Home > Sample Business Plans > SanaSana

SanaSana
FINANCIAL PROJECTIONS

The financial projections for SanaSana are quite encouraging. The growth of Hispanic adoption of Internet usage10 , the lack of useful health content targeted at the Hispanic/Latino population, and the opportunity for product developers to seek feedback from a targeted community in a cost-effective manner provide a unique, yet short window of opportunity for SanaSana to be a first mover. The following sections provide a synopsis of the financial outlook for the business.

5.1 5-Year Financial Summary.

The table below provides a 5-year earnings outlook for SanaSana. As can be expected, earnings and cash flow for Startup, Year 1 and Year 2 are negative due to slow revenue ramp-up with heavy expenditures in content development to build the site and marketing functions to attract a large number of necessary customers.

OPERATING EARNINGS
(In thousands)StartupYear 1Year 2Year 3Year 4Year 5
Revenues
Sponsorships$0$1,440$3,840$7,560$13,920$23,400
Product Development Services$0$3,663$5,598$8,192$12,267$17,808
Research Studies & Commerce$0$1,265$2,619$4,455$7,201$12,237
Advertising$0$832$1,927$3,101$5,011$8,125
Total$0$7,200$13,984$23,307$38,399$61,569
Expenses
Content Development$406$372$1,224$2,322$3,526$5,044
Operations$231$1,203$1,444$1,788$2,177$2,716
Marketing$220$12,110$10,129$14,018$18,777$25,129
G&A$1,065$2,359$2,716$3,078$3,496$3,977
Total$1,922$16,044$15,514$21,206$27,976$36,866
EBT($1,922)($8,844)($1,529)$2,101$10,423$24,703
INFLATED EBT (3% per year)($1,922)($9,110)($1,622)$2,296$11,731$28,637
Taxes (Assumes 35% tax rate)($673)($3,188)($568)$804$4,106$10,023
NET EARNINGS($1,249)($5,921)($1,055)$1,493$7,625$18,614
Cash Flow (adj for tax credits)($1,922)($9,110)($1,622)$5,922$7,625$18,614
Cumulative Cash Flow($1,922)($11,032)($12,654)($6,733)$893$19,507

This income model is contingent upon a number of key volume estimates. Figure 13 below provides the more critical volume assumptions for SanaSana. Please see Appendix F for the complete list of assumptions and all detailed financial statements.

Figure 10. Assumptions
 StartupYear 1Year 2Year 3Year 4Year 5
# Hispanics in the US Online3,541,3334,957,8676,445,2278,378,79510,892,43314,160,163
# registered users 198,315257,809335,152435,697566,407
# content areas 20406080100
# emails sent 12,606,04526,090,27837,309,09753,352,00976,293,372
# Health Capsules sent per year per content area 5252525252
Total New product space purchased per year 4809601,4401,9202,400
# Licensing agreements (content licensing) 69152030
# willing to participate in research studies 6184,5615,9307,70810,021
# new products samples sent per year 1,189,8881,703,0982,440,0583,513,4165,058,613
# surveys distributed per year 98,166127,732166,368217,774285,046
# focus groups per year 90.0150.0210.0285.0360.0

5.2 Revenues and Expenses

Below are brief descriptions of the revenue and expense components of the income statement. For a more detailed description of the key line items, please see Appendix F.

5.2.1 Revenues
SanaSana will have four primary sources of income: sponsorships, product development services, research subjects and commerce, in addition to advertising. 5.2.2 Expenses
We have divided SanaSana's expenses into four categories: Content Development, Marketing, Operations and General and Administrative (G&A).

5.3 Funding Requirements

5.3.1 Amount and timing.
As can be seen from the Statement of Cash Flows below, the management of SanaSana, will need $10 million of cash over the next 18 months.

Pro-forma Statement of Cash Flows (FY2000)
EOP
Startup
EOP
Year 1
EOP
Year 2
EOP
Year 3
EOP
Year 4
EOP
Year 5
CASH FLOWS FROM OPERATIONS
Net Earnings($1,249,308)($5,748,894)($993,987)$1,365,954$6,775,079$16,056,886
Change in Working Capital
Decrease /(Increase) Accounts receivable$0($1,374,509)($1,305,680)($1,730,704)($2,814,255)($4,348,203)
Decrease / (Increase) Inventory($22,077)$2,000($16,392)($21,099)($23,162)($29,190)
Decrease / (Increase) Prepaid expenses($8,400)($1,600)($4,000)$0$0$0
Increase / (Decrease) Accounts payable$219,135$975,781($46,051)$444,257$529,446$700,868
TOTAL CASH FROM OPERATIONS($1,060,650)($6,147,222)($2,366,110)$58,408$4,467,108$12,380,362
CASH FLOW FROM INVESTING
Investments$0$0$0$0$0$0
TOTAL CASH FROM INVESTING$0$0$0$0$0$0
CASH FLOW FROM FINANCING
Short-term debt$0$0$0$0$0$0
Long-term debt$0$0$0$0$0$0
Owner's equity$2,000,000$6,000,000$2,000,000$0$0$0
TOTAL CASH FROM FINANCING$2,000,000$6,000,000$2,000,000$0$0$0
NET INCREASE / (DECREASE) IN CASH$939,350($147,212)($366,110)$58,408$4,467,108$12,380,362
CASH, BEGINNING OF PERIOD$0$939,350$792,128$426,019$484,426$4,951,535
CASH, END OF PERIOD$939,350$792,128$426,019$484,426$4,951,535$17,331,896

5.3.2 Staged Funding Needed
This investment will be required in the installments detailed below:

Jun 2000Nov 2000Feb 2001
Cash Needed$2.0MM$2.5MM$5.5MM

5.3.3 Use of Funds
Startup (June 2000 to December 2000). During the first six months after launch (startup phase), SanaSana will invest a majority of its capital in building the web site and content for its business. Also, SanaSana will begin a communication and sales effort with potential business partners and doctors. The goal of this effort is to have a set of established businesses and medical professionals supporting the business prior to its launch. A smaller set of funds will also be used to begin a marketing effort to potential Hispanic users.

Year 1 (December 2000 to December 2001). The majority of the funds available in this phase will be spent on consumer marketing. As described above, the success of this business is dependent upon achieving a critical mass of consumers. It is only with this large, targeted consumer-base that SanaSana can expect to earn revenue from advertising.

5.3.4 Long-Term Financial Strategy
We see two options for our future financial strategy, internal expansion or exit strategy.
Expansion Model. In order to increase market share and access additional markets, SanaSana must raise additional capital.

Acquisition Model. Current competitors in both the Spanish language and English language market space are obviously acquiring candidates.
SanaSana
Table of ContentsAppendices
0. Executive Summary
1. Business Description
2. Market Analysis
3. Management Team
4. Operating Strategies
5. Financial Projections
6. Business Risks
Health Demographics
Future Business Offerings
Competitive Landscape
Internet Usage and Penetration
Technical Infrastructure Implementation
Detailed Financial Statements
All information herein is confidential and belongs to SanaSana.