Start-up Funding | |
Start-up Expenses to Fund | $14,200 |
Start-up Assets to Fund | $45,800 |
Total Funding Required | $60,000 |
Assets | |
Non-cash Assets from Start-up | $0 |
Cash Requirements from Start-up | $45,800 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $45,800 |
Total Assets | $45,800 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $25,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $25,000 |
Capital | |
Planned Investment | |
Dawson | $35,000 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $35,000 |
Loss at Start-up (Start-up Expenses) | ($14,200) |
Total Capital | $20,800 |
Total Capital and Liabilities | $45,800 |
Total Funding | $60,000 |
Growth Management and Strategies is wholly owned by Bill Dawson, and is classified as an LLC.
Growth Management and Strategies offers a variety of services to the small business client. Many of the services are customized for each client, and a bidding process is observed. The company also offers a traditional fixed rate sheet for its services.
The target customer owns a small business, and is generally dissatisfied with the revenue that the business is generating, or is dissatisfied with the daily management of their business. The customer is likely to operate a business worth between $200K and $10 million, with growth rates of between 1-10%, or even a negative growth rate.
Market growth, that is, the predicted growth in the small business sector within the Boston/Cambridge Metro area is expected to be around 3% per year. This may increase due to additional SBA lending programs designed to match the strengths of research and faculty grant work with the needs of the market and small businesses willing to take new products to market. Regardless of the market growth, the company’s customer base is far more dependant upon service needs, and a solid reputation. Mr. Dawson is well respected within the community, and has built a number of relationships with high profile individuals, and is a frequent contributor to the business section of the Boston Herald.
The corresponding market analysis table below breaks the potential market down into tactical sub-markets.
These are not the only differentiators used to determine the market potential for a client, they are simply a starting point for the sales team as they reach out to this group of small businesses, owners and investors.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
200K – $500K Revenue | 4% | 1,250 | 1,300 | 1,352 | 1,406 | 1,462 | 3.99% |
$501K – $3 million Revenue | 1% | 320 | 323 | 326 | 329 | 332 | 0.92% |
$3 million – $10 million Revenue | -5% | 129 | 123 | 117 | 111 | 105 | -5.02% |
Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
Total | 2.82% | 1,699 | 1,746 | 1,795 | 1,846 | 1,899 | 2.82% |
The target market strategy involves isolating potential customers by revenue, then drilling down to very specific needs via the sales team’s needs analysis methodology.
The first tier customers, businesses with over $3 million in revenue, is more experienced in outsourcing and may find themselves more comfortable hiring Growth Management and Strategies on retainer. Strategically, a retainer helps maintain consistent cash flow, even if during some months these customers will require more services than what they have paid for that month. This issue will be addressed in the Personnel topic.
The second tier customers, those businesses operating at revenue levels of $501K – $3 million, typically are very excited to have moved out of the home office stage, and into a new level of stability. If they are self-funded, these businesses can be the most challenging to work with because they are often not willing to part with company shares, and don’t yet have a sense of what kind of marketing investment is necessary to grow a business at this stage. The company will serve these small businesses based on a bid cycle, and needs analysis.
The third tier customers are easier to identify, and more ubiquitous than the rest. These small businesses are operating on $200K – $500K in revenue, often are operating out of a home, and have a firm sense of their market and potential, yet have trouble executing their plans effectively, or following through on growth strategies that generate wealth. Again, the strategy is to provide these businesses with a short needs analysis, and focus on the quantity of such customers to maintain a solid revenue stream.
This industry is split up between a variety of players, including small businesses advising small businesses, such as the case with Growth Management and Strategies, to large conglomerate multinational consulting firms that send in newbie MBAs and use their name recognition to convince their clients that every one of these MBAs will generate over $300K a year in value. Sometimes they do, but when they don’t, GMS plans to be there.
At the other end of the spectrum, there are a wide variety of mom and pop consulting firms owned by very talented people who simply don’t have the marketing resources or expertise to reach a broader spectrum of customer.
GMS is somewhere in between. With years of guerrilla marketing experience, and a long-term plan for success, Mr. Dawson is determined to build the company each client at a time, and to focus on a sales team that outperforms all the competitors.
GMS is planning to grow exponentially within the first two years, to over $2 million in consulting revenue. At this point the service business analysis will be re-evaluated from the outside in.
Typically small business clients will learn about the consulting services market through word-of-mouth experience passed on through a friend or contemporary. Still, outbound sales teams dominate this category, and the stronger your sales team and name recognition, the greater your odds of finding clients willing to place your company on retainer or accept your company’s bid. The most competitive players in this market tend to have some of the best sales teams in the industry, that is, people who know not only how to communicate the technical needs analysis in a non-technical way, but in addition, are able to follow through and execute on promises and provide accurate, industry specific information that is useful to the client even before the deal is made.
Price is also important, and operates on a complex tiered system that is dependant upon the effectiveness of a particular salesperson, the word-of-mouth (WOM) advertising already in the mind of the potential client, and the ability of the client to reform the way they think about their own business. The demands of turning a business around, or pushing it to the limits of its potential are in direct proportion to the price of each bid. GMS must be careful not to be lured into out bidding a competitor, only to find that the customer has no plans to modify their business plan, and are seeking a “magic bullet” that may or may not exist. Competition in this industry leads to frustration and burnout for many people, and it takes a strong sense of purpose to push the business beyond the realm of the high-intensity, low-return client.
GMS will pursue a strategy in line with the experience of the owner, and implementation will be performance based and follow a clear path. Milestones are important to the implementation of this plan, and so is the vision and the will of the company’s owner, Mr. Dawson. The overall company strategy is tied very closely with the sales strategy, that is, with the front lines of the business. One of the biggest threats to any strategy is that they can become too high-minded, and not literal enough to translate into action. This will not be the case with GMS, a solid company that hires top talent and achieves it’s goals on time and on budget.
GMS has a significant competitive edge in the following areas:
GMS’s marketing strategy revolves around a three-tiered focus. At the top of pyramid one, imagine a customer service ideal. This ideal is also included in the competitive comparison.
Pyramid three has at the top a team-centric company culture. Tactics revolve around building this culture from the ground up so that it rewards innovation and determination, and management shows no personal bias or favoritism except when a salesperson or consultant is outperforming the mean. Although this strategy appears to be an internal management goal or company summary object, it is highly relevant to marketing’s performance because without integrity standards and a consistent company culture, GMS’s marketing will feel disconnected and unsupported, and will suffer as a result. A more detailed breakdown of tactics and programs related to this strategy is available in the full marketing plan.
GMS plans to develop and train 5-6 new salespeople by year two. Upon start up, the primary sales contact will be Mr. Dawson, but this will change as the revenues increase, and the company is able to invest in human capital.
GMS has a sales strategy that focuses on an initial needs analysis. Once the results of the needs analysis has been forwarded or described over the phone to a potential client, the salesperson will ask for a personal interview, a chance to sit down and discuss specifics. At no time should this be perceived by the potential client as “pushy” or “agressive.”
The goal of this sales process is to get behind the numbers, and the business successes, to identify where the client’s needs lie. Once this is mapped out, GMS will decide how these problems can be best addressed, and will offer both a bid and some action points. If the client wants to use the action points to move forward on their own, this is very acceptable. GMS’s research has in fact shown that the clients that choose this path, often come back to seek additional information, and more often than not, accept the bid.
This strategy differs from the course often taken by large consulting firms in that the customer is not condescended to, or treated as if the knowledge isn’t right there in their own heads. Often, consulting companies will send a large ego to clean up a client’s mess, and find that the strategy backfires when the client only chooses to give the consultant the chance to bid. GMS’s sales strategy revolves around customer service and empowerment, not condescension and sales “closers.”
Sales forecast is based on the assumption that most of the revenue will be the result of consulting bids. The growth in retainer revenue is about 30% lower than the expected yearly growth in consulting bids of 80%/year. This may seem like an agressive number at first glance, but this is not a large company being discussed in this business plan. The smaller the company, often the larger the opportunity for exponential sales growth, and especially if the firm uses sound sales and marketing strategies to take share from the larger, less nimble consultancies.
The Needs Analysis service is listed only to highlight the fact that some outside information gathering firms/consultants will be used to compile the necessary information. This poses some risk because there are no costs associated with the Needs Analysis efforts. Nevertheless, GMS is confident that this product will set the company apart from the competition, and generate sales far in excess of the costs incurred.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Job Bids | $257,493 | $463,487 | $834,276 |
Retainer | $549,337 | $714,138 | $928,379 |
Needs Analysis | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Sales | $806,829 | $1,177,624 | $1,762,655 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Job Bids | $0 | $0 | $0 |
Retainer | $0 | $0 | $0 |
Needs Analysis | $10,151 | $11,673 | $13,424 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $10,151 | $11,673 | $13,424 |
The milestones table includes one listing each for the business plan and the marketing plan. Each of these are crucial to the long-term and short-term success of GMS. The other milestones are also important, but most are simply tasks necessary in starting up almost any business. Nevertheless, the most important milestone in this table is financial. The SBA loan will determine whether this company will have the working capital to operate for 5-12 months with little or no immediate revenue. If GMS cannot find the working capital to meet the minimum cash flow expectations set forth in this document, the company will dissolve and the owner will turn his talents elsewhere. Therefore, it is possible that the line item for “SBA Loan” may be changed to acquire family or friends as investors. Ideally it will not come to that and Mr. Dawson will be able to retain full control of the company, and direct it entirely based on his vision.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business Plan | 7/1/2003 | 8/1/2003 | $250 | Dawson | NA |
Select and Purchase Equipment | 7/15/2002 | 9/1/2002 | $4,500 | Dawson | NA |
Establish Sales Routine, Methods | 8/12/2002 | 8/22/2002 | $0 | Dawson | NA |
Setup LAN, Utilities, Office | 8/1/2002 | 9/1/2002 | $450 | Dawson | NA |
Marketing Plan | 6/1/2002 | 7/1/2002 | $250 | Dawson | NA |
Corporate Minutes, Board Selection | 9/1/2002 | 9/15/2002 | $0 | Dawson | NA |
SBA Loan | 10/1/2002 | 11/1/2002 | $250 | Dawson | NA |
Totals | $5,700 |
The management team will initially consist of Bill Dawson. A Harvard MBA, and world-renowned consultant for major Fortune 500 companies, Mr. Dawson has built a reputation based his customer-centric approach to consulting, a relative anomaly in the world of high profile consulting. Many consultants are trained to believe they are right and the client was put on this earth to learn from the consultant. That is not the case for GMS, as the management team (Dawson) takes a different tact. The consultant acts as an interviewer, learning all that is possible to learn about the client in a one or two week period. As a management tool, this approach is very effective because it gives the sales team flexibility in dealing with potential customers, and relieves the uncomfortable pressure to close the sale.
Mr. Dawson’s approach to managing customers is also the approach he will take in dealing with his salespeople. GMS doesn’t need a hefty management structure, or administrative overhead. Many of those processes may be handled through outsourcing and Internet technology. On the contrary, the management structure at GMS is designed to reward the performer and educate the underperformer. Each salesperson is given a battery of psychological and rational tests, and most importantly, are screened based on how well they will fit into the Dawson management style. This leaves little to chance, and encourages a team atmosphere that remains light-hearted and fun.
This table demonstrates how GMS plans to start acquiring clients. One salesperson will be trained initially, and that person will later head a team of salespeople as the company expands. The promise of growth, and chance to work for a strategically positioned consulting business is enough to have three major players bidding for the job. Although each will see a major cut in salary from their current position, the chance to share in company profits (10%) and growth is enough to draw them to a low base, high commission position that offers no guarantees.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Salesperson #1 | $54,000 | $62,000 | $68,000 |
Other | $0 | $0 | $0 |
Total People | 1 | 3 | 5 |
Total Payroll | $54,000 | $62,000 | $68,000 |
The Financial Plan is based on a pending SBA loan, and a corresponding cash flow amount held in a highly liquid account.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 7.00% | 7.00% | 7.00% |
Long-term Interest Rate | 5.50% | 5.50% | 5.50% |
Tax Rate | 31.83% | 32.00% | 31.83% |
Other | 0 | 0 | 0 |
The Break-even Analysis table is based on the assumption that each hour worked can be billed at approximately $70 per unit, and the employees will start at approximately $25/hour. This doesn’t include the cost of the payroll burden, however the assumptions are fairly accurate. Fixed costs are related to the lease and other monthly costs.
Break-even Analysis | |
Monthly Revenue Break-even | $10,203 |
Assumptions: | |
Average Percent Variable Cost | 1% |
Estimated Monthly Fixed Cost | $10,075 |
The following table and chart show the Projected Cash Flow figures for Growth Management and Strategies.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $806,829 | $1,177,624 | $1,762,655 |
Subtotal Cash from Operations | $806,829 | $1,177,624 | $1,762,655 |
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 | $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 | $806,829 | $1,177,624 | $1,762,655 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $54,000 | $62,000 | $68,000 |
Bill Payments | $191,326 | $481,392 | $581,431 |
Subtotal Spent on Operations | $245,326 | $543,392 | $649,431 |
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 | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $245,326 | $543,392 | $649,431 |
Net Cash Flow | $561,503 | $634,232 | $1,113,224 |
Cash Balance | $607,303 | $1,241,536 | $2,354,759 |
The following table and charts are the Projected Profit and Loss and Gross Margin figures for Growth Management and Strategies.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $806,829 | $1,177,624 | $1,762,655 |
Direct Cost of Sales | $10,151 | $11,673 | $13,424 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $10,151 | $11,673 | $13,424 |
Gross Margin | $796,679 | $1,165,951 | $1,749,231 |
Gross Margin % | 98.74% | 99.01% | 99.24% |
Expenses | |||
Payroll | $54,000 | $62,000 | $68,000 |
Sales and Marketing and Other Expenses | $6,000 | $6,000 | $6,000 |
Depreciation | $0 | $0 | $0 |
Rent | $42,000 | $42,000 | $42,000 |
Utilities | $7,800 | $7,800 | $7,800 |
Insurance | $3,000 | $3,000 | $3,000 |
Payroll Taxes | $8,100 | $9,300 | $10,200 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $120,900 | $130,100 | $137,000 |
Profit Before Interest and Taxes | $675,779 | $1,035,851 | $1,612,231 |
EBITDA | $675,779 | $1,035,851 | $1,612,231 |
Interest Expense | $1,375 | $1,375 | $1,375 |
Taxes Incurred | $215,990 | $331,032 | $512,789 |
Net Profit | $458,414 | $703,444 | $1,098,067 |
Net Profit/Sales | 56.82% | 59.73% | 62.30% |
The following table is the Projected Balance Sheet for Growth Management and Strategies.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $607,303 | $1,241,536 | $2,354,759 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $607,303 | $1,241,536 | $2,354,759 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $607,303 | $1,241,536 | $2,354,759 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $103,090 | $33,878 | $49,035 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $103,090 | $33,878 | $49,035 |
Long-term Liabilities | $25,000 | $25,000 | $25,000 |
Total Liabilities | $128,090 | $58,878 | $74,035 |
Paid-in Capital | $35,000 | $35,000 | $35,000 |
Retained Earnings | ($14,200) | $444,214 | $1,147,658 |
Earnings | $458,414 | $703,444 | $1,098,067 |
Total Capital | $479,214 | $1,182,658 | $2,280,725 |
Total Liabilities and Capital | $607,303 | $1,241,536 | $2,354,759 |
Net Worth | $479,214 | $1,182,658 | $2,280,725 |
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8742, Business Management Consultants, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 45.96% | 49.68% | 6.98% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 43.95% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 75.76% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 24.24% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 16.97% | 2.73% | 2.08% | 31.78% |
Long-term Liabilities | 4.12% | 2.01% | 1.06% | 17.26% |
Total Liabilities | 21.09% | 4.74% | 3.14% | 49.04% |
Net Worth | 78.91% | 95.26% | 96.86% | 50.96% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 98.74% | 99.01% | 99.24% | 100.00% |
Selling, General & Administrative Expenses | 41.90% | 39.27% | 37.09% | 85.31% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.02% |
Profit Before Interest and Taxes | 83.76% | 87.96% | 91.47% | 1.90% |
Main Ratios | ||||
Current | 5.89 | 36.65 | 48.02 | 1.88 |
Quick | 5.89 | 36.65 | 48.02 | 1.48 |
Total Debt to Total Assets | 21.09% | 4.74% | 3.14% | 55.78% |
Pre-tax Return on Net Worth | 140.73% | 87.47% | 70.63% | 3.41% |
Pre-tax Return on Assets | 111.05% | 83.32% | 68.41% | 7.72% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 56.82% | 59.73% | 62.30% | n.a |
Return on Equity | 95.66% | 59.48% | 48.15% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 2.86 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 61 | 25 | n.a |
Total Asset Turnover | 1.33 | 0.95 | 0.75 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.27 | 0.05 | 0.03 | n.a |
Current Liab. to Liab. | 0.80 | 0.58 | 0.66 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $504,214 | $1,207,658 | $2,305,725 | n.a |
Interest Coverage | 491.48 | 753.35 | 1,172.53 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.75 | 1.05 | 1.34 | n.a |
Current Debt/Total Assets | 17% | 3% | 2% | n.a |
Acid Test | 5.89 | 36.65 | 48.02 | n.a |
Sales/Net Worth | 1.68 | 1.00 | 0.77 | 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 | |||||||||||||
Job Bids | 0% | $1,000 | $1,500 | $2,250 | $3,375 | $5,063 | $7,594 | $11,391 | $17,086 | $25,629 | $38,443 | $57,665 | $86,498 |
Retainer | 0% | $500 | $875 | $1,531 | $2,680 | $4,689 | $8,207 | $14,361 | $25,133 | $43,982 | $76,968 | $134,695 | $235,716 |
Needs Analysis | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
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 | |
Job Bids | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Retainer | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Needs Analysis | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 |
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 | ||
Salesperson #1 | 0% | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | |
Total Payroll | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 |
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 | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | |
Long-term Interest Rate | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | |
Tax Rate | 30.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | |
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 | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Direct Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Gross Margin | $1,150 | $1,973 | $3,318 | $5,522 | $9,140 | $15,096 | $24,943 | $41,287 | $68,540 | $114,180 | $190,944 | $320,585 | |
Gross Margin % | 76.67% | 83.05% | 87.76% | 91.21% | 93.72% | 95.54% | 96.86% | 97.79% | 98.46% | 98.93% | 99.26% | 99.49% | |
Expenses | |||||||||||||
Payroll | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | |
Sales and Marketing and Other Expenses | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Rent | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | |
Utilities | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | |
Insurance | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | |
Payroll Taxes | 15% | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | |
Profit Before Interest and Taxes | ($8,925) | ($8,103) | ($6,757) | ($4,553) | ($935) | $5,021 | $14,868 | $31,212 | $58,465 | $104,105 | $180,869 | $310,510 | |
EBITDA | ($8,925) | ($8,103) | ($6,757) | ($4,553) | ($935) | $5,021 | $14,868 | $31,212 | $58,465 | $104,105 | $180,869 | $310,510 | |
Interest Expense | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | |
Taxes Incurred | ($2,712) | ($2,629) | ($2,199) | ($1,494) | ($336) | $1,570 | $4,721 | $9,951 | $18,672 | $33,277 | $57,841 | $99,327 | |
Net Profit | ($6,328) | ($5,588) | ($4,672) | ($3,174) | ($714) | $3,337 | $10,032 | $21,147 | $39,678 | $70,714 | $122,913 | $211,069 | |
Net Profit/Sales | -421.85% | -235.27% | -123.57% | -52.42% | -7.32% | 21.12% | 38.96% | 50.09% | 57.00% | 61.27% | 63.90% | 65.51% |
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 | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Subtotal Cash from Operations | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
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 | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
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 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | |
Bill Payments | $111 | $3,332 | $3,479 | $3,979 | $4,770 | $6,032 | $8,072 | $11,398 | $16,867 | $25,925 | $41,023 | $66,337 | |
Subtotal Spent on Operations | $4,611 | $7,832 | $7,979 | $8,479 | $9,270 | $10,532 | $12,572 | $15,898 | $21,367 | $30,425 | $45,523 | $70,837 | |
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 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
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 | $4,611 | $7,832 | $7,979 | $8,479 | $9,270 | $10,532 | $12,572 | $15,898 | $21,367 | $30,425 | $45,523 | $70,837 | |
Net Cash Flow | ($3,111) | ($5,457) | ($4,198) | ($2,425) | $482 | $5,268 | $13,180 | $26,320 | $48,244 | $84,987 | $146,837 | $251,376 | |
Cash Balance | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
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 | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
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 | $3,217 | $3,347 | $3,822 | $4,571 | $5,767 | $7,698 | $10,846 | $16,020 | $24,585 | $38,858 | $62,782 | $103,090 |
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 | $3,217 | $3,347 | $3,822 | $4,571 | $5,767 | $7,698 | $10,846 | $16,020 | $24,585 | $38,858 | $62,782 | $103,090 |
Long-term Liabilities | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
Total Liabilities | $25,000 | $28,217 | $28,347 | $28,822 | $29,571 | $30,767 | $32,698 | $35,846 | $41,020 | $49,585 | $63,858 | $87,782 | $128,090 |
Paid-in Capital | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 |
Retained Earnings | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) |
Earnings | $0 | ($6,328) | ($11,915) | ($16,588) | ($19,761) | ($20,475) | ($17,139) | ($7,107) | $14,040 | $53,718 | $124,432 | $247,345 | $458,414 |
Total Capital | $20,800 | $14,472 | $8,885 | $4,212 | $1,039 | $325 | $3,661 | $13,693 | $34,840 | $74,518 | $145,232 | $268,145 | $479,214 |
Total Liabilities and Capital | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Net Worth | $20,800 | $14,472 | $8,885 | $4,212 | $1,039 | $325 | $3,661 | $13,693 | $34,840 | $74,518 | $145,232 | $268,145 | $479,214 |
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Tips to help you find the right business consultant for your company include specifying your goals and asking potential candidates thorough questions about their offerings and processes.
Find out more about business consultants
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Why hire a business consultant, types of business consultants, how to hire the right business consultant.
A business consultant is an expert who helps business owners find solutions to their business challenges and optimize their productivity and performance.
Business consultants provide advice and develop strategies to help business owners overcome obstacles and meet their goals. A business consultant's specific responsibilities can vary depending on their areas of expertise and their clients’ individual requirements.
A business consultant’s process typically involves three phases: investigation, strategy development, and implementation.
A business consultant investigates issues hindering growth. They analyze your business’s systems and staff and external factors to identify opportunities and determine the root cause of existing problems.
After they have identified the source of the problem, a consultant can assist in finding solutions to address the issue. The consultant will factor in information they uncovered during the investigative phase (including your business’s strengths and weaknesses and external influences such as market conditions and competitor activities) to create a customized plan of action.
A business consultant can then help you implement their solutions. During the implementation phase, the consultant typically oversees staff management and training, monitors the plan and makes adjustments as necessary, and conducts evaluations to measure the overall impact of the implementation.
Business owners hire consultants for a wide variety of reasons, from addressing specific issues to obtaining big-picture input on how to achieve core objectives.
It can be challenging to figure out the next step when your company’s growth has stalled. A business consultant can provide new insights and creative approaches to help stimulate growth.
Transitions can be unsettling for staff and consumers alike. If your business is restructuring or going through a merger or acquisition, a business consultant can help facilitate a smooth transition.
Whether you are expanding into a new location, launching a new digital storefront, or offering new products, a business consultant can provide information about industry trends, competitors’ tactics, and market entry plans to help you meet your expansion goals.
There are times when you know what a project needs to succeed, but your staff doesn’t have the know-how to make it happen. A business consultant can bridge the knowledge gap by providing the external expertise needed to complete the project.
Companies often refer to business consulting services when they want to optimize their efficiency. A business consultant can evaluate your company’s operations to identify problem areas and develop time-saving and cost-reduction strategies.
Crises such as recessions, pandemics, and public relations issues can have a significant impact on business operations. Hiring business consultants can be a smart move during a crisis, as they can implement proven methods for responding to and managing crises. Consultants can provide the neutral perspective necessary to navigate the chaos and get your business back on track.
A business plan helps you stay focused and hit your goals no matter what stage your business is in. A business plan typically includes a description of your company, your mission statement, the strategies you will use to achieve your business’s success, and any funding requests.
A business consultant can help you create a comprehensive business plan that supports your company’s objectives in every stage and ensure that each part of the plan aligns with your ultimate vision.
Whenever a company updates its current systems or integrates new technology, there is a risk of integration failure. A business consultant with information technology (IT) experience can help minimize disruptions and confirm that your systems are functioning properly.
Business consultants offer services across multiple industries, including the financial, marketing, and tech fields.
The different types of business consultants include the following:
Tips to help you find the right business consultant for your company include specifying your goals and asking potential candidates thorough questions about their offerings and processes.
In order to achieve your goals, you should know exactly what issues you need help with. Consultants can’t solve what they can’t see. A lack of clarity about your specific challenges can make it difficult to find a candidate who can help you.
When it comes to a business consultant’s credentials, don’t just take their word for it. Reach out to their references and read reviews before making a hiring decision. Look for a consultant who has experience working within your industry and has had success helping comparable companies.
Ask the consultant what kind of tools, resources, and procedures they use to accomplish results and how they have tackled similar problems in the past. The right consultant will offer innovative solutions and use methodologies that align with your workplace culture.
You and the consultant should agree on the metrics for success and ultimate outcomes. Success metrics–or key performance indicators (KPIs)–help you monitor the impact of the consultant’s work.
For instance, if you hire a marketing consultant, you might use email open rates or the number of leads generated as success metrics and agree on a goal of a certain percentage increase within a specified timeframe.
A consulting agreement communicates expectations and provides legal protection for your business. Your consulting agreement should clearly define the details of the work and the terms that both parties agree to.
A legal expert can help ensure that your consulting agreement contains clauses outlining key information such as deliverables, payment terms, deadlines, and grounds for termination.
With our consultant contract services , a qualified attorney can help you write, revise, and customize your consulting agreement so that it is legally binding and protects your business.
A new system is only as effective as the people who maintain it. A business consultant should have the ability to train your staff on how to use the tools or systems they implement to help ensure your company’s continued success.
The cost of hiring a business consultant depends on a variety of factors, including the type of consultant you hire, the scope of the work, and whether you hire a freelance consultant or a consulting firm.
For instance, according to a 2023 survey by the Institute of Electrical and Electronics Engineers (IEEE) , engineering consultants charge a median rate of $180, while the U.S. Bureau of Labor Statistics reported a 2023 median hourly wage of $37.83 for all occupations in the Management, Scientific, and Technical Consulting Services category.
To calculate the return on investment (ROI) of a business consultant, you subtract the actual or estimated costs of the consultancy from the amount of income the consultancy is expected to bring in. The sum is the profit the consultancy is expected to generate. You then divide the sum by the costs.
The formula for ROI for a business consultant can be written as follows:
ROI = (Profit from consultancy - Cost of consultancy) / Cost of consultancy x 100%
While the ROI formula may seem simple enough, keep in mind that it can be challenging to accurately estimate profits , and the cost of hiring a consultant may offset other expenses, such as the costs associated with an unmitigated public relations disaster or the cost of hiring a full-time employee instead of a consultant.
For instance, if you are hiring a consultant instead of a full-time employee , you should take into account the total expenses associated with hiring an individual full-time vs. the cost of hiring a consultant on an as-needed basis. When you consider the costs of recruitment, hiring, training, salary, benefits, bonuses, payroll taxes, and insurance, hiring a consultant can be cheaper than hiring a full-time employee.
The decision to hire a freelance consultant or a consulting firm comes down to the consultant or firm’s relevant experience and availability, and your budget and personal preferences.
One benefit of hiring a consulting firm is that the quality of their work is backed by their brand. Another perk is that a consulting firm typically has many employees, so if an issue arises during the consulting period that is beyond the expertise of one employee, you may be able to access the full knowledge base of the firm.
Freelance consultants may have limited availability to take on consulting jobs in comparison to consulting firms, but they may be more affordable than a firm. Freelance consultants are often highly motivated to provide their best work to help build a name for themselves.
Whether you choose a freelance consultant or hire a consulting firm, you should verify their qualifications. A business consultant usually has a bachelor’s degree–typically in a field such as business administration, marketing, or finance. Some consultants may have a master’s degree, while other business consultants may have additional certifications. You should ask to see proof of their track record and details about how they have solved problems for similar clients.
Business consulting can be a rewarding career and many consultants charge top dollar for their services, so it’s important to hire someone who has the qualifications and experience necessary to help your business succeed.
A consulting agreement should include information about the scope of work, payment terms, and what happens if either party breaches the agreement. Consulting agreements often contain the following clauses:
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The news is full of efforts to develop a vaccine effective against COVID-19. Your company also needs to be vaccinated against the impacts of communicable disease and the best way to do this is for your leaders to develop a good pandemic plan. In today’s post, we’ll look at the four main components of such a plan.
Related on BCMMETRICS: Learning from COVID-19: 7 Lessons for Business from the Pandemic
In the old days six months ago, our business continuity consulting clients used to laugh when we said their BC plans should include a plan regarding what they would do if a pandemic struck.
Nowadays, the hard reality and destructive power of a fast-moving infectious disease is apparent to almost everyone.
If you want to read a prescient post, check out this one from MHA Consulting’s Richard Long: Not If But When: Is Your Company Ready for the Next Global Pandemic? It was published on January 2, 2019, almost a year to the day before the WHO said people in Wuhan, China, were getting sick from a mysterious new illness.
In some respects, the horse is out of the barn regarding COVID-19. In the current pandemic, it’s too late for plans and preparations. Most companies are in a posture of adapting on the fly in terms of having employees work from home, reconfiguring the workplace, bringing employees back, and protecting people’s safety.
However, the threat of infectious disease will outlive the current coronavirus outbreak.
To update an old saying: Surprise me once, shame on you. Surprise me twice, shame on me.
Responsible leaders understand that, even as they’re trying to steer their organizations through the current pandemic, they need to prepare them for possible future disease outbreaks.
From now on, every business continuity plan must include a pandemic plan.
Such plans need to be flexible, adaptable, and comprehensible. (The flip side of the company that has no pandemic plan is the company whose pandemic plan is so technical, you need to be an M.D. to grasp it.)
Your pandemic plan should be focused on protecting the organization’s people and customers and keeping its critical operations going in the event a communicable disease is at large in the community, sickening workers or their dependents, impacting work spaces, and impeding operations.
Pandemic planning should be incorporated into every aspect of business recovery planning, not just crisis management. The BC plans for the organization’s IT/disaster recovery program, business processes, and supply chain should all include instructions on what to do if there’s a pandemic.
I previously mentioned two types of pandemic plans: the nonexistent kind and the type that are so complex only a doctor can understand them.
A better kind of pandemic plan addresses four key areas as laid out below.
Hopefully, we will soon have a vaccine offering protection against COVID-19. A vaccine is already available for organizations to provide them a comparable sort of protection: a pandemic plan for the organization that addresses every aspect of the business from IT/DR to supply chains, and which covers the four areas of vigilance and preparation, strategy, contingencies, and testing.
For more information on pandemic planning and other hot topics in BC and IT/disaster recovery, check out these recent posts from BCMMETRICS and MHA Consulting:
Michael Herrera is the Chief Executive Officer (CEO) of MHA. In his role, Michael provides global leadership to the entire set of industry practices and horizontal capabilities within MHA. Under his leadership, MHA has become a leading provider of Business Continuity and Disaster Recovery services to organizations on a global level. He is also the founder of BCMMETRICS, a leading cloud based tool designed to assess business continuity compliance and residual risk. Michael is a well-known and sought after speaker on Business Continuity issues at local and national contingency planner chapter meetings and conferences. Prior to founding MHA, he was a Regional VP for Bank of America, where he was responsible for Business Continuity across the southwest region.
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Officials at the Centers for Disease Control have warned that the coronavirus outbreak may cause severe disruptions to everyday life. In today’s post, we’ll look at five steps your organization can take […]
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Glencore drops plan to exit coal.
ZURICH: Swiss commodities giant Glencore announced on Wednesday that it had decided against spinning off its coal business for now after consulting shareholders who view the polluting fossil fuel as a cash-generating activity.
Glencore completed its takeover of the steelmaking coal unit of Teck Resources in July following a protracted battle over the business with the Canadian company.
The Swiss commodities trading and mining group had considered merging the newly acquired business, Elk Valley Resources, with its own coal activities and spinning it off.
But Glencore said that after consulting its shareholders, most expressed a preference for retaining the coal and carbon steel materials business.
“I certainly am convinced that it’s the right decision,” Glencore CEO Gary Nagle said in a telephone conference.
The company has argued it needs the cash flow from its coal mines to invest in raw materials useful for the green transition, such as copper and cobalt.
“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the Board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” chairman Kalidas Madhavpeddi said.
“The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio,” Madhavpeddi added in a statement.
Published in Dawn, August 8th, 2024
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U.s. department of the treasury announces up to $83 million in american rescue plan small business support to drive economic growth for 125 alaska tribes.
Unprecedented collaboration between Tribes has generated the largest small business financing consortium in the country.
WASHINGTON – Today, the U.S. Department of the Treasury announced the approval of up to $83 million in State Small Business Credit Initiative (SSBCI) funds for a consortium of 125 Alaska Tribes. Funded by the Biden-Harris Administration’s American Rescue Plan (ARP), this investment supports the nation’s largest Tribal SSBCI consortium and is part of the most expansive investment in small business financing for Tribal governments in history. The launch of intertribal SSBCI consortia has been critical to enabling small, remote, and capacity-constrained Tribes to access federal funding. Through the consortium, 125 Tribes will access critical economic development resources for Alaska’s Tribal economy.
The funds are anticipated to catalyze as much as $830 million in additional private sector investment across the state and in Native-owned businesses. The funding will be administered on behalf of the Tribal consortium by the Alaska Small Business Development Center (Alaska SBDC) within the University of Alaska Anchorage (UAA) Business Enterprise Institute (BEI).
For the first time ever, the ARP included dedicated SSBCI funding for Tribal governments. With today's announcement, Treasury has now approved SSBCI applications for up to $415 million to support more than 220 Tribes through the SSBCI Capital Program for small businesses and Tribal enterprises.
“Today’s announcement reflects success that is only possible when federal agencies listen to Tribal Nations to understand their unique needs and incorporate their feedback in developing program policy and guidance. Through the flexibility of the consortium model, these Tribes will benefit from the historic opportunity that these resources for small businesses presents to Indian Country. These funds will serve some of the most rural populations in the United States, creating jobs and expanding capital access for Tribes across Alaska. We look forward to following this announcement with Treasury’s first official visit to an Alaska Native Village at Chickaloon Village,” said U.S. Treasurer Chief Lynn Malerba.
“Our Tribe is looking forward to the transformational impact this funding can have on the Tribal economy of Alaska. Rural Alaska is entrepreneurial. Our SSBCI consortium will address capital access barriers and unlock private financing for all of our small businesses that are ready to grow,” said Rena Greene, Deputy Director and Acting Executive Director of Nome Eskimo Community, one of the 125 consortium member Tribes.
“Alaska’s tribes are the backbone of our rural economies. The Alaska SBDC is proud to have worked with the Alaska Federation of Natives to bring 125 Alaskan tribes together in the largest tribal consortium in the nation. This collaborative effort over the last two years will result in hundreds of millions of dollars in private sector loans and equity investments flowing into rural and Alaska Native-owned businesses, drastically changing the economic landscape of some of the most remote communities in the nation,” says Alaska SBDC State Director Jon Bittner.
“When the American Rescue Plan Act was signed by President Biden, AFN set out to make sure that Alaska Tribes accessed as much of the funding as possible. Our Navigators worked closely with UAA to help over 100 Tribes access SSBCI, an unprecedented program for Tribal nations. We are proud of that work and proud of the over $80 million in small business funding that we are bringing to Native Alaska,” said Executive Vice President and General Counsel for the Alaska Federation of Natives Nicole Borromeo.
"Our local and Alaska-Native centric economies thrive and rely on homegrown small businesses—from coffee shops to electricians. This funding invests in what’s already working here in our state and helps us grow our economies the Alaska way, not the Lower 48 way,” said Congresswoman Mary Sattler Peltola.
Reauthorized and expanded as part of the ARP, SSBCI is a nearly $10 billion program to support small businesses and entrepreneurship in communities across the United States by providing capital and technical assistance to promote small business stability, growth, and success. SSBCI represents a transformational investment in American small businesses and is expected to catalyze at least $10 of private investment for every $1 of SSBCI Capital Program funding to increase access to capital to small businesses and entrepreneurs, including those in underserved communities.
The Alaska SSBCI Tribal Consortium offers four programs, approved for up to $83.1 million. The programs include a Loan Participation Program, a Loan Guarantee Program, a Collateral Support Program, and an Equity/Venture Capital Funds Program.
The Loan Participation and Loan Guarantee Programs, allocated $10.3 and $37.9 million respectively, are designed to reduce interest rates or risks associated with critical small business investments in Alaska and Native-owned businesses. The Collateral Support program, allocated $12.0 million, will provide collateral for small business lending. The program will incentivize loans to underserved borrowers across Alaska. Rural Tribal communities in Alaska depend on small businesses like fishing operations and tourism enterprises, and collateral support is expected to incentivize lenders to support those businesses. The equity/venture capital program, allocated $22.9 million, provides equity capital support to small businesses through a new venture capital program implementing a fund investment strategy, targeting Tribal member-owned businesses, mostly located in rural areas of Alaska.
The Treasury Department has worked across the Biden-Harris Administration to deploy historic support from the American Rescue Plan to Indian Country, including over $500 million in Tribal SSBCI funding and $20 billion allocated through the State and Local Fiscal Recovery Fund program to nearly 600 Tribal governments, the largest-ever single infusion of federal funding into Indian Country. The Biden-Harris Administration has also delivered the largest-ever infusion of federal capital to Native-serving CDFIs through the Emergency Capital Investment Program, Rapid Response Program and Equitable Recovery Program. Treasury invested $234 million in Native-owned and Native-majority shareholder depository institutions through the Emergency Capital Investment Program (ECIP), and Treasury projects that the investments across the ECIP portfolio could increase lending in Native communities by up to nearly $7 billion over the next decade based on preliminary analysis.
Lenders and small businesses who are interested in receiving more information about the consortium’s SSBCI programs can contact: [email protected] or [email protected] .
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