Freelance Editor (Financial Plan)
Financial Plan
Business History
Nineteen ninety-four was our first year in operation. In addition to the "standard" development of a start-up business, there were additional problems. These incidents account for the sometimes negative growth of a viable growing business. Existing computer systems also proved unable to handle the volume and quality of work necessary to succeed.
The Scrivener invested $12,000.00 drawn from personal savings in new computer equipment and software in August 1994.
Ratios for a Creative Business*
Quick: [Short term assets divided by short-term liabilities]. Ideal = 1.0 to 1.5. The Scrivener as of June 1995 has a ratio of 1.25.
Debt to Asset: [Total liabilities divided by total assets]. Ideal = 0.3 to 0.6. The Scrivener as of June 1995 has a ratio of 0.5.
**Return on Equity: [Net profit divided by owner's equity]. Ideal = 15% to 35%. The Scrivener as of June 1995 has a ratio of 18%.
Return on Net Working Capital: [Net revenue divided by short-term assets minus short-term liabilities]. Ideal = 5 to 10. The Scrivener as of June 1995 has a ratio of 6.
*Creative Business Newsletter **Business performance index
Assumptions
Sales - $2,000.00 per month based on a workload of eighty hours per month at an average cost of $25.00 per hour.
Newsletters - 2 per month at an average billing of $300.00 each
Accounts Payable
Repay nearly $15,000 in personal loans to start business at a monthly cost of $486.70
Pay monthly overhead and expenses, excluding loans, average of $600.00
Pay business Visa charges, currently $200 per month.
Accounts Receivable
Projects below $50: payment is due upon job completion.
Projects between $50 and $100: $50 is due upon job acceptance, the balance is due upon completion.
Projects over $100 are divided into thirds, with one-third due upon job acceptance, the second third due upon delivery of the first draft, and the balance due upon job completion.
1.75% monthly interest (21% APR) is charged on accounts over 30 days old.
Bad Checks are sent to the Silver County Attorney's office.
Taxes
The Scrivener has not had to pay income tax, nor does it collect sales taxes.
Accounting System
The Scrivener uses M.Y.O.B. ver. 5. Client project times are kept by Time slips, a report listing client, project, and activity is printed for each invoice activity. An accountant will be auditing the books and amending any errors which occurred during the set-up phase.
