. Donation, Grant, and Gift revenue
21.2% of Mental Health and Crisis Intervention revenue was by Substance Abuse charities, equivalent to $6.3 billion. As a startup entity will limited resources our ability to command large portions of this revenue stream is very limited. In addition, we suspect the revenue growth will be limited as the COVID-19 pandemic has lowered revenues throughout the broader economy. As such we are assuming, we can obtain half of one percent of the overall $6.3 Billion market. This estimate is derived from being located in dense states with access to large pools of capital. We assume that revenue growth will coincide with overall GDP growth of 2% to 3% per annum (Agyemang, 2019).
2. Interest and Investment Income
A portion of donations will be invested in a portfolio of securities. These securities are intended to provide addition income that can be used in the operations of the business. Currently the portfolio will be constructed of half equity securities and half bond securities. The equity portion is expected to generate 6% to 9% growth per year. This growth is comprised of 2-3% GDP growth, 2-3% Dividend Yield, and 2-3% of Price Inflation based on the federal reserves mandate. The bond portion will be allocated to investment grade securities yielding 2% to 3%. As a result, we expect the portfolio overall to yield between 4-6% per annum off an initial investment of $500,000
3. Sales Revenue
Periodically, the company will engage in sales efforts to help support the business. These sales efforts will include selling of company merchandise such as clothing, coffee mugs, magnets, bumper stickers, and other misc. goods. There is no research or precedent to determine this figure. The estimate will be $100,000 of sales
4. Advertising
Advertising is critical to operation success. It allows consumers to recognize our product offering will also solidifying our presence in the market. It also allows us to communicate our value proposition to consumers while also establishing trust. Research has shown the advertising budgets for prominent non-profit firms range anywhere from 5% to 25% of revenue depending on the brand. Prominent brands such as Relay for Life often raise substantial sums of money and can therefore use a large amount of money for advertising. As an initial startup, will use a conservative estimate of 10% of revenue dedicated for advertising.
5. Cost of goods sold
Cost of goods sold relate to the cost of material used in merchandise clothing, coffee mugs, bumper stickers and so forth. For major retailers such as Walmart and Target, gross margin ranges from 20% to 30%. To be conservative we will estimate gross margin at 25% meaning that costs of goods sold will be 75% of the sales revenue.
6. Depreciation
The business during initial operations will purchase buildings, land, computer, desk, chairs tables and other property plant and equipment. Each of these items is expected to depreciate at a different level. However, depreciation is tax deductible as such we will use an accelerated depreciation method in early years to help lower our overall tax burden. Our largest expense by far will be related to land...
The industry standard is deprecation land and building by 40 years. We will assume a land and building cost of $4,000,000, totaling a depreciation cost of $100,000
7. Employee benefits
To attract retain and empower employees, benefits must be near industry standard. Industry paid in the non-profit sector is lower than the for-profit sector. Likewise, employees are typically motivated both intrinsically and extrinsically by factors not necessary associate with salary. As such we intend to pay market rate salaries and market rate benefits. The median employee salary is...
…these capabilities in house.
16. Salaries and wages
To attract retain and empower employees, benefits must be near industry standard. Industry paid in the non-profit sector is lower than the for-profit sector. Likewise, employees are typically motivated both intrinsically and extrinsically by factors not necessary associate with salary. As such we intend to pay market rate salaries and market rate benefits. The median employee salary is between $32,000 and $70,000 per year according to day from PayScale. We initially intend to hire 10 personnel to work in the office. Janitorial and cleaning duties will be outsourced and not on our payroll specifically. These expenses will be included in the Maintenance and Repairs line item. We assume a median salary of $45,000 per year for each employee with manager being higher, and entry level position being lower. The benefits portion will include an employee much for HSA contributions of $600 per employee or $6000 per year for 10 employees. We will also match defined benefit contribution plans up to 3% of salary or $1,350 per employee per year. To be conservative total benefits will be roughly $20,000 per year (Berman, 1989)
17. Software
Software includes licenses related to Microsoft office, Bloomberg licenses for the investment portfolio, and other non-profit related databases. Bloomberg license costs $20,000 per terminal for 2 terminals. Microsoft license cost $70 per license for 10 employees. Other non-profit licenses cost between $3000 to $4000 per year.
18. Travel
Due to COVID-19 travel restrictions will be limited for 2021 and the beginning of 2022
19. Utilities
Utilities include gas electric, internet, water, and other energy expenses
20. Other
No other expenses this period.
2021
Donation, Grant, and Gift revenue
$3,150,000.00
Interest and Investment Income
$20,000.00
Sales Revenue
$100,000.00
Total Revenue
$3,272,021.00
Advertising
$315,000.00
Cost of goods sold
$75,000.00
Depreciation
$100,000.00
Employee benefits
$20,000.00
Furniture and equipment
$50,000.00
Insurance
$100,000.00
Interest expense
$0.00
Maintenance and repairs
$26,000.00
Office supplies
$15,000.00
Payroll taxes
$34,425.00
Mortgage
$180,000.00
Research and development
$200,000.00
Salaries and wages
$450,000.00
Software
$45,000.00
Travel
$000
Utilities
$30,000.00
Other
$0.00
Total Expenses
$1,640,425.00
Net Income Before Taxes
$1,631,596.00
Income tax expense
$407,899.00
Income from Continuing Operations
$1,223,697.00
Income from discontinued operations
$0.00
Effect of…
