ENGINEERING INNOVATION

Engineering Innovation

Engineering Innovation

Introduction

Engineering Innovation is a firm specializing in mechanical, electrical, plumbing and fire protection. We provide engineering, design and consulting services on government, educational, health care and commercial facilities, and through subcontracting with architects working on such facilities. The firm provides engineering services using technologically superior processes, providing greater value for clients and enhanced design and construction.

The target clients are architectural firms. The targeted work is segmented into five categories: educational, health care, commercial and government facilities, and contractors. Pyramid's competitive edge will be our knowledge of digital-based design resources. Superior customer service will also be a point of firm differentiation. Implementation of a quality control and assurance program will also provide a focus for production.

Engineering Innovation, P.C. was created as a professional corporation chartered in Pennsylvania.   The company is privately owned by the four founding partners: John Lavoie, Tom Heasley, John Solarczyk and Eric Haugh, all licensed engineers, with a combined 90 years of experience in their fields.

Year 1 sales are expected to exceed $350,000 and increase to in excess of $400,000 by the end of Year 2. The current year will mark the first year of profitability with expected profits rising significantly by the end of Year 3.

The most significant challenges ahead include expanding the client base, and ultimately positioning the firm to have a presence in a larger global market.

This business plan outlines the objective, focus, and implementation of this firm. We are seeking an additional $26,000 of short-term borrowing to maintain our cash flow over the next year as we become profitable.

Finances

The financial plan which follows summarizes information regarding the following items:

Important Assumptions.

Key Financial Indicators.

Break-Even Analysis.

Projected Profit and Loss.

Projected Cash Flow.

Projected Balance Sheet.

Business Ratios.

Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix.

Some of the more important underlying assumptions are:

We assume a strong economy, without major recession.

We assume the creation of Nunavut will not dramatically change the delivery of engineering services.

Interest rates, tax rates, and personnel burdens are based on conservative assumptions.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

30.00%

30.00%

30.00%

Other

0

0

0

Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years. We foresee modest growth in sales and a marginal reduction in operating expenses for the years presented.

Break-even Analysis

The following table and chart summarize our break-even analysis. With our estimated monthly fixed costs, the table and chart below show the number of billing targets per month we will need to cover our costs. We don't really expect to reach break-even until a few months into the business operation.

The break-even assumes unit variable costs at 30 percent of unit revenue. The unit revenue value of $60/hour is an aggregate measure for all the types of services which will be offered.

Break-even Analysis

Monthly Units Break-even

111

Monthly Revenue Break-even

$6,845

Assumptions:

Average Per-Unit Revenue

$61.42

Average Per-Unit Variable ...