Start-up | |
Requirements | |
Start-up Expenses | |
Legal | $3,000 |
Accounting | $2,000 |
Brochures | $2,500 |
Consultants | $0 |
Insurance | $0 |
Rent | $0 |
Research and Development | $0 |
Expensed Equipment | $15,000 |
Other | $0 |
Total Start-up Expenses | $22,500 |
Start-up Assets | |
Cash Required | $213,500 |
Start-up Inventory | $0 |
Other Current Assets | $0 |
Long-term Assets | $9,000 |
Total Assets | $222,500 |
Total Requirements | $245,000 |
Non-readers rely on visual images as a form of communication, a replacement for the more typical text that readers are able to understand. The first component of the software is a digital cookbook of recipes. The software displays pictures of the different ingredients needed for the recipe. The pictures are then printed allowing the individual to take the picture to the grocery store facilitating the purchasing of the groceries. On each picture is also text explaining what the item is. Within each recipe is the ability to print the different utensils and pots needed to complete the item. While the recipes are meant to be cooked with support, the main goal is to allow the individual to have independent shopping.
The user first sees a bunch of different pictures of food dishes with names below the pictures. The user then chooses a dish and is brought to a screen where the ingredients are listed by picture and also the different utensils/pots/pans needed are listed. Once the user chooses what they want to prepare they can then print up a list of the different ingredients. The list is picture based (with text) and they are able to take the picture list to the grocery to assist them in purchasing the ingredients independently.
The second component of the software is the social occasion/party planning module. This is the fun part (in addition to the fun food pictures). Everyone likes to plan for party. The screen opens with pictures showing different occassions such as a picnic in the park, friends and movie night, birthday party, holiday event, pool party, etc. When the user clicks on the chosen image they hear 30 seconds of background music in a theme matched to the event that they have chosen. Once they have chosen the event the software takes them through the different steps of food preparation for the event. These food preparation steps are the previously explained food component that is now organized not by dish but by event. If a picnic in a park is chosen there will be several dishes to be made, all of them cold as there is no way of heating the dishes while you are in the park. All users of this module will be entertained by the background sounds as well as the excitement of planning for a party.
This component is especially important in the individual’s development. Planning activities are especially important for a population that is so isolated. Without socialization skills such as parties, the clients end up learning the skills and then sit in their apartment alone.
Ultimately, FoodFun’s software product combines two of the most important lifeskills/transition training areas, food preparation and social leisure. The food component allows the non-reading individuals with developmental disabilities to become more independent in their daily activities. The social planning module leverages the existing food module and assists the users in panning for social occassions centered around food. This module is designed to be entertaining to capture the interest and imagination of the user, drawing them into the software, creating the desire to use the product.
The software product will be developed by three contract programmers. The software will be upgraded yearly.
The market for lifeskills training software can be segmented into four groups. The first is centers for independent living, the second is school districts, the third is proactive parents, and the last is agencies charged with special education administration. Each of the four segments is distinct and will be communicated with in different ways. These four segments have been chosen because they are the main purchasers of products for individuals with developmental disabilities.
The software industry for individuals with developmental disabilities has just begun to grow. Only within the last few years has there been a significant increase in the number of computers found in classrooms using specialized software. Competing with the software companies are products that have printed pictures on them, typically laminated cards. While these cards are helpful, they are less interactive.
FoodFun LIS has identified four distinct market segments for their products:
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Centers for Independent Living | 6% | 3,245 | 3,440 | 3,646 | 3,865 | 4,097 | 6.00% |
School Districts | 5% | 14,856 | 15,599 | 16,379 | 17,198 | 18,058 | 5.00% |
Proactive Parents | 8% | 824,555 | 890,519 | 961,761 | 1,038,702 | 1,121,798 | 8.00% |
Agencies | 6% | 5,354 | 5,675 | 6,016 | 6,377 | 6,760 | 6.00% |
Total | 7.93% | 848,010 | 915,233 | 987,802 | 1,066,142 | 1,150,713 | 7.93% |
These four target segments were chosen because they have the greatest likelihood of purchasing FoodFun’s products.
There are several companies making products that specifically address learning needs for individuals with developmental disabilities. While some of the companies’ products are also suitable for traditional students, most companies in this industry specialize on products for developmental disabilities.
Within the industry there are a wide range of products. There are many different product groups that target specific types of disabilities. There are also different products targeted on a specific disability. Some might concentrate on spelling, reading comprehension, counting, sentence construction, etc. Lastly, within each specific category products take different forms, some may be CDs, software, cards, audio tapes, etc.
There are three main companies that are direct competitors to FoodFun Lifeskills Instructional Software, focusing on individuals with developmental disabilities or individuals with autism (75% of individuals with autism are developmentally disabled and non-readers).
FoodFun’s marketing strategy will be to raise visibility of the software product among the decision makers who are in charge of purchasing aids and instructional tools. The campaign will be targeted to reach these people/organizations so that they are aware of the options they have in developing the skills of individuals with developmental disabilities. Lastly, the sales strategy will seek to convince the prospective customers that there can be significant gains in learning through FoodFun’s carefully designed software.
A table with sales forecast information and charts displaying monthly and yearly sales projections follows.
FoodFun LIS’ competitive edge is their clever incorporation of entertaining fun within the education software. Currently, there are several different vendors that are marketing software for this niche, however, the software is strictly educational. While this is well and good for developing skills, the students are not always that eager to use the software. FoodFun has adopted the philosophy that if they can make the education/training fun, the students will use it far more often, having fun while they are learning valuable skills.
Two different studies (not developmental disability specific studies, but the results are still applicable) have shown that if students are enjoying themselves, they will spend 2.4 times as long using the software that they perceive as fun. What this means is that the student is spending 2.4 times as long developing necessary skills when they are enjoying the software. FoodFun has incorporated entertainment aspects to their software to utilize this phenomenon.
FoodFun’s marketing strategy reflects their perception of the industry: that most of the companies operating today are operated by educators; that they make nice products; but not many people know about the products, and overall awareness is poor. The reality is that so many prospective customers in the United States are unaware of the different available products. FoodFun will employ an aggressive marketing strategy to raise awareness of their products among customers who are in need of these products, and thereby increasing software purchases. FoodFun will be advertising heavily in various industry journals and magazines as a proven method of reaching the target audience. The ads will generate awareness of FoodFun LIS and will lead the customers to FoodFun’s website where they can demo the software. This strategy is based on the philosophy that you can have a great product, but if no one knows about it you are not going to be successful.
FoodFun will use an aggressive sales campaign that will rely on conference participation as well as target cold calling. There are numerous industry conferences throughout the country that are specifically for educators. The conferences are the places where people get together and share strategies that work with their colleagues in different departments and different states. While the conferences are not typically packed with vendors, FoodFun LIS will be present since the conferences are a captive assortment of the right people – the educators that are in the trenches working with the special students. The conferences will be an excellent networking opportunity and should develop significant sales.
The second prong of the sales strategy will be a campaign aimed at contacting key decision makers and introducing them to FoodFun LIS and their products. Autism consultants for school districts comprise one group that will be targeted. The districts often take the consultants’ recommendations when making purchasing decisions for special education. Research will be done to determine states’ education districts structures to determine if it is the ESD (educational service district) that is providing the services or if the money has been given to agencies to disperse to various service providers. This information will be valuable in determining who is the proper consumer for the special software. These personal contacts will help generate significant sales.
The following table and charts present sales forecasts in a monthly format as well as yearly projections. Forecasts have been conservatively estimated to increase the likelihood of attainment. Sales has been broken down by customer group.
A fulfillment house will be contracted to produce, package, and ship the hard copy software product to purchasers. Download of the software from the FoodFun LIS website will be available. This will drastically reduce cost of goods if purchasers use the download only purchase option.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Centers for Independent Living | $23,439 | $96,957 | $118,616 |
School Districts | $43,405 | $179,550 | $219,660 |
Proactive Parents | $9,983 | $41,297 | $50,522 |
Agencies | $19,966 | $82,593 | $101,044 |
Total Sales | $96,793 | $400,397 | $489,842 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Centers for Independent Living | $1,641 | $6,787 | $8,303 |
School Districts | $3,038 | $12,569 | $15,376 |
Proactive Parents | $699 | $2,891 | $3,537 |
Agencies | $1,398 | $5,782 | $7,073 |
Subtotal Direct Cost of Sales | $6,776 | $28,028 | $34,289 |
FoodFun LIS has several milestones, presented in the following table and chart, which will be instrumental in the success of the organization.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business plan completion | 1/1/2004 | 2/15/2004 | $0 | Sue | Busines Development |
Beta version completed | 2/1/2004 | 4/15/2004 | $0 | ABC | Programming |
Organizational hiring complete | 3/15/2004 | 5/1/2004 | $0 | Sue | HR |
Public release of software | 4/15/2004 | 5/15/2004 | $0 | ABC | Programming |
Profitability | 5/15/2004 | 5/30/2005 | $0 | Sue | Accounting |
Totals | $0 |
FoodFun will develop a website that will be used as both a marketing and sales tool. On the site interested parties can receive more information regarding the company and the current product list. Once the beta version of the software is ready interested customers can download a trial version of the software for their evaluation. The website will also provide people with company contact information to allow them to ask any questions that they may have.
Online sales will be contracted to one of the third party Internet sales businesses, such as Yahoo! Shopping. The site will provide customers with a download only purchase option.
The website will be marketed using simple yet effective means. The first method is inclusion of the URL address in all promotional activities. This will be especially important because it will allow all interested parties to view screen shots of the software and download a trial version of the product. FoodFun LIS recognizes that no ad will be able to communicate everything, therefore FoodFun will rely on the website to provide the additional information. The second marketing tool for the website will be comprehension search engine submission. The submission process will provide FoodFun will many visitors to the website. This will be accomplished when an interested party searches on “autism software” or some other set of keywords. The search engine will then list a number of “hits” that correspond to the search terms.
FoodFun will employ one computer science student for the design and development of the website. Development will occur concurrently with the development of the software.
Sue spent eight years teaching at Northwestern. While she taught a number of general special education classes, her passion was lifeskills for individuals with developmental disabilities, focusing on life transitions. In addition to teaching, Sue served as a member of the board of several different nonprofit agencies. Her time spent on the different boards was quite pleasing since it provided her with a bit more direct experience with the individuals in need. In the school setting most of her interactions was specifically with graduate and undergraduate students.
Sue began to realize as much as she enjoyed teaching, she felt isolated from the students that she was trying to help. She recognized that her work as an educator would in effect benefit the students, but she was looking for a different connection. Because she had an amazing amount of knowledge about the subject of special education, Sue began to brainstorm some ideas of starting a business that would serve individuals with developmental disabilities. While this intrigued Sue, she did not feel she had the requisite business experience, so she took several business courses to help develop this new skill set. While taking these course (and teaching at the same time) Sue began to realize that while there were many different study aids on the market, they were all strictly educational. Sue believed (and studies would indicate) that if a fun component was added to the aid, students would use it more often and learn more. With this information in hand, Sue began to create an idea for some software that was both educational and entertaining at the same time. This was the beginning of FoodFun Lifeskills Instructional Software.
FoodFun LIS will require the following employees:
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Sue | $22,000 | $26,000 | $30,000 |
Accounting | $16,200 | $21,600 | $21,600 |
Software Documentation | $19,800 | $26,400 | $26,400 |
Product Development | $15,400 | $26,400 | $26,400 |
Customer Service/ Tech Support | $19,800 | $26,400 | $26,400 |
Customer Service/ Tech Support | $19,800 | $26,400 | $26,400 |
Marketing/ Sales | $27,000 | $36,000 | $36,000 |
Marketing/ Sales | $27,000 | $36,000 | $36,000 |
Total People | 8 | 8 | 8 |
Total Payroll | $167,000 | $225,200 | $229,200 |
The following sections outline important financial information.
The following table details important financial assumptions.
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 | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
The Break-even Analysis is shown below.
Break-even Analysis | |
Monthly Revenue Break-even | $20,959 |
Assumptions: | |
Average Percent Variable Cost | 7% |
Estimated Monthly Fixed Cost | $19,492 |
The table and charts illustrate the projected profit and loss.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $96,793 | $400,397 | $489,842 |
Direct Cost of Sales | $6,776 | $28,028 | $34,289 |
Other Costs of Goods | $0 | $0 | $0 |
Total Cost of Sales | $6,776 | $28,028 | $34,289 |
Gross Margin | $90,018 | $372,369 | $455,553 |
Gross Margin % | 93.00% | 93.00% | 93.00% |
Expenses | |||
Payroll | $167,000 | $225,200 | $229,200 |
Sales and Marketing and Other Expenses | $6,600 | $7,200 | $7,200 |
Depreciation | $1,800 | $1,800 | $1,800 |
Rent | $10,450 | $11,400 | $11,400 |
Utilities | $5,500 | $6,000 | $6,000 |
Insurance | $5,500 | $5,500 | $5,500 |
Payroll Taxes | $25,050 | $33,780 | $34,380 |
Programming | $12,000 | $0 | $0 |
Total Operating Expenses | $233,900 | $290,880 | $295,480 |
Profit Before Interest and Taxes | ($143,882) | $81,489 | $160,073 |
EBITDA | ($142,082) | $83,289 | $161,873 |
Interest Expense | $9,134 | $9,566 | $9,943 |
Taxes Incurred | $0 | $21,577 | $45,039 |
Net Profit | ($153,017) | $50,346 | $105,091 |
Net Profit/Sales | -158.09% | 12.57% | 21.45% |
The following chart and table show projected cash flow.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $24,198 | $100,099 | $122,460 |
Cash from Receivables | $46,108 | $217,218 | $342,905 |
Subtotal Cash from Operations | $70,306 | $317,317 | $465,366 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $40,000 | $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 | $70,306 | $357,317 | $465,366 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $167,000 | $225,200 | $229,200 |
Bill Payments | $75,294 | $124,114 | $152,785 |
Subtotal Spent on Operations | $242,294 | $349,314 | $381,985 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $16,227 | $16,227 | $16,227 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $258,521 | $365,541 | $398,212 |
Net Cash Flow | ($188,214) | ($8,224) | $67,154 |
Cash Balance | $25,286 | $17,062 | $84,215 |
The following table presents the projected balance sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $25,286 | $17,062 | $84,215 |
Accounts Receivable | $26,487 | $109,566 | $134,042 |
Inventory | $1,408 | $5,824 | $7,126 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $53,180 | $132,452 | $225,383 |
Long-term Assets | |||
Long-term Assets | $9,000 | $9,000 | $9,000 |
Accumulated Depreciation | $1,800 | $3,600 | $5,400 |
Total Long-term Assets | $7,200 | $5,400 | $3,600 |
Total Assets | $60,380 | $137,852 | $228,983 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $7,124 | $10,477 | $12,744 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $7,124 | $10,477 | $12,744 |
Long-term Liabilities | $83,773 | $107,546 | $91,319 |
Total Liabilities | $90,897 | $118,023 | $104,063 |
Paid-in Capital | $145,000 | $145,000 | $145,000 |
Retained Earnings | ($22,500) | ($175,517) | ($125,171) |
Earnings | ($153,017) | $50,346 | $105,091 |
Total Capital | ($30,517) | $19,829 | $124,920 |
Total Liabilities and Capital | $60,380 | $137,852 | $228,983 |
Net Worth | ($30,517) | $19,829 | $124,920 |
The following table outlines some of the more important ratios from the Computer Software industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5045.9903.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 313.66% | 22.34% | 1.51% |
Percent of Total Assets | ||||
Accounts Receivable | 43.87% | 79.48% | 58.54% | 29.71% |
Inventory | 2.33% | 4.23% | 3.11% | 39.18% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 19.28% |
Total Current Assets | 88.08% | 96.08% | 98.43% | 88.17% |
Long-term Assets | 11.92% | 3.92% | 1.57% | 11.83% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 11.80% | 7.60% | 5.57% | 43.83% |
Long-term Liabilities | 138.74% | 78.02% | 39.88% | 9.87% |
Total Liabilities | 150.54% | 85.62% | 45.45% | 53.70% |
Net Worth | -50.54% | 14.38% | 54.55% | 46.30% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 93.00% | 93.00% | 93.00% | 24.10% |
Selling, General & Administrative Expenses | 251.09% | 80.43% | 71.55% | 15.49% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.58% |
Profit Before Interest and Taxes | -148.65% | 20.35% | 32.68% | 2.35% |
Main Ratios | ||||
Current | 7.46 | 12.64 | 17.69 | 1.86 |
Quick | 7.27 | 12.09 | 17.13 | 0.86 |
Total Debt to Total Assets | 150.54% | 85.62% | 45.45% | 5.06% |
Pre-tax Return on Net Worth | 501.42% | 362.71% | 120.18% | 56.70% |
Pre-tax Return on Assets | -253.42% | 52.17% | 65.56% | 11.68% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -158.09% | 12.57% | 21.45% | n.a |
Return on Equity | 0.00% | 253.90% | 84.13% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 2.74 | 2.74 | 2.74 | n.a |
Collection Days | 54 | 83 | 121 | n.a |
Inventory Turnover | 9.55 | 7.75 | 5.30 | n.a |
Accounts Payable Turnover | 11.57 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 25 | 27 | n.a |
Total Asset Turnover | 1.60 | 2.90 | 2.14 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 5.95 | 0.83 | n.a |
Current Liab. to Liab. | 0.08 | 0.09 | 0.12 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $46,056 | $121,975 | $212,639 | n.a |
Interest Coverage | -15.75 | 8.52 | 16.10 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.62 | 0.34 | 0.47 | n.a |
Current Debt/Total Assets | 12% | 8% | 6% | n.a |
Acid Test | 3.55 | 1.63 | 6.61 | n.a |
Sales/Net Worth | 0.00 | 20.19 | 3.92 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Centers for Independent Living | 0% | $0 | $0 | $0 | $0 | $540 | $1,350 | $1,944 | $2,970 | $3,918 | $4,023 | $4,266 | $4,428 |
School Districts | 0% | $0 | $0 | $0 | $0 | $1,000 | $2,500 | $3,600 | $5,500 | $7,255 | $7,450 | $7,900 | $8,200 |
Proactive Parents | 0% | $0 | $0 | $0 | $0 | $230 | $575 | $828 | $1,265 | $1,669 | $1,714 | $1,817 | $1,886 |
Agencies | 0% | $0 | $0 | $0 | $0 | $460 | $1,150 | $1,656 | $2,530 | $3,337 | $3,427 | $3,634 | $3,772 |
Total Sales | $0 | $0 | $0 | $0 | $2,230 | $5,575 | $8,028 | $12,265 | $16,179 | $16,614 | $17,617 | $18,286 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Centers for Independent Living | $0 | $0 | $0 | $0 | $38 | $95 | $136 | $208 | $274 | $282 | $299 | $310 | |
School Districts | $0 | $0 | $0 | $0 | $70 | $175 | $252 | $385 | $508 | $522 | $553 | $574 | |
Proactive Parents | $0 | $0 | $0 | $0 | $16 | $40 | $58 | $89 | $117 | $120 | $127 | $132 | |
Agencies | $0 | $0 | $0 | $0 | $32 | $81 | $116 | $177 | $234 | $240 | $254 | $264 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $156 | $390 | $562 | $859 | $1,133 | $1,163 | $1,233 | $1,280 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sue | 0% | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Accounting | 0% | $0 | $0 | $0 | $1,800 | $1,800 | $1,800 | $1,800 | $1,800 | $1,800 | $1,800 | $1,800 | $1,800 |
Software Documentation | 0% | $0 | $0 | $0 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 |
Product Development | 0% | $0 | $0 | $0 | $0 | $0 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 |
Customer Service/ Tech Support | 0% | $0 | $0 | $0 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 |
Customer Service/ Tech Support | 0% | $0 | $0 | $0 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 | $2,200 |
Marketing/ Sales | 0% | $0 | $0 | $0 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Marketing/ Sales | 0% | $0 | $0 | $0 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Total People | 0 | 1 | 1 | 7 | 7 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | |
Total Payroll | $0 | $2,000 | $2,000 | $16,400 | $16,400 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $0 | $0 | $0 | $0 | $2,230 | $5,575 | $8,028 | $12,265 | $16,179 | $16,614 | $17,617 | $18,286 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $156 | $390 | $562 | $859 | $1,133 | $1,163 | $1,233 | $1,280 | |
Other Costs of Goods | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $156 | $390 | $562 | $859 | $1,133 | $1,163 | $1,233 | $1,280 | |
Gross Margin | $0 | $0 | $0 | $0 | $2,074 | $5,185 | $7,466 | $11,406 | $15,046 | $15,451 | $16,384 | $17,006 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 0.00% | 93.00% | 93.00% | 93.00% | 93.00% | 93.00% | 93.00% | 93.00% | 93.00% | |
Expenses | |||||||||||||
Payroll | $0 | $2,000 | $2,000 | $16,400 | $16,400 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | |
Sales and Marketing and Other Expenses | $0 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | |
Depreciation | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Rent | $0 | $950 | $950 | $950 | $950 | $950 | $950 | $950 | $950 | $950 | $950 | $950 | |
Utilities | $0 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Insurance | $0 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Payroll Taxes | 15% | $0 | $300 | $300 | $2,460 | $2,460 | $2,790 | $2,790 | $2,790 | $2,790 | $2,790 | $2,790 | $2,790 |
Programming | $3,000 | $3,000 | $3,000 | $3,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $3,150 | $8,000 | $8,000 | $24,560 | $21,560 | $24,090 | $24,090 | $24,090 | $24,090 | $24,090 | $24,090 | $24,090 | |
Profit Before Interest and Taxes | ($3,150) | ($8,000) | ($8,000) | ($24,560) | ($19,486) | ($18,905) | ($16,624) | ($12,684) | ($9,044) | ($8,639) | ($7,706) | ($7,084) | |
EBITDA | ($3,000) | ($7,850) | ($7,850) | ($24,410) | ($19,336) | ($18,755) | ($16,474) | ($12,534) | ($8,894) | ($8,489) | ($7,556) | ($6,934) | |
Interest Expense | $823 | $812 | $801 | $790 | $779 | $767 | $756 | $745 | $733 | $722 | $710 | $698 | |
Taxes Incurred | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Profit | ($3,973) | ($8,812) | ($8,801) | ($25,350) | ($20,265) | ($19,673) | ($17,380) | ($13,428) | ($9,777) | ($9,361) | ($8,416) | ($7,782) | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | 0.00% | -908.73% | -352.87% | -216.49% | -109.48% | -60.43% | -56.35% | -47.77% | -42.56% |
Pro Forma Cash Flow | |||||||||||||
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 Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $558 | $1,394 | $2,007 | $3,066 | $4,045 | $4,153 | $4,404 | $4,572 | |
Cash from Receivables | $0 | $0 | $0 | $0 | $0 | $56 | $1,756 | $4,243 | $6,127 | $9,297 | $12,145 | $12,485 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $0 | $558 | $1,450 | $3,763 | $7,309 | $10,172 | $13,450 | $16,549 | $17,057 | |
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 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $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 | $0 | $0 | $0 | $0 | $558 | $1,450 | $3,763 | $7,309 | $10,172 | $13,450 | $16,549 | $17,057 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $0 | $2,000 | $2,000 | $16,400 | $16,400 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | $18,600 | |
Bill Payments | $127 | $3,917 | $6,661 | $6,722 | $8,733 | $6,766 | $6,140 | $7,096 | $7,096 | $7,413 | $7,261 | $7,361 | |
Subtotal Spent on Operations | $127 | $5,917 | $8,661 | $23,122 | $25,133 | $25,366 | $24,740 | $25,696 | $25,696 | $26,013 | $25,861 | $25,961 | |
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 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $1,291 | $1,302 | $1,313 | $1,324 | $1,335 | $1,346 | $1,357 | $1,369 | $1,380 | $1,392 | $1,403 | $1,415 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $1,419 | $7,219 | $9,974 | $24,446 | $26,468 | $26,712 | $26,098 | $27,064 | $27,076 | $27,404 | $27,265 | $27,375 | |
Net Cash Flow | ($1,419) | ($7,219) | ($9,974) | ($24,446) | ($25,910) | ($25,262) | ($22,335) | ($19,755) | ($16,904) | ($13,955) | ($10,715) | ($10,319) | |
Cash Balance | $212,081 | $204,862 | $194,888 | $170,441 | $144,531 | $119,269 | $96,934 | $77,178 | $60,274 | $46,320 | $35,604 | $25,286 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $213,500 | $212,081 | $204,862 | $194,888 | $170,441 | $144,531 | $119,269 | $96,934 | $77,178 | $60,274 | $46,320 | $35,604 | $25,286 |
Accounts Receivable | $0 | $0 | $0 | $0 | $0 | $1,673 | $5,798 | $10,063 | $15,019 | $21,026 | $24,190 | $25,258 | $26,487 |
Inventory | $0 | $0 | $0 | $0 | $0 | $844 | $454 | $892 | $1,033 | $1,246 | $1,279 | $1,357 | $1,408 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $213,500 | $212,081 | $204,862 | $194,888 | $170,441 | $147,047 | $125,520 | $107,889 | $93,231 | $82,546 | $71,789 | $62,218 | $53,180 |
Long-term Assets | |||||||||||||
Long-term Assets | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 |
Accumulated Depreciation | $0 | $150 | $300 | $450 | $600 | $750 | $900 | $1,050 | $1,200 | $1,350 | $1,500 | $1,650 | $1,800 |
Total Long-term Assets | $9,000 | $8,850 | $8,700 | $8,550 | $8,400 | $8,250 | $8,100 | $7,950 | $7,800 | $7,650 | $7,500 | $7,350 | $7,200 |
Total Assets | $222,500 | $220,931 | $213,562 | $203,438 | $178,841 | $155,297 | $133,620 | $115,839 | $101,031 | $90,196 | $79,289 | $69,568 | $60,380 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $3,695 | $6,440 | $6,429 | $8,506 | $6,562 | $5,904 | $6,860 | $6,849 | $7,171 | $7,016 | $7,115 | $7,124 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $3,695 | $6,440 | $6,429 | $8,506 | $6,562 | $5,904 | $6,860 | $6,849 | $7,171 | $7,016 | $7,115 | $7,124 |
Long-term Liabilities | $100,000 | $98,709 | $97,406 | $96,094 | $94,770 | $93,435 | $92,089 | $90,731 | $89,363 | $87,983 | $86,591 | $85,188 | $83,773 |
Total Liabilities | $100,000 | $102,404 | $103,846 | $102,523 | $103,276 | $99,997 | $97,992 | $97,591 | $96,211 | $95,154 | $93,607 | $92,303 | $90,897 |
Paid-in Capital | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 | $145,000 |
Retained Earnings | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) | ($22,500) |
Earnings | $0 | ($3,973) | ($12,784) | ($21,585) | ($46,935) | ($67,200) | ($86,872) | ($104,252) | ($117,680) | ($127,458) | ($136,819) | ($145,235) | ($153,017) |
Total Capital | $122,500 | $118,527 | $109,716 | $100,915 | $75,565 | $55,300 | $35,628 | $18,248 | $4,820 | ($4,958) | ($14,319) | ($22,735) | ($30,517) |
Total Liabilities and Capital | $222,500 | $220,931 | $213,562 | $203,438 | $178,841 | $155,297 | $133,620 | $115,839 | $101,031 | $90,196 | $79,289 | $69,568 | $60,380 |
Net Worth | $122,500 | $118,527 | $109,716 | $100,915 | $75,565 | $55,300 | $35,628 | $18,248 | $4,820 | ($4,958) | ($14,319) | ($22,735) | ($30,517) |
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Embarking on the journey of creating software is akin to building a house; without a blueprint, the process can become a labyrinth of confusion. Let’s face it, a software development plan is your compass in the digital wilderness. It delineates the terrain, plotting a course from nebulous ideas to polished, functional software.
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Every software development project, whether following the Waterfall model or Scrum methodology , has some features in common.
The process starts with conceiving an idea. Next comes its design, realization, and programming, all crucial in the development lifecycle .
It should also encompass the later parts of the application’s life cycle, including software maintenance and user acceptance testing (UAT) .
In its simplest form, a software development plan is a timeline of the project . It showcases the scheduling for each phase, indicating when it starts and when it concludes. This planning aids in task tracking and sprint planning .
Zooming in on a phase reveals the different substeps, code reviews , and integration testing that it entails.
A software development plan communicates the approach that the project will undertake, the required product roadmap software tools and platforms, and the needed resources. This clarity is vital for the project team members, as well as clients and other stakeholders. You can use a flipbook software to document your plan, capturing elements like technical specifications and presenting it in an interactive way, so your team and clients can effortlessly grasp it.
The development plan answers the following questions:
There are various elements that managers may incorporate in the software management plan. These essentials include:
The functionality details might remain undefined at this juncture. However, the plan should document the outputs and their relevance in the project scope .
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To construct an effective software development plan, it’s vital to understand its importance and how it fits into the broader software design and architecture landscape.
Below are the most common phases of a software development project, often seen in both Agile development and the Waterfall model . Use them as a guide when detailing the phases and elements of any project.
After a client puts in a request for the development of software, the management team, including those familiar with project management and Scrum methodology , sits down to plan. These are some important elements to consider:
Get all the involved departments together , ensuring task tracking and sprint planning . This includes developers, project managers, security, quality assurance teams, and other stakeholders. Using a product planning software tool is an excellent way to manage all this, ensuring adherence to coding standards and maintaining a clear documentation .
When defining the goals of the project, specify intentions, visions, and preferred endpoint . Such clarity makes it easier to predict the outcome of the project, both for the client and the company. This definition stage is crucial for setting a proper project scope . Something that is often overlooked leading to project scope creep, a major project plan risk that could have been easily avoided.
Defining the goals is also essential to write a realistic, concise project plan that accounts for software maintenance and user acceptance testing (UAT) phases.
Software should automate certain tasks, boost productivity, streamline processes, and align with the chosen functionality to address problems. The exact goal and how it fits into the development phases should be clear.
With that in mind, define how to quantify the success of the project, considering milestones , deadlines , and deliverables . Many managers make use of a Gantt chart or even source code management tools to visualize and track this part.
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Writing a software company business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan: 1. Executive Summary. An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready ...
How to Write a Business Plan for a Software Company . If you want to start a software company or expand your current one, you need a business plan. ... The following are examples of customer segments: start-up tech companies, companies in need of CRM software, research and development companies, and cloud-computing corporations. As you can ...
A Sample Software Development Business Plan Template. 1. Industry Overview. The software development industry has grown in the space of a century from an almost on-existent industry to one that is not only a billion dollar industry but an indispensable one, especially as software form the basis of modern gadgets and devices.
Let's go through the content of each section in more detail! 1. The executive summary. In your software development company's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.
The executive summary of a software business plan is a one- to two-page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan. Start with a one-line description of your software company. Provide a short summary of the key points in each section of your ...
A software company business plan is a strategic document that outlines the objectives, strategies, and operational details of your venture in the software industry. It serves as a blueprint for ...
How to Write a Software Development Business Plan in 7 Steps: 1. Describe the Purpose of Your Software Development Business. The first step to writing your business plan is to describe the purpose of your software development business. This includes describing why you are starting this type of business, and what problems it will solve for ...
An executive summary's main objective is to emphasize critical information about the tech company business plan. But, it's vital not to overload the summary with unnecessary details regarding the concept. It should grab people's interest and make them want to learn more. Tip #3.
Develop A Software Company Business Plan - The first step in starting a business is to create a detailed software company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
A business plan is essential for any new project, especially in the software development industry. It provides an outline of the project's goals, resources, and timeline, and helps to identify potential risks and rewards. Having a clear business plan in place can help ensure the success of the project by providing a roadmap for the team to work ...
1. Create Your Executive Summary. The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans. Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Step 3: Creating a Winning Business Plan. A solid business plan not only helps in securing funding but also serves as a roadmap for your company's growth. It guides your decision-making and helps you adapt to changes in the market. A well-crafted business plan is essential for guiding your software company from start to finish.
How To Write A Business Plan (2024 Guide)
How to Write a Simple Business Plan
Table of Contents: Provide a table of contents that gives page indices for different sections of the business plan, it is very common for these to exceed 20 pages and it is important to have a directory to navigate it. Executive Summary: Provide a 3 sentence description of the purpose of the company. This should explain the problem that the ...
Step 2: Do your market research homework. The next step in writing a business plan is to conduct market research. This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to ...
The Best Business Plan Software of 2024. Wrike: Best overall. Smartsheet: Best for goal management. LivePlan: Best for financial forecasting. Aha!: Best for roadmapping. Bizplan: Best for ...
The business development plan is a key document that helps you map your ecosystem and strategize your business development efforts. It consists of a research part and an action part. In the first part, you analyze your market, competitors, and customers. In the second, you use your insights to build value propositions, content plans, and ...
How to Write a Business Plan: Guide + Examples
A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business. Business plans can help you get funding or bring on new business partners.
7) End with a call to action. End your proposal with a clear call to action. Invite the client to take the next step, whether it's a meeting, a call, or signing the proposal. Make it easy for them to move forward with you by providing all necessary contact information and any next steps they need to take.
The structure of the software development project plan. The first step in writing a software development plan is establishing its key components. In this part, we will examine the sections of a typical software development plan, and give you a checklist about their contents with a sample of a software development project plans.
FoodFun LIS is a start-up organization. The following assets and professional services will be needed for the formation and start of operations. Legal services for company formation. Accounting services to set up the accounting shell of the company QuickBooks Pro software. Computer programmers (3) to rapidly develop the software.
How to Write a Software Development Plan. To construct an effective software development plan, it's vital to understand its importance and how it fits into the broader software design and architecture landscape.. Below are the most common phases of a software development project, often seen in both Agile development and the Waterfall model.Use them as a guide when detailing the phases and ...