Looking for a telecommunications business plan? You're in the right place.
A business that resells phone lines and data circuits has to answer questions a lender or an investor asks first. How much does a carrier charge before the firm adds anything? How many customers cancel each year? How many support staff does each hundred customers need? Can a business with a thin margin per line still earn a profit after payroll?
In this article we'll walk through a complete sample business plan for a telecom reseller in Pittsburgh, Pennsylvania, section by section, so you can see what good looks like and write your own with confidence. 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 reseller on one page, with the raise, the break-even point and the customer count a reader looks for first
- The wholesale cost shares: learn how to show what each product costs from the carrier, so a lender can see the margin that is left
- The churn and site model: find out how cancellations change the number of new customers you must win each year
- The support desk plan: spot how many technicians a customer base needs, and when each hire becomes necessary
- The SWOT analysis: name your weak points, such as carrier dependence, without putting a reader off
- The five-year profit, cash flow and balance sheet: understand how billing overhead, bad debt and carrier payment terms show up in cash
- The downside case: have an answer ready for "what if revenue is 20% short?", along with the steps the owner takes in response
If you're setting up a business telephone or data reseller, read this before you write your own. TeleSpace is fictional, so take what fits your market and change the rest.
In this plan
- TeleSpace at a Glance
- The Company and What It Resells
- Pittsburgh's Small-Office Phone and Circuit Market
- The Office Behind the Phone Bill
- Winning and Keeping Sites
- Marketing: What a Signed Site Costs
- Running the Support Desk and Billing Office
- Rachel Doran and the Team
- What TeleSpace Costs to Run and What It Earns
- Sources
Want a telecommunications business plan you can edit for your own business? Get the telecommunications business plan template and build it in the Toolkit.
TeleSpace at a Glance
TeleSpace is a Pennsylvania business that sells telephone lines, SIP and PRI trunks and data circuits to small businesses and multi-site offices in the Pittsburgh area. It buys the underlying service wholesale from carriers, bills the customer one monthly invoice and answers the support calls from a local desk. Founder Rachel Doran opens it on January 1, 2027 in a leased office and staging room in the Strip District.
The firm opens with $900,000: $150,000 of Rachel's savings, $500,000 from two local investors and a $250,000 bank term loan. Equity is 72% of the money. Most of it is a $744,500 reserve for two loss years, $60,000 of carrier deposits and the weeks in which wholesale bills fall due before customers pay. Equipment and build-out take $103,000, and legal work, filings and the launch campaign take $52,500.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,153,583 | $2,288,000 | $3,481,000 |
| Net income after start-up costs | ($302,882) | ($69,869) | $179,914 |
| Closing cash | $429,195 | $263,565 | $340,140 |
TeleSpace counts customers in sites, meaning an office or branch that buys lines and a circuit. Thirty-six sites are signed before opening through two managed-IT partners, and the base reaches 132 sites by December 2027 and 486 by the end of Year 5, after about 14% of sites cancel each year. Wholesale and direct costs take 53.0 cents of each revenue dollar, so gross margin is thin at 47.0%, and the business works only if each support hire covers a growing number of sites.
Years 1 and 2 are losses because the firm carries an engineer, technicians, an account executive and an installer ahead of the base that pays for them. EBITDA turns positive in November 2027 and for the full year in Year 3. Net income turns positive in Year 3 and reaches a 10.6% margin in Year 5.
A second run takes 20% off every revenue line. With later hiring, one hire dropped, a smaller marketing budget, a pay cut for Rachel and lower partner and commission payouts, year-end cash stays above zero in all five years.
The Company and What It Resells
Legal name: TeleSpace Communications, Inc., a Pennsylvania corporation. Owners: Rachel Doran, 51%; two investors, 49%. Premises: a leased 2,400-square-foot office, support floor and staging room in the Strip District. Start date: 1 January 2027. Stage: pre-launch. Thirty-six service orders are signed; the lease and the carrier contracts are in review.
Why the firm exists
Small offices in Pittsburgh usually deal with three suppliers for phones, internet and help when something breaks. TeleSpace offers one invoice and one local number to call for all three.
Targets for the first two years
- 132 sites live by December 2027, up from 42 at cutover.
- 215 sites by December 2028, with Year 2 revenue of $2,288,000.
- Gross margin held at 47.0% while carrier prices change.
- Make the bank repayments from 2028 and earn the first full-year profit in 2029.
Five products
| Product | How it is priced | Year 1 share of revenue |
|---|---|---|
| Voice lines and hosted seats | $38 per line a month | 31% |
| SIP and PRI trunks | $24 per channel a month | 8% |
| Resold data circuits | $425 a month for a typical circuit | 27% |
| Local support plans | $195 a month per site | 13% |
| Porting, cabling and turn-up | $1,650 per new site, one time | 20% |
Rules the firm confirms before it sells
Whether a reseller needs state authority, a federal registration or fee filings depends on the services it sells and how it sells them. TeleSpace's counsel confirms the position for each product before launch, covering universal-service and 911 questions, number-porting duties, any filing with the Pennsylvania Public Utility Commission and the taxes and surcharges that appear on customer bills. Because the firm runs its own softswitch for trunk routing, counsel also confirms whether robocall-mitigation, lawful-intercept, customer-data and multi-line 911 duties apply. The plan sets aside $24,000 of legal work at opening and $7,000 a year for filings and fee administration. The obligations and the amounts may change.
Pittsburgh's Small-Office Phone and Circuit Market
The customers are offices with 5 to 40 people: medical and dental practices, law and accounting offices, light manufacturers and distributors, and nonprofits with a few locations. Many have old phone lines they never reviewed, a cable or fiber circuit bought separately, and a managed-IT firm that does not want to take the phone calls.
The managed-IT channel
Two Pittsburgh managed-IT firms are the first partners. Each has clients on phone and circuit contracts that are coming up for renewal, and each prefers to hand the voice work to a specialist. Thirty-six of the opening sites come from them, on service orders that take effect at cutover and bind the customer only once the port-in completes. Each partner earns 8% of the recurring revenue on the sites it brings, which is $37,000 in Year 1 and peaks at $73,000 in Year 3 as direct sales take a larger share.
What the work costs
The plan carries wholesale cost as a share of price, not as a quoted carrier rate: 62% for voice lines, 57% for trunks, 68% for data circuits and 12% for the support plan. Carrier price lists and contract terms vary, and the plan makes no claim about any carrier's rates. The firm's own prices are set so a site contributes about $451 a month of gross profit in Year 1 before support wages. Pittsburgh technician pay in the plan starts at $62,000 to $65,000; the national median for telecommunications equipment installers and repairers was $66,200 in May 2025, per the Bureau of Labor Statistics.
Who else sells to this office
| Alternative | What it offers | Why a site picks it | Where TeleSpace differs by design |
|---|---|---|---|
| The incumbent carrier or cable company | Lines, internet and bundles from one account | A single national bill | A local desk that answers and visits |
| A hosted-voice provider | Cloud phones sold online | Low entry price | Lines, trunks and the circuit billed together |
| A national or regional agent | Carrier services sold on commission | Many carriers to compare | TeleSpace supports the service after it is sold |
| The customer's managed-IT firm | Voice added to an IT contract | Existing relationship | A specialist engineer, with the IT firm kept as the partner |
| A neighboring regional reseller | The same model, smaller | Personal service | Larger support bench and a billing office |
Each row describes an offer and where TeleSpace sits against it, not a ranking. Providers revise plans often, so none are named or priced here.
SWOT
| Strengths | Weaknesses |
|---|---|
| Rachel's fifteen years in business telecom | Dependence on a few wholesale carriers |
| Thirty-six sites signed before opening | A thin gross margin of 47.0% |
| Senior engineer on the payroll from day one | Year 1 loses money and draws on the reserve |
| Opportunities | Threats |
|---|---|
| Legacy line and PRI customers moving to SIP | Carriers raising wholesale prices faster than TeleSpace can re-price |
| Managed-IT firms that want to hand off voice | Larger resellers discounting to win small sites |
| Support plans that raise margin per site | Customers leaving when a contract term ends |
The Office Behind the Phone Bill
The office manager with a phone bill nobody has read
The buyer is often the office manager or the practice administrator, 35 to 60, who inherited the phone arrangement and notices it only when something fails. A typical site has 10 phones, a fax or alarm line or two and one internet circuit.
What they do today
Some keep the original local lines and pay for features nobody uses. Others pay the cable company for internet and a separate vendor for phones, and call each in turn when an outage hits.
What starts a search
A circuit that drops during a busy day, a contract renewal letter with a higher price, a move to a new office, or a managed-IT firm saying it will stop handling the phones.
What the buyer asks of a supplier
The phones keep ringing through a cutover. Someone local answers within the hour. The invoice is one page, and the price does not move without notice.
Winning and Keeping Sites
From survey to cutover
Each lead gets a site survey of the existing lines, circuits and phones, a written quote within three business days, and a cutover scheduled outside business hours. Rachel sells through Year 1, joined by the account executive in month 4.
The Year 1 pipeline
Year 1 brings 143 new sites: 36 signed before opening, six more won in January and 101 from February to December. Marketing is measured against the 107 won after opening.
| Source | New sites | Share |
|---|---|---|
| Managed-IT partner referrals | 38 | 36% |
| Direct outreach by Rachel and the account executive | 30 | 28% |
| Existing customer referrals | 14 | 13% |
| Search and website | 13 | 12% |
| Trade associations and chambers | 12 | 11% |
Pricing and terms
Quotes are built from the site's line count, trunk channels and circuit speed. Circuits are sold on 36-month terms so that the carrier commitment behind each one is matched by the customer's; carrier minimums and early-termination charges are confirmed in each contract and are not modeled separately. Prices rise 2% a year from Year 2.
Churn and the site count
Churn is 1.25% of sites a month, about 14% a year. A cancelled site takes everything with it, so every year the firm must win enough new sites to replace the losses before it grows.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| New sites | 143 | 108 | 135 | 145 | 150 |
| Cancelled sites | 11 | 26 | 39 | 53 | 66 |
| Sites at year end | 132 | 215 | 311 | 403 | 486 |
By Year 5 the firm replaces 66 cancellations before it adds 84 sites of net growth. Nearly every quote includes a support plan, since sites that rely on TeleSpace for help are expected to stay longer; the model applies one churn rate to all sites, which is cautious for them.
The first 36
All 36 sites signed before opening came from the two managed-IT partners' client lists. Rachel's non-solicitation terms from her earlier employers were reviewed with a lawyer before she approached any customer.
Marketing: What a Signed Site Costs
Year 1 marketing is $82,000: $22,000 of launch work paid from start-up capital and $60,000 of running cost. Spread over the 107 sites won after opening, that is about $766 each. It is 7.1% of Year 1 revenue and falls to 2.9% in Year 3 and 2.0% in Year 5, as referrals carry more of the load. Later years cost between $741 and $787 per new site.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, brand and rack-room photography (launch) | $9,000 | A site with product pages for lines, trunks and circuits |
| Partner kit and onboarding (launch) | $6,000 | Training sessions and a co-branded quote sheet |
| Launch events (launch) | $7,000 | Introductions to 40 local office managers |
| Managed-IT partner program | $14,000 | Partner lunches and a portal; about 38 sites |
| Direct outreach tools and mailers | $16,000 | List data and sequenced outreach; about 30 sites |
| Customer referral credits | $6,000 | Bill credits for introductions; about 14 sites |
| Search and website content | $14,000 | Pages on SIP migration and PRI replacement; about 13 sites |
| Associations and chambers | $6,000 | Memberships and sponsored talks; about 12 sites |
| Customer newsletter and cutover follow-up | $4,000 | Notes after each go-live that prompt referrals |
Milestones
- January 2027: 42 sites cut over.
- March 2027: 54 sites live and the first partner sends a second batch of introductions.
- June 2027: 77 sites.
- September 2027: 102 sites.
- December 2027: 132 sites and $145,053 of monthly revenue.
Running the Support Desk and Billing Office
The Strip District floor
The 2,400 square feet hold a support floor, a staging bench where handsets and adapters are configured before they ship, and a rack room for a redundant softswitch pair and session border controllers, which together with the test bench come to $85,000 of equipment. Rent is about $20 a square foot, $48,000 in Year 1.
How a cutover runs
A cutover has four steps: the order goes to the carrier, the numbers are ported on a set date, the installer or a contract cabler pulls the circuit into the site, and a technician is on the line the first morning. The senior engineer owns the number-porting calendar and the test calls.
Who answers the phone
Support runs from 8 a.m. to 6 p.m. Eastern, with an on-call rotation after hours for outages. One technician carries roughly 65 to 105 sites. The firm has two technicians at the end of Year 1, three in Year 2, four in Year 3 and five by Year 5. A technician is hired when the previous one is near capacity, and the second senior engineer is hired late, in month 46.
Billing and collections
The rating module on the softswitch and a billing platform produce about one invoice per site per month. Until month 14 Rachel and the support desk run billing; then the billing and collections specialist takes over invoicing, disputes, collections and the monthly reconciliation to carrier invoices. Receivables average 34 days, and the allowance for bad debt is 1.1% of revenue. Carrier invoices are due sooner than customer payments, which is why the opening reserve is large.
Carrier relationships
Carrier invoices are paid on 21-day terms and checked line by line against what TeleSpace has billed customers. The carrier orders coordinator, from month 26, tracks circuit orders, commit dates and renewals, so that no circuit outlives its customer without a plan.
Systems and insurance
Software costs $36,000 in Year 1 and $100,000 by Year 5: the billing and rating platform, a ticketing system, remote monitoring and the softswitch license. Insurance covers general liability, professional and technology liability, cyber risk and the installer's vehicle, and costs $18,000 in Year 1; key-person life and disability cover on Rachel is bought separately. A tax advisor and counsel confirm the fees and surcharges shown on customer invoices.
Rachel Doran and the Team
Rachel Doran, founder and chief executive
Rachel has fifteen years in business telecom: nine in enterprise sales at a regional carrier and six running provisioning and customer operations at a Pittsburgh managed-IT firm. She holds the largest share of the company. Her $150,000 is most of her savings, and the 51% share also reflects her unpaid work before opening and the partner relationships she brings.
Where the team is thin
Rachel has not built a billing system, has not managed a regulatory filing calendar and has not run a company profit and loss. The plan answers each: a billing consultant sets up the platform in the first quarter, counsel keeps the filing calendar, and a retired carrier executive on the investor side reviews the monthly numbers.
If Rachel is out
The senior circuits and voice engineer knows every carrier relationship and every cutover. The firm covers key-person risk with life and disability insurance on Rachel and a written runbook for each carrier.
Outside help
The two investors, a retired carrier executive and a managed-IT owner, meet the team each quarter. A local telecom attorney is on retainer for carrier contracts and filings.
Ownership and the bank
TeleSpace Communications, Inc. is 51% Rachel's and 49% the investors'. The bank loan rests on Rachel's personal guarantee and a lien on the equipment.
What TeleSpace Costs to Run and What It Earns
The model covers five years: 2027 month by month, then one column a year. Site counts, wholesale cost and support load come first, because every other line follows from them.
Money in and money out at opening
| Use of funds | Amount |
|---|---|
| Redundant softswitch pair, session border controllers, test bench, laptops, install tools | $85,000 |
| Office build-out, staging bench and rack room | $18,000 |
| Business registrations, carrier certifications, state filings | $6,500 |
| Legal: carrier and reseller agreements, customer terms, regulatory review | $24,000 |
| Launch: website, referral kit, first-quarter campaigns | $22,000 |
| Cash reserve for the ramp, including $60,000 of carrier deposits | $744,500 |
| Total uses | $900,000 |
| Source of funds | Amount |
|---|---|
| Rachel Doran's savings | $150,000 |
| Two local investors (a retired carrier executive and a managed-IT owner) | $500,000 |
| Bank term loan | $250,000 |
| Total sources | $900,000 |
TeleSpace opens with $900,000. Rachel Doran puts in $150,000 of savings, two local investors put in $500,000, and a bank term loan supplies $250,000. Equity is $650,000, or 72% of the total. The loan runs seven years at 9.75%, interest only for the first twelve months, with a personal guarantee from Rachel; the rate is a planning figure and not a quote. The largest use is a $744,500 reserve. It holds $60,000 of carrier deposits, and it carries the firm through two loss years, a period in which a reseller pays its wholesale bills within three weeks while its own customers take about five.
Site counts, wholesale cost and support load
- The unit of the model is a site: one office or branch that buys lines and a circuit. Thirty-six sites are signed before opening through two managed-IT partners, and six more go live in January, so month one starts with 42. Gross new sites are 143, 108, 135, 145 and 150 over the five years. Year-end sites are 132, 215, 311, 403 and 486.
- Churn is 1.25% of the prior month's sites every month, or about 14% a year. That removes 11, 26, 39, 53 and 66 sites over the five years, 195 in all, and each cancelled site takes its lines, circuit and support plan with it. Small offices close, move and switch providers, so the rate is deliberately not low. The model applies one rate to every site, and no win-back is counted.
- An average site pays $987 a month for recurring services in Year 1. That is 10 voice lines at $38 ($380), a SIP or PRI trunk of 12 channels at $24 on 35% of sites ($101), a resold data circuit at $425 on 80% of sites ($340) and a local support plan at $195 on 85% of sites ($166). Prices rise 2% a year from Year 2. Customer-facing taxes and regulatory surcharges are collected and passed on, so they sit outside revenue; the rates change and are not forecast.
- Each new site pays a one-time porting, cabling and turn-up fee of $1,650, which carries a 48% direct cost for contract cabling, port-in charges and handsets.
- Wholesale cost is modeled line by line as a share of price: 61% for voice lines, 56% for trunks, 67% for data circuits and 12% for support plans, which covers monitoring tools and vendor escalation seats. Recurring services keep 45.7% as gross margin, about $451 a site each month. Install fees lift the blended figure to 47.0%, so direct costs are 53.0% of revenue in every year. Holding the shares flat means carrier price rises are passed through to customers; a carrier raising rates faster than TeleSpace can re-price would squeeze the margin, and the downside table does not capture that. As a check, two points off gross margin in Year 3 would cost about $70,000 before tax.
- Partners are paid. The two managed-IT partners and later referral partners earn 8% of the recurring revenue on the sites they bring. Partner-sourced sites make up 50% of recurring revenue in Year 1, falling to 38%, 28%, 20% and 15% as direct and referral sales take over, so the payout is $37,000 in Year 1 and peaks at $73,000 in Year 3. Sales commissions are separate: 8% of first-year contract value on sites the account executives and Rachel win directly, $18,000 in Year 1 and $45,000 in Year 5.
- Support load is staffed by sites. One technician carries between about 65 and 105 sites, with the two senior engineers and the field installer taking escalations and cutovers. Technicians number 2 at the end of Year 1 (66 sites each), 3 in Year 2 (72), 4 in Year 3 (78), 4 in Year 4 (101) and 5 in Year 5 (97). A technician starts when the book approaches the count the previous ones can carry, so the ratio rises toward 105 in the month before each hire and drops after it.
- Billing is its own cost. The softswitch's rating module and the billing platform produce about one invoice per site per month; Rachel and the support desk run billing until the billing and collections specialist starts in month 14. Receivables average 34 days. Carrier and wholesale invoices are paid on 21-day terms, a shorter period than customers take, which is why the firm needs the reserve. An allowance of 1.1% of revenue covers bad debt, $13,000 in Year 1 and $66,000 in Year 5.
- Each salary carries a 27% load for employer payroll tax, health coverage, workers' compensation and a retirement match. The wages in the personnel table are launch-year rates; 3% raises start in Year 2 and are charged on their own line. Technician pay starts at $62,000 to $65,000 and the installer at $60,000; the national median for telecommunications equipment installers and repairers was $66,200 in May 2025 (Bureau of Labor Statistics), and Pittsburgh pay may differ.
- Rent is about $20 a square foot on 2,400 square feet in Pittsburgh, rising 3% a year, with no move inside the five years. Handset, adapter and router stock is held at 2% of direct costs. The softswitch pair, session border controllers and test bench come to $85,000 of equipment.
- The model taxes profit at 21% federal plus 7% for Pennsylvania, after the early losses are carried forward. Both are planning rates; the state's corporate rate has been scheduled to change over several years, federal and state limits on using prior losses may reduce the benefit, and a tax advisor confirms the figures. No dividends are paid in the five years, because the reserve is what lets the firm take on circuit commitments.
Revenue by product
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Voice lines and hosted seats | $353,454 | $811,000 | $1,251,000 | $1,731,000 | $2,198,000 |
| SIP and PRI trunks | $93,759 | $215,000 | $332,000 | $459,000 | $583,000 |
| Resold data circuits | $316,248 | $726,000 | $1,120,000 | $1,549,000 | $1,967,000 |
| Local support plans | $154,172 | $354,000 | $546,000 | $755,000 | $959,000 |
| Porting, cabling and turn-up fees | $235,950 | $182,000 | $232,000 | $254,000 | $268,000 |
| Total revenue | $1,153,583 | $2,288,000 | $3,481,000 | $4,748,000 | $5,975,000 |
| Growth on prior year | – | 98% | 52% | 36% | 26% |
Voice lines and data circuits together make up 58% of Year 1 revenue and 70% of Year 5. Install fees are 20% of Year 1 because 143 sites go live that year, and shrink to 4% of Year 5 as the base grows and cancellations replace some of the new sites. Local support plans are the smallest recurring line and the one with the best margin, which is why nearly every quote includes one.
The 2027 monthly run
| Month | Voice lines and hosted seats | SIP and PRI trunks | Resold data circuits | Local support plans | Porting, cabling and turn-up fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|
| Jan 2027 | $7,980 | $2,117 | $7,140 | $3,481 | $69,300 | $90,018 | ($20,075) |
| Feb 2027 | $17,000 | $4,510 | $15,211 | $7,415 | $9,900 | $54,036 | ($36,975) |
| Mar 2027 | $19,258 | $5,108 | $17,231 | $8,400 | $11,550 | $61,547 | ($33,447) |
| Apr 2027 | $21,867 | $5,801 | $19,565 | $9,538 | $13,200 | $69,971 | ($29,490) |
| May 2027 | $24,634 | $6,534 | $22,041 | $10,745 | $13,200 | $77,154 | ($26,117) |
| Jun 2027 | $27,556 | $7,310 | $24,655 | $12,019 | $14,850 | $86,390 | ($21,779) |
| Jul 2027 | $30,631 | $8,125 | $27,407 | $13,361 | $14,850 | $94,374 | ($18,029) |
| Aug 2027 | $33,858 | $8,981 | $30,294 | $14,769 | $16,500 | $104,402 | ($13,319) |
| Sep 2027 | $37,235 | $9,877 | $33,316 | $16,241 | $16,500 | $113,169 | ($9,201) |
| Oct 2027 | $40,760 | $10,812 | $36,469 | $17,779 | $18,150 | $123,970 | ($4,128) |
| Nov 2027 | $44,430 | $11,786 | $39,753 | $19,380 | $18,150 | $133,499 | $348 |
| Dec 2027 | $48,245 | $12,798 | $43,166 | $21,044 | $19,800 | $145,053 | $5,775 |
January's $90,018 includes $69,300 of turn-up fees on 42 go-lives, so February is the lowest revenue month at $54,036. Revenue then builds each month as new sites go live and recurring charges accumulate. EBITDA is negative from January to October and turns marginally positive in November. The monthly view charges the 34-day collection lag against late-year revenue, and its lowest month-end cash is $349,000 in Dec. The annual balance sheet applies the same terms to average-year revenue and closes the year at $429,195, so the two views differ by design; the annual figure is the one the bank sees.
Support desk and payroll plan
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and chief executive | $125,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Senior circuits and voice engineer | $92,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Support technician | $62,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Account executive | $64,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Field installer | $60,000 | Month 6 | 1 | 1 | 1 | 1 | 1 |
| Second support technician | $62,000 | Month 10 | 1 | 1 | 1 | 1 | 1 |
| Billing and collections specialist | $57,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Third support technician | $63,000 | Month 20 | – | 1 | 1 | 1 | 1 |
| Carrier orders coordinator | $58,000 | Month 26 | – | – | 1 | 1 | 1 |
| Second account executive | $66,000 | Month 27 | – | – | 1 | 1 | 1 |
| Fourth support technician | $64,000 | Month 36 | – | – | 1 | 1 | 1 |
| Second senior network engineer | $96,000 | Month 46 | – | – | – | 1 | 1 |
| Fifth support technician | $65,000 | Month 50 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $472,863 | $690,245 | $887,095 | $1,012,190 | $1,179,301 |
The firm opens with Rachel and a senior circuits and voice engineer, and the first support technician starts in month 2. An account executive joins in month 4, a field installer in month 6, and the second technician in month 10, as the book passes 100 sites. The billing and collections specialist starts in month 14 and the third technician in month 20. Year 3 adds a carrier orders coordinator, a second account executive and a fourth technician. The second senior network engineer arrives in month 46 and the fifth technician in month 50. Delivery roles (technicians, engineers and the installer) are 8 of the 13 people at the end of Year 5. Rachel's $125,000 is inside the costs, so the profit lines are what is left after she is paid.
Earnings after wholesale cost
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,153,583 | $2,288,000 | $3,481,000 | $4,748,000 | $5,975,000 |
| Direct costs (wholesale carrier and circuit charges, platform licenses) | ($611,755) | ($1,213,346) | ($1,846,004) | ($2,517,904) | ($3,168,593) |
| Gross profit | $541,828 | $1,074,654 | $1,634,996 | $2,230,096 | $2,806,407 |
| Payroll incl. on-costs | ($472,863) | ($690,245) | ($887,095) | ($1,012,190) | ($1,179,301) |
| Rent | ($48,000) | ($49,440) | ($50,920) | ($52,450) | ($54,020) |
| Utilities | ($5,400) | ($5,600) | ($5,800) | ($6,000) | ($6,200) |
| Marketing | ($60,000) | ($84,000) | ($100,000) | ($110,000) | ($118,000) |
| Insurance | ($18,000) | ($24,000) | ($30,000) | ($36,000) | ($40,000) |
| Professional fees | ($14,000) | ($16,000) | ($18,000) | ($20,000) | ($22,000) |
| Software subscriptions | ($36,000) | ($52,000) | ($70,000) | ($86,000) | ($100,000) |
| Sales commissions (8% of first-year value on rep-sourced sites) | ($18,000) | ($30,000) | ($38,000) | ($42,000) | ($45,000) |
| Partner revenue share (8% of recurring revenue on partner-sourced sites) | ($37,000) | ($64,000) | ($73,000) | ($72,000) | ($68,000) |
| Regulatory filings, E911 administration and fee compliance | ($7,000) | ($9,000) | ($11,000) | ($13,000) | ($15,000) |
| Vehicles, fuel and tools for field work | ($9,000) | ($12,000) | ($14,000) | ($17,000) | ($19,000) |
| Training and carrier certifications | ($4,000) | ($6,000) | ($8,000) | ($9,000) | ($10,000) |
| Test bench refresh, laptops and new-hire kit | $0 | ($6,000) | ($8,000) | ($11,000) | ($9,000) |
| Phones, travel and supplies | ($6,000) | ($8,000) | ($10,000) | ($12,000) | ($13,000) |
| Bad debt allowance (about 1.1% of revenue) | ($13,000) | ($25,000) | ($38,000) | ($52,000) | ($66,000) |
| Annual pay raises (3% a year) | $0 | ($20,707) | ($54,024) | ($93,857) | ($148,013) |
| EBITDA | ($206,435) | ($27,338) | $219,157 | $585,599 | $893,873 |
| Depreciation | ($19,571) | ($19,571) | ($19,571) | ($19,571) | ($19,571) |
| Interest | ($24,375) | ($22,960) | ($19,672) | ($16,049) | ($12,056) |
| Income tax | $0 | $0 | $0 | ($108,678) | ($228,754) |
| Net income before start-up costs | ($250,382) | ($69,869) | $179,914 | $441,300 | $633,492 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($52,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($302,882) | ($69,869) | $179,914 | $441,300 | $633,492 |
Year 1 loses $250,382 before start-up costs and $302,882 after them. EBITDA stays negative through Year 2 at ($27,338), and a second loss follows, $69,869 after interest. Year 3 earns $179,914, a 5.2% net margin, and margin climbs to 9.3% in Year 4 and 10.6% in Year 5. Gross margin never moves from 47.0%, so the climb comes entirely from overhead: payroll falls from 41% of revenue in Year 1 to 22% in Year 5, as each technician and each billing hour covers more sites. Pay raises reach $148,013 a year by Year 5 and are already counted. Income tax is nil through Year 3 because the early losses carry forward, then $108,678 in Year 4 and $228,754 in Year 5.
Cash in the account
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($367,805) | ($133,389) | $112,103 | $368,069 | $563,191 |
| Softswitch, test bench and office build-out | ($103,000) | $0 | $0 | $0 | $0 |
| Funding received | $900,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($32,241) | ($35,528) | ($39,151) | ($43,144) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $429,195 | ($165,629) | $76,575 | $328,918 | $520,047 |
| Closing cash | $429,195 | $263,565 | $340,140 | $669,058 | $1,189,105 |
Cash ends every year above zero. The lowest year-end balance is $263,565 in Year 2, after a second loss year and the first principal payments. Loan principal of about $32,200 to $43,100 a year is repaid from Year 2, and operations cover it from Year 3.
What the firm owns and owes
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $429,195 | $263,565 | $340,140 | $669,058 | $1,189,105 |
| Accounts receivable | $107,457 | $213,129 | $324,258 | $442,279 | $556,575 |
| Handset, adapter and router stock | $12,235 | $24,267 | $36,920 | $50,358 | $63,372 |
| Softswitch, test bench and office build-out (net) | $83,429 | $63,857 | $44,286 | $24,714 | $5,143 |
| Total assets | $632,315 | $564,818 | $745,604 | $1,186,410 | $1,814,195 |
| Carrier and wholesale payables | $35,197 | $69,809 | $106,208 | $144,866 | $182,303 |
| Bank loan | $250,000 | $217,759 | $182,231 | $143,080 | $99,936 |
| Paid-in capital | $650,000 | $650,000 | $650,000 | $650,000 | $650,000 |
| Retained earnings | ($302,882) | ($372,750) | ($192,836) | $248,464 | $881,956 |
| Total liabilities and equity | $632,315 | $564,818 | $745,604 | $1,186,410 | $1,814,195 |
Margin, break-even and loan cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -17.9% | -1.2% | 6.3% | 12.3% | 15.0% |
| Net margin (before start-up costs) | -21.7% | -3.1% | 5.2% | 9.3% | 10.6% |
| Payroll incl. pay raises as share of revenue | 41% | 31% | 27% | 23% | 22% |
| Revenue per full-time equivalent at year end | $192,264 | $286,000 | $316,455 | $395,667 | $459,615 |
| Average monthly revenue | $96,132 | $190,667 | $290,083 | $395,667 | $497,917 |
| Monthly revenue needed to cover operating costs | $132,758 | $195,517 | $251,200 | $291,769 | $339,324 |
| Debt service cover (EBITDA / interest + principal) | -8.5x | -0.5x | 4.0x | 10.6x | 16.2x |
In Year 1 average monthly revenue is $96,132 against $132,758 needed to cover operating costs. November and December 2027 clear that bar, at $133,499 and $145,053. Year 2 falls short again, at $190,667 against $195,517, and Year 3 clears it, at $290,083 against $251,200. Debt service cover is negative in Years 1 and 2 (-8.5x and -0.5x) and carried by the reserve, then 4.0x in Year 3.
A fifth of revenue missing, every year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $922,866 | $1,830,400 | $2,784,800 | $3,798,400 | $4,780,000 |
| Net income before start-up costs | ($303,997) | ($144,879) | $26,593 | $253,766 | $460,972 |
| Net income after start-up costs | ($356,497) | ($144,879) | $26,593 | $253,766 | $460,972 |
| Closing cash | $392,478 | $168,457 | $109,187 | $269,131 | $634,632 |
Revenue is 20% below the base case on every line in all five years, and wholesale cost, commissions and partner payouts fall with it. Rachel's response has four parts: every hire from month 13 starts six months late, the second senior network engineer is never hired, marketing falls 20%, and her pay drops 20%. With those in place, year-end cash never falls below $109,187, and the firm loses money in Years 1 and 2 and earns a modest profit from Year 3. Equity at the end of Year 1 is $293,503. Without the response, the same shortfall leaves year-end cash negative in Years 2 through 5 and delays the first profit to Year 4.
Sources
- Bureau of Labor Statistics, Telecommunications equipment installers and repairers, Occupational Outlook Handbook: median pay of $66,200 a year in May 2025, used as a reference for technician wages.
- Federal Communications Commission, telecommunications reporting worksheet (Form 499-A) and universal-service pages: cited only as the place counsel confirms federal filing and contribution duties.
- Pennsylvania Public Utility Commission, telecommunications pages: cited only as the place counsel confirms whether state authority applies to each product.
- Pennsylvania Department of Revenue, corporate net income tax page: cited only as the place to confirm the rate. The 7% state rate in the model is a planning rate, and a tax advisor confirms the current figure.
- Wholesale prices, circuit costs and customer prices are the plan's own figures. No carrier's price list was used.
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