Financial Plan Report: FirstStepPHYSIO Business Operations

The financial plan for FirstStepPHYSIO, a physiotherapy business, is detailed in this report. It outlines sales forecasting based on market trends and membership growth, projecting significant revenue increases over five years. A projected cash flow statement highlights the inflow and outflow of cash, including initial investments, loan repayments, and operational expenses, demonstrating the business's increasing cash generation efficiency. The break-even analysis determines the sales point at which all costs are covered, and the income statement provides a yearly profit and loss overview. The balance sheet shows the assets, liabilities, and equity of the business, and finally, the report discusses future financial requirements for expansion, including potential bank loans, retained earnings, and investments in staff training, workplace renovation, and equipment purchases. This comprehensive financial plan is designed to enhance profitability and strengthen the market position of the business.

Health practice management

TABLE OF CONTENTS
4 Financial Plan..........................................................................................................................3
4.1 Introduction......................................................................................................................3
4.2 Projected Cash Flow........................................................................................................3
4.3 Break even analysis..........................................................................................................5
4.4 Future financial requirements..........................................................................................8

4 FINANCIAL PLAN
4.1 Introduction
Financial planning is essential for accessing the requirement of financial and checking the
feasibility of business. The section here with deals with the financial plan of
FirstStepPHYSIO, which is going to start its operation from the current year. Business works
with the objective to provide best health services to the client to assist them in achieving their
health goals. Currently, the business is owned by the original 3 founders, who will contribute
AUD 100000 in total for 33% share. This is supplementary cover start-up requirements, and
provide the business with a cash cushion to use for expansion over the first five years. The
business will take a loan of AUD 30000 as well, for the smooth operations of the business.
This loan will be replayed in upcoming 3 years.
Sales Forecasting
Sales
Memberships AUD10
Childcare AUD15
Massage AUD10
Physical Therapy AUD10
Fruit Bar Drinks AUD5
AUD 50
Forecasting for sales has been done by considering the market trend of Australia through
implementing survey methodology.
Particulars Year 1 Year 2 Year3 Year 4 Year 5
Members 150 225 338 507 761
Yearly membership price (AUD) 600 600 600 600 600
Average selling price 90 000 135 000 202 800 304 200 456 600
Note: The sale is going to be increased due to increase in members by 50% each year due to
referral and marketing. For this purpose, promotion campaigns of business will update on a
yearly basis and attractive benefits will be provided to employees and clients who will

provide membership to business through referrals. With this approach, both clients and
employees will be motivated for making an increase in membership.
4.2 Projected Cash Flow
Particulars Pre operating
year
Year 1 Year 2 Year 3 Year 4 Year 5
Cash inflow
Opening -27
000
-5 000 61 100 194
051
437 400.6
Sales 90 000 135
000
202
800
304
200
456 600
Initial investments
Owners savings 100 000
Bank loan 30 000
Total cash inflow (A) 130 000 63 000 130
000
263
900
498
251
894 000.6
Total cash outflow
Direct expenses
Equipments 40 210
Utilities 10 000 10 700 11 449 12 250 13 108
Total direct expenses 10 000 10 700 11 449 12 250 13 108
Gym registration fee 2 000
Marketing and
promotions
20 000
Furniture and Interior 25 000
Kitchen and fixtures 10 000
interior decorator 50 000
Rent 4 000 4 000 4 000 4 000 4 000
Marketing expenses 500 500 500 500 500
Salaries to staff 42 000 42 000 42 000 42 000 42 000
Telephone charges 1000 1100 1200 1300 1400
Electricity bill 500 600 700 800 900
Insurance 50 000
Loan repayment 10 000 10 000 10 000

Total cash outflow (B) 157 000 68 000 68 900 69 849 60 850 61 907.96
Total cash flow(A-B) -27 000 -5 000 61 100 19
4051
43
7401
832092.6
Projected cash flow shows increasing trend of cash generation efficiency of the
business. Through this statement, the target will be set for business to ensure actual
performance is as per the expectations (Rossouw, 2016). Implementation of the plan will be
supported by effective cash management strategies to ensure liquidity of business and
optimum utilisation of available resources.
Projected of cash flow statement is supported by following financial assumptions:
 The place of the gym is going to be rented, and the amount paid for rent will be fixed
@ Aud 4000 yearly.
 The utility expenses will be increased @ 7% p.a.
 The sale is going to be increased due to increase in members by 50% each year due to
referral and marketing.
 The telephonic charges are going to be increased @ Aud 100 per year.
 The electricity expenses are expected to be increased by 10% as its capacity is
increased
 The loan of business will be repaid in 3 years, and 7% interest is paid for 3 years, and
it will be paid on the remaining amount from 2 years.
 The marketing expenses are going to be fixed @500 Aud per year
 The depreciation will be paid @10% straight-line method for 5 years
 The cost of goods sold is minimum @10% for the business
 Insurance of Aud 50000 will be done. However, the business will make use of AAMI
and will need public liability and indemnity insurances
4.3 Break even analysis
Break even analysis is significant for business as it assists in setting targets to ensure
all costs are recovered, and appropriate planning is done for desired targets. Break even
analysis assist in determining the point of sales at which all fixed and variables costs are
covered to attain no profit any loss situation (Johnston, Messina & Yates, 2016). By
considering sales and operational expenses break analysis of the business is as follows:

Break even analysis

Year 1 Year 2 Year 3 Year 4 Year 5
Sales 90 000 135 000 202 800 304 200 456 600
Fixed cost
rent 4000 4000 4000 4000 4000
salaries 42 000 42 000 42 000 42 000 42 000
marketing 500 500 500 500 500
depreciation 12 521 12 521 12 521 12 521 12 521
Interest 2100 1400 700
Miscellaneous expense 500 500 500 500 500
Total 61 621 60 921 60 221 59 521 59 521
Variables Cost
Telephone charges 1000 1100 1200 1300 1400
utilities 10000 10700 11449 12250 13108
Total 11 000 11 800 12 649 13 550 14 508
contribution (S-V) 79 000 123 200 190 151 290 649.57 442 092.04
Contribution Ratio 0.88 0.91 0.94 0.96 0.97
BEP (Break Even Point) 70 201 66 756 64 227 62 296 61 474
Year 1 Year 2 Year 3 Year 4 Year 5
56000
58000
60000
62000
64000
66000
68000
70000
72000
BEP (Break Even Point)
Axis Title
Projected income statement
Income Statement Year 1 Year 2 Year 3 Year 4 Year 5

Sales 90 000 135 000 202
800
304 200 456 600
COGS 9000 13 500 20 280 30 420 45 660
Gross profit 81 000 121 500 182
520
273 780 410 940
Expenses
Utilities 10 000 10 700 11 449 12
250.43
13 107.9601
Rent 4000 4000 4000 4000 4000
Marketing 500 500 500 500 500
Salaries to staff 42 000 42 000 42 000 42 000 42 000
Telephone charges 1000 1100 1200 1300 1400
electricity bill 500 600 700 800 900
Depreciation (furniture &
fixtures )
12 521 12 521 12 521 12 521 12 521
Interest payment 2100 1400 700
Miscellaneous expense 500 500 500 500 500
Total expenses 73 121 73 321 73 570 73 871 74 929
Profit before tax
(Operating profit)
7879 48179 10895
0
199909 336011
Tax @10% 788 4818 10895 19991 33601
Net profit 7091 43 361 98 055 179 918 302 410
Depreciation calculation AUD
Equipment 40210
Furniture and Interior 25000
Kitchen and fixtures 10000
interior decorator 50000
125210
10% rate 12521
Balance Sheet

Projected balance sheet
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current assets
Cash 61 100.0 194 051.0 437 401.0 832 093
Advance paid for
promotions 20 000.0
Prepaid expenses 11 000.0 600.0
Debtors 28 150.0 35 420.0 26 544.0 30 500.0 35 000
Fixed assets
Equipment 40 210.0 36 200.0 32 580.0 29 322.0 26 390
Furniture 85 000.0 18 000.0 16 000.0 16 000.0 16 000
Total assets 153 360.0 181 720.0 269 775.0 513 223.0 909 482
Equity and liabilities
Current liabilities
Creditors
Bank overdraft 5 000.0 73 530.0 167 379
Long term liabilities
Bank loan 30 000.0 20 000.0 10 000.0 0.0 0
Capital
Amount invested 100 000.0 118 360.0 161 720.0 259 775.0 439 693
Profits 18 360.0 43 360.0 98 055.0 179 918.0 302 410
Total equity 153 360.0 181 720.0 269 775.0 513 223.0 9 09 482
4.4 Future financial requirements
With the growth and popularity of business, planning for expansion will be done to enhance
profitability and strengthen market positions. After completion of five years; staff will be
increased to manage gym clients in a better manner. Further, new machinery will be
purchased as per the demand and trend in the market. For this purpose funds will be
generated from following sources:
Bank loan

Financial institutions will provide a loan to business as proposed venture will have good
credibility in the market (Lanen, 2016). For this purpose, a business can provide their fixed
assets as security for a loan through which they have to lower financial cost to banks. In
addition to this; business will be liable to pay regular interest payments and be obliged for
repayment.
Retained earnings
All profits of business will not be distributed to owners as a portion of the earnings will be
saved for future expenses. Cumulative funding of retained earnings can assist in future
expansion. For utilisation of this source; business will not be required to pay finance charges
and repayment of the used amount.
Collected funds from the above-described financing options will be invested in the following
manner:
Training and development of staff
By considering the primary motive of business, i.e. to offer motivation and education while
helping with rehabilitation and training business will offer extensive training to new Physio
and Personal trainers (DRURY, 2013). Further, they existing trainers will be provided with
updating methods for physiotherapy so that they can assist customers in an effective manner
with their health goals. For this purpose, experienced experts will be hired.
Renovation of workplace
The workplace will be renovated with the changing requirements of clients and convenience
of employees. With this approach better work environment will be provided through which
client can be increased by the business entity.
Purchase of new equipment
The new equipment will be purchased by a business in future years for making improvement
in services and to add new services to the product portfolio.
Planning for start-up of branch
With the increasing popularity of business, a new branch of the gym will be set up for
expansion of business and to take a venture to a new level.