Home Health Care Services Business Plan Sample - Financial Plan

Home Health Care Services Business Plan Sample - Financial Plan | Bplans 7/11/18, 3(17 PM
Home Health Care Services

Business Plan
Palo Alto Software
Financial Plan
We want to finance growth mainly through cash flow. We recognize that this
means we will have to grow more slowly than we might like.
The most important factor for our financial plan is collection of

receivables. Our home health care services will be reimbursed primarily by
Medicare, Medicaid, and other private insurances. History indicates that
these payors are sometimes slow to reimburse and receivables can get hung
up in the automated payment system if not tracked closely. As we broaden
our scope of services to include a larger payor base, these lags in collection of
receivables will have less impact on cash flow.
Our figures are based on start-up capital as shown in the Start-up and Start-
up Funding tables; we will consider an additional loan if needed.
7.1 Important Assumptions
The General Assumptions table, below, shows our important (and

conservative) annual assumptions concerning interest rates, tax rates, and
personnel burden. In addition:
1. We assume a strong economy, without major recession.

2. We assume, of course, that there are no significant unforeseen changes
in the federal policy that dictates Medicare and Medicaid reimbursement
of Home Health Care Services.
https://www.bplans.com/home_health_care_services_business_plan/financial_plan_fc.php Page 1 of 11
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 8.00% 8.00% 8.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
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7.2 Break-even Analysis
The Break-even Analysis below is based on monthly fixed costs and an

Average Per Unit Variable Cost. This assumption about cost of sales may at
first look low, but in our service-based business, payroll is included with
other operating expenses in our fixed monthly amounts, so the variable costs
relate to the only other cost of service provided: mileage to and from service
locations.
At these levels, we need to bill and collect the amount shown below per
month to cover our per month costs. We don't really expect to reach break-
even until a few months into the business operation.
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7.3 Projected Profit and Loss
Our projected profit and loss is shown in the following table, with sales
increasing throughout the three years of the plan, and profits are notable
even for the start-up phase of this business. per month
We are projecting growth and total annual sales very conservatively, with
high projected expenses. Our cost of sales is relatively low, as this is a service
agency and the primary costs involved in providing the services are those
related to payroll. The costs of sales reflects the cost of mileage
reimbursement to employees, because the services we provide are home- and
community-based and require travel to and from service locations.
The Profit and Loss table also contains our expenses for independently
contracted physical, occupational and speech therapists, as well as the
owner's and Clinical Director's after-tax draws.
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Pro Forma Profit and Loss

Sales $432,940 $480,074 $533,073
Direct Cost of Sales $24,121 $24,676 $25,245
Other Costs of Sales $0 $0 $0
Total Cost of Sales $24,121 $24,676 $25,245

Gross Margin $408,819 $455,398 $507,829
Gross Margin % 94.43% 94.86% 95.26%
Expenses
Payroll $109,343 $118,322 $121,870
Payroll Taxes $29,920 $30,423 $30,956
Depreciation $0 $0 $0
Rent $2,400 $3,600 $3,600
Heat and Lights $1,800 $1,800 $1,800
Phone $3,000 $3,000 $3,000
Cell Phones $1,800 $1,800 $1,800
Water and Garbage $600 $600 $600
Internet Access $300 $300 $300
Professional Liability Insurance $9,000 $12,000 $12,000
Workman's Comp Insurance $600 $600 $600
Premises and Content Insurance $600 $600 $600
Advertising and Marketing $1,200 $1,200 $1,200
Meals and Entertainment $600 $600 $600
Professional Development $1,200 $1,200 $1,200
Office Equipment and Supplies $4,800 $4,800 $4,800
Contracted Therapists: OT/PT/ST $19,500 $19,500 $19,500
Nursing Supplies $12,000 $12,000 $12,000
Total Operating Expenses $198,663 $212,346 $216,425
Profit Before Interest and Taxes $210,156 $243,053 $291,403
EBITDA $210,156 $243,053 $291,403
Interest Expense $4,000 $4,000 $4,000
Taxes Incurred $61,847 $71,716 $86,221
Net Profit $144,309 $167,337 $201,182
Net Profit/Sales 33.33% 34.86% 37.74%
7.4 Projected Cash Flow
The following cash flow projections show the annual amounts only. Collection
of accounts receivable from our sales on credit will greatly affect our cash
flow. Cash flow projections are critical to our success. The monthly cash flow
is shown in the illustration, with one bar representing the cash flow per
month, and the other the monthly cash balance. The annual cash flow figures
are included here and the more important detailed monthly numbers are
included in the appendix.
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Pro Forma Cash Flow

Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $341,293 $470,096 $521,854
Subtotal Cash from Operations $341,293 $470,096 $521,854
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $341,293 $470,096 $521,854
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $109,343 $118,322 $121,870
Bill Payments $161,040 $196,683 $208,739
Subtotal Spent on Operations $270,383 $315,006 $330,608
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $270,383 $315,006 $330,608
Net Cash Flow $70,910 $155,091 $191,246
Cash Balance $115,509 $270,600 $461,846
7.5 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth
of net worth, and a sufficiently healthy financial position. The monthly
estimates are included in the appendix.
Pro Forma Balance Sheet

Assets
Current Assets
Cash $115,509 $270,600 $461,846
Accounts Receivable $91,647 $101,624 $112,843
Other Current Assets $3,500 $3,500 $3,500
Total Current Assets $210,656 $375,724 $578,189
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $210,656 $375,724 $578,189
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $18,248 $15,979 $17,262
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $18,248 $15,979 $17,262
Long-term Liabilities $50,000 $50,000 $50,000
Total Liabilities $68,248 $65,979 $67,262
Paid-in Capital $20,000 $20,000 $20,000

Retained Earnings ($21,901) $122,408 $289,745
Earnings $144,309 $167,337 $201,182
Total Capital $142,408 $309,745 $510,927
Total Liabilities and Capital $210,656 $375,724 $578,189
Net Worth $142,408 $309,745 $510,927
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financials for your own business plan.
7.6 Business Ratios
The following table shows the projected businesses ratios, and a comparison
of our ratios with standards for the home health care industry (SIC code
8082.000). We expect to maintain healthy ratios for profitability, risk, and
return.

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Home Health Care Services Business Plan Sample - Financial Plan | Bplans 7/11/18, 3(17 PM

Home Health Care Services

The most important factor for our financial plan is collection of

7.1 Important Assumptions

The General Assumptions table, below, shows our important (and

1. We assume a strong economy, without major recession.

Need real financials?

We recommend using LivePlan as the easiest way to create automatic

Create your own business plan

7.2 Break-even Analysis

The Break-even Analysis below is based on monthly fixed costs and an

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Create your own business plan

7.3 Projected Profit and Loss

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Pro Forma Profit and Loss

Total Cost of Sales $24,121 $24,676 $25,245

7.4 Projected Cash Flow

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Pro Forma Cash Flow

Cash Balance $115,509 $270,600 $461,846

7.5 Projected Balance Sheet

Pro Forma Balance Sheet

Paid-in Capital $20,000 $20,000 $20,000

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7.6 Business Ratios

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