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Cover Page




Covenant Financial Advisors
6600 Preston Road

Suite 2021

Plano, Texas 75024

(214)868-1771 office
(214)41...
Legal Page

                                     Confidentiality Agreement




The undersigned reader acknowledges that th...
Table of Contents



1.0 Executive Summary...................................................................................
Table of Contents




                    Page 1
Covenant Financial Advisors, LLC




1.0 Executive Summary

   Introduction

   Covenant Financial Advisors is a minority-...
Covenant Financial Advisors, LLC



•   Life, Disability, and Long-term Care Insurance




While developing a personal ris...
Covenant Financial Advisors, LLC



their financial resources if they attempt to maintain their pre-retirement standard of...
Covenant Financial Advisors, LLC



  Chart: Highlights


                         Highlights
    $400,000

    $360,000

...
Covenant Financial Advisors, LLC



2.0 Products and Services

   Covenant Financial Advisors services clients all over th...
Covenant Financial Advisors, LLC



financial services firms to attract new clients. But in the minds of consumers, many o...
Covenant Financial Advisors, LLC



4.0 Strategy and Implementation Summary

   In summary, retirees and pre-retirees are ...
Covenant Financial Advisors, LLC



   5. Rick Lindsey, the president of Covenant Financial has solid relationships and re...
Covenant Financial Advisors, LLC




   Each separate seminar requires extensive planning which includes being responsible...
Covenant Financial Advisors, LLC



  Chart: Milestones


                                      Milestones

     April Sem...
Covenant Financial Advisors, LLC




6.0 Financial Plan


   The financial projections for this 2010 business plan are sol...
Covenant Financial Advisors, LLC


Purchase of Assets                                                 $4,500              ...
Covenant Financial Advisors, LLC



Chart: Profit Yearly


                             Profit Yearly

  $160,000

  $140,...
Covenant Financial Advisors, LLC



   Chart: Sales by Year


                               Sales by Year


     $400,000...
Covenant Financial Advisors, LLC




The only thing that continues to keep this company from reaching its full potential i...
Appendix


Table: Financials


Financials
                                                      Mar        Apr       May  ...
Appendix




           Page 2
Covenant Financial Advisors2, Llc
Covenant Financial Advisors2, Llc
Covenant Financial Advisors2, Llc
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Covenant Financial Advisors2, Llc

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Business plan for independent financial services firm, specializing in retirement planning.

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Covenant Financial Advisors2, Llc

  1. 1. Cover Page Covenant Financial Advisors 6600 Preston Road Suite 2021 Plano, Texas 75024 (214)868-1771 office (214)419-0019 fax mrqb18@yahoo.com email www.CovenantAdvice.com website
  2. 2. Legal Page Confidentiality Agreement The undersigned reader acknowledges that the information provided by ______________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of ___________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _____________________. Upon request, this document is to be immediately returned to _____________________________. _________________________________ Signature _________________________________ Name (typed or printed) _______________________ Date This is a business plan. It does not imply an offering of securities.
  3. 3. Table of Contents 1.0 Executive Summary...............................................................................................................................1 Chart: Highlights..................................................................................................................................4 1.1 Company Summary...........................................................................................................................4 2.0 Products and Services............................................................................................................................5 4.0 Strategy and Implementation Summary.................................................................................................7 4.1 Competitive Edge...............................................................................................................................7 4.2 Marketing Strategy.............................................................................................................................8 4.3 Sales Strategy.....................................................................................................................................8 4.4 Milestones..........................................................................................................................................8 Table: Milestones.................................................................................................................................9 Chart: Milestones...............................................................................................................................10 5.0 Management Summary........................................................................................................................10 6.0 Financial Plan.......................................................................................................................................11 Table: Financials................................................................................................................................11 Chart: Profit Monthly.........................................................................................................................12 Chart: Profit Yearly............................................................................................................................13 Chart: Sales Monthly.........................................................................................................................13 Chart: Sales by Year..........................................................................................................................14 6.1 Projected Cash Flow........................................................................................................................14 Chart: Cash.........................................................................................................................................15 Table: Financials..........................................................................................................................................1 Page 1
  4. 4. Table of Contents Page 1
  5. 5. Covenant Financial Advisors, LLC 1.0 Executive Summary Introduction Covenant Financial Advisors is a minority-owned financial consulting firm specializing in retirement counseling focused on women, pre-retirees, retirees and small business owners. Our faith and trust in God and our responsibilities to our clients are our top priorities at all times. We are specialists in developing and implementing customized investment, savings, and insurance portfolios that provide solutions to some of the complicated financial issues of life...before, during and after retirement. Rick Lindsey, our president, has been a trusted advisor helping clients understand and navigate the "risks and rewards" of retirement planning since 2003. The Firm Covenant Financial Advisors was founded in 2007. Our mission is to glorify God by faithfully serving our clients and our community with integrity, compassion and expertise with regard to managing the "risks" associated with the preservation and distribution of wealth. Our ultimate goal is to educate and empower our clients with the knowledge and wisdom to take full advantage of the financial resources available to them. In doing so, we should be able to assist them in turning some assets into tax-advantaged resources that will continue to grow and leave lasting legacies for generations to come. While serving all of Texas, our primary office is located in Plano, Texas. We are proud to be an independent financial consulting firm. We are affiliated with several national marketing organizations that support us in whatever capacity needed. We are experts in assisting our clients in understanding the importance of integrating social security, medicare and tax planning into their retirement strategies. Since inception Covenant Financial Advisors has been a sole proprietorship. The need for growth and a capital infusion has dictated the need to expand the business model to a limited liability corporation and bring in one or two minority owner/investors. The ultimate growth of the firm will be determined by our ability to obtain the additional capital and then how accurately and efficiently the firm is able to implement the facets of this 2010 business plan. The Products Covenant Financial Advisors services its clients by developing, implementing and monitoring customized retirement portfolios utilizing the following products and services: • Retirement Counseling • Social Security & Medicare Planning • Lifetime Income Structure & Distribution • Medicare Supplemental Plans • Managed Money Accounts • Fixed and Indexed Annuities Page 1
  6. 6. Covenant Financial Advisors, LLC • Life, Disability, and Long-term Care Insurance While developing a personal risk assessment, each client is taken through a step-by-step process that helps them fully understand their risks and the options available to them to mitigate that risk. "Our first question to them is "What is it you're trying to achieve? And what are your financial concerns about getting there?" Once we know the answer to that question, and their goals have been established, we customize appropriate strategies to suit their "risk profiles", "time horizons" and objectives to help them reach those goals while minimizing the risks to their portfolios. The Market According to a 2006 leading-edge research study conducted by McKinsey & Company, which was based on a national survey of 3,086 people aged 40-75; consumers' increasingly declining confidence in traditional financial institutions is translating into many of them actively looking at other alternatives such as non-traditional independent financial advisors. The survey concluded that while consumers' anxiety around the financial risks in retirement are rising rapidly, the majority hold some serious misconceptions that are jeopardizing their future living standards in retirement. In particular, pre-retirees are vastly overestimating the likelihood of working longer to make up for savings shortfalls and significantly underestimating their probable retirement expenses. The McKinsey research also uncovered a widespread belief among consumers that financial advisors are primarily interested in "pushing products", as opposed to providing unbiased retirement advice, and are placing their own compensation objectives above the interests of their clients. While these results were similar across almost all channels, one notable exception to the pervasive sentiment of consumer skepticism occurred within the independent financial advisor channel. Here, retirees and pre-retirees alike claimed to be receiving a significantly higher level of retirement advice than consumers utilizing any other channel. At the same time the independent financial advisors' scored the highest marks along such key customer satisfaction dimensions as product knowledge and overall advice capabilities. The retirement market was at that time a $66 billion dollar market and expected to grow by nearly 10% a year for the next decade. Eventually, this market is projected to grow to over $158 billion by 2012, the year when those born at the peak of the baby boom turn 55. Driving this growth is a demographic shift unprecedented in modern U.S. history. The retiree segments (pre-retirees, people transitioning into retirement, and full retirees) will far outstrip other segments in growth over the next 15 years, swelling by 36 million to over 100 million people. This will result in one of the most significant "money in motion" events ever in personal financial services, unleashing over $1 trillion dollars of assets annually within the next decade. A more recent 2008 study conducted by Ernst & Young LLP on behalf of Americans for Secure Retirement coalition stated that almost three out of five new middle-class retirees will outlive Page 2
  7. 7. Covenant Financial Advisors, LLC their financial resources if they attempt to maintain their pre-retirement standard of living. The study went on to conclude that due to a lack of proper planning, over 42% of women in the workforce today will be forced to live below the poverty level in retirement. This study reinforces what many already know - "retirement security" has long been a major concern for working women. Women generally earn less than their male counterparts and therefore have less to save. Additionally, they live longer, are often primary caregivers spending less time in the workforce to accumulate Social Security benefits and participate in employer-based retirement plan. The sum of these findings is this; there is a serious disconnect between the dreams and expectations of working Americans for a secure retirement and the reality of their current preparedness. As an independent financial advisory firm, Covenant Financial Advisors is not only properly positioned but uniquely qualified to help restore consumer confidence in financial advisors that consider the best interests of their clients first. While at the same time, leading the mission of getting more Americans to take control of their financial futures by being more educated, more involved, and more prepared for their retirements today. Financial Path To Success The financial projections for this 2010 business plan are solidly based on past performance. The firm is entering its 4th year of operations. We have taken actual P&L revenue and expense numbers from the past three years and incorporated them into our 2010 forecast. We've also developed a detailed marketing plan which shows how each new dollar of capital will be allocated to support the business plan and grow the firm. Past experience and the mentorship of other successful advisors has brought us to the conclusion that hosting educational seminars for the public will offer the firm the best return on each investment dollar. Hence, the $50,000 in new capital will for the first time allow us to allocate significant marketing dollars to acquiring new clients through educational seminars. We will also do specialized marketing in and around events that target women and golfers. We have been profitable in this venture since year 1. Profitability is not the issue. We simple need the funds to get out and reach the people with our story. I have no doubts that we would be able to obtain profitability on any new cash flow within the prescribed 90 day window even using fairly conservative assumptions and revenue projections. In summary, in exchange for $50,000 in capital through equity infusion I am willing offer a 25% equity stake in the firm. I would like a 5 year buy back option on that offer, but that would be negotiable. The acquisition of this capital is critical to the success of this business plan and this firm and is thus the number one priority of management. Once we’re up and running there will be no stopping us; all we require is a hand-up to get started. Covenant Financial Advisors will flourish in a financial services industry that needs a shot of integrity and a little more diversity wouldn’t hurt either. Page 3
  8. 8. Covenant Financial Advisors, LLC Chart: Highlights Highlights $400,000 $360,000 $320,000 $280,000 $240,000 Sales $200,000 Gross Margin $160,000 Profit Before Interest and Taxes $120,000 $80,000 $40,000 $0 FY 2011 FY 2012 FY 2013 1.1 Company Summary Covenant Financial Advisors is a faith-based financial consulting firm specializing in retirement counseling focused on women, pre-retirees, retirees and small business owners. Our faith and trust in God and our responsibilities to our clients are our top priorities at all times. Rick Lindsey, our president, has been helping clients navigate through their retirement planning since 2003. While serving all of Texas, our primary offices are located in Plano, Texas. We are proud to be a completely independent financial consulting firm serving all of Texas. We are specialists in assisting our clients in understanding the importance of integrating social security, Medicare and tax planning into their retirement strategies. We then develop and implement customized investment, savings, and insurance strategies that provide real-time solutions with regard to the smartest means of income distribution and legacy generation. As an independent financial services firm we are able to offer our clients a wide assortment of products and services. We are first, retirement counselors which enable us to charge for consulting fees to clients only looking for advice or a second opinion. We are also insurance brokers, already appointed with over a dozen top-rated insurance carriers. Those relationships allow us to offer life insurance, health insurance, long-term care insurance, and Medicare supplemental insurance for commission payments when appropriate for our clients needs. And lastly, we are also experienced investment advisors which allow us to actively manage investment accounts within the stock market on a fee basis. Primarily, as retirement counselors, we guide our clients through the maze of entitlement programs, investments and savings options available to them with education, patience and integrity. Our main focus is to enable our clients with the knowledge to effectively manage their financial resources to last throughout their retirement years; ensuring that they always have more than one stable source of income to rely on. And hopefully, with our help, they will never face a financial situation for which they are unprepared. Page 4
  9. 9. Covenant Financial Advisors, LLC 2.0 Products and Services Covenant Financial Advisors services clients all over the state of Texas. We develop, implement and monitor retirement portfolios utilizing the following products and services: • Retirement Counseling • Social Security & Medicare Planning • Income Structure & Distribution • Medicare Supplemental Plans • Managed Money Accounts • Fixed and Indexed Annuities • Life, Disability, and Long-term Care Insurance While developing a personal risk assessment, we walk each client through a step-by-step process that helps them truly understand their risks and the options available to them to mitigate that risk. "Our first question to them is "What is it you're trying to achieve? And what are your financial concerns about getting there?" Once we know the answer to that question, and their goals have been established, we customize appropriate strategies to suit their "risk profiles", "time horizons" and objectives to help them reach those goals while minimizing the risks to their portfolios. The end result is that they feel more confident in their financial decisions. We want our clients to be able to sleep at night without having to worry about their retirement resources being eaten away by another severe downturn in the stockmarket. Once their investments and retirement strategies are in place we schedule regular appointments to monitor our customized strategy and reevaluate any decisions that may wander off course from our client's objectives. The process of properly managing someone's retirement portfolio will always be dynamic and ever changing. The last part of the process is to sit down with our clients and talk through the proper application of estate planning tools such as power of attorney, wills, trusts, endowments, charitable giving strategies and other proven estate planning strategies. This is to further insure that we have left nothing to chance when it comes to what they want to achieve with their money. 3.0 Market Analysis Summary According to 2006 leading-edge research study conducted by McKinsey & Company, which was based on a national survey of 3,086 people aged 40-75; consumers' increasingly declining confidence in traditional financial institutions is translating into many of them actively looking at other alternatives such as independent advisors. The survey concluded that while consumers' anxiety around the financial risks in retirement are rising rapidly, the majority hold some serious misconceptions that are jeopardizing their future living standards in retirement. In particular, pre-retirees are vastly overestimating the likelihood of working longer to make up for savings shortfalls and significantly underestimating their probable retirement expenses. The McKinsey study went on to say that, the combination of consumers' high anxiety levels and serious misconceptions around retirement would seem to create the ideal opportunity for Page 5
  10. 10. Covenant Financial Advisors, LLC financial services firms to attract new clients. But in the minds of consumers, many of the established financial services channels are falling well short of attaining the confidence of potential new clients. The McKinsey research uncovered a widespread belief among consumers that financial advisors are primarily interested in "pushing products", as opposed to providing unbiased retirement advice, and are placing their own compensation objectives above the interests of their clients. While these results were similar across almost all channels, one notable exception to the pervasive sentiment of consumer skepticism occurred within the independent financial advisor channel. Here, retirees and pre-retirees alike claimed to be receiving a significantly higher level of retirement advice than consumers utilizing any other channel. At the same time the independent financial advisors' scored the highest marks along such key customer satisfaction dimensions as product knowledge and overall advice capabilities. The retirement market was at that time a $66 billion dollar market and expected to grow by nearly 10% a year for the next decade. Eventually, this market is projected to grow to over $158 billion by 2012, the year when those born at the peak of the baby boom turn 55. Driving this growth is a demographic shift unprecedented in modern U.S. history. The retiree segments (pre-retirees, people transitioning into retirement, and full retirees) will far outstrip other segments in growth over the next 15 years, swelling by 36 million to over 100 million people. This will result in one of the most significant "money in motion" events ever in personal financial services, unleashing over $1 trillion dollars of assets annually within the next decade. A more recent 2008 study conducted by Ernst & Young LLP on behalf of Americans for Secure Retirement coalition stated that almost three out of five new middle-class retirees will outlive their financial resources if they attempt to maintain their pre-retirement standard of living. The study went on to conclude that due to a lack of proper planning, over 42% of women in the workforce today will be forced to live below the poverty level in retirement. This study reinforces what we already know - "retirement security" has long been a major concern for working women. Women generally earn less than their male counterparts and therefore have less to save. Additionally, they live longer, are often primary caregivers spending less time in the workforce to accumulate Social Security benefits and participate in employer-based retirement plan. The average 401k fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages. According to a January 8th, 2010 article in (Bloomberg) President Obama's administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged. There is "a tremendous amount of interest in the White House" in retirement-security initiatives, according to Assistant Labor Secretary Phyllis C. Borzi. The sum of these findings is this; there is a serious disconnect between the dreams and expectations of working Americans for a secure retirement and the reality of their current preparedness. As an independent financial advisory firm, Covenant Financial Advisors is not only properly positioned but uniquely qualified to help restore consumer confidence in financial advisors that consider the best interests of their clients first. While at the same time, leading the mission of getting more Americans to take control of their financial futures by being more educated, more involved, and more prepared for their retirements today. Page 6
  11. 11. Covenant Financial Advisors, LLC 4.0 Strategy and Implementation Summary In summary, retirees and pre-retirees are far less tolerant than their younger counterparts to a financial advisor's lack of specialized skills and knowledge...at this stage, consumers tend to become much more aware of the need for holistic retirement advice, including such specialized elements as insurance, annuities, and tax planning. To that end, Covenant Financial Advisors will separate itself from its competitors by superb execution in four key areas: Build a Relationship-Oriented Business Build long-term relationships with our clients and their children. We want them to know that Covenant Financial is here to help them through the difficult times of their lives. We want our clients to appreciate the value of our relationship to the point that they truly trust us to help them secure their future and the futures of their loved-ones. Daily Emphasize Client Service as a Top Priority We will never forget who we work for! Our only job is to take care of our clients. We answer their phone calls promptly. We follow through on commitments. We don't promise things that we can't deliver! We make ourselves available to them when they need us. Focus on Our Target Markets Covenant Financial Advisors are retirement planning specialists. We will focus our marketing and services to our four target groups and become experts in the issues that affect them. Those target groups are Women, Pre-retirees, Retirees, and Small Business Owners. Differentiate and Deliver It is not our goal to simply market better and sell more services than our competitors; the primary mission of Covenant Financial Advisors is to deliver the highest quality of advice and service to our clients. Therefore, we are committed to being the most knowledge-intensive, service-oriented and client-centered retirement consulting firm that they will ever meet. We will make a difference in the lives of our clients and in the communities we serve. 4.1 Competitive Edge Once fully capitalized, there are several competitive advantages that will become tremendous assets for Covenant Financial Advisors and provide the momentum to catapult it into the next level of multi-million dollar financial services advisory firms. 1. Covenant Financial is a minority-owned business in an industry where they are scarce. Providing financial guidance and advice for an underserved community with an ever- expanding middle-class in need of trustworthy and reliable financial services professionals. 2. Covenant Financial is a faith-based firm with a solid reputation and firm relationships in the Christian community of North Texas and surrounding areas. 3. Covenant Financial is a client-centered financial consulting firm and has developed the reputation of a caring, service oriented consulting firm that puts the interests of its clients first. 4. Covenant Financial is an independent financial services firm, with the back office support of over 24 national marketing, insurance and investment organizations. Page 7
  12. 12. Covenant Financial Advisors, LLC 5. Rick Lindsey, the president of Covenant Financial has solid relationships and referral ties to the employee base of AT&T in Texas as a result of his 24 year career with the company. 6. Covenant has shown steady triple-digit growth since inception in 2007. 7. Covenant is developing new niche markets which include 401k advisory services for medical services firms and female affinity organizations. 8. Covenant has worked hard to become experts in social security, medicare and medicare supplemental insurance plans to more holistically assist in our clients retirement planning. 4.2 Marketing Strategy Covenant Financial Advisors marketing strategy is simple and straightforward: Focus on our niche markets women, pre-retirees, retirees and small business owners. a. Work constantly on building a strong relationship business. We want to be seen as the financial firm clients believe in, because so many of their friends already trust us. b. Emphasize our strength which is always client-centered service first and foremost; we answer calls and we get back to our clients with an answer. c. Focus on our core specialty which is retirement consulting and all of the issues surrounding it, including lifetime income, social security, medicare and legacy planning. 4.3 Sales Strategy At Covenant Financial Advisors our sales process is fairly simple and straightforward. 1. We meet prospective clients via seminars, referrals, client events, other sponsored events. 2. The first complimentary meeting is usually set within a week. This is strictly a meeting to determine if we can help them and if there is a mutual feel that we can work together. This is the meeting where I ask probing questions to find out what it is they are trying to achieve and what their financial concerns are? 3. We also discuss compensation at this meeting so that the potential clients know exactly how Covenant Financial Advisors is compensated for our services. From this point forward, our consulting fees are $150.00 per hour, but may be waived if prospect becomes a client. 4. If we decide to move forward with the relationship, we set the next meeting within a week and we ask them to bring in all pertinent financial information for us to review. Here we delve a little deeper into their goals, risk tolerance, and time lines. We also discuss any issues that might be unique to their situation now or in the foreseeable future. 5. Depending on the amount of material we have to analyze, the next meeting is set for 7 -10 days. At that time we lay out our findings, starting with the concerns that were most important to them. We then illustrate how we would address the issues one by one until we get them comfortable with the direction that their retirement is headed. 6. At that time, the clients have the option of adopting all or part of our recommendations and becoming clients of Covenant Financial Advisors. Or they can choose to not become clients at this time after which they would simply pay their consulting fee based on our hourly consulting rates of $150.00 per hour for our services and be on their way. 4.4 Milestones The following table lists important program milestones, with the dates, cities and budgets for each. The milestone schedule indicates our emphasis this year on reaching more prospects through dinner seminars. Page 8
  13. 13. Covenant Financial Advisors, LLC Each separate seminar requires extensive planning which includes being responsible for; • work with mail house to design mailers • setup and approve mass mailing schedules • research city locations • contracting dinner venues with access to private dining • developing cost-effective menus • testing audio-visual setup and backups • pre-event qualification calls • post-event appointments and follow-up calls • and a host of other smaller details that must all be professionally managed, monitored, and documented for use with future seminars and presentations. Table: Milestones Milestones Milestone Start Date End Date Budget Manager City April Seminar 3/10/2010 4/6/2010 $4,000 Lindsey Desoto April Seminar 3/10/2010 4/8/2010 $4,000 Lindsey Desoto April Seminar 3/17/2010 4/20/2010 $4,000 Lindsey Arlington April Seminar 3/17/2010 4/22/2010 $4,000 Lindsey Arlington May Seminar 4/12/2010 5/4/2010 $4,000 Lindsey Mesquite May Seminar 4/12/2010 5/4/2010 $4,000 Lindsey Mesquite May Seminar 4/19/2010 5/18/2010 $4,000 Event Manager Keller May Seminar 4/19/2010 5/20/2010 $4,000 Event Manager Keller June Seminar 5/10/2010 6/1/2010 $4,000 Event Manager Addison June Seminar 5/10/2010 6/3/2010 $4,000 Event Manager Addison Totals $40,000 Page 9
  14. 14. Covenant Financial Advisors, LLC Chart: Milestones Milestones April Seminar April Seminar April Seminar April Seminar May Seminar May Seminar May Seminar May Seminar June Seminar June Seminar Mar `10 Apr May 5.0 Management Summary Rick Lindsey is the president and founder of Covenant Financial Advisors. Rick graduated with honors from the University of Central Arkansas in Conway, Arkansas ('78) where he was also recognized as a Presidential Scholar. He later earned his Masters Degree in Management from Webster University in St. Louis, Missouri ('94). Before moving to the financial services industry in 2002 Rick enjoyed a successful 24 year career with SBC Communications, now known as AT&T. After leaving AT&T Rick began his career in financial services with American Express as a financial advisor. Over the next several years Rick continued his professional growth with MetLife Insurance Co. and Wachovia Bank. Finally, in March of 2007, while feeling the urgent call to make even a larger impact in his community, Rick stepped out in faith and established Covenant Financial Advisors. Covenant Financial's mission is to become an invaluable community partner while providing much needed financial support to the average investor. Rick holds his Series 7 and Series 66 registrations and Group 1 insurance license in the state of Texas. He has been working with individuals and businesses in North Texas for several years and has extensive personal and professional experience in his speciality areas of retirement and estate planning. Rick is also an active member of the Dallas chapter of the Society of Financial Professionals. Current plans are to hire an Event Manager to manage the seminar program and all client appreciation events by the end of the 2nd quarter of this year. And a Relationship Manager to handle day-to-day service and documentation processing by the end of the 4th quarter. Page 10
  15. 15. Covenant Financial Advisors, LLC 6.0 Financial Plan The financial projections for this 2010 business plan are solidly based on past performance. The firm is entering its 4th year of operations. We have taken actual P&L revenue and expense numbers from the past three years and incorporated them into our 2010 forecast. Past experience has taught us that hosting educational seminars for the public offers the firm the best return on investment dollars. Hence, the $50,000 in new capital will for the first time allow us to allocate significant marketing dollars to acquiring new clients through educational seminars. We will also do specialized marketing in and around events that target women and golfers. We have no doubt that we will be profitable within 90 days if not sooner! We approached the financial planning from an extremely conservative standpoint and based those projections on actual historical results and achievable gross margins. Although our projected 2010 net cash flow of $83,000 is directly related to our new capital investment; our projected profit before interests and taxes is conservatively projected to grow by 25% in year 2 and another 20% in year 3 due to the expected expansion costs of a rapidly growing firm. Also, our actual interest and tax rates will most likely be somewhat lower than the assumed rates due to some of the tax benefits we will have access to after restructuring into a limited liability corporation. In summary, obtaining the $50,000 in capital through equity infusion or long-term loan is critical to the success of this business plan and is the number one priority of current management. Table: Financials Financials FY 2011 FY 2012 FY 2013 Beginning Balance Opening Balance Cash & Checking $0 $83,000 $148,000 Plus Money Received New Investment $50,000 $0 $0 New Loans $0 $0 $0 Sales $220,000 $315,000 $385,000 Other $0 $0 $0 Subtotal Money Received $270,000 $315,000 $385,000 Less Money Spent Direct Costs Direct Cost of Sales $65,000 $72,000 $80,000 Other Costs of Sales $5,250 $13,500 $15,000 Normal Operating Expenses Payroll and Payroll Taxes, Benefits, Etc. $50,000 $90,000 $120,000 Rent and Utilities $3,400 $6,000 $7,500 Sales and Marketing Expenses $3,950 $2,500 $4,000 Other Operating Expenses $3,900 $3,000 $4,500 Other Outflows Payments of Taxes $46,000 $60,000 $75,000 Debt Payments $5,000 $0 $0 Page 11
  16. 16. Covenant Financial Advisors, LLC Purchase of Assets $4,500 $3,000 $5,000 Other $0 $0 $0 Subtotal Money Spent $187,000 $250,000 $311,000 Ending Balance Ending Balance Cash and Checking $83,000 $148,000 $222,000 Profit Before Interest and Taxes Sales $220,000 $315,000 $385,000 Less Cost of Sales ($70,250) ($85,500) ($95,000) Gross Margin $149,750 $229,500 $290,000 Less Operating Expenses ($61,250) ($101,500) ($136,000) Profit Before Interest and Taxes $88,500 $128,000 $154,000 Net Cash Flow $83,000 $65,000 $74,000 Chart: Profit Monthly Profit Monthly $15,000 $12,000 $9,000 $6,000 $3,000 Profit Before Interest and Taxes $0 ($3,000) ($6,000) ($9,000) Apr Aug Dec Jun Oct Feb Page 12
  17. 17. Covenant Financial Advisors, LLC Chart: Profit Yearly Profit Yearly $160,000 $140,000 $120,000 $100,000 Profit Before Interest and Taxes $80,000 $60,000 $40,000 $20,000 $0 FY 2011 FY 2012 FY 2013 Chart: Sales Monthly Sales Monthly $30,000 $27,000 $24,000 $21,000 $18,000 $15,000 Sales $12,000 $9,000 $6,000 $3,000 $0 Mar May Jul Sep Nov Jan Apr Jun Aug Oct Dec Feb Page 13
  18. 18. Covenant Financial Advisors, LLC Chart: Sales by Year Sales by Year $400,000 $360,000 $320,000 $280,000 $240,000 Sales $200,000 $160,000 $120,000 $80,000 $40,000 $0 FY 2011 FY 2012 FY 2013 6.1 Projected Cash Flow The proposed new capital investment of $50,000 is critical to the continued viability of Covenant Financial Advisors. The lack of cash flow is the Achilles heel of any business. Covenant Financial has enjoyed triple-digit growth over its first three years of existence. Our growth has mainly been the result of a strong existing network at AT&T, great client service, strong word of mouth referrals from our existing clients and a couple of dinner seminars conducted in the 4th quarter of last year. However, it has become painfully clear that if we are to have sustainable growth we have to refine and execute a more consistent marketing strategy for 2010. Therefore, it became imperative that Covenant Financial Advisors expands to add additional partner/investor. This partner needed in order to secure additional equity to stabilize the operational cash flow of the firm which will in turn fund its primary marketing strategy and allow for the continued growth and development of new revenue streams. For a commitment of $50,000 the partner will be offered a 25% equity in the firm. I would also like to include an option to buy back that stake within 5 years at whatever is deemed to be a "fair-market" value at that time. All of these terms are negotiable. The sales and expense forecasts are based on real results of the past three years obtained with very limited capital. The primary vehicle for acquiring new clients will be educational seminars supported by mass mailings to specific regions of North Texas on a rotating basis. Experience and research has shown that pre-retirees and retirees are unhappy with the traditional ways their assets are currently being managed and are constantly looking for new ideas. We at Covenant Financial Advisors believe that our "safe-alternatives" approach to growing and preserving the wealth of our clients will go over well with a retiree population that is growing increasingly aware of the dangers of outliving their resources and are unwilling to leave the fates of their families vulnerable to the whims of the stock markets. Page 14
  19. 19. Covenant Financial Advisors, LLC The only thing that continues to keep this company from reaching its full potential is developing and implementing an appropriate means of "getting the word out". We believe that conducting monthly educational seminars across the Dallas/Fort Worth metroplex will do just that. Thereby, propelling Covenant Financial Advisors into one of the elite financial services firms in the country. Chart: Cash Cash $90,000 $80,000 $70,000 $60,000 $50,000 Net Cash Flow $40,000 Opening Balance Cash & Checking $30,000 $20,000 $10,000 $0 Jul Jun Aug Sep Jan Feb Oct Mar Apr May Nov Dec Page 15
  20. 20. Appendix Table: Financials Financials Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Beginning Balance Opening Balance Cash & Checking $0 $0 $6,000 $19,850 $33,400 $43,250 $53,100 $58,450 $68,800 $74,400 $79,200 $83,000 $83,000 Plus Money Received New Investment $0 $20,000 $15,000 $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales $0 $5,000 $20,000 $20,000 $30,000 $30,000 $25,000 $30,000 $25,000 $20,000 $15,000 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Money Received $0 $25,000 $35,000 $35,000 $30,000 $30,000 $25,000 $30,000 $25,000 $20,000 $15,000 $0 $0 Less Money Spent Direct Costs Direct Cost of Sales $0 $5,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $4,000 $0 $0 $0 Other Costs of Sales $0 $0 $500 $1,000 $1,000 $1,000 $500 $500 $250 $250 $250 $0 $0 Normal Operating Expenses Payroll and Payroll Taxes, Benefits, Etc. $0 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $0 $0 Rent and Utilities $0 $500 $500 $300 $300 $300 $300 $300 $300 $300 $300 $0 $0 Sales and Marketing Expenses $0 $2,500 $50 $50 $250 $250 $250 $250 $250 $50 $50 $0 $0 Other Operating Expenses $0 $3,000 $100 $100 $100 $100 $100 $100 $100 $100 $100 $0 $0 Other Outflows Payments of Taxes $0 $1,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $0 $0 Debt Payments $0 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $0 $0 Purchase of Assets $0 $1,500 $1,500 $1,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Money Spent $0 $19,000 $21,150 $21,450 $20,150 $20,150 $19,650 $19,650 $19,400 $15,200 $11,200 $0 $0 Ending Balance Ending Balance Cash and Checking $0 $6,000 $19,850 $33,400 $43,250 $53,100 $58,450 $68,800 $74,400 $79,200 $83,000 $83,000 $83,000 Profit Before Interest and Taxes Sales $5,000 $20,000 $20,000 $30,000 $30,000 $25,000 $30,000 $25,000 $20,000 $15,000 $0 $0 Less Cost of Sales ($5,000) ($8,500) ($9,000) ($9,000) ($9,000) ($8,500) ($8,500) ($8,250) ($4,250) ($250) $0 $0 Gross Margin $0 $11,500 $11,000 $21,000 $21,000 $16,500 $21,500 $16,750 $15,750 $14,750 $0 $0 Less Operating Expenses ($11,000) ($5,650) ($5,450) ($5,650) ($5,650) ($5,650) ($5,650) ($5,650) ($5,450) ($5,450) $0 $0 Profit Before Interest and Taxes ($11,000) $5,850 $5,550 $15,350 $15,350 $10,850 $15,850 $11,100 $10,300 $9,300 $0 $0 Net Cash Flow $6,000 $13,850 $13,550 $9,850 $9,850 $5,350 $10,350 $5,600 $4,800 $3,800 $0 $0 Page 1
  21. 21. Appendix Page 2

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