Looking for a software publishing business plan? You're in the right place.
A publisher that sells to schools has to answer questions a consumer-app founder never meets. When does the money actually arrive? What do student-data rules add to the cost? How much cash covers a payroll that runs twelve months on income that lands in three? And what happens if schools buy a fifth less than the plan says?
In this article we walk through a complete sample plan for an educational and language-learning software publisher in Indianapolis, Indiana, section by section. We cover the executive summary, the SWOT analysis and, above all, the financials, so you can see what a lender or investor will test and write your own with confidence.
Here's what you'll take away:
- The executive summary: see how to put a three-channel publisher on one page, so a reader knows the raise, the channels and the first profitable year within a minute
- The market and the SWOT: learn how to describe free tools and big-publisher courses as real competition without naming prices you cannot source
- The pricing and seat counts: find out how per-seat school licenses and per-title family licenses build revenue from numbers a reader can rebuild
- The first year, month by month: spot the summer cash peak and the nine-month dry run before it, and plan your reserve around them
- The student-data and procurement section: see how to say what you collect, what you refuse to do with it, and where counsel's confirmation is needed
- The five-year profit, cash flow and balance sheet: understand how each hire, price and renewal rate shows up in the numbers
- The downside case: have an answer ready for the 'what if schools buy 20% less?' question, together with the steps the founders take
If you're setting up a courseware or language-learning publisher, read this before you write your own. The company is fictional, so take what fits and change the rest.
In this plan
To turn this example into your own software publishing business plan (educational and language-learning titles), use the software publishing business plan (educational and language-learning titles) template.
The Short Version
Supple Software is an Indianapolis publisher of language-learning and curriculum-aligned courseware for grades 3 to 12. It opens on January 1, 2027 with six released courses and sells them three ways: yearly per-seat licenses to schools, yearly or monthly per-title licenses to homeschool families through its own web store, and wholesale through reseller catalogs. A small training line supports the school contracts. Marguerite Hale, the chief executive, and Tomas Reyes, the chief product officer, founded the company.
Opening takes $1,500,000: $200,000 from the founders, $1,150,000 from seed investors and a $150,000 bank term line. Equipment, build-out, the first print run, legal and accessibility work and the launch take $256,000. The other $1,244,000 stays in the bank, because the company pays twelve months of salaries on income that arrives mostly between June and September.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $868,000 | $1,700,000 | $2,605,000 |
| Net income after start-up costs | ($631,332) | ($224,018) | $215,509 |
| Closing cash | $694,494 | $384,137 | $503,624 |
Year 1 sells about 24,000 school seats across roughly 60 buildings and about 3,440 family course-years. Two years of losses follow, because a team of eight or nine is on payroll before the first renewal cycle has built a base. The first profit lands in Year 3. By Year 5 net income is $451,562, or 10.7% of revenue, with every role still full-time.
Revenue is shown when a license is invoiced. On an accounting basis that spreads each license over its twelve months, the first profit would come a year later; the financial section sizes the difference. The same section describes a seasonal credit line that covers the weeks before each summer.
A second run of the model takes 20% off every revenue line. With later hiring, a smaller marketing budget, a pay cut for the chief executive and no larger office, year-end cash stays positive in all five years.
The company's position is narrow by design. Courses are mapped to published state standards by in-house editors, school data is limited to what a class roster needs, and a family can buy a single course for a single learner without a sales call.
Supple and Its Catalog
Legal name: Supple Software, Inc., an Indiana corporation. Owners: Marguerite Hale and Tomas Reyes, with seed investors holding 40% of the shares. Premises: a leased office of 2,100 square feet in Indianapolis. Opening date: January 1, 2027. Stage: pre-launch. The six launch courses were written during 2026 and are contributed to the company at formation. No reseller agreement is signed.
The launch library and what follows
| Series | Courses | Grades | Annual license, family store |
|---|---|---|---|
| Supple Languages | Spanish 1 and 2, French 1 and 2, German 1 | 6 to 12 and adult learners | $79 to $129 per course |
| Supple Math Studio | Fluency and standards practice | 3 to 5 | $79 per course |
Three more releases are planned: Math Studio for grades 6 to 8 in August 2028, German 2 in August 2029 and a reading series for grades 2 to 5 in August 2031. Each lands before the summer buying season. The instructional designer and the world-languages editor build the first two, with contract authors paid from the outside-content line; the math and reading editor, hired in month 47, builds the third. A three-course family bundle sells for $189.
Aims for the first two years
- About 60 paying school buildings and 3,440 family course-years by December 2027.
- Renew at least 88% of school seats at the first anniversary.
- Reach $1,700,000 of revenue in 2028.
- Close 2028 with more than $300,000 in the bank.
Four commitments
Four things carry the plan: a seat price a school can approve without a bid, a family price that needs no discount code, a reseller discount that leaves the publisher a margin, and a data policy short enough for a district technology director to read in one sitting.
The School and Homeschool Market
Two budgets, one calendar
Schools and families both buy ahead of the new school year. Many states and districts start their fiscal year on July 1, and the school year typically begins in early August in Indiana, so building-level orders concentrate between June and September. Budget calendars differ by state and district, and some Indiana school corporations may budget on a calendar year. The plan therefore shows some spring buying as well as the summer run, and each district's own calendar needs confirming before a quote. Families shop in two waves: the January reset and the weeks before the school year.
Where Supple sells first
Indiana is the home market, and the first courses are mapped to Indiana's published standards and to a widely used language-proficiency scale. Maps for other states are added once a building in that state asks for one, with the first out-of-state adoptions not expected before Year 2. Family sales and reseller catalogs have no state boundary.
What changed in school buying
Federal pandemic relief helped many schools buy digital tools in the early 2020s. That funding was time-limited, and buildings that want to keep such tools must find the money in ordinary budgets; each district's position differs and needs confirming. Supple sets seat prices for that setting: $13 to $19 per seat a year, low enough that a principal can buy from a single building's supply or instructional budget.
Who else a buyer could choose
| Alternative | What it offers | Why a buyer picks it | Where Supple differs by design |
|---|---|---|---|
| Large publisher-backed digital courses | Full-year courses with teacher dashboards, sold district-wide | Existing contract, one vendor for text and software | Priced per building, with a six-week trial and no multi-year lock |
| Consumer language apps | Self-paced practice for individuals | Free or low-cost, strong brand awareness | A teacher view, class rosters and standards mapping |
| Free and teacher-made resources | Worksheets, videos, open lessons | No cost | A complete sequence with audio, assessments and reporting |
| Homeschool curriculum publishers | Boxed grade-level programs, often print-led | Trusted by the community, one purchase covers a year | One course at a time, digital first, with an optional printed workbook |
| Supplemental practice platforms | Drill and adaptive practice in math | Already approved in many districts | Lessons written by the editors, not generated from item banks |
The table describes categories, not rankings. Providers change plans and prices often, so none are quoted here, and none is named because a named comparison would need a dated, sourced fact.
Strengths, weak spots, openings and threats
| Strengths | Weaknesses |
|---|---|
| Founders have built and sold courseware before | One senior editor covers every language title |
| Low seat price and a six-week trial | No brand outside the founders' own network |
| Six released courses on opening day | Two years of losses before profit |
| Pre-summer cash lows that need a credit line |
| Opportunities | Threats |
|---|---|
| Buildings replacing lapsed relief-funded licenses | Free tools improving fast in languages |
| Reseller catalogs reaching homeschool families directly | Districts consolidating vendors around a few large publishers |
| Standards changes that force new alignment maps |
Buyers: Teachers, Principals and Parents
The world-language teacher
A teacher in grades 6 to 12 with too many sections and too little audio. The teacher finds Supple, runs a six-week trial in one class and takes the results to the principal.
The building principal or curriculum lead
This person holds the budget and asks what a seat costs, who else uses it and what happens to student records. A purchase order from a single building is the usual path; a district office joins when a bid threshold or a data-agreement review applies.
The district technology director
The technology director checks sign-in, class rosters, accessibility and the data policy. A stalled review at this step can leave a trial unconverted.
The homeschool parent
A parent is choosing for one to four children and buys a course for a year at a time, or month by month. Orders cluster in January and in the six weeks before the school year. Parents tend to read other families' reviews before they buy, so the store shows them.
Why they leave
A course that ends before the school year does, a sign-in step that breaks on a Monday morning, and a price that rises sharply at renewal.
How Titles Get Sold
Three routes, four revenue lines
| Route | Who buys | How it is priced | Year 1 share of revenue |
|---|---|---|---|
| School and district licenses | Buildings, then districts | $13 to $19 per seat per year | 41% |
| Family web store | Parents | $79 to $129 per course a year, $14 a month, or a $189 bundle | 38% |
| Reseller catalogs | Homeschool and school-supply catalogs | About 60% of list, booked at wholesale | 16% |
| Teacher training and set-up | Buildings that buy | $2,000 a day | 5% |
The Year 1 school pipeline
About 200 buildings start a six-week trial, and roughly 30% of them buy, which gives the 60 in the plan. Many arrive through the founders' publishing contacts, and a few districts adopt several buildings together. The education sales manager starts in month 4 and runs the trials. The chief executive takes the first 20 calls herself.
Renewals and growth
Seats renew at 88% a year, and Year 2 therefore starts with about 21,000 seats and adds about 26,000.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| School seats under license, approx. | 24,000 | 47,000 | 74,000 | 96,000 | 116,000 |
Family orders
The web store sells one course for one learner for a year, a three-course bundle, or a monthly plan at $14 a course. Monthly plans bring in about 45% of family revenue and keep billing level through the year. About 3,440 course-years in Year 1 become about 12,000 by Year 5, and about 70% of family customers renew. The first January orders come from a list of roughly 9,000 parents who took free sample lessons during 2026. Families can cancel renewal in the account page without contacting anyone.
The reseller route
Catalogs buy at about 60% of list and carry the cost of their own mailing and trade shows. Revenue is booked at the wholesale price. Two catalogs have said they would list the launch courses and place small orders from January, but no written agreement is signed. The chief executive makes the formal approaches until the marketing manager starts in month 8, and the large orders of June and July depend on at least two catalogs signing by May. Together the catalogs are 16% of revenue and no single catalog is expected to exceed 8%.
Reaching Schools and Parents
Where the marketing money is spent
Year 1 marketing is $205,000: $70,000 of launch work paid from the start-up funds and $135,000 of operating spend. That is 24% of Year 1 revenue, or 16% leaving out the launch work. Operating spend falls to 8% of revenue in Year 3 and 6% in Year 5, as renewals and referrals carry more of the load. Marketing aimed at families totals $98,000 in Year 1 (search, conventions and co-op events, email and sample lessons, plus the convention debut), or about $28 for each of the 3,440 course-years. For schools, the cost is the free trial, the sample kits and the sales manager's time.
| Item | Year 1 spend | What it is expected to do |
|---|---|---|
| Web store build, catalog and demo videos (launch) | $24,000 | A store that sells a single course in three clicks, plus a printable catalog for resellers |
| Booths and sample classroom kits (launch) | $28,000 | A presence at two state education conferences and a world-language teachers' meeting |
| Homeschool convention debut (launch) | $18,000 | A first booth and trial accounts for convention visitors |
| Paid search and social for families | $40,000 | Searches for a named language or grade, and retargeting of store visitors |
| Homeschool conventions and co-op events | $22,000 | Two regional events, plus speaker spots |
| Email and lesson-sample content | $18,000 | Monthly sample lessons and the January and July sends |
| Reseller catalog placements and co-op fees | $20,000 | Product listings and trade-show co-op payments |
| Free trials and sample kits | $15,000 | Printed workbooks and quick-start cards for the school pilots |
| Webinars for teachers | $8,000 | Four live sessions a year, recorded for the trial page |
| Website upkeep and analytics | $12,000 | Tracking from first visit to renewal |
Marketing by month
- January 2027: store live, six courses released, first building invoices out.
- April 2027: reseller agreements sought, the chief executive leading.
- June 2027: the main school invoice run begins.
- August 2027: peak month, $140,000 of revenue.
- December 2027: 60 buildings, about 3,440 course-years and a first renewal letter ready for the spring.
Building, Teaching and Protecting Data
Space in Indianapolis
Supple leases 2,100 square feet in Indianapolis at about $22 a square foot a year, or $46,000. Engineers and support staff work from home on set days. In Year 4 the company moves to roughly 2,700 square feet. The audio booth, where editors record and check native-speaker audio, takes about a tenth of the space.
How a course is made
An editor and an instructional designer write each unit against the state standards or a language-proficiency scale. Native-speaker reviewers check the text and the audio before release. An engineer builds the activities, the teacher dashboard, and sign-in and roster sync through the school's identity provider. QA tests every release on Chromebooks, iPads and Windows laptops, three device types common in classrooms. Outside voice talent, illustration and contract authors cost $50,000 in Year 1 and $85,000 by Year 5.
Standards and alignment
Each course ships with an alignment map showing which published standards each unit addresses. The maps are Supple's own work and do not carry any state or agency approval.
Student data and privacy
Supple collects a student name or ID, a class and progress data, and nothing else about a student. It does not sell data, show advertising to students or use student records to train products outside the customer's own account. Data is deleted at the customer's request or after a stated period when a contract ends.
Two federal rules shape the paperwork. Under FERPA, a school may share student records with an outside provider as a "school official" when the provider does work the school would otherwise do itself and the school controls how the records are used. For students under 13, the FTC's published COPPA guidance describes a school giving consent in place of parents only when the data is used for the school's educational purpose and nothing commercial. A family buying direct is a different case: the parent is the customer and gives consent at checkout.
States add their own student-data laws, and districts often ask vendors to sign a data-privacy agreement before a purchase order is approved. Which Indiana statutes and which agreement formats apply is for counsel to confirm. The $59,000 of legal and accessibility work in the start-up budget includes that review.
How a school gets to a purchase order
A single building can usually buy under its own spending limit with a quote and a purchase order. Larger purchases may need formal quotes or a bid, and the thresholds vary by district and state. Supple checks the rule in each district before it quotes and does not plan around any single bid. The plan names no districts.
Accessibility and support
Districts commonly ask for an accessibility statement. The outside audit and the statement are part of the $59,000 start-up budget for legal and accessibility work, and a QA and accessibility specialist joins in month 41. Support runs 8 a.m. to 5 p.m. Eastern. The busiest weeks are the first two of the school year, when class rosters change daily.
Cover for the risks, and the print stock
Policies cover a data breach, errors in the software, general liability and injured employees, and each founder carries key-person life and disability cover. The yearly bill starts at $20,000 and reaches $35,000 by Year 5. Printed workbooks and homeschool kits come from a commercial printer in runs sized to the season; the first run costs $25,000.
The Founders and Who Answers for What
Marguerite Hale, chief executive
Marguerite taught Spanish for six years, then spent nine years at a regional educational publisher, the last four as product director. She holds an Indiana teaching license. She puts in $100,000 of her own savings and takes a $110,000 salary.
Tomas Reyes, chief product officer
Tomas spent fourteen years building learning software, first for a university and then for a courseware vendor. He leads engineering, the platform and the data policy. He puts in the other $100,000 and takes $115,000.
Where the team is thin
Three gaps stand out. Neither founder has run a district-level sales cycle alone. One editor covers every language. Finance is handled by an outside accounting firm on a monthly retainer until the finance and operations manager starts in month 38. The plan answers each in turn: an education sales manager in month 4, a math and reading editor in month 47, and the outside accounting firm.
If a founder is out
Tomas is the only person who knows the whole platform, so a second engineer starts in month 15 and the code is documented from day one. Marguerite's school relationships are shared with the sales manager from month 4.
Outside help
An education attorney reviews privacy terms and the license agreement each year. An advisory panel of two retired school curriculum directors meets twice a year for a modest fee, inside the professional-fees line.
Ownership, title and the bank
The seed investors receive 40% of the shares for $1,150,000. The founders assign the six launch courses and the code to the company at formation; counsel confirms that none was written on a former employer's time or equipment and that Marguerite's former publisher has no claim on the work. The bank line is secured on equipment and receivables, and the bank would likely ask for an SBA guarantee or cash collateral, personal guarantees from both founders and quarterly accounts. A seasonal credit line of $300,000 is expected by the end of Year 2, on terms a bank decides.
School-Year Finance, 2027 to 2031
The forecast runs from January 2027 to December 2031. The first year is month by month because school purchasing is lumpy: the summer months carry the largest share of the cash. Later years are annual, so their cash balances are year-end figures. Seat counts, order counts and prices are listed first, which lets a reader recompute every line of revenue. Revenue is shown on a billings basis, as explained in the notes below.
What the $1.5 million buys
| Use of funds | Amount |
|---|---|
| Workstations, audio booth and a Chromebook, iPad and Windows test bench | $62,000 |
| Office build-out | $30,000 |
| First print run of workbooks and homeschool kits | $25,000 |
| Legal and accessibility: entity, IP assignment, student-privacy review, license terms, outside accessibility audit | $59,000 |
| State vendor registrations, security assessment and payment set-up | $10,000 |
| Launch: web store, catalogs, conference booths, sample classroom kits | $70,000 |
| Cash reserve for two school-year cycles | $1,244,000 |
| Total uses | $1,500,000 |
| Source of funds | Amount |
|---|---|
| Founders' savings (Marguerite Hale and Tomas Reyes) | $200,000 |
| Seed investors (equity) | $1,150,000 |
| Bank term line, drawn at opening | $150,000 |
| Total sources | $1,500,000 |
Supple raises $1,500,000: $200,000 from Marguerite Hale and Tomas Reyes (13%), $1,150,000 from seed investors (77%) and a $150,000 bank term line (10%). The investors receive 40% of the shares. Repayment is spread over five years at 9.5%, and the first twelve months are interest only. Equipment and receivables fall short as security, so a lender would probably want an SBA guarantee or cash collateral plus personal guarantees from both founders. Treat 9.5% as an illustration; no lender has quoted it. Just $256,000 of the total is spent on equipment, build-out, the first print run, legal and accessibility work and the launch. The other $1,244,000 stays in the bank. Operations use $991,506 of cash across Years 1 and 2, because the team is paid year-round while most school money arrives in summer, and the rest of the reserve is what carries the downside case at the end of this section.
Seats, orders and prices behind the forecast
- School and district licenses are priced per student seat per year. Year 1 averages $15 a seat, so $358,000 is about 24,000 seats in roughly 60 school buildings, an average of 400 seats each. Seat prices rise about 3% a year and run from $13 to $19 depending on the course and the size of the order. Seats renew at 88% a year. Year 2 therefore holds about 21,000 renewed seats plus 26,000 new ones, and by Year 5 the line reaches about 116,000 seats. These figures are the plan's own and are not an observed market price.
- The sales funnel behind Year 1: about 200 buildings start a six-week trial on a sample class, and roughly 30% of them buy. Many of the first buildings come through the founders' publishing contacts, and a few districts adopt several buildings at once. A building that buys in spring lands in the first invoice run, and the main run follows from June to September.
- Families buy a yearly license through the web store at $79 to $129 for one course and one learner, or $189 for a three-course bundle, or pay month by month at $14 a course. Monthly plans bring in about 45% of family revenue and keep web-store billing level through the year. The blended price per course-year is about $96 in Year 1 and $112 in Year 5, as bundles and second courses lift the average and prices rise about 3% a year. That is about 3,440 course-years in Year 1, 8,650 in Year 3 and 12,000 in Year 5. About 70% of family customers renew each year. The January orders come from a list of roughly 9,000 parents who took free sample lessons during 2026.
- Reseller and catalog revenue is booked at the wholesale price, roughly 60% of list, so the reseller's margin never appears in revenue. Two catalogs have said they would list the launch courses, but no written agreement is signed at opening, which makes this the least certain line. If none signs in Year 1, revenue falls by about $140,000, and the downside case on the last page already runs at a deeper cut than that. Together the catalogs are 16% of revenue and no single catalog is expected to exceed 8%.
- Teacher training and set-up bills at $2,000 a day in Year 1 and rises 3% a year. Year 1 holds about 20 days and Year 5 about 91. Contract trainers deliver about half of the days; the sales manager, the district account executive and the support team deliver the rest.
- Direct costs run at 20.2% of revenue in Year 1 and at close to the same blend afterward. Stream rates are 14% for school seats (hosting, class-roster tools, royalties to owners of licensed audio and text, bank collection costs), 26% for the web store (card fees, a 10% affiliate commission, hosting, printing and shipping of workbooks and kits), 14% for reseller sales and 50% for training.
- Development cost is expensed as it is spent, not capitalized. The editors, designers and engineers sit in payroll, and outside voice talent, illustration, licensed audio and contract authors sit in their own line. US accounting rules for software that is sold generally allow capitalizing only after a technical-feasibility point that most courseware reaches late, so expensing is the cautious route and does not flatter profit. A CPA confirms the treatment. Only equipment and build-out are capitalized.
- Each salary carries a 27% load for employer payroll taxes, health coverage, paid leave and a retirement match; workers' compensation sits in the insurance line. Pay levels are Supple's own, from $50,000 for support staff up to $125,000 for the second senior engineer, and none comes from a salary survey. Annual 3% raises start in Year 2 and sit on a line of their own.
- The Indianapolis lease is priced at $22 per square foot per year for 2,100 square feet, about $46,000, rising 3% a year until a move to about 2,700 square feet in Year 4 at roughly $62,000. Both are planning figures for a local broker to confirm. The insurance bill buys cyber, errors-and-omissions, general liability and workers' compensation cover, plus key-person policies on both founders, rising from $20,000 to $35,000 a year. An insurer has to confirm the premiums.
- School invoices are paid in 30 to 60 days, web-store orders in a day or two and reseller invoices in 60. The blended receivable period is 34 days. Suppliers are paid in 30 days. Inventory is the $25,000 first print run plus 6% of annual direct costs.
- The tables are on a billings basis: each license is booked in the month it is invoiced. Accounting rules would normally spread a 12-month license across the months of service. A rough estimate puts the difference at $260,000 to $300,000 a year in the growth years, because roughly half of each summer's school billings and a quarter of family billings would still be unearned at December 31. On that basis Year 3 would show a small loss of about $80,000 and the first profit would arrive in Year 4. Cash would be the same. The engine has no deferred-revenue account, so the tables cannot show it.
- Years 2 to 5 are annual, so the tables hide the low point that comes before each summer. A rough month-by-month check using the Year 1 billing pattern puts the base-case low around June of each year: close to zero in Year 3 and above zero in the other years. In the downside case the June low falls roughly $110,000 to $220,000 below zero in Years 3 to 5. The plan therefore expects a $300,000 seasonal credit line by the end of Year 2, drawn between March and July and repaid each autumn. It sits outside the model, and a bank decides whether to grant it.
- Tax is modeled at 21% federal and 4.9% for Indiana after carrying operating losses forward. Indiana could change its rate, and the 4.9% has not been checked against the current schedule. Start-up costs of $139,000 are not carried forward as a tax loss, a cautious choice, while operating losses are applied in full. If federal limits cap how much of a year's taxable income those losses can offset, Years 3 and 4 could carry a small tax bill. Shareholders receive no dividends over the five years.
Revenue by sales channel
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| School and district seat licenses | $358,000 | $730,000 | $1,180,000 | $1,580,000 | $1,980,000 |
| Homeschool and family title licenses (web store) | $330,000 | $630,000 | $900,000 | $1,130,000 | $1,340,000 |
| Reseller and catalog sales (net of reseller discount) | $140,000 | $270,000 | $410,000 | $550,000 | $680,000 |
| Teacher training and set-up services | $40,000 | $70,000 | $115,000 | $155,000 | $205,000 |
| Total revenue | $868,000 | $1,700,000 | $2,605,000 | $3,415,000 | $4,205,000 |
| Growth on prior year | – | 96% | 53% | 31% | 23% |
School seats grow from 41% of Year 1 revenue to 47% of Year 5. Family licenses start at 38% and settle at 32% as the school line outgrows them. Reseller sales hold near 16% and training near 5%. Schools pay once a year, so growth in that line shows up in the invoice runs of June to September.
The first school year, month by month
| Month | School and district seat licenses | Homeschool and family title licenses (web store) | Reseller and catalog sales (net of reseller discount) | Teacher training and set-up services | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $4,000 | $27,000 | $6,000 | $1,000 | $38,000 | ($65,582) |
| Feb 2027 | $6,000 | $25,000 | $6,000 | $2,000 | $39,000 | ($64,784) |
| Mar 2027 | $12,000 | $25,000 | $8,000 | $3,000 | $48,000 | ($57,604) |
| Apr 2027 | $20,000 | $24,000 | $10,000 | $3,000 | $57,000 | ($50,424) |
| May 2027 | $30,000 | $25,000 | $14,000 | $3,000 | $72,000 | ($38,457) |
| Jun 2027 | $52,000 | $28,000 | $22,000 | $4,000 | $106,000 | ($11,333) |
| Jul 2027 | $70,000 | $35,000 | $24,000 | $5,000 | $134,000 | $11,006 |
| Aug 2027 | $78,000 | $36,000 | $20,000 | $6,000 | $140,000 | $15,792 |
| Sep 2027 | $44,000 | $31,000 | $12,000 | $5,000 | $92,000 | ($22,502) |
| Oct 2027 | $22,000 | $27,000 | $8,000 | $4,000 | $61,000 | ($47,233) |
| Nov 2027 | $12,000 | $25,000 | $6,000 | $2,000 | $45,000 | ($59,998) |
| Dec 2027 | $8,000 | $22,000 | $4,000 | $2,000 | $36,000 | ($67,178) |
Revenue runs from $38,000 in January to $72,000 in May, climbs as school invoices and summer family orders arrive, and peaks at $140,000 in August. EBITDA is positive only in July and August and negative in the other ten months. The monthly view spreads each year's operating costs evenly across the twelve months, so the monthly profit follows revenue; in practice costs would step up with each hire, and the early months would be a little lighter and the late months a little heavier. The cash flow table below gives the year-end balance after inventory and receivables.
Who is hired when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Co-founder and chief executive | $110,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Co-founder and chief product officer | $115,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Curriculum editor, world languages | $76,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Software engineer | $108,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Instructional designer | $70,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Customer success and support representative | $50,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Education sales manager | $82,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Marketing manager, homeschool and catalog channels | $80,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Software engineer, platform and reporting | $110,000 | Month 15 | – | 1 | 1 | 1 | 1 |
| Second support representative | $50,000 | Month 29 | – | – | 1 | 1 | 1 |
| District account executive | $72,000 | Month 28 | – | – | 1 | 1 | 1 |
| Finance and operations manager | $85,000 | Month 38 | – | – | – | 1 | 1 |
| Quality assurance and accessibility specialist | $72,000 | Month 41 | – | – | – | 1 | 1 |
| Second senior engineer | $125,000 | Month 45 | – | – | – | 1 | 1 |
| Curriculum editor, math and reading | $74,000 | Month 47 | – | – | – | 1 | 1 |
| Marketing specialist, email and search | $62,000 | Month 51 | – | – | – | – | 1 |
| Third support representative | $52,000 | Month 53 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $761,577 | $993,987 | $1,128,183 | $1,400,704 | $1,733,973 |
Four people start in January: the two founders, a world-languages editor and a software engineer. The instructional designer joins in month 3, the support representative and the education sales manager in month 4, and the marketing manager in month 8, once the first reseller conversations have shown what the role needs. That makes eight by the end of Year 1. Year 2 adds a platform engineer in month 15. Year 3 brings a district account executive in month 28 and a second support representative in month 29, both ahead of the summer. A finance and operations manager starts in month 38, quality assurance and accessibility testing in month 41, the second senior engineer in month 45 and the math and reading editor in month 47. Year 5 adds a marketing specialist in month 51 and a third support representative in month 53. Headcount is 8, 9, 11, 15 and 17 at year end. The founders draw $110,000 and $115,000 from month 1, inside the costs, so the profit lines are what is left after both have been paid.
Earnings by year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $868,000 | $1,700,000 | $2,605,000 | $3,415,000 | $4,205,000 |
| Direct costs (hosting, payment and affiliate fees, content royalties, printing and freight, contract trainers) | ($175,520) | ($343,760) | ($526,762) | ($690,554) | ($850,301) |
| Gross profit | $692,480 | $1,356,240 | $2,078,238 | $2,724,446 | $3,354,699 |
| Payroll incl. on-costs | ($761,577) | ($993,987) | ($1,128,183) | ($1,400,704) | ($1,733,973) |
| Rent | ($46,000) | ($47,400) | ($48,800) | ($62,000) | ($63,900) |
| Utilities | ($7,200) | ($7,400) | ($7,600) | ($7,800) | ($8,000) |
| Marketing | ($135,000) | ($175,000) | ($215,000) | ($245,000) | ($270,000) |
| Insurance | ($20,000) | ($24,000) | ($28,000) | ($32,000) | ($35,000) |
| Professional fees | ($40,000) | ($44,000) | ($48,000) | ($52,000) | ($56,000) |
| Software subscriptions | ($42,000) | ($58,000) | ($74,000) | ($88,000) | ($98,000) |
| Outside content production (voice talent, illustration, licensed audio) | ($50,000) | ($70,000) | ($80,000) | ($85,000) | ($85,000) |
| Sales commissions, conferences and travel | ($45,000) | ($75,000) | ($105,000) | ($135,000) | ($165,000) |
| Equipment replacement and new-hire equipment | $0 | ($14,000) | ($16,000) | ($22,000) | ($18,000) |
| Bad debt allowance | ($4,000) | ($9,000) | ($14,000) | ($18,000) | ($23,000) |
| Annual pay raises (3% a year) | $0 | ($29,820) | ($68,706) | ($129,883) | ($217,629) |
| EBITDA | ($458,297) | ($191,367) | $244,948 | $447,059 | $581,196 |
| Depreciation | ($19,786) | ($19,786) | ($19,786) | ($19,786) | ($4,286) |
| Interest | ($14,250) | ($12,865) | ($9,654) | ($6,124) | ($2,244) |
| Income tax | $0 | $0 | $0 | $0 | ($123,105) |
| Net income before start-up costs | ($492,332) | ($224,018) | $215,509 | $421,149 | $451,562 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($139,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($631,332) | ($224,018) | $215,509 | $421,149 | $451,562 |
Before start-up costs Year 1 is $492,332 in the red; expensing $139,000 of legal, licensing and launch spending takes that to $631,332. Year 2 still loses $224,018, because the team is larger than the first renewal base can pay for. Profit arrives in Year 3 at $215,509, an 8.3% net margin, and rises to $421,149 in Year 4 and $451,562 in Year 5, or 10.7% of revenue. Payroll including raises falls from 88% of revenue in Year 1 to 46% in Year 5, which is where the margin comes from. Earlier losses shelter the profits from income tax until Year 5, when a tax charge of $123,105 appears and holds net income below Year 4's margin.
Cash in and out
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($713,506) | ($278,000) | $155,054 | $369,118 | $385,804 |
| Workstations, audio booth, test bench and office build-out | ($92,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,500,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($32,356) | ($35,568) | ($39,098) | ($42,978) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $694,494 | ($310,356) | $119,487 | $330,020 | $342,825 |
| Closing cash | $694,494 | $384,137 | $503,624 | $833,644 | $1,176,469 |
The December balance never goes below zero. Its low point is $384,137 at the close of Year 2. Supple clears the bank term line completely during Year 5. Each growth year, unpaid summer invoices tie up part of the gain.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $694,494 | $384,137 | $503,624 | $833,644 | $1,176,469 |
| Accounts receivable | $80,855 | $158,356 | $242,658 | $318,110 | $391,699 |
| Printed workbooks and homeschool kits | $35,531 | $45,626 | $56,606 | $66,433 | $76,018 |
| Workstations, audio booth, test bench and office build-out (net) | $72,214 | $52,429 | $32,643 | $12,857 | $8,571 |
| Total assets | $883,094 | $640,548 | $835,530 | $1,231,044 | $1,652,757 |
| Accounts payable (printers, hosting, royalty holders, contract trainers) | $14,426 | $28,254 | $43,296 | $56,758 | $69,888 |
| Bank term line | $150,000 | $117,644 | $82,076 | $42,978 | $0 |
| Paid-in capital | $1,350,000 | $1,350,000 | $1,350,000 | $1,350,000 | $1,350,000 |
| Retained earnings | ($631,332) | ($855,350) | ($639,842) | ($218,692) | $232,870 |
| Total liabilities and equity | $883,094 | $640,548 | $835,530 | $1,231,044 | $1,652,757 |
Break-even and payroll weight
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -52.8% | -11.3% | 9.4% | 13.1% | 13.8% |
| Net margin (before start-up costs) | -56.7% | -13.2% | 8.3% | 12.3% | 10.7% |
| Payroll incl. pay raises as share of revenue | 88% | 60% | 46% | 45% | 46% |
| Revenue per full-time equivalent at year end | $108,500 | $188,889 | $236,818 | $227,667 | $247,353 |
| Average monthly revenue | $72,333 | $141,667 | $217,083 | $284,583 | $350,417 |
| Monthly revenue needed to cover operating costs | $120,205 | $161,656 | $191,497 | $237,886 | $289,708 |
| Debt service cover (EBITDA / interest + principal) | -32.2x | -4.2x | 5.4x | 9.9x | 12.9x |
Year 1 brings in $72,333 a month on average where $120,205 is needed for operating costs; Year 2 brings $141,667 against $161,656. Only in Year 3 does revenue pass the line, $217,083 to $191,497. Debt service cover is negative through Year 2 and then reads 5.4x, 9.9x and 12.9x.
If every channel sells 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $694,400 | $1,360,000 | $2,084,000 | $2,732,000 | $3,364,000 |
| Net income before start-up costs | ($566,088) | ($306,769) | $13,971 | $233,931 | $403,875 |
| Net income after start-up costs | ($705,088) | ($306,769) | $13,971 | $233,931 | $403,875 |
| Closing cash | $636,130 | $257,776 | $191,772 | $348,938 | $658,085 |
Here every revenue line lands 20% below forecast, in all five years. Marguerite answers in six ways. Hiring from month 13 slips nine months, which pushes the two Year 5 hires to the last month or off the plan. The second senior engineer is dropped. Marketing is cut 20%, and so is her salary. The office stays at 2,100 square feet. Commissions and bad debt shrink with sales. December cash bottoms out at $191,772 in Year 3, and profit first appears that year at $13,971, compared with $215,509 in the base case. Each year trails the base. Cash dips before each summer by more than the year-end balances show, as the notes above say, and the seasonal credit line covers that gap. Equity at the close of Year 1 is $644,912, so the company is still solvent on paper. Had Marguerite taken none of these steps, December cash would go negative in Year 3.
Sources
- US Department of Education, Student Privacy Policy Office, FERPA (the school official exception for outside providers).
- Federal Trade Commission, Complying with COPPA: Frequently Asked Questions (schools and consent). The guidance is revised from time to time.
- Indiana Department of Revenue, corporate tax information. The 4.9% state rate in the model is a planning figure, and the rate may change.
- Student-data agreements, district procurement thresholds, state fiscal-year dates and Indiana student-privacy statutes vary and change; none is quoted here, and counsel confirms each before a contract is signed.
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