Marketing Plan for Ultimate Choice Tours and Travel Ltd - Case Study Example

Ultimate Choice Tours and Travel Ltd 1.0 Executive Summary The tours and travel sector has experienced unrivaled expansion in the recent past. The growth is associated with the fact that the world has been transformed into a global village hence increasing information dissemination about various travel destinations around the world. Ultimate Choice Tours and Travel Limited is in the process of entering the lucrative market in the travel industry in order to take advantage of the increasing number of travelers/tourists touring Australia. There exists an opportunity for our succeeding in the industry as it is rapidly expanding each year. Ultimate Travel aims at harnessing the opportunity provided by the rapid expansion as well as the limited competition in the travel sector of this industry, with a devoted and knowledgeable workforce, exceptional networking, and efficient management as well as marketing. The company will offer travel and escapade packages in Sydney but also in the entire Australia. Initially our services will comprise of pre-arranged visits routine packaged to suit customer’s expectations, and tour consultation. However, we will eventually offer lodging reservations and other similar services. We seek to distinguish ourselves by becoming the ultimate tour and travel service provider in the entire Australia. We will offer exceptionally high class, comfortable, edifying services customary designed towards meeting the customer’s needs, which will result to high level of customer loyalty. We intend to reach our customers through traditional marketing communication channels and the internet. By this, we will avail the right information on time to our target customers. We will put in place a market incursion strategy aimed at ensuring our being known and valued in the tourism sector. As such, we will employ a competitive pricing strategy while maintaining a margin of 10% on all sales. Our differentiating point and hence competitive advantage will be achieved by ensuring that clients learn and appreciate the natural world via enlightening briefings regarding objects genesis as opposed to just taking them on sightseeing excursions. We intend to achieve sales revenue of $ 500,000 by the time the third year comes to an end. Table of Contents Ultimate Choice Tours and Travel Ltd 1 1.0 Executive Summary 1 2.0 Introduction 4 2.1 Mission and Vision 5 2.2 Strengths and core competencies: 5 3.0 Market Analysis 5 3.1 Market Segmentation 6 3.2 Target Market Segment Strategy 7 3.3 Market Needs 7 3.4 Market Trends 8 3.5 Service Business Analysis 8 3.6 Distributing the Service 8 3.7 Competition and Buying Patterns 9 3.8 Main Competitors 10 4.0 Operation 11 4.1 Operations structure 12 4.2 Premises 13 4.3 Hours of operations 13 4.4 Staffing 13 4.5 Web site plan 14 5.0 Financial Plan 15 Initially, we have estimated that the company will undergo sluggish growth in its first quarters of operations. This is partially associated with the fact that we are a new company (startup-company) as well as other factors, which are seasonal. In addition, we have based our income estimates partly on the anticipated revenues from accounts that we managed to secure before we departed from our former employers .furthermore, it is good to note that we have acquired sufficient cash which will help us endure the negative cash flow situation that we are likely to encounter during our initial stages of operations (William,2001). The company also anticipates that our gross margin and sales volume will eventually increase. Therefore, the financial projections that we present gives a conservative but sensible portrayal of ultimate tours and travel limited’s financial position Ultimate tours and travel services limited’s Financial plan is detailed as shown by the below sections.. 15 5.1 Important assumptions 15 5.2 Key Financial Indicators 16 5.3 Profitability analysis 17 5.4 Break-even Analysis 18 5.5 Projected profit and loss 19 5.6 Projected Cash Flow 21 5.7 Projected Balance Sheet 23 5.8 Business Ratios 24 6.0 Conclusion 25 References: 27 Appendix 28 2.0 Introduction The proposed name of the travel agent shall be Ultimate choice tours and travel services. The name has been chosen due to the following reasons; 1. It is easy to read and remember, it also sounds business like, and customers may therefore feel proud to be associated with the company. The name is also unique as no other company is currently using it. This will easily distinguish us from our competitors and given the level of services, we intend to provide, this is likely to become a household name among travelers (Peterson,2006). 2. We intend to provide high-class travel services to our customers and provide new services that are not currently being provided by the current service providers. Therefore we see our company eventually becoming the ultimate choice for travelers and hence the choice of the name ultimate choice travel and tour services. 3. It can be translated into many languages and since we intend to provide travel services not only in Australia but also internationally in the end, we found the name being appropriate (Pinson, 2004). Ultimate tours and travel services limited will be situated in Sydney’s Central Business District’s George Street. Its directors are Chris Charleston, Jane Atkinson and Ibrahim Raj in Sydney. Ultimate Choice tours and travel limited commences operations in 2012 with an aim of providing tours and travel services to tourists as well as high profile domestic clients. 2.1 Mission and Vision Vision: To provide high quality tours and travel services to our clients. Mission: To become a market leader in the travel business of the larger tours and travel industry by providing quality services which surpass our client’s expectations. 2.2 Strengths and core competencies: Offering low cost services as compared to our competitors. Employing highly skilled personnel for management of the firm. All the directors are professionals in various fields, which give the company a competitive edge over our competitors. 3.0 Market Analysis The tourism industry is today undergoing a rapid expansion of unrivaled nature resulting from the easening of foreign exchange policy and macroeconomic policy aimed at reviving the industry. In addition, sound economic policies by the government have resulted in economic growth, which has greatly boosted the travel industry performance. For instance, the present drive by the federal government about moving away from agricultural based economy to a diversified one gives an opportunity to Ultimate Tours and travel to give an important contribution in helping achieve the goal. An all-inclusive market research reveals that a gap exists in the industry and hence the need for Travel business that will focus on offering leisure tours to tourists in the high profile and international travelers segments. Although other travel companies have been in operation for a long time, there exists a market need for a company that provides luxurious travel and adventure to tourists. Moreover, considering that Australia has a great number of tourist attractions, the tourism industry has become an important part of the economy and is destined to become the greatest foreign exchange earner for the country. We appreciate the fact that success in the industry calls for excellent networking. The company therefore plans on instituting networks as well as tactical cooperations with different hotels, cottages as well as travel agents to guarantee a sustained stream of customers. We however seek to maintain our clients through provision of high quality and comfortable services. This, we believe will enable us achieve our initial target of market share of 8% mainly targeting on the entire Sydney and Melbourne (Eric, 2003). For us to achieve this, we intend to we aim at implementing an aggressive selling strategy, that will be well aided by the other functions of the business. 3.1 Market Segmentation Ultimate Tours will focus on high profile clients as well as international travelers who seek leisure tours and outings when on holiday in Australia, with an aim of helping them discover the many attractions and appreciate the rich Australian culture. Although most of our travelers originate from within Australia, we will mainly target those from America and Europe for they often lack transport and sufficient information about Australia. In this regard, we shall target those wanting to know as numerous sites as they can and have a lot to spend (Janet, 2010). We will therefore competently sell ourselves as well as the services we offer by offering a service of unrivaled nature. 3.2 Target Market Segment Strategy Our strategy will be that of availing the precise services to the target clients. As such, we aim at ensuring that our pricing considers our customers budgets while ensuring that the clients know that we exist, appreciate the services that we offer, and are able to get us whenever they want. Every picture, promotion and publication strategy we employ will have to convey a source of quality to the target client. The company realizes the need of focusing our marketing messages to our service quality. We therefore have to come up with good message, communicate it appropriately and make good on it. It is with the aim of effectively and efficiently tapping our target customers that we established strategic alliance with other organizations such as travel agents, cottages and hotels.. 3.3 Market Needs Despite the sector having undergone rapid expansion within the last decade, most firms entering the trade have always forgotten Sydney and Melbourne. It is with this consideration that we aim at exploiting the unexploited market in these areas by providing our clients with a superior service and hence achieve our business goals (Jeffrey, 2003). We appreciate the fact that our target market calls for more than just showing the tourists areas of interest but more so informing them about their importance as well as origins . it is for this reason that we will not just provide services but we will offer services of unmatched nature relative to the market. 3.4 Market Trends Despite the main uncertainties bedeviling the sector, it is certain that tourism is here to stay. However, the question is on how big the sector will become and whether it will be able to sustain if not exceed the current growth rate. It is however clear that despite how big the market eventually will be, we believe that travel will be part and parcel of this market sector. Tourism data give a dependable guide concerning the extent of the market. Research indicates that tourism arrivals for the year 2010 totaled 1,351,798 in Sydney which was an increase of about 12.65% from that of 2009.of this, 205,146 (15.2%) were vacation tourists while 319,440 (23, 6%) were high profile visitors, both groups of which make our target market which total 524,586 persons. 3.5 Service Business Analysis Australia has many tourist attraction sites. Furthermore, the tourism industry has become a vital player in the economy and has the potential to become the major Australian foreign exchange earner. Bearing this in mind, we aim at playing a major role in developing the sector through offering impeccable service facilities primarily tailored towards tourists. 3.6 Distributing the Service We appreciate the fact that operations like ultimate tours are marketed mainly through mouth to mouth as well as referrals with tactical cooperations and prior experience playing a vital role. In this regard, we will establish relations with various cottages, hotels, and travel agencies who often serve our target clients. Invariably the experience our customers will have with us will greatly influence them in making decisions on whether to refer others for our services. We will therefore provide a lavish, comfortable and treasured service to our customers which will serve to compel them to on a good word about us. Meanwhile, we will get connection to the Web and market ourselves on the Internet. This will also help our potential clients make bookings online, hence saving on time and cost. Furthermore, Web presence will help us widen our customer base thus increasing their numbers. 3.7 Competition and Buying Patterns The main element that will influence our customers’ loyalty is the reputation and reliability of the firm (Shaper, Volery and Lewis, 2011). This will largely depend on the quality of services and places of excursion we offer to our clients especially taking in mind the diverse needs of different clients in their bid to see as many places as they can. Due to the nature of our services, we will charge prices based on the distance travelled since different clients choose to s tour different sites at differing periods. It’s a common practice in out line of operation for customers to directly compare different travel companies usually having two or more companies from which to make choice. However, they mostly rely on word of mouth/ referral from travel agencies, cottages, hotels and government agencies as well as other related entities. 3.8 Main Competitors Ultimate tours have researched on our competitors some who are already established while others are still at their initial stages of establishment. As such, we will market ourselves in such a way that clients will prefer our services to those of the competitors (Juliet, 2007). The following is a more systematic comparison of our major competitors as well as their strengths and weak points: 3.8.1 Premier adventurers limited: it has its head office the second floor of the Travellers’ Hotel -South Melbourne, the firm offers tailor-made tour services throughout Melbourne and her adjacent states. The firm provides Mobile Wilderness expeditions, vacation Adventures, single day explorations as well as expedition operators. Of fastidious concern to Ultimate tours are the day time adventures around Melbourne which it provides to Traveler’s Hotel guests. Research shows that the firm is the sole company providing daytime adventure within Melbourne. 3.8.2 Capital Travelers: it is one of the highly valued companies in the line we intend to venture. The company has a fleet of nine buses that includes three semi-luxury Volvo train-buses, three semi-luxuries B7 Volvo, a Mercedes Benz and a DAF bus. Their Volvo buses have radio facilities while the train buses have toilet facilities. The company is has been in operation for the last fifteen years and is owned by Mr Klein and his wife. His sons are also helping them achieve what they aimed at achieving when they first conceived the idea of providing a nationwide travel service revered for its reliability and efficiency. The company has recently launched new imported double Decker luxury bus services in their bid to provide unrivaled service to their customers. 3.8.3 Central Melbourne tours and travel limited: Similar to Capital Travelers, the company is highly valued in the industry and has very many buses. The company offers local as well as international trips in addition to offering transport to a number of towns every day. The company however does not have marketing edge and focus on foreign tourists which i9s what we intend to have. The above analysis shows that most of our competitors offer safari expeditions. This therefore presents us with an opportunity that we have to realize. 4.0 Operation Chris Charleston will act as the managing director. However, Ultimate tours being a small company, its workers will be allocated most of the duties as well as making of decisions. As such, we will hire highly qualified personnel who can participate in all business aspect. All our workers will be required to posses five years experience in the industry, acquaintance and aptitude in the all the activities we will endorse, and Certified Travel Counselor (CTC) certificate for the available positions. The CTC qualification has to be got from the Institute of Certified Travel Agents (ICTA). 4.1 Operations structure Ultimate travel will commence operating with 3 senior posts which are explained below: 4.1.1 Managing director: Chris Charleston aged 48 has a degree in sales and Marketing from Melbourne University. Charleston has worked for sixteen years in the industry with ten years being spent as the manager for Premier travel agency, Sydney branch. As the manager at Premier, Charleston increased sales by $2.5 million and was able to establish the adventure travel division; the division generated $400000 in revenue. He has also worked for four years in the united states in adventure sports, prokaying tour and two years as a sponsored cross-country mountain bike racer, he also spent 25 years surfing ,, three years of which he was an amateur competitor he has also participated in other adventure and organized sports including snowboarding, track and field and beach volleyball. 4.1.2 Marketing and Advertising Director: Jane Atkinson aged 35 has a B.S in management, Sydney University. Jane has over ten years experience as an adventure travel and is a marketer dealing with adventure sports. She also has rich mountaineering experience having summitted three 8,000-meter peaks, such as she is also an avid climber and has been skiing sine she was five. 4.1.3 Accountant: Ibrahim Raj aged 40 has a degree in Accounting from the University of Monash. Ibrahim is an accountant from Melbourne. He has been an auditor for the State of Melbourne for five years and four more years in a non profit masking organization before he went back to further his education. Before he went back to school, he was a was a commercial sport angler in Sydney where he established relations with many service providers in Sydney..Ultimate travel will take advantage of these relations since Sydney is a key destination for tourists. 4.2 Premises Ultimate tours and travel intends to use 240000 dollars to rent 15000 square meters of fully serviced space for our head office and the branch offices as well as internal refurbishing and acquisition office furniture. 4.3 Hours of operations We intend to operate every day of the week for 24 hours. This is intended to respond to customers requirements regardless of the time they place their orders. This will also boost the company sales. 4.4 Staffing Apart from the management staff, we intend to employ highly qualified staff who will also be trained in customer care to ensure they offer quality service to our customers (Dennis,2008). We intend to employ the following members of staff in the course of the year. -sales agents and phone representatives -Tour guides. -order fulfillment agents The firm intends to offer free training on customer care to the members of staff as well as occasional refresher courses in order to ensure quality service to our customers. This way, we are sure to be the travel tour service provider of choice for the tourists and other travelers The following table shows the predicted employee numbers during the first year as well as annual budget for the 1st three years. Its worthwhile noting that ultimate travel does not foresee the urgency to increase workers during the first three years of operation. Personnel plan First year Second year Third year Managing director $6000 $6240 $6490 accountant $13200 $13720 $14270 Travel agents and tour guides $35000 $36000 $37000 Marketing and advertising dir $13800 $13800 $13800 Total people 15 15 15 Total payroll $68000 $69760 $71560 4.5 Web site plan The company intends to establish a website that will be used as the basis of disseminating information and the mechanism of email communication. We intend to introduce the website to our customers immediately the website is in place. Although we do not expect the customers to adopt the system immediately, we are optimistic that with time, they will find it more convenient than other traditional means and hence adopt it (John, 2005). Consequently, we will be hiring a collage graduate who has majored in information technology to design, complete and maintain the website. This is aimed at minimizing costs, maximizing sales as well as ensuring quick responses to customers. 5.0 Financial Plan Initially, we have estimated that the company will undergo sluggish growth in its first quarters of operations. This is partially associated with the fact that we are a new company (startup-company) as well as other factors, which are seasonal. In addition, we have based our income estimates partly on the anticipated revenues from accounts that we managed to secure before we departed from our former employers .furthermore, it is good to note that we have acquired sufficient cash which will help us endure the negative cash flow situation that we are likely to encounter during our initial stages of operations (William,2001). The company also anticipates that our gross margin and sales volume will eventually increase. Therefore, the financial projections that we present gives a conservative but sensible portrayal of ultimate tours and travel limited’s financial position Ultimate tours and travel services limited’s Financial plan is detailed as shown by the below sections.. 5.1 Important assumptions In coming up with our financial plan, we have made the following assumptions; -that national growth expectations for the tourism sector are accurate. -that economic conditions favorable to the travel sector will not decline in the short run. -that international conditions remain favorable in the short run for travel companies and service providers and the company will be able to keep these relationships General Assumptions Year 1 Year 2 Year 3 Plan month 1 2 3 Current interest rate 10.00% 10.00% 10.00% Long-term interest rate 10.00% 10.00% 10.00% Tax rate 25.00% 25.00% 25.00% other nil nil nil 5.2 Key Financial Indicators In the chart below key financial indicators are indicated for the first years of operations. The company projects growth in revenue with comparatively steady costs of operation. Favorable economic growth in the industry supports our planned financial success. 5.3 Profitability analysis As earlier indicated, our company will mainly deal with provision of travel services to high profile customers as well as domestic and international tourists. We have further segmented our project into three categories i.e. domestic tourists, those from Europe and America as well as those coming from South Africa. In our opinion, our clients from Europe and America are expected to be the most profitable segment of our project (Jack, 2010). This is because traditionally they arrive in large numbers and have always been seen as people who are willing to spend. Their currency is also competitive internationally and the adverse climatic changes in these countries encourage tourism. We have analyzed the three segments in terms of numbers and the revenue expected from each segment for the first year in the table below. Domestic clients South African clients Europe and America clients Totals Expected arrivals in numbers 2700 1300 4000 8000 Expected sales in dollars 184000 100000 300000 534000 Expected profitability 3740 2000 8000 13740 Based on the above figures, we will mainly target clients from Europe and America since we expect to rip maximum profits from them. However, we will still market ourselves to the other segments as they have potential to significantly boost our earnings. 5.4 Break-even Analysis In the following table, we detail Ultimate travel's break even analysis. This includes monthly revenue break-even levels. We assume a 10% gross margin in calculating the break even which is a realistic estimate that will improve as we develop strategic relationships and our customers realize the value Ultimate travel’s offerings. Break even analysis Monthly revenue break even $33,902 assumptions Average percent variable cost 78% Estimated monthly cost of operation $7375 5.5 Projected profit and loss We anticipate that Ultimate travel's profit scenario will improve as we continue operating to the third quarter of our first year (Edward, 2005). Ultimate tours foresee its gross margin improving from 10% in the first to 15% in the second year. The following table shows the Annual projected income . In the table below, we detail Ultimate’s anticipated monthly profits for the first year of operation. Profoma profit and loss Year 1 Year-2 Year 3 sales $534204 $588069 $646878 Direct cost of sales $417993 $452813 $491627 Other costs of sales $0 $0 $0 Total cost of sales $417993 $452813 $491627 Gross margin $116211 $135256 $155251 Gross margin % $21.75% 23.00% 24.00% Expenses $0 $0 $0 payroll $45000 $46248 $247526 Marketing/promotion $26100 $26280 $26280 rent $10500 $10500 $10500 utilities $4500 $4500 $4500 insurance $2400 $2400 $2400 Total operating expenses $88500 $89928 $91226 Profit before interest and taxes $27700 $45328 $64025 Interest expense $8078 $7330 $6550 Taxes incurred $5890 $11399 $17243 Net profit $13743 $26599 $40233 Net profit/ sales 2.57% 4.52% 6.22% 5.6 Projected Cash Flow The following illustration shows the Monthly cash flow. The figures are projected on the basis of a 60-day debt collection period. The first year starts with a negative cash flow that turns positive midstream. Profoma cash flow statement 1st year 2nd year 3rd year Cash received Cash from operations Cash sales $400653 $441052 $485159 Cash from receivables $100048 $143639 $158031 Sub total-cash receivable $500701 $584691 $643190 expenditures Expenditures from operations Cash spending $45000 $46248 $47546 Bills payments $415328 $533008 $555493 Long-term liabilities-principle repayments $7800 $7800 $7800 Sub total cash spent $468128 $587056 $610839 Net cash flow $32574 $(2365) $32351 Cash balance $67574 $65208 $97559 5.7 Projected Balance Sheet This shows steady and planned growth. In year two, we expect net worth to improve considerably and provide ultimate travel with a considerably strong financial position. Net worth improves considerably in year two and will provide ATI with a strong financial position. Year 1 Year 2 Year 3 assets cash $67574 $65208 $97559 Accounts receivables $33503 $36881 $40569 Other current assets $17500 $17500 $17500 Total current assets $118576 $119589 $155628 Long term assets Long term assts $26925 $26925 $26925 Total long term assets $26925 $26925 $26925 Total assets $145501 $146514 $182553 Liabilities and capital Current liabilities Accounts payable $60133 $42347 $45953 Long term liabilities $77200 $69400 $61600 Total liabilities $137333 $111747 $107553 Paid in capital $18000 $18000 $18000 Retained earnings $(23575) $(9832) $(16767) earnings $13743 $26599 $40233 Total capital $8168 $34767 $40233 Total liabilities and capital $145501 $146514 $182553 Net worth $8168 $34767 $75000 5.8 Business Ratios Our primary business ratios are detailed in the table below. Our initial analysis show that our profitability ratios , risk ratios and return ratios are favorable and are expected to greatly improve in the second year . Ratio analysis Year 1 Year-2 Year3 industry average Sales growth 0% 10.08% 10.00% 4.00% Percent of total assets Accounts receivable 23.03% 25.17% 22.22% 25.20% Other current assets 12.03% 11.94% 9.59% 38.805 Total current assets 81.50% 81.62% 85 % 64 % Long term assets 18% 18% 14% 36% Total assets 100.00% 100.00% 100.00% 100.00% Current liabilities 41.% 28.% 26% 40% Long term liabilities 53.06% 47.37% 33.74% 16% Total liabilities 94.39% 76.27% 58.92% 56% Net worth 5.61% 23.73% 41.08% 44% sales 100.00% 100.00% 100.00% 100.00% Gross margin 21% 23% 24.% 38.30% Selling, general& adm expenses 19% 18% 17% 27.50% Profit before interest and taxes 5% 8% 9.% 1.30% Main ratios Current ratio 1.97 2 3 1.5 Total debt to total assets 94% 76% 59% 55.90% Net profit margin 3% 5% 6% 7% Return on equity 168 76% 54% 49% Collection days 56 87 87 87 Total asset turnover 3.7 4 3.5 3.3 Interest coverage 3.4 6.2 10 7 6.0 Conclusion Ultimate choice tours and travel services therefore has potential to be among the key market leaders. It intends to expand its operations to other parts of Sydney after the three years of operation. This will help it maximize revenue as well minimize risk. The future growth prospects are high for Ultimate limited due to the ever-increasing growth in the tourism industry. `Although ultimate limited may experience problems such competition, inability to experience economies of scale and limited capital outlay among others, we expect the firm to perform quite well. The strategic alliances formed between Ultimate choice tours and travel and the various hotels as well as other companies will enable it to have strong competitive advantage over its competitors. This will also enable the firm to survive the expected fall in the economic growth in the country. Ultimate efforts to combine internet technology with its experienced staff will enhance higher sales. This will also result to limited operating expenses as well as a ready market in Sydney. The government support such as tax holidays as well as the subsidies it offers will also support the growth of the firm. The experts employed in the firm will also support its professionalism as well as good customer relations. Ultimate choice tours and travel services will therefore be able to achieve its both short term and long-term goals in the projected period or even earlier if the proposed plan is implemented. The firm also expects to take any corrective action if there is any variance in the implementation of the proposed plan as compared to the actual performance. References: Pinson, L, 2004, Anatomy of a Business Plan, Dearborn Trade, Chicago. Eric, S, 2003, The Ernst & Young Business Plan Guide, John Wiley and Sons, New York. John, M 2005, Entrepreneurial Skills, Rutledge, London. Shaper, M, Volery, T, Weber, P & Lewis K 2011, Entrepreneurship and small business, 3rd ed., John Wiley & Sons, Milton. Peterson,D,2006, Business plans for learners, macmillan, Melbourne. Janet, B, 2010, Business plans hand book, Rutledge, London. Jeffrey,A, 2003,Writing business plans that work, Longman publishers, Sydney. Julliet,K, 2007, How to write a successiful business plan, Prenticehouse, Sydney. Dennis, K, 2008, The entrepreneurs guide to writing business plans and proposals, John Wiley and Sons, New York William,J,2001, Start up: an entrepreneurs guide to launching and managing a new business, macmillan, Melbourne. Jack, M2010, Leading edge business planning for entrepreneurs, Light House publishers, Chicago. Edward,B, 2005, How to prepare a business plan, Rutledge, London. Appendix SALES FORECAST JAN 2012 FEB 2012 MAR 2012 APR 2012 MAY 2012 JUN 2012 JUL 2012 AUG 2012 SEP 2012 OCT 2012 NOV 2012 DEC 2012 Melbourne 20000 22000 24200 26620 29282 32210 35431 38974 42872 47159 51875 57062 National 2000 2200 2420 2662 2928 3221 3543 3897 4287 4716 5188 5706 Internet 500 550 605 666 732 805 886 974 1072 1179 1297 1427 Corporate 2500 2750 3025 3328 3660 4026 4026 4872 5359 5895 6484 7133 Total sales 25000 27500 30250 33276 36602 40262 43886 48717 53590 58949 64844 71328 Direct cost of sales JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Melbourne 15600 17160 18876 20764 22840 25124 27636 30400 33440 36784 40463 44508 National 1560 1716 1888 2076 2824 2512 2764 3040 3344 3678 4047 4451 Internet 390 429 472 519 571 628 691 836 836 920 1012 1113 Corporate 1950 2145 2360 2596 2855 3140 3455 4180 4180 4598 5058 5564 Subtotal direct cost of sales 19500 21450 23596 25955 29090 31404 34546 38546 41800 45980 50580 55636 PROFOMA PROFIT AND LOSS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Sales 2500 27500 30250 33276 36602 40262 43886 48717 53590 58949 64844 71328 Direct cost of sales 19500 21450 23596 25955 20090 31404 34546 38456 41800 45980 50580 55636 Other costs 0 0 0 0 0 0 0 0 0 0 0 0 Total cost of sales 19500 21450 23596 25955 29090 31404 34546 38456 41800 45980 50580 55636 Gross margin 5500 6050 6654 7321 7512 8858 9340 10261 11790 12969 14264 15962 Gross margin% 22 22 22 22 20.52 22 21.28 21.06 22 22 22 22 Expenses Payroll 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 Marketing 2175 2175 2175 2175 2175 2175 2175 2175 2175 2175 2175 2175 Depreciation Rent 875 875 875 875 875 875 875 875 875 875 875 875 Utilities 375 375 375 375 375 375 375 375 375 375 375 375 Insurance 200 200 200 200 200 200 200 200 200 200 200 200 Total operating expenses 7375 7375 7375 7375 7375 7375 7375 7375 7375 7375 7375 7375 Profit before interest and tax (1875) (1325) (721) (54) 137 1483 1965 2886 4415 5594 6889 8317 EBITDA (1875) (1325) (721) (54) 137 1483 1965 2886 4415 5594 6889 8317 Interest Expense 703 698 692 687 681 676 670 665 660 654 649 643 Taxes incurred (773) (607) (424) (222) (163) 242 388 666 1127 1482 1872 2302 Net profit (1805) (1416) (989) (518) (381) 565 906 1555 2629 3458 4368 5372 Net profit/sales -7.22 -5.15 -3.27 -1.56 -1.04 1.40 2.06 3.19 4.91 5.87 6.74 7.53 PROFOMA CASHFLOW JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC CASH RECEIVED Cash sales 18750 20625 22688 24957 27452 30197 32915 36538 40193 44212 48633 53496 Cash from receivables 0 208 6271 6898 7588 8347 9181 10096 11012 12220 13442 14786 Total cash from operations 18750 20833 28958 31855 35039 38543 42096 46633 51204 56432 62075 68282 Total cash received 18750 20833 28958 31855 35039 38543 42096 46633 51204 56432 62075 68282 Cash spending 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 Bill payments 768 23125 25243 27574 30151 33323 36056 39369 43539 47362 51907 56909 Subtotal spending on operations 4518 26875 28993 31324 33901 37073 39806 43119 47289 51112 55657 60659 Loan repayment 650 650 650 650 650 650 650 650 650 650 650 650 Subtotal cash spent 5168 27525 29643 31974 34551 37723 40456 43769 47939 51762 56307 60309 Net cash flow 13582 (6692) (685) (119) 488 820 1639 2864 3265 4669 5768 6974 Cash balance 48582 41890 41205 41086 41574 42394 44033 46897 50163 54832 60600 67574 Pro forma balance sheet JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current assets Cash 48582 41890 41205 41086 41574 42394 44033 46897 50163 54832 60600 67574 Accounts receivable 6250 12917 14208 15629 17192 18911 20701 22785 25171 27688 30457 33503 Others 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 Total current assets 72332 72307 72913 74215 76266 78805 82234 87182 92833 100020 108557 118576 Long term assets 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 Total long-term assets 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 26925 Total assets 99257 99232 99838 101140 103191 105730 109159 114107 119758 126945 135482 1455011 Accounts payable 22286 24327 26573 29043 32125 34749 37922 41965 45638 50016 54835 60133 Subtotal current liabilities 22286 24327 26573 29043 32125 34749 37922 41965 45638 50016 54835 60133 Longterm liabilities 84350 83700 83050 82400 81750 81100 80450 79800 79150 78500 77850 77200 Total liabilities 106636 108027 109623 111443 113875 115849 118372 121765 124788 128516 132685 137333 Paid in capital 12379 13795 14785 15303 15684 11473 14927 19269 23618 28754 34752 41350 Retained earnings (5000) (5000) (5000) (5000) (5000) (5000) (5000) (5000) (5000) (5000) (5000) (5000 Total capital 99257 99232 99838 101140 103191 105730 109159 114107 119758 126945 135482 1455011 Total liabilities and capital 106636 108027 109623 111443 113875 99257 99232 99838 101140 103191 105730 109159 net worth 99257 99232 99838 101140 103191 105730 109159 114107 119758 126945 135482 1455011 Read More