Beruflich Dokumente
Kultur Dokumente
Business Plan
ALF Development
702-102-1231
123 Anywhere
Columbus, OH
Confidentiality Agreement
The undersigned reader of ALF Developments Business Plan hereby acknowledges that the information
provided is completely confidential and therefore the reader agrees not to disclose anything found in the
business plan without the express written consent of ALF Development.
It is also acknowledged by the reader that the information to be furnished in this business plan is in all aspects
confidential in nature, other than information that is in the public domain through other means and that any
disclosure or use of the same by the reader may cause serious harm and or damage to ALF Development.
Upon request this business plan document will be immediately returned to ALF Development.
__________________________________________________
Signature
__________________________________________________
Printed Name
ALF is a real estate development company in the forefront of meeting demand in the senior
healthcare area through buildings that exceed expectations and empower operators to
fulfill their mission in excellent environments.
Appendix............................................................................................................................. 32
The following business plan outlines the five year growth strategy that pairs ALF Developments expertise
in the real estate industry, with the growing need for dedicated senior living in the area. It details the
problems the company solves in the market, and the projected financial performance based on its current
business model.
Project Summary
ALF Development is exploring a 17 acre parcel in Oak Creek, Wisconsin with a focus on serving
Southeastern Wisconsin including Milwaukee and the surrounding county. The company plans to design
and construct a total of four buildings in two phases. Phase One will consist of two buildings leased to a
registered facility for independent retirement living purposes. The units will include x, y, z amenities.
Phase Two will consist of an additional two buildings operated by a registered facility to offer memory
care CBRF assisted living, including patients with Alzheimers, dementia and related ailments. This will
create a Retirement Community servicing a wide-range of the elderly and retiring population with both
independent living needs and assisted care.
Market Summary
The Retirement Communities industry provides residential and personal care services for the elderly and
other individuals who are unable to fully care for themselves or who desire to live in a community facility.
The Retirement Communities industry is forecast to exhibit accelerated growth in the next two decades.
An aging population and growing need for dementia care are stimulating much of the industry's growth.
Retirement communities provide many services to assist seniors that suffer from chronic illnesses or with
activities of daily living. In the past five years, the number of assisted living facilities that provide dementia
care has risen as a proportion of total facilities. While the industry exhibited resistance to the economic
downturn, the poor housing market hampered individuals' ability to move into a community because
many seniors finance the expenses of retirement communities through selling their houses. However,
since bottoming out, occupancy rates have been on the rise across the industry, benefiting from the
associated rise in housing prices that began in 2012. As a result, industry revenue is expected to grow at
an annualized rate of 3.5% to $66.3 billion, including a projected 4.7% jump in 2017.
Industry profit margins benefited from slow growth in new senior housing starts early in the five-year
period, which increased occupancy levels across existing facilities. Higher occupancy rates were able to
buoy the industry's profit margins as high as 11.7% of revenue in 2012. However, as the number of
industry establishments has risen more rapidly in the later part of the period, profit margins have fallen.
In addition, profitability has been pressured by the costs associated with regulation compliance, which
In the five years to 2022, a growing economy, an aging population, healthcare reform and new services
will facilitate industry growth. IBISWorld estimates industry revenue is projected to grow at an annualized
rate of 4.2% to $81.3 billion by 2022. As the housing market grows, more seniors will be able to sell their
homes and pay resident fees. However, despite increased financing for the construction market, risk
associated with bank-line renewal and the lower liquidity that many operators are experiencing will likely
cause them to depend on real estate investment trusts to supply new industry facilities. Over the five
years to 2022, the number of industry establishments is projected to rise at an average annual rate of
3.3% to 54,286 locations to meet demands of an aging population.
Purchase land for development in the Milwaukee area (has site been identified?)
Develop two apartment-style buildings suited for independent retirement living within the first 6
months.
Develop two additional buildings dedicated to memory care to be leased to a registered facility.
Full capacity estimated at 6 months for each development phase.
Keys to Success
Being familiar with local tastes and preferences: Meeting the residential care needs of the local
population changes with each region. Companies must adapt their services and accommodations
to attract nearby residents by making them feel at home.
Ability to attract local support/patronage: Ability to attract local support/patronage: Many
residents prefer to move to facilities that are located in their current cities to stay in proximity to
family and friends.
Ability to provide a broad spectrum of care: Continuing care retirement communities are growing
in popularity. Such facilities enable operators to meet a range of customers' needs. More
individuals are choosing to move to facilities where they can stay for the remainder of their lives.
Financing Summary
Strong growth in the aging population and an increase in the incidence of progressive illnesses, such as
Alzheimer's disease, will drive demand for services. Over the 10 years to 2022, IBISWorld estimates that
the number of individuals aged 65 and older will increase at an annualized rate of 3.2% to 55.6 million.
Social factors, such as an increase in people living alone and a reduction in the level of assistance families
provide to the elderly, are also expected to boost demand.
In the next five years, a growing economy, an aging population, favorable healthcare reform legislation
and new service offerings will support this growth.
With occupancy levels still below their 2007 peak, revenue and profit have the potential to grow as the
economy continues to expand. As occupancy rises, more aggressive increases in pricing will magnify this
effect, helping profit margins grow. In addition, the housing market is projected to regain some strength
as a result of the improving economic climate. IBISWorld forecasts that housing prices will continue to
grow in the next five years as demand improves in conjunction with higher income growth and shrinking
unemployment. However, this pace of recovery is vulnerable to the Federal Reserves interest rate
policies, which directly determine mortgage rates and, in turn, the affordability of homes.
In the five years to 2022, healthcare reform will become a more pertinent topic as the government faces
steeper budget deficits. Medicare and Medicaid reimbursement for senior care is expected to suffer,
which may deter many individuals from entering retirement communities. Pension obligations and a
decline in real estate tax revenue will lead to tax increases, particularly in the form of increased local real
estate taxes. Higher taxes are projected to cause more operators to sell real estate assets and lease more
facilities.
Many Americans have been delaying their retirement, which is expected to persist throughout the next
two decades. Today, people have longer life spans and improved health, enabling them to extend their
work lives. Additionally, people have decided to remain in the workforce for longer periods, as their
savings accounts and pensions suffered during the recession.
Over the next five years, credit concerns will remain low. Long-term borrowing costs are forecast to
increase as the yield on treasury bills trends upward through 2022, although they will remain well below
historical norms. This trend may hamper the industry as the cost of borrowing money for constructing
new facilities rises. While financing for new construction is projected to become more available over the
next five years, the risk associated with bank-line renewal and the lower liquidity experienced by many
operators will likely cause them to depend on real estate investment trusts to supply new industry
facilities. Consequently, real estate investment trusts (REITs) are projected to own more assets in the
industry as operators realize the difficulty of managing and owning industry properties. The four largest
publicly-listed US healthcare REITs that invest in diverse assets, such as senior-living facilities, medical
offices, skilled-nursing facilities and hospitals, are looking to purchase more of these properties to tap into
industry growth. Despite the changing supply model, industry growth will spur new industry construction;
according to data from the National Investment Center for the Seniors Housing and Care Industry (NIC),
the number of new senior housing starts surpassed prerecession levels in 2013. Over the five years to
2022, IBISWorld projects industry establishments to rise at an annualized rate of 3.3% to 54,286 locations.
Market Needs
Demand for industry services is driven by the growth in the 65-and-older population and aging generation
of baby boomers. IBISWorld estimates that in the five years to 2017, the number of adults aged 65 and
older will increase at an annualized rate of 3.1% to 47.3 million. The largest market segment in the industry
is elderly people who live alone, particularly those who have no children. According to the National Center
for Assisted Living (NCAL), the average age of residents in assisted living facilities is nearly 87 years. Also,
the number of people aged 85 and older increased across all states during the 10 years to 2022.
More than three-quarters of residents in industry facilities are female, reflecting the overall demographics
in the United States, where women are the majority in the older population. More specifically, women
represent nearly 70.0% of the population aged 85 and over. Although women outnumber men in the older
ages, men continue to increase at a faster rate than women. Among five-year age groups, men between
Based on Census Data 2006-2010 and the 2011-2015 American Community Survey 5-Year estimates,
Milwaukee County has a population of 955,939 residents out of which 11.9% are 65 years and over. The
Wisconsin Department of Health Services a growth in this segment of the population of 5.9% through
2040.
Demand Determinants
Growth in the aging population and the generation of retiring baby boomers are driving demand for industry
services. According to the National Center for Assisted Living, the average age of residents in assisted living
facilities is 87 years. As people age, they become frailer and more inclined to suffer from chronic illnesses,
including memory loss, heart disease, diabetes, colon cancer and high blood pressure. In addition, aging
negatively affects a person's functional abilities, such as sight, hearing, muscle strength and coordination,
exposing older people to significant risks of injuries. Consequently, older adults or their families consider
moving into retirement communities, where they can receive assistance with activities of daily living, including
bathing, dressing, toileting and eating. As a result of the aging demographic trend, demand for services
provided by retirement communities is expected to stay strong in future years.
The decision to move into a retirement or assisted living community is influenced by an individual's ability to
pay for the services. Since most seniors who consider moving into a facility are retired, their wealth is
influenced by their assets. The state of the US economy and the housing market has a significant impact on
industry occupancy rates. A drop in home prices has both a psychological and financial impact on seniors, often
causing them to delay their decision to move. The inability or unwillingness of seniors to sell their homes in a
The cost of services is, in some markets, influenced by the extent of insurance coverage and government
assistance. According to the US Health and Human Services Department, assisted living facilities for the elderly
make up a largely private-pay sector; most residents cover the costs out-of-pocket or use private insurance. A
private room in an assisted living facility costs, on average, less than two-thirds of an equivalent room in a
nursing home. However, there is less reimbursement available compared with a nursing home, so most
residents pay out-of-pocket. Medicaid, which is now available in about 40 states, only covers partial costs. High-
service or high-privacy assisted living facilities are largely unaffordable for most moderate and low income
older people unless they spend down their assets or receive help from relatives. An increase in the availability
of insurance that covers long-term care could promote industry activity.
The decision to enter an assisted living community often depends on the individual's need for assistance and
the available alternatives in the market. According to the US Census Bureau, 16.0% of the population aged 75
to 79 requires assistance with the activities of daily life. This percentage increases considerably to 30.0% for
those aged 80 and over.
Over the past 20 years, assisted living has proved to be an alternative to institutionalized care for many seniors.
While many seniors are able to live out their lives in assisted living without moving to a nursing home, this is
not always possible. Most states still require a person to move to a nursing home or other institution if their
needs increase significantly. As a result, assisted living communities make admission and retention
determinations based on state regulations, as well as their own ability to meet a given resident's particular
needs without compromising the ability to care for other residents.
Demographics have been a fundamental driver for growth in retirement communities. The increasing age of
people living in the US encouraged operators to expand geographically and offer additional services. Advances
in nutrition and medical science have resulted in an increased life expectancy and, consequently, a growing
number of older residents. Many seniors are living longer, more active lives and delaying retirement to
accumulate more wealth to provide for their needs after exiting the workforce. As a result, these individuals
Demand for industry services is driven by the growth in the 65-and-older population and aging generation of
baby boomers. IBISWorld estimates that in the five years to 2017, the number of adults aged 65 and older will
increase at an annualized rate of 3.1% to 47.3 million. The largest market segment in the industry is elderly
people who live alone, particularly those who have no children.
More than three-quarters of residents in industry facilities are female, reflecting the overall demographics in
the United States, where women are the majority in the older population. More specifically, women represent
nearly 70.0% of the population aged 85 and over. Although women outnumber men in the older ages, men
continue to increase at a faster rate than women. Among five-year age groups, men between 90 and 94
experienced the fastest growth rate (50.3%), while women between 65 and 69 increased the fastest (28.2%).
Most seniors move to assisted living because of health reasons or because they have a need for assistance or
are unable to live alone, according to the Assisted Living Federation of America (ALFA). The need for assistance
increases with age, rising from 20.9% of the 75 to 84 years of age population to 50.2% of the 85 years of age
population. Moderately disabled seniors need assistance with one to two activities of daily living (ADLs), while
severely disabled seniors need assistance with two or more activities. The average assisted living resident
needs assistance with 1.6 ADLs according to the ALFA.
Many retirement communities provide services to seniors with physical and behavioral issues, including care
for the individuals coping with Alzheimer's disease and dementia. Although Alzheimer's disease develops
differently for every individual, most often it is diagnosed in people aged 65 and older. As the disease
progresses, these individuals begin experiencing problems with language and long-term memory loss and,
therefore, require special assistance in daily tasks, such as feeding themselves.
Financial profile
The resident profile varies by geographic region. For instance, a notable difference between the metropolitan
and nonmetropolitan assisted living resident concerns financial status. The average annual pretax income of
residents overall is about $29,000, and residents' average assets are worth $160,000. However, the pretax
income and average asset figures for metropolitan residents are $31,000 and $182,000, respectively, compared
with $27,700 and $133,600, respectively, for nonmetropolitan residents. Additionally, the percentage of
residents with incomes of less than $20,000 is 27.0% overall, but there is a significant difference between
metropolitan and nonmetropolitan numbers for this demographic (22.1% compared with 33.2%).
Residents move to industry facilities from a variety of settings, including their homes or apartments (60.0%);
another retirement or independent living community (12.0%); a family residence, such as living with children
(10.0%); another assisted living facility or group home (9.0%); or a nursing facility (8.0%). Today, many older
Americans want to remain in their current homes and communities as they age; according to the US Census
During the initial development phase, we will target local and regional senior housing and senior living
approved operators to present our development plans and offer the location for much needed services
in the Milwaukee area. Target leaseholders will include large, national name brands such as Brookdale,
Five Star Quality Care and Sunrise Senior Living, as well as well-known mid-size companies with strong
reputations in the market, such as Residential Living Services, Alexian and Wilson Commons amongst
others.
Adrian
Board/Investors
Wilcourt/Legal
John Doe/CEO
Susan Kevin
Miller/COO Jones/CFO
Marketing
Sales Director Accounting
Director
Strengths
Strengths of an assisted living company can come from a well-designed facility. Touches like devoting
more storage space to lower-level drawers and cabinets, or installing lever-style door handles, can meet
the needs of seniors who demand the ability to live as independently as possible. Walk-in closets not only
imply luxury, they make it easier for seniors to examine what they want to wear. Focusing on those
features when conducting a tour reassures adult children that their aging parents will be taken care of,
while also showing the prospective residents that the company has their comfort in mind. In addition,
offering specialized care for those with memory loss, dementia and Alzheimers disease illustrates that
operators will be able to give seniors the services they need as their condition worsens.
Weaknesses
Building assisted living facilities costs money, so access to capital can constrain growth. Expenses such as
liability insurance can be a drain on revenue and keep an assisted living company from being cost-
effective, particularly a small business less able to spread that cost around to a large number of users. A
lack of trained workers also can limit prospects. When a company operates in an area where skilled
workers cannot be found, it may have to pay more to train them or import them from elsewhere. This
increases costs and creates communication barriers that can have a negative impact on the customer
experience. Initial costs will be reduced by ALF Development delivering a finalized product.
Opportunities
Economic forces leave assisted living companies in a strong position. Demand is growing faster than supply, as
the population ages faster than the availability of assisted living facilities are constructed, meaning expansion
doesnt face the same market risk as it does in other industries. In areas where seniors have disposable income
and can afford your services, a well-targeted marketing campaign can increase awareness of what you offer
and its applicability to their own situation, another opportunity for growth. Adding services like an on-site
pharmacy and an extensive array of medical personnel, or allowing senior residents to have a significant voice
in programming events and enriching other aspects of the user experience, can be a differentiator that
demonstrates these operators strive to maintain as independent a lifestyle as possible for their seniors. A
successful initial launch will also create opportunities for geographical expansion for ALF Development.
Threats
Increased regulation can raise the costs associated with an assisted living company, to the point where it may
become a barrier to entry if companies are looking to expand into a different state with a more stringent
regulatory agency. In addition, the desire to ramp up quickly with new facilities can lead to inadequate training
and unprepared workers. An emphasis on cost-cutting can leave a company vulnerable to crippling lawsuits if
it leads to subpar resident care or harsh working conditions. An economic downturn can eliminate a large chunk
of the market, as seniors and their families may re-evaluate the feasibility of lower-cost solutions.
Brookdale Senior Living (Brookdale) is the largest operator of senior living communities in the United States by
total capacity. Headquartered in Tennessee, the company operates 1,123 properties in 47 states, serving more
than 108,000 residents. The top five states, Florida, Texas, California, Ohio and Washington, represent nearly
50.0% of the company's total unit capacity. Brookdale's units offer various types of retirement communities;
most units are for rental independent living, assisted living and dementia. The company also operates
rehabilitation therapy and home health businesses that serve about 62,500 units and 66,000 units,
respectively. Brookdale has about 53,000 full-time employees and 29,000 part-time employees. The company
presently includes the merged companies Alterra, American Retirement, Emeritus Corporation and numerous
other smaller acquisitions.
Brookdale's target independent living residents are senior citizens aged 75 and older; the average resident
stays in these facilities for about 32 months. Brookdale's target assisted living residents are senior citizens aged
80 and older that require assistance with two or three activities of daily living; the average resident resides in
these facilities stay for about 21 months. The company's memory care facilities are specifically designed,
freestanding facilities for residents with Alzheimer's disease and other dementia conditions. Brookdale's
continuing care retirement communities (CCRCs) include a variety of living arrangements and services, with
most of these facilities offering independent living, assisted living and skilled nursing on one campus.
In July 2014, Brookdale completed the acquisition of Emeritus Corporation (Emeritus), which added 493
communities to the company's portfolio. The company's senior housing portfolio is particularly resistant to
economic downturns, compared with many other operators, as almost all of its properties are dedicated to
assisted living and dementia. These services are less discretionary than independent living facilities, making the
company somewhat of a specialist operator in the larger industry. Moreover, the company generated nearly
90.0% of its revenue from private sources, therefore limiting its vulnerability to changes in government
funding. At the time of the acquisition, Emeritus owned 37.0% of its communities and leased 63.0%.
Financial performance
Revenue at Brookdale has consistently increased over the five years to 2017, growing at an annualized rate of
11.6% to $4.8 billion. This growth includes a 32.5% increase in 2014 and a 29.5% rise in 2015, the result of the
company's acquisition of Emeritus' 493 communities specializing in both assisted living and dementia care. In
addition to strong occupancy across Brookdale's facilities, which averaged 88.0% over the past five years, the
company has had success in moving away from government funding over the period. The company generates
an estimated 80.0% of its revenue from private payers and only 20.0% from government funding sources.
While Brookdale managed to generate an operating profit through 2013, the company continues to be
burdened by high interest expenses that hampered overall profitability. In 2014 and 2015, the company
Over the next five years, Brookdale anticipates to achieve revenue growth through the continued expansion of
ancillary services, such as therapy, home health and hospice services, as well as the redevelopment and
repositioning of existing communities. The company also plans to achieve revenue growth through a
combination of occupancy growth and monthly fee increases due to Brookdale's competitive strength and
growing demand for retirement communities. Brookdale's economies of scale will help the company cut costs
related to the procurement of goods and services and increase efficiencies in relation to various corporate
functions.
The Retirement Communities industry is highly fragmented and characterized by numerous local and regional
operators. According to data from the US Census Bureaus Service Annual Survey, nonprofit operators account
for 42.0% of industry revenue, but account for only 20.0% of total facilities in the United States. Although the
industry is fragmented, there are several players that are relatively large and influence smaller participants.
Five Star Quality Care operates independent and assisted living facilities, as well as skilled-nursing homes. The
company owns, leases and operates 274 senior living communities, with more than 31,400 units in 32 states.
Most of its facilities are leased from Senior Housing Properties Trust (SNH). The company also owns and
operates an institutional pharmacy business and leases two inpatient rehabilitation hospitals in the Boston
area from SNH.
Over the five years to 2017, Five Stars revenue is expected to grow at an annualized rate of 3.1% to more
than $1.4 billion. The companys growth is attributed to the acquisitions and long-term leases of independent
and assisted living communities where residents private resources account for 77.0% of the companys total
National HealthCare Corporation (NHC), a long-term care provider, offers services to 74 skilled-nursing facilities
with more than 9,400 beds. NHCs affiliates operate 36 homecare programs, five independent living centers
and 18 assisted living communities. Other services include Alzheimers units, long-term care pharmacies,
hospices, a rehabilitation services company and management services to third parties. Over the five years to
2017, the company has invested millions in new construction for skilled-nursing and assisted living facilities. It
also invested $345.0 million to acquire healthcare and skilled-nursing centers and homecare programs. Over
the past five years, NHCs revenue has grown at an estimated annualized rate of 5.0%, reaching $969.9 million
in 2017.
Sunrise Senior Living (Sunrise) operates 315 communities located in the United States, Canada and the United
Kingdom, with an estimated capacity of 26,000 units. The company offers a range of personalized senior living
services, including independent living, assisted living, care for individuals with Alzheimers and other forms of
dementia, nursing and rehabilitative care.
Through 2012, Sunrise performed relatively poorly despite the fact that it operated more needs-driven assisted
living units than Brookdale, as well as more top-tier properties that may be expected to outperform industry
average. Sunrises occupancy suffered from its expensive fees, its uncertain financial position and the
distractions brought on by major financial restructuring and turnover in leadership.
In January 2013, the third-largest healthcare real estate investment trust Health Care REIT completed the
closing of its previously announced acquisition of Sunrise to expand its assisted living communities. The $4.3
billion investment included 120 wholly-owned properties and five joint-venture properties, which generate
high average monthly rental rates due to the high concentration of age and income-qualified seniors. In
September 2012, Health Care REIT also announced its plans to sell Sunrises management business to affiliates
of private equity firms KKR, BPOC and Coastwood for $130.0 million. As a result of the management
partnership, Health Care REIT was able to reduce management fees charged on the wholly owned and joint
venture communities. Consequently, Sunrises performance improved substantially in the latter half of the
current five-year period, with revenue expected to reach more than $863.8 million in 2017.
Marketing Plan
Business Development
Targeted, direct contact with top management at these companies together with presentations on our
vision and design will ensure prompt leaseholder acquisition. The developed buildings together with a
strong operator and current demand will ensure full-capacity within 6 months.
Strategic Partners
Affiliate relationships will be formed with local senior referral service companies, as well as AARP, the
Wisconsin Alzheimers Institute Milwaukee Program, and the Milwaukee County Department on Aging.
Financial Forecasts
Use of Funds
Financial Highlights
Gross Margin/Revenue 72% 73% 73% 73% 73% 73% 72% 72% 72% 71% 71% 71% 72% 71% 71%
EBITDA/Revenue 1% 40% 52% 57% 61% 62% 64% 65% 66% 67% 67% 67% 64% 67% 67%
Net Profit/Revenue -262% -86% -31% -4% 12% 21% 33% 41% 46% 49% 51% 53% 34% 54% 56%
Net Cash Flow (240) (208) (175) (141) (107) (78) (17) 46 108 170 207 270 (165) 3227 3226
Cash Balance - Ending 0 0 0 0 0 0 0 46 153 324 531 801 801 4027 7253
10000 10000
Revenue
8000 8000
4000 4000
EBITDA
2000 2000
Net Profit
0 0
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
Projected Cash Flow By Year ($000) Projected Net Income By Year ($000)
8000 6000
7000
5000
6000 Net Cash Flow
5000 4000
4000 3000
3000
2000
2000 Cash Balance
1000 1000
0 0
(1000) Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
Financial Indicators
Financial Indicators
Year 1 Year 2 Year 3
Profitability %'s:
Gross Margin 72% 71% 71%
Net Profit Margin 34% 54% 56%
EBITDA to Revenue 64% 67% 67%
Return on Assets 9% 27% 24%
Return on Equity 27% 48% 33%
Financial Ratios
7%
6%
5%
4%
3%
2%
1%
0%
Year 1 Year 2 Year 3
Revenue Forecast
Revenue By Year
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Year 1 Year 2 Year 3
Month 11
Month 12
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Expenses
Sales & Marketing 120,000 123,600 123,600
Legal and Professional Fees 60,000 61,800 61,800
Office Expenses 24,000 24,720 24,720
Other SG&A 120,000 123,600 123,600
0 - - -
0 - - -
0 - - -
0 - - -
0 - - -
0 - - -
0 - - -
Total Operating Expenses 324,000 333,720 333,720
Wages & Payroll 27,041 26,611 27,409
Depreciation, Amortization & Taxes 1,319,592 1,204,730 1,060,950
Net Income 1,470,979 4,997,883 5,140,864
Net Income/Revenue 34% 54% 56%
Cash Outflows
Investing Activities
New Fixed Assets Purchases - - -
Inventory Addition to Bal.Sheet - - -
Cost of Sales 1,229,148 2,664,576 2,664,576
Operating Activities
Salaries and Wages 25,836 26,611 27,409
Fixed Business Expenses 324,000 333,720 333,720
Taxes - - -
Financing Activities
Loan Payments 2,881,129 2,881,129 2,881,129
Line of Credit Interest 74,182 94,747 94,747
Line of Credit Repayments - - -
Dividends Paid - - -
Year 1 Cash
1,000,000
600,000
400,000
200,000
-
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Balance
(200,000)
(400,000)
Long-term Assets
Long-term Assets 15,200,000 15,200,000 15,200,000
Accumulated Depreciation 560,000 1,120,000 1,680,000
Total Long-term Assets 14,640,000 14,080,000 13,520,000
Total Assets 15,659,597 18,326,334 22,211,273
Sensitivity Analysis
Revenue
$90,000,000
$80,000,000
Best Case
$70,000,000
$60,000,000
Most Likely
$50,000,000
$40,000,000
$20,000,000
$10,000,000
$-
Year 1 Year 2 Year 3
Break-Even Analysis
Breakeven Analysis
$900,000
$800,000
$700,000
COST-VOLUME-PROFIT
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
100000
150000
200000
250000
300000
350000
400000
450000
500000
550000
600000
650000
700000
750000
800000
0
50000
NET UNITS
Revenue 41,328 88,416 135,504 182,592 229,680 271,008 359,928 448,848 537,768 626,688 680,040 768,960 4,370,760
Subtotal Cost of Revenue 11,534 23,933 36,331 48,730 61,128 72,662 99,338 126,014 152,690 179,366 195,372 222,048 1,229,148
Total Cost of Revenue 11,534 23,933 36,331 48,730 61,128 72,662 99,338 126,014 152,690 179,366 195,372 222,048 1,229,148
Gross Margin 29,794 64,483 99,173 133,862 168,552 198,346 260,590 322,834 385,078 447,322 484,668 546,912 3,141,612
Gross Margin/Revenue 72% 73% 73% 73% 73% 73% 72% 72% 72% 71% 71% 71% 71%
Expenses
Sales & Marketing 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Legal and Professional Fees 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Office Expenses 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Other SG&A 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
0 - - - - - - - - - - - - -
Total Operating Expenses 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 324,000
EBIT 2,794 37,483 72,173 106,862 141,552 171,346 233,590 295,834 358,078 420,322 457,668 519,912 2,817,612
EBIT/Revenue 7% 42% 53% 59% 62% 63% 65% 66% 67% 67% 67% 68% 57%
Cash Received
Revenue
41,328 88,416 135,504 182,592 229,680 271,008 359,928 448,848 537,768 626,688 680,040 768,960
New Current Borrowing
- - - - - - - - - - - -
New Long-Term Liabilities
- - - - - - - - - - - -
Sale of Other Current Assets
- - - - - - - - - - - -
Sale of Long-Term Assets
- - - - - - - - - - - -
New Investment Received
- - - - - - - - - - - -
Subtotal Cash Received
41,328 88,416 135,504 182,592 229,680 271,008 359,928 448,848 537,768 626,688 680,040 768,960
Expenditures