Cleaning, Financial Model, Service Businesses

10-year Financial Projections, 5-year Financial Projections, Accounting, Cap Table, Cash Flow Analysis, Cash Flow Projections, Cash on Cash Yield, Cash-on-Cash Multiple, DCF Model, Debt Schedule, Debt Service Coverage, Discount Rate, Excel, Financial Analysis, Financial Feasibility, Financial Model, Financial Modeling, Financial Projections, Financial Statements, Forecast, Forecasting, Income Statement, Investment Multiple, IRR (Internal Rate of Return), NPV (Net Present Value), Private Equity, Pro-Forma, Profitability Analysis, Return on Invested Capital (ROIC), Return on Investment (ROI), Revenue Projections, Scenario Analysis, Sensitivity Analysis, Staffing, Startup Financial Models, Terminal Value, Three Statement Model | Three Financial Statements

 

Video Overview:

I was researching the basic mechanics of how plumbing businesses make money, and it turns out there are some neat configurations that were unique and fun to build. These bottom-up assumptions drive the financial forecast of a plumbing business startup / ongoing operation / potential exit are very elegant. It also would work pretty perfectly with an electrician business.

The template was built to manage scale and configure the unit’s economics specific to this service business. You could easily model a situation where there are 1,000s of plumbers / trucks, and the growth rates will depend on each assumption category.

Revenue Assumptions:
– Up to three service tier configurations
– Each configuration represents a different level of service (summary of each is in the file along with source references)

For each service tier, the following is defined:
– Start Month
– Starting Job Count/mo.
– Monthly Growth of Job Count
– Average Ticket Value (charged to customer)
– Average Hours Required per Job
– Average Jobs per Month per Plumber

As the above assumptions are configured, there is an automatic sanity check to ensure the inputs are feasible and defensible. You will see the per year
– Annual Jobs Completed
– Average Hours per Plumber per Month
– Monthly Earnings per Plumber
– Total Plumber Count/Truck Count
– Average Hours per Day per Plumber (per defined working days in a month)

Expense Assumptions:
– Plumber Wages (differentiated by service tier)
– Payroll Taxes / Benefits (differentiated by service tier)

Variable Costs per Service Tier
– Parts / Materials required per job
– Truck maintenance
– Insurance per Truck
– General ‘other’ costs per plumber per month

Fixed Costs
– Define a range of general and administrative costs / sales and marketing costs per start month, monthly cost per month, and description (32 slots each)

There is also a schedule for fixed asset purchases (i.e. trucks mainly) and one-time other startup costs, terminal value based on EBITDA multiple, and inventory levers for how often purchases happen.

The model solves for the minimum equity investment required to keep cash above $0, and there is an option to finance some of those costs with a traditional loan (SBA or otherwise).

Output Reports:
– Monthly and Annual pro forma detail
– Monthly and Annual Financial Statements (Income Statement, Balance Sheet, Cash Flow Statement)
– Annual Executive Summary
– Cap Table (detailed)
– Lots of visualizations
– DCF Analysis (project level, investor pool, owner pool)
– IRR, Equity Multiple, ROI, NPV for each pool and in aggregate