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Confidentiality Agreement
The undersigned reader acknowledges that the information provided by _______________ in this
business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________.
It is acknowledged by reader that information to be furnished in this business plan is in all respects
confidential in nature, other than information which is in the public domain through other means
and that any disclosure or use of same by reader, may cause serious harm or damage to
_______________.
Upon request, this document is to be immediately returned to _______________.
___________________ Signature
___________________ Name (typed or printed)
___________________ Date
This is a business plan. It does not imply an offering of securities.
Table of Contents
Page 1
1.0 Executive Summary .................................................................................................................... 1
Chart: Highlights .......................................................................................................................... 2
1.1 Objectives .................................................................................................................................... 2
1.2 Mission .......................................................................................................................................... 2
1.3 Keys to Success ........................................................................................................................ 2
2.0 Company Summary ..................................................................................................................... 2
2.1 Company Ownership ............................................................................................................... 3
2.2 Start-up Summary ................................................................................................................... 3
Table: Start-up .............................................................................................................................. 3
Chart: Start-up ............................................................................................................................. 4
3.0 Products ........................................................................................................................................... 4
4.0 Market Analysis Summary ........................................................................................................ 4
4.1 Market Segmentation ............................................................................................................. 4
Table: Market Analysis ............................................................................................................... 4
Chart: Market Analysis (Pie) .................................................................................................... 5
4.2 Target Market Segment Strategy ...................................................................................... 5
4.3 Industry Analysis ...................................................................................................................... 6
4.3.1 Competition and Buying Patterns .............................................................................. 7
5.0 Web Plan Summary ..................................................................................................................... 7
5.1 Website Marketing Strategy ................................................................................................. 7
5.2 Development Requirements ................................................................................................. 7
6.0 Strategy and Implementation Summary ............................................................................ 7
6.1 SWOT Analysis .......................................................................................................................... 7
6.1.1 Strengths ............................................................................................................................. 8
6.1.2 Weaknesses ........................................................................................................................ 8
6.1.3 Opportunities ..................................................................................................................... 8
6.1.4 Threats ................................................................................................................................. 8
6.2 Competitive Edge ..................................................................................................................... 8
6.3 Marketing Strategy .................................................................................................................. 8
6.4 Sales Strategy ........................................................................................................................... 8
6.4.1 Sales Forecast.................................................................................................................... 9
Table: Sales Forecast ............................................................................................................. 9
Chart: Sales Monthly .............................................................................................................. 9
Table of Contents
Page 2
Chart: Sales by Year ............................................................................................................. 10
6.5 Milestones.................................................................................................................................. 10
Chart: Milestones ....................................................................................................................... 10
7.0 Management Summary ............................................................................................................ 11
7.1 Personnel Plan ......................................................................................................................... 11
Table: Personnel ......................................................................................................................... 11
8.0 Financial Plan ............................................................................................................................... 12
8.1 Start-up Funding .................................................................................................................... 12
Table: Start-up Funding .......................................................................................................... 12
8.2 Important Assumptions ....................................................................................................... 13
8.3 Break-even Analysis .............................................................................................................. 14
Table: Break-even Analysis .................................................................................................... 14
Chart: Break-even Analysis ................................................................................................... 14
8.4 Projected Profit and Loss ..................................................................................................... 15
Table: Profit and Loss ............................................................................................................... 15
Chart: Profit Monthly ................................................................................................................ 16
Chart: Profit Yearly .................................................................................................................... 16
Chart: Gross Margin Monthly ................................................................................................. 17
Chart: Gross Margin Yearly .................................................................................................... 17
8.5 Projected Cash Flow .............................................................................................................. 18
Table: Cash Flow ........................................................................................................................ 18
Chart: Cash .................................................................................................................................. 19
8.6 Projected Balance Sheet ...................................................................................................... 20
Table: Balance Sheet ................................................................................................................ 20
8.7 Business Ratios ....................................................................................................................... 20
Table: Ratios ................................................................................................................................ 20
Table: Sales Forecast ......................................................................................................................... 1
Table: Personnel ................................................................................................................................... 2
Table: Personnel ................................................................................................................................... 2
Table: Profit and Loss ......................................................................................................................... 3
Table: Profit and Loss ......................................................................................................................... 3
Table: Cash Flow .................................................................................................................................. 5
Table: Cash Flow .................................................................................................................................. 5
Table of Contents
Page 3
Table: Balance Sheet .......................................................................................................................... 7
Table: Balance Sheet .......................................................................................................................... 7
Euro Equipment Rental
Page 1
1.0 Executive Summary
Euro Equipment Rental, LLC. is a Breaux Bridge, Tennessee company that sells and rents heavy
equipment such as dozers, backhoes, excavators, and trenchers as well as small home use and construction equipment such as tillers, augers, and chain saws.
EER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, Pro-
Cut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The
company is the only authorized distributor for the South-Tennessee area for Slamrod Equipment and Komatsu Forklifts.
EER has a world-class management team with direct knowledge of the industry, extensive
research experience, and unique administrative skills. Its team includes Mr. David James and
Mrs. Sally James. Having lived in Denton Parish for six years, and worked throughout the state,
as well as parts of Texas, Mississippi, Alabama, and Georgia, President/CEO, Mr. James has
compiled an extensive list of customers/potential customers, vendors, and contacts for
equipment consignment.
The company plans to employ two people from the area, in positions within the shop. By
employing local individuals, ER would be contributing toward the development of the area.
Funds would remain in the area thereby boosting the economy and contributing to the
community as a whole. Loyal customers help to expand the company's business area by word-
of-mouth and a pocketful of ER's business cards.
A key component of the company's strategy is to continue to add to its ever-increasing product
line which currently includes homeowner equipment from Echo and Interstate Batteries,
commercial, equipment from Ramrod, Compact S/I Technology, and industrial equipment from Komatsu.
The company is seeking a loan/credit line in the amount of $300,000 for the purpose of
expanding the business. Expansion plans include the purchase of additional land and
construction of a larger shop/service area, increase rental inventory, purchase of delivery truck,
and the hiring of additional personnel including a mechanic and delivery driver. Projected revenues for Year 1 to Year 3 are $210,000, $420,000, and $840,000, respectively.
Euro Equipment Rental
Page 2
Chart: Highlights
1.1 Objectives
1.2 Mission
EER's mission is to become THE exclusive full-service equipment rental, sales, and service
company in upper and lower Denton Parish with the ability to service the surrounding parishes
of Memphis, Knoxville, Grand Prairie, Plano, Garland, Irvine, and Riverside. Therefore the
company's strategy is to create a limited geographical niche for itself where there are no potential competitors.
EER's vision is to continue to expand its service to other areas. The company's coverage area is constantly increasing, as the areas are becoming aware of the company's presence.
1.3 Keys to Success
2.0 Company Summary
EER began its operations on Jan. 21, 2011 with little capital investment. The company
combined 10 years of experience in the sales and rental field to generate a large customer
base. After eight months of operations at the present facility, the company has increased its
customer list by 100% and its vendor list by 75%. ER takes pride in having brought several
new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.
Euro Equipment Rental
Page 3
2.1 Company Ownership
EER was founded in Memphis, Tennessee in Jan. 2011 to sell and rent heavy equipment, small
home use machines, and construction equipment. The company was formed by Mr. Daphne
James and Mrs. Sally Jameson. EER is a Tennessee Limited Liability, with principal offices
located in Chattanooga, TN.
2.2 Start-up Summary
Table: Start-up
Start-up
Requirements
Start-up Expenses Legal $5,000 Stationery etc. $600 Brochures $500 Consultants $2,500 Insurance $3,000 Rent $12,000 Expensed Equipment $10,000 Other $5,000 Total Start-up Expenses $38,600
Start-up Assets Cash Required $40,000 Start-up Inventory $800,000 Other Current Assets $100,000 Long-term Assets $0 Total Assets $940,000
Total Requirements $978,600
Euro Equipment Rental
Page 4
Chart: Start-up
3.0 Products
EER sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers, as
well as small home use, and construction equipment such as tillers, augers, and chain saws. ER
takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.
EER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, Pro-
Cut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The
company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment
and Komatsu Forklifts.
4.0 Market Analysis Summary
The company expects to participate in a variety of different industries, including commercial
and residential construction and farm machinery. The following sections will describe the industries in which EER hopes to compete.
4.1 Market Segmentation
The chart and table below describe the segmentation of the market.
Table: Market Analysis
Market Analysis
2011 2012 2013 2014 2015 Potential Customers Growth CAGR
Petro-chemical clients 1% 5 5 5 5 5 0.00% Contractors and subcontractors 10% 160 176 194 213 234 9.97%
Euro Equipment Rental
Page 5
Municipalities 1% 8 8 8 8 8 0.00% Farmers 3% 127 131 135 139 143 3.01% Industrial clients 4% 86 89 93 97 101 4.10% Other 2% 40 41 42 43 44 2.41% Total 5.86% 426 450 477 505 535 5.86%
Chart: Market Analysis (Pie)
4.2 Target Market Segment Strategy
EER currently has customers in the industrial and commercial fields, petro-chemical plants,
contractors, sub-contractors, oil fields, and municipalities, with expansion potential in other
areas. The Market Analysis table below gives the total potential number of businesses that
could rent or buy our equipment in the local area.
Euro Equipment Rental
Page 6
4.3 Industry Analysis
Industry Description (information provided by imarketinc.com)
Market size statistics - Industrial trucks and tractors
Establishments primarily engaged in manufacturing industrial trucks, tractors, trailers, stackers
(truck type), and related equipment used for handling materials on floors and paved surfaces in
and around industrial and commercial plants, depots, docks, airports, and terminals.
Estimated number of U.S. establishments 1,004
Total people employed in this industry 37,854
Total annual sales in this industry $13,004 million
Average employees per establishment 38
Average sales per establishment $16 million
Market size statistics - Farm machinery and equipment
Establishments primarily engaged in manufacturing farm machinery and equipment including
soil preparation machinery, for use in the preparation and maintenance of the soil, planting and
harvesting of the crop, preparing crops for market on the farm, or for use in performing other
farm operations and processes.
Estimated number of U.S. establishments 2,594
Total people employed in this industry 79,978
Total annual sales in this industry $30,474 million
Average employees per establishment 31
Average sales per establishment $13.3 million
Market size statistics - Construction machinery
Establishments primarily engaged in manufacturing heavy machinery and equipment, such as bulldozers, concrete mixers, cranes.
Estimated number of U.S. establishments 2,266
Total people employed in this industry 125,081
Total annual sales in this industry $58,196 million
Average employees per establishment 57
Average sales per establishment $34.3 million
Euro Equipment Rental
Page 7
4.3.1 Competition and Buying Patterns
ER's closest competitors are located in Memphis Xarish. They include the following five companies:
WBC Equipment;
Southern Equipment;
Jones Service Rental ;
Rental Service Depot ; Orange-Mound Rental.
Being located in or near Memphis, they charge a drop off and/or pick up fee. EER can, in most
cases, wave this fee which will allow the customer more funds to purchase/rent additional
equipment.
5.0 Web Plan Summary
5.1 Website Marketing Strategy
5.2 Development Requirements
6.0 Strategy and Implementation Summary
The company plans to rapidly develop marketing alliances with industry leaders and pursue new
sales of homeowner, commercial, and industrial equipment. The market strategy is to capitalize
on ER's ever-increasing customer base and contacts by offering the latest products and personalized service.
The company's goal in the next year is to obtain financing which will allow for expanding the
shop/service area with up-to-date servicing equipment, hiring additional employees, and
obtaining a delivery truck as well as rental and sales inventory for all aspects of the company's customer base.
The company's goal in the next two to five years is to hire additional employees, concentrate on
customer service, and promote the company and the environment that has allowed for this
increase in service by way of discounts and promotional specials that will benefit the company
and the customer.
6.1 SWOT Analysis
Euro Equipment Rental
Page 8
6.1.1 Strengths
6.1.2 Weaknesses
6.1.3 Opportunities
6.1.4 Threats
6.2 Competitive Edge
Obtain financing. The company is currently working to obtain financing that will enable it to
carry out its operations.
Expansion. EER is currently in need of property for expansion and display, rental and sale,
and to increase its product line. Storage is a constant problem without a building and
additional land to met ER's current needs.
Purchase additional equipment. Most previous equipment purchases have been for
resale/consignment, and the markup has not allowed for a great increase in supplies.
Hire more employees. The company plans to employ two people from the area, in positions
within the shop. They will be responsible for maintenance, repair, and delivery. This will
enable Mr. and Mrs. James to focus on the core of the business.
Increase advertising. The company is currently working to expand its advertising
campaigns. The company has designed a tri-fold brochure that will make people in the area
aware of its product offering and how it can meet their needs.
Establish more alliances. ER has contacts with several companies with floor plans, which will
enable the company to stock several of their items for resale. The company plans to purchase some of their products, leaving them to furnish the display equipment.
6.3 Marketing Strategy
The company has strategic alliances with the ARAQ. This alliance is valuable to EER because the
company gets to air television ads, and they are valuable to the ally firms because they are
promoting a local company and this helps in community development. EER plans to also form
strategic alliances with Internet sites, area publications, and other equipment dealers.
6.4 Sales Strategy
Euro Equipment Rental
Page 9
6.4.1 Sales Forecast
The following table and charts show the Projected Sales Forecast for Equipment Rental.
Table: Sales Forecast
Sales Forecast
FY 2012 FY 2013 FY 2014
Sales Sales and Rentals $201,091 $420,000 $840,000 Other $0 $0 $0 Total Sales $201,091 $420,000 $840,000
Direct Cost of Sales FY 2012 FY 2013 FY 2014 Sales and Rentals $33,498 $60,000 $150,000 Other $3,000 $6,000 $12,000 Subtotal Direct Cost of Sales $36,498 $66,000 $162,000
Chart: Sales Monthly
Euro Equipment Rental
Page 10
Chart: Sales by Year
6.5 Milestones
Chart: Milestones
Euro Equipment Rental
Page 11
7.0 Management Summary
The company's management philosophy is based on responsibility, equal opportunity and
respect for all employees. EER maintains an environment and structure that encourages productivity and respect for customers and fellow employees.
7.1 Personnel Plan
EER's management is highly experienced and qualified. Its key management team includes Mr.
David James and Mrs. Sally James.
Jointly, they are responsible for processing quotes, arranging financing, as needed, scheduling invoices for pickup and delivery, and contract sales/rentals.
Descriptions of the management team and responsibilities are as follows.
Mr. David James. Mr. James has 10 years of marketing experience, 15 years rental/sales experience, and 15 years mechanical experience.
Mr. James makes all decisions concerning equipment purchases, as this is his area of expertise.
Mr. James is in charge of obtaining all equipment for sales and rentals, completing contracts,
working up quotes, setting up delivery of merchandise, arranging financing as needed, contacting customers, and verifying pickup and delivery.
Mrs. Sally L. James. Mrs. James has 10 years secretarial experience and 12 years accounts payable and receivable experience.
Mrs. James answers the phone, faxes, does all the computer work, files any monthly or
quarterly tax forms, compiles correspondence as needed, accounts receivable, accounts
payable, meets with a bookkeeper for end of year tax return, keeps all office needs running smoothly, filing, typing, copies, and is majority stock holder in the company (45%).
Future plans call for the hiring of a mechanic and shopman with hopes of adding a truck and
delivery driver shortly there after from the area, with additional office/shop personnel to be added as needed.
On occasion part-time personnel will be used and job training provided through the area
schools for those interested in this area of the job market.
Table: Personnel
Personnel Plan
FY 2012 FY 2013 FY 2014 Sales/Rental Associate $19,200 $19,200 $19,200 Sales/Rental Associate $19,200 $19,200 $19,200 Sales/Rental Associate $19,200 $19,200 $19,200 Maintenance/Technician $0 $5,010 $9,500 Maintenance Technician $0 $0 $6,000 Total People 5 6 7
Total Payroll $57,600 $62,610 $73,100
Euro Equipment Rental
Page 12
8.0 Financial Plan
EER was capitalized with $5,000 when it was formed in May 1997. A strong knowledge of the
area and supply and demand needs led to the formation of the company. Most items purchased
to this date (truck, trailer, computer, office supplies, envelopes, and stationery) have been financed through personal funds, and a $4,000 line of credit with Hibernia Bank.
EER's first sales placed $5,145 into the business account, most of which was used to pay off
initial purchases with the balance being used for office and truck expenses such as telephone
bill, postage, and fuel. As of April 1, 2000, the truck has been paid in full along with several of
the smaller home use items. The company has generated sales in the amount of $52,490 with cost being $38,870 and a profit of $13,620 (97-98 Income Tax Return).
Funding Requirements and Uses
The company is seeking a loan/credit line in the amount of $300,000 for the purpose of
expanding the business. Expansion plans include the purchase of additional land and
construction of a larger shop/service area, increase rental inventory, and hiring of additional
personnel including a mechanic and delivery driver. The table below provides a breakdown of the use of funds.
Use of Funds
Purchase land 26' X 176' on the north side of existing building $7,000
Erect shop area 26' X 33' on land w/concrete slab, office area $10,000
Shop equipment $14,000
Rental inventory $60,000
Consolidate regions loan, Hibernia L. O. C., current equipment purchases Bosch electric
breaker, 3.0 KW generator, shop items $50,000
Advertising $7,000
Balance for working capital, employee training, office equipment modernization,
maintenance inventory (i.e.: oil, air, and hydraulic filters), unforeseen
building/maintenance expense
$152,000
Shop equipment to include: air compressor, air tools and accessories, blow torch, welding
machine and accessories, 1 1/2 ton chain hoist, oil/water separator, holding tank, assorted hand tools, washing vat, chain saw sharpener and repair accessories.
Rental inventory to include: Trash and diaphragm pumps 2 ea. 2" and 3", 3/4" submersible
pump and accessories, 3 hp. concrete vibrator, 2-48" concrete power trowels, Case 580L or JD
310 Backhoe, small trailer and larger trailer, 1-ton Ford F350 or F450 Diesel delivery truck, air
compressor, 90 lb. air hammer and accessories, rotovator for tractor, 1 push mower, 1 lawn tractor.
8.1 Start-up Funding
Table: Start-up Funding
Start-up Funding Start-up Expenses to Fund $38,600
Euro Equipment Rental
Page 13
Start-up Assets to Fund $940,000 Total Funding Required $978,600
Assets Non-cash Assets from Start-up $900,000 Cash Requirements from Start-up $40,000 Additional Cash Raised $521,400 Cash Balance on Starting Date $561,400 Total Assets $1,461,400
Liabilities and Capital
Liabilities Current Borrowing $1,500,000 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $1,500,000
Capital
Planned Investment Investor 1 $0 Investor 2 $0 Other $0 Additional Investment Requirement $0 Total Planned Investment $0
Loss at Start-up (Start-up Expenses) ($38,600) Total Capital ($38,600)
Total Capital and Liabilities $1,461,400
Total Funding $1,500,000
8.2 Important Assumptions
Euro Equipment Rental
Page 14
8.3 Break-even Analysis
The table and chart below contain the Break-even Analysis for Equipment Rental.
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even $14,275
Assumptions: Average Percent Variable Cost 18% Estimated Monthly Fixed Cost $11,684
Chart: Break-even Analysis
Euro Equipment Rental
Page 15
8.4 Projected Profit and Loss
The Projected Profit and Loss can be seen in the following table and charts.
Table: Profit and Loss
Pro Forma Profit and Loss
FY 2012 FY 2013 FY 2014 Sales $201,091 $420,000 $840,000 Direct Cost of Sales $36,498 $66,000 $162,000 Other Production Expenses $2,560 $42,000 $126,000 Total Cost of Sales $39,059 $108,000 $288,000
Gross Margin $162,032 $312,000 $552,000 Gross Margin % 80.58% 74.29% 65.71%
Expenses Payroll $57,600 $62,610 $73,100 Sales and Marketing and Other Expenses $14,000 $31,000 $82,598 Depreciation $0 $0 $0 Supplies and equipment $9,924 $19,851 $39,702 Utilities $1,602 $2,403 $3,604 Telephone $7,812 $7,810 $7,810 Insurance $14,448 $21,688 $32,533 Repairs and Maintenance $10,932 $20,397 $30,596 Services $2,832 $2,833 $2,833 Rent $12,420 $12,420 $12,420 Payroll Taxes $8,640 $9,392 $10,965 Other $0 $0 $0
Total Operating Expenses $140,210 $190,404 $296,161
Profit Before Interest and Taxes $21,822 $121,597 $255,839 EBITDA $21,822 $121,597 $255,839 Interest Expense $220,289 $236,580 $231,880 Taxes Incurred $0 $0 $7,188
Net Profit ($198,466) ($114,983) $16,771 Net Profit/Sales -98.69% -27.38% 2.00%
Euro Equipment Rental
Page 16
Chart: Profit Monthly
Chart: Profit Yearly
Euro Equipment Rental
Page 17
Chart: Gross Margin Monthly
Chart: Gross Margin Yearly
Euro Equipment Rental
Page 18
8.5 Projected Cash Flow
Table: Cash Flow
Pro Forma Cash Flow
FY 2012 FY 2013 FY 2014
Cash Received
Cash from Operations Cash Sales $40,218 $84,000 $168,000 Cash from Receivables $141,273 $314,663 $631,063 Subtotal Cash from Operations $181,491 $398,663 $799,063
Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $803,646 $20,000 $20,000 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $151,000 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $1,136,137 $418,663 $819,063
Expenditures FY 2012 FY 2013 FY 2014
Expenditures from Operations Cash Spending $57,600 $62,610 $73,100 Bill Payments $279,146 $461,537 $732,557 Subtotal Spent on Operations $336,746 $524,147 $805,657
Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $45,248 $30,000 $60,000 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $29,100 $19,000 $25,000 Purchase Other Current Assets $58,000 $2,000 $22,000 Purchase Long-term Assets $91,000 $4,000 $9,000 Dividends $65,000 $10,000 $20,000 Subtotal Cash Spent $625,094 $589,147 $941,657
Net Cash Flow $511,043 ($170,483) ($122,594) Cash Balance $1,072,443 $901,959 $779,366
Euro Equipment Rental
Page 19
Chart: Cash
Euro Equipment Rental
Page 20
8.6 Projected Balance Sheet
EER's projected balance sheets for 2011-2021.
Table: Balance Sheet
Pro Forma Balance Sheet
FY 2012 FY 2013 FY 2014
Assets
Current Assets Cash $1,072,443 $901,959 $779,366 Accounts Receivable $19,600 $40,937 $81,873 Inventory $763,502 $765,328 $770,893 Other Current Assets $158,000 $160,000 $182,000 Total Current Assets $2,013,544 $1,868,224 $1,814,132
Long-term Assets Long-term Assets $91,000 $95,000 $104,000 Accumulated Depreciation $0 $0 $0 Total Long-term Assets $91,000 $95,000 $104,000 Total Assets $2,104,544 $1,963,224 $1,918,132
Liabilities and Capital FY 2012 FY 2013 FY 2014
Current Liabilities Accounts Payable $26,313 $38,975 $62,112 Current Borrowing $2,258,398 $2,248,398 $2,208,398 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $2,284,711 $2,287,373 $2,270,510
Long-term Liabilities $121,900 $102,900 $77,900 Total Liabilities $2,406,611 $2,390,273 $2,348,410
Paid-in Capital $0 $0 $0 Retained Earnings ($103,600) ($312,066) ($447,050) Earnings ($198,466) ($114,983) $16,771 Total Capital ($302,066) ($427,050) ($430,278) Total Liabilities and Capital $2,104,544 $1,963,224 $1,918,132
Net Worth ($302,066) ($427,050) ($430,278)
8.7 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7359, [Euro Equipment Rental], are shown for
comparison.
Table: Ratios
Ratio Analysis
Euro Equipment Rental
Page 21
FY 2012 FY 2013 FY 2014 Industry Profile Sales Growth n.a. 108.86% 100.00% 7.07%
Percent of Total Assets Accounts Receivable 0.93% 2.09% 4.27% 27.61% Inventory 36.28% 38.98% 40.19% 3.96% Other Current Assets 7.51% 8.15% 9.49% 44.65% Total Current Assets 95.68% 95.16% 94.58% 76.22% Long-term Assets 4.32% 4.84% 5.42% 23.78% Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 108.56% 116.51% 118.37% 33.47% Long-term Liabilities 5.79% 5.24% 4.06% 16.23% Total Liabilities 114.35% 121.75% 122.43% 49.70% Net Worth -14.35% -21.75% -22.43% 50.30%
Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 80.58% 74.29% 65.71% 100.00% Selling, General & Administrative Expenses 81.36% 57.86% 45.92% 84.88% Advertising Expenses 3.33% 5.71% 6.90% 1.01% Profit Before Interest and Taxes 10.85% 28.95% 30.46% 1.94%
Main Ratios Current 0.88 0.82 0.80 1.73 Quick 0.55 0.48 0.46 1.33 Total Debt to Total Assets 114.35% 121.75% 122.43% 57.72% Pre-tax Return on Net Worth 65.70% 26.93% -5.57% 3.77% Pre-tax Return on Assets -9.43% -5.86% 1.25% 8.92%
Additional Ratios FY 2012 FY 2013 FY 2014 Net Profit Margin -98.69% -27.38% 2.00% n.a Return on Equity 0.00% 0.00% 0.00% n.a
Activity Ratios Accounts Receivable Turnover 8.21 8.21 8.21 n.a Collection Days 58 33 33 n.a Inventory Turnover 0.05 0.09 0.21 n.a Accounts Payable Turnover 11.61 12.17 12.17 n.a Payment Days 27 25 24 n.a Total Asset Turnover 0.10 0.21 0.44 n.a
Debt Ratios Debt to Net Worth 0.00 0.00 0.00 n.a Current Liab. to Liab. 0.95 0.96 0.97 n.a
Liquidity Ratios Net Working Capital ($271,166) ($419,150) ($456,378) n.a Interest Coverage 0.10 0.51 1.10 n.a
Additional Ratios Assets to Sales 10.47 4.67 2.28 n.a Current Debt/Total Assets 109% 117% 118% n.a Acid Test 0.54 0.46 0.42 n.a Sales/Net Worth 0.00 0.00 0.00 n.a Dividend Payout 0.00 0.00 1.19 n.a
Appendix
Page 1
Table: Sales Forecast
Sales Forecast
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Sales Sales and Rentals 0% $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000 Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Sales $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000
Direct Cost of Sales Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Sales and Rentals $1,500 $1,500 $2,063 $2,160 $3,108 $3,485 $4,200 $4,173 $3,723 $3,259 $2,250 $2,078
Other $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Subtotal Direct Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $3,973 $3,509 $2,500 $2,328
Appendix
Page 2
Table: Personnel
Personnel Plan
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Maintenance/Technician 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Maintenance Technician 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total People 5 5 5 5 5 5 5 5 5 5 5 5
Total Payroll $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800
Appendix
Page 3
Table: Profit and Loss
Pro Forma Profit and Loss
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Sales $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000
Direct Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $3,973 $3,509 $2,500 $2,328
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $560 $750 $500 $750
Total Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $4,533 $4,259 $3,000 $3,078
Gross Margin $8,250 $8,250 $8,887 $11,990 $14,142 $16,665 $19,976 $20,627 $20,081 $14,241 $12,000 $6,922
Gross Margin % 82.50% 82.50% 79.35% 83.26% 80.81% 81.69% 81.78% 82.34% 81.58% 76.98% 80.00% 69.22%
Expenses
Payroll $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 Sales and Marketing and Other Expenses $917 $917 $917 $2,417 $2,417 $917 $917 $917 $917 $917 $917 $917
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Supplies and equipment $827 $827 $827 $827 $827 $827 $827 $827 $827 $827 $827 $827
Utilities $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134
Telephone $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651
Insurance $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204
Repairs and Maintenance $911 $911 $911 $911 $911 $911 $911 $911 $911 $911 $911 $911
Services $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236
Rent $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 Payroll Taxes 15% $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $11,434 $11,434 $11,434 $12,934 $12,934 $11,434 $11,434 $11,434 $11,434 $11,434 $11,434 $11,434
Profit Before Interest and Taxes ($3,184) ($3,184) ($2,547) ($944) $1,208 $5,231 $8,542 $9,193 $8,647 $2,807 $566 ($4,512)
EBITDA ($3,184) ($3,184) ($2,547) ($944) $1,208 $5,231 $8,542 $9,193 $8,647 $2,807 $566 ($4,512)
Interest Expense $15,000 $15,971 $16,808 $17,485 $18,121 $18,733 $19,322 $19,665 $19,746 $19,787 $19,814 $19,836
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($18,184) ($19,155) ($19,355) ($18,429) ($16,913) ($13,502) ($10,780) ($10,472) ($11,100) ($16,980) ($19,248) ($24,348)
Appendix
Page 4
Net Profit/Sales -181.84% -191.55% -172.81% -127.98% -96.65% -66.19% -44.13% -41.80% -45.09% -91.78% -128.32% -243.48%
Appendix
Page 5
Table: Cash Flow
Pro Forma Cash Flow
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Cash Received
Cash from Operations
Cash Sales $2,000 $2,000 $2,240 $2,880 $3,500 $4,080 $4,885 $5,010 $4,923 $3,700 $3,000 $2,000
Cash from Receivables $0 $267 $8,000 $8,032 $9,045 $11,603 $14,077 $16,427 $19,558 $20,029 $19,528 $14,707
Subtotal Cash from Operations $2,000 $2,267 $10,240 $10,912 $12,545 $15,683 $18,963 $21,437 $24,481 $23,729 $22,528 $16,707
Additional Cash Received Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Current Borrowing $149,000 $116,543 $100,372 $83,643 $78,625 $75,836 $73,048 $43,494 $24,535 $22,305 $20,632 $15,613
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $151,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $302,000 $118,810 $110,612 $94,555 $91,170 $91,519 $92,011 $64,931 $49,016 $46,034 $43,160 $32,320
Expenditures Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Expenditures from Operations
Cash Spending $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800
Bill Payments $721 $21,667 $22,633 $23,514 $25,640 $26,225 $25,387 $25,968 $26,321 $26,949 $27,164 $26,957
Subtotal Spent on Operations $5,521 $26,467 $27,433 $28,314 $30,440 $31,025 $30,187 $30,768 $31,121 $31,749 $31,964 $31,757
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $12,416 $12,416 $12,416 $8,000
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $2,350 $2,350 $2,350 $2,350 $2,350 $2,350 $5,000 $5,000 $5,000
Purchase Other Current Assets $10,000 $12,000 $25,000 $4,000 $7,000 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $30,000 $27,000 $34,000 $0 $0 $0 $0 $0 $0 $0 $0
Appendix
Page 6
Dividends $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417
Subtotal Cash Spent $20,938 $73,883 $84,850 $74,081 $45,207 $38,792 $37,954 $38,534 $51,303 $54,581 $54,797 $50,174
Net Cash Flow $281,062 $44,926 $25,762 $20,474 $45,963 $52,727 $54,057 $26,397 ($2,288) ($8,548) ($11,636) ($17,854)
Cash Balance $842,462 $887,389 $913,151 $933,625 $979,588 $1,032,315 $1,086,372 $1,112,769 $1,110,481 $1,101,933 $1,090,297 $1,072,443
Appendix
Page 7
Table: Balance Sheet
Pro Forma Balance Sheet
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Assets Starting Balances
Current Assets Cash $561,400 $842,462 $887,389 $913,151 $933,625 $979,588 $1,032,315 $1,086,372 $1,112,769 $1,110,481 $1,101,933 $1,090,297 $1,072,443 Accounts Receivable $0 $8,000 $15,733 $16,693 $20,181 $25,136 $29,853 $35,317 $38,930 $39,064 $33,835 $26,307 $19,600 Inventory $800,000 $798,250 $796,500 $794,187 $791,777 $788,419 $784,684 $780,234 $775,811 $771,838 $768,330 $765,830 $763,502 Other Current Assets $100,000 $110,000 $122,000 $147,000 $151,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 Total Current Assets $1,461,400 $1,758,712 $1,821,622 $1,871,031 $1,896,583 $1,951,143 $2,004,852 $2,059,923 $2,085,510 $2,079,383 $2,062,098 $2,040,433 $2,013,544
Long-term Assets Long-term Assets $0 $0 $30,000 $57,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Long-term Assets $0 $0 $30,000 $57,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 Total Assets $1,461,400 $1,758,712 $1,851,622 $1,928,031 $1,987,583 $2,042,143 $2,095,852 $2,150,923 $2,176,510 $2,170,383 $2,153,098 $2,131,433 $2,104,544
Liabilities and Capital Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Current Liabilities Accounts Payable $0 $20,913 $21,852 $22,660 $24,765 $25,380 $24,522 $25,091 $25,423 $26,043 $26,266 $26,050 $26,313 Current Borrowing $1,500,000 $1,649,000 $1,765,543 $1,865,915 $1,949,558 $2,028,183 $2,104,019 $2,177,067 $2,220,561 $2,232,680 $2,242,569 $2,250,785 $2,258,398 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $1,500,000 $1,669,913 $1,787,395 $1,888,575 $1,974,323 $2,053,563 $2,128,541 $2,202,158 $2,245,983 $2,258,723 $2,268,835 $2,276,835 $2,284,711
Long-term Liabilities $0 $151,000 $151,000 $151,000 $148,650 $146,300 $143,950 $141,600 $139,250 $136,900 $131,900 $126,900 $121,900 Total Liabilities $1,500,000 $1,820,913 $1,938,395 $2,039,575 $2,122,973 $2,199,863 $2,272,491 $2,343,758 $2,385,233 $2,395,623 $2,400,735 $2,403,735 $2,406,611
Paid-in Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Retained Earnings ($38,600) ($44,017) ($49,433) ($54,850) ($60,267) ($65,683) ($71,100) ($76,517) ($81,933) ($87,350) ($92,767) ($98,183) ($103,600) Earnings $0 ($18,184) ($37,340) ($56,694) ($75,123) ($92,036) ($105,538) ($116,318) ($126,790) ($137,890) ($154,870) ($174,118) ($198,466) Total Capital ($38,600) ($62,201) ($86,773) ($111,544) ($135,390) ($157,720) ($176,638) ($192,835) ($208,724) ($225,240) ($247,637) ($272,302) ($302,066) Total Liabilities and Capital $1,461,400 $1,758,712 $1,851,622 $1,928,031 $1,987,583 $2,042,143 $2,095,852 $2,150,923 $2,176,510 $2,170,383 $2,153,098 $2,131,433 $2,104,544
Net Worth ($38,600) ($62,201) ($86,773) ($111,544) ($135,390) ($157,720) ($176,638) ($192,835) ($208,724) ($225,240) ($247,637) ($272,302) ($302,066)
Recommended