Looking for a telecom wireless business plan? You're in the right place.
A wireless reseller buys airtime wholesale and sells it a line at a time, so the questions a lender or investor asks are narrow and numerical. How many lines must sign before the margin on airtime covers a support team? What happens to cash when customers pay for phones over twelve months but the distributor wants payment in thirty days? How fast can lines leave before growth stalls? A generic template has no answers to these.
This article walks through a complete sample plan for a wireless reseller serving small businesses and fleets in Atlanta, Georgia, section by section. It covers the executive summary, the SWOT analysis and, in particular, the five-year financials, ending with a downside case and the steps the owner takes in response.
Here's what you'll take away:
- The executive summary: see how to state a thin-margin business on one page, with the raise, the loss years and the date profit arrives
- The line roll-forward: learn how gross additions, churn and year-end lines fit together, so your growth figure can be checked
- The unit economics: find out what a line, a phone, a tracker and a protection plan each earn, and why the phone is the smallest earner
- The marketing budget: see what a reseller might pay to win a line, and which channels supply the 2,920 lines won in Year 1
- The support staffing ratio: work out how many lines one agent can carry and when each hire is due
- The cash plan: understand how a device-inventory credit line and an equity reserve carry the company through two loss-making years
- The downside case: have an answer ready for "what if sales come in a fifth short?", with the specific hires and costs the owner cuts
If you're planning a wireless resale business, 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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The Offer in One Page
Westgate Vale, Inc. is a Georgia wireless reseller that opens in Atlanta in January 2027. It buys airtime wholesale from a host carrier through a network enabler, then sells mobile lines to businesses with 5 to 150 employees, with phones, accessories, a device protection plan and fleet vehicle tracking attached. Founder Denise Okafor holds 52% of the shares. Two angel investors hold the other 48%.
The company raises $1.35 million: $200,000 from Denise, $900,000 from the two investors and a $250,000 device-inventory credit line. Most of the money, $989,000, stays in the bank as a reserve. Opening stock takes $150,000, platform integration and licensing take $56,000, a lab and fit-out take $55,000, legal and regulatory work takes $48,000, and the launch campaign takes $52,000.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,694,598 | $3,365,575 | $5,640,859 |
| Net income after start-up costs | ($454,570) | ($244,683) | $112,062 |
| Closing cash | $623,539 | $259,537 | $219,370 |
The company opens with 450 lines on signed letters of intent and has 3,080 in service by December 2027. Each line earns about $18.50 a month after wholesale airtime. Support, sales and billing staff cost more than the lines earn until the company averages about 6,000 lines, which happens during Year 3, so the first two years lose money and the first full-year profit arrives in Year 3.
A second run takes 20% off every revenue line. With later hires, four positions left unfilled, a pay cut for Denise, tighter collections and a smaller opening stock order, cash stays positive in all five years, and the Year 3 profit shrinks to $28,796.
The pitch is narrow. Business customers get one bill for every phone and tracker, one support number staffed in Atlanta, and phones financed over twelve months, all from a company small enough that the owner knows each account.
What Westgate Vale Resells
Legal name: Westgate Vale, Inc., a Georgia corporation. Owners: Denise Okafor (52%) and two angel investors (48%). Premises: a 4,500-square-foot flex unit in northwest Atlanta, with offices, a stockroom and a provisioning bench. Opening date: January 2027. Stage: pre-launch, with 450 lines on signed letters of intent. Signing the host-carrier agreement is a condition of opening.
Five lines on every invoice
| Product | How it is priced | Share of Year 1 revenue |
|---|---|---|
| Monthly service plans | $42 a line on average | 52% |
| Devices, with 12-month installment plans | About $620 a device | 29% |
| Accessories | About $90 per device sold | 4% |
| Device protection and financing fees | $10 a line a month | 5% |
| Fleet tracking add-on | $25 a vehicle a month | 10% |
Goals through 2028
- 3,080 lines in service by December 2027, up from 450 at opening.
- 4,700 lines by the end of 2028, with monthly revenue averaging about $280,000 through that year.
- A profit for the full year 2029, when average monthly revenue passes the roughly $439,000 break-even level.
- Churn at or below 1.5% of lines a month throughout.
Where the rules sit
Resale of wireless service is regulated, and the rules turn on how the company is structured. Westgate Vale's counsel confirms before launch whether the company files with the FCC, contributes to the Universal Service Fund directly or through its host carrier, and handles customer-data rules for call and usage records, emergency-calling duties and number-porting obligations. Georgia registration and the tax treatment of device installments and protection plans are also for counsel and an accountant. Surcharges and taxes collected from customers are passed on and sit outside revenue. None of these points is stated here as settled fact, and any of them can change the cost base.
Atlanta's Business Phone Bills
Who buys
Atlanta has contractors, delivery firms, home-service companies, clinics, schools and property managers whose people work away from a desk. Each pays for a bundle of lines, and many buy from a national carrier's business channel or a local dealer. The plan does not quote a count of metro firms. The target is narrower: about 220 accounts by the end of 2027 and about 907 by 2031, at roughly 14 lines each.
What a line is worth
At a $42 average price and a 56% airtime and platform cost, a line earns about $18.50 a month. The tracker adds about $15.50 on a vehicle, and the protection plan adds about $6.20. A phone sold at a 10% margin earns about $62 once.
| Item | Monthly price or unit price | Direct cost | Margin |
|---|---|---|---|
| Service line | $42.00 | $23.52 | $18.48 a month |
| Vehicle tracker | $25.00 | $9.50 | $15.50 a month |
| Protection and financing fee | $10.00 | $3.80 | $6.20 a month |
| Phone, per unit | $620 | $558 | $62 once |
| Accessories, per device sold | $90 | $40.50 | $49.50 once |
Where else a business could buy
| Alternative | What it offers | Why a business picks it | Where Westgate Vale differs by design |
|---|---|---|---|
| National carriers' business channels | Network, plans and devices from one supplier | Brand, coverage and scale | One local contact, pooled billing, trackers and financing in one agreement |
| Authorized dealers and wireless agents | Local sales of carrier plans | A face they know, with carrier promotions | Westgate Vale owns the billing and support instead of passing the customer back to the carrier |
| Other business-focused resellers | Discounted lines on a host network | Lower price | Fleet tracking and device installment plans in the bundle |
| IT managed-service providers | Lines bundled with device management | One IT vendor | A specialist support desk for phones and vehicles |
| Consumer plans bought on a card | Cheap lines with no contract | Price and speed | Invoicing, controls and one bill for the whole fleet |
Each row describes a type of supplier. It does not rank anyone, and no named provider's prices are quoted because they change often.
SWOT
| Strengths | Weaknesses |
|---|---|
| A founder with 13 years in wireless business sales and 450 lines on letters of intent | One host carrier supplies every line |
| Add-ons that earn more per month than the phone does | Thin margin on devices, with credit risk on installments |
| A small support team that answers every call from Atlanta | A loss in both of the first two years |
| Opportunities | Threats |
|---|---|
| Fleet owners who want trackers and lines on one bill | The host carrier raising wholesale rates or reclaiming accounts |
| Referrals from IT firms, dealers and insurance brokers | National carriers discounting lines to hold small accounts |
| Installment financing that lets a small firm refresh phones | Fee and tax changes that add cost per line |
Who Signs the Wireless Contract
The office manager at a 10-to-60-person firm
The buyer is usually the owner or an office manager who inherited the phone bill. It runs from 5 to 25 lines across several plans and a stack of device invoices nobody has reconciled.
The fleet manager at a field business
A landscaping, HVAC or delivery firm may run 30 to 150 lines and a vehicle for each driver. The manager wants to know where trucks are, who has gone over the data limit and which phones are lost.
What sets off a switch
A device refresh that costs a few thousand dollars at once, a bill that doubled after a promotion ended, a driver whose phone failed on a job, or a contract that comes up for renewal.
What the buyer asks the supplier
- One bill, with lines grouped by department or vehicle.
- A person who answers the phone.
- A fixed price for twelve months.
- Phones that work on day one, with numbers ported without a gap.
From Quote to Port-In
How a sale moves
A prospect gets a coverage check and a quote within two working days. Signing is followed by a device order, a port-in of every number, and a switch-over date that suits the customer. The plan allows about two weeks from signature to all lines live. Denise sells alongside the first account executive in Year 1.
The 2027 pipeline
Of the 3,370 gross lines added in Year 1, 450 are on letters of intent signed before opening. The other 2,920 come from about 700 quotes, a 30% close rate and about 14 lines per account, which is about 209 new accounts.
| Source of lines won after launch | Lines | Share |
|---|---|---|
| Referral partners (dealers, IT firms, insurance brokers) | 800 | 27% |
| Account-executive outbound calls and visits | 700 | 24% |
| Search and the website | 650 | 22% |
| Fleet-manager outreach | 450 | 15% |
| Trade associations and events | 320 | 11% |
Monthly additions peak near 300 lines in spring 2027, when the founder's own network converts, and ease to about 200 a month by December. They average about 190 a month in 2028, then rise to about 340 a month in 2029. Three changes drive the step up. The fleet specialist has had a year of fleet pipeline, the third account executive is fully ramped, and the marketing manager, who starts in month 26, runs the referral and association programs. The plan prices that at $30,000 more marketing and one more manager.
Line roll-forward
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Lines at start of year | 0 | 3,080 | 4,700 | 7,700 | 10,300 |
| Gross additions | 3,370 | 2,320 | 4,116 | 4,220 | 4,470 |
| Lines lost to churn | 290 | 700 | 1,116 | 1,620 | 2,070 |
| Lines at year end | 3,080 | 4,700 | 7,700 | 10,300 | 12,700 |
Why lines leave
At 1.5% a month, the company loses 700 lines in Year 2 and 2,070 in Year 5, so by Year 5 nearly half of gross additions only replace lines that left. The plan treats this as the main sales cost. Departures come from moves, closures and price shopping at renewal, in proportions the plan does not estimate. Fleet accounts may stay longer because a tracker adds a reason to remain, but the model applies one churn rate to every account. A rate of 2% a month would remove another 233 lines in Year 2, 372 in Year 3 and 690 in Year 5, and each of those lines would have to be won again.
Paying for Each New Line
What the budget buys
Year 1 marketing is $172,000: $52,000 of launch work paid from start-up capital and $120,000 of operating spend. That is 10.1% of Year 1 revenue and falls to 3.1% by Year 3 and 2.3% by Year 5. Against the 2,920 lines won after launch, each line costs about $59, or about $825 an account at 14 lines. Sales payroll is on top of that.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, brand and partner kit (launch) | $34,000 | A quote request page, coverage checker and printed packs for dealers and IT firms |
| Launch events and trade shows (launch) | $18,000 | First meetings with fleet and facilities managers |
| Referral partner payouts | $26,000 | A payout on each live line; about 800 lines |
| Search and local ads | $30,000 | Searches such as "business cell plans Atlanta" and "fleet phone plans"; about 650 lines |
| Trade associations and chamber memberships | $14,000 | Contractor and facilities groups; about 320 lines |
| Fleet-manager outreach | $18,000 | Direct mail and professional-network messages; about 450 lines |
| Content and email | $12,000 | Contract-renewal and device-refresh reminders |
| Customer referral credits | $20,000 | A bill credit for an introduction that signs |
Milestones
- January 2027: 450 lines on letters of intent move over once the host-carrier agreement is signed.
- June 2027: 1,820 lines in service.
- September 2027: 2,540 lines, and the first new-phone launch season for device sales.
- December 2027: 3,080 lines, 900 vehicles tracked and $222,104 of monthly revenue.
Behind the Support Queue
The northwest Atlanta unit
The company leases about 4,500 square feet of flex space at roughly $22 a square foot, which comes to $99,000 in Year 1. It holds offices, a stockroom with racking and a provisioning bench where phones are set up and tested before they ship. In Year 4 the company moves to about 6,000 square feet, at $140,000 a year.
What Westgate Vale runs and what it buys
The host carrier provides the radio network. A network enabler supplies SIM provisioning, rating and billing. Westgate Vale owns the customer, the price, the invoice and the support desk. It also owns the credit risk on installment plans and all device logistics.
The host-carrier agreement
Wholesale terms are not public, and this plan does not state the real market rate. The plan prices airtime and platform fees at 56% of service revenue. The contract is expected to carry a monthly minimum, volume tiers and a term of several years. If the opening months fall below the minimum, the shortfall would cost more than the 56% figure allows. Counsel reviews the contract for price-change rights, traffic-priority language and what happens to accounts if the agreement ends. This is the largest single risk in the plan.
Support, staffed by lines per agent
Agents work weekdays with an after-hours line for fleet drivers. The plan holds one agent to roughly 1,500 lines: 1,540 at the end of Year 1, then 1,567, 1,540, 1,471 and 1,588 at the end of Years 2 to 5. The operations lead takes escalations until the third agent starts in month 14. A self-service portal for plan changes, usage and tracker views goes live in Year 2 and is what keeps the ratio steady as lines grow.
Billing, device logistics and credit control
The operations lead runs billing in Year 1, and a billing and provisioning specialist joins in month 30 as invoiced accounts pass 400. The device logistics coordinator receives, configures and ships phones, and handles returns. The credit analyst starts in month 12, once enough installment balances have built, and checks each account before a phone ships on installments. In Year 5 device, accessory and tracker stock turns about six times a year on cost. The balance sheet carries $279,736 of stock and $905,905 of receivables.
Fitting trackers
Most trackers plug into the vehicle's diagnostic port and the customer fits them. Hard-wired units on heavy vehicles go to a local installer, paid per job and billed through to the customer.
Systems
A CRM, a help desk with call recording, the enabler's billing portal, a mobile device management console and the tracker vendor's portal. Software spend grows from $46,000 in Year 1 to $146,000 in Year 5.
Insurance and compliance
General liability, cyber, errors and omissions, property cover for the stockroom and workers' compensation cost $30,000 in Year 1. Regulatory filings, licenses and carrier compliance cost another $12,000. Counsel confirms the list before opening.
Denise Okafor and the Bench
Denise Okafor, founder and chief executive
Denise spent seven years in the Atlanta business-sales team of a national carrier and six at an authorized dealer, where she ran accounts of 15 to 80 lines. She holds a business degree from a Georgia university. Her $200,000 comes from savings and a retirement-plan rollover that her adviser has reviewed. The 450 lines on letters of intent come from customers who asked to follow her, and counsel has reviewed her former employers' non-solicitation terms.
Where the team is thin
Three gaps stand out. Denise has not negotiated a wholesale agreement, has not run credit decisions on installment plans, and has not managed a company with a general ledger. Telecom counsel and an adviser who ran a regional reseller handle the first, the credit analyst handles the second, and the controller starts in month 20.
If Denise is out
The operations and billing lead holds the billing platform, the host-carrier contacts and the day-to-day desk. A written continuity plan lists enabler and carrier contacts, and key-person life cover is bought separately.
Advisers
A telecom attorney on retainer, a CPA firm that handles the surcharge filings, and a former reseller executive who meets Denise each quarter to review churn and wholesale terms.
Ownership and the bank
Denise holds 52% and the two investors hold 48%. The credit line carries Denise's guarantee and a minimum-liquidity test of $125,000, tested at each year end. The base case clears it, with $219,370 at the end of Year 3, its lowest point. The downside run ends Year 3 at $154,550, which clears the test by $29,550.
The Numbers: Lines, Margin and Cash
The forecast runs five years: 2027 month by month, 2028 to 2031 as annual totals. Revenue is built from lines in service, a monthly price per line, devices sold and vehicles tracked, so the P&L can be traced to those counts. Every price, cost rate and count below is a figure this example sets for itself.
What the raise pays for
| Use of funds | Amount |
|---|---|
| Opening stock of phones, tablets and trackers | $150,000 |
| Offices, stockroom racking, provisioning and testing lab, laptops | $55,000 |
| Legal and regulatory: carrier contract review, entity set-up, CPNI and tax-filing set-up | $48,000 |
| Platform integration and onboarding with the network enabler, business licenses | $56,000 |
| Launch: website, brand, partner kit and first campaigns | $52,000 |
| Cash reserve to carry the plan to profit | $989,000 |
| Total uses | $1,350,000 |
| Source of funds | Amount |
|---|---|
| Denise Okafor's savings and rollover | $200,000 |
| Two angel investors | $900,000 |
| Device-inventory credit line | $250,000 |
| Total sources | $1,350,000 |
Equity supplies $1.1 million of the $1.35 million (81%): $200,000 from Denise Okafor and $900,000 from two angel investors. The other $250,000 is a device-inventory credit line at 10%, interest only for twelve months and then repaid over 48 months. The rate is a placeholder and not a lender quote. The line is secured on stock and receivables, which together come to $319,845 at the end of Year 1, and it carries Denise's personal guarantee. Stock takes $150,000 of the money on day one. The $989,000 reserve is the largest use of funds because the company loses money for two years: wholesale airtime is paid from the first day while revenue builds over a year.
Planning figures behind the forecast
- Lines in service. 450 lines are signed on letters of intent before opening and convert once the host-carrier agreement is in place, and 3,080 are active by December 2027. Year-end counts after that are 4,700, 7,700, 10,300 and 12,700. At about 14 lines per account (small offices run 4 to 12, fleets 30 or more), that is roughly 220 accounts at the end of Year 1 and 907 at the end of Year 5.
- Churn. 1.5% of lines leave each month, which removes 290 lines in Year 1 and 2,070 in Year 5. Gross additions of 3,370, 2,320, 4,116, 4,220 and 4,470 lines over the five years replace them and deliver the growth. The same rate applies to every account type in every year.
- Service price and wholesale cost. The average line brings $42 a month in Year 1, rising 2% a year to $45.50 in Year 5. Host-carrier airtime and the network enabler's platform and billing fees take 56% of service revenue, or $23.52 a line in Year 1. Wholesale terms are not public, so the rate is a planning figure; a real agreement may price airtime on tiers and may carry a monthly minimum.
- Devices and accessories. In Year 1 only 16% of new lines buy a phone from the company, because the opening customers port in devices they own; that share rises to 25% in Year 2 and 28% in Year 3, then holds at 30%. Another 1.1% of lines upgrade through the company each month, about 13% a year, and the rest of the base keeps its phones or buys elsewhere. About 790 devices sell in Year 1 and 2,860 in Year 5, at an average of $620 rising to $635. Cost is 90% of the price, so a phone earns about $62. Cases, chargers and vehicle mounts add $90 per device sold at a 45% direct cost. In 2027 unit sales run 10% to 30% above trend from September to December, when new phones launch and fleet budgets turn over, and 5% below in February, June and July; later years are spread evenly.
- Device financing and protection. Half of devices are sold on 12-month installment plans with no deposit, and the rest are paid on delivery. Worked outside the model, the unpaid part of those plans comes to roughly $130,000 at the end of Year 1, inside receivables of $148,568. A protection and financing add-on reaches 45% of lines in Year 1 (phased in over the year) and 52% by Year 4. The company keeps $10 per line per month before a 38% direct cost for the administrator and claims; administrators and insurers often keep a larger share, which would lower that margin. How such a program is structured affects licensing, and counsel decides that before launch.
- Fleet tracking. A vehicle tracker add-on reaches 900 vehicles in December 2027, 29% of lines, and 4,400 in Year 5, 35% of lines. The fee is $25 per vehicle per month, rising to $27, with a 38% direct cost for the tracking platform license and hardware subsidy. Most trackers plug into the vehicle's diagnostic port and the customer fits them; hard-wired units on heavy vehicles go to a local installer, paid per job and billed through.
- Direct costs. The engine applies the Year 1 blend of direct costs to every year, 62.8% of revenue. As device sales shrink from 29% of revenue to 18% and the add-ons grow, the true blend would improve. Priced by product, gross margin would be about 40% in Year 3 and 42% in Year 5 against the model's 37.2%, which makes the Year 3 profit a floor: the difference is about $160,000 of gross profit in that year. The model takes no credit for it.
- Collections and stock. Receivables average 32 days of revenue and cover installment balances and open fleet invoices; service lines bill in advance by card or bank debit. The later years are conservative, because installment balances grow more slowly than revenue. Carrier and distributor invoices are paid in about 32 days. Stock is the $150,000 opening purchase plus 2% of annual direct costs, which gives $171,277 at the end of Year 1 and $279,736 at the end of Year 5.
- Bad debt and fees. The allowance runs from $14,000 in Year 1 to $86,000 in Year 5, or 0.8% of Year 5 revenue, and sits mainly on installment plans and invoiced fleet accounts. Card and bank-debit fees grow from $9,000 to $50,000. Surcharges and taxes that the company collects and passes on are left out of revenue.
- Payroll. Salaries carry a 27% load for payroll taxes, health cover, workers' compensation and a retirement match. Account executives are shown at $80,000 of target pay, base plus commission. Pay rises of 3% a year start in Year 2 and are charged on their own line. No published wage survey was opened for this example, so the salaries are the plan's own figures.
- Premises and tax. The 4,500-square-foot flex unit is set at about $22 a square foot a year, or $99,000, which a local broker would need to confirm. The move to 6,000 square feet in Year 4 brings rent to $140,000. The model taxes the company at the 21% federal rate and a 5.2% Georgia planning rate after loss carry-forward; both rates can change, so confirm them with an adviser.
Revenue by product
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Per-line monthly service plans | $885,885 | $1,997,904 | $3,251,280 | $4,816,800 | $6,279,000 |
| Device sales and financing | $491,219 | $677,989 | $1,231,800 | $1,546,020 | $1,815,465 |
| Accessories | $71,307 | $98,418 | $177,379 | $220,860 | $257,310 |
| Device protection and financing fees | $82,332 | $224,064 | $372,000 | $561,600 | $717,600 |
| Fleet tracking add-on | $163,855 | $367,200 | $608,400 | $922,200 | $1,263,600 |
| Total revenue | $1,694,598 | $3,365,575 | $5,640,859 | $8,067,480 | $10,332,975 |
| Growth on prior year | – | 99% | 68% | 43% | 28% |
Monthly service plans carry 52% of Year 1 revenue and 61% of Year 5 revenue. Device sales are the second line in Year 1 at 29% and fall to 18% by Year 5, while the two add-ons together rise from 15% to 19%. The mix matters more than the total: a phone earns about $62 once, and a line earns about $18.50 of service margin every month.
Month by month in 2027
| Month | Per-line monthly service plans | Device sales and financing | Accessories | Device protection and financing fees | Fleet tracking add-on | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|
| Jan 2027 | $17,955 | $44,640 | $6,480 | $810 | $3,287 | $73,172 | ($47,318) |
| Feb 2027 | $24,150 | $27,112 | $3,936 | $1,449 | $5,114 | $61,761 | ($51,565) |
| Mar 2027 | $35,280 | $33,592 | $4,876 | $2,293 | $7,159 | $83,200 | ($43,585) |
| Apr 2027 | $47,040 | $35,918 | $5,214 | $3,289 | $9,205 | $100,666 | ($37,084) |
| May 2027 | $58,800 | $38,244 | $5,552 | $4,435 | $11,250 | $118,281 | ($30,527) |
| Jun 2027 | $70,560 | $38,542 | $5,595 | $5,733 | $13,295 | $133,725 | ($24,779) |
| Jul 2027 | $81,900 | $38,867 | $5,642 | $7,114 | $15,195 | $148,718 | ($19,198) |
| Aug 2027 | $92,400 | $41,089 | $5,964 | $8,561 | $16,948 | $164,962 | ($13,152) |
| Sep 2027 | $102,060 | $47,263 | $6,861 | $10,058 | $18,555 | $184,797 | ($5,769) |
| Oct 2027 | $110,880 | $45,037 | $6,538 | $11,590 | $20,016 | $194,061 | ($2,320) |
| Nov 2027 | $118,860 | $48,744 | $7,076 | $13,140 | $21,331 | $209,151 | $3,296 |
| Dec 2027 | $126,000 | $52,171 | $7,573 | $13,860 | $22,500 | $222,104 | $8,118 |
Revenue passes $200,000 a month in November and reaches $222,104 in December. EBITDA improves every month in this view, from a loss of $47,318 in January to a profit of $8,118 in December, and the year as a whole loses $263,884. The view spreads annual costs evenly, so the step-up in payroll toward year end is not shown, and 2028 averages a loss of about $17,700 a month. The device line carries a September bump from new-phone launches, and another from November as fleet budgets turn over.
Payroll and the support ratio
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and chief executive | $135,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Operations and billing lead | $82,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Account executive 1 | $80,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Support agent 1 | $44,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Device logistics coordinator | $42,000 | Month 5 | 1 | 1 | 1 | 1 | 1 |
| Support agent 2 | $44,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Account executive 2 | $80,000 | Month 11 | 1 | 1 | 1 | 1 | 1 |
| Credit and collections analyst | $56,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Fleet solutions specialist | $74,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Support agent 3 | $44,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Controller | $88,000 | Month 20 | – | 1 | 1 | 1 | 1 |
| Account executive 3 | $80,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Marketing manager | $72,000 | Month 26 | – | – | 1 | 1 | 1 |
| Support agent 4 | $44,000 | Month 27 | – | – | 1 | 1 | 1 |
| Billing and provisioning specialist | $52,000 | Month 30 | – | – | 1 | 1 | 1 |
| Support agent 5 | $44,000 | Month 34 | – | – | 1 | 1 | 1 |
| Account executive 4 | $80,000 | Month 38 | – | – | – | 1 | 1 |
| Warehouse and returns clerk | $40,000 | Month 41 | – | – | – | 1 | 1 |
| Support agent 6 | $44,000 | Month 41 | – | – | – | 1 | 1 |
| Support agent 7 | $44,000 | Month 47 | – | – | – | 1 | 1 |
| Support agent 8 | $44,000 | Month 54 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $501,650 | $932,180 | $1,261,110 | $1,521,037 | $1,644,227 |
The company opens with Denise and the operations and billing lead, and adds an account executive and the first support agent in month 2. A device logistics coordinator joins in month 5, the second support agent in month 8, a second account executive in month 11, and the credit and collections analyst in month 12, once installment balances start to build. The fleet solutions specialist arrives in month 13. Eight people are on payroll at the end of Year 1, 12 at the end of Year 2, 16 at the end of Year 3, 20 at the end of Year 4 and 21 in Year 5. Support agents are the biggest group: 2, 3, 5, 7 and 8 at each year end, which puts 1,540, 1,567, 1,540, 1,471 and 1,588 lines in front of each agent. One agent carries roughly 1,500 lines throughout; the operations lead takes escalations until the third agent starts in month 14, and a self-service portal for plan changes and usage is live from Year 2. A billing and provisioning specialist starts in month 30. Denise's $135,000 sits inside costs, so profit in the tables is what remains after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,694,598 | $3,365,575 | $5,640,859 | $8,067,480 | $10,332,975 |
| Direct costs (host-carrier airtime, device and accessory cost, platform fees) | ($1,063,832) | ($2,112,835) | ($3,541,209) | ($5,064,589) | ($6,486,818) |
| Gross profit | $630,766 | $1,252,740 | $2,099,650 | $3,002,891 | $3,846,157 |
| Payroll incl. on-costs | ($501,650) | ($932,180) | ($1,261,110) | ($1,521,037) | ($1,644,227) |
| Rent | ($99,000) | ($102,000) | ($105,000) | ($140,000) | ($144,000) |
| Utilities | ($9,000) | ($11,000) | ($13,000) | ($15,000) | ($17,000) |
| Marketing | ($120,000) | ($145,000) | ($175,000) | ($210,000) | ($235,000) |
| Insurance | ($30,000) | ($37,000) | ($45,000) | ($52,000) | ($58,000) |
| Professional fees | ($36,000) | ($40,000) | ($45,000) | ($50,000) | ($55,000) |
| Software subscriptions | ($46,000) | ($70,000) | ($98,000) | ($124,000) | ($146,000) |
| Regulatory filings, licenses and carrier compliance | ($12,000) | ($14,000) | ($16,000) | ($18,000) | ($20,000) |
| Vehicles, travel and customer visits | ($18,000) | ($24,000) | ($30,000) | ($36,000) | ($40,000) |
| Equipment replacement and new-hire kit | $0 | ($8,000) | ($12,000) | ($16,000) | ($18,000) |
| Bad debt allowance (device financing and business accounts) | ($14,000) | ($34,000) | ($52,000) | ($70,000) | ($86,000) |
| Card, ACH and collection fees | ($9,000) | ($20,000) | ($32,000) | ($42,000) | ($50,000) |
| Annual pay raises (3% a year) | $0 | ($27,965) | ($76,802) | ($141,041) | ($206,365) |
| EBITDA | ($263,884) | ($212,405) | $138,738 | $567,813 | $1,126,565 |
| Depreciation | ($9,686) | ($9,686) | ($9,686) | ($9,686) | ($9,686) |
| Interest | ($25,000) | ($22,592) | ($16,991) | ($10,802) | ($3,966) |
| Income tax | $0 | $0 | $0 | ($29,159) | ($279,430) |
| Net income before start-up costs | ($298,570) | ($244,683) | $112,062 | $518,166 | $833,483 |
| Start-up costs expensed at opening (legal, platform integration, launch marketing) | ($156,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($454,570) | ($244,683) | $112,062 | $518,166 | $833,483 |
The company loses $298,570 before start-up costs in Year 1 and $454,570 after them, then loses $244,683 in Year 2. Year 3 is the first profit at $112,062. By Year 5 net income is $833,483, 8.1% of revenue after tax. Payroll falls from 30% of revenue in Year 1 to 18% in Year 5, which is where most of the margin comes from, because direct costs stay at 62.8% of revenue in every year. Income tax is small in Year 4 and larger in Year 5 as the early losses are used up.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($671,461) | ($310,507) | $18,930 | $418,196 | $740,794 |
| Provisioning lab, racking and fit-out | ($55,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,350,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($53,496) | ($59,097) | ($65,285) | ($72,122) |
| Owner distributions | $0 | $0 | $0 | ($60,000) | ($120,000) |
| Net change in cash | $623,539 | ($364,002) | ($40,167) | $292,911 | $548,673 |
| Closing cash | $623,539 | $259,537 | $219,370 | $512,281 | $1,060,954 |
Closing cash is above zero in every year, and the lowest year-end balance, $219,370, comes at the end of Year 3, after two loss-making years and the receivables that growth ties up in Year 3. The credit line is repaid in full by Year 5. Owner distributions of $60,000 and $120,000 start in Years 4 and 5, with the credit line down to $72,122 at the end of Year 4.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $623,539 | $259,537 | $219,370 | $512,281 | $1,060,954 |
| Accounts receivable | $148,568 | $295,064 | $494,541 | $707,286 | $905,905 |
| Device and tracker stock | $171,277 | $192,257 | $220,824 | $251,292 | $279,736 |
| Provisioning lab, racking and fit-out (net) | $45,314 | $35,629 | $25,943 | $16,257 | $6,571 |
| Total assets | $988,698 | $782,487 | $960,678 | $1,487,116 | $2,253,166 |
| Carrier and distributor payables | $93,267 | $185,235 | $310,462 | $444,019 | $568,707 |
| Device-inventory credit line | $250,000 | $196,504 | $137,407 | $72,122 | $0 |
| Paid-in capital | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 |
| Retained earnings | ($454,570) | ($699,253) | ($587,191) | ($129,025) | $584,459 |
| Total liabilities and equity | $988,698 | $782,487 | $960,678 | $1,487,116 | $2,253,166 |
Break-even and margins
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -15.6% | -6.3% | 2.5% | 7.0% | 10.9% |
| Net margin (before start-up costs) | -17.6% | -7.3% | 2.0% | 6.4% | 8.1% |
| Payroll incl. pay raises as share of revenue | 30% | 29% | 24% | 21% | 18% |
| Revenue per full-time equivalent at year end | $211,825 | $280,465 | $352,554 | $403,374 | $492,046 |
| Average monthly revenue | $141,217 | $280,465 | $470,072 | $672,290 | $861,081 |
| Monthly revenue needed to cover operating costs | $200,295 | $328,018 | $439,011 | $545,167 | $608,865 |
| Debt service cover (EBITDA / interest + principal) | -10.6x | -2.8x | 1.8x | 7.5x | 14.8x |
Average monthly revenue reaches the level needed to cover operating costs in Year 3, at $470,072 against $439,011. Year 1 and Year 2 fall short, at $141,217 against $200,295 and $280,465 against $328,018. Debt service cover is negative until Year 3 and then climbs from 1.8x to 14.8x.
A fifth fewer lines and sales: the downside run
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,355,678 | $2,692,460 | $4,512,687 | $6,453,984 | $8,266,380 |
| Net income before start-up costs | ($372,033) | ($293,209) | $28,796 | $435,756 | $700,967 |
| Net income after start-up costs | ($528,033) | ($293,209) | $28,796 | $435,756 | $700,967 |
| Closing cash | $620,248 | $237,471 | $154,550 | $468,256 | $1,044,749 |
This run takes 20% off lines, devices, add-ons and every other revenue stream in every year. Denise responds in eight steps. Hires from month 13 start six months late. The marketing manager, the third and fourth account executives and the warehouse clerk are never hired. Her own pay and the marketing budget each fall 20%. The office stays at 4,500 square feet and distributions stop. Collections tighten from 32 to 28 days, and the opening stock order drops from $150,000 to $110,000. The bad debt allowance also rises 40%, which is a cost of the downturn and not a response to it. Even so, Year 3 profit shrinks to $28,796 from $112,062, and the lowest year-end cash is $154,550. Equity at the end of Year 1 is $571,967. Net income and closing cash sit below the base case in every year. This run does not test a higher churn rate, a wholesale price rise or a loss of the host-carrier relationship. Each of those would hit the company harder than a revenue shortfall alone.
Sources
- FCC, Universal Service Fund, for who contributes and how contributions are set. No rate or rule is quoted here; counsel confirms current requirements before launch.
- FCC rules on customer proprietary network information, 47 CFR Part 64, Subpart U, for the customer-data duties that apply to wireless providers. Counsel confirms how they apply to a reseller.
- Georgia Department of Revenue, corporate income tax, where the current state rate is published. The model's 5.2% is a planning figure and not a quoted rate; the 21% federal rate is set by statute and may change.
- Wholesale airtime prices, device prices, installment terms and rent are the plan's own figures, set for this example. No competitor price is quoted.
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