It is anticipated that the multi-million dollar loan that the company will seek to secure will cover the business start-up costs and provide funds for operating expenses for the first year. Management projects that it will need to obtain additional investment capital to fund the loan and long-term assets.
The Highlights chart that accompanies the Executive Summary sets forth the company's anticipated profitability analysis. Management believes that even minimal revenues should be sufficient to offer investors an acceptable return on investment.
NOTES FOR PROJECTIONS
All sales projections/assumptions are based on operating at 35% +/- of capacity. Refer to the Sales Forecast topic for demographic break down and average cost per person.
In the following Investment Analysis Table, one should note that the entire (gross loan + points) amount of our long-term liabilities ($4,542,500) is the figure we used to determine the Net Present Value (NPV) and the Internal Rate of Return (IRR) of our company's projected values.
These benchmark indicators give I&B Investments a sense of relative comparison for five years of projections.
Important notice concerning Break-even Analysis
The figures represented in this analysis are connected to the costs presented in the Start-up, Start-up Funding, and Use of Funds tables.
The following chart shows what we need to produce from sales per month to break-even (according to the assumptions). That is less than 1/2 of our planned 2003 sales level and less than 1/3 +/- for the years beyond. We strongly believe we can succeed and provide handsome returns for our owners/investors.
For the Break-even Analysis, we assume our per month fixed costs include most of management's payroll, loan payments, investor repayments and an estimation of other basic expenses.
Margins are harder to assume. Our overall average of $8.50 (goods/services sold to each person) is based on the local market average number of sales and with an average cost of 20% ($8.50 - $1.70 = $6.80 gross profit per each good/services sold).
We believe that not only will we entertain a much higher number of customers monthly than required by this break-even chart, we believe that we are going to possibly double the amount projected in our cash flow charts in this business plan, because we are going to be the only facilities of its kind within a 50 mile radius.
Important notes regarding Depreciation & Payroll Burden
As per depreciation figures, our preliminary assessment using a standard 200% declining balance on equipment and assets gives us a first year figure of $190,000 +/-. This figure is considered our income tax deductible base and will adjust each year depending on taxable items, gross income, actual values and depreciation of assets.
Upon reviewing the next table (Profit & Loss), one should note that the company is making a profit in the first month of operation. The yearly analysis is indicated in the table below. The monthly analyses can be found in the appendix.
The company's estimated cash flow analysis is outlined in the following table, including the cost and increase in sales and profits made from Phase 2. I&B Investments low overhead will ensure positive cash balance.
Estimated balance sheets for the years 2003-2008 including Phase 2 in the year 2006 are provided below.
The company's projected business ratios are provided in the table below. The final column, Industry Profile, shows significant ratios for the Amusement and Entertainment Industry, as determined by the Standard Industry Classification (SIC) Index code 7999.