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An investment consultancy sells advice and nothing else, so a lender or a first client asks sharp questions. Who pays for the advice, and how much? How long does it take for a committee to say yes? How many retainers does the firm need before it can afford its first analyst? A generic template has no answer to any of them.
This article walks through a complete sample plan for a Memphis firm that advises foundations and nonprofit endowments: the executive summary, the SWOT analysis and, above all, the financials, from the first month to the fifth year.
What the plan shows you how to do:
- Executive summary: put a fee-only advisory firm on one page, so a reader sees who it serves and what it needs to open
- Regulatory position: describe your registration and your limits honestly, and show a reader where the open questions sit
- Winning a mandate: set out a sales cycle that runs through committee meetings, with a funnel the marketing budget can actually fill
- Fee model: price retainers, policy reviews and manager searches so each line pays for the hours behind it
- Start-up funding and the first twelve months: size the reserve to a real trough, with a thin first summer in view
- Five-year profit, cash and balance sheet: see how each hire, pay rise and distribution changes what the firm keeps
- Downside case: have an answer ready when a lender asks what happens if fees run 20% short
The firm is fictional, so take the structure and change the figures to fit your own practice.
In this plan
Looking for a investment consulting business plan template? The Toolkit builds yours with your own numbers.
Executive Summary
Anchor Quay is a fee-only investment consultancy that opens in downtown Memphis on 1 January 2027. It advises the volunteer investment committees of foundations, church endowments, independent schools and health-care foundations in the Mid-South. The firm writes investment policy, selects and monitors outside managers, reports on performance and coaches committees through their quarterly meetings. It does not manage money, hold assets or earn commissions. Dana Whitfield, CFA, owns 100%.
The firm raises $200,000: $150,000 of Dana's savings and a $50,000 bank term loan. Of that, $159,000 is held as a cash reserve, $20,000 buys equipment and fit-out, and $21,000 covers legal work, registration and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $342,300 | $628,000 | $853,000 |
| Net income after start-up costs | ($90,286) | $16,364 | $77,618 |
| Closing cash | $62,364 | $52,822 | $108,865 |
Two clients have signed engagement letters before opening, and the plan has the firm reaching eight retainer clients by December 2027. Year 1 loses money because an analyst is paid from May, months before the retainers cover the cost. EBITDA is positive in only four months of 2027. Year 2 is the first year with a profit.
If fees run 20% below plan and Dana responds with later hires, a smaller marketing budget, a pay cut and no distributions, year-end cash stays above $45,000 in every year of the model. A harsher variant, in which the 2027 wins slip two quarters and the largest client leaves in Year 2, outruns the reserve; the financial section sets out the cure.
The offer is narrow. Fees are flat dollar retainers and never a share of assets, no manager pays the firm for a recommendation, and a committee gets a written policy it can hand to the next chair.
Anchor Quay at a Glance
Legal name: Anchor Quay Advisors, LLC, a Tennessee limited liability company. Owner: Dana Whitfield, CFA, 100%. Premises: 1,100 square feet of leased office space downtown, Memphis. Start date: 1 January 2027. Stage: pre-launch. Two retainer clients have signed engagement letters; registration filings are being prepared.
Why the firm exists
Give the volunteers who oversee a nonprofit's endowment a written policy, a manager line-up they can defend and a quarterly report they can read, for a fixed annual fee.
Two-year goals
- Eight retainer clients by December 2027, up from two at opening.
- $628,000 of fee income in 2028 and the first full-year profit.
- A senior consultant on payroll by mid-2028, so no client depends on Dana alone.
- Owner distributions from 2029, paid only from cash the model shows is spare.
Three kinds of work
| Work | How it is priced | Year 1 share of fees |
|---|---|---|
| Retainer: policy upkeep, quarterly reporting, manager monitoring, meeting attendance | Flat annual fee in three bands, averaging $44,400 | 64% |
| Policy and portfolio review when a client starts, later spending-policy and asset-liability studies | Fixed fee, $9,500 at launch for a review | 22% |
| Manager searches and committee education sessions | Fixed fee, $16,000 for a search, $6,500 for a half-day session | 14% |
Regulatory position
Anchor Quay plans to register as an investment adviser with the Tennessee Securities Division. The Division's registration page says advisers and their representatives must register before doing business in the state, and that examiners look at disclosure history, finances and business practices, with particular attention to client contract provisions. The SEC's small-business page (updated September 2026) says advisers with less than $100 million of regulatory assets under management are generally barred from registering with the SEC.
The firm gives advice only: no discretion over client accounts and no custody of client money. How that work counts toward regulatory assets under management is a question for securities counsel before filing, and the plan budgets $10,000 of legal fees for it. The path is stated in advance: if counsel concludes that the firm's advice counts and that it will pass the SEC's threshold, Anchor Quay moves from state to SEC registration. That switch is not costed separately; the $10,000 to $15,000 a year of outside compliance support in the model is the only provision for it. The plan makes no claim about the total assets its clients hold, so no figure here depends on the answer. Each person who advises clients registers as a representative; exam and designation fees are in the $3,000 licensing line. Retirement plans are outside the scope of this plan.
The Mid-South Nonprofit Market
What committees have to get right
A private foundation that does not distribute enough of its income on time pays a 30% excise tax on the shortfall under section 4942, according to the IRS, and a further tax applies if the shortfall is not made up. Spending policy therefore has a hard deadline for a foundation, which is why the firm sells spending-policy studies alongside its retainers. Most other work, from policy statements to manager line-ups, carries no deadline and waits until something forces it.
What the plan does not claim
No count of Mid-South institutions or of their combined assets appears in this plan, because none was found in a primary source. The plan builds from the bottom: about 40 first conversations, 20 proposals and 6 wins in 2027. The market has to supply that many committees, and the founder's own working list of prospects is where the check is made.
What the people cost
The Bureau of Labor Statistics reports a May 2025 median of $102,740 for financial and investment analysts and projects 7% employment growth from 2025 to 2035. For personal financial advisors the median is $105,070 and growth 1%. Analysts at Anchor Quay start at $82,000, below the median and above the pay that the lowest-paid tenth falls under, $63,720. Dana's $140,000 sits above the advisor median. It is set from her pay as a senior consultant and not from a market survey.
What a committee could do instead
| Alternative | What it offers | Why a committee picks it | How Anchor Quay differs |
|---|---|---|---|
| National institutional consulting firms | Research teams, manager databases, large-client reporting | Scale, and a name the board recognises | A senior person at every meeting, and a price band for funds under $15 million |
| Bank trust departments | Custody, trading and advice under one roof | Convenience, and an existing relationship | No products, no trading, no custody; advice is paid for separately |
| Private-bank and wealth-management advisers | Investment advice bundled with other services | A familiar adviser the board members use personally | A practice built for committees, with policy and governance documents |
| Other independent consultants | Similar services at similar scale | Personal fit, local reputation | Fixed retainers by size band and a written reporting calendar |
| Doing nothing new | A custodian statement read each quarter | No fee | A cost the committee has to justify against the risk of an unreviewed policy |
The table describes categories and how this firm positions itself. Named firms and their fees are left out because none was verified from a primary source.
SWOT
| Strengths | Weaknesses |
|---|---|
| Fourteen years in investment consulting and endowment management | One senior person until month 18 |
| Two engagement letters signed before opening | A new firm's name carries no track record with committees |
| Fee-only model with no product conflicts | Year 1 loses money and uses part of the reserve |
| Opportunities | Threats |
|---|---|
| Committees with a new chair or a dissatisfied member | Large consultants cutting prices for small clients |
| Referrals from attorneys and auditors who serve nonprofits | A client going out for bid after three or four years |
| Spending-policy and governance work beyond manager selection | Fee pressure if committees compare flat retainers with asset-based quotes |
Inside the Investment Committee
Who decides
A typical client has a committee of five to nine volunteers, usually board members, with a staff executive who does the day-to-day work. The chair serves a fixed term, so the person who hired a consultant is often gone by the third year. That turnover is why the plan sets one client lost a year.
What they do today
Some committees keep a single manager and review the statement each quarter. Some rely on the bank that holds the account. Some have a member who works in finance and runs the portfolio from memory. The common gap is a written investment policy that matches how the institution actually spends.
What sets a search in motion
A new chair, a bad year, a gift that changes the size of the fund, or an audit comment about documentation. The buying process starts at a quarterly meeting and rarely finishes before the next one.
The staff executive
Often the most important reader. The executive director or finance officer wants reports that need no translation for a volunteer board, and a consultant who does the work between meetings.
What the firm is asked to be
Independent, prompt with data, and clear about fees. A committee wants to see the fee in dollars and know that no manager pays the firm for a recommendation.
Winning a Mandate
The path to a signed engagement
A first call; a request for statements, the current investment policy and a fee schedule; a diagnostic meeting of 90 minutes at no charge; a written proposal with a fixed annual retainer; a presentation to the committee; and an engagement letter. Dana takes every first call in 2027.
Year 1 funnel
Six clients are won during 2027, in addition to the two signed before opening: about 40 first conversations, about 20 formal proposals, and a 30% win rate on proposals.
| Where the six wins come from | Clients | Share |
|---|---|---|
| Referral partners (attorneys, auditors, bankers) | 2 | 33% |
| Invited bids and database-listed searches | 2 | 33% |
| Conferences and speaking | 1 | 17% |
| Introductions from existing clients | 1 | 17% |
The two signed clients
A $26 million private family foundation and a $31 million diocesan school endowment, each at $3,700 a month on a three-year engagement letter that either side can end on 90 days' notice. Together they are $88,800 a year of retainer. A third client, a health-care foundation, asked for a proposal in the fourth quarter of 2026 and decides at its March meeting, which is why the plan has three clients at the end of March. Client counts step up in months 3, 5, 6, 8, 10 and 11 because executive committees can approve an engagement between quarterly meetings.
Dana's former employer
Dana's agreement with her former firm has a 12-month client non-solicitation clause and no non-compete. A lawyer has reviewed it. Neither signed client was served by the former firm in the past two years, and the plan counts no 2027 win from the former firm's client list.
The prospect list at opening
Dana's list holds 28 named institutions. Ten have had an introductory conversation and three have asked for a proposal. The remaining conversations in the funnel, about 40 in all, are expected to come from referral partners, conferences and bid alerts.
Retainer bands
| Portfolio size | Monthly retainer | Annual |
|---|---|---|
| Under $15 million | $2,500 | $30,000 |
| $15 to $40 million | $3,700 | $44,400 |
| Over $40 million | From $5,500 | From $66,000 |
By December 2027 the plan has three clients in the smallest band, three in the middle and two in the largest, which makes the average $3,700. These are the firm's own list prices for this example. Fees rise $100 a month each year at renewal.
What a client is worth
A middle-band client pays $44,400 a year in retainer. The first year adds a $9,500 policy review, and a search, commissioned by roughly one client in three or four each year, adds $16,000 or more. Over three years a typical client brings in about $160,000. The largest retainer, $66,000, is 8% of Year 3 revenue, so one lost client is a visible hit but not an end to the firm.
Clients lost
The plan expects one client a year to leave from 2028, 12.5% of opening clients in Year 2 and 5% by Year 5. The usual causes are a new chair or a formal re-bid. The defence is a reporting calendar that gives the staff executive no reason to look elsewhere.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Retainer clients at year end | 8 | 12 | 16 | 19 | 21 |
Net additions shrink after Year 2 as the plan limits itself to what the team can serve; the senior consultant joins at about ten clients, and each later hire follows the client count.
Where Anchor Quay Shows Up
What $38,000 buys in 2027
The 2027 budget is $38,000: $8,000 of launch spend from start-up capital and $30,000 of running costs. That is 11% of Year 1 revenue, falling to 4% in Year 3 and 3.5% in Year 5 as referrals and renewals take over. Divided across the six clients won in the year, it comes to about $6,300 per client, or less than two months of a middle-band retainer.
| Channel | 2027 spend | What it is expected to do |
|---|---|---|
| Website, brochure and brand (launch) | $8,000 | A plain site and a printed leave-behind that a committee chair can pass to a colleague |
| Regional nonprofit and philanthropy conferences | $9,000 | Exhibiting and sponsoring where executives and trustees meet; about 1 client |
| Referral partner programme | $4,500 | Quarterly coffees with attorneys and auditors who serve nonprofits; about 2 clients |
| Bid databases and proposal production | $5,000 | Alerts on invited searches and a clean proposal template; about 2 clients |
| Board and committee workshops | $3,500 | Free half-hour sessions on spending policy at board meetings |
| Annual research note | $4,000 | A short paper on endowment policy for Mid-South boards, printed and mailed |
| Committee roundtable breakfasts | $4,000 | Two events a year for client and prospect committee members; about 1 client by introduction |
Marketing milestones
- March 2027: three retainer clients.
- June 2027: five clients; first conference season complete.
- September 2027: six clients and the second search under way.
- December 2027: eight clients and $29,600 of monthly retainer revenue.
Running the Practice
The downtown office
1,100 square feet, at $26 a square foot a year ($28,600 in Year 1), with a conference room that seats ten for committee sessions, on a five-year lease. The firm moves to 1,500 square feet at $27.50 a square foot in Year 4. Rent figures are not a survey result.
The quarterly calendar
Performance reports go to every client within 20 days of quarter-end. A committee book is drafted ten days before each meeting. Each client has an annual policy review, a fee review and a manager-by-manager monitoring memo. Between meetings, the staff executive has one named consultant and one analyst to call.
Data and systems
A performance-reporting platform, a manager research database, a CRM, a secure client portal and e-signature. Together they cost $32,000 in Year 1 and $55,000 by Year 5. Custodian data feeds supply the account information, and the firm never holds client assets.
Delivery hours
Capacity is planned in hours, and the inputs section lists the per-client figures. Dana is counted at 1,350 productive hours a year because sales and compliance take the rest. The analyst's start in month 5 is the hire that keeps 2027 inside capacity. A senior consultant adds about 1,560 hours from month 18. Senior consultants are on salary only; a bonus pool or equity offer, if one were needed to keep them, would come out of Year 3 profit and is not in the model. Supply of hours exceeds demand by 4% to 15% in every year, and by about 15% in Year 5, enough to take on two or three more retainer clients before another hire. Dana's 730 non-delivery hours cover the selling load: roughly 420 hours for 40 conversations and 20 proposals, with the rest for compliance and running the firm.
Compliance and insurance
- State adviser registration, Form ADV disclosure documents, a code of ethics and a records-retention schedule.
- Outside compliance support at $10,000 in Year 1.
- Professional liability, cyber and general liability insurance at $11,000 in Year 1; workers' compensation sits in the payroll on-cost.
- A written conflicts policy: the firm takes no payment from any manager, broker or product provider.
- A written information-security plan for client data held in the portal.
If Dana is unavailable
Until the senior consultant joins in month 18, a retired consultant on a standby agreement can run committee meetings for up to 60 days. The firm carries key-person life and disability cover on Dana.
Who Sits at the Table
Dana Whitfield, CFA, founder
Dana has fourteen years in the field: five as an analyst at a Memphis foundation's investment office, then nine as a consultant to nonprofit clients at a national consulting firm, the last four as a senior consultant leading eleven relationships. She holds the CFA charter. Her $150,000 investment is her savings. She left to run a firm where she does the committee work herself.
Where the team is thin
Dana has not sold a retainer under her own name, has not run payroll and has no formal compliance background. The plan responds with a weekly business-development schedule, outside compliance support, and a securities attorney on retainer before filing.
Advice from outside
Two unpaid advisers meet Dana twice a year: a retired foundation executive and a practising securities attorney. Neither owns any part of the firm.
Ownership and the bank
Dana owns 100% of the LLC and gives the bank a personal guarantee. The bank holds a lien on the firm's equipment and receivables and the guarantee; no property is pledged. The loan agreement asks for quarterly accounts and a minimum net worth of $40,000 at each year end. Year 1 equity is $59,714 in the base case and $50,762 in the 20% downside, and the harsher variant in the financial section breaches the covenant.
Fees, Payroll and Cash: The Five-Year Model
The figures in this section come out of one model that runs monthly through 2027 and by year after that. The inputs are listed first, so each table can be read against the reason for its numbers.
What it takes to open the doors
| Use of funds | Amount |
|---|---|
| Laptops, monitors, phones and a conference-room display | $12,000 |
| Office furniture and fit-out | $8,000 |
| Tennessee adviser and representative registration, exam and designation fees | $3,000 |
| Legal: entity, advisory agreement, Form ADV review, lease | $10,000 |
| Launch: website, institutional brochure and brand | $8,000 |
| Cash reserve for a slow first year | $159,000 |
| Total uses | $200,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitfield's savings | $150,000 |
| Bank term loan | $50,000 |
| Total sources | $200,000 |
Dana Whitfield puts in $150,000 of her own savings, which is 75% of the $200,000 raised. A bank lends the other $50,000 over seven years at 10.5%, with interest only for the first six months. The bank takes a lien on the firm's equipment and receivables and Dana's personal guarantee, and asks for quarterly accounts and a minimum net worth of $40,000 tested at each year end; no property is pledged. The rate is a placeholder for this example and not a quoted offer. The $159,000 reserve is sized to the first year: operating cash flow is negative $114,878 in 2027, and the firm still needs a cushion at the weakest point of the year. Opening costs of $21,000 (legal work, registration and the launch campaign) go through the 2027 profit and loss; the $20,000 of equipment and fit-out is capitalised.
What the numbers rest on
- Retainers average $3,700 a month ($44,400 a year) in 2027 and rise by $100 a month each year as contracts renew. Year-end retainer clients are 8, 12, 16, 19 and 21. Dana opens with two signed, wins six more in 2027, and loses one client a year from 2028 to committee turnover and re-bids. As an illustration, $44,400 is about 16 basis points on a $28 million portfolio. Retainers are flat dollar fees and not a percentage of assets, and the plan makes no claim about the combined assets its clients hold. Client counts step up in months 3, 5, 6, 8, 10 and 11, which depends on executive committees being able to approve an engagement between quarterly meetings.
- Policy and portfolio reviews are fixed-fee engagements billed when a client starts: $9,500 in 2027, rising $300 a year. There are 8 in Year 1 (two at opening) and 5, 5, 4 and 3 in the years after. From Year 2 the line also holds spending-policy and asset-liability studies for existing clients, 3, 4, 4 and 5 a year at $14,700 to $16,000.
- Manager searches bill $16,000 each: three in 2027 (July, September and November), then 4, 4, 5 and 5 a year at $16,400 to $18,000. The plan caps searches at three to five a year, roughly one for every three or four clients, because a committee replaces managers only after a review or a poor stretch. A search is billed on its own because it is a project of about 190 hours outside the retainer's scope. The same line holds half-day committee education sessions at $6,500 to $7,000, with 2, 3, 3 and 3 a year from Year 2. Search work follows committee meeting calendars, so it arrives in lumps.
- Delivery capacity is checked in hours. A retainer client takes about 190 hours a year across consultant and analyst, a policy review about 75, a study about 130, a search about 190 and an education session about 40. Dana is counted at 1,350 delivery hours of a 2,080-hour year; the other 730 go to selling, compliance and running the firm, and 2027 selling alone (about 40 first conversations and 20 proposals) takes roughly 420 of them. Each analyst is counted at 1,400 hours and each senior consultant at 1,560. Supply of hours exceeds demand by 4% to 15% in every year. Demand-based revenue works out to about $163 per delivery hour in Year 1, rising to about $210 by Year 5 as the mix moves toward retainers.
- Clients are institutions with committees that approve invoices, so the model allows 30 days to collect and a bad-debt allowance of $1,500 in Year 1 rising to $5,000. Direct costs run at about 0.9% of revenue: data pulls and printed committee books, charged at 2% of review fees and 3% of search and education fees.
- Payroll adds 27% to wages for payroll taxes, health cover, workers' compensation and a retirement match (15% for the part-time coordinator). Wages in the personnel table are launch rates; 3% annual pay raises are a separate line from Year 2 and reach $93,402 by Year 5. Analysts are paid $82,000, which is below the $102,740 BLS median for financial and investment analysts and above the $63,720 that its lowest-paid tenth falls under (May 2025 data).
- Rent is based on 1,100 square feet of downtown Memphis office space at $26 a square foot a year, then 1,500 square feet at $27.50 from Year 4. These rents are not from a market survey. Performance-reporting, manager-database and CRM subscriptions cost $32,000 in Year 1 and $55,000 by Year 5. Professional liability, cyber and general liability cover costs $11,000 in Year 1.
- Income tax is charged at the federal corporate rate of 21% and the Tennessee excise tax rate of 6.5%, with losses carried forward. Opening costs are not deducted in the tax base, and losses offset profit at 100%, although federal rules may limit how much of a carried-forward loss can be used; both effects are small. Tennessee excise tax applies to limited liability companies as well, so a federal pass-through election would not remove it. Tennessee also levies a franchise tax of 0.25% of net worth, which the model leaves out because the amount is small at these balance sheets.
- Distributions of $40,000 and $60,000 are paid in Years 4 and 5, once retained earnings are positive,, only from cash the model shows the firm can spare. The loan runs to term rather than being paid off early.
Fee income by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Annual retainers (ongoing consulting) | $218,300 | $456,000 | $655,000 | $840,000 | $984,000 |
| Policy and portfolio reviews | $76,000 | $93,000 | $110,000 | $104,000 | $112,000 |
| Manager searches and committee education | $48,000 | $79,000 | $88,000 | $108,000 | $111,000 |
| Total revenue | $342,300 | $628,000 | $853,000 | $1,052,000 | $1,207,000 |
| Growth on prior year | – | 83% | 36% | 23% | 15% |
Retainers carry the model: 64% of Year 1 fee income and 82% of Year 5, and the line grows 4.5 times between the two. Reviews fall from 22% of income to 9% as the flow of new clients flattens. Searches fall from 14% to 9% once the plan caps them at five a year, and they remain the line most exposed to a committee postponing a decision by a quarter.
Month by month in Year 1
| Month | Annual retainers (ongoing consulting) | Policy and portfolio reviews | Manager searches and committee education | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $7,400 | $19,000 | $0 | $26,400 | ($7,153) |
| Feb 2027 | $7,400 | $0 | $0 | $7,400 | ($25,988) |
| Mar 2027 | $11,100 | $9,500 | $0 | $20,600 | ($12,903) |
| Apr 2027 | $11,100 | $0 | $0 | $11,100 | ($22,320) |
| May 2027 | $14,800 | $9,500 | $0 | $24,300 | ($9,235) |
| Jun 2027 | $18,500 | $9,500 | $0 | $28,000 | ($5,567) |
| Jul 2027 | $18,500 | $0 | $16,000 | $34,500 | $877 |
| Aug 2027 | $22,200 | $9,500 | $0 | $31,700 | ($1,899) |
| Sep 2027 | $22,200 | $0 | $16,000 | $38,200 | $4,545 |
| Oct 2027 | $25,900 | $9,500 | $0 | $35,400 | $1,769 |
| Nov 2027 | $29,600 | $9,500 | $16,000 | $55,100 | $21,299 |
| Dec 2027 | $29,600 | $0 | $0 | $29,600 | ($3,980) |
January holds two $9,500 reviews for the clients signed before opening, and February and April show how little the retainers alone cover. EBITDA, the profit before interest, depreciation and tax, is positive in only four months (July, September, October and November) and November is the strongest, at $55,100 of revenue with the third search. Cash is lowest in Sep, about $36,000 once 30 days of receivables are set aside.
The team and when it grows
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and principal consultant | $140,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Investment analyst | $82,000 | Month 5 | 1 | 1 | 1 | 1 | 1 |
| Senior consultant | $125,000 | Month 18 | – | 1 | 1 | 1 | 1 |
| Client coordinator (part time, 25 hours a week) | $32,000 | Month 12 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Second investment analyst | $82,000 | Month 32 | – | – | 1 | 1 | 1 |
| Second senior consultant | $128,000 | Month 54 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $250,293 | $411,344 | $520,882 | $581,630 | $676,457 |
Dana works alone from January to April. The analyst joins in month 5, the part-time coordinator in month 12, and the first senior consultant in month 18, with roughly ten retainer clients on the books. The second analyst follows in month 32 at about fifteen clients, and the second senior consultant in month 54 at about twenty, after Years 1 to 4 and the start of Year 5 have run inside capacity without one. The coordinator is shown as 0.5 of a head. Senior consultants are paid salary only, with no bonus or equity in the model. Dana's $140,000 is counted as a cost from month one, so every profit figure below comes after her pay.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $342,300 | $628,000 | $853,000 | $1,052,000 | $1,207,000 |
| Direct costs (third-party data pulls and printed committee books) | ($2,960) | ($5,431) | ($7,376) | ($9,097) | ($10,437) |
| Gross profit | $339,340 | $622,569 | $845,624 | $1,042,903 | $1,196,563 |
| Payroll incl. on-costs | ($250,293) | ($411,344) | ($520,882) | ($581,630) | ($676,457) |
| Rent | ($28,600) | ($29,500) | ($30,400) | ($41,300) | ($42,500) |
| Utilities | ($3,000) | ($3,100) | ($3,200) | ($3,900) | ($4,000) |
| Marketing | ($30,000) | ($34,000) | ($38,000) | ($42,000) | ($45,000) |
| Insurance | ($11,000) | ($13,000) | ($15,500) | ($17,500) | ($19,000) |
| Professional fees | ($12,000) | ($13,000) | ($14,000) | ($15,000) | ($16,000) |
| Software subscriptions | ($32,000) | ($37,000) | ($43,000) | ($50,000) | ($55,000) |
| Outside compliance support and annual adviser filings | ($10,000) | ($11,000) | ($12,500) | ($14,000) | ($15,000) |
| Client travel across the Mid-South | ($12,000) | ($15,000) | ($18,000) | ($20,000) | ($22,000) |
| Designations, continuing education and conferences | ($6,000) | ($8,000) | ($10,000) | ($12,000) | ($13,000) |
| Phones, supplies and printing | ($3,500) | ($4,200) | ($5,000) | ($5,800) | ($6,500) |
| Equipment replacement and new-hire kit | $0 | ($4,000) | ($6,000) | ($5,000) | ($8,000) |
| Bad debt allowance | ($1,500) | ($2,500) | ($3,500) | ($4,500) | ($5,000) |
| Annual pay raises (3% a year) | $0 | ($12,340) | ($31,722) | ($53,933) | ($84,901) |
| EBITDA | ($60,553) | $24,585 | $93,920 | $176,340 | $184,205 |
| Depreciation | ($3,543) | ($3,543) | ($3,543) | ($3,543) | ($3,543) |
| Interest | ($5,190) | ($4,679) | ($4,021) | ($3,291) | ($2,480) |
| Income tax | $0 | $0 | ($8,738) | ($44,300) | ($46,568) |
| Net income before start-up costs | ($69,286) | $16,364 | $77,618 | $125,206 | $131,614 |
| Opening costs expensed in Year 1 (legal, registration, launch marketing) | ($21,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($90,286) | $16,364 | $77,618 | $125,206 | $131,614 |
Year 1 loses $60,553 at EBITDA and $69,286 after interest and depreciation; with the $21,000 of opening costs the loss is $90,286. Year 2 is the first profitable year, at $16,364. EBITDA margin runs -17.7%, 3.9%, 11.0%, 16.8% and 15.3%. The slip in Year 5 comes from the second senior consultant joining in month 54 and from pay raises, which cost $84,901 that year, 7.0% of revenue. Income tax first appears in Year 3, at $8,738, reduced by the Year 1 loss carried forward.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($114,878) | ($3,576) | $62,668 | $112,392 | $122,417 |
| Equipment and fit-out | ($20,000) | $0 | $0 | $0 | $0 |
| Funding received | $200,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($2,758) | ($5,967) | ($6,625) | ($7,355) | ($8,165) |
| Owner distributions | $0 | $0 | $0 | ($40,000) | ($60,000) |
| Net change in cash | $62,364 | ($9,543) | $56,043 | $65,037 | $54,252 |
| Closing cash | $62,364 | $52,822 | $108,865 | $173,902 | $228,154 |
Year-end cash never falls below $52,822 (Year 2), and builds to $228,154 by Year 5 after $100,000 of distributions. Year-end figures hide the low point: the weakest month of the model is September 2027, at about $36,000. Year 1 operating cash flow of negative $114,878 is worse than the EBITDA loss because $28,134 of fees are still uncollected at year end and the opening costs and interest are paid in cash.
Balance sheet at each year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $62,364 | $52,822 | $108,865 | $173,902 | $228,154 |
| Accounts receivable | $28,134 | $51,616 | $70,110 | $86,466 | $99,205 |
| Equipment and fit-out (net) | $16,457 | $12,914 | $9,371 | $5,829 | $2,286 |
| Total assets | $106,956 | $117,352 | $188,346 | $266,197 | $329,645 |
| Bank loan | $47,242 | $41,275 | $34,650 | $27,295 | $19,130 |
| Paid-in capital | $150,000 | $150,000 | $150,000 | $150,000 | $150,000 |
| Retained earnings | ($90,286) | ($73,923) | $3,696 | $88,901 | $160,515 |
| Total liabilities and equity | $106,956 | $117,352 | $188,346 | $266,197 | $329,645 |
Margins, break-even and loan cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -17.7% | 3.9% | 11.0% | 16.8% | 15.3% |
| Net margin (before start-up costs) | -20.2% | 2.6% | 9.1% | 11.9% | 10.9% |
| Payroll incl. pay raises as share of revenue | 73% | 67% | 65% | 60% | 63% |
| Revenue per full-time equivalent at year end | $136,920 | $179,429 | $189,556 | $233,778 | $219,455 |
| Average monthly revenue | $28,525 | $52,333 | $71,083 | $87,667 | $100,583 |
| Monthly revenue needed to cover operating costs | $33,615 | $50,267 | $63,188 | $72,843 | $85,099 |
| Debt service cover (EBITDA / interest + principal) | -7.6x | 2.3x | 8.8x | 16.6x | 17.3x |
In Year 1 average monthly revenue of $28,525 sits below the $33,615 needed to cover operating costs, and the firm loses money. Year 2 averages $52,333 against $50,267 needed, a margin of safety of about 4%. Loan cover is negative in Year 1, 2.3 times in Year 2 and 8.8 times in Year 3. Payroll takes 73% of revenue in Year 1 and 60% to 67% from Year 2.
If fees come in 20% light
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $273,840 | $502,400 | $682,400 | $841,600 | $965,600 |
| Net income before start-up costs | ($78,238) | $17,033 | $8,591 | $27,654 | $83,985 |
| Net income after start-up costs | ($99,238) | $17,033 | $8,591 | $27,654 | $83,985 |
| Closing cash | $59,040 | $54,863 | $45,577 | $56,334 | $125,504 |
This case takes 20% off the volume of every fee line in every year: fewer retainer clients, reviews, searches and sessions, at unchanged prices. The management response: the first analyst starts two months late, every hire from month 13 starts six months late, the second senior consultant is dropped, marketing is cut by 20%, Dana takes a 20% pay cut, the firm stays in its first office and no distributions are paid. On those terms year-end cash never falls below $45,577 (Year 3) and the firm earns a profit from Year 2, only $8,591 of it in Year 3. In 2027 month-end cash after receivables bottoms at about $43,000 in November, higher than the base case's $36,000 in September, because the pay cut and later hire save cash early. Year 1 equity is $50,762, about $10,800 above the $40,000 net-worth covenant. Without the response, month-end cash after allowing for receivables falls below zero from September of Year 1, and year-end cash is negative from Year 2. A harsher variant, run outside the tables with the same response, slip the 2027 wins by two quarters (the two clients signed before opening stay, and only three of the six others arrive in the year, in September, November and December) and the largest-band client leave at the start of Year 2. Year 1 revenue is then $162,200 and the loss after opening costs $209,460, equity is negative $59,460 and the covenant is breached. Cash after receivables is below zero from September 2027 and reaches negative $56,675 in December; it recovers only to $395 by the end of 2028. The reserve does not cover this case. The plan's answer is a $75,000 undrawn bank line of credit requested at opening and a deferral of Dana's salary, and neither is modelled.
Sources
- U.S. Securities and Exchange Commission, Investment advisers, small-business guide, page updated September 2026 (SEC and state registration thresholds).
- Tennessee Department of Commerce and Insurance, Securities Division, Registration Section overview (adviser and representative registration).
- Internal Revenue Service, Taxes on failure to distribute income: private foundations (30% excise tax under section 4942).
- Bureau of Labor Statistics, Financial and investment analysts and Personal financial advisors, Occupational Outlook Handbook, May 2025 wage data and 2025 to 2035 projections.
- Tennessee Department of Revenue, Franchise and excise tax: due dates and tax rates (excise 6.5%, franchise 0.25% of net worth) and Franchise and excise tax overview (applies to limited liability companies).
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