Looking for a computer software business plan? You're in the right place.
A software company that sells to schools, libraries or public programs has questions to answer before anyone invests. How many licenses must it sell before the team is paid for? How long does a public buyer take to decide? What share of customers renew? A generic template won't show what sensible answers look like.
This article walks through a complete sample plan for a digital-skills software company in Chicago, Illinois, section by section. It covers the executive summary, the SWOT analysis and, above all, the financials.
What you'll take away:
- The executive summary: see how to put a recurring-revenue business and its funding on one page, so an investor knows the ask in a minute
- The buyer analysis: learn how to describe who signs, who uses and who approves the budget, so a reader believes the sales cycle you claim
- The seed round and launch spend: find out what a software start-up needs in the bank before licenses begin to pay
- The license and renewal model: see how seats, price and renewal rates turn into revenue, and which number moves the forecast most
- The hiring schedule: check when engineers, support staff and sales hires arrive relative to revenue, so the payroll doesn't outrun the licenses
- The five-year profit, cash flow and balance sheet: follow three loss-making years into a profitable fourth
- The downside case: have an answer ready for the "what if revenue is 25% short?" question, with the steps the founder takes
If you're planning a software company, read this before writing your own. The company is fictional, so take what fits and change the rest.
In this plan
If you need a computer software business plan template for your own plan, start it in the Toolkit.
Executive Summary
Clickpath Learning is an Illinois company that sells browser-based digital-skills courses to the organizations that teach adults to use computers: public library systems, workforce programs and adult-education providers. It opens in Chicago's West Loop on 1 January 2027. Founder Priya Raman ran an adult digital-skills program at a Chicago community college for nine years before leaving to build the software her classes lacked.
The company raises $1,600,000 before opening: $150,000 from Priya, $450,000 from three angel investors and $1,000,000 from a seed fund. Of that, $116,500 pays for the platform build, the first 40 lessons, equipment and the launch, and the rest funds three years of operating losses. There is no debt. By the end of Year 4 about 79% of the money has been spent, and $334,640 remains at the lowest point.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $196,800 | $526,300 | $996,100 |
| Net income after start-up costs | ($539,684) | ($337,949) | ($203,099) |
| Closing cash | $1,014,804 | $631,347 | $361,599 |
Three organizations (two library systems and one community-college program) sign paid pilots before opening. Ten more sign during Year 1, which ends with 13 licenses. Year 3 ends with 47, and the company turns profitable in Year 4. Losses in the first three years are the reason for the equity round: licenses are expected to sell slowly to public buyers, and the team has to exist before the revenue does.
The plan also tests a 25% revenue shortfall. Priya slips later hires by six months, drops the second sales hire and cuts marketing and her own pay, yet cash still falls below the base case every year, to $98,623 at the Year 4 low against $334,640. The company stays above zero, with less room for a longer or deeper miss.
Clickpath at a Glance
Legal name: Clickpath Learning, Inc., an Illinois corporation. Founder and chief executive: Priya Raman. Premises: 1,000 square feet of leased office in the West Loop, Chicago. Launch: 1 January 2027, with 40 lessons and three paying pilot organizations. The round closes in mid-2026 and the platform and lessons are built and paid for before opening; the model books those costs at opening.
The product
A learner opens a lesson on a phone, tablet or library computer, with no software to install. The first 40 lessons cover the mouse and keyboard, email, safe browsing and spotting scams, filling in online forms, video calls and searching for work. Each lesson runs 10 to 15 minutes in plain language. Staff get a dashboard showing who has started, who has finished and where learners stall, and learners can print a completion certificate. Spanish-language lessons are added from Year 2.
How it is sold
An organization buys a 12-month license priced by learner seat at $15. The average license covers 1,400 seats, or $21,000 a year. The seat price is a planning figure and has not been benchmarked against vendors; libraries often count walk-in use, so some buyers may ask for a flat site fee instead, and the model treats $21,000 as that fee. A one-off implementation fee of $3,500 covers roster upload, branding and staff training. Two further lines sit on top:
| Product line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Annual site licenses | $15 per learner seat, about $21,000 a year | 66% |
| Workplace skills add-on | $300 a month per organization | 2% |
| Implementation and staff training | $3,500 per new organization | 20% |
| Custom course builds | Milestone-billed, $12,000 per project in Year 1 | 12% |
Goals for the first three years
- 13 licensed organizations by December 2027 and 47 by December 2029.
- A renewal rate of at least 85% of organizations on the opening base each year.
- Positive EBITDA in Year 4, after three years of funded losses.
- A team of eight full-time people by the end of Year 3.
Records, accessibility and security
Learners are mainly adults, but library computers are also used by teenagers, so the company does not treat children's data rules as out of scope; it collects only a name, an email address or a library card number, and progress data, and confirms the rules that apply with counsel. Illinois has a Library Records Confidentiality Act, and library buyers may treat learner records as confidential library records. How that act applies to Clickpath's data is a question for counsel before the first library contract. Every buyer signs a data-handling agreement.
Public-sector buyers may ask for accessibility documentation and security reports. The launch budget includes $9,000 for an outside accessibility audit, which produces a VPAT (a standard accessibility conformance report), and a security review. A SOC 2 report is planned for Year 3.
Who Buys Digital-Skills Courseware
The pool of public and nonprofit buyers
Three kinds of organization teach adults basic computer skills in volume. Public libraries run drop-in classes and lend out devices. Local workforce programs, including American Job Center operators, prepare jobseekers for online applications. Adult-education providers, often community colleges and nonprofits, teach English and literacy alongside computer skills. The federal Workforce Innovation and Opportunity Act covers adult education under Title II, which the Department of Labor's WIOA page describes as run through the Education Department's Office of Career, Technical, and Adult Education, and it supports the American Job Center system and local workforce areas. Which programs can spend federal funds on courseware varies by state and grant, and the company confirms it with each buyer. Clickpath does not depend on any grant, but grant-funded programs are among the budgets some of its customers draw on.
What courseware costs the people who make it
The Bureau of Labor Statistics put the median pay for software developers at $135,980 in May 2025 and projects 10% employment growth from 2025 to 2035. For instructional coordinators, the people who plan curricula, it reports a median of $77,440 and 2% growth. The plan prices its two scarcest hires near those figures: a lead engineer at $140,000 and a learning designer at $78,000.
Alternatives a buyer has today
| Alternative | What it offers | Why a buyer picks it | Where Clickpath differs by design |
|---|---|---|---|
| Free online lessons from nonprofits and public programs | Self-paced basic-skills content | No cost | Staff dashboard, completion records, Spanish and workplace modules, a named support contact |
| General online course catalogues | Large library covering many subjects | One contract for many topics | Short lessons written for first-time computer users |
| Digital-literacy assessment tools | Skill tests and certificates | Recognized benchmarks | Lessons and practice built around the same tasks |
| Classroom instructors and volunteer tutors | Live, in-person help | Personal attention | Software extends the instructor's reach rather than replacing them |
| Software the organization builds itself | Bespoke content | Full control | A maintained product and a price below one developer's salary |
The table describes categories, not a ranking. Free content is a real alternative, and many buyers will use it for a while before they buy.
SWOT
| Strengths | Weaknesses |
|---|---|
| Founder who ran the classes the product is for | First-time software founder; no sales team yet |
| Three paying pilots before launch | The plan expects a six-to-nine-month decision cycle at public buyers |
| Lesson scripts drawn from the founder's own classes | One product line, 40 lessons at launch |
| Opportunities | Threats |
|---|---|
| Spanish-language lessons for Chicago-area programs | Free courses covering the same ground |
| Employers and workforce boards paying for custom builds | Budget cuts or grant delays at buyers |
| Add-on modules that raise the value of each license | A funded competitor lowering prices |
Inside the Buyer's Office
The program manager who picks the product
The day-to-day buyer is a library digital-services manager, a workforce program director or an adult-education coordinator. They teach or supervise people who have never used a computer, report on how many learners finished, and have a fixed annual budget with little room to add a product mid-year.
What they use now
A mix of free lessons, a few instructor-led sessions and a sign-in sheet. Learner progress is tracked by hand, which is the weak point at reporting time.
What triggers a purchase
A funder asking for completion numbers, a waiting list for classes, a new device-lending program, or a staff member who leaves and takes the classes with them.
Who else signs
A finance officer or purchasing office approves the order. Larger contracts may need quotes or a formal bid; each buyer sets its own thresholds, and the founder confirms them before quoting.
What buyers ask the company for
Short lessons learners finish. Reports that go straight into a funder's template. A price set in advance for the year. A person to call.
From Demo to Purchase Order
The path
- A 20-minute demo for the program manager.
- A free 30-day trial site with 25 seats.
- A written quote the finance office can approve, valid for 60 days.
- A purchase order, then implementation within three weeks.
The plan expects the cycle to run six to nine months. Priya takes every demo until the first account executive joins in month 8.
Year 1 pipeline
The plan expects about 40 qualified demos in Year 1 and 10 new licenses, one demo in four. Year 1 signings follow buyers' budgets, so they bunch in the second half, with peaks in July and November. Buyers' fiscal years differ, and the founder confirms each one.
| Source of new licenses | Year 1 new organizations | Share |
|---|---|---|
| Conferences and association meetings | 4 | 40% |
| Outbound email and webinars | 3 | 30% |
| Referrals from the three pilots | 2 | 20% |
| Search and sample lessons | 1 | 10% |
How prices are set
Price is per learner seat at $15, with a typical organization buying 1,400 seats. Smaller libraries buy fewer; a regional workforce board may buy several times that. Pilots pay $1,200 a month in the first year, about 70% of list, and reprice to list at renewal. Prices rise 3% a year from Year 2.
Renewals and the add-on
Organizations on the opening base are expected to renew at 85% in Year 2, rising to 89% by Year 4. Each quarter the implementation manager reviews usage: licenses where fewer than a third of seats are in use are flagged for a training session before the renewal conversation. Organizations that also buy the workplace skills add-on are expected to renew more often, because the product then supports more of their programs.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Licensed organizations at year end | 13 | 26 | 47 | 69 | 91 |
| Add-on organizations at year end | 3 | 8 | 16 | 26 | 36 |
Getting in Front of Buyers
What the marketing budget buys
Year 1 marketing is $49,000: $17,000 of launch spend from the seed round and $32,000 of running costs. A further $12,000 covers conference fees, travel and bid preparation. Across 10 new organizations that is about $6,100 each, roughly 3.5 months of a $21,000 license, before the founder's and account executive's pay. Marketing falls from 25% of Year 1 revenue (launch spend included) to 5% in Year 3 and 3% in Year 5 as referrals and renewals carry more of the load. Fully loaded for Year 2, with $40,000 of marketing, $18,000 of conference costs, $26,000 of commissions and the account executive's pay, a new organization costs about $11,700 to win, or about nine months of gross profit on a first-year contract of $21,630.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, demo site and sample lessons (launch) | $7,000 | A public site with ten free lessons and a booking link for demos |
| Case-study video and pilot kits (launch) | $4,000 | Two short films from pilot staff and a printed starter pack |
| Conference debut (launch) | $6,000 | A first booth at a state library association meeting |
| Free starter lessons and guides | $9,000 | Content for program managers searching for ways to report completions |
| Outbound email and sequencing tools | $6,000 | Targeted mail to library, workforce and adult-education leaders |
| Webinars for program staff | $5,000 | Quarterly sessions on teaching first-time computer users |
| Paid search and social | $6,000 | Targeted to program manager job titles and phrases |
| Association memberships and pilot referral program | $6,000 | Introductions inside library and adult-education networks |
Marketing milestones
- January 2027: three pilots live.
- July 2027: eight organizations, two signed as budgets open.
- December 2027: 13 organizations and $21,100 of monthly license revenue.
Building and Running the Platform
Product and hosting
A web application on managed cloud hosting, with video lessons delivered through a content delivery service. Hosting, delivery and licensed components cost about 9% of license revenue. Gross margin is about 86% before implementation and support staff and 65% to 77% after them, rising over the five years. Releases ship every two weeks and every lesson is tested on a phone, a tablet and a library desktop before it goes live.
Staff and capacity
Implementation takes about 40 hours per new organization and support about 2 hours a month per live organization. At about 140 productive hours a month per person, one implementation and support manager is enough in Year 2, a second person is needed from month 25, and a part-time specialist helps from month 52. The founder and learning designer cover onboarding until month 7.
Office
1,000 square feet in the West Loop at about $34 a square foot a year, all-in, for $34,000 in Year 1, with room for eight desks, and part of the team works from home. The company moves to about 1,500 square feet in Year 4.
Tools
Customer relationship software, a support desk, analytics, video recording and editing, and developer tools cost $16,000 in Year 1 and $39,000 by Year 5.
Insurance and safeguards
- Cyber and technology errors and omissions coverage, general liability, workers' compensation and directors' coverage for the investors, plus key-person life cover on Priya and Daniel, budgeted at $20,000 in Year 1.
- A written security policy, annual penetration test and encrypted storage of learner records.
- A data-handling agreement and privacy notice for every buyer, with non-appropriation and termination clauses reviewed by counsel.
- A written statement of accessibility, backed by the outside audit, kept up to date as lessons are added.
Vendors and advisers
A cloud hosting provider, a video delivery service and two freelance voice artists, none hard to replace. A part-time bookkeeper and an outside accountant handle monthly accounts.
The Team
Priya Raman, founder and chief executive
Priya spent nine years running an adult digital-skills program at a Chicago community college, where she rose from instructor to program manager and built the lesson plans the software is based on. She holds a master's degree in adult education. Her $150,000 is her savings.
Daniel Okoye, lead software engineer
Twelve years building web learning platforms, most recently as a senior engineer at a Chicago training-software company. He joins in month 1 at $140,000 and leads the build.
Where the team is thin
Priya has not run a software company or managed a sales team. The plan covers this with an advisory board of two former library-system directors and the angel investors' experience, and with an account executive in month 13. The company depends on two people for the platform in Year 1; the second engineer arrives in month 31.
If Priya or Daniel leaves
The code is kept in a company repository with documented deployment steps, and the learning designer holds the lesson scripts.
Investors and governance
Three angel investors and a seed fund hold shares in the company alongside Priya; the split is set in the investment documents and is not modeled here. The model pays no dividends, so an investor's return depends on a later sale or financing, which the plan does not forecast. A board of three meets quarterly and reviews the pipeline, renewal rates and cash.
What an investor or lender will ask to see
- The three signed pilot agreements and any letters of intent from further buyers; letters of intent are not contracts.
- Contract terms, including non-appropriation clauses that let a public buyer end a term if its funding is not appropriated, which the 85% to 89% renewal rate allows for.
- The accessibility report (VPAT) and, from Year 3, the SOC 2 report.
- The fully loaded cost of winning a customer, about $11,700 in Year 2, against a first-year contract of $21,630.
Money Plan: Licenses, Hires and Cash
Clickpath sells a recurring product, so the model starts from organizations under license and works outward to price, hires and cash. Year 1 is monthly; Years 2 to 5 are annual totals. The inputs sit ahead of the results so each figure can be traced back.
The seed round and launch spend
| Use of funds | Amount |
|---|---|
| Laptops, accessibility test devices, monitors | $12,000 |
| Office furniture and fit-out | $8,000 |
| Platform and first 40 lessons, paid before opening: contract engineering, scripts, recording | $55,000 |
| Legal: entity, license terms, privacy policy, investor documents | $14,000 |
| Accessibility audit and security review | $9,000 |
| Business registration and state vendor registration | $1,500 |
| Launch: website, demo site, conference debut, pilot kits | $17,000 |
| Operating funding for the first three years of losses | $1,483,500 |
| Total uses | $1,600,000 |
| Source of funds | Amount |
|---|---|
| Priya Raman's savings | $150,000 |
| Three angel investors ($150,000 each) | $450,000 |
| Seed fund | $1,000,000 |
| Total sources | $1,600,000 |
The company raises $1,600,000 before opening: $150,000 from Priya, $450,000 from three angel investors at $150,000 each and $1,000,000 from a seed fund, with no debt. Equity carries three loss-making years, a poor fit for a lender weighing a young software company with a handful of contracts. Almost all of the money is spent on losses. Of the total, $116,500 pays for the build, equipment and launch. Counting those, operations and equipment use $1,265,360 of cash through Year 4 ($1,245,360 from operations plus $20,000 of equipment), 79% of the raise. What remains is $334,640, the lowest year-end balance in the base case and about two and a half months of Year 4 costs. The ownership split between Priya and the investors is not modeled.
Pricing and delivery inputs
- A license covers one organization for 12 months and is priced by learner seat at $15. The average organization buys 1,400 seats, which is $21,000 a year or $1,750 a month. The seat price is a planning figure and has not been benchmarked against any vendor. Libraries often count walk-in use, which does not map neatly onto seats, so some buyers may prefer a flat site fee; the model treats $21,000 as that fee. The three pilot organizations pay $1,200 a month for their first year, about 70% of list, and move to the standard rate on renewal. Prices rise 3% a year from Year 2.
- Organizations under license at the end of each year are 13, 26, 47, 69 and 91. New organizations are 10 in Year 1 (on top of the three pilots), then 15, 24, 27 and 30. Renewal rates on the opening base are 85% in Year 2 (11 of 13), 88% in Year 3 (23 of 26), 89% in Year 4 (42 of 47) and 88% in Year 5 (61 of 69). A lost organization is a lost license; the model does not track partial seat reductions. Public contracts commonly let a buyer end the term if its funding is not appropriated, and the renewal rates allow for losses of that kind. The founder confirms the clause wording with counsel for each buyer.
- The plan expects a sales cycle of six to nine months from first demo to purchase order, so the first new signing falls in April. Buyers' fiscal years differ; some follow the calendar year and others start in July. Signings in the model cluster in July and in the fourth quarter, and the founder confirms each buyer's calendar and purchasing rules before quoting. The plan expects about one qualified demo in four to end in a license, roughly 40 demos for the 10 new organizations of Year 1. A six-month slip in that cycle is not modeled; it would move revenue later and is covered only by the general shortfall case.
- The workplace skills add-on costs $300 a month ($3,600 a year) per organization and starts in month 7. Attach rates at year end are 23% of organizations in Year 1, then 31%, 34%, 38% and 40%.
- Implementation is billed at $3,500 a new organization (the pilots pay half): roster upload, branding, staff training and a six-week check-in. It takes about 40 hours of staff time per organization, which payroll already carries, and the direct-cost line adds 12% for travel and contract trainers.
- Custom course builds are two milestone-billed projects in Year 1 ($12,000 each, in September and December), then $30,000, $48,000, $60,000 and $72,000 a year. Direct costs on these are 40%, because contract writers, developers and voice talent do much of the work.
- Direct costs are 9% on licenses and the add-on for cloud hosting and video delivery, 12% on implementation and 40% on custom builds, which comes to about 13.4% of total revenue. Gross margin on that basis is about 86%. Counting the implementation and support staff who serve customers, it is closer to 65% in Year 1, 70% in Years 2 and 3 and 75% to 77% in Years 4 and 5.
- Support capacity is modeled at 40 hours of implementation per new organization and 2 hours a month of support per live organization, against about 140 productive hours a month per implementation or support person. The implementation and support manager starts in month 7, a second person in month 25 and a part-time specialist in month 52. The founder and the learning designer cover onboarding until month 7.
- The fully loaded cost of winning a new organization in Year 2 is about $11,700: $40,000 of marketing, $18,000 of conference and bid costs, $26,000 of commissions and about $92,000 of the account executive's loaded pay, spread over 15 new organizations. That is about nine months of gross profit on a first-year contract of $21,630.
- Receivables average 55 days because public buyers pay on net-30 to net-60 terms and some approvals run late. Annual licenses are normally invoiced in advance, which would improve cash, but the model recognizes and collects revenue evenly through the year and leaves out that upfront billing. That makes the cash line cautious.
- Payroll adds 27% to wages for payroll taxes, health coverage, workers' compensation and a retirement match (12% for the part-time role). The lead engineer's $140,000 sits just above the U.S. Bureau of Labor Statistics median of $135,980 for software developers (May 2025); the learning designer's $78,000 sits near the $77,440 median for instructional coordinators in the same data. Annual pay raises of 3% are charged as a separate line from Year 2.
- Rent is 1,000 square feet in the West Loop at about $34 a square foot a year all-in, then 1,500 square feet from Year 4. Insurance is $20,000 in Year 1 for cyber and technology errors and omissions, general liability, workers' compensation, directors' coverage for the investors and key-person life cover on Priya and the lead engineer, rising to $28,000 by Year 5. These are planning figures and not quotes. Professional fees include $22,000 in Year 3 for a SOC 2 audit, a security report that public and nonprofit buyers increasingly request.
- Selling costs outside payroll are marketing ($32,000 in Year 1, on top of $17,000 of launch spend), conference fees, travel and bid preparation ($12,000), and commissions of about 8% of first-year contract value on new organizations from Year 2 ($26,000, $43,000, $50,000 and $57,000). Spanish-language content updates begin in Year 1 with $4,000 and run at $12,000 a year after that.
- Tax is charged at the 21% federal rate plus an Illinois rate of 9.5%, which the Tax Foundation's 2026 table lists as two corporate taxes of 7% and 2.5%. The model carries losses forward in full and so shows no income tax in any year. Federal law limits the deduction of carried-forward losses to 80% of taxable income, Illinois may cap its own loss deduction, and start-up costs are only partly deductible in the year paid, so a real Year 4 or Year 5 bill could be higher. Confirm with a tax adviser. Rates may change. No dividends are paid; surplus cash stays in the company.
Revenue by product line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Annual site licenses | $128,950 | $421,800 | $813,200 | $1,330,900 | $1,890,900 |
| Workplace skills add-on | $3,600 | $20,400 | $45,800 | $82,600 | $125,600 |
| Implementation and staff training | $40,250 | $54,100 | $89,100 | $103,300 | $118,200 |
| Custom course builds | $24,000 | $30,000 | $48,000 | $60,000 | $72,000 |
| Total revenue | $196,800 | $526,300 | $996,100 | $1,576,800 | $2,206,700 |
| Growth on prior year | – | 167% | 89% | 58% | 40% |
Licenses and the add-on are the recurring base: 67% of Year 1 revenue and 91% of Year 5. Implementation and custom builds are a larger share early (33% in Year 1) because they arrive with each new organization, and they shrink as renewals build. Year 2 revenue is 167% above Year 1 because Year 1 is a part-year ramp: the company averages 7 licensed organizations across Year 1 and about 20 across Year 2. Growth then slows to 89%, 58% and 40% as the base gets larger and each year's new signings count for less of it.
Month by month, Year 1
| Month | Annual site licenses | Workplace skills add-on | Implementation and staff training | Custom course builds | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $3,600 | $0 | $5,250 | $0 | $8,850 | ($43,126) |
| Feb 2027 | $3,600 | $0 | $0 | $0 | $3,600 | ($47,672) |
| Mar 2027 | $3,600 | $0 | $0 | $0 | $3,600 | ($47,672) |
| Apr 2027 | $5,350 | $0 | $3,500 | $0 | $8,850 | ($43,126) |
| May 2027 | $7,100 | $0 | $3,500 | $0 | $10,600 | ($41,610) |
| Jun 2027 | $8,850 | $0 | $3,500 | $0 | $12,350 | ($40,094) |
| Jul 2027 | $12,350 | $300 | $7,000 | $0 | $19,650 | ($33,772) |
| Aug 2027 | $14,100 | $300 | $3,500 | $0 | $17,900 | ($35,288) |
| Sep 2027 | $14,100 | $600 | $0 | $12,000 | $26,700 | ($27,666) |
| Oct 2027 | $15,850 | $600 | $3,500 | $0 | $19,950 | ($33,512) |
| Nov 2027 | $19,350 | $900 | $7,000 | $0 | $27,250 | ($27,190) |
| Dec 2027 | $21,100 | $900 | $3,500 | $12,000 | $37,500 | ($18,313) |
Revenue in January and February comes only from the three pilots and their set-up fees. The first new organization signs in April, and July and November each bring two. Custom-build milestones lift September and December. EBITDA, the profit before interest, depreciation and tax, is negative in every month of Year 1, narrowing from about $43,000 a month in January to about $18,000 in December.
Hiring schedule
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and chief executive | $90,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead software engineer | $140,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Learning designer | $78,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Implementation and support manager | $68,000 | Month 7 | 1 | 1 | 1 | 1 | 1 |
| Account executive (base salary) | $70,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Software engineer | $125,000 | Month 31 | – | – | 1 | 1 | 1 |
| Implementation specialist | $62,000 | Month 25 | – | – | 1 | 1 | 1 |
| Second account executive (base salary) | $70,000 | Month 34 | – | – | 1 | 1 | 1 |
| Learning designer (second) | $78,000 | Month 46 | – | – | – | 1 | 1 |
| Support specialist (part time, 25 hours a week) | $31,000 | Month 52 | – | – | – | – | 0.5 |
| Total payroll incl. on-costs | $471,382 | $566,420 | $746,760 | $917,575 | $1,017,910 |
Priya, the lead engineer and the learning designer work from month 1. The implementation and support manager starts in month 7, as the base reaches eight organizations, and the first account executive in month 8, so that Priya is not the only person selling during the second half of the year. The implementation specialist (month 25) arrives ahead of the second engineer (month 31) because support load grows first. The second account executive follows in month 34, a second learning designer in month 46 and a part-time support specialist in month 52. The table shows the part-time role as 0.5.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $196,800 | $526,300 | $996,100 | $1,576,800 | $2,206,700 |
| Direct costs (hosting and video delivery, trainer travel, contract course writers) | ($26,359) | ($70,493) | ($133,418) | ($211,197) | ($295,567) |
| Gross profit | $170,441 | $455,807 | $862,682 | $1,365,603 | $1,911,133 |
| Payroll incl. on-costs | ($471,382) | ($566,420) | ($746,760) | ($917,575) | ($1,017,910) |
| Rent | ($34,000) | ($35,000) | ($36,100) | ($52,000) | ($53,600) |
| Utilities | ($3,600) | ($3,700) | ($3,800) | ($5,400) | ($5,600) |
| Marketing | ($32,000) | ($40,000) | ($46,000) | ($52,000) | ($56,000) |
| Insurance | ($20,000) | ($22,000) | ($24,000) | ($26,000) | ($28,000) |
| Professional fees | ($12,000) | ($16,000) | ($38,000) | ($22,000) | ($24,000) |
| Software subscriptions | ($16,000) | ($22,000) | ($28,000) | ($34,000) | ($39,000) |
| Conference fees, travel and bid preparation | ($12,000) | ($18,000) | ($22,000) | ($25,000) | ($27,000) |
| Sales commissions | $0 | ($26,000) | ($43,000) | ($50,000) | ($57,000) |
| Spanish-language and plain-language content updates | ($4,000) | ($12,000) | ($12,000) | ($14,000) | ($14,000) |
| Phones, supplies and recruiting | ($4,000) | ($5,500) | ($6,500) | ($8,000) | ($8,500) |
| Equipment replacement and new-hire kit | $0 | ($4,000) | ($6,000) | ($8,000) | ($6,000) |
| Bad debt allowance | ($500) | ($2,000) | ($4,000) | ($6,000) | ($8,000) |
| Annual pay raises (3% a year) | $0 | ($16,993) | ($45,478) | ($85,084) | ($127,757) |
| EBITDA | ($439,041) | ($333,806) | ($198,956) | $60,544 | $438,766 |
| Depreciation | ($4,143) | ($4,143) | ($4,143) | ($4,143) | ($1,143) |
| Interest | $0 | $0 | $0 | $0 | $0 |
| Income tax | $0 | $0 | $0 | $0 | $0 |
| Net income before start-up costs | ($443,184) | ($337,949) | ($203,099) | $56,401 | $437,624 |
| Start-up costs expensed at opening (platform and lesson build $55,000, legal, accessibility audit, registrations, launch marketing) | ($96,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($539,684) | ($337,949) | ($203,099) | $56,401 | $437,624 |
Year 1 loses $443,184 before start-up costs and $539,684 after them. Year 2 loses $337,949 and Year 3 $203,099, the last year of losses and the first with revenue near $1 million. Year 4 earns $56,401, an EBITDA margin of 3.8%, and Year 5 earns $437,624, a margin of 19.9%. Payroll takes 80% of revenue in Year 3 and 52% in Year 5. The model shows no income tax in the five years because carried-forward losses absorb all taxable profit; the tax note in the inputs explains why a real bill could arrive sooner.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($565,196) | ($383,457) | ($269,748) | ($26,959) | $343,850 |
| Equipment and fit-out | ($20,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,600,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | $0 | $0 | $0 | $0 |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $1,014,804 | ($383,457) | ($269,748) | ($26,959) | $343,850 |
| Closing cash | $1,014,804 | $631,347 | $361,599 | $334,640 | $678,490 |
Closing cash falls from $1,014,804 at the end of Year 1 to $631,347, $361,599 and then $334,640 at the end of Year 4, the low point, before rising to $678,490 in Year 5. Equity of $1,600,000 funds every dollar of the burn; no loan is drawn, so there is no principal to repay and no debt-service ratio to report.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $1,014,804 | $631,347 | $361,599 | $334,640 | $678,490 |
| Accounts receivable | $29,655 | $79,305 | $150,097 | $237,600 | $332,516 |
| Equipment and fit-out (net) | $15,857 | $11,714 | $7,571 | $3,429 | $2,286 |
| Total assets | $1,060,316 | $722,367 | $519,268 | $575,669 | $1,013,292 |
| Bank loan | $0 | $0 | $0 | $0 | $0 |
| Paid-in capital | $1,600,000 | $1,600,000 | $1,600,000 | $1,600,000 | $1,600,000 |
| Retained earnings | ($539,684) | ($877,633) | ($1,080,732) | ($1,024,331) | ($586,708) |
| Total liabilities and equity | $1,060,316 | $722,367 | $519,268 | $575,669 | $1,013,292 |
Margins, break-even and renewals
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -223.1% | -63.4% | -20.0% | 3.8% | 19.9% |
| Net margin (before start-up costs) | -225.2% | -64.2% | -20.4% | 3.6% | 19.8% |
| Payroll incl. pay raises as share of revenue | 240% | 111% | 80% | 64% | 52% |
| Revenue per full-time equivalent at year end | $39,360 | $105,260 | $124,513 | $175,200 | $232,284 |
| Average monthly revenue | $16,400 | $43,858 | $83,008 | $131,400 | $183,892 |
| Monthly revenue needed to cover operating costs | $58,645 | $75,978 | $102,152 | $125,574 | $141,673 |
| Debt service cover (EBITDA / interest + principal) | – | – | – | – | – |
Year 1 averages $16,400 a month against $58,645 needed to cover operating costs. Year 2 averages $43,858 against $75,978, and Year 3 $83,008 against $102,152. Year 4 averages $131,400 against $125,574, the first year above the line. Revenue per full-time equivalent rises from $39,360 at the end of Year 1 to $232,284 in Year 5. Renewal rates matter more than new sales: at 85% to 89% a year, about one organization in eight is lost and replaced each year before any growth.
If revenue runs 25% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $147,600 | $394,725 | $747,075 | $1,182,600 | $1,655,025 |
| Net income before start-up costs | ($456,534) | ($420,355) | ($235,761) | ($110,598) | $159,541 |
| Net income after start-up costs | ($553,034) | ($420,355) | ($235,761) | ($110,598) | $159,541 |
| Closing cash | $1,008,868 | $555,418 | $270,705 | $98,623 | $188,120 |
Here every revenue line is 25% lower in every year, which is about one quarter fewer licenses, add-ons, implementations and builds. Priya responds in order: every hire from month 13 slips by six months, the second account executive is dropped, marketing falls 20%, her own pay falls 20%, and the company stays in its first office. These cuts reduce the support and sales load only as fast as customers fall short, and the account executive hired in month 8 stays. On those steps cash ends every year below the base case: $1,008,868 in Year 1, $555,418 in Year 2, $270,705 in Year 3 and $98,623 in Year 4, the lowest point. Year 5 returns a profit of $159,541. Closing equity at the end of Year 1 is $1,046,966. A deeper or longer shortfall would need a bridge round or further cuts, and would be harder to recover from because the cuts leave less sales capacity.
Sources
- Bureau of Labor Statistics, Software developers, Occupational Outlook Handbook: median pay (May 2025) and 2025 to 2035 growth.
- Bureau of Labor Statistics, Instructional coordinators, Occupational Outlook Handbook: median pay (May 2025) and 2025 to 2035 growth.
- Department of Labor, Workforce Innovation and Opportunity Act: adult education under Title II, local workforce areas and the American Job Center system.
- Tax Foundation, State corporate income tax rates and brackets, 2026 table: Illinois 9.5%, comprising two taxes of 7% and 2.5%.
Create a plan as complete as this one
Pick the amount of help you want.
Do it yourself
$197 Toolkit, 12 months
Build your plan with the AI Wizard and every tool you need, at your own pace.
Start my plan →Done with you
$497 Toolkit Plus, 12 months
Our AI builds the plan with you, section by section, from your answers.
Want a person too? Upgrade to a consultation with an MBA graduate.
See Toolkit Plus →Done for you
From $1,997 written for you
We research and write the whole plan, and you review the finished draft.
See the writing service →That is the example. For your own business, the computer software business plan template walks you through each section.