Doggie Pause

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Animal Day Care Business Plan

Financial Plan

We want to finance the start-up of our company mainly through personal investment and a short-term business loan.  We think this is a good risk/return situation and we will provide the necessary personal guarantees to secure the business loan. We will finance growth through the collection of the fees for our services. We understand that without these payments we will not be able to be a profitable business.

7.1 Important Assumptions

Our important financial assumptions are shown below.

General Assumptions
Year 1 Year 2 Year 3
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

According to our break-even projections, we need more than $12,000 in monthly sales to break even. We think this is a manageable sales amount. Furthermore, a significant portion of our fixed cost is our own salaries, so that reduces risk as well.

Break-even Analysis
Monthly Revenue Break-even $12,197
Assumptions:
Average Percent Variable Cost 12%
Estimated Monthly Fixed Cost $10,687

7.3 Projected Profit and Loss

The projections show how we intend to almost break even in the first year (a loss of less than $1,000), make a small profit in the second year and show profit of 9% on sales in the third year. We are confident that even though we have a loss in the first months after opening, we will be profitable in the future as years go on and business increases.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $149,729 $180,000 $216,000
Direct Cost of Sales $18,535 $22,250 $26,600
Other $0 $0 $0
Total Cost of Sales $18,535 $22,250 $26,600
Gross Margin $131,194 $157,750 $189,400
Gross Margin % 87.62% 87.64% 87.69%
Expenses
Payroll $64,800 $91,800 $101,800
Sales and Marketing and Other Expenses $15,000 $9,000 $6,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $2,725 $3,000 $3,000
Insurance $6,000 $6,000 $6,000
Rent $30,000 $30,000 $30,000
Payroll Taxes $9,720 $13,770 $15,270
Other $0 $0 $0
Total Operating Expenses $128,245 $153,570 $162,070
Profit Before Interest and Taxes $2,949 $4,180 $27,330
EBITDA $2,949 $4,180 $27,330
Interest Expense $3,324 $2,032 $666
Taxes Incurred $0 $537 $6,777
Net Profit ($375) $1,611 $19,887
Net Profit/Sales -0.25% 0.89% 9.21%

7.4 Projected Cash Flow

For Doggie Pause to be successful we need a steady growth in clientele. Without customers bringing in their canines we have no cash flow, no profit, and no business. The cash flow depends on a bridge loan in mid-year from the founders, to be repaid at the end of the year.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $149,729 $180,000 $216,000
Subtotal Cash from Operations $149,729 $180,000 $216,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $10,000 $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 $159,729 $180,000 $216,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $64,800 $91,800 $101,800
Bill Payments $77,005 $87,772 $93,678
Subtotal Spent on Operations $141,805 $179,572 $195,478
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $12,673 $14,004 $13,322
Other Liabilities Principal Repayment $10,000 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $164,478 $193,576 $208,800
Net Cash Flow ($4,749) ($13,576) $7,200
Cash Balance $15,251 $1,675 $8,874

7.5 Projected Balance Sheet

The projected balance sheet shows stability and a gradual increase of net worth.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $15,251 $1,675 $8,874
Other Current Assets $0 $0 $0
Total Current Assets $15,251 $1,675 $8,874
Long-term Assets
Long-term Assets $7,500 $7,500 $7,500
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $7,500 $7,500 $7,500
Total Assets $22,751 $9,175 $16,374
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $8,299 $7,117 $7,752
Current Borrowing $27,327 $13,322 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $35,626 $20,439 $7,752
Long-term Liabilities $0 $0 $0
Total Liabilities $35,626 $20,439 $7,752
Paid-in Capital $20,000 $20,000 $20,000
Retained Earnings ($32,500) ($32,875) ($31,265)
Earnings ($375) $1,611 $19,887
Total Capital ($12,875) ($11,265) $8,622
Total Liabilities and Capital $22,751 $9,175 $16,374
Net Worth ($12,875) ($11,265) $8,622

7.6 Business Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 20.22% 20.00% -2.90%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 31.90%
Total Current Assets 67.03% 18.25% 54.20% 55.90%
Long-term Assets 32.97% 81.75% 45.80% 44.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 156.59% 222.78% 47.34% 32.70%
Long-term Liabilities 0.00% 0.00% 0.00% 19.90%
Total Liabilities 156.59% 222.78% 47.34% 52.60%
Net Worth -56.59% -122.78% 52.66% 47.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 87.62% 87.64% 87.69% 42.50%
Selling, General & Administrative Expenses 88.01% 86.83% 78.47% 26.40%
Advertising Expenses 10.02% 5.00% 2.78% 0.50%
Profit Before Interest and Taxes 1.97% 2.32% 12.65% 2.40%
Main Ratios
Current 0.43 0.08 1.14 2.19
Quick 0.43 0.08 1.14 1.48
Total Debt to Total Assets 156.59% 222.78% 47.34% 52.60%
Pre-tax Return on Net Worth 2.92% -19.06% 309.25% 4.50%
Pre-tax Return on Assets -1.65% 23.41% 162.84% 9.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.25% 0.89% 9.21% n.a
Return on Equity 0.00% 0.00% 230.65% n.a
Activity Ratios
Accounts Payable Turnover 10.28 12.17 12.17 n.a
Payment Days 27 32 29 n.a
Total Asset Turnover 6.58 19.62 13.19 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 0.90 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($20,375) ($18,765) $1,122 n.a
Interest Coverage 0.89 2.06 41.03 n.a
Additional Ratios
Assets to Sales 0.15 0.05 0.08 n.a
Current Debt/Total Assets 157% 223% 47% n.a
Acid Test 0.43 0.08 1.14 n.a
Sales/Net Worth 0.00 0.00 25.05 n.a
Dividend Payout 0.00 0.00 0.00 n.a