.

Electricity -

The amount of $ 300 represents 15% of the gross household electricity account which

will cover home office expenses.


Page 19

Insurance -

Comprehensive Business insurance - $ 560 per year as per quote from Sear and

Associates, refer 4.1.

Legal Fees -

The amount of $200 was verbally quoted by our solicitor for legal opinion on - invoice

terms and conditions and general matters relating to the establishment of the business.

Motor Vehicle Expenses -

A total of $ 3,970 has been allowed for in motor vehicle expenses which will cover

registration, insurance and running costs not directly associated with a job.

Telephone/Fax/Internet -

It is estimated that the amount of $ 1,790 will cover the mobile phone, office phone and

facsimile machine over the first 12 months.

Printing and Stationery -

The amount of $ 300 includes postage, stationery, letterheads (also used for invoices)

Repairs and Maintenance and Replacements -

An allocation for repairs and maintenance has been included in direct costs. A budget of

$1,970 has been allowed for equipment repairs and replacements.

Sundries -

$1,400 has been allocated to allow for incidental expenses not covered in other

budgets.

Freight, cartage and postage expenses -

The amount of $100 has been allowed to cover costs associated with trade shows.

5.8 Contingency Plans

The major threats to business success are –

• Accident or illness

• Major economic downturn resulting in high unemployment

To minimise the impact of these risks we have accident and health insurance. We also

have the support of 3 teenage children who are capable of helping if necessary as a

short-term solution. Our extended families are also a source of support if the situation

arose.

Although we have no control over the economy we will constantly be looking at other

services that can bee added to the range of services, for example carpet cleaning. We

believe that in regional and rural areas it is vital to have a wide range of services as we

are targeting a small population area.

In addition we will be using strict budgetary control through our Quickbooks system to

manage our monthly cashflow and to review costs and pricing to ensure we achieve our

target income. We also intend to be in a positive cash position at the end of 12 months

and will not have to rely on an overdraft.


Page 20

APPENDIX

1. Table 5 Sales Projections Years 1 and 2

2. Table 6 Cashflow Forecast Years 1 and 2

3. Table 7 Projected Profit and Loss Years 1 and 2

4. NAB confirmation of loan

5. Letter from landlord

6. Business name registration

7. Insurance quote

8. Work experience resumes

9. Promotional samples (flyer, business card)

10. Research Information -

• Survey questions

• Statistics and reports

• Magazine articles


Page 21

SalesForecast(YEAR1)incGST THEHOMESERVICESWORKSHOP

Month

1 2 3 4 5 6 7 8 9 10 11 12 YEAR

MonthName Mar-2010

Apr-2010

May-2010

Jun-2010

Jul-2010 Aug-2010

Sep-2010

Oct-2010

Nov-2010

Dec-2010

Jan-2011

Feb-2011 TOTAL

RegularCleaning(perhr) 8 10 15 15 15 20 20 20 28 28 5 18 202

UnitPrice $38.00 304 380 570 570 570 760 760 760 1,064 1,064 190 684 $7,676

UnitCost $3.20 26 32 48 48 48 64 64 64 90 90 16 58 $646

GrossProfit $34.80 278 348 522 522 522 696 696 696 974 974 174 626 $7,030

MajorCasualCleaning(phr) 4 8 12 12 12 16 16 20 20 22 8 16 166

UnitPrice $45.00 180 360 540 540 540 720 720 900 900 990 360 720 $7,470

UnitCost $5.20 21 42 62 62 62 83 83 104 104 114 42 83 $863

GrossProfit $39.80 159 318 478 478 478 637 637 796 796 876 318 637 $6,607

RegularGroundMaint(phr) 3 5 8 12 12 12 16 16 16 18 5 10 133

UnitPrice $42.00 126 210 336 504 504 504 672 672 672 756 210 420 $5,586

UnitCost $8.70 26 44 70 104 104 104 139 139 139 157 44 87 $1,157

GrossProfit $33.30 100 167 266 400 400 400 533 533 533 599 167 333 $4,429

MajorGroundMaint(perhr) - 1 2 3 4 6 6 8 8 10 4 12 64

UnitPrice $42.00 - 42 84 126 168 252 252 336 336 420 168 504 $2,688

UnitCost $11.70 - 12 23 35 47 70 70 94 94 117 47 140 $749

GrossProfit $30.30 - 30 61 91 121 182 182 242 242 303 121 364 $1,939

SmallRepairs&Maint(ph) 6 8 15 20 25 25 25 25 25 25 4 25 228

UnitPrice $42.00 252 336 630 840 1,050 1,050 1,050 1,050 1,050 1,050 168 1,050 $9,576

UnitCost $2.00 12 16 30 40 50 50 50 50 50 50 8 50 $456

GrossProfit $40.00 240 320 600 800 1,000 1,000 1,000 1,000 1,000 1,000 160 1,000 $9,120

WindowCleaning(ph) 4 7 7 7 10 10 10 15 15 15 5 15 120

UnitPrice $35.00 140 245 245 245 350 350 350 525 525 525 175 525 $4,200

UnitCost $2.40 10 17 17 17 24 24 24 36 36 36 12 36 $288

GrossProfit $32.60 130 228 228 228 326 326 326 489 489 489 163 489 $3,912

TotalUnits 25 39 59 69 78 89 93 104 112 118 31 96 913

TotalSales $1,002 $1,573 $2,405 $2,825 $3,182 $3,636 $3,804 $4,243 $4,547 $4,805 $1,271 $3,903 $37,196

TotalofDirectCosts $94 $162 $250 $307 $336 $396 $431 $487 $512 $564 $168 $454 $4,160

GrossProfit $908 $1,411 $2,155 $2,518 $2,846 $3,240 $3,373 $3,756 $4,035 $4,241 $1,103 $3,449 $33,037


Page 22

CashFlow-Year1 THEHOMESERVICESWORKSHOP Mar-

2010 Apr-2010

May-2010

Jun-2010

Jul-2010

Aug-2010

Sep-2010

Oct-2010

Nov-2010

Dec-2010

Jan-2011

Feb-2011 TOTAL

CASHINFLOW

Sales 1,002 1,573 2,405 2,825 3,182 3,636 3,804 4,243 4,547 4,805 1,271 3,903 37,196

Loans 5,000 - - - - - - - - - - - 5,000

OwnersFunds 2,000 - - - - - - - - - - - 2,000

TotalCashInflow(A) 8,002 1,573 2,405 2,825 3,182 3,636 3,804 4,243 4,547 4,805 1,271 3,903 44,196

CASHOUTFLOW-ExpensesattractingGST

Materials(Directcosts) 94 162 250 307 336 396 431 487 512 564 168 454 4,160

AccountingFees 70 70 70 70 70 70 70 70 70 70 70 70 840

Advertising&Promotion 150 150 150 150 150 150 150 150 150 150 150 150 1,800

Cartage,Freight,Postage

100 100 100 100 100 100 100 100 100 100 100 1,100

Electricity&Gas

75

75

75

75 300

Insurance 560

560

LegalFees 200

200

MotorVehicleExpenses 180 220 240 680 260 280 280 710 280 280 280 280 3,970

OfficeSupplies 25 25 25 25 25 25 25 25 25 25 25 25 300

Repairs&Replacements 50 80 120 120 180 180 180 180 220 220 220 220 1,970

Telephone 80 120 120 120 120 160 160 160 160 180 180 180 1,740

Licenses&Fees 180

180

PurchaseofFixedAssets

500

600

- - 500 1,600

OtherOverheadExpenses - 100 100 100 100 100 150 150 150 150 150 150 1,400

CASHOUTFLOW-ExpensesNOTattractingGST

BankCharges 15 15 15 15 15 15 15 15 15 15 15 15 180

BankInterest 35 35 35 35 35 35 35 35 35 35 35 35 420

Drawings(byOwners)

-

LoanRepayments 265 265 265 265 265 265 265 265 265 265 265 2,656 5,571

TaxPayments(QtlyPAYG) (128) 98 220 120 357 409 321 431 550 602 (25) 329 3,283

GSTPayments(Qtrly) - (53) - - 214 - - 509 - - 735 - 1,405

TotalOutflow(B) 1,776 1,387 1,785 2,606 2,227 2,260 2,781 3,287 2,607 2,656 2,367 5,239 30,978

OPENINGBALANCE 600 6,826 7,013 7,633 7,851 8,806 10,183 11,205 12,161 14,101 16,250 15,154 600

NETCASHFLOW(C) 6,226 186 620 219 955 1,376 1,023 956 1,940 2,149 (1,096) (1,336) 13,218

CASHBALANCE 6,826 7,013 7,633 7,851 8,806 10,183 11,205 12,161 14,101 16,250 15,154 13,818 13,818


Page 23

Profit&LossStatement(Year1)

THEHOMESERVICESWORKSHOP Month

Mar-2010

Apr-2010 May-2010 Jun-2010 Jul-2010 Aug-2010 Sep-2010 Oct-2010 Nov-2010 Dec-2010 Jan-2011 Feb-2011 Totals

Income

Sales 911 1,430 2,186 2,568 2,893 3,305 3,458 3,857 4,134 4,368 1,155 3,548 33,815

TotalIncome 911 1,430 2,186 2,568 2,893 3,305 3,458 3,857 4,134 4,368 1,155 3,548 33,815

COGS

DirectCosts 86 147 227 279 305 360 391 443 466 512 153 413 3,781

GrossProfit 825 1,283 1,959 2,289 2,588 2,946 3,067 3,415 3,668 3,856 1,003 3,135 30,033

Expenses

AccountingFees 64 64 64 64 64 64 64 64 64 64 64 64 764


BankCharges 14 14 14 14 14 14 14 14 14 14 14 14 164

BankInterest 32 32 32 32 32 32 32 32 32 32 32 32 382

Cartage,Freight,Postage - 91 91 91 91 91 91 91 91 91 91 91 1,000

Electricity&Gas - - 68 - - 68 - - 68 - - 68 273

Insurance 509 - - - - - - - - - - - 509

LegalFees 182 - - - - - - - - - - - 182


OfficeSupplies 23 23 23 23 23 23 23 23 23 23 23 23 273


Telephone 73 109 109 109 109 145 145 145 145 164 164 164 1,582

Licenses&Fees 164 - - - - - - - - - - - 164

OtherOheadExpenses - 91 91 91 91 91 136 136 136 136 136 136 1,273

TotalExpenses 1,405 832 955 1,286 959 1,082 1,059 1,450 1,164 1,114 1,114 1,182 13,600

ProfitBeforeTax (579) 451 1,004 1,003 1,629 1,864 2,008 1,965 2,504 2,742 (111) 1,953 16,433

LessTax (127) 99 221 221 358 410 442 432 551 603 (24) 430 3,615

NetProfitAfterTax (452) 352 783 782 1,270 1,454 1,566 1,532 1,953 2,139 (86) 1,524 12,818


Page 24

SalesForecast(Year2)incGST THEHOMESERVICESWORKSHOP

Month

1 2 3 4 5 6 7 8 9 10 11 12 YEAR

MonthName

Mar-2011

Apr-2011

May-2011

Jun-2011

Jul-2011

Aug-2011

Sep-2011

Oct-2011

Nov-2011

Dec-2011

Jan-2012

Feb-2012

TOTAL

RegularCleaning(ph) 20 20 25 25 30 30 31 31 30 30 10 20 302

UnitPrice $38.00 760 766 950 958 1,140 1,150 1,159 1,169 1,140 1,140 380 760 $11,472

UnitCost $3.20 64 65 80 81 96 97 98 98 96 96 32 64 $966

GrossProfit $34.80 696 702 870 877 1,044 1,053 1,061 1,070 1,044 1,044 348 696 $10,506

MajorCasualCleaning(ph) 15 15 15 20 20 20 20 25 25 25 5 20 225

UnitPrice $45.00 675 675 675 900 900 900 900 1,125 1,125 1,125 225 900 $10,125

UnitCost $5.20 78 78 78 104 104 104 104 130 130 130 26 104 $1,170

GrossProfit $39.80 597 597 597 796 796 796 796 995 995 995 199 796 $8,955

RegularGroundMaint(ph) 15 15 15 25 25 30 30 35 35 35 5 20 285

UnitPrice $42.00 630 630 630 1,050 1,050 1,260 1,260 1,470 1,470 1,470 210 840 $11,970

UnitCost $8.70 131 131 131 218 218 261 261 305 305 305 44 174 $2,480

GrossProfit $33.30 500 500 500 833 833 999 999 1,166 1,166 1,166 167 666 $9,491

MajorGroundMaint(ph) 10 10 10 10 10 15 15 20 25 25 - 15 165

UnitPrice $42.00 420 420 420 420 420 630 630 840 1,050 1,050 - 630 $6,930

UnitCost $11.70 117 117 117 117 117 176 176 234 293 293 - 176 $1,931

GrossProfit $30.30 303 303 303 303 303 455 455 606 758 758 - 455 $5,000

SmallRepairs&Maint(ph) 25 25 25 25 25 30 30 30 35 35 - 20 305

UnitPrice $42.00 1,050 1,050 1,050 1,050 1,050 1,260 1,260 1,260 1,470 1,470 - 840 $12,810

UnitCost $2.00 50 50 50 50 50 60 60 60 70 70 - 40 $610

GrossProfit $40.00 1,000 1,000 1,000 1,000 1,000 1,200 1,200 1,200 1,400 1,400 - 800 $12,200

WindowCleaning(ph) 25 25 30 30 30 30 30 35 35 35 - 25 330

UnitPrice $35.00 875 875 1,050 1,050 1,050 1,050 1,050 1,225 1,225 1,225 - 875 $11,550

UnitCost $2.40 60 60 72 72 72 72 72 84 84 84 - 60 $792

GrossProfit $32.60 815 815 978 978 978 978 978 1,141 1,141 1,141 - 815 $10,758

TotalUnits

110 110 120 135 140 155 156 176 185 185 20 120 1612

TotalSales

$4,410 $4,416 $4,775 $5,428 $5,610 $6,250 $6,259 $7,089 $7,480 $7,480 $815 $4,845 $64,857

TotalofDirectCosts $500 $500 $528 $641 $657 $769 $770 $911 $977 $977 $102 $618 $7,948

GrossProfit $3,911 $3,916 $4,248 $4,787 $4,954 $5,480 $5,489 $6,178 $6,503 $6,503 $714 $4,228 $56,909


Page 25

CashFlow-Year2 THEHOMESERVICESWORKSHOP YEAR2CASHFLOW Mar-

2011 Apr-2011

May-2011

Jun-2011

Jul-2011

Aug-2011

Sep-2011

Oct-2011

Nov-2011

Dec-2011

Jan-2012

Feb-2012

TOTAL

CASHINFLOW

SalesincGST 4,410 4,416 4,775 5,428 5,610 6,250 6,259 7,089 7,480 7,480 815 4,845 64,857

TotalCashInflow(A) 4,410 4,416 4,775 5,428 5,610 6,250 6,259 7,089 7,480 7,480 815 4,845 64,857

CASHOUTFLOW

Materials(Directcosts) 500 500 528 641 657 769 770 911 977 977 102 618 7,948

AccountingFees 75 75 75 75 75 75 75 75 75 75 75 75 900


Cartage,Freight,Postage 110 110 110 110 110 110 110 110 110 110 110 110 1,320

Electricity&Gas - - 90 - - 90 - - 90 - - 90 360

Insurance 65 65 65 65 65 65 65 65 65 65 65 65 780


OfficeSupplies 50 50 50 50 50 50 50 50 50 50 50 50 600


Telephone 150 150 150 150 180 180 180 180 180 180 150 150 1,980

Licenses&Fees 210 - - - - - - - - - - - 210

PurchaseofFixedAssets - - 300 300 - - 300 300 - - - - 1,200

OtherOverheadExpenses 120 120 120 120 120 120 120 120 120 120 120 120 1,440

CASHOUTFLOW-ExpensesNOTattractingGST

BankCharges 18 18 18 18 18 18 18 18 18 18 18 18 216

BankInterest 35 35 35 35 36 36 36 36 36 36 36 36 429

Drawings(byOwners) 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000

LoanRepayments 265 265 265 265 265 265 265 265 265 265 265 265 3,180

TaxPayments(QtlyPAYG) 500 544 532 598 745 832 707 930 1,037 925 (97) 588 7,839

GSTPayments(Qtrly) - 381 - - 776 - - 1,054 - - 1,330 - 3,542

TotalOutflow(B) 5,668 5,882 5,908 6,297 6,666 6,180 6,691 7,684 6,593 7,041 5,794 5,754 76,159

OPENINGBALANCE 13,818 12,560 11,094 9,961 9,092 8,035 8,104 7,673 7,077 7,965 8,404 3,425 13,818

NETCASHFLOW(C) (1,258) (1,466) (1,133) (869) (1,056) 69 (432) (595) 887 439 (4,979) (909) (11,302)

CASHBALANCE 12,560 11,094 9,961 9,092 8,035 8,104 7,673 7,077 7,965 8,404 3,425 2,515 2,515


Page 26

Profit&LossStatement(Year2)

THEHOMESERVICESWORKSHOP Month Mar-2011 Apr2011 May-2011 Jun-2011 Jul-2011 Aug2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011 Jan-2012 Feb-2012 Totals

Income

SalesincGST 4,009 4,015 4,341 4,934 5,100 5,681 5,690 6,444 6,800 6,800 741 4,405 58,961

OtherIncome - - - - - - - - - - - - -

TotalIncome 4,009 4,015 4,341 4,934 5,100 5,681 5,690 6,444 6,800 6,800 741 4,405 58,961

COGS

DirectCosts 454 455 480 583 597 699 700 828 888 888 92 561 7,225

GrossProfit 3,555 3,560 3,861 4,352 4,503 4,982 4,990 5,616 5,912 5,912 649 3,843 51,735

Expenses(Fixedcosts)

AccountingFees 68 68 68 68 68 68 68 68 68 68 68 68 818


BankCharges 16 16 16 16 16 16 16 16 16 16 16 16 196

BankInterest 32 32 32 32 32 32 33 33 33 33 33 33 390

Cartage,Freight,Postage 100 100 100 100 100 100 100 100 100 100 100 100 1,200

Electricity&Gas - - 82 - - 82 - - 82 - - 82 327

Insurance 59 59 59 59 59 59 59 59 59 59 59 59 709


OfficeSupplies 45 45 45 45 45 45 45 45 45 45 45 45 545


Telephone 136 136 136 136 164 164 164 164 164 164 136 136 1,800

OtherOverheadExpenses 109 109 109 109 109 109 109 109 109 109 109 109 1,309

TotalExpenses 1,276 1,085 1,167 1,358 1,112 1,194 1,499 1,113 1,195 1,704 1,086 1,168 14,955

ProfitBeforeTax 2,279 2,476 2,695 2,994 3,391 3,788 3,491 4,504 4,717 4,208 (437) 2,676 36,780

LessTax 501 545 593 659 746 833 768 991 1,038 926 (96) 589 8,092

Net Profit After Tax 1,778 1,931 2,102 2,335 2,645 2,954 2,723 3,513 3,679 3,282 (341) 2,087 28,689


Page 27

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