Horse Reseller Business Plan

GFX: Gravestat Farm eXchange

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Financial Plan

7.0 Financial Plan

As has been stated throughout the content of this document, the financial analysis charts and tables contained herein have been built with two primary factors at the forefront of consideration:

1. To provide an extremely conservative outlook for GFX based on minimum performance expectations rather than a "blue sky" outlook.
2. To provide a healthy foundation for a long term business operation while supporting the financial needs of the home portion of a home based business. Corners have not been cut, expenses have not been hidden. Rather, this document and loan request has been specifically designed to secure the right amount of start-up funding to ensure a long and successful future for GFX.

We intend to seek, and welcome, continued education, counseling, and adjustments to this Financial Plan throughout the future of GFX.

7.1 Important Assumptions

The accompanying table lists our main assumptions for developing our financial projections.

The majority of the assumptions are based on raw average estimates suggested by the software program used to create this business plan. As GFX moves into full operation these figures will be monitored and adjusted according to actual business conditions.

Three Key Factors:

1. Personnel Burden is listed, and will remain, at 0. GFX will be owned and operated solely by immediate family.
2. Inventory turnover is listed at 12 to reflect one month of inventory in stock at all times. However, horses are typically "turned" within seven days, and all but a very limited inventory of tack and equipment will be ordered and shipped directly from the source upon customer order.
3. GFX does not sell on credit terms. This is the norm (almost without exception) in the horse industry. GFX will only offer credit card purchases as an alternative to cash/check payment.

General Assumptions

General Assumptions
	FY 2001	FY 2002	FY 2003
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	25.42%	25.00%	25.42%
Other	0	0	0

7.2 Break-even Analysis

The following table and chart show our break-even point.

Break-even Analysis



Break-even Analysis

Break-even Analysis
Monthly Units Break-even	69
Monthly Revenue Break-even	$21,312
Assumptions:
Average Per-Unit Revenue	$310.27
Average Per-Unit Variable Cost	$209.63
Estimated Monthly Fixed Cost	$6,913

7.3 Projected Profit and Loss

Two Critical Issues regarding the following GFX P&L Statement:

1. The entire P&L statement, which stems from the Sales Forecast, is intended to reflect an extremely conservative projection. It does not indicate the full potential of GFX given the level of management and expertise that serves as the foundation of GFX. Rather, it has been created, by intent, to demonstrate the absolute minimum performance level expected during the period.
2. It is of critical importance to note that, being a home based business and the sole source of income for our family, the expense portion of P&L contains virtually every expense, business and personal, conceivable. It does include such minute details as groceries, medicines, gas, daily cash, revolving credit, even "fast food," etc.

A note to the reviewer: It is a simple matter to inflate sales projections, deflate cost of goods sold, and hide expenses for purposes of a business plan. Rather, since we are relying on this venture to provide the livelihood for our family, we have chosen to evaluate and present it far below the best case scenario. We hope that the reviewer of this document will take this into full consideration.

Profit and Loss

Pro Forma Profit and Loss
	FY 2001	FY 2002	FY 2003
Sales	$299,100	$411,000	$510,000
Direct Costs of Goods	$202,080	$278,700	$343,500
Other	$0	$0	$0
	------------	------------	------------
Cost of Goods Sold	$202,080	$278,700	$343,500
Gross Margin	$97,020	$132,300	$166,500
Gross Margin %	32.44%	32.19%	32.65%
Expenses
Payroll	$0	$0	$0
Sales and Marketing and Other Expenses	$70,416	$70,416	$70,416
Depreciation	$0	$0	$0
Depreciation	$0	$0	$0
Leased Equipment	$1,020	$1,020	$1,020
Utilities	$5,520	$5,520	$5,520
Insurance	$6,000	$6,000	$6,000
Rent	$0	$0	$0
Payroll Taxes	$0	$0	$0
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$82,956	$82,956	$82,956
Profit Before Interest and Taxes	$14,064	$49,344	$83,544
EBITDA	$14,064	$49,344	$83,544
Interest Expense	$10,404	$9,350	$8,250
Taxes Incurred	$630	$9,998	$19,137
Net Profit	$3,030	$29,995	$56,157
Net Profit/Sales	1.01%	7.30%	11.01%

Gross Margin Monthly



Gross Margin Yearly



Profit Monthly



Profit Yearly



7.4 Projected Cash Flow

The healthy state of the attached Cash Flow Table and Charts are, in themselves, the primary justification for this business loan request.

This loan request is intended to provide a solid foundation for the start-up and continued health of GFX. As a home based business, virtually every personal and business expense has been factored in. This has been done to ensure that personal expenses (food & shelter) do not prevent GFX from continuing operation. Rather, every calculation has taken these variables into account to ensure that the "home side" of our home business does not inhibit the "business side" of the business.

The all important Cash Balance figure remains at a healthy level, and shows growth, for the full period of this business plan to guarantee continued operation. However it also provides for sufficient cash flow to take advantage of positive business opportunities as they present themselves, and/or to absorb unexpected negative influences.

Cash



Cash Flow

Pro Forma Cash Flow
	FY 2001	FY 2002	FY 2003
Cash Received
Cash from Operations
Cash Sales	$299,100	$411,000	$510,000
Subtotal Cash from Operations	$299,100	$411,000	$510,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$299,100	$411,000	$510,000
Expenditures	FY 2001	FY 2002	FY 2003
Expenditures from Operations
Cash Spending	$0	$0	$0
Bill Payments	$268,094	$407,011	$458,443
Subtotal Spent on Operations	$268,094	$407,011	$458,443
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$11,000	$11,000	$11,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$279,094	$418,011	$469,443
Net Cash Flow	$20,006	($7,011)	$40,557
Cash Balance	$62,006	$54,995	$95,552

7.5 Projected Balance Sheet

The following Projected Balance Sheet was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly.

Balance Sheet

Pro Forma Balance Sheet
	FY 2001	FY 2002	FY 2003
Assets
Current Assets
Cash	$62,006	$54,995	$95,552
Inventory	$32,527	$44,860	$55,290
Other Current Assets	$0	$0	$0
Total Current Assets	$94,533	$99,855	$150,842
Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$94,533	$99,855	$150,842
Liabilities and Capital	FY 2001	FY 2002	FY 2003
Current Liabilities
Accounts Payable	$46,003	$32,329	$38,159
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$46,003	$32,329	$38,159
Long-term Liabilities	$99,000	$88,000	$77,000
Total Liabilities	$145,003	$120,329	$115,160
Paid-in Capital	$15,000	$15,000	$15,000
Retained Earnings	($68,500)	($65,470)	($35,474)
Earnings	$3,030	$29,995	$56,157
Total Capital	($50,470)	($20,474)	$35,682
Total Liabilities and Capital	$94,533	$99,855	$150,842
Net Worth	($50,470)	($20,474)	$35,682

7.6 Business Ratios

The following Business Ratios Table was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its purpose nor implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly. The Industry Profile column contains statistics from the Standard Industry Code (SIC) #0752, Animal Specialty Services.

Ratios

Ratio Analysis
	FY 2001	FY 2002	FY 2003	Industry Profile
Sales Growth	0.00%	37.41%	24.09%	-2.90%
Percent of Total Assets
Inventory	34.41%	44.93%	36.65%	8.20%
Other Current Assets	0.00%	0.00%	0.00%	31.90%
Total Current Assets	100.00%	100.00%	100.00%	55.90%
Long-term Assets	0.00%	0.00%	0.00%	44.10%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	48.66%	32.38%	25.30%	32.70%
Long-term Liabilities	104.72%	88.13%	51.05%	19.90%
Total Liabilities	153.39%	120.50%	76.34%	52.60%
Net Worth	-53.39%	-20.50%	23.66%	47.40%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	32.44%	32.19%	32.65%	42.50%
Selling, General & Administrative Expenses	32.05%	25.47%	22.20%	26.40%
Advertising Expenses	2.01%	1.46%	1.18%	0.50%
Profit Before Interest and Taxes	4.70%	12.01%	16.38%	2.40%
Main Ratios
Current	2.05	3.09	3.95	2.19
Quick	1.35	1.70	2.50	1.48
Total Debt to Total Assets	153.39%	120.50%	76.34%	52.60%
Pre-tax Return on Net Worth	-7.25%	-195.34%	211.01%	4.50%
Pre-tax Return on Assets	3.87%	40.05%	49.92%	9.40%
Additional Ratios	FY 2001	FY 2002	FY 2003
Net Profit Margin	1.01%	7.30%	11.01%	n.a
Return on Equity	0.00%	0.00%	157.38%	n.a
Activity Ratios
Inventory Turnover	10.71	7.20	6.86	n.a
Accounts Payable Turnover	6.83	12.17	12.17	n.a
Payment Days	27	36	28	n.a
Total Asset Turnover	3.16	4.12	3.38	n.a
Debt Ratios
Debt to Net Worth	0.00	0.00	3.23	n.a
Current Liab. to Liab.	0.32	0.27	0.33	n.a
Liquidity Ratios
Net Working Capital	$48,530	$67,526	$112,683	n.a
Interest Coverage	1.35	5.28	10.13	n.a
Additional Ratios
Assets to Sales	0.32	0.24	0.30	n.a
Current Debt/Total Assets	49%	32%	25%	n.a
Acid Test	1.35	1.70	2.50	n.a
Sales/Net Worth	0.00	0.00	14.29	n.a
Dividend Payout	0.00	0.00	0.00	n.a