Looking for an internet service provider business plan? You're in the right place.
A lender or investor reading a plan for a business broadband company wants to see where the circuits come from, what the carrier charges, how many customers leave each year and how many technicians it takes to keep them online. How much capital does a reseller need before the first circuit bills? When does the company stop losing money? What happens if sales come in 20% short?
This article walks through a complete sample plan for a business internet provider in Minneapolis, Minnesota, section by section. It covers the executive summary, the SWOT analysis and, in the greatest detail, the financials.
What you will take from it:
- The at-a-glance summary: see how to put the funding ask, the product and the first-year loss on one page
- The market and customer sections: learn how to describe a buyer, a competitor set and a service area without inventing statistics
- The SWOT analysis: name carrier dependence and thin early margins plainly, so a reader trusts the rest
- The circuit model: follow price, carrier cost and churn for each service line, and use the same logic for your own
- The staffing plan: tie NOC and field hires to circuits in service, so headcount never runs ahead of revenue
- The five-year profit, cash flow and balance sheet: see how a $1.5 million raise carries the company through two loss years and into profit
- The downside case: have an answer ready when asked what happens if bookings fall 20% short, with the management steps spelled out
River Bay is fictional. Keep the structure, then replace the prices, carriers and customer counts with your own.
In this plan
If you need a internet service provider business plan template for your own plan, start it in the Toolkit.
At a Glance
River Bay, Inc. is a business internet provider that opens in Minneapolis on January 1, 2027. It sells dedicated internet access and business broadband circuits to offices with 10 to 150 staff, buys the underlying fiber and cable from carriers, and adds managed Wi-Fi, firewalls and monitoring on top. Priya Raman, a former carrier network engineer, is founder and CEO.
The company raises $1,500,000: $1,050,000 of equity ($300,000 from Priya, $750,000 from three angel investors) and a $450,000 bank term loan. The largest piece is a $1,208,000 cash reserve, because a circuit bills only after installation and the company carries a network team before its customer base can pay for it. Core network gear, two used service vans and the NOC fit-out take $192,000. Legal work, telecom registrations and the launch campaign take the remaining $100,000.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $678,756 | $2,644,800 | $4,704,900 |
| Net income after start-up costs | ($733,454) | ($115,292) | $347,876 |
| Closing cash | $558,143 | $268,414 | $428,777 |
By December 2027 River Bay has 144 circuits in service. Years 1 and 2 lose money; Year 3 is the first profitable year, and the net margin reaches 8.4% in Year 5. A second run of the model takes 20% off every revenue line. With later hiring, one hire dropped, a smaller marketing budget, a pay cut for Priya and no office move, cash stays positive in all five years and the company is profitable from Year 3.
River Bay does not own fiber. Its margin comes from buying circuits at wholesale, selling them with monitoring and managed equipment, and keeping customers on annual or longer contracts. The circuit lines alone earn thinner margins than the managed lines, and the plan depends on the managed add-ons reaching 80% of circuits by Year 5.
River Bay in Brief
Legal name: River Bay, Inc., a Minnesota corporation. Ownership: Priya Raman and three angel investors. Space: about 3,500 square feet of flex space in the Twin Cities, holding the office, the network operations center (NOC) and a parts room. Start date: January 1, 2027. Stage: pre-launch. Carrier master agreements are drafted and the first circuit orders are in negotiation.
What River Bay sells
| Service | How it is priced | Share of Year 1 revenue |
|---|---|---|
| Dedicated internet access and fiber circuits | About $1,150 a month, 36-month term | 35% |
| Business broadband and failover circuits | About $290 a month, 12-month term | 20% |
| Managed Wi-Fi and firewall | $520 per site a month, bundled with a circuit | 23% |
| Installation and site surveys | $1,800, $300 or $450 one time | 22% |
Where the company is headed
- 144 circuits in service by December 2027, from none at opening.
- A first profitable year in 2029, the third.
- 691 circuits in service by the end of 2031, with a 27-person team.
- An attach rate of 80% for managed Wi-Fi and firewall by Year 5.
- Bank repayments on schedule from 2028, when interest-only ends.
Carriers and rules
River Bay buys from regional fiber owners, cable operators and wholesale aggregators, and each agreement sets price, term and installation timelines. Carriers may require deposits or guarantees, and some agreements carry early-termination charges. Customer contracts therefore pass an early-termination fee to the customer, set near the remaining carrier commitment. Federal and state rules vary with the service sold. FCC registration, telecom fee and contribution reporting, and Minnesota registration requirements may apply, and some charges may be passed through to customers. The plan budgets $12,000 for registrations and $38,000 for legal work before launch. Priya would confirm the exact obligations with telecom counsel before the first sale.
The Twin Cities Connectivity Market
Offices that depend on a line
Every office with a payment terminal, a cloud phone system or a line-of-business application depends on its connection. The market River Bay targets is the mid-size office that has outgrown a consumer-grade cable plan and is too small for the account teams of a national carrier. This plan does not size the market with a published statistic. The volumes rest on Priya's pipeline work before launch.
What technicians earn
The Bureau of Labor Statistics reports a May 2025 median of $62,890 for computer support specialists and $66,200 for telecommunications equipment installers and repairers (excluding line installers). Both occupations are projected to shrink 3% from 2025 to 2035. River Bay pays NOC technicians $63,000 to $65,000, close to the support median, and field technicians $66,000, level with the installer median. These are national figures, and Twin Cities pay may run higher, so the plan relies on certifications and a clear path to senior roles as retention tools.
Where else a customer could buy
| Alternative | What it offers | Why a customer picks it | How River Bay differs |
|---|---|---|---|
| National carriers | Circuits, voice and SD-WAN in large bundles | One contract for many sites | Local response and a named engineer |
| Cable operators' business divisions | Business cable and some fiber | Low entry price | Monitoring, failover and managed equipment included |
| Regional fiber owners selling direct | Own network, deep local routes | Lowest carrier cost on-net | Choice across several carriers per address |
| Managed IT firms that resell circuits | Helpdesk plus a circuit | One vendor for IT | A network-only specialist that partners with those firms |
| Wholesale aggregators and agents | Quotes from many carriers | Broad price comparison | Ownership of the support relationship after the sale |
The table describes categories. None is quoted on price, because each revises its plans often and publishes its own.
SWOT
| Strengths | Weaknesses |
|---|---|
| Founder with 13 years in carrier networks | Buys every circuit from a carrier it does not control |
| Support and monitoring bundled into each circuit | Years 1 and 2 lose money on a fixed network team |
| Several wholesale sources per address | Business-hours NOC with overnight on-call until month 38 |
| Opportunities | Threats |
|---|---|
| Offices outgrowing consumer plans | Carrier price increases or reseller-policy changes |
| Managed add-ons that raise revenue per site | Large carriers undercutting on bundles |
| Referrals from IT firms that do not want to run circuits | Fiber builds that pass customers' buildings and reduce reseller margin |
Who Buys a Circuit
The buyer
The decision usually sits with an office manager, an owner or a part-time IT contractor in a company of 10 to 150 employees. Examples are a dental group, a law firm, a manufacturer with a sales office, a property manager and a regional retailer's head office. No customer is planned to exceed 5% of monthly revenue.
How they cope now
Most run a cable connection with a consumer-grade router, and many have no failover. The same few things go wrong: an outage during a payment run, Wi-Fi dead spots in a second office, and nobody who will answer the phone on the carrier's side.
What triggers a change
A long outage, a move to a cloud phone system, a new location, a cyber-insurance questionnaire that asks about firewalls, or a contract that is due to renew.
What they ask for
An answer within the hour, a price that stays flat, one number to call, and a clear contract term.
How River Bay Sells
From inquiry to signed order
An inquiry gets a site survey call within a day. The engineer checks which carriers reach the address, and an account executive returns a proposal within three working days with a primary circuit, an optional failover and the managed add-ons. Priya sells alongside the first account executive through Year 1.
Where Year 1 circuits come from
River Bay expects 150 circuits to start billing in Year 1, 48 dedicated and 102 broadband. None bills before March, and the first dedicated circuits arrive then.
| Source | Circuits | Share |
|---|---|---|
| Priya's network from the carrier world | 42 | 28% |
| IT consultants and managed-service partners | 36 | 24% |
| Building managers and commercial brokers | 27 | 18% |
| Paid search and local content | 24 | 16% |
| Outbound calls by account executives | 21 | 14% |
Priya and the partner channel carry just over half of Year 1. From Year 2 the load shifts to account executives (three by month 18, four by month 40) and the partner coordinator hired in month 30, so circuits added per year hold at 170 to 184 while spend per circuit stays flat.
Pricing
Dedicated circuits are quoted by speed and distance and average about $1,150 a month; broadband circuits average $290. Managed Wi-Fi and firewall add $520 a site. Contracts carry a 2% annual uplift clause from the second year.
Terms, churn and renewals
Dedicated circuits run on 36-month terms and broadband circuits on 12 months. Churn is modeled by line: dedicated circuits lose 0.4% of the open base each month from month 7, and broadband circuits lose 1.3% a month from month 4. From Year 2 the plan uses 7% a year for dedicated and 15% for broadband. In Year 1 that removes 1 dedicated and 5 broadband circuits.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Dedicated circuits at year end | 47 | 114 | 178 | 238 | 293 |
| Broadband circuits at year end | 97 | 182 | 263 | 336 | 398 |
| Total circuits in service | 144 | 296 | 441 | 574 | 691 |
| Gross circuits added | 150 | 170 | 180 | 184 | 184 |
A customer who also buys managed Wi-Fi and a firewall is harder to move, since the equipment and configuration belong to River Bay. The attach rate moves from 45% to 80%.
Where the Marketing Money Goes
What the budget buys
Year 1 marketing is $106,000: $50,000 of launch work paid from start-up capital and $56,000 of running spend. Against 150 new circuits that is about $707 per circuit before the account executives' pay. Spend per new circuit falls to about $489 in Year 3 and $587 in Year 5, and marketing drops from 16% of revenue in Year 1 to 2% by Year 3.
| Channel | Year 1 spend | What it does |
|---|---|---|
| Website, brand and case-study video (launch) | $28,000 | Pages for dental, legal, property and retail offices, with a coverage checker |
| Launch events and direct mail (launch) | $22,000 | Introductions to building managers and IT consultants |
| Paid search | $14,000 | Searches such as "business fiber Minneapolis" and "dedicated internet access Twin Cities" |
| Partner program | $16,000 | Referral fees and training for IT consultants who resell circuits |
| Building-manager and broker outreach | $8,000 | Coverage maps and site-survey offers |
| Content and local events | $10,000 | Chamber and trade meetings, plus guides on failover and uptime |
| Customer communications | $8,000 | Maintenance notices and outage updates |
Milestones
- March 2027: first dedicated circuits and first managed Wi-Fi and firewall installs.
- June 2027: 49 circuits in service.
- December 2027: 144 circuits and about $127,000 of monthly revenue.
Running the Network and the Crews
The NOC
A small operations center monitors every circuit and handles tickets during business hours. The lead engineer and the NOC technicians rotate on-call overnight until a dedicated overnight technician starts in month 38. Targets are a response within an hour for outages and a next-business-day fix for equipment faults.
Field work
Carriers install the circuit. River Bay's field technicians survey sites, run inside cabling, mount and configure customer equipment and handle repairs. Two used vans carry stock and test equipment.
Customer equipment
River Bay owns the firewalls and access points and installs them at the customer's site under the service agreement. The hardware cost, about $1,700 a site, is spread over 36 months inside the add-on cost line. Equipment is returned when a contract ends.
Capacity
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Circuits per NOC technician | 72 | 99 | 110 | 96 | 99 |
| Circuits per field technician | 72 | 99 | 110 | 115 | 138 |
Field load per technician rises in Years 4 and 5 as standard configurations cut the work per circuit. If tickets rise faster, the next NOC hire moves earlier, and the downside case shows which hires slip.
Systems
A ticketing system, network monitoring, a provisioning and billing platform and a customer portal. Software spend starts at $30,000 in Year 1 and reaches $118,000 in Year 5.
Insurance and contracts
Cover for general liability, technology errors and omissions, cyber risk and commercial vehicles costs $22,000 in Year 1. Workers' compensation sits inside the 27% payroll load. Customer contracts set service levels and credits and limit liability for outages; counsel reviews the template before launch.
Space
The flex space in Year 1 costs $50,000. In Year 4 the company moves to about 6,500 square feet to fit the larger team and parts room.
The People Behind the NOC
Priya Raman, founder and CEO
Priya has 13 years in business networking: first as a network engineer at a regional carrier, then as a solutions engineer at a wholesale aggregator. She has designed several hundred business circuits. Her $300,000 investment is most of her savings. Counsel has reviewed the non-solicitation terms in her earlier employment agreements before she opens. She started River Bay to run a company where the engineer who sells a circuit also stands behind it.
Gaps in the team
Priya has never managed a P&L or a team of 15, and she has no finance background. The plan answers by hiring a controller and contracts manager in month 34 and retaining an outside accountant until then. A network engineer joins in month 26 so that technical knowledge no longer sits with two people.
If the lead engineer leaves
Network configurations and runbooks live in the company's documentation system, and a retained consulting engineer can cover for a month while a search runs.
Advisers and investors
A telecom attorney advises on carrier contracts and regulatory filings. The three angel investors each have operating experience in business services and meet the founder quarterly. The bank term loan would carry a personal guarantee and a requirement to deliver quarterly accounts.
Circuits, Costs and Cash
The forecast follows circuits in service. Each circuit has a price, a carrier cost and a churn rate, and support staff are added as the count grows. Year 1 is shown by month; Years 2 to 5 are annual.
Funding the build
| Use of funds | Amount |
|---|---|
| Core routers, switches, edge gear and rack for the network operations center | $52,000 |
| Two used service vans, fitted out, and field test equipment | $100,000 |
| Office and NOC fit-out, workstations, wall displays | $40,000 |
| Telecom registrations and business licenses | $12,000 |
| Legal: carrier master agreements, entity, customer contract template | $38,000 |
| Launch: website, brand, case-study video, first campaigns | $50,000 |
| Cash reserve for the build-up before circuits bill | $1,208,000 |
| Total uses | $1,500,000 |
| Source of funds | Amount |
|---|---|
| Priya Raman's savings | $300,000 |
| Angel investors (three, converting to common shares) | $750,000 |
| Bank term loan | $450,000 |
| Total sources | $1,500,000 |
The $450,000 term loan runs seven years at 9.5%, with interest only for the first twelve months ($42,750 of interest in Year 1, then $58,434 of principal in Year 2). Priya would expect to give a personal guarantee and a lien on the vans and network gear; actual lender terms differ. Equity is $1,050,000, or 70% of the raise: $300,000 from Priya and $750,000 from three angel investors. The $1,208,000 reserve is the largest line because a circuit bills only after installation and the network team is paid before then. Operations absorb $981,152 of cash across Years 1 and 2, and operating cash flow turns positive in Year 3.
Operating figures behind the forecast
- Dedicated internet access (DIA) circuits average $1,150 a month on 36-month terms; business broadband and failover circuits average $290 on 12-month terms. No dedicated circuit bills before March, because fiber orders take time and off-net builds can take longer. In Year 1, 48 DIA and 102 broadband circuits start billing, which leaves 47 and 97 in service at year end (144 in all) after churn.
- Churn is modeled by line. In Year 1, DIA circuits lose 0.4% of the open base each month from month 7 and broadband circuits lose 1.3% from month 4, which removes 1 and 5 circuits. From Year 2 the annual rates are 7% of the opening DIA base and 15% of the opening broadband base. Gross additions in Years 2 to 5 are 70, 72, 72 and 72 DIA circuits and 100, 108, 112 and 112 broadband circuits, so total additions run 170, 180, 184 and 184 a year.
- Circuit cost is the carrier charge for the loop and port: 50% of DIA revenue ($575 of a $1,150 circuit) and 60% of broadband revenue ($174 of $290). Installation work carries 45% for cabling subcontractors and carrier install charges. Managed Wi-Fi and firewall carries 38% ($198 on a $520 site): about $151 for licenses and cloud management and about $47 for customer hardware, roughly $1,700 a site spread over 36 months. The engine blends these at the Year 1 mix and applies 46.4% in every year. Add-ons grow as a share of revenue, so the blend is somewhat conservative later, but customer equipment is paid for at installation and the reserve covers that timing. Wholesale rates come from carrier agreements and may change.
- Managed Wi-Fi and firewall sells at $520 a site a month from month 3. It is attached to 45% of circuits in Year 1, then 58%, 66%, 74% and 80%. One-time fees are $1,800 per DIA circuit, $300 per broadband circuit and $450 per add-on site, which makes installation 22% of Year 1 revenue and 3% of Year 5.
- Prices rise 2% a year from Year 2 under contract uplift clauses. Pay raises of 3% a year are charged on their own line and are not written into the base salaries in the personnel table.
- Support is sized by circuits per head. NOC technicians cover about 72 circuits each at the end of Year 1, 99 in Year 2, 110 in Year 3, 96 in Year 4 and 99 in Year 5, at roughly one ticket a circuit a month. Field technicians cover 72, 99, 110, 115 and 138. The NOC works business hours with an on-call engineer overnight until the overnight technician starts in month 38.
- Account executive salaries are on-target earnings and include commission, so no separate commission line appears. Every salary carries a 27% load for payroll taxes, health coverage, workers' compensation and a retirement match.
- Receivables average 32 days, carrier invoices are paid at 30 days, and customer routers, firewalls and access points in stock equal about 6% of annual direct cost, or roughly three weeks.
- Rent covers about 3,500 square feet of flex space for the office, NOC and parts room ($50,000 in Year 1) and about 6,500 square feet from Year 4 ($96,000). Colocation for the core router is a separate line because it follows network growth. Both are planning figures, to be confirmed with a local broker.
- The model taxes River Bay as a C corporation: 21% federal and 9.8% Minnesota, after losses carry forward. The state figure is the top rate shown by the Tax Foundation and may change, so an adviser should confirm it. No distributions are paid in any year; the investors' return is the value of the business.
Revenue by service line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Dedicated internet access and fiber circuits | $237,386 | $1,133,100 | $2,096,200 | $3,046,100 | $3,965,900 |
| Business broadband and failover circuits | $137,422 | $495,200 | $805,600 | $1,106,100 | $1,382,400 |
| Managed Wi-Fi and firewall add-ons | $157,785 | $812,100 | $1,578,900 | $2,486,900 | $3,417,700 |
| Installation and site-survey fees | $146,163 | $204,400 | $224,200 | $238,200 | $248,400 |
| Total revenue | $678,756 | $2,644,800 | $4,704,900 | $6,877,300 | $9,014,400 |
| Growth on prior year | – | 290% | 78% | 46% | 31% |
Dedicated circuits supply 35% of Year 1 revenue and 44% of Year 5. Managed Wi-Fi and firewall rises from 23% to 38% as the attach rate climbs to 80%, while installation fees fall from 22% to 3%. Year 2 growth of 290% comes from the base: Year 1 averages about 57 circuits in service against 144 at year end, and Year 2 averages about 220.
Month by month in Year 1
| Month | Dedicated internet access and fiber circuits | Business broadband and failover circuits | Managed Wi-Fi and firewall add-ons | Installation and site-survey fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $435 | $0 | $900 | $1,335 | ($75,813) |
| Feb 2027 | $0 | $1,305 | $0 | $900 | $2,205 | ($75,346) |
| Mar 2027 | $1,725 | $2,610 | $2,457 | $9,023 | $15,815 | ($68,053) |
| Apr 2027 | $5,175 | $4,472 | $4,662 | $9,525 | $23,834 | ($63,755) |
| May 2027 | $9,200 | $6,589 | $7,189 | $12,030 | $35,008 | ($57,767) |
| Jun 2027 | $13,800 | $8,969 | $10,045 | $12,533 | $45,347 | ($52,227) |
| Jul 2027 | $18,943 | $11,607 | $13,220 | $15,038 | $58,808 | ($45,013) |
| Aug 2027 | $24,617 | $14,356 | $16,593 | $15,038 | $70,604 | ($38,691) |
| Sep 2027 | $30,844 | $17,214 | $20,166 | $17,543 | $85,767 | ($30,565) |
| Oct 2027 | $37,620 | $20,181 | $23,939 | $17,543 | $99,283 | ($23,322) |
| Nov 2027 | $44,370 | $23,253 | $27,791 | $18,045 | $113,459 | ($15,725) |
| Dec 2027 | $51,092 | $26,431 | $31,723 | $18,045 | $127,291 | ($8,312) |
Monthly revenue grows from $1,335 in January to $127,291 in December. January and February carry only a few broadband circuits and installation fees, and the first dedicated circuits bill in March. EBITDA stays negative every month, narrowing from ($75,813) in January to ($8,312) in December. Cash falls through the year while the network team is paid ahead of billing.
Sales, NOC and field headcount
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and CEO | $132,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead network engineer | $115,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Business account executive (first) | $90,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Support and NOC technician (first) | $63,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Field technician (first) | $66,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Provisioning and billing coordinator | $60,000 | Month 7 | 1 | 1 | 1 | 1 | 1 |
| Business account executive (second) | $90,000 | Month 9 | 1 | 1 | 1 | 1 | 1 |
| Field technician (second) | $66,000 | Month 10 | 1 | 1 | 1 | 1 | 1 |
| Support and NOC technician (second) | $63,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Business account executive (third) | $90,000 | Month 18 | – | 1 | 1 | 1 | 1 |
| Field technician (third) | $66,000 | Month 20 | – | 1 | 1 | 1 | 1 |
| Support and NOC technician (third) | $63,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Network engineer | $102,000 | Month 26 | – | – | 1 | 1 | 1 |
| Support and NOC technician (fourth) | $64,000 | Month 28 | – | – | 1 | 1 | 1 |
| Field technician (fourth) | $66,000 | Month 30 | – | – | 1 | 1 | 1 |
| Marketing and partner coordinator | $62,000 | Month 30 | – | – | 1 | 1 | 1 |
| Controller and contracts manager | $90,000 | Month 34 | – | – | 1 | 1 | 1 |
| Second provisioning and billing coordinator | $60,000 | Month 36 | – | – | 1 | 1 | 1 |
| Network security engineer | $105,000 | Month 36 | – | – | 1 | 1 | 1 |
| Support and NOC technician (fifth, overnight cover) | $65,000 | Month 38 | – | – | – | 1 | 1 |
| Customer success manager | $72,000 | Month 40 | – | – | – | 1 | 1 |
| Business account executive (fourth) | $90,000 | Month 40 | – | – | – | 1 | 1 |
| Field technician (fifth) | $66,000 | Month 42 | – | – | – | 1 | 1 |
| Second senior network engineer | $110,000 | Month 44 | – | – | – | 1 | 1 |
| Customer success manager (second) | $72,000 | Month 46 | – | – | – | 1 | 1 |
| Support and NOC technician (seventh) | $65,000 | Month 46 | – | – | – | 1 | 1 |
| Support and NOC technician (sixth) | $65,000 | Month 50 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $668,338 | $1,067,753 | $1,544,849 | $2,302,087 | $2,682,981 |
Priya, the lead network engineer and the first account executive start in month 1. The first NOC and field technicians follow in month 3, the billing coordinator in month 7, the second account executive in month 9, a second field technician in month 10 and a second NOC technician in month 12. Year 2 adds an account executive (month 18), a field technician (month 20) and a NOC technician (month 22). Year 3 adds a network engineer (month 26), a NOC technician (month 28), a field technician and a partner coordinator (month 30), a controller (month 34), and a second billing coordinator and a security engineer (month 36). Year 4 adds the overnight NOC technician (month 38), a customer success manager and a fourth account executive (month 40), a field technician (month 42), a second senior network engineer (month 44), and a second customer success manager and a NOC technician (month 46). Year 5 adds a NOC technician in month 50. Year-end headcount runs 9, 12, 19, 26 and 27. Priya's $132,000 salary sits inside the costs, so profit is what remains after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $678,756 | $2,644,800 | $4,704,900 | $6,877,300 | $9,014,400 |
| Direct costs (carrier circuit charges, cross-connects, managed-service licenses, customer equipment and install subcontractors) | ($315,009) | ($1,227,443) | ($2,183,529) | ($3,191,734) | ($4,183,555) |
| Gross profit | $363,747 | $1,417,357 | $2,521,371 | $3,685,566 | $4,830,845 |
| Payroll incl. on-costs | ($668,337) | ($1,067,752) | ($1,544,849) | ($2,302,087) | ($2,682,981) |
| Rent | ($50,000) | ($52,000) | ($54,000) | ($96,000) | ($99,000) |
| Utilities | ($9,000) | ($10,500) | ($12,000) | ($14,500) | ($15,500) |
| Marketing | ($56,000) | ($72,000) | ($88,000) | ($100,000) | ($108,000) |
| Insurance | ($22,000) | ($32,000) | ($44,000) | ($56,000) | ($64,000) |
| Professional fees | ($18,000) | ($22,000) | ($26,000) | ($30,000) | ($34,000) |
| Software subscriptions | ($30,000) | ($50,000) | ($76,000) | ($100,000) | ($118,000) |
| Colocation cabinet, power and cross-connects for the core | ($30,000) | ($34,000) | ($42,000) | ($52,000) | ($60,000) |
| Vehicle fuel, maintenance and tolls | ($14,000) | ($22,000) | ($32,000) | ($42,000) | ($48,000) |
| Training, vendor certifications and licenses | ($8,000) | ($12,000) | ($16,000) | ($20,000) | ($23,000) |
| Phones, tools and consumables | ($9,000) | ($14,000) | ($20,000) | ($26,000) | ($30,000) |
| Spare customer gear, test-kit refresh and new-hire kit | $0 | ($24,000) | ($34,000) | ($46,000) | ($54,000) |
| Bad debt allowance | ($4,000) | ($12,000) | ($20,000) | ($28,000) | ($34,000) |
| Annual pay raises (3% a year) | $0 | ($32,033) | ($94,081) | ($213,466) | ($336,738) |
| EBITDA | ($554,590) | ($38,929) | $418,440 | $559,514 | $1,123,626 |
| Depreciation | ($36,114) | ($36,114) | ($36,114) | ($36,114) | ($36,114) |
| Interest | ($42,750) | ($40,249) | ($34,450) | ($28,075) | ($21,067) |
| Income tax | $0 | $0 | $0 | ($27,148) | ($306,518) |
| Net income before start-up costs | ($633,454) | ($115,292) | $347,876 | $468,177 | $759,927 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($100,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($733,454) | ($115,292) | $347,876 | $468,177 | $759,927 |
Year 1 loses $633,454 before start-up costs and $733,454 after them. Year 2 loses $115,292. Year 3 is the first profitable year at $347,876 (7.4% of revenue), followed by 6.8% in Year 4, when the larger office and seven hires arrive together, and 8.4% in Year 5. Payroll with pay raises falls from 98% of revenue in Year 1 to 33% in Year 5. Losses carried forward hold income tax to $27,148 in Year 4 and $306,518 in Year 5.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($749,857) | ($231,295) | $224,596 | $336,208 | $630,690 |
| Core network gear, service vans and NOC fit-out | ($192,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,500,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($58,434) | ($64,234) | ($70,609) | ($77,616) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $558,143 | ($289,729) | $160,363 | $265,599 | $553,073 |
| Closing cash | $558,143 | $268,414 | $428,777 | $694,376 | $1,247,449 |
Cash stays positive in every year. The lowest year-end balance is $268,414 in Year 2, after a second year of operating losses and the first loan principal of $58,434. Operating cash flow turns positive in Year 3 at $224,596.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $558,143 | $268,414 | $428,777 | $694,376 | $1,247,449 |
| Accounts receivable | $59,507 | $231,873 | $412,484 | $602,941 | $790,304 |
| Customer routers, firewalls and access points in stock | $18,901 | $73,647 | $131,012 | $191,504 | $251,013 |
| Core network gear, service vans and NOC fit-out (net) | $155,886 | $119,771 | $83,657 | $47,543 | $11,429 |
| Total assets | $792,437 | $693,705 | $1,055,930 | $1,536,364 | $2,300,195 |
| Payables to carriers and license vendors | $25,891 | $100,886 | $179,468 | $262,334 | $343,854 |
| Bank loan | $450,000 | $391,566 | $327,332 | $256,724 | $179,107 |
| Paid-in capital | $1,050,000 | $1,050,000 | $1,050,000 | $1,050,000 | $1,050,000 |
| Retained earnings | ($733,454) | ($848,747) | ($500,870) | ($32,694) | $727,234 |
| Total liabilities and equity | $792,437 | $693,705 | $1,055,930 | $1,536,364 | $2,300,195 |
Margins, coverage and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -81.7% | -1.5% | 8.9% | 8.1% | 12.5% |
| Net margin (before start-up costs) | -93.3% | -4.4% | 7.4% | 6.8% | 8.4% |
| Payroll incl. pay raises as share of revenue | 98% | 42% | 35% | 37% | 33% |
| Revenue per full-time equivalent at year end | $75,417 | $220,400 | $247,626 | $264,512 | $333,867 |
| Average monthly revenue | $56,563 | $220,400 | $392,075 | $573,108 | $751,200 |
| Monthly revenue needed to cover operating costs | $142,802 | $226,453 | $327,007 | $486,104 | $576,475 |
| Debt service cover (EBITDA / interest + principal) | -13.0x | -0.4x | 4.2x | 5.7x | 11.4x |
Year 1 averages $56,563 of monthly revenue against $142,802 needed to cover operating costs. Year 2 falls just short at $220,400 against $226,453, and Year 3 clears the bar by a wide margin. EBITDA is negative in Years 1 and 2, so debt service cover is below zero until Year 3, when it reaches 4.2x. The reserve pays the interest and principal in the meantime.
If bookings run 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $543,005 | $2,115,840 | $3,763,920 | $5,501,840 | $7,211,520 |
| Net income before start-up costs | ($654,476) | ($215,869) | $199,143 | $332,066 | $450,921 |
| Net income after start-up costs | ($754,476) | ($215,869) | $199,143 | $332,066 | $450,921 |
| Closing cash | $547,625 | $187,742 | $231,251 | $394,356 | $671,493 |
In this case every revenue line is 20% below the base in all five years. Priya responds in six steps: hires from month 13 on start six months later, the second senior network engineer is never hired, marketing falls 20%, her salary falls 20% to $105,600, the company stays in its first space (Year 4 rent stays near $55,600), and spares, vehicle, colocation and software spend are trimmed by 30%, 10%, 8% and 8%. Bad debt follows the smaller sales base. Year-end cash never drops below $187,742, the low point coming in Year 2. Net income is a loss in Years 1 and 2 and a profit from Year 3. Every year is worse than the base case on both net income and cash. Equity at the end of Year 1 is $295,524, so the bank would be told early if a net-worth covenant were close. Without the response, a test run of the same shortfall takes cash below zero in Year 2.
Sources
- Bureau of Labor Statistics, Computer support specialists, Occupational Outlook Handbook: May 2025 median pay $62,890; employment projected to decline 3% from 2025 to 2035.
- Bureau of Labor Statistics, Telecommunications equipment installers and repairers, except line installers: May 2025 median pay $66,200; employment projected to decline 3% from 2025 to 2035.
- Tax Foundation, Minnesota: graduated corporate income tax with a top rate of 9.80%. The rate may change.
- Carrier prices, wholesale terms and telecom registration requirements in this plan are the company's own planning figures, with no published source behind them; confirm with carriers and telecom counsel.
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