Wi-Fi Kiosks Business Plan

Stroll Net

This business plan was created with Business Plan Pro software, the fastest way to prepare a complete business plan.

With Business Plan Pro, you can open this plan (or any of the 500 others included in the product) and quickly customise it to match your business. Or you can use the software's step-by-step wisard to easily create a custom business plan from scratch. Learn more »

Financial Plan

7.0 Financial Plan

Sales: Stroll Net is basing their projected Internet usage sales on the financial snapshot information provided to them by Supplier One, Inc. Internet usage was estimated by calculating the average number of minutes each customer will spend accessing the Internet and then generating a conservative estimate as to how many transactions will be made per day.

Cost of Goods Sold: The cost of goods sold was determined by the "retail profit analysis" we obtained from Supplier One, Inc. The cost of prepaid calling cards is 20% of the selling price. The cost of Internet access is £50 per month, paid to Supplier Two for networking fees. The cost of terminal placement is 20% of total internet access sales.

Salaries Expense: The founders of Stroll Net, Cam Piotr and Bob Green, will receive a salary of £24,000 in year one, £26,400 in year two, and £29,040 in year three.

Payroll Expense: Stroll Net intends to hire eight full-time employees at £10.00/hour and a full-time technician at £12.00/hour. The total cost of employing nine people at these rates for the first year is £14,720/month.

Rent Expense: Stroll Net is looking to purchase a 2200 square foot facility at £104.74/sq. foot.

Utilities Expense: Stroll Net is responsible for the payment of utilities including electric, water and garbage disposal. The basic monthly service charge for utilities expense will be £168.04. The phone bill will generated by five phone lines; one will be dedicated to a modem and four for business purposes. The basic monthly service charge for each line provided by Bellsouth is £59.95/month. Therefore, the total cost associated with the five phone lines is estimated at £299.75/month.

Marketing Expense: Stroll Net will allocate £50,000 for promotional expenses at the time of start-up. These pounds will be used for advertising on television, radio, the Internet and the local newspapers in order to build consumer awareness. For additional information, please refer to section 5.0 of the business plan.

Insurance Expense: Stroll Net has allocated £1,500 for insurance for the first year. As revenue increases in the second and third year of business, Stroll Net intends to invest more money for additional insurance coverage.

Legal and Consulting Fees: The cost of obtaining legal consultation in order to draw up the paper work necessary for client contracts is £1,500.

Depreciation: In depreciating our capital equipment, we used the Modified Accelerated Cost Recovery Method. We depreciated our terminals over a three-year time period.

Taxes: Stroll Net is an LLC and, as an entity, it is not taxed. However, there is a 10% payroll burden.

7.1 Important Assumptions

Basic assumptions are presented in the table below.

General Assumptions

General Assumptions
	2005	2006	2007
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	11.50%	10.00%	10.00%
Tax Rate	25.00%	25.00%	25.42%
Other	0	0	0

7.2 Break-even Analysis

Break-even data is presented in the chart and table below. With estimated monthly operating expenses at approximately £37,400, including everything from payroll to rent and insurance to maintenance of the kiosks, and average direct costs at roughly 90¢ for every £7.46 of sales, we reach break-even at approximately 5,700 sales per month. We project reaching the break-even point in the seventh month.

Break-even Analysis



Break-even Analysis

Break-even Analysis
Monthly Units Break-even	5,707
Monthly Revenue Break-even	£42,599
Assumptions:
Average Per-Unit Revenue	£7.46
Average Per-Unit Variable Cost	£0.90
Estimated Monthly Fixed Cost	£37,481

7.3 Projected Profit and Loss

The following table contains our projections for profit and loss data. We anticipate a net profit of approximately £134,300 in the first year, as the Stroll Net idea catches on and sales increase. With a net profit margin of 18%, these projections are well within a reasonable range.

Profit and Loss

Pro Forma Profit and Loss
	2005	2006	2007
Sales	£727,071	£908,806	£1,136,007
Direct Costs of Goods	£87,343	£109,176	£136,470
Other	£0	£0	£0
	------------	------------	------------
Cost of Goods Sold	£87,343	£109,176	£136,470
Gross Margin	£639,728	£799,630	£999,537
Gross Margin %	87.99%	87.99%	87.99%
Expenses
Payroll	£284,498	£309,440	£397,952
Sales and Marketing and Other Expenses	£53,598	£59,174	£68,279
Depreciation	£44,676	£45,000	£45,000
Utilities	£5,613	£6,174	£6,792
Insurance	£1,500	£6,000	£7,500
Maintenence/Repairs	£3,500	£4,200	£5,800
Travel	£13,717	£24,652	£29,961
Payroll Taxes (National Insurance)	£42,675	£46,416	£59,693
	------------	------------	------------
Total Operating Expenses	£449,777	£501,056	£620,977
Profit Before Interest and Taxes	£189,951	£298,574	£378,560
EBITDA	£234,627	£343,574	£423,560
Interest Expense	£10,877	£8,500	£7,500
Taxes Incurred	£44,768	£72,518	£94,311
Net Profit	£134,305	£217,555	£276,749
Net Profit/Sales	18.47%	23.94%	24.36%

Profit Monthly



Profit Yearly



Gross Margin Monthly



Gross Margin Yearly



7.4 Projected Cash Flow

Cash flow data for the first three years is presented in the chart and table below. The table shows anticipated repayment of the long-term loan, as well as projected dividends which will be paid to investors in years two and three. In year three, we will purchase two more paykiosks terminals for new locations. The more detailed monthly cash flow data can be found in the appendix.

Cash Flow

Pro Forma Cash Flow
	2005	2006	2007
Cash Received
Cash from Operations
Cash Sales	£727,071	£908,806	£1,136,007
Subtotal Cash from Operations	£727,071	£908,806	£1,136,007
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£0	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£0	£0	£0
Sales of Other Current Assets	£0	£0	£0
Sales of Fixed assets	£0	£0	£0
New Investment Received	£0	£0	£0
Subtotal Cash Received	£727,071	£908,806	£1,136,007
Expenditures	2005	2006	2007
Expenditures from Operations
Cash Spending	£284,498	£309,440	£397,952
Bill Payments	£213,482	£361,737	£409,772
Subtotal Spent on Operations	£497,980	£671,177	£807,724
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£0	£0	£0
Other Liabilities Principal Repayment	£0	£0	£0
Fixed liabilities Principal Repayment	£10,000	£10,000	£10,000
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£0	£0	£40,000
Dividends	£0	£100,000	£200,000
Subtotal Cash Spent	£507,980	£781,177	£1,057,724
Net Cash Flow	£219,091	£127,628	£78,283
Cash Balance	£279,091	£406,719	£485,002

Cash



7.5 Projected Balance Sheet

Our projected balance sheet is presented in the table below. As sales increase, and we repay our long-term loan, the net worth of the company will increase from £281,710 at start-up to over £610,000 by year three.

Balance Sheet

Pro Forma Balance Sheet
	2005	2006	2007
Assets
Current Assets
Cash	£279,091	£406,719	£485,002
Other Current Assets	£11,400	£11,400	£11,400
Total Current Assets	£290,491	£418,119	£496,402
Fixed assets
Fixed assets	£312,810	£312,810	£352,810
Accumulated Depreciation	£44,676	£89,676	£134,676
Total Fixed assets	£268,134	£223,134	£218,134
Total Assets	£558,625	£641,253	£714,536
Liabilities and Capital	2005	2006	2007
Current Liabilities
Accounts Payable	£52,610	£27,683	£34,217
Current Borrowing	£0	£0	£0
Other Current Liabilities	£0	£0	£0
Subtotal Current Liabilities	£52,610	£27,683	£34,217
Fixed liabilities	£90,000	£80,000	£70,000
Total Liabilities	£142,610	£107,683	£104,217
Paid-in Capital	£310,171	£310,171	£310,171
Retained Earnings	(£28,461)	£5,844	£23,399
Earnings	£134,305	£217,555	£276,749
Total Capital	£416,015	£533,570	£610,320
Total Liabilities and Capital	£558,625	£641,253	£714,536
Net Worth	£416,015	£533,570	£610,320

7.6 Business Ratios

The following table outlines some of the more important ratios from the Data communications services industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 4899.9901.

Ratios

Ratio Analysis
	2005	2006	2007	Industry Profile
Sales Growth	0.00%	25.00%	25.00%	1.63%
Percent of Total Assets
Other Current Assets	2.04%	1.78%	1.60%	53.65%
Total Current Assets	52.00%	65.20%	69.47%	74.50%
Fixed assets	48.00%	34.80%	30.53%	25.50%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	9.42%	4.32%	4.79%	24.78%
Fixed liabilities	16.11%	12.48%	9.80%	18.28%
Total Liabilities	25.53%	16.79%	14.59%	43.06%
Net Worth	74.47%	83.21%	85.41%	56.94%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	87.99%	87.99%	87.99%	52.82%
Selling, General & Administrative Expenses	73.78%	64.05%	63.63%	30.92%
Advertising Expenses	7.37%	6.51%	6.01%	0.82%
Profit Before Interest and Taxes	26.13%	32.85%	33.32%	6.18%
Main Ratios
Current	5.52	15.10	14.51	1.84
Quick	5.52	15.10	14.51	1.60
Total Debt to Total Assets	25.53%	16.79%	14.59%	54.39%
Pre-tax Return on Net Worth	43.04%	54.36%	60.80%	8.03%
Pre-tax Return on Assets	32.06%	45.24%	51.93%	17.61%
Additional Ratios	2005	2006	2007
Net Profit Margin	18.47%	23.94%	24.36%	n.a
Return on Equity	32.28%	40.77%	45.34%	n.a
Activity Ratios
Accounts Payable Turnover	5.01	12.17	12.17	n.a
Payment Days	27	44	27	n.a
Total Asset Turnover	1.30	1.42	1.59	n.a
Debt Ratios
Debt to Net Worth	0.34	0.20	0.17	n.a
Current Liab. to Liab.	0.37	0.26	0.33	n.a
Liquidity Ratios
Net Working Capital	£237,881	£390,436	£462,186	n.a
Interest Coverage	17.46	35.13	50.47	n.a
Additional Ratios
Assets to Sales	0.77	0.71	0.63	n.a
Current Debt/Total Assets	9%	4%	5%	n.a
Acid Test	5.52	15.10	14.51	n.a
Sales/Net Worth	1.75	1.70	1.86	n.a
Dividend Payout	0.00	0.46	0.72	n.a