Looking for an ISP business plan? You're in the right place.
A lender or an investor reading an ISP plan wants to see how the numbers work before the network does. How many subscribers does the company need before it covers its wholesale bills? How fast do customers leave? How many people answer the phones? A blank template gives no hint of what a sensible answer looks like.
In this article we walk through a complete sample plan for a small ISP in Phoenix, Arizona, section by section, from the executive summary and SWOT analysis to a five-year set of financials built on subscriber counts, churn and wholesale cost per customer.
Here is what you will take away:
- The executive summary shows how to describe a reseller ISP on one page, so a reader sees what you own, what you rent and what you are asking for
- A competitor table covers cable, telephone, wireless and satellite rivals without quoting prices you cannot source
- The subscriber and churn model turns sign-ups and monthly churn into a customer count a lender can check
- Wholesale cost per line sets your gross margin, and you will see what happens to it when the wholesaler raises the price
- How to size a help desk from contacts per subscriber, instead of guessing at headcount
- Five years of profit, cash flow and balance sheet show how each hire, price and funding choice reaches the bottom line
- The downside case gives you an answer to "what if revenue is 20% short?", with the steps the owner takes in response
If you are planning an ISP, read this before you write your own. The company is fictional, so take what fits your market and change the rest.
In this plan
To turn this example into your own isp business plan, use the isp business plan template.
The Business in Brief
Flint Hollow, Inc. is an Internet service provider that opens in Phoenix, Arizona on January 1, 2027. It sells dial-up, residential broadband and small-business broadband to households and offices in outlying communities at the edge of the Phoenix area. It does not own the last-mile wires. The broadband lines are leased from a telephone company's wholesale DSL program and a regional cable operator's resale program, and Flint Hollow adds its own billing, its own help desk and its own web-hosting and email platform on top. Dana Whitcomb, who has spent a decade in ISP support management and network operations, is founder and general manager.
Opening takes $1,400,000: $350,000 of Dana's savings, $750,000 from three members of a local investor group and a $300,000 bank term loan. Most of it, $997,000, sits as a cash reserve. A retiring local operator's subscriber list costs $140,000, network and server equipment $120,000 and a service van with field tools $38,000. The rest goes on modem stock, the office, legal work, registrations and the launch campaign.
| Year 1 | Year 3 | Year 5 | |
|---|---|---|---|
| Revenue | $1,004,960 | $2,732,396 | $4,070,241 |
| Net income after start-up costs | ($563,070) | $117,189 | $362,847 |
| Closing cash | $688,196 | $681,811 | $1,235,867 |
The company starts with 800 accounts bought with the list and ends Year 1 with 1,572. By Year 5 it has 3,917 subscribers, 3,254 of them residential. Wholesale access is the largest cost, at about 37% of revenue in Year 1 and 40% in Year 5, and the help desk is the largest group of staff: 3 agents at the end of Year 1 and 9 seats, the team lead included, at the end of Year 5. The plan sets churn at 1.3% a month for households and 0.8% for business lines. It expects customers in these towns to leave slowly, because few of them have an alternative and many value a person who answers the phone.
Year 1 and Year 2 lose money, because payroll and wholesale bills begin in January and the subscriber base needs about three years to cover them. The company is profitable from Year 3, and its Year 5 net margin is 8.9%.
A second run of the model takes 20% off every revenue line and raises wholesale prices 5%. With later hiring, a smaller marketing budget, a pay cut for Dana and no distributions, year-end cash stays positive throughout, and the company turns profitable in Year 5.
Flint Hollow at a Glance
Legal name: Flint Hollow, Inc., an Arizona corporation. Owners: Dana Whitcomb (about 32%) and three members of a local investor group (about 68% between them). Office: about 2,400 square feet of leased flex space with an equipment room, in an outlying Phoenix submarket. Start date: January 1, 2027. Stage: the list purchase agreement is drafted, the lease is in negotiation and the wholesale transfer is awaiting the seller's provider.
Where the company sits in the trade
Flint Hollow serves people who can get a connection, but not a good one. Some are on dial-up. Some are on a DSL line that a national company stopped promoting years ago. Others are on a cable plan that is fast enough and impossible to get help with. The company sells them a connection under a local name, with a phone number answered by a person.
Targets for the first two years
- Close Year 1 with 1,572 subscribers and Year 2 with 2,393.
- Hold residential churn at or below 1.3% a month and business churn at or below 0.8%.
- Move at least a third of departing dial-up accounts onto a broadband plan.
- Close most of the gap between Year 2 average monthly revenue ($156,790) and the revenue needed to cover costs ($166,531), then clear it in Year 3.
What the company sells
| Product | How it is priced | Year 1 revenue |
|---|---|---|
| Dial-up and legacy accounts | $17.50 a month | $54,738 |
| Residential broadband on leased DSL or cable | $62 a month on average | $624,904 |
| Small-business broadband with a static IP | $140 a month | $212,375 |
| Web hosting, email and router rental | $23 a month on average per add-on account | $47,409 |
| Activation and modem sales | $65 per new broadband account | $65,534 |
Who the company answers to
The FCC has adopted rules for broadband consumer labels, which show price and speed information at the point of sale. The labels page in the Sources describes who must comply and when, and the company confirms the current requirements with counsel before launch. A provider that hosts customers' content can register a designated agent with the U.S. Copyright Office for copyright notices, and an ISP can receive lawful requests from law enforcement. Counsel confirms whether any federal communications-surveillance obligations apply at this size. The plan sells no voice service, which keeps the federal fee filings simpler, though counsel confirms that too. Arizona registrations and local licenses are budgeted at $7,000 at opening and $5,000 a year after that. Privacy notices and a written data-security plan are part of customer onboarding.
The wholesale relationship
Two wholesale arrangements carry the broadband business. One buys resold DSL on a telephone company's copper. The other is a cable resale or wholesale-access agreement with a regional operator, which operators grant at their discretion and which may not be available on these terms; the plan treats it as a target to negotiate. Prices, minimums, deposits and availability are set by those companies and can change, and a telephone company may retire copper in a town it serves. Flint Hollow therefore seeks a three-year term with notice periods on price changes, looks for a second wholesale source in Year 2 and reads each provider's network notices town by town. If copper is retired in a served town, those lines would move to a cable or fiber wholesale product at a cost this plan does not model. The target that wholesale prices move with Flint Hollow's own list prices is also a plan figure, and the downside case raises them 5% above it.
Phoenix's Edge: Who Buys a Local ISP
Why the outlying towns are a market
Towns at the edges of the Phoenix area are served unevenly. A cable network can stop at the last subdivision, and a DSL line can be too long to carry a modern speed. The company picks each town from the FCC's National Broadband Map and the wholesale providers' own serviceability checks, and does not market to an address until both agree it can be served. The size of the gap in any particular town is for that check to show, and the plan states no market-wide figure.
The slice that matters
The company needs households and offices that have somewhere to buy a connection but a reason to switch. Three groups fit: households that never left dial-up or an old DSL plan, home-based workers who need a steady connection and a person to call, and small offices that need a static IP, hosted email on their own domain or a place to put a small website.
Who else sells a connection
| Alternative | What it offers | Why a customer might choose it | How Flint Hollow differs by design |
|---|---|---|---|
| Incumbent cable operator | Broadband on its own network where built | Highest speeds in covered areas | Local phone support and one bill for access, email and hosting |
| Incumbent telephone company | DSL or fiber where available | Established brand, bundled with phone | A smaller, personal service with business extras |
| Fixed-wireless and cellular home internet | Connection without a wired line | No installation of a line, often sold on a simple monthly price | A wired connection, and a technician who knows the address |
| Satellite internet | Coverage almost anywhere | Reaches homes with no other option | A wired line, a local contract and a person to call, for homes that can get one |
| Other small local ISPs | Similar local service | Familiar names in some towns | Hosting, email and a staffed help desk under one roof |
Each row describes a category and the point of contrast. It is not a ranking. Providers revise plans and prices often, so none are quoted here.
SWOT
| Strengths | Weaknesses |
|---|---|
| 800 paying accounts on day one | Depends on two wholesale suppliers it does not control |
| A help desk sized from measured workload | Gross margin is capped by the wholesale rate |
| Low churn on business lines | Year 1 and Year 2 lose money |
| Opportunities | Threats |
|---|---|
| Dial-up accounts that can be moved to broadband | Copper retirement and wholesale price rises |
| Small offices that want hosting and email from their ISP | Fiber or fixed wireless arriving in a served town |
| Referrals from a satisfied local base | A single bad outage damaging a small reputation |
Who Phones the Help Desk
The household on an old plan
Typical households are a retiree on dial-up, a family on an old DSL line, or a rural homeowner whose cable plan has no local office. They notice the bill, and they phone when the connection drops. The plan sets 0.8 contacts per subscriber a month at 18 minutes each, a heavy load that reflects a customer base with dial-up and older DSL in it. Real handling times will differ, and the help-desk reports in Year 1 replace these figures.
The small office
A dental office, a contractor, a feed store, an RV park or a church. Each needs a dependable connection, a static IP for a camera or a point-of-sale system, and email on its own domain. The accounts manager visits the larger offices and sells the hosting and email add-ons.
What makes someone switch
A long outage with no one to call, a price change on a promotional plan, a request for hosting or email on a domain, or a neighbor's recommendation.
What they ask of the company
The connection stays up. The bill matches the quote. A person answers within a few rings, and the same person can read the account.
Who the plan counts
| Subscribers at year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Dial-up and legacy | 217 | 147 | 99 | 67 | 45 |
| Residential broadband | 1,175 | 1,921 | 2,507 | 2,935 | 3,254 |
| Small-business broadband | 181 | 325 | 444 | 541 | 618 |
| Total | 1,572 | 2,393 | 3,051 | 3,544 | 3,917 |
Winning and Keeping Subscribers
From inquiry to connection
A caller or web visitor gets a serviceability check by address, then a quote that includes the activation fee and any modem charge. Households get a shipped self-install kit with a phone walk-through. Business sites get a visit from the field technician, who sets up the router and checks the static IP and email before leaving. The plan expects about 80% of households to connect without a visit.
Churn, in numbers
Monthly churn is 1.3% for residential accounts, 0.8% for business lines and 3.2% for dial-up. Over a year those rates remove about 14.5% of households, 9% of business accounts and 32% of dial-up accounts. In Year 1 that means 121 residential, 11 business and 103 dial-up departures, and 36 of the dial-up customers who leave take a broadband plan instead. In Year 5 the losses are 481 residential and 55 business accounts, which is why Year 5 still needs 932 new broadband sign-ups.
How prices work
List prices are flat for the first year and rise 3% a year after that. The plan targets wholesale prices that rise in step, so the gross margin near 56% stays steady while dollars of gross profit grow with the base. The $65 activation covers most of the modem and the shipping.
Add-ons
Hosting, email and router rental are offered to every new account. The share of accounts that take one is 14% in Year 1, 17% in Year 2, 20% in Year 3, 22% in Year 4 and 24% in Year 5. An add-on account pays an average of $23 a month, at a 20% direct cost.
Where the sign-ups come from
Year 1 brings 1,008 new broadband sign-ups, including the 36 dial-up conversions.
| Source | Year 1 sign-ups |
|---|---|
| Postcard mailers | 320 |
| Website and search ads | 180 |
| Local radio and community papers | 160 |
| Referrals from current subscribers | 150 |
| Small-business outreach | 132 |
| Dial-up conversion offers | 36 |
| Community events and HOA presentations | 30 |
Reaching the Outlying Towns
What Year 1 marketing costs
Year 1 marketing comes to $110,000: $40,000 of launch spending funded from start-up capital and $70,000 of running cost. That works out to about $109 for each of the 1,008 new broadband sign-ups, or $69 counting running spend alone. A household at $62 a month with a $27.50 wholesale cost returns the $109 in about three months of gross profit. On running spend alone the cost per sign-up is $71 in Year 2, $81 in Year 3 and $102 in Year 5, rising as the reachable households in each town fill up. Running marketing is 7.0% of Year 1 revenue and 2.3% of Year 5 revenue.
| Channel | Year 1 spend | What it does |
|---|---|---|
| Postcard mailers | $30,000 | About 54,000 pieces to postal routes in cleared towns, at a 0.5% response |
| Local radio and community papers | $20,000 | Spots and print ads in the towns being opened |
| Website and search ads | $22,000 | A serviceability checker on the site, and ads for "internet" searches in each town |
| Referral bill credits | $3,750 | $25 off the next bill for each referral that connects, about 150 in the year |
| Community events and HOA presentations | $9,000 | Booths and short talks that ask for questions |
| Small-business outreach | $12,000 | Seminars on hosting and email, and chamber and farm-bureau memberships |
| Bill inserts, newsletter, win-back offers | $13,250 | Keeps current customers and offers dial-up accounts a broadband plan |
A town at a time
The company opens towns in turn. Each opening starts with a serviceability check, then a mailer, a week of radio and an open house at a local hall. A town is considered closed to marketing when the wholesale providers can serve no more addresses in it.
Milestones
- January 2027: 800 accounts transferred, mailers going out in the first two towns.
- June 2027: about 1,200 subscribers and the first business seminar.
- December 2027: 1,572 subscribers and $112,446 of monthly revenue.
Running the Service
The office and equipment room
The company leases about 2,400 square feet at $42,000 in Year 1, which is roughly $17.50 a square foot all in, with a 3% annual escalator. The space holds the help-desk floor, a small stockroom for modems, and an equipment room for the routers, billing server and a backup power system. The mail and hosting servers sit in a rented Phoenix data-center rack, along with the upstream connections.
How a connection reaches a customer
A customer's line is leased from the wholesale provider and handed to Flint Hollow at an aggregation point. From there the traffic runs over the company's own routers to two upstream carriers. Upstream transit, rack space and backhaul links cost $96,000 in Year 1 and $144,000 by Year 5.
Systems
Subscriber billing with autopay, a ticketing and chat tool, network monitoring, a RADIUS server for logins and mail filtering. Software costs $34,000 in Year 1 and $60,000 in Year 5. The billing system produces the figures the company reports to its lenders each month: subscribers, churn, wholesale cost per subscriber and tickets per subscriber.
The help desk
In Year 1 the desk takes phone, chat and email from 8 a.m. to 8 p.m. on weekdays and 9 a.m. to 5 p.m. on Saturdays. From month 14, when the fourth agent joins, hours extend to 7 a.m. to 10 p.m. seven days a week. Network faults outside those hours go to an on-call rota, with a contract network consultant as backup to the engineer. The plan sizes the desk from workload. At 0.8 contacts a subscriber a month, 18 minutes a contact and 150 productive hours a month for each seat at 70% occupancy, 1,572 subscribers need about 3.6 seats and 3,917 need about 9. The team lead takes escalations and covers peaks, and the network engineer and Dana take overflow in Year 1.
Field work and stock
One technician starts in month 5, when the business installs begin to build up, and handles wiring faults and the roughly one household in five that cannot self-install. A second joins in month 49. A service van, tools and line-test gear are bought at opening, and fuel and maintenance run $9,000 in Year 1. Modems and routers come from a single distributor, and the $12,000 of stock is about 300 units, or three to four months of sign-ups at the Year 1 pace.
Insurance and safeguards
General liability, cyber liability, errors and omissions, property and workers' compensation cost $14,000 in Year 1. Customer data is held under a written security plan, and the company keeps backups of the email and hosting servers off site.
The Team Behind the Help Desk
Dana Whitcomb, founder and general manager
Dana spent four years managing support at a dial-up ISP that was later acquired, and then six running network operations at a regional provider. She has negotiated wholesale terms, run a billing migration and trained more than 40 support agents. Her $350,000 comes from a home sale and savings.
Network and systems engineer
Starts in January at $96,000. Runs the routers, the RADIUS and mail servers and the monitoring, and shares the on-call rota with Dana until the hosting administrator arrives in month 32. A contract network consultant is the backup.
Where the team is thin
Dana has not run sales for business accounts, and has not been the person who signs a wholesale agreement alone. The company hires an accounts manager in month 5 and keeps an Arizona telecommunications lawyer on retainer for the wholesale agreements. A fractional CFO reviews the numbers each quarter. These costs sit in Year 1 professional fees of $30,000.
Ownership and the bank
Dana holds about 32% of the shares and the three investors, who put in $250,000 each, hold about 68% between them. A three-person board has seats for Dana, one investor and one independent director. The bank's term loan is guaranteed personally by Dana, secured on the network equipment, and carries a quarterly reporting covenant and a $150,000 minimum-deposit covenant.
Subscribers, Wholesale Costs and Cash
The tables that follow come from a single five-year model of subscribers, wholesale bills and staffing: monthly through Year 1, then annual. The operating figures come before the results, so each line can be traced to the input that produced it.
What the launch costs and who pays for it
| Use of funds | Amount |
|---|---|
| Purchase of a legacy subscriber list (dial-up and DSL accounts) | $140,000 |
| Core routers, RADIUS and billing servers, mail and hosting servers, power backup | $120,000 |
| Service van, field tools and line-test gear | $38,000 |
| Modem and router stock | $12,000 |
| Office, help-desk stations and equipment room | $22,000 |
| Federal and state registrations, local business licenses | $7,000 |
| Legal: wholesale access agreements, entity, customer terms | $24,000 |
| Launch: website, mailers to outlying communities, local radio | $40,000 |
| Cash reserve for the first months of support payroll and wholesale bills | $997,000 |
| Total uses | $1,400,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitcomb's savings | $350,000 |
| Three members of a local investor group | $750,000 |
| Bank term loan | $300,000 |
| Total sources | $1,400,000 |
Dana puts in $350,000, and three members of a local investor group put in $250,000 each, so the equity is $1,100,000 and Dana holds about 32% of it. The bank adds a $300,000 term loan at 10.25% over six years, with nine months of interest only. Dana guarantees it personally, the network equipment is pledged, and the bank asks for a covenant to keep at least $150,000 on deposit. A lender reading Years 1 and 2 would see negative debt service cover, so the loan rests on the guarantee and the reserve, not on earnings. The rate is a planning figure for the example, not a quoted lending rate. Of the $1,400,000, $997,000 stays in the bank as a reserve. That is large next to the $403,000 of purchases, and it is sized to the gap between help-desk payroll and wholesale bills, which start in the first month, and a subscriber base that takes about three years to cover them. The $140,000 list purchase closes only if the seller's wholesale access account transfers to Flint Hollow with it, and the price is adjusted for any account that does not transfer.
Operating figures behind the forecast
- The company opens with 800 accounts bought from a retiring local operator: 320 dial-up, 420 residential DSL and cable and 60 small-business lines. Diligence confirms the seller's counts, average bill, account age and consent to transfer before closing. Monthly churn is 3.2% on dial-up, 1.3% on residential broadband and 0.8% on business lines. Those rates equal roughly 32%, 14.5% and 9% of accounts a year, and the plan treats them as planning figures. In Year 1 about 103 dial-up, 121 residential and 11 business accounts leave.
- New accounts come in at 70 residential and 11 small-business broadband sign-ups a month in Year 1, 80 and 14 in Year 2, then fewer as the reachable households fill up. About 35% of departing dial-up accounts move to a broadband plan and are counted as residential sign-ups: 36 of them in Year 1. Subscribers at year end run 1,572, 2,393, 3,051, 3,544 and 3,917.
- List prices are $17.50 a month for dial-up, $62 for residential broadband and $140 for small-business broadband with a static IP. The residential figure blends lower-speed DSL lines with faster cable lines, and speeds vary by address. Hosting, email and router rental average $23 a month per add-on account, and the share of accounts that take one climbs from 14% in Year 1 to 24% in Year 5. Activation and a modem sale bring $65 per new broadband account. List prices rise 3% a year from Year 2.
- Wholesale access costs $27.50 a month for each residential line and $62 for each business line in Year 1, about 44% of the list price in both cases. The plan sets a target of access prices that move with list prices, so the percentage holds; the wholesale agreements, not the plan, decide that. Dial-up carries 30% in direct costs, add-ons 20% and activation 62% (mostly the modem). Wholesale access is about 37% of revenue in Year 1 and 40% by Year 5, and all direct costs together are about 44%, which leaves a gross margin near 56%.
- Support is sized from workload. Each subscriber makes about 0.8 contacts a month by phone, chat or email, each takes about 18 minutes, and a seat is productive for about 150 paid hours a month at 70% occupancy. At those rates, 1,572 subscribers need about 3.6 seats and 3,917 need about 9. The staffing table carries 3 agents at the end of Year 1 and 9 seats (eight agents and a team lead) at the end of Year 5, with the founder and the engineer covering the early gap.
- Each salary carries a 27% load for employer payroll taxes, health cover, workers' compensation and a retirement match. The salaries in the personnel table are launch-year rates. Raises of 3% a year start in Year 2 and appear on their own line.
- Rent is $42,000 in Year 1 for about 2,400 square feet of flex office space with a small equipment room, roughly $17.50 a square foot all in, with a 3% annual escalator. Upstream transit, data-center rack space and backhaul links to the wholesale provider cost $96,000 in Year 1 and $144,000 by Year 5. The dial-up modem pool's phone and number services shrink from $9,000 to $2,000 as dial-up accounts fall away.
- About half of residential bills are paid by card at roughly 2.9% a transaction, which puts card fees near 1.4% of revenue: $14,000 in Year 1 and $57,000 in Year 5. The rest pays by bank draft, and the model sets collections at about 6 days on average. Business invoices are on short terms, and wholesale bills are paid about 30 days after they arrive. The $12,000 of modem and router stock, about 300 units, stays on the shelf at that level.
- Professional fees of $30,000 in Year 1 cover a telecom lawyer on retainer, an outside accountant for the corporate return, a quarterly review by a fractional CFO, a network consultant who backs up the engineer and the independent director's fee. They rise to $38,000 by Year 5. The service van, tools and line-test gear cost $38,000 at opening, and fuel, maintenance and supplies run $9,000 in Year 1.
- The model taxes the company as a C corporation at 21% federal and a 4.9% Arizona rate, which are the rates the plan was written against; state rates change, so confirm the current figures with an Arizona tax adviser. Operating losses carry forward, but the model leaves the $211,000 of opening costs out of that pool and applies no cap on how much of a carryforward can offset a year's income, so a tax adviser confirms the federal limit. Federal law has barred new taxes on internet access itself since the moratorium was made permanent in 2016, but hosting, email and equipment sales may be taxed differently. The model carries no transaction-privilege-tax line because that tax is collected from customers and passed on; a tax adviser confirms the treatment.
- Distributions of $40,000 in Year 4 and $60,000 in Year 5 come only after the company has been profitable for a full year. The bank loan runs its full term.
Revenue by product line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Dial-up and legacy accounts | $54,738 | $38,162 | $26,606 | $18,549 | $12,932 |
| Residential broadband (leased DSL and cable) | $624,904 | $1,218,188 | $1,773,263 | $2,231,645 | $2,606,123 |
| Small-business broadband and static IP | $212,375 | $450,045 | $696,299 | $913,810 | $1,103,418 |
| Web hosting, email and router rental | $47,409 | $97,920 | $161,437 | $220,522 | $279,614 |
| Activation and modem sales | $65,534 | $77,160 | $74,791 | $70,688 | $68,154 |
| Total revenue | $1,004,960 | $1,881,475 | $2,732,396 | $3,455,214 | $4,070,241 |
| Growth on prior year | – | 87% | 45% | 26% | 18% |
Residential broadband carries the company, at 62% of Year 1 revenue and 64% of Year 5 revenue. Small-business lines are 21% of Year 1 and 27% of Year 5, and they churn the least. Dial-up revenue shrinks from $54,738 to $12,932 as accounts leave or convert. Hosting, email and router rental grows from 5% of revenue to 7% and, at a 20% direct cost, earns the best margin per dollar of any recurring line.
Month by month in Year 1
| Month | Dial-up and legacy accounts | Residential broadband (leased DSL and cable) | Small-business broadband and static IP | Web hosting, email and router rental | Activation and modem sales | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|
| Jan 2027 | $5,421 | $30,264 | $9,873 | $2,796 | $5,498 | $53,852 | ($40,762) |
| Feb 2027 | $5,247 | $34,425 | $11,334 | $3,014 | $5,491 | $59,511 | ($37,568) |
| Mar 2027 | $5,079 | $38,526 | $12,783 | $3,229 | $5,483 | $65,100 | ($34,413) |
| Apr 2027 | $4,917 | $42,567 | $14,221 | $3,443 | $5,476 | $70,624 | ($31,296) |
| May 2027 | $4,760 | $46,548 | $15,647 | $3,653 | $5,470 | $76,078 | ($28,217) |
| Jun 2027 | $4,607 | $50,472 | $17,062 | $3,861 | $5,463 | $81,465 | ($25,177) |
| Jul 2027 | $4,460 | $54,339 | $18,465 | $4,067 | $5,457 | $86,788 | ($22,173) |
| Aug 2027 | $4,317 | $58,149 | $19,858 | $4,271 | $5,451 | $92,046 | ($19,205) |
| Sep 2027 | $4,179 | $61,905 | $21,239 | $4,472 | $5,445 | $97,240 | ($16,273) |
| Oct 2027 | $4,045 | $65,606 | $22,609 | $4,672 | $5,439 | $102,371 | ($13,378) |
| Nov 2027 | $3,916 | $69,254 | $23,968 | $4,868 | $5,433 | $107,439 | ($10,517) |
| Dec 2027 | $3,790 | $72,849 | $25,316 | $5,063 | $5,428 | $112,446 | ($7,691) |
Revenue climbs every month, from $53,852 in January to $112,446 in December, because new sign-ups outrun churn from the first month. EBITDA is negative throughout the year, and the monthly loss narrows from $40,762 to $7,691. Year 1 closes with $688,196 in the bank, and the lowest year-end balance in the plan comes at the end of Year 2.
Help-desk and network staffing
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and general manager | $105,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Network and systems engineer | $96,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Help-desk agent 1 | $42,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Help-desk agent 2 | $42,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Help-desk agent 3 | $42,000 | Month 6 | 1 | 1 | 1 | 1 | 1 |
| Billing and collections clerk | $44,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Business accounts manager | $64,000 | Month 5 | 1 | 1 | 1 | 1 | 1 |
| Install and field technician | $50,000 | Month 5 | 1 | 1 | 1 | 1 | 1 |
| Help-desk agent 4 | $42,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Help-desk team lead | $58,000 | Month 21 | – | 1 | 1 | 1 | 1 |
| Help-desk agent 5 | $42,000 | Month 25 | – | – | 1 | 1 | 1 |
| Hosting and email administrator | $76,000 | Month 32 | – | – | 1 | 1 | 1 |
| Help-desk agent 6 | $42,000 | Month 36 | – | – | 1 | 1 | 1 |
| Help-desk agent 7 | $42,000 | Month 44 | – | – | – | 1 | 1 |
| Second field technician | $50,000 | Month 49 | – | – | – | – | 1 |
| Help-desk agent 8 | $42,000 | Month 55 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $512,868 | $689,398 | $840,952 | $968,375 | $1,089,660 |
Two agents and the network engineer start in January with Dana. The accounts manager and the first field technician start in month 5, the third agent in month 6 and the billing clerk in month 8. From there each hire follows the subscriber count: agent 4 in month 14, a team lead in month 21, agent 5 in month 25, the hosting and email administrator in month 32, agent 6 in month 36, agent 7 in month 44, a second technician in month 49 and agent 8 in month 55. Headcount runs 8, 10, 13, 14 and 16 at the five year ends. The support group is 3 agents at the end of Year 1 and 9 seats at the end of Year 5, including the team lead. Dana's $105,000 sits inside payroll, so the profit lines are after her pay.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,004,960 | $1,881,475 | $2,732,396 | $3,455,214 | $4,070,241 |
| Direct costs (wholesale access, modems sold, hosting hardware) | ($437,761) | ($819,572) | ($1,190,233) | ($1,505,093) | ($1,773,000) |
| Gross profit | $567,199 | $1,061,903 | $1,542,163 | $1,950,121 | $2,297,241 |
| Payroll incl. on-costs | ($512,868) | ($689,398) | ($840,952) | ($968,375) | ($1,089,660) |
| Rent | ($42,000) | ($43,300) | ($44,600) | ($45,900) | ($47,300) |
| Utilities | ($9,000) | ($9,500) | ($10,000) | ($10,500) | ($11,000) |
| Marketing | ($70,000) | ($82,000) | ($88,000) | ($92,000) | ($95,000) |
| Insurance | ($14,000) | ($16,000) | ($18,000) | ($19,500) | ($21,000) |
| Professional fees | ($30,000) | ($32,000) | ($34,000) | ($36,000) | ($38,000) |
| Software subscriptions | ($34,000) | ($42,000) | ($50,000) | ($56,000) | ($60,000) |
| Upstream transit, colocation and backbone links | ($96,000) | ($112,000) | ($126,000) | ($136,000) | ($144,000) |
| Telephone lines, modem pool and number services | ($9,000) | ($7,000) | ($5,000) | ($3,000) | ($2,000) |
| Regulatory fees and compliance | ($5,000) | ($6,000) | ($7,000) | ($8,000) | ($8,500) |
| Equipment replacement and spares | $0 | ($14,000) | ($20,000) | ($28,000) | ($30,000) |
| Card processing fees | ($14,000) | ($27,000) | ($38,000) | ($49,000) | ($57,000) |
| Vehicle fuel, maintenance and field supplies | ($9,000) | ($10,000) | ($11,000) | ($12,000) | ($13,000) |
| Bad debt allowance | ($9,000) | ($17,000) | ($24,000) | ($28,000) | ($31,000) |
| Annual pay raises (3% a year) | $0 | ($20,682) | ($51,214) | ($89,795) | ($136,762) |
| EBITDA | ($286,670) | ($65,977) | $174,397 | $368,051 | $513,019 |
| Depreciation | ($34,743) | ($34,743) | ($34,743) | ($34,743) | ($34,743) |
| Interest | ($30,657) | ($27,478) | ($22,465) | ($16,913) | ($10,765) |
| Income tax | $0 | $0 | $0 | $0 | ($104,664) |
| Net income before start-up costs | ($352,070) | ($128,198) | $117,189 | $316,394 | $362,847 |
| Start-up costs expensed at opening (subscriber list, legal, licensing, launch marketing) | ($211,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($563,070) | ($128,198) | $117,189 | $316,394 | $362,847 |
Year 1 loses $352,070 before start-up costs and $563,070 after the $211,000 of opening costs. Year 2 loses $128,198. The company turns profitable in Year 3 at $117,189, a 4.3% margin, and Years 4 and 5 earn $316,394 and $362,847, an 8.9% net margin in Year 5. Margin improves because payroll falls from 51% of revenue in Year 1 to 30% in Year 5 while direct costs stay near 44%. Wage rises are in the plan and are not trimmed to reach that result. The Year 3 margin is thin, and a smaller subscriber base or a dearer wholesale contract would take it away, which is what the downside case tests. Income tax first appears in Year 5, once the earlier operating losses are used up.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($520,866) | ($76,482) | $168,410 | $365,134 | $409,500 |
| Network, vehicle and office equipment | ($180,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,400,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($10,937) | ($46,650) | ($51,663) | ($57,215) | ($63,363) |
| Owner distributions | $0 | $0 | $0 | ($40,000) | ($60,000) |
| Net change in cash | $688,196 | ($123,132) | $116,746 | $267,919 | $286,137 |
| Closing cash | $688,196 | $565,064 | $681,811 | $949,730 | $1,235,867 |
Closing cash stays above zero in every year. The lowest year-end balance is $565,064 at the end of Year 2, after the second year of operating losses and the first full year of loan repayment. Distributions begin in Year 4.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $688,196 | $565,064 | $681,811 | $949,730 | $1,235,867 |
| Accounts receivable | $16,520 | $30,928 | $44,916 | $56,798 | $66,908 |
| Modem and router stock | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 |
| Network, vehicle and office equipment (net) | $145,257 | $110,514 | $75,771 | $41,029 | $6,286 |
| Total assets | $861,973 | $718,507 | $814,498 | $1,059,557 | $1,321,061 |
| Wholesale access payable | $35,980 | $67,362 | $97,827 | $123,706 | $145,726 |
| Bank loan | $289,063 | $242,412 | $190,749 | $133,534 | $70,171 |
| Paid-in capital | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 |
| Retained earnings | ($563,070) | ($691,267) | ($574,078) | ($297,684) | $5,163 |
| Total liabilities and equity | $861,973 | $718,507 | $814,498 | $1,059,557 | $1,321,061 |
Margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -28.5% | -3.5% | 6.4% | 10.7% | 12.6% |
| Net margin (before start-up costs) | -35.0% | -6.8% | 4.3% | 9.2% | 8.9% |
| Payroll incl. pay raises as share of revenue | 51% | 38% | 33% | 31% | 30% |
| Revenue per full-time equivalent at year end | $125,620 | $188,148 | $210,184 | $246,801 | $254,390 |
| Average monthly revenue | $83,747 | $156,790 | $227,700 | $287,935 | $339,187 |
| Monthly revenue needed to cover operating costs | $126,073 | $166,531 | $201,950 | $233,592 | $263,440 |
| Debt service cover (EBITDA / interest + principal) | -6.9x | -0.9x | 2.4x | 5.0x | 6.9x |
The average-revenue and revenue-needed rows of the ratios table compare average monthly revenue with the revenue needed to pay all operating costs at the plan's 56% gross margin. Year 2 is short, at $156,790 against $166,531. Year 3 clears it, at $227,700 against $201,950. Debt service cover is negative in the first two years and reaches 2.4x in Year 3 and 5.0x in Year 4.
A 20% revenue shortfall in every year, with dearer wholesale access
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $803,968 | $1,505,180 | $2,185,917 | $2,764,171 | $3,256,193 |
| Net income before start-up costs | ($439,688) | ($271,748) | ($97,022) | ($19,779) | $103,429 |
| Net income after start-up costs | ($650,688) | ($271,748) | ($97,022) | ($19,779) | $103,429 |
| Closing cash | $597,906 | $328,893 | $229,166 | $198,990 | $284,074 |
Every revenue line comes in 20% below the base case in all five years, and wholesale access prices rise 5% on top. Dana's response has five parts: every hire from month 13 onward starts six months later, the second field technician is never hired, marketing is cut 20%, her own pay falls 20% and distributions stop. The company loses money in each of the first four years and earns a profit in Year 5. Year-end cash never drops below $198,990, and equity at the end of Year 1 is $449,312. The lowest balance sits close to the $150,000 deposit covenant, so Dana would raise it with the bank in Year 1. If none of those steps were taken, the same case would leave year-end cash negative from Year 3 on. The case does not test the loss of purchased accounts at transfer, a copper retirement in a served town or a wholesale price rise above 5%.
Sources
- FCC, National Broadband Map: the page where reported fixed-broadband availability is searched by address, used here to choose towns. No coverage figure on this page comes from it.
- FCC, Broadband Consumer Labels: the page that describes the label requirement for broadband providers. Confirm the current rules there.
- U.S. Copyright Office, DMCA designated agent directory: where a service provider registers an agent for notices.
- Arizona Department of Revenue, azdor.gov: corporate income tax and transaction privilege tax guidance. The 4.9% rate in the model is the rate the plan was written against; confirm the current rate there.
- Internet Tax Freedom Act, made permanent by the Trade Facilitation and Trade Enforcement Act of 2015: the federal limit on taxing internet access. Hosting, email and equipment sales are treated separately; confirm with an adviser. The permanent ban took effect in 2016.
- Federal corporate income tax rate of 21%: Internal Revenue Code section 11.
Create a plan as complete as this one
Pick the amount of help you want.
Do it yourself
$197 Toolkit, 12 months
Build your plan with the AI Wizard and every tool you need, at your own pace.
Start my plan →Done with you
$497 Toolkit Plus, 12 months
Our AI builds the plan with you, section by section, from your answers.
Want a person too? Upgrade to a consultation with an MBA graduate.
See Toolkit Plus →Done for you
From $1,997 written for you
We research and write the whole plan, and you review the finished draft.
See the writing service →Still searching for a isp business plan template? Build yours here.