Looking for a financial services business plan? You're in the right place.
A finance firm that is paid on commission has to answer awkward questions early. Who actually pays you, and when? How many funded deals does a month need before the rent is covered? What happens when a lender takes a commission back? A blank template has no figures for any of that.
This article takes a complete sample plan for a commercial finance brokerage in Cincinnati, Ohio, and walks through it from the executive summary and SWOT to the full financials, so you can see how a plan like this fits together before you write yours.
What you get from reading it:
- The executive summary: put the funding request and the fee model on one page, so a banker sees both before turning over
- The lender and competitor picture: describe who else a borrower can call without quoting prices you cannot source
- The deal pipeline: tie applications to funded deals through a funding rate, so your revenue line has a number behind it
- The marketing plan: price a funded deal in marketing dollars and see which referral channels could carry it
- The first year by month: spot the months before commissions fund, and size a reserve to cover them
- The five-year profit and loss, cash flow and balance sheet: see how a clawback allowance and a seasonal fourth quarter show up in each
- The downside case: have a worked answer to "what if volume is a fifth short?", with the steps the owner takes and the cash that is left
The firm is fictional. Keep what fits your own brokerage and change the rest.
In this plan
To turn this example into your own financial services business plan, use the financial services business plan template.
Summary: What Cedar Hollow Arranges and Needs
Cedar Hollow is a commercial finance brokerage in Cincinnati, Ohio. It opens on 1 January 2027 and places financing for local owner-run businesses with a panel of outside lenders. It does not lend its own money. Founder Sarah Lewis owns 100% of the firm.
Three fee lines pay for it. Lenders pay a commission when they fund an equipment or vehicle loan, and another when they fund a credit line. Borrowers pay a fixed packaging fee when an SBA or term-loan application the firm prepared closes.
The firm needs $160,000: $100,000 of Sarah's savings and a $60,000 bank term loan. Of that, $132,000 is held as a reserve, $9,000 buys computers and furniture and $19,000 pays for legal work, licensing and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $269,300 | $520,000 | $760,000 |
| Net income after start-up costs | ($63,682) | $6,307 | $84,961 |
| Closing cash | $61,624 | $37,527 | $61,686 |
In 2027 the firm funds 60 equipment deals, closes 15 packaged loans and places 34 credit lines, 109 transactions in all. Commissions are paid after a lender funds, so the first months lose money. Monthly operating profit is positive in July and from September to December, and the fourth quarter is strongest because year-end equipment buying peaks. Year 2 is the first profitable year, with $6,307 of net income and about $1,200 a month of cushion over its break-even revenue.
A 20% shortfall in volume is modelled as well. Even with later hires, less marketing, a founder pay cut and no distributions, Year 1 loses $93,163 and year-end cash falls to $4,912 in Year 3, so the plan shows how thin the margin is without claiming it is safe.
How Cedar Hollow Is Set Up
Legal name: Cedar Hollow, LLC, an Ohio limited liability company that elects to be taxed as a corporation. The financials use corporate tax rates; an S corporation election would change them. Owner: Sarah Lewis, 100%. Office: about 1,000 square feet of leased space in downtown Cincinnati. Opening: 1 January 2027. Stage: pre-launch. Six lender agreements are signed and six more are in review, for a panel of about twelve by opening day. The lease is in draft, and applications for three transactions from Sarah's own contacts are ready to submit on the first day.
The three fee lines
| Line | Who pays | How it is priced | Share of Year 1 revenue |
|---|---|---|---|
| Equipment and vehicle finance | The lender, on funding | About 2.5% of the financed amount, $2,400 on average | 53% |
| SBA and term-loan packaging | The borrower, on closing | Fixed fee, $4,500 on average | 25% |
| Credit lines and repeat financing | The lender, on funding | About 2% of the limit, $1,700 on average | 21% |
What it takes to hold the panel
A lender will only take deals from a broker it has approved. Cedar Hollow opens with a panel of about twelve: two community banks with SBA lending programs, five independent equipment lenders, two vehicle-and-truck finance companies and three working-capital lenders. The panel exists so a borrower is shown more than one answer, and the firm is paid the same kind of commission whichever lender wins, which it discloses to borrowers.
Targets to the end of 2028
- 109 funded transactions in 2027, about 207 in 2028.
- A first profitable year in 2028 with revenue of $520,000, though only just.
- A senior broker in post by month 13 and an SBA packager by month 22.
- Annual clawbacks held under 2% of lender-paid commissions.
Who the firm answers to
Cedar Hollow does not make loans, take deposits or hold client funds. Counsel confirms before opening whether Ohio or any other state requires a registration or a disclosure for commercial-finance brokers, and the $5,500 legal budget covers that work. The plan does not treat the answer as settled in advance. On SBA loans the firm acts as a loan agent, and the SBA's rules on agent fees and their disclosure apply. Counsel checks those rules against the SBA's current guidance before the first packaging engagement, and the fee terms in this plan are subject to that check. Residential mortgages are out of scope.
Cincinnati Borrowers and the Lender Field
The financing market behind a local desk
The market this firm cares about is narrow. It is a small business buying a truck, a CNC machine, a dental chair or a piece of kitchen equipment, with a ticket from $20,000 to $250,000. Large corporate leasing and national fleet programs are outside it, and the plan does not size the market with a national figure that would include them.
Pay for the people who do this work
The Bureau of Labor Statistics put the median loan officer's pay at $76,690 in May 2025 and projects 1% employment growth for the occupation from 2025 to 2035. Cedar Hollow's coordinator ($52,000) and packager ($68,000) are paid below that median, about 32% and 11% under it, because those roles process files and do not originate loans. The founder's $105,000 sits above it, and the senior brokers earn $60,000 and $65,000 in base pay plus incentive pay on the commissions they bring in, so their total pay is above the median once volume arrives.
Who else a borrower can call
| Alternative | What it offers | Why a borrower uses it | How Cedar Hollow differs |
|---|---|---|---|
| The borrower's own bank | One lender's products, often with a relationship discount | Familiar, one signature | A panel instead of a single answer |
| Equipment dealer financing | A lender chosen by the seller at the point of sale | Convenient at the moment of purchase | A comparison run before the dealer's offer is accepted |
| Online small-business lenders | Fast approvals for smaller amounts | Speed, no meetings | A named broker who handles larger, more custom deals |
| Other independent brokers | A panel and a commission model like this one | Established lender relationships | A narrower focus on three borrower groups and a Cincinnati base |
| Merchant cash advance providers | Fast, expensive working capital | Approval with weak credit | Cedar Hollow places credit lines and does not broker advances |
The table describes what each category offers and how the firm positions itself. It is not a ranking. Rates and approval rules differ by lender and change often, so none is quoted.
Strengths, weaknesses and what could go wrong
| Strengths | Weaknesses |
|---|---|
| Twelve years in commercial lending, with a book of local relationships | One senior person: when Sarah is out, deals stall |
| A panel the firm can show a borrower | New lender approvals take weeks, and a new broker starts small with each |
| Reserve sized for a slow first quarter | Year 1 loses money and relies on the reserve |
| Opportunities | Threats |
|---|---|
| Accountants and dealers who want a reliable place to send clients | Rate rises that cool equipment purchases |
| Year-end buying in the fourth quarter | Lenders cutting broker commissions or tightening approvals |
| Repeat purchases from clients already funded | A lender clawing back commission after early payoff or default |
Who Comes Asking for Capital
Three borrower groups
Equipment buyers. Owner-run manufacturers, contractors, healthcare and dental practices, trucking operators and restaurants with 5 to 60 employees, buying machinery or vehicles that cost $20,000 to $250,000.
Businesses that have outgrown a bank's first answer. An owner who needs $400,000 to buy a building or another company, and who has been told the paperwork is too thin. These are the SBA and term-loan engagements.
Existing clients. Anyone Cedar Hollow has funded once. They return for a line of credit, an add-on machine or a refinance.
What they are trying to do
They want the asset in service. Interest rate matters, but the date the equipment arrives matters more, and a quote that takes two weeks loses to a dealer's same-day offer.
What makes them pick a broker
A banker has told them no or not yet. An accountant has suggested someone. A dealer's financing looks expensive. Their own time is short.
What a deal looks like from their side
An application of one to three pages for equipment under about $150,000. A fuller file for larger amounts: two years of tax returns, interim statements, a debt schedule and a description of the asset. Cedar Hollow takes the file to several lenders and reports back on terms.
From First Call to Funded Deal
The pipeline in numbers
| Step | Equipment | Packaging | Credit lines |
|---|---|---|---|
| Applications or engagements started | about 100 | about 36 | about 55 |
| Funded or closed in Year 1 | 60 | 15 | 34 |
| Rate | 60% | 42% | 62% |
Across the three lines, about 191 applications become 109 funded transactions, a rate of 57%.
The sequence
A discovery call within a day of an enquiry. A one-page application. The funding coordinator builds the package and Sarah chooses the two or three lenders most likely to say yes. Terms go back to the borrower within two working days for equipment and within two weeks for a packaged loan. Funding follows the borrower's signature and the lender's own conditions.
How the fees are set
The equipment commission is whatever the lender pays, and the firm tells the borrower so in writing. The packaging fee is fixed before work starts and depends on the file: a smaller term-loan file sits near $3,000, and a full SBA acquisition file can reach $6,500 or more. The $4,500 average reflects a mix.
Keeping the business
Funded clients are the cheapest source of the next deal. A client who financed a truck in 2027 might add a trailer in 2029. The repeat line grows from $57,800 in Year 1 to $320,000 in Year 5 on that basis.
Where the Referrals Come From
What the first year costs
Year 1 marketing is $48,000: $12,000 of launch spend from start-up capital and $36,000 of running costs. That is 17.8% of Year 1 revenue, falling to 6.8% in Year 3 and 5.6% in Year 5 as referrals and repeat clients take over. Spread over 109 funded transactions, Year 1 costs about $440 per funded transaction, or about $250 per application. The cost is front-loaded, since launch spend comes before any commission funds.
| Channel | Year 1 spend | Funded transactions it is expected to produce |
|---|---|---|
| Website and lender-ready collateral (launch) | $7,500 | – |
| Launch events and partner introductions (launch) | $4,500 | – |
| Accountant, attorney and commercial real estate referral partners | $9,000 | 45 |
| Equipment dealers and manufacturer relationships | $7,000 | 30 |
| Local search and paid search | $8,000 | 14 |
| LinkedIn outreach and short written guides | $5,000 | 9 |
| Chamber and trade association events | $4,000 | 6 |
| Client newsletter and annual funding-review event | $3,000 | – |
Another five transactions come from Sarah's existing contacts and cost nothing extra. Equipment dealers and other non-professional partners are paid a share of the commission on each funded deal, which is the 10% direct cost on the equipment line. Accountants and attorneys are thanked but not paid for introductions, because their professional rules and the lender agreements may restrict referral fees; counsel confirms before any such payment is made.
Markers along the way
- January 2027: website live, first two equipment deals funded.
- April 2027: first packaged loan closes.
- July 2027: monthly EBITDA turns slightly positive for the first time.
- December 2027: 18 transactions funded in the month, $46,000 of revenue.
Running the Desk
Office
About 1,000 square feet downtown at $22 a square foot all in, which is $22,000 a year. Six desks and a meeting room. The firm moves to about 1,600 square feet in Year 4 at a combined $37,000.
How a deal moves
A file is opened in the CRM, a checklist of documents is sent, the coordinator completes the package and Sarah reviews it before submission. Lender conditions are tracked until funding. Commission is invoiced or reconciled to the lender's statement once the deal funds.
Systems
A CRM with a document portal, a lender-submission platform, credit-reporting access and e-signature. Software costs $14,000 in Year 1 and $25,000 by Year 5.
Commission clawbacks
The firm's lender agreements let a lender recover part of a commission when a loan is repaid early or goes bad in its first months. The firm sets aside about 2% of lender-paid commissions each year for this, and logs every funded deal against its clawback period so none is a surprise.
People and when they arrive
Sarah at launch, the coordinator in month 4, then a senior broker in month 13. The SBA packager follows in month 22, a part-time administrator in month 36 and a second senior broker in month 40. Each hire follows revenue, and the downside case shows which ones move.
Cover and records
- Professional liability, cyber, general liability and workers' compensation insurance, budgeted at $9,000 in Year 1.
- Written lender agreements, borrower disclosures of how the firm is paid and, on SBA loans, the agent-fee disclosures the SBA requires.
- A written information security plan covering borrowers' tax returns and bank statements.
The Team
Sarah Lewis, founder and managing broker
Sarah has twelve years in commercial lending, the last seven as a vice president running an equipment finance and small-business lending group at a regional bank in the Cincinnati area. She holds a business degree and has no securities license, since the firm sells none. Her $100,000 stake is twelve years of savings. She is leaving a larger organization to work directly with owners.
Gaps in the team
Sarah has not built a referral network from nothing, has not run a firm's books and has no experience placing alternative working-capital products. The plan covers these with a fixed weekly outreach routine, a part-time outsourced bookkeeper, and a firm policy of declining products it cannot explain to a borrower.
If Sarah is out
The coordinator keeps files moving and lenders can be reached by the senior broker from month 13. Until then, key-person life and disability cover on Sarah protects the bank loan. A retired lender who knows the panel is on call to review pending files.
Outside advice
An Ohio attorney for the lender agreements, an accountant who reviews quarterly figures, and an adviser from the local Small Business Development Center for pricing and referral questions.
Ownership
Sarah owns 100% of Cedar Hollow, LLC and gives the bank a personal guarantee. The loan carries a covenant to deliver quarterly accounts.
The Numbers: Commissions, Costs and Cash
One model sits behind every table here: twelve months of detail for 2027, then a yearly view to 2031. The list of inputs comes before the results, so each total can be traced back to the choice that produced it.
Funding the first year
| Use of funds | Amount |
|---|---|
| Laptops, monitors, phones and office furniture | $9,000 |
| Business registration, lender approvals and license checks | $1,500 |
| Legal: entity set-up, lender and referral agreements | $5,500 |
| Launch: website, lender-ready collateral, partner events | $12,000 |
| Cash reserve for the months before commissions fund | $132,000 |
| Total uses | $160,000 |
| Source of funds | Amount |
|---|---|
| Sarah Lewis's savings | $100,000 |
| Bank term loan | $60,000 |
| Total sources | $160,000 |
Sarah Lewis puts in $100,000 of savings, 62.5% of the $160,000 total. A bank lends the other $60,000 over five years at 10.5%, interest-only for the first six months, against her personal guarantee. The rate is an illustration for this example, not a quoted lending rate. The $132,000 reserve is 82.5% of the raise because a broker is paid only after a lender funds, and the first commissions land two to three months after launch while the coordinator and the rent are already running.
What the figures rest on
- Equipment and vehicle finance pays a lender commission averaging $2,400 a funded deal, which is about 2.5% of an average financed amount of $96,000. Lenders set their own broker pay. Year 1 funds 60 deals from about 100 submitted applications, a 60% funding rate. Two deals and one credit line fund in January from applications Sarah has ready on opening day. Referral payouts to equipment dealers and other non-professional partners come out of this line, which is why its direct cost is 10%.
- SBA and term-loan packaging is a fixed fee averaging $4,500 a closed file, agreed in writing. SBA rules on agent fees, including fee disclosure, apply to SBA loans, and counsel confirms them against the SBA's current guidance before the first engagement. Year 1 closes 15 files from about 36 engagements, with the first closing in April because an SBA file takes weeks to move from packaging to approval.
- Credit lines and repeat financing pays a commission averaging $1,700: about 2% of an $85,000 average line, or a smaller commission on an add-on purchase by an existing client. Year 1 places 34 from about 55 requests.
- Prices rise 3% a year from Year 2. At that price path the later revenue lines imply roughly 207 funded transactions in Year 2, 296 in Year 3 and 415 in Year 5, against 109 in Year 1.
- Equipment financing is busiest in the fourth quarter, when owners buy before year end. Year 1 reflects that: November and December carry 32% of the year's equipment commissions. Later years are spread evenly by the model and make no seasonal claim.
- Lenders can reclaim part of a commission if a borrower pays off early or defaults. A clawback allowance of about 2% of lender-paid commissions is charged every year. Packaging fees carry a separate bad-debt allowance.
- Commissions reach the firm roughly 30 days after a deal funds, so receivables are modelled at 30 days. The model carries one-twelfth of annual revenue as the year-end receivable, which understates December in Year 1 (see the cash note).
- Payroll adds 27% to wages for payroll taxes, health coverage, workers' compensation and a retirement match (15% for the part-time administrator). Wages are launch rates, and 3% annual pay raises are charged as their own line from Year 2. Senior brokers receive a base salary plus incentive pay of 12% of lender-paid commissions, charged as a separate line from Year 2 and cut in step with volume in the downside.
- Rent is set at about 1,000 square feet at an all-in $22 a square foot in Year 1, rising to about 1,600 square feet from Year 4. The rate is a planning figure, not a published market quote.
- Cedar Hollow, LLC elects to be taxed as a corporation, so tax is the 21% federal corporate rate plus 1.8% for Cincinnati's municipal net profit tax. Ohio's commercial activity tax is not charged because gross receipts stay far below the $6 million exclusion that applies from 2025. An S corporation election would move the federal tax to Sarah's personal return; corporate treatment is the cautious placeholder.
- Distributions of $30,000, $40,000 and $70,000 are paid in Years 3 to 5, only from cash the model shows the firm can spare. The loan runs to its scheduled end in Year 5.
Revenue by fee type
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Equipment and vehicle finance commissions | $144,000 | $270,000 | $370,000 | $465,000 | $530,000 |
| SBA and term-loan packaging fees | $67,500 | $125,000 | $190,000 | $235,000 | $265,000 |
| Credit lines and repeat financing | $57,800 | $125,000 | $200,000 | $265,000 | $320,000 |
| Total revenue | $269,300 | $520,000 | $760,000 | $965,000 | $1,115,000 |
| Growth on prior year | – | 93% | 46% | 27% | 16% |
Equipment finance is the base, at 53% of Year 1 revenue and 48% of Year 5. Packaging fees arrive in lumps and stay near a quarter of revenue. The credit-line and repeat line is the one that compounds: it starts at 21% of revenue and reaches 29% by Year 5, because each funded client is a candidate for the next purchase.
Month by month in 2027
| Month | Equipment and vehicle finance commissions | SBA and term-loan packaging fees | Credit lines and repeat financing | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $4,800 | $0 | $1,700 | $6,500 | ($17,862) |
| Feb 2027 | $4,800 | $0 | $1,700 | $6,500 | ($17,862) |
| Mar 2027 | $7,200 | $0 | $3,400 | $10,600 | ($14,055) |
| Apr 2027 | $7,200 | $4,500 | $3,400 | $15,100 | ($9,876) |
| May 2027 | $9,600 | $4,500 | $3,400 | $17,500 | ($7,647) |
| Jun 2027 | $9,600 | $4,500 | $5,100 | $19,200 | ($6,068) |
| Jul 2027 | $12,000 | $9,000 | $5,100 | $26,100 | $339 |
| Aug 2027 | $12,000 | $4,500 | $5,100 | $21,600 | ($3,840) |
| Sep 2027 | $14,400 | $9,000 | $5,100 | $28,500 | $2,568 |
| Oct 2027 | $16,800 | $9,000 | $6,800 | $32,600 | $6,375 |
| Nov 2027 | $21,600 | $9,000 | $8,500 | $39,100 | $12,411 |
| Dec 2027 | $24,000 | $13,500 | $8,500 | $46,000 | $18,819 |
January brings $6,500 and December $46,000, a sevenfold climb from the first month to the last. EBITDA is below zero from January to June and again in August, and positive in July and from September to December. The lowest month-end cash balance comes in Sep, at about $22,000 once the 30 days of receivables are allowed for.
Desk and back-office headcount
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and managing broker | $105,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Funding coordinator | $52,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Senior equipment-finance broker | $60,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| SBA loan packager | $68,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Client administrator (part time, 20 hours a week) | $21,000 | Month 36 | – | – | 0.5 | 0.5 | 0.5 |
| Second senior broker | $65,000 | Month 40 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $182,880 | $297,180 | $363,963 | $448,013 | $468,650 |
Sarah works alone for three months. The funding coordinator, who assembles lender packages and chases documents, starts in month 4. A senior equipment-finance broker follows in month 13, an SBA loan packager in month 22, a part-time administrator in month 36 and a second senior broker in month 40. Year 3 ends with four full-time staff and one half-time, Year 4 with five and one half-time. Sarah's $105,000 starts in month 1 and sits in the costs, so every profit line is after her pay. Senior brokers carry a lower base ($60,000 and $65,000) and earn incentive pay of 12% of lender-paid commissions, shown as its own line in the profit and loss. People cost with incentive pay is 68% of revenue in Year 1, 67% in Year 2, 60% in Years 3 and 4 and 56% in Year 5.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $269,300 | $520,000 | $760,000 | $965,000 | $1,115,000 |
| Direct costs (referral-partner payouts, lender-portal fees) | ($19,218) | ($37,109) | ($54,236) | ($68,865) | ($79,570) |
| Gross profit | $250,082 | $482,891 | $705,764 | $896,135 | $1,035,430 |
| Payroll incl. on-costs | ($182,880) | ($297,180) | ($363,962) | ($448,012) | ($468,650) |
| Rent | ($22,000) | ($22,700) | ($23,400) | ($37,000) | ($38,100) |
| Utilities | ($2,400) | ($2,500) | ($2,600) | ($3,200) | ($3,300) |
| Marketing | ($36,000) | ($40,000) | ($52,000) | ($58,000) | ($62,000) |
| Insurance | ($9,000) | ($9,800) | ($10,600) | ($11,500) | ($12,200) |
| Professional fees | ($6,000) | ($6,500) | ($7,000) | ($7,500) | ($8,000) |
| Software subscriptions | ($14,000) | ($17,000) | ($20,000) | ($23,000) | ($25,000) |
| Association dues, continuing education and license renewals | ($3,000) | ($4,000) | ($5,000) | ($6,000) | ($6,500) |
| Client travel, phones and supplies | ($6,000) | ($7,500) | ($9,000) | ($10,000) | ($10,500) |
| Equipment replacement and new-hire kit | $0 | ($3,500) | ($3,000) | ($6,000) | ($3,500) |
| Commission clawback allowance | ($4,000) | ($7,500) | ($11,000) | ($14,000) | ($16,500) |
| Broker incentive pay (12% of lender-paid commissions, with payroll taxes) | $0 | ($40,000) | ($68,400) | ($87,600) | ($102,000) |
| Bad debt allowance (packaging fees) | ($1,500) | ($2,500) | ($3,500) | ($4,200) | ($4,800) |
| Annual pay raises (3% a year) | $0 | ($8,915) | ($22,165) | ($41,543) | ($58,820) |
| EBITDA | ($36,698) | $13,296 | $104,137 | $138,579 | $215,560 |
| Depreciation | ($1,800) | ($1,800) | ($1,800) | ($1,800) | ($1,800) |
| Interest | ($6,184) | ($5,190) | ($3,911) | ($2,492) | ($917) |
| Income tax | $0 | $0 | ($13,464) | ($30,110) | ($47,724) |
| Net income before start-up costs | ($44,682) | $6,307 | $84,961 | $104,177 | $165,120 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($19,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($63,682) | $6,307 | $84,961 | $104,177 | $165,120 |
Year 1 loses $44,682 before start-up costs and $63,682 after the $19,000 of legal, licensing and launch spend. Year 2 is the first profitable year, but only just, at $6,307. Year 3 reaches a 13.7% EBITDA margin, 14.4% in Year 4 when the second senior broker and the larger office arrive, and 19.3% in Year 5. Income tax is zero in Years 1 and 2 and starts in Year 3, once the Year 1 loss has been used up.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($84,016) | ($12,499) | $67,035 | $89,128 | $154,591 |
| Computers and furniture | ($9,000) | $0 | $0 | $0 | $0 |
| Funding received | $160,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($5,360) | ($11,598) | ($12,876) | ($14,295) | ($15,871) |
| Owner distributions | $0 | $0 | ($30,000) | ($50,000) | ($90,000) |
| Net change in cash | $61,624 | ($24,097) | $24,159 | $24,833 | $48,720 |
| Closing cash | $61,624 | $37,527 | $61,686 | $86,518 | $135,239 |
Year-end cash is lowest at the end of Year 2, at $37,527, after the first-year loss and a second year that roughly breaks even; the lowest month in the plan is September 2027. The Year 1 closing balance of $61,624 is flattered by the model's receivables rule, which carries one-twelfth of annual revenue ($22,134) rather than December's actual $46,000. With December's revenue still uncollected, Year 1 closing cash would be about $37,800, and the difference reverses in Year 2. Distributions begin in Year 3, and the loan balance falls from $60,000 to nil by the end of Year 5.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $61,624 | $37,527 | $61,686 | $86,518 | $135,239 |
| Accounts receivable | $22,134 | $42,740 | $62,466 | $79,315 | $91,644 |
| Computers and furniture (net) | $7,200 | $5,400 | $3,600 | $1,800 | $0 |
| Total assets | $90,958 | $85,667 | $127,752 | $167,633 | $226,883 |
| Bank loan | $54,640 | $43,042 | $30,166 | $15,871 | $0 |
| Paid-in capital | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 |
| Retained earnings | ($63,682) | ($57,375) | ($2,414) | $51,763 | $126,883 |
| Total liabilities and equity | $90,958 | $85,667 | $127,752 | $167,633 | $226,883 |
Break-even and coverage
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -13.6% | 2.6% | 13.7% | 14.4% | 19.3% |
| Net margin (before start-up costs) | -16.6% | 1.2% | 11.2% | 10.8% | 14.8% |
| Payroll incl. pay raises as share of revenue | 68% | 59% | 51% | 51% | 47% |
| Revenue per full-time equivalent at year end | $134,650 | $130,000 | $168,889 | $175,455 | $202,727 |
| Average monthly revenue | $22,442 | $43,333 | $63,333 | $80,417 | $92,917 |
| Monthly revenue needed to cover operating costs | $25,735 | $42,140 | $53,988 | $67,981 | $73,573 |
| Debt service cover (EBITDA / interest + principal) | -3.2x | 0.8x | 6.2x | 8.3x | 12.8x |
The last two rows of the break-even table set average monthly revenue against the revenue needed to carry operating costs. Year 1 averages $22,442 against $25,735 needed. Year 2 averages $43,333 against $42,140, a cushion of about $1,200 a month. Debt service cover is negative in Year 1 and 0.8x in Year 2, which means Year 2 operating profit does not cover that year's interest and principal and the reserve makes up the difference. It is the thinnest point in the plan. Cover reaches 6.2x in Year 3.
If funded volume comes in a fifth short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $215,440 | $416,000 | $608,000 | $772,000 | $892,000 |
| Net income before start-up costs | ($74,163) | $943 | $20,539 | $81,864 | $123,933 |
| Net income after start-up costs | ($93,163) | $943 | $20,539 | $81,864 | $123,933 |
| Closing cash | $36,569 | $11,230 | $4,912 | $60,802 | $160,801 |
Every revenue line is cut by 20% in every year, and the response is lighter than a full retrenchment. The funding coordinator still starts in month 4, every hire from month 13 starts six months later, the second senior broker is dropped, marketing is cut by 20%, incentive pay falls with commissions, Sarah takes a 10% pay cut, the firm stays in its first office and no distributions are paid. The Year 1 loss grows to $93,163 after start-up costs, and equity ends the year at $6,837, so a net-worth covenant would need to be reset with the bank. Month-end cash after allowing for receivables bottoms at about $12,000 in October 2027, against about $22,000 in the base case. Year 2 earns $943 against $6,307 in the base case, and year-end cash is lowest in Year 3 at $4,912. That leaves no room for a second miss. The firm is profitable from Year 2, and later years recover as the delayed hires arrive and the dropped hire is not replaced. Cash in Years 4 and 5 runs ahead of what the profit lines alone would suggest only because no distributions are paid.
Sources
- Bureau of Labor Statistics, Loan officers, Occupational Outlook Handbook: May 2025 median pay and 2025 to 2035 outlook.
- Ohio commercial activity tax, 2025 exclusion of $6 million: Ohio Society of CPAs summary. The Ohio Department of Taxation page was not opened.
- Cincinnati municipal income tax of 1.8% on business net profits: City of Cincinnati income tax account application and secondary summaries; confirm the current rate with the city.
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