Financial Forecasts
Profit and Loss Forecast: See Attached
Profit and loss forecast explanatory notes
Sales -these figures assume an initial four clients during the first month of trading and then gradually increasing to 20 clients a month by the end of our first year. This will give us an estimated turnover of £16,280.00 in our first year.
Materials - paper, ink and binding are the only materials needed to compile a business plan. We have calculated these to be £15.00 for each 40 page document based on the price list supplied by Stanley Office Supplies. In order to meet our expected turnover, £2,220.00 of materials will be needed to produce our expected 148 business plans within the first year.
Labour - assuming each plan takes an average of six hours to compile, this estimate is equivalent to £5.00 per hour.
Cost of goods sold - it will cost £6,660.00 to produce sufficient business plans to meet our expected turnover of £16,280.00.
Gross profit - based on our enclosed figures we anticipate our annual gross profit will be £9,620.00.
Rent - as we intend to work from home, we will not incur any premises rental charges.
Water rates - we have allowed a 25 per cent contribution from the business towards the total cost of our residential water rates bill.
Electricity & gas - an additional 20 per cent has been added to our previous annual electricity and gas bills to allow for the extra use and then a 25 per cent contribution towards the new cost has been calculated.
Postage & carriage - each plan will cost £3.00 to despatch which includes a 20 per cent contribution towards the cost of sending information to potential clients who decide not to use our services.
Business stationery - this cost is based on the price list supplied by Stanley Office Supplies and includes letterheads, business cards, compliment slips and envelopes.
Repairs & renewals - a £4.00 contribution towards the costs of repairs and renewals has been calculated for each business plan sold.
Insurance (business) - the total annual cost of £120.00 has been estimated based on a home business insurance policy arranged through Connor Associates.
Advertising - this £40.00 monthly advertising cost is based on a £10.00 advertisement being placed in two monthly business magazines and the remaining £20.00 being used for classified advertising in local newspapers.
Telephone - an additional 20 per cent has been added to our previous annual telephone bill to allow for the extra use and then a 25 per cent contribution towards the new cost has been calculated.
Sundries - this cost is represented by tea, coffee, and various business magazines and newspapers.
Professional charges - this £50.00 cost is for our partnership agreement to be drawn up by our solicitor, Paul Whitehead.
Wages (employees) -we will not be in a position to employ anyone during our first year of trading.
Bank 8 interest charges - as we anticipate our account to be in credit we will take advantage of twelve months' free banking currently being offered by the bank.
National lnsurance - our National Insurance contribution will be paid by monthly direct debit.
Depreciation - we anticipate our £500.00 second-hand computer system will be used in the business for two years before being replaced. This represents a monthly depreciation cost of £20.80. Our new printer will remain in use for four years which represents a monthly depreciation cost of £5.20.
Total overheads - our total overheads are estimated at £3,090.00.
Net profit - the above figures indicate that our expected net profit will be £6,530.00.
Interest payable -assuming the bank will advance us £600.00 at 12.9 per cent APR this represents a total monthly repayment charge of £28.50 of which £3.50 is interest.
Profit before tax - our annual profit before tax is calculated at £6,488.00.
Taxation - this total cost of £1,622.00 is calculated at 25 per cent of the profit made by the business.
Retained profit - using the enclosed figures we should complete our first year of trading with a retained profit of £4,866.00.
Cashflow Forecast: See Attached
Cashflow forecast explanatory notes
Sales Receipts - see profit and loss forecast .
Capital Introduced - this £1,000.00 represents our initial investment taken from our personal savings which will remain in the business for the duration of our trading life.
Loans - this figure of £600.00 represents the two year loan we expect to obtain from the bank.
Total receipts - this figure of £17,880.00 is calculated by totalling our sales receipts (£16,280.00), capital introduced (£1000.00) and loans (£600.00).
Materials - see profit and loss forecast.
Salaries - as we will only draw a salary from the business plans actually sold this figure of £4,440.00 is based on the total plans sold during our first year. Although this does not represent a large amount of money, by December we anticipate compiling at least 20 business plans a month which will give us an income of at least £600.00 per month.
Rent - see profit and loss forecast.
Water rates - see profit and loss forecast.
Electricity & gas - see profit and loss forecast.
Postage & carriage - see profit and loss forecast.
Business stationery - see profit and loss forecast.
Repairs & renewals - see profit and loss forecast.
Insurance (business) - see profit and loss forecast.
Advertising - see profit and loss forecast.
Telephone - see profit and loss forecast.
Sundries - see profit and loss forecast.
Capital items - the total cost of £750.00 comprises a second-user computer system at £500.00 and a new inkjet printer at £250.00 which we will need to purchase at the end of December 200X.
Professional charges - see profit and loss forecast.
Wages (employees) - see profit and loss forecast.
Customs & Excise (VAT) - as our expected annual turnover of £16,280.00 is below the £51,000.00 registration limit we will not be registered for VAT during our first year of trading.
National Insurance - see profit and loss forecast.
Bank & interest charges - with free banking for the first year our only interest charges will be £42.00 which represents the interest payable on our £600.00 loan from the bank.
Loan repayments - borrowing £600.00 over two years with 12.9 per cent interest represents a annual repayment of £300.00.
Total payments - we expect our total payments for the first year to be £ 10,153.50.
Net flow - even though our net flow indicates steady financial growth, we will still require a £600.00 loan as a contingency in the event our sales receipts do not meet our expectations or our payments exceed our estimates.
Opening bank balance - this figure simply represents the closing balance from the preceding month of trading.
Closing bank balance - we anticipate completing our first year of trading with a closing bank balance of £7,726.50.
Balance Sheet Forecast: See Attached
Balance sheet explanatory notes
Fixed assets - these include our second-user computer system and our new inkjet printer. The net worth of these assets has been calculated in accordance with the depreciation described in the Profit and loss explanatory notes.
Current assets
Raw materials - as we offer a service as opposed to manufacturing a product, we will not carry any raw materials in stock.
Debtors - as our clients will pay for their business plans in full before being despatched, we will not have any debtors.
Cash in the bank - the amount of money we will have in the bank at any given time is illustrated in our cashflow forecast.
Total current assets - as we neither carry raw materials or have any debtors our total current assets are represented solely by the cash we have in the bank.
Current liabilities
Creditors - we anticipate keeping our creditors to an absolute minimum but we will take advantage of credit given by companies providing items such as materials, business stationery, insurance and advertising. Our National Insurance payments are also listed under creditors as they will be paid monthly in arrears.
Tax liability - this is calculated from the tax due on our business profits as illustrated in the profit and loss forecast.
Overdraft - providing we meet our sales projections and we do not exceed our expected payments, then we do not anticipate the need for an overdraft facility.
Total liabilities - as we will not have an overdraft, our total liabilities will be represented by the total of our creditors and tax liability which we estimate to be £ 1,998.50.
Net current assets - we have calculated the difference between our Total current assets and our Total liabilities to be £5,728.00 at our year end.
Financed by
Capital introduced - this will remain at £1,000.00; see our cashflow forecast for further information.
Bank loans - having repaid £300.00 of our £600.00 loan at £25.00 per month during our first year of trading, we will be left with the balance of £ 300.00 remaining at the end of our first year.
Retained profit - this will be £4,866.00; see our profit and loss forecast for further information.
Total capital - at the end of our first year of trading we anticipate having accumulated £6,166.00 in total capital/net assets.
