Breakeven Analysis - I really need help calculating this.

Our company's breakeven point occurs after the agency consecutively yields two months of positive net income. This actually occurs in in November of Year 1. However, this is predicted to be followed by a series of losses during the proceeding two years of operations. It will not be until the second half of the third year that Six-Star Global will start to show a profit again. Subsequently, during the 3^rd quarter, the company will actually breakeven (i.e. our expenses and revenues will equal). For both the third and fourth quarter of year 3, the company is once again expected to have a positive net income.

Budget Project Notes

1.      Inside sales workers can process at least one sale every 30 min. Another inside sales representative is needed for every 15 deals completed during their shift.  The marketing/sales manager can close extra deals that the representatives cannot cover, if needed.

2.      Median salary for an inside sales representative in Mesa, AZ is $34,753 (Salary.com, 2011).

3.      Median salary for marketing manager in Mesa, AZ is $85,405 (Salary.com, 2011).

4.      Median salary for administrative assistant in Mesa, AZ is $35,563 (Salary.com, 2011).

5.     Mesa office space ranging from $8/sq. ft. - $18/sq. ft. per year, depending upon the location. Our 2100 sq. ft. agency location is listed as $8/sq. ft. per year with first 5 months lease  (AZofficespace.com, 2011).

6.      Straight line depreciation is used with our office furniture over 5 years.

7.      Number of Baby Boomers in the US is approximately 26% of the US population (i.e.78 million people). Of that number, 86% were born in the US and 14% are immigrants (Jones, 2010).

8.      Mesa, AZ is in one of the top five counties with the most baby boomers (Jones, 2010).

9.      Our company will not have any real tangible assets to borrow against as collateral. Our funding will come from investors that will receive company stock in return. We will require $750,000 to launch the company and an additional $400,000 each year for continuing our operations. Most of those funds will be invested in marketing for the agency, as well as the normal operations in the business. Overall, marketing and payroll will consistently be our biggest expense.

10.  Cost of computer is based off of prices found on dell.com and other online retailing computer stores.  The costs of the desk and computer chairs are estimates based on IKEA.com. 

11.  The cost of the all-in-one printer is based off of pricing found on Amazon.com.  A very nice efficient laser all-in-one printer can be purchased for under $1,000.

12.  The office supplies include items like pens, notepads, printer ink, etc.  The food and beverages will be purchased at a warehouse store like Costco or Sams Club to benefit from the bulk discount.

13.  The sales budget is very conservative looking to grab less than 5 thousandths of 1% of the total US market share for specific procedures we are specializing in.  Out of the approximate 279 million procedures that are performed in the US each year we hope to capture just over 1,000 of those by the end of year 1 and just over 2,500 by the end of year 3.  Six Star Global Healthcare Solutions will invest heavily into marketing.  We are projecting our sales to increase by 50% each year and to continue on that exponential growth for the first 5 - 7 years after which will begin to level off to normal growth. 

14.  Cost of travel is based off of estimates from costhelper.com, expedia.com, and travelabroad.com.  They an approximation based on hotel and rental rates found on these websites.

15.  The sales budget costs are broken down as follows:

The following are references that were used in calculating the cost of the procedures as well and the number of procedures that would be performed in the US.

16.  Dental Costs found in Six Star Budget (Medical Staff Writers, 2008).

17.  Hip replacements increased 37% and knee replacements increased 53% in 2004 compared with 2000 (Stacy, 2008).

18.  Hip and knee replacement increased significantly among those aged 45-64 (Stacy, 2008). 

19.  By 2015 there will be an estimated 600,000 hip replacements and 1.4 million knee replacements (Stacy, 2008).

20.  There were 12.5 million cosmetic plastic surgery procedures performed in the US in 2009 (ASPA, 2010).

21.  The cost of a total knee replacement is ~$35,000.