In confidence
July 2014
Business plan Paddle is a one-stop shop for SMEs looking for business funding.
Executive summary Access to finance remains a significant and enduring challenge for the UK’s 4.7 million small and medium-sized businesses. A large variety of funding models and funding providers have developed to tackle this issue and to fill the funding gap where banks remain unwilling to lend to small businesses. As a result, the market for small business finance has become increasingly complex and it is difficult for SMEs to know what the right funding options are. Reports show that less than 2% of SME owners are aware of the range of funding options available to them. Like all borrowers, SMEs are looking for the best price (the interest rate for debt funding) and the best level of service offered. In other industries (consumer borrowing, business insurance, the energy industry) the Internet gives users transparency over price and value, allowing them to compare quotes and select the most suitable. This has not yet happened for small business loans. Businesses must put in separate applications through separate finance providers to find the best deal. Paddle aims to become the one-stop-shop for SME business finance. It will provide clear education and awareness on funding options available, a review and rating service of different funding providers and a simple, single application process for borrowers to complete so as to gain access to multiple loan offers. Paddle operates on an affiliate business model where finance providers pay a fee for each business introduced that they successfully fund. This enables Paddle to present a range of options and allow the SME to select their preferred option. This model is expected to generate revenues of £56,250 per month and be profit-making by October 2015. In year two the site is expected to generate a net profit of over £500k and to continue growing with annualised growth rates of over 100% in years 3 and 4.
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence The purpose of this business plan is to outline the vision for Paddle, the route to market and to demonstrate how it will move to revenue generation.
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Contents The market ........................................................................................................................... 4 The website.......................................................................................................................... 6 Development plan .............................................................................................................. 11 Promotion ........................................................................................................................... 13 Revenue ............................................................................................................................. 14 Risks .................................................................................................................................. 15 The team ............................................................................................................................ 17 Competition ........................................................................................................................ 18 Finances ............................................................................................................................ 19
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
The market With the banks remaining unwilling to lend to small businesses, a funding gap has opened up, estimated at £59 billion by 2016 1. A growing market for alternative finance has developed to fill this gap. It is estimated that the UK alternative finance market will grow to £1.6 billion this year and provide around £850m worth of business finance for start-ups and SMEs in 2014 2. If this trend continues as it is expected to, the market could provide over £4.5 billion of lending in 2016.
There is an acute lack of awareness from SMEs of funding available The market for alternative finance is becoming increasingly complex and it is difficult for SMEs to know what the right funding options are. Despite the recent hype around alternative finance providers, reports 3 show that less than 2% of SME owners are aware of the funding options available to them. This is equivalent to 4.7 million businesses in the UK that do not understand the business finance market. Out of these 4.7 million, the recent SME Finance Monitor 4 estimates that 16% of SMEs are seekers of finance in the next 3 months. This brings the number of potential UK SMEs who would benefit immediately from understanding funding options available to 752,000 businesses. Paddle will educate small businesses on the most suitable funding options available and will enable access to multiple funding providers in one place. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !Breedon!Report,!http://www.ft.com/cms/s/0/657252e0;6f4d;11e1;b368;00144feab49a.html,!March!2012! !NESTA!;!http://www.nesta.org.uk/publications/rise-future-finance#sthash.DxIreJ3h.dpuf! 3!Economia!article!;!http://economia.icaew.com/opinion/march;2014/three;things;that;need;to;change;in;sme;banking!! 4!SME!Finance!Monitor,!http://www.sme;finance;monitor.co.uk/!,!January!2014! 1 2
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
The Paddle website Vision To build, scale and become the most used website for SME businesses to learn about, compare, connect with and obtain alternative business finance.
Learn about business finance The typical user of the website is a small business looking for advice on where to go for growth finance of between £5,000 and £250,000 and which wants to understand the cheapest and best value option. Paddle will break down in layman terms how each type of business finance works (e.g. invoice financing, peer-to-peer, crowdfunding) and what it can be used for. Using existing content that Enterprise Nation has developed as well as new, built for purpose content, the aim is to simplify the various options as far as possible by using basic explanations, interactive videos, factual comparisons between funding types, etc. The Paddle blog will produce regular content on the most popular and most misunderstood topics of business finance (e.g. ‘What’s better – equity or debt?’; ‘The difference between peer-to-peer lending and crowdfunding’). The website will also promote (in person) training events in London and other UK major cities on various topics related to access to finance which entrepreneurs can attend to receive more in depth training and support.
Compare different funding options Users will be able to enter basic information on their business and their funding requirements into a tool to determine the most suitable type/s of funding for them. The tool will present funding providers available in the market for those particular funding types, and will feature reviews and feedback from other users on each provider. The aim is to present as much independent advice as possible to enable businesses to make the correct decision on the most appropriate funding option for them.
Connect with multiple funders and compare quotes Once a user has identified the most suitable funding providers, they are then able to select one or more providers to apply to. By filling in one application form with all of the information required, this information is then submitted directly to each of the funders selected. Paddle Business Plan – www.paddlebusiness.co.uk
In confidence Once the application form is submitted, the user will receive quotes from those funders which approve the application, and the user is then in a position to accept the quote which provides the best value.
In summary, the benefits to SMEs from using Paddle include: 1. 2. 3. 4. 5.
A single place to go to learn about business finance A tool to identify suitable funding options Save time by submitting one application to connect with multiple providers Find the best value by receiving multiple quotes from different funding providers Benefit from qualitative reviews and feedback from others who have used the same provider 6. Over time this service will contribute to a competitive and efficient market for alternative finance
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Development plan The planned build, development and scale-up plan of the Paddle website and its content over the next six months is as follows: Month Aug – Oct 2014
Development Build MVP of website. Include functionality for users to connect with funders either manually or through APIs. Build content for the site - Use current educational content available and develop new content on different areas of access to finance Agree affiliate arrangements with as many of the funding providers as possible Engage a community to review and provide feedback on different funding providers* Test and iterate website. Continue to develop the functionality to automate as much of the end-to-end application process as possible
Aug – Oct 2014 Aug – Dec 2014 Oct – Dec 2014 Oct – Dec 2014
* One technique we will use to produce initial content for the reviews and feedback available on the site is to contact funding providers, asking for their permission to use/re-contact their existing case studies for use as reviews on the site. The objective is to get a well-branded but simplified version of the site live by October 2014 and to continue testing and iterating improvements of the website after then, adding new funding providers, improving the finance finder tool, bringing on new affiliate partners and adding new content to make the site as valuable as possible for any small business interested in access to finance. Preliminary ideas for plans beyond December 2014 include: Consultancy Government support Bank declines
Look at other revenue streams to provide more tailored support to SMEs by connecting them to accountants and finance professionals. Look at ways to engage with government support programmes operated by the British Business Bank, by bringing attention and referring to these schemes for those unable to access private sector finance Look at ways to support the 250,000 businesses declined for funding by banks each year through a more direct referral arrangement
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence Sponsorship for website development We will look to fund development of the Paddle website through sponsorship from an appropriate brand looking to put their name to the project in order to support small businesses (this objective appeals to many large businesses at the moment). It is crucial that the sponsor be independent i.e. not a funding provider or a company in anyway affiliated with a particular funder or type of funding. An accountancy firm would be a good candidate for such sponsorship and initial discussions have already taken place with Intuit, a software company that develops financial and tax preparation software for small businesses, accountants and individuals. We have also approached KPMG for sponsorship. Discussions will continue over the coming weeks with Intuit, KPMG and other potential sponsors.
(
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Promotion Paddle benefits from a strong route to market and will become a high profile name across the national small business community through the following activities: • Online promotion - the site will be promoted to the Enterprise Nation community with a social media following of 43,000+, monthly website traffic of 45,000 unique visitors and a weekly newsletter distribution of 58,000+ small businesses. This will get the site up and running fast as 60,000+ people are introduced to it. Through a strong existing relationship, it is envisaged the site will also be promoted to the Start Up Loans community of 20,000 start-up businesses, many of which are looking for further funding. • Events - the site will be promoted through regular events organised on topics related to access to finance in London and in other major UK cities. This is boosted by Enterprise Nation opening an event space at Somerset House where some of these events will take place. Other venues are likely to include the growing number of accelerators who are keen to promote knowledge on access to finance to their communities. • National media coverage – by pitching the site and the topic of fundraising to the national press, Paddle will gain appearances on national TV/radio and in print media to attract attention and visitors to the website • Referral programme – offering incentives to small business communities to share the site with their members looking for finance. Rewards can be financial or non-financial (£100 Amazon voucher for a successfully funded referral) • Strategic partnerships – partnerships will be key in promoting the site to large communities of small businesses. The team already have close ties with many of these organisations which will be leveraged to get Paddle to market and to revenue as quickly as possible
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Revenue The aim is to build, scale and become the most used website for SME businesses looking for finance. The main way to commercialise and generate revenue is through an affiliate model. Businesses will use the site to receive quotes from different funding providers who are able to lend. Where finance is accepted, the funding provider pays an affiliate fee to the site for making the referral. Almost all funders have some form of affiliate agreement. This is an accepted way for them to drive volume through commercial finance brokers. The affiliate fee structure varies according to the funding provider. Generally, this will be approximately equal to 2% of the total funds processed, although this can vary between 0.5% and 3% of total funds. This model is expected to generate revenues of ÂŁ56,250 per month and be profit-making by October 2015. In year 2, the site is expected to generate a net profit of over ÂŁ500k. This is itemised in the Finances section.
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Business risks The following key business risks have been identified and key actions identified to respond to them: •
Technical complexity – There is a risk that it will be too technically complex to build an automated process for businesses to connect with different funding providers. It is envisaged that this will be done by connecting through their APIs. However, this is likely to be expensive to implement well and will rely on all funders having suitable APIs available into their systems. To mitigate this risk, significant on-going development cost has been allocated once the website is live to ensure these challenges can be met. At a later date, we may consider bringing this development in-house to retain full control. An alternative solution (at least temporarily in the short-term) is to collect information from the businesses applying for funding and then to send the form to the funder by email or enter the information manually through their respective websites although this is obviously likely to be time-consuming. Another solution may be to work with fewer funding partners in the meantime to ensure a one-stop shop where the user is able to receive quotes through the Paddle website. The compromise though is on independence of the advice provided. Fewer funders on the platform means less choice for the businesses looking for finance.
•
Market risk – This plan has shown that the market for alternative finance is expected to continue growing over the next few years at annualised rates of 100%. There is a risk however that as the economy returns to growth, the banks will start lending more to this space, leaving less expansion opportunity for the alternative finance market and therefore less potential volume of funding applications to the site. This is however unlikely as the funding gap is estimated at close to £60 billion by 2016. Even if this is not accurate, it would seem there is plenty of room for the alternative finance market to grow.
•
Conversion of users – There is a risk that not enough users complete funding applications through the website. Also, a risk that not enough of those who do complete applications are accepted. Conversion to completed applications will be the key metric for the site’s development. Working with a lean design agency will help to ensure that the site is tested to maximise this conversion rate and ensure as many funding applications submitted as possible. Over time, we will work to maintain a high quality of applications so that as many as possible get funded.
•
Competitive risk – There are a number of websites which have developed finance finder tools. Currently, these do not offer functionality to receive funding quotes from
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence multiple funders. However, this model is being developed in the US and when it becomes more proven, it is likely that organisations in the UK will look to build something similar. AlternativeBusinessFunding.co.uk would be an obvious website to develop this concept in the future and has a strong profile should it wish to do so. However, they are jointly owned by a group of funding providers and the challenge for them will be a conflict of interest if they were to commercialise the platform in the way that Paddle is proposing. There is a clear first-mover advantage in this market. This plan has highlighted the importance of developing a solution quickly and getting it out to market in order to become a recognisable brand.
!
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
The team The Paddle website will be developed and managed by an experienced team with a strong ethic. Key team members are: (REMOVED)
To realise this plan, we are hiring a UK based design agency to manage the build and testing of the website. A full design brief has been submitted and the choice of agency will be finalised over the next two weeks with a plan to start build by late August 2014. Current candidates include: Built By Click - Design agency based in London’s Shoreditch who use a lean, evidencebased design process to ensure that what is built is fit for audience with a focus on creating the highest possible conversion rate of users to applications. We have an existing relationship with Click through Enterprise Nation who used them to build the Marketplace for Growth Vouchers. Rob Calvert, who would manage this project, is a Director at Click, specialising in project management and user experience. He is a science graduate from the University of Cambridge. Sleeptwitch – A small design agency based in Surrey. Previous clients include StartUp Britain (built the responsive website) and Reebok Sports Club.
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Competition The closest comparison to the concept proposed by Paddle is Fundera, a New York based start-up on a similar mission to help small businesses get funding by allowing them to put in one application and gain access to multiple loan offers. A site with a similar concept to this, Buynance, is due to re-launch (according to their website) in July 2014. When it comes to direct competition in the UK, there is no one-stop provider that delivers the full complement of what Paddle is proposing. There are various sites however that deliver awareness on different funding options.
Competitor Better Business Finance
Details A UK site providing support to businesses looking to raise finance with a tool to help find the best finance type and provider. The tool lists different providers and their website/contact details.
Funding Store
Provides some education (limited) on different types of business finance and a search tool to connect with different providers. It does NOT enable a user to put in one application and receive multiple quotes.
Alternative Business Finance
A collective of 10 alternative finance providers with a finance finder tool to help small businesses find the right source of alternative finance. Users are NOT able to connect with the funders directly, they must apply separately through each of the funders’ websites. This site could become a competitive threat to Paddle
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence
Finances The following projections show revenue and outgoings. Revenue Year 1: October 2014 – September 2015
Site visitors Convert to application (%) No. of funding applications % successful loan applications Affiliate fee (%) Average loan size Affiliate revenue
£ £
Oct-14 M1 5,000 0.5% 25 25% 1.5% 10,000 938
Nov-14 M2 5,000 0.5% 25 25% 1.5% £ 10,000 £ 938
Dec-14 M3 5,000 0.5% 25 25% 1.5% £ 10,000 £ 938
Jan-15 M4 10,000 0.5% 50 25% 1.5% £ 10,000 £ 1,875
Feb-15 M5 10,000 0.5% 50 25% 1.5% £ 10,000 £ 1,875
Mar-15 M6 10,000 0.5% 50 25% 1.5% £ 10,000 £ 1,875
Apr-15 M7 15,000 1.0% 150 25% 1.5% £ 15,000 £ 8,438
Feb-16 M 17 30000 1.5% 450 37.5% 2% 20,000 67,500
Mar-16 M 18 30000 1.5% 450 37.5% 2% 20,000 67,500
Apr-16 M 19 35000 1.5% 525 50% 2% 20,000 105,000
May-15 M8 15,000 1.0% 150 25% 1.5% £ 15,000 £ 8,438
Jun-15 Jul-15 Aug-15 Sep-15 M9 M 10 M 11 M 12 15,000 20,000 20,000 20,000 1.0% 1.0% 1.0% 1.0% 150 200 200 200 25% 25% 25% 25% 1.5% 1.5% 1.5% 1.5% £ 15,000 £ 15,000 £ 15,000 £ 15,000 £ 8,438 £ 11,250 £ 11,250 £ 11,250 £
YEAR TOTAL 150,000 1,275
67,500
Revenue Year 2: October 2015 – September 2016
Site visitors Convert to application (%) No. of funding applications % successful loan applications Affiliate fee (%) Average loan size Affiliate revenue
£ £
Oct-15 M 13 25000 1.5% 375 37.5% 2% 20,000 56,250
£ £
Nov-15 M 14 25000 1.5% 375 37.5% 2% 20,000 56,250
£ £
Dec-15 M 15 25000 1.5% 375 37.5% 2% 20,000 56,250
£ £
Jan-16 M 16 30000 1.5% 450 37.5% 2% 20,000 67,500
£ £
£ £
£ £
£ £
May-16 M 20 35000 1.5% 525 50% 2% 20,000 105,000
£ £
Revenue projections are based on the following assumptions:
Assumption Paddle Business Plan – www.paddlebusiness.co.uk
Year 1
Year 2
Jun-16 M 21 35000 1.5% 525 50% 2% 20,000 105,000
£ £
Jul-16 M 22 40000 1.5% 600 50% 2% 20,000 120,000
£ £
Aug-16 M 23 40000 1.5% 600 50% 2% 20,000 120,000
£ £
Sep-16 M 24 40000 1.5% 600 50% 2% 20,000 120,000 £
YEAR TOTAL 390,000 5,850
1,046,250
In confidence Site visitors Conversion % of visitors to funding applications Success rate (%) of funding applications to drawn-down loans Average affiliate fee (% of total loan funds) (Varies according to funding provider) Average loan value (Varies according to funding provider. Funding Circle average loan value = £60k, Zopa average less than £10k)
Paddle Business Plan – www.paddlebusiness.co.uk
150,000 visitors 0.5% months 1-6 1% months 7-12 25% with a lower quality of applications 1%
390,000 visitors 1.5%
£10,000 months 1-6 £15,000 months 7-12
£20,000
37.5% months 13-18 50% months 19-24 1.5%
In confidence Outgoings Year 1: October 2014 – September 2015 Year 2
Pre-start Month
Oct-15 Month 13
TOTAL COST OF SALES
Nov-15 Month 14 0
Dec-15 Month 15 0
Jan-16 Month 16 0
Feb-16 Month 17 0
Mar-16 Month 18 0
Apr-16 Month 19 0
May-16 Month 20 0
Jun-16 Month 21 0
Jul-16 Month 22 0
Aug-16 Month 23 0
Sep-16 Month 24 0
Totals 0
0
Site development costs TOTAL DEVELOPMENT COSTS
£
5,000
Administrative expenses No. of salary employees Salary cost Workspace Other Expenses TOTAL ADMIN COSTS
£
2 7,000 1,000 1,000 £
9,000
5,000
£
2 7,000 1,000 1,000 £
9,000
5,000
£
2 7,000 1,000 1,000 £
9,000
5,000
£
2 7,000 1,000 1,000 £
9,000
5,000
£
2 7,000 1,000 1,000 £
9,000
5,000
£
2 7,000 1,000 1,000 £
9,000
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
12,000
60,000
102,000.00 12,000.00 12,000.00 £
126,000
Marketing costs Online marketing Offline marketing (events, etc) Partnerships Social media & blog
5,000 2,500 1,000 500
5,000 2,500 1,000 500
5,000 2,500 1,000 500
5,000 2,500 1,000 500
5,000 2,500 1,000 500
5,000 2,500 1,000 500
10,000 2,500 1,000 500
10,000 2,500 1,000 500
10,000 2,500 1,000 500
10,000 2,500 1,000 500
10,000 2,500 1,000 500
10,000 2,500 1,000 500
90,000.00 30,000.00 12,000.00 6,000.00
TOTAL MARKETING COSTS
9,000
8,500
8,500
8,500
8,500
8,500
13,500
13,500
13,500
13,500
13,500
13,500
132,500.00
TOTAL NON-SALES COSTS
23,000.00
22,500.00
22,500.00
22,500.00
22,500.00
22,500.00
30,500.00
30,500.00
30,500.00
30,500.00
30,500.00
30,500.00
318,500.00
TOTAL COSTS
£ 23,000.00
Paddle Business Plan – www.paddlebusiness.co.uk
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 30,500.00
£ 30,500.00
£
30,500.00
£ 30,500.00
£ 30,500.00
£ 30,500.00
£
318,500.00
In confidence Outgoings Year 2: October 2015 – September 2016 Year 2
Pre-start Month
Oct-15 Month 13
TOTAL COST OF SALES
Nov-15 Month 14 0
Dec-15 Month 15 0
Jan-16 Month 16 0
Feb-16 Month 17 0
Mar-16 Month 18 0
Apr-16 Month 19 0
May-16 Month 20 0
Jun-16 Month 21 0
Jul-16 Month 22 0
Aug-16 Month 23 0
Sep-16 Month 24 0
Totals 0
0
Site development costs TOTAL DEVELOPMENT COSTS
£
5,000
Administrative expenses No. of salary employees Salary cost Workspace Other Expenses TOTAL ADMIN COSTS
£
2 7,000 1,000 1,000 £
9,000
Marketing costs Online marketing Offline marketing (events, etc) Partnerships Social media & blog
5,000 2,500 1,000 500
5,000
£
2 7,000 1,000 1,000 £
9,000 5,000 2,500 1,000 500
5,000
£
2 7,000 1,000 1,000 £
9,000 5,000 2,500 1,000 500
5,000
£
2 7,000 1,000 1,000 £
9,000 5,000 2,500 1,000 500
5,000
£
2 7,000 1,000 1,000 £
9,000 5,000 2,500 1,000 500
5,000
£
2 7,000 1,000 1,000 £
9,000 5,000 2,500 1,000 500
5,000
£
3 10,000 1,000 1,000 £
12,000 10,000 2,500 1,000 500
5,000
£
3 10,000 1,000 1,000 £
12,000
5,000
£
3 10,000 1,000 1,000 £
10,000 2,500 1,000 500
12,000 10,000 2,500 1,000 500
5,000
£
3 10,000 1,000 1,000 £
12,000 10,000 2,500 1,000 500
5,000
£
3 10,000 1,000 1,000 £
12,000 10,000 2,500 1,000 500
5,000
£
3 10,000 1,000 1,000 £
12,000
60,000
102,000.00 12,000.00 12,000.00 £
126,000
10,000 2,500 1,000 500
90,000.00 30,000.00 12,000.00 6,000.00
TOTAL MARKETING COSTS
9,000
8,500
8,500
8,500
8,500
8,500
13,500
13,500
13,500
13,500
13,500
13,500
132,500.00
TOTAL NON-SALES COSTS
23,000.00
22,500.00
22,500.00
22,500.00
22,500.00
22,500.00
30,500.00
30,500.00
30,500.00
30,500.00
30,500.00
30,500.00
318,500.00
TOTAL COSTS
£ 23,000.00
Paddle Business Plan – www.paddlebusiness.co.uk
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 22,500.00
£ 30,500.00
£ 30,500.00
£
30,500.00
£ 30,500.00
£ 30,500.00
£ 30,500.00
£
318,500.00
In confidence Income statement (£) Years 1-2 : October 2014 – September 2016 Year 1
Pre-start Month
Revenue Cost of sales
Oct-14 Month 1 938 0 ________
Nov-14 Month 2 938 0 ________
Dec-14 Month 3 938 0 ________
Jan-15 Month 4 1,875 0 ________
Feb-15 Month 5 1,875 0 ________
Mar-15 Month 6 1,875 0 ________
Apr-15 Month 7 8,438 0 ________
May-15 Month 8 8,438 0 ________
Jun-15 Month 9 8,438 0 ________
Jul-15 Month 10 11,250 0 ________
Aug-15 Month 11 11,250 0 ________
Sep-15 Month 12 11,250 0 ________
Total
Gross profit
0 0 ________ 0
Development costs Administrative costs Marketing costs
10,000 1,000 0 ________
5,000 0 1,000 ________
5,000 0 1,000 ________
5,000 0 1,000 ________
5,000 0 1,000 ________
5,000 0 1,000 ________
5,000 0 1,000 ________
5,000 5,000 4,000 ________
5,000 5,000 4,000 ________
5,000 5,000 4,000 ________
5,000 5,000 4,000 ________
5,000 5,000 4,000 ________
5,000 5,000 4,000 ________
70,000 31,000 30,000 ________
(11,000)
(5,063)
(5,063)
(5,063)
(4,125)
(4,125)
(4,125)
(5,563)
(5,563)
(5,563)
(2,750)
(2,750)
(2,750)
(63,500)
________ (11,000)
0 ________ (5,063)
0 ________ (5,063)
0 ________ (5,063)
0 ________ (4,125)
0 ________ (4,125)
0 ________ (4,125)
0 ________ (5,563)
0 ________ (5,563)
0 ________ (5,563)
0 ________ (2,750)
0 ________ (2,750)
0 ________ (2,750)
0 ________ (63,500)
EBITDA Net financing cost Profit before tax Tax 30% Net Profit
0 (11,000)
938
0
938
0
938
0
1,875
0
1,875
0
1,875
0
8,438
0
8,438
0
8,438
0
11,250
0
11,250
0
11,250
67,500 0 ________ 67,500
0
0
(5,063)
(5,063)
(5,063)
(4,125)
(4,125)
(4,125)
(5,563)
(5,563)
(5,563)
(2,750)
(2,750)
(2,750)
(63,500)
Oct-15 Month 13 56,250 0 ________ 56,250
Nov-15 Month 14 56,250 0 ________ 56,250
Dec-15 Month 15 56,250 0 ________ 56,250
Jan-16 Month 16 67,500 0 ________ 67,500
Feb-16 Month 17 67,500 0 ________ 67,500
Mar-16 Month 18 67,500 0 ________ 67,500
Apr-16 Month 19 105,000 0 ________ 105,000
May-16 Month 20 105,000 0 ________ 105,000
Jun-16 Month 21 105,000 0 ________ 105,000
Jul-16 Month 22 120,000 0 ________ 120,000
Aug-16 Month 23 120,000 0 ________ 120,000
Sep-16 Month 24 120,000 0 ________ 120,000
1,046,250 0 ________ 1,046,250
5,000 9,000 9,000 ________ 33,250
5,000 9,000 8,500 ________ 33,750
5,000 9,000 8,500 ________ 33,750
5,000 9,000 8,500 ________ 45,000
5,000 9,000 8,500 ________ 45,000
5,000 9,000 8,500 ________ 45,000
5,000 12,000 13,500 ________ 74,500
5,000 12,000 13,500 ________ 74,500
5,000 12,000 13,500 ________ 74,500
5,000 12,000 13,500 ________ 89,500
5,000 12,000 13,500 ________ 89,500
5,000 12,000 13,500 ________ 89,500
60,000 126,000 132,500 ________ 727,750
0 ________ 33,250
0 ________ 33,750
0 ________ 33,750
0 ________ 45,000
0 ________ 45,000
0 ________ 45,000
0 ________ 74,500
0 ________ 74,500
0 ________ 74,500
0 ________ 89,500
0 ________ 89,500
0 ________ 89,500
0 ________ 727,750
(9,975)
(10,125)
(10,125)
(13,500)
(13,500)
(13,500)
(22,350)
(22,350)
(22,350)
(26,850)
(26,850)
(26,850)
23,275
23,625
23,625
31,500
31,500
31,500
52,150
52,150
52,150
62,650
62,650
62,650
! ! ! Year 2 Revenue Cost of sales Gross profit Development costs Administrative costs Marketing costs EBITDA Net financing cost Profit before tax Tax 30% Net Profit
!
Paddle Business Plan – www.paddlebusiness.co.uk
Total
0 509,425
!
In confidence Cash flow statement (£) Years 1-2 : October 2014 – September 2016
Paddle Business Plan – www.paddlebusiness.co.uk
In confidence Year 1
Oct-14 Month 1
Month
Nov-14 Month 2
Dec-14 Month 3
Jan-15 Month 4
Feb-15 Month 5
Mar-15 Month 6
Apr-15 Month 7
May-15 Month 8
Jun-15 Month 9
Jul-15 Month 10
Aug-15 Month 11
Sep-15 Month 12
Total Totals Total 67,500.00
Pre Start
Sales VAT return - 10% Own money Loans Grant Total Income
937.50
937.50
937.50
1,875.00
1,875.00
1,875.00
8,437.50
8,437.50
8,437.50
11,250.00
11,250.00
11,250.00
21,200.00
21,200.00 60,000.00
£
21,200
£
938
Cost of Sales
£
938
£
60,938
£
1,875
£
1,875
£
1,875
£
8,438
£
8,438
£
8,438
£
11,250
£
11,250
£
11,250
£
88,700
0
0
0
0
0
0
0
0
0
0
0
0
0.00
Non-sales costs
11,000
6,000
6,000
6,000
6,000
6,000
6,000
14,000
14,000
14,000
14,000
14,000
14,000
131,000.00
Taxation Profit before tax Tax rate Tax charge
10,200 30% 0
5,063 30% 0
5,063 30% 0
54,938 30% 16,481
4,125 30% 0
4,125 30% 0
4,125 30% 0
5,563 30% 0
5,563 30% 0
5,563 30% 0
2,750 30% 0
2,750 30% 0
2,750 30% 0
17,700.00
Total Expenditure
£
11,000
Income less Expenditure Opening Bank Balance Closing Bank Balance
£ £ £
10,200 -£ £ 10,200 £
£
Year 2
£
6,000
£
22,481
5,063 -£ 10,200 £ 5,138 £
5,063 5,138 75
£ £ £
38,456 -£ 75 £ 38,531 £
Oct-15 Month 13
Month Sales VAT return - 10% Own money Loans Grant Total Income
6,000
Nov-15 Month 14
56,250.00
£
Dec-15 Month 15
56,250.00
6,000
£
4,125 -£ 38,531 £ 34,406 £
Jan-16 Month 16
56,250.00
6,000
£
4,125 -£ 34,406 £ 30,281 £
Feb-16 Month 17
67,500.00
6,000
£
4,125 -£ 30,281 £ 26,156 £
Mar-16 Month 18
67,500.00
14,000
£
5,563 -£ 26,156 £ 20,594 £
Apr-16 Month 19
67,500.00
14,000
£
5,563 -£ 20,594 £ 15,031 £
May-16 Month 20
105,000.00
14,000
£
5,563 -£ 15,031 £ 9,469 £
Jun-16 Month 21
105,000.00
14,000
£
2,750 -£ 9,469 £ 6,719 £
Jul-16 Month 22
105,000.00
14,000
£
2,750 -£ 6,719 £ 3,969 £
Aug-16 Month 23
120,000.00
14,000
£
147,481
2,750 -£ 3,969 1,219 £
58,781
Sep-16 Month 24
120,000.00
16,481.25
120,000.00
1,219
Totals Total 1,046,250.00 0.00
£
Cost of Sales
56,250
£
56,250
£
56,250
£
67,500
£
67,500
£
67,500
£
105,000
£
105,000
£
105,000
£
120,000
£
120,000
£
120,000
£ 1,046,250
0
0
0
0
0
0
0
0
0
0
0
0
0.00
Non-sales costs
23,000
22,500
22,500
22,500
22,500
22,500
30,500
30,500
30,500
30,500
30,500
30,500
318,500.00
Taxation Profit before tax Tax rate Tax charge
33,250 30% 9,975
33,750 30% 10,125
33,750 30% 10,125
45,000 30% 13,500
45,000 30% 13,500
45,000 30% 13,500
74,500 30% 22,350
74,500 30% 22,350
74,500 30% 22,350
89,500 30% 26,850
89,500 30% 26,850
89,500 30% 26,850
727,750.00 218,325.00
Total Expenditure
£
32,975
£
32,625
£
32,625
£
36,000
£
36,000
£
36,000
£
52,850
£
52,850
£
52,850
£
57,350
£
57,350
£
57,350
£
536,825
Income less Expenditure Opening Bank Balance Closing Bank Balance
£ £ £
23,275 23,275
£ £ £
23,625 23,275 46,900
£ £ £
23,625 46,900 70,525
£ £ £
31,500 70,525 102,025
£ £ £
31,500 102,025 133,525
£ £ £
31,500 133,525 165,025
£ £ £
52,150 165,025 217,175
£ £ £
52,150 217,175 269,325
£ £ £
52,150 269,325 321,475
£ £ £
62,650 321,475 384,125
£ £ £
62,650 384,125 446,775
£ £ £
62,650 446,775 509,425
£
509,425
£
509,425
Notes on Income Statement and Cash Flow forecasts Paddle Business Plan – www.paddlebusiness.co.uk
In confidence No salaries will be taken by directors for the first 6 months while the platform is launched and the website is in development. The company becomes profitable in October 2015 requiring £81,200 to build the platform, get it to market and secure revenue channels for the first 12 months. £21,000 of this money is required within the first 3 months of operations and will be provided either by a sponsor to underwrite the startup costs or by directors’ loans to the company or a mix of the two. The remaining £60,000 of funding is required in November 2014 and will be raised either through a loan or through private investment into the company. By this point, there will be a working beta platform and proof of concept with businesses having raised finance through the site.
Paddle Business Plan – www.paddlebusiness.co.uk