Transcript beevm.net
Bee VM FINANCIAL FORECAST PRESENTATION Basic Information ■ Bee VM ■ Owner – William Ricardi ■ 76 York Park ■ Belfast – BT15 3QW ■ 07508 478789 ■ http://www.beevm.net ■ [email protected] Method of Income Bee VM’s income is achieved via the sale of support hours, either as part of the initial support package, or ad hoc as our clients require. The average cost of support hours is £75, before any appropriate VAT or duty. After factoring in the amount of time required for sales, training, scripting, holidays, and regular setup and maintenance, a team of 5 highly trained technologists can generate 8,000 support hours per year. This means that at peak utilization, £600,000 in sales can be made in a year without expanding the initial workforce. The expectation is that 40% utilization will be realized in the 15/16 business year. 70% in 16/17. And full utilization will be realized in 17/18. With the approval of our investors, 18/19 will serve as a growth year, allowing for 14,000+ support hours of capacity in 19/20. Financial Plan Projected 5 employees at average salary of £35,000 year one. £5,000 managed office space. £5,000 hardware, software, and bandwidth. £5,000 education and certification. £35,000 travel, trade shows, and advertising. £225,000 total costs year one. 8000 available support hours at £75 an hour: £600,000 at full utilization. Projected Year 1 utilization: 40% - £240,000. Projected Year 2 utilization: 70% - £420,000. Projected Year 3 utilization: 100% - £600,000. At 50% investor net profit capture and +5% to +10% costs year on year, funding recap by Q3 Year 3, doubled by Q4 Year 4. With a Year 5 expansion, £300,000+ investor profit per annum is possible. Year by Year Projections Financial Year Salaries Office Expenses Travel and Ads Total Annual Costs Gross Sales Net Profits 15/16 175,000 15,000 35,000 225,000 240,000 15,000 16/17 192,500 22,500 45,000 260,000 420,000 160,000 17/18 211,750 25,000 48,250 285,000 600,000 315,000 Totals 579,250 62,500 128,250 770,000 1,260,000 490,000 At an investment recapture rate of 50% of the Net Profits, the initial £225,000 investment will be recaptured by Q3 of Year 3. Year 4 and after, the yearly investor profits with a minimal growth plan would be £160,000 per year. With an aggressive growth plan accepting lesser Year 4 yields, Year 5 Net Profits could reach upward of £600,000 for investor profits in excess of £300,000 per annum. Month by Month Projections 07/15 08/15 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 Salaries 14583 14583 14583 14583 14583 14583 14583 14583 14583 14583 14583 14583 Expense 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 Ads 0 6000 2000 2000 4500 2000 2000 6000 2000 2000 4500 2000 Sales 0 10000 0 20000 10000 0 10000 67500 22500 10000 67500 22500 Profits -15833 -11833 -17833 2167 -10333 -17833 -7833 45667 4667 -7833 47167 4667 YTD Net -15833 -27666 -45499 -43332 -53665 -71498 -79331 -33664 -28997 -36830 10337 15004 07/16 08/16 09/16 10/16 11/16 12/16 01/17 02/17 03/17 04/17 05/17 06/17 Salaries 16042 16042 16042 16042 16042 16042 16042 16042 16042 16042 16042 16042 Expense 1875 1875 1875 1875 1875 1875 1875 1875 1875 1875 1875 1875 Ads 2500 6500 2500 2500 6000 2500 2500 6500 2500 2500 6000 2500 Sales 67500 20000 10000 87500 10000 0 10000 67500 35000 22500 67500 22500 Profits 47083 -4417 -10417 67083 -13917 -20417 -10417 43083 14583 2083 43583 2083 YTD Net 47083 42666 32249 99332 85415 64998 54581 97664 112247 114330 157913 159996 Key Drivers for Financial Success The U.K. Government Service Design Manual ( see https://www.gov.uk/service-manual ) now requires Government services to favor Open Source software and methodologies over closed source alternatives. By adopting an Open Source, Agile policy, we can leverage our government contacts and win business from more expensive, partialservice, closed source service providers. In addition to the growth factors in Cloud services stated in the Financial Assumptions & Forecast section, we have witnessed an increased use of Cloud resources by small and medium businesses that do not have full time system administration resources. A full service administration option at a fraction of the cost of a full time employee will be quite attractive. Year 18/19 Expansion and 2021 Exit With investor agreement, 18/19 would see a cost increase from £300K up to £500K to facilitate expansion, putting profits for that year down to £160,000, but allowing for accelerated growth in 19/20. With the expansion of staff and of services sold (entering the area of virtual currency facilitation, etc.), 19/20 projections could see gross sales of £1.35 million with net profits of £675K, positioning Bee VM for exit. Trade sale on approx. valuation of £3 million could be conducted in 2021. ROI after a 5 year investment of £225,000: £2,162,500 return after five years of profit split, and proceeds from sale of the company. Financial Assumptions & Forecast Basic assumptions are a continued market trend towards Cloud computing, and growing need for security, Agile, and automation. Studies by Cisco, Goldman Sachs, and Centaur Partners put the 2018 CAGR of Cloud services at between 21% and 30% based on sector. ComputerWorld forecasts (as reported by Forbes) project in 2015: A 24% decrease in physical hardware spending, a 46% increase in security spending, and a 42% increase in Cloud spending . InformationWeek’s Wallstreet & Technology forecast shows an over 40% savings for clients embracing software automation and Agile in 2015. Projection Risks Lack of year 1 market penetration will lead to a slower growth curve. Increased Year 2+ competition if success is seen as threatening to partialservice providers. Expect counter-marketing in response to major contract announcements. Local tech demands rise, salary costs go up further than projected. This could reduce net profits by 7 to 12 percent in year 3+. Exchange rate shift from Euro to Pound stifles Year 4+ Western Europe expansion rates.