BUS 485 Week 5 CLC – Financial Plan for the Capstone Project

                      

The Homework Hangout Inc.   

Grand Canyon University

 

 

 

 

The Homework Hangout Inc.

Pro Forma Income Statement

2016

2017

2018

Support and Revenues

Contributions
               800,000
    1,000,000
    2,500,000
Governmental Fees and Grants
           1,250,000
    2,000,000
    2,000,000
Program Service Fees
               105,000
       300,000
       450,000
Donated Materials and Services
             (500,000)
      (600,000)
      (800,000)
Investment Income
                          –  
                  –  
         10,000
Gain on Sale or disposal of property & equipment
                          –  
         10,000
         12,000

Total Support and Revenues

           1,655,000
    2,710,000
    4,172,000
Operating Expenses

Administrative / Office Expenses
                 60,000
         72,000
         75,000
Salaries
               780,000
       790,000
       800,000
Employee Benefits
               195,000
       197,500
       200,000
Payroll taxes
                 59,670
         60,435
         61,200
Marketing Costs
               300,000
       350,000
       400,000
Research and Development
                 10,000
         12,000
         15,000
Office Leases
                 36,000
         36,000
         36,000
Social adjustment, development, and recreation
               950,000
       955,000
    1,000,000

Total Operating Expenses

2,390,670

2,472,935

2,587,200

Change in Net assets
             (735,670)
       237,065
    1,584,800

Break Even Point:

If the Homework Hangout sells tutoring rates at 20$ an hour and pays tutors at $10 an hour, the company would need to sell 39,600 educational hours for a breakeven point.  Our previous numbers aren’t is counting additional services on the side such as sporting and camping events, sleepovers, or specialty instruction like musical training and does not include possible concession sales.

The Homework Hangout Inc. will need to make sure that there are proper funding and reliable sources of income to support and safeguard the importance of why the company was created and what it seeks to accomplish within the community. A majority of funding will be found through the school district and the people who support the school system. Any donations of supplies from parents of the program will be accepted. A fee of 20$ per hour per student will be charged for services provided by the Homework Hangout Inc. Furthermore, The Homework Hangout will seek sponsorship from community businesses and take donations to help fund any provisions needed for the program. The Homework Hangout will also seek capital from USSBA and apply any assistance granted from the USSBA to the program. The Homework Hangout will also pursue any potential investors who want to be part of a long-term program that will help provide a service to students of the community and give them to the tools desired to help build a firm educated future.

       As an organization, it is important to allow for the financial numbers to influence some of your business plans. The collective management team must decide the best course of action to provide funding when funds beyond personal or initial investment are exhausted. The timing of seed funding through outside sources or partners is critical in planning future expansion, current staffing levels, pricing for services, and break-even point with which to measure profit margin beyond expense and income statements. This planning will allow for a control measure to set budgeting based on the fixed costs, the ability to manage the variable costs to stay within the or below the established break-even numbers. If these can be maintained, then expansion and continual growth can be expected to follow the plan set in an initial offering to investment partners. The Break-even analysis will determine the minimum number of clients we must service to cover the costs of doing business allowing for robust planning in the other aspect of the firm (Benson, 2016). 

     Other tools to assist in Homework Hangout’s plan of activities is what payment terms we will offer to clients, partners, and other outside staff people who are independent renting space to hold classes.  The terms must be acceptable to each party without hurting or depleting the influx of revenue necessary to continue the operations of the business. The successful management of the finances will provide for the rapid growth of the Homework Hangout in the region as the premier afterschool social and learning spot for teens in the initial market offering. With this success, the expansion through acquisition of other properties to expand the footprint of the business will meet or exceed the business plan.

            The Homework Hangout will likely use the debt to equity ratio in order to make sure that the company can accurately show the difference between the amount of capital borrowed and the amount given by shareholders. The company will also likely use a profitability ratio such as return on assets in order to verify that the company is maintaining decent profit margins. By using all of these tools The Homework Hangout should be able to precisely see where financial adjustments will need to be made in order to ensure the success and growth of The Homework Hangout.

Resources

About SBA | The U.S. Small Business Administration | SBA.gov. (n.d.). Retrieved from https://www.sba.gov/about-sba

Benson, T. (2016). The Key Elements of the Financial Plan. Bplans Starting a business made easy. Retrieved from http://articles.bplans.com/the-key-elements-of-the-financial-plan/