Looking for an online booking business plan? You're in the right place.
A booking platform asks a lender or investor to trust a count of small shops that sign up, stay and pay. How many locations go live each month? How many cancel? How much of the revenue comes from subscriptions, and how much from a share of card payments, and what does the platform have to be careful about when it touches payments, text messages and clinic data? A blank template won't show you what a sensible answer looks like.
In this article we'll walk through a complete sample plan for a Columbus company that sells appointment and reservation software to independent salons, clinics, studios and tour operators, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to put a subscription-and-payments business on one page, so a reader knows what is being raised and why within a minute
- The revenue mix: learn how to split subscriptions, payment share and setup fees, so each line can be traced to a price and a customer count
- The trial funnel and marketing budget: find out what it costs to win one small shop, and how fast that cost comes back
- The churn and support figures: see how cancellations and help-desk staffing shape the forecast, so margins are not guesses
- The five-year profit, cash flow and balance sheet: understand how each hire shows up in the numbers, and the year the plan turns a profit
- The downside case: have an answer ready for "what if revenue is 20% short?", along with the steps the founders take in response
If you're planning a software company, read this before you write your own. The company is fictional, so take what fits and change the rest.
In this plan
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Executive Summary
Northwood Gable is a Columbus, Ohio software company that sells online appointment and reservation booking to independent service businesses: salons and barbershops, physical therapy and wellness clinics, fitness and photo studios, and small tour and activity operators. A customer gets a booking page, an embeddable widget for its own website and social profiles, a staff calendar that works in a phone browser, text reminders, and card payments taken at the time of booking. Nadia Sorensen, CEO, and Tomas Vega, CTO, founded the company. The platform opens to paying customers on January 1, 2027 with 20 beta locations.
The company raises $1,475,000: $175,000 from the founders, $700,000 from a lead seed fund, $500,000 from five angel investors and a $100,000 bank term loan. Most of it, $1,376,000, stays in the bank as a reserve because Years 1 and 2 lose money while the team is built. Devices and the office take $38,000. Legal work, payments-compliance advice, partner onboarding and the launch campaign take the remaining $61,000.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $360,200 | $1,524,600 | $3,127,000 |
| Net income after start-up costs | ($689,785) | ($434,751) | $209,283 |
| Closing cash | $753,491 | $299,681 | $485,617 |
Customers pay in four ways: a monthly subscription for each location, a share of card payments processed through the platform, a one-time onboarding fee and an optional text-reminder add-on. The count of live locations grows from 20 at opening to 360 by December 2027 and to 3,100 by the end of Year 5. Net income turns positive in Year 3, at $209,283, and reaches $907,658, a 14.5% net margin, in Year 5. Year 3 is the thin year, and the plan says so in the profit discussion.
A second run of the model takes 20% off every revenue line. With later hiring, no last engineer, smaller marketing from Year 3, a pay cut for the CEO and no second office move, cash stays positive in all five years and every year is worse than the base case.
The pitch is narrow on purpose. The product replaces the phone, the paper appointment book and the direct-message inbox for owners with one to a few locations, and it lets them take deposits so a no-show costs something. Larger suites and general-purpose scheduling tools cover the same ground, and the plan makes no claim that Northwood Gable beats them on features.
What Northwood Gable Is
Legal name: Northwood Gable, Inc., a Delaware corporation with its office in Columbus, Ohio. Founders: Nadia Sorensen (CEO) and Tomas Vega (CTO). Stage: the product is built and in beta with 20 locations. Billing starts on January 1, 2027. Product: a hosted booking system with a booking page, a website widget, a staff calendar, text reminders, deposits and card payments.
The one-line offer
Let an owner who runs on phone calls and message threads take bookings and deposits at any hour, for a flat monthly fee per location.
Four sources of revenue
| Source | How it is priced | Year 1 share of revenue |
|---|---|---|
| Location subscriptions | $49, $99 or $189 a month by tier, $92 blended | 49% |
| Payment processing | A share of card volume, about 0.55% net, $60 a location a month | 32% |
| Onboarding and import | About $150 a new location after waivers | 16% |
| Text reminders and deposits add-on | About $17.50 a month for 40% of locations | 4% |
The Year 1 mix of locations
| Type of location | Share of the 360 live in December 2027 |
|---|---|
| Hair, nail, barber and spa | 45% |
| Physical therapy, chiropractic and wellness clinics | 25% |
| Fitness, yoga, dance and photo studios | 20% |
| Tour, class and activity operators | 10% |
The split is a plan figure. A salon books one chair for 60 minutes. A tour operator sells seats on a departure with a capacity of 14, so the product carries both a staff-and-room calendar and a seats-per-departure calendar.
Where the company aims to be
- 360 live locations by December 2027, up from 20 at opening.
- $1,524,600 of revenue in 2028 and 1,050 locations at the end of that year.
- The first profitable year in 2029, with 1,850 locations.
- 32 people on payroll and 3,100 locations by the end of 2031, with the bank line repaid during that year.
Rules the company works under
Card payments run through a licensed payment partner, and Northwood Gable does not hold customer funds. Whether a revenue-sharing arrangement with a partner triggers registration or money-transmission rules depends on the structure and the state, so counsel confirms the contract before launch. Clinics add a further question. Appointment times and contact details can count as protected health information when a medical practice sends them to a vendor, and a vendor can then be a business associate under federal health-privacy rules. The product therefore keeps clinical notes out of the system and asks clinic customers to sign a business associate agreement where counsel says one applies. Text reminders generally need consent from the person being messaged, and carriers can require the sender to register its messaging program. Counsel confirms both points before the first reminder goes out.
Appointment Software in Central Ohio and Beyond
Independent service businesses book by phone, by direct message, on paper and in free calendar apps. The owner usually does the booking in the gaps between clients. Missed calls are missed bookings, and a no-show leaves an empty chair that is paid for anyway.
The plan does not size the national market with a quoted statistic. The company sells from Columbus through trials on its website, so any independent shop in the country is a possible customer, and early field work stays in Ohio and the neighboring states where Nadia has contacts. Trade associations and distributors reach owners in those states more cheaply than ads do.
What owners already use
| Alternative | What it offers | Why an owner picks it | Where Northwood Gable differs by design |
|---|---|---|---|
| Phone, paper appointment book and message inbox | Free, familiar | No setup | Online booking at any hour, reminders and deposits |
| General-purpose scheduling tools | Calendar links, simple payments | Low entry price, quick start | Staff, room and capacity rules, plus a widget made for service shops |
| All-in-one suites for one trade, such as salon or clinic software | Booking, point of sale, inventory, payroll | One system for everything | Booking only, so setup is quicker and the monthly fee is lower |
| Activity and tour booking systems | Departures, seats, channel connections | Built for tours | A single product that also covers salons, clinics and studios |
| Booking widgets built into website builders | Convenient for an existing site | No second login | Works on any site, with payment and reminder rules the builder lacks |
Each row sketches one kind of tool and how Northwood Gable stacks up. It is not a ranking, and no vendor is named because providers revise plans and prices often. Owners compare features and fees on each provider's own pages.
SWOT
| Strengths | Weaknesses |
|---|---|
| A founder with nine years in multi-site salon operations and a founder who has built scheduling software | Neither founder has run a payments-compliance function |
| Flat per-location pricing that is easy to explain | No brand yet, and every owner starts from a trial |
| 20 beta locations that use the product weekly | Year 1 and Year 2 lose money and draw on the reserve |
| Opportunities | Threats |
|---|---|
| Owners leaving direct-message booking for a system that takes deposits | Larger suites adding free booking to existing plans |
| Referrals from trade associations, accountants and beauty-supply distributors | Payment, privacy and text-message rules tightening |
| A payments share that grows with each customer's volume | High cancellation among very small shops |
The Owners Behind the Calendars
The typical customer is a sole operator or an owner with up to five staff, who answers the phone between clients and loses a few bookings a week to voicemail. Examples include a barbershop with four chairs, a physical therapy clinic with two treatment rooms, a yoga studio with a class timetable and a food-tour operator running two departures a day.
Owners change tools at predictable moments. A busy week of missed calls, a run of no-shows, a staff member leaving with the client list in a personal phone, or a competitor down the street launching online booking can each start a search. Switching is slow for the owner because the appointment book has to be moved, so the company's import service is part of the product.
What an owner asks first is practical. Can clients book at night? Do deposits come out of the client's card at booking? Does a second chair or a new hire mean a new plan? Who answers the phone when the calendar looks wrong on a Saturday? The product, the price list and the support schedule are built around those four questions.
Clinics ask a fifth. Where does the appointment data live, and who can see it? The company answers in writing, and its answer is the reason clinic customers reach a security conversation earlier than salons do.
Trials, Demos and Onboarding
From first visit to a live booking page
A visitor starts a free 14-day trial with an email address and a business name. About half of trials never need a person: the owner builds services, hours and staff in an hour and goes live. The rest book a 20-minute demo with Nadia, and from month 6 with the first account executive. A paid plan starts when the trial ends and the owner has added a card.
The Year 1 funnel
About 385 gross new locations come from roughly 1,750 trial starts, a conversion rate of 22%. The 20 beta locations are not counted in either figure. Cancellations take about 45 locations over the year, so 20 plus 385 less 45 leaves 360 at the end. The 22% rate is a plan figure, and the beta group gives the first test of it.
| Where trials come from | Gross new locations in Year 1 | Share |
|---|---|---|
| Paid search and social ads | 130 | 34% |
| Search and content, unpaid | 105 | 27% |
| Referral partners (associations, distributors, accountants) | 65 | 17% |
| Trial follow-up email and phone | 45 | 12% |
| Trade shows and sponsorships | 40 | 10% |
How prices are set
Three tiers are priced by the number of staff calendars and the features needed. The solo tier at $49 covers one calendar. The studio tier at $99 covers up to five and adds deposits and the website widget. The multi-staff tier at $189 covers unlimited staff and rooms, group classes and seats-per-departure capacity. The blended $92 reflects 40%, 46% and 14% in each tier. The text-reminder add-on at about $17.50 a month sells separately and adds longer reminder sequences and larger deposit rules. List prices hold through Year 1 and rise about $3 a year.
Staying power
At 2.6% monthly churn a location stays about 38 months on average. The plan expects owners who take card payments through the platform and send text reminders to cancel less often, so onboarding steers every new location toward both within the first week.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Locations at year end | 360 | 1,050 | 1,850 | 2,550 | 3,100 |
| Gross new locations after opening | 385 | 885 | 1,165 | 1,202 | 1,160 |
Growth slows after Year 3 because the first wave of independent shops has been reached and cancellations replace a growing share of signings. Year 5 still grows 31%, and the model goes no further.
Where the $207,000 Goes
What Year 1 marketing buys
Year 1 operating marketing is $207,000, or about $538 for each of the 385 gross new locations. A further $28,000 of launch work, funded from the start-up reserve, covers the website, widget demo, sales collateral and first events. The total against Year 1 revenue is large because revenue is still small. The ratio falls to 20% in Year 3 and 11% in Year 5. Cost per new location rises with the years, from $538 to $593, as the easiest prospects sign first. A new location returns about $159 a month in revenue and $133 in gross margin. After the $150 onboarding fee and the $150 sales bonus are counted, marketing repays in under five months of gross margin. That figure leaves out the account executives' base pay.
| Channel | Year 1 spend | What it is for |
|---|---|---|
| Paid search and social ads | $85,000 | Searches like "online booking for salons" and "appointment software for clinics"; about 130 locations |
| Content, search and review listings | $30,000 | Guides on no-show policy, deposits and reminders, plus integration pages; about 105 locations |
| Referral partners | $25,000 | Fees to associations, distributors and accountants who introduce owners; about 65 locations |
| Trade shows and sponsorships | $30,000 | Two regional beauty and wellness shows and chapter events; about 40 locations |
| Email and phone follow-up | $15,000 | Nudges to trial users who have not gone live; about 45 locations |
| Website, brand and demo video | $22,000 | The public site, the widget demo and short walk-through videos used across every channel |
Milestones
- January 2027: 20 beta locations move to paid plans.
- June 2027: 146 locations, first account executive in place.
- September 2027: 252 locations, a regional trade show attended.
- December 2027: 360 locations and about $52,000 of monthly subscription and payment revenue.
Keeping the Calendar Up
The product
Northwood Gable runs one hosted application. Owners and staff use it in a phone browser, with no app-store download, and clients book through a page or a widget that loads inside the owner's own site. The system prevents double booking across staff, rooms and departures, handles time zones for tour operators, sends reminders and holds deposits until the appointment passes. A waiting list refills cancelled slots.
Hosting and cost to serve
The application runs on a major US cloud provider. Hosting and database costs come to about 9% of subscription revenue, near $8 a location a month. Messaging fees are the largest direct cost on the reminder add-on, at 55% of its revenue. The company targets 99.9% availability, a goal that it measures but does not promise customers in writing.
Support
Support is staffed Tuesday through Saturday, which are the days service businesses are busiest, and answers chat and phone. The first reply on chat targets one hour within staffed hours. The ratio runs between one support, onboarding or success employee for every 180 and every 230 locations.
Payments and data
Card details never touch Northwood Gable's servers; the payment partner stores them. The company asks counsel and the partner to confirm what that means for its card-data security obligations. Chargeback losses sit inside the direct costs of payments. Appointment data is encrypted in storage and in transit, access is limited by role, and clinic customers receive a written data-handling summary. The budget includes a security review at launch and annual penetration testing, but no SOC 2 report in the five years. The finance and compliance manager hired in month 37 would price one if clinic customers began requiring it.
The office
About 1,800 square feet in a Columbus office park at roughly $23 a square foot, or $42,000 in Year 1. Most engineers and some support staff work from home part of the week. The company moves to about 2,400 square feet in Year 3 and about 3,200 in Year 4.
Insurance and licenses
Technology errors-and-omissions coverage, cyber liability and general liability cost $14,000 in Year 1 and $36,000 by Year 5. Ohio employers generally buy workers' compensation through the state's bureau rather than a private insurer, and the 27% payroll load includes that premium. The company confirms both points with a broker and the bureau before hiring.
Tools and vendors
A payment partner, a cloud host, a text-message carrier service, email delivery and a support desk tool. The software line starts at $22,000 and reaches $68,000 by Year 5. Each vendor can be replaced, but moving the payment partner would mean re-collecting card details from every customer, which is the hardest switch.
Nadia, Tomas and the Hires Behind Them
Nadia Sorensen, CEO and head of sales
Nadia spent nine years in operations at a regional multi-location hair and spa group in Ohio, ending as the manager responsible for 14 sites and their booking systems. She knows how front desks lose bookings and what an owner will tolerate in a monthly bill. She runs every demo until the first account executive starts in month 6. Her salary is $100,000.
Tomas Vega, CTO and lead engineer
Tomas has twelve years as a software engineer, the last six at a Columbus firm that sells scheduling and billing software to healthcare practices, where he led the team that built appointment reminders. He wrote the first version of the platform. His salary is $125,000.
Where the team is thin
Neither founder has run a payments-compliance program. Neither has led a support team of ten, and both have raised money only from friends and family. Counsel and the payment partner cover compliance until the finance and compliance manager arrives in month 37, the first onboarding and support specialist writes the support playbook, and the seed investors supply fundraising advice.
If one founder is out
Tomas is the only person who understands the full codebase at launch. The full-stack engineer joins in month 2 and works from documented deployment steps, and the repository and cloud accounts are controlled by two administrators. Nadia's demo script, price list and partner contacts live in the shared sales notes.
Board and investors
The board has three seats: the two founders and one director chosen by the lead seed fund. Investors meet quarterly. Ownership percentages are not modeled.
Ownership and the bank
The founders hold their shares alongside a lead seed fund and five angel investors. The $100,000 bank term loan is secured by a personal guarantee from each founder and requires quarterly financial statements. A lender could ask for an SBA guarantee at this size.
The model behind Northwood Gable
Everything below hangs on the number of live locations. Each month-end count is multiplied by a subscription price and a payments share, a one-time onboarding fee is added for every new signing, and cancellations are taken out. Year 1 appears month by month; Years 2 to 5 are annual totals.
Seed round and what it pays for
| Use of funds | Amount |
|---|---|
| Laptops, test phones and tablets, card readers for demos | $24,000 |
| Office build-out and furniture | $14,000 |
| Legal: entity, investor documents, merchant terms, privacy policy, trademark | $21,000 |
| Security review and payments-compliance advice | $9,000 |
| Payment-partner onboarding, business registrations | $3,000 |
| Launch: website, embeddable widget demo, sales collateral, first trade events | $28,000 |
| Operating reserve for the loss-making first year | $1,376,000 |
| Total uses | $1,475,000 |
| Source of funds | Amount |
|---|---|
| Founders (savings) | $175,000 |
| Lead seed fund | $700,000 |
| Five angel investors ($100,000 each) | $500,000 |
| Bank term loan | $100,000 |
| Total sources | $1,475,000 |
The company raises $1,475,000: $175,000 from the two founders, $700,000 from a lead seed fund, $500,000 from five angel investors at $100,000 each and a $100,000 bank term loan. The bank loan is a five-year term at 9.75%, interest only for the first twelve months, and both founders sign personal guarantees. A lender could ask for an SBA guarantee at this size. The rate is an example, not a quote. Equity supplies 93% of the money; a software firm has little collateral to offer a lender. The $1,376,000 reserve dwarfs the $38,000 equipment budget by design: Years 1 and 2 lose $689,785 and $434,751 while engineers, support staff and sales hires are paid ahead of the subscriptions that will carry them. The investors' ownership share is not modeled.
Locations, churn and what each one earns
- The platform opens with 20 beta locations that move to paid plans in January and ends 2027 with 360 live. Year-end counts for the five years are 360, 1,050, 1,850, 2,550 and 3,100. One location is a salon, clinic room, studio or tour desk with its own calendar.
- Cancellations run at 2.6% of locations a month in Year 1, easing to 1.8% by Year 5. Gross signings after opening are 385, 885, 1,165, 1,202 and 1,160, and the locations lost each year are about 45, 195, 365, 502 and 610. Independent service businesses close, merge or switch tools often, so these rates are a planning figure with no outside source.
- Subscriptions average $92 a location each month in Year 1, from three tiers: a solo tier at $49, a studio tier at $99 for up to five staff calendars and a multi-staff tier at $189 for unlimited staff, rooms and tour capacity. About 40%, 46% and 14% of locations sit in each. The blended price rises to $104 by Year 5. The tiers set the price by staff count and features, and deposits come with the studio and multi-staff tiers.
- Payments bring in $60 a location each month in Year 1, rising to $68. The figure rests on 75% of locations taking card payments through the platform, at about $14,500 of monthly volume each, with the company keeping 0.55% after interchange and network fees. Volume per location grows to about $16,500 by Year 5. Northwood Gable would work through a licensed payment partner and would not hold customer funds itself. The revenue share is a plan figure, and the partner agreement and counsel decide what it really is.
- The text-reminder and no-show deposit add-on sells at about $17.50 a month to 40% of locations, which is $7 across all of them. It adds the extended deposit rules and reminder sequences that the tiers leave out. Carrier and messaging fees take 55% of that revenue.
- Each new location pays an onboarding and calendar-import fee that averages $150 after waivers, rising to $170. The list price is about $199, and roughly one setup in four is waived to win the signing. The 20 beta locations pay no fee. Import contractors for messy spreadsheets and paper appointment books cost 30% of the fee, about $45 a location.
- Direct costs total 16.3% of revenue in every year, which holds the Year 1 mix of revenue lines, so gross margin sits at 83.7%. Hosting and the database take 9% of subscriptions, about $8 a location each month. Payment fraud tools, partner fees and chargeback losses take 16% of payment revenue. Onboarding, support and customer-success payroll is not in direct costs. Moving that payroll into cost of service would bring Year 5 gross margin down to near 70%.
- Each hire carries a 27% load for payroll taxes, health coverage, 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 sit on their own line. Account executives earn a $58,000 base plus $150 for each new location they close.
- Marketing costs about $538 per gross new location in Year 1 and rises to about $593 by Year 5, because each new signing comes from a wider and more expensive pool of prospects. Sales bonuses, onboarding labor and account-executive salaries come on top of that figure.
- The company rents about 1,800 square feet in Columbus at roughly $23 a square foot, or $42,000 in Year 1. It moves to about 2,400 square feet in Year 3 ($58,000) and about 3,200 square feet in Year 4 ($80,000). Most engineers and some support staff work from home part of the week. Utilities are separate.
- Receivables average 5 days, because card payments and subscription charges settle fast, and the company pays hosting, messaging and processor bills after about 20 days. Customers pay by card or bank debit, so Northwood Gable does not run invoices and collections.
- The model taxes profits at the 21% federal corporate rate with the Year 1 and 2 losses carried forward, which is why Year 5 is the first year with a tax charge. It uses the carried loss in full, although federal rules can cap how much of a loss offsets a later year's profit, so Years 3 and 4 would carry a small tax in practice. Ohio does not tax corporate income the way most states do and taxes gross receipts instead, and Columbus levies its own city tax on net profits, so the model sets the state rate to zero and leaves both out. The $2,500 to $6,500 a year for filings and payment-program fees does not include them. A tax adviser would confirm the receipts-tax threshold, the city rate and the loss rules before the first filing.
Revenue by source
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Location subscriptions (starter, studio and multi-staff tiers) | $175,200 | $803,700 | $1,705,200 | $2,666,400 | $3,525,600 |
| Payment-processing revenue (net of interchange) | $114,200 | $524,500 | $1,113,600 | $1,742,400 | $2,305,200 |
| Text reminders and no-show deposits add-on | $13,200 | $59,200 | $121,800 | $184,800 | $237,300 |
| Onboarding and calendar-import fees | $57,600 | $137,200 | $186,400 | $198,300 | $197,200 |
| Total revenue | $360,200 | $1,524,600 | $3,127,000 | $4,791,900 | $6,265,300 |
| Growth on prior year | – | 323% | 105% | 53% | 31% |
Subscriptions and payments grow with the number of live locations, and together they supply 80% of Year 1 revenue and 93% of Year 5. Onboarding fees fall from 16% of revenue to 3% as growth slows, so the mix shifts toward revenue that repeats every month. Year 2 growth of 323% comes from a low base: Year 1 starts with 20 locations and averages about 160. Growth then slows to 105%, 53% and 31%.
Year 1 locations and revenue by month
| Month | Location subscriptions (starter, studio and multi-staff tiers) | Payment-processing revenue (net of interchange) | Text reminders and no-show deposits add-on | Onboarding and calendar-import fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $900 | $600 | $100 | $0 | $1,600 | ($74,715) |
| Feb 2027 | $2,700 | $1,700 | $200 | $2,800 | $7,400 | ($69,858) |
| Mar 2027 | $4,500 | $2,900 | $300 | $3,400 | $11,100 | ($66,760) |
| Apr 2027 | $6,700 | $4,400 | $500 | $4,100 | $15,700 | ($62,908) |
| May 2027 | $9,200 | $6,000 | $700 | $4,500 | $20,400 | ($58,972) |
| Jun 2027 | $12,000 | $7,800 | $900 | $5,200 | $25,900 | ($54,367) |
| Jul 2027 | $15,000 | $9,800 | $1,100 | $5,700 | $31,600 | ($49,594) |
| Aug 2027 | $18,200 | $11,900 | $1,400 | $6,100 | $37,600 | ($44,570) |
| Sep 2027 | $21,500 | $14,000 | $1,600 | $6,200 | $43,300 | ($39,797) |
| Oct 2027 | $24,800 | $16,200 | $1,900 | $6,400 | $49,300 | ($34,772) |
| Nov 2027 | $28,200 | $18,400 | $2,100 | $6,500 | $55,200 | ($29,832) |
| Dec 2027 | $31,500 | $20,500 | $2,400 | $6,700 | $61,100 | ($24,891) |
Operating costs are spread evenly over Year 1, so the monthly EBITDA loss shrinks from $74,715 in January to $24,891 in December purely as revenue builds. Real payroll would jump in months 2, 4, 6 and 9 when hires start, and the annual total is the number to trust. No seasonality is modeled. The lowest year-end cash balance in the five years comes in Year 2, at $299,681. Month-end cash in December 2027 is about $745,000.
Who is on payroll, and when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Nadia Sorensen, CEO and head of sales | $100,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Tomas Vega, CTO and lead engineer | $125,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Full-stack engineer | $112,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Onboarding and support specialist | $52,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Account executive (base salary; bonus sits in operating costs) | $58,000 | Month 6 | 1 | 1 | 1 | 1 | 1 |
| Support specialist | $48,000 | Month 9 | 1 | 1 | 1 | 1 | 1 |
| Front-end and widget engineer | $108,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Onboarding specialist (second) | $54,000 | Month 15 | – | 1 | 1 | 1 | 1 |
| Account executive (second) | $58,000 | Month 17 | – | 1 | 1 | 1 | 1 |
| Support specialist (second) | $48,000 | Month 18 | – | 1 | 1 | 1 | 1 |
| Customer success manager | $68,000 | Month 24 | – | 1 | 1 | 1 | 1 |
| Payments and integrations engineer | $122,000 | Month 27 | – | – | 1 | 1 | 1 |
| Support specialist (third) | $48,000 | Month 29 | – | – | 1 | 1 | 1 |
| Account executive (third) | $58,000 | Month 31 | – | – | 1 | 1 | 1 |
| Onboarding specialist (third) | $54,000 | Month 33 | – | – | 1 | 1 | 1 |
| Support specialist (fourth) | $48,000 | Month 36 | – | – | 1 | 1 | 1 |
| Finance and compliance manager | $82,000 | Month 37 | – | – | – | 1 | 1 |
| Partnerships manager (studio groups, clinics and tour operators) | $78,000 | Month 39 | – | – | – | 1 | 1 |
| Quality and release engineer | $102,000 | Month 40 | – | – | – | 1 | 1 |
| Account executive (fourth) | $58,000 | Month 41 | – | – | – | 1 | 1 |
| Support specialist (fifth) | $48,000 | Month 43 | – | – | – | 1 | 1 |
| Data and reporting engineer | $110,000 | Month 44 | – | – | – | 1 | 1 |
| Product designer | $92,000 | Month 46 | – | – | – | 1 | 1 |
| Customer success manager (second) | $68,000 | Month 47 | – | – | – | 1 | 1 |
| Support specialist (sixth) | $48,000 | Month 49 | – | – | – | – | 1 |
| Account executive (fifth) | $58,000 | Month 51 | – | – | – | – | 1 |
| Onboarding specialist (fourth) | $54,000 | Month 53 | – | – | – | – | 1 |
| Customer success manager (third) | $68,000 | Month 54 | – | – | – | – | 1 |
| Support specialist (seventh) | $48,000 | Month 55 | – | – | – | – | 1 |
| Second senior platform engineer | $135,000 | Month 57 | – | – | – | – | 1 |
| Account executive (sixth) | $58,000 | Month 58 | – | – | – | – | 1 |
| Support specialist (eighth) | $48,000 | Month 60 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $528,955 | $903,393 | $1,289,897 | $1,939,713 | $2,614,295 |
Nadia and Tomas start in January. A full-stack engineer joins in month 2, the first onboarding and support specialist in month 4, an account executive in month 6 and a second support specialist in month 9, which makes six people at the end of Year 1. Year 2 takes the team to 11, Year 3 to 16, Year 4 to 24 and Year 5 to 32. Support, onboarding and customer-success hires follow location counts at roughly one for every 180 to 230 locations. Engineers follow the roadmap instead: a front-end widget engineer in month 14, a payments and integrations engineer in month 27 and a quality and release engineer in month 40. Sales bonuses sit in operating costs, so the account-executive wage in the table is the base only. Nadia's $100,000 and Tomas's $125,000 are paid from month 1, so every profit figure here is already net of both founders' pay.
Profit and loss, five years
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $360,200 | $1,524,600 | $3,127,000 | $4,791,900 | $6,265,300 |
| Direct costs (cloud hosting, text-message fees, processor and fraud fees, import contractors) | ($58,580) | ($247,949) | ($508,550) | ($779,316) | ($1,018,937) |
| Gross profit | $301,620 | $1,276,651 | $2,618,450 | $4,012,584 | $5,246,363 |
| Payroll incl. on-costs | ($528,955) | ($903,393) | ($1,289,897) | ($1,939,713) | ($2,614,295) |
| Rent | ($42,000) | ($43,300) | ($58,000) | ($80,000) | ($82,400) |
| Utilities | ($4,200) | ($4,300) | ($5,600) | ($7,400) | ($7,700) |
| Marketing | ($207,000) | ($469,000) | ($636,000) | ($683,000) | ($688,000) |
| Insurance | ($14,000) | ($18,000) | ($24,000) | ($30,000) | ($36,000) |
| Professional fees | ($18,000) | ($22,000) | ($28,000) | ($34,000) | ($40,000) |
| Software subscriptions | ($22,000) | ($32,000) | ($44,000) | ($56,000) | ($68,000) |
| Sales bonuses on new locations | ($58,000) | ($133,000) | ($175,000) | ($180,500) | ($174,000) |
| Penetration testing, monitoring and security tooling | ($6,000) | ($10,000) | ($14,000) | ($18,000) | ($22,000) |
| Refunds and bad debt | ($3,000) | ($8,000) | ($14,000) | ($20,000) | ($26,000) |
| Equipment replacement and new-hire kit | $0 | ($10,000) | ($9,000) | ($16,000) | ($14,000) |
| Recruiting, phones, travel and two trade shows | ($7,000) | ($11,000) | ($14,000) | ($17,000) | ($19,000) |
| State and city business filings, payment-program fees | ($2,500) | ($3,500) | ($4,500) | ($5,500) | ($6,500) |
| Annual pay raises (3% a year) | $0 | ($27,102) | ($78,555) | ($179,864) | ($328,117) |
| EBITDA | ($611,035) | ($417,944) | $223,898 | $745,607 | $1,120,351 |
| Depreciation | ($8,000) | ($8,000) | ($8,000) | ($8,000) | ($2,000) |
| Interest | ($9,750) | ($8,807) | ($6,616) | ($4,201) | ($1,541) |
| Income tax | $0 | $0 | $0 | $0 | ($209,152) |
| Net income before start-up costs | ($628,785) | ($434,751) | $209,283 | $733,406 | $907,658 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($61,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($689,785) | ($434,751) | $209,283 | $733,406 | $907,658 |
Before start-up costs Year 1 loses $628,785; after them the loss is $689,785. Year 2 loses $434,751 because hiring runs ahead of revenue. Year 3 is the first profitable year, at $209,283 and a 6.7% net margin, and profit then climbs to $733,406 in Year 4 and $907,658 in Year 5, a 14.5% net margin. Payroll including pay raises takes 44% of revenue in Years 3 and 4 and 47% in Year 5. Marketing falls from 20% of revenue in Year 3 to 14% in Year 4 and 11% in Year 5, which drives most of the margin gain. Year 3 has little room. A subscription shortfall of about 13% would erase that year's profit, and the model does not offset it with any change in spending. Income tax first appears in Year 5 ($209,152), once the early losses are used up.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($683,509) | ($432,325) | $209,611 | $733,435 | $902,604 |
| Devices and office build-out | ($38,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,475,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($21,484) | ($23,675) | ($26,090) | ($28,750) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $753,491 | ($453,809) | $185,936 | $707,345 | $873,854 |
| Closing cash | $753,491 | $299,681 | $485,617 | $1,192,963 | $2,066,816 |
Year-end cash stays above zero throughout, with the low point at the close of Year 2 ($299,681). Nothing is paid out to owners. Loan principal begins to fall in Year 2 and is cleared during Year 5. The model is annual after Year 1, so a low point inside Year 2 or Year 3 could sit under the year-end figure.
Balance sheet at each year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $753,491 | $299,681 | $485,617 | $1,192,963 | $2,066,816 |
| Accounts receivable | $4,934 | $20,885 | $42,836 | $65,642 | $85,826 |
| Devices and office build-out (net) | $30,000 | $22,000 | $14,000 | $6,000 | $4,000 |
| Total assets | $788,425 | $342,566 | $542,453 | $1,264,605 | $2,156,642 |
| Accrued hosting, messaging and processor bills | $3,210 | $13,586 | $27,866 | $42,702 | $55,832 |
| Bank term loan | $100,000 | $78,516 | $54,840 | $28,750 | $0 |
| Paid-in capital | $1,375,000 | $1,375,000 | $1,375,000 | $1,375,000 | $1,375,000 |
| Retained earnings | ($689,785) | ($1,124,536) | ($915,253) | ($181,847) | $725,810 |
| Total liabilities and equity | $788,425 | $342,566 | $542,453 | $1,264,605 | $2,156,642 |
Break-even, margins and loan coverage
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -169.6% | -27.4% | 7.2% | 15.6% | 17.9% |
| Net margin (before start-up costs) | -174.6% | -28.5% | 6.7% | 15.3% | 14.5% |
| Payroll incl. pay raises as share of revenue | 147% | 61% | 44% | 44% | 47% |
| Revenue per full-time equivalent at year end | $60,033 | $138,600 | $195,438 | $199,663 | $195,791 |
| Average monthly revenue | $30,017 | $127,050 | $260,583 | $399,325 | $522,108 |
| Monthly revenue needed to cover operating costs | $90,826 | $168,643 | $238,301 | $325,124 | $410,613 |
| Debt service cover (EBITDA / interest + principal) | -62.7x | -13.8x | 7.4x | 24.6x | 37.0x |
Year 1 averages $30,017 of monthly revenue against the $90,826 needed to cover operating costs, and Year 2 averages $127,050 against $168,643. Year 3 clears the bar with $260,583 against $238,301. Debt service coverage is negative while the company loses money, then reaches 7.4x in Year 3 and 37.0x in Year 5.
If bookings revenue comes in 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $288,160 | $1,219,680 | $2,501,600 | $3,833,520 | $5,012,240 |
| Net income before start-up costs | ($651,509) | ($511,449) | $32,485 | $441,020 | $544,023 |
| Net income after start-up costs | ($712,509) | ($511,449) | $32,485 | $441,020 | $544,023 |
| Closing cash | $731,111 | $201,719 | $212,391 | $628,945 | $1,140,575 |
Here every revenue line runs 20% below plan for five years, as if signings and prices both disappointed while churn held. Management answers in six ways. Hires from month 13 onward are pushed back four months, the second senior platform engineer never arrives, marketing is cut 20% from Year 3, Nadia takes a 20% pay cut to $80,000, sales bonuses and refund costs shrink with revenue, and the company stays in its Year 3 office. Owners take nothing out. Under those measures the lowest year-end cash is $201,719, in Year 2, and equity at the end of Year 1 is $662,491. Profit and closing cash trail the base case in each year. Year 1 loses $712,509 and Year 2 loses $511,449. Year 3 turns a $32,485 profit instead of the base $209,283, and Year 5 reaches $544,023 against $907,658. The Year 2 low of $201,719 covers about one month of Year 2 costs, so the board would slow hiring well before reaching it. Only revenue is cut here. Churn and serving costs stay as planned, and a downturn driven by cancellations would bite harder, since each lost location must be replaced at full acquisition cost. If management did nothing, cash would go negative in Year 2 and stay there to Year 5.
Sources
- Ohio Department of Taxation, commercial activity tax and corporate income tax pages. Used for the statement that Ohio has no corporate income tax and instead taxes gross receipts. The page could not be opened for this plan, so the text hedges the point and leaves rates and thresholds out.
- Ohio Bureau of Workers' Compensation. Used for the statement that Ohio employers generally buy workers' compensation through the state bureau. The page could not be opened for this plan, so the text asks for confirmation.
- U.S. Department of Health and Human Services, HIPAA guidance on business associates. Used for the point that a vendor holding appointment data for a medical practice may be a business associate. The page could not be opened for this plan, and counsel decides whether the rule applies.
- Payment Card Industry Security Standards Council, PCI DSS documents. Used for the point that the payment partner stores card data and that the company's own obligations need confirmation. The page could not be opened for this plan, so no requirement is quoted.
- Federal Communications Commission and CTIA guidance on text-message consent and carrier program registration. Used for the point that reminders need consent and registration. The pages could not be opened for this plan, so no rule is cited by number.
- Payment-facilitator and money-transmission rules vary by state. No regulator page could be opened for this plan, and the plan makes no claim about how Northwood Gable would be classified.
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