Martini Astrology and Tarot

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Astrology Tarot Card Business Plan

Financial Plan

Martini Astrology and Tarot's financial growth will be through cash flow. I recognize that this means we will have to grow more slowly, but it ensures stability.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. From the beginning, we realize that word of mouth and repeat customers will be critical, and can only be influenced through quality readings and customer satisfaction.

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 25.00% 25.00% 25.00%
Other 0 0 0

7.2 Key Financial Indicators

The following Benchmarks chart indicates the key financial indicators for the first three years. I foresee major growth in sales, especially during holiday seasons.

7.3 Break-even Analysis

The following table and chart summarize the Break-even Analysis. With relatively low monthly fixed costs, it will not be difficult to achieve the break-even point the first month. It's important to note that most of the fixed cost is my own compensation.

Break-even Analysis
Monthly Units Break-even 276
Monthly Revenue Break-even $4,281
Assumptions:
Average Per-Unit Revenue $15.50
Average Per-Unit Variable Cost $2.19
Estimated Monthly Fixed Cost $3,675

7.4 Projected Profit and Loss

Advertising expenses are accounted for depending on the month and what holidays will be coming up. Travel expenses stay the same since most traveling will be done in the general area of Eugene and not much is expected. Other expenses include books, seminars, costumes, etc. Utilities, rent, and consultants are not taken into account because most work will not be done at home. Costs to look into at a later date might include the cost of a stand at the Saturday Market, licensing, working from a small office, etc.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $68,900 $78,414 $86,255
Direct Cost of Sales $9,750 $10,792 $11,871
Other $60 $65 $70
Total Cost of Sales $9,810 $10,857 $11,941
Gross Margin $59,090 $67,556 $74,314
Gross Margin % 85.76% 86.15% 86.16%
Expenses
Payroll $35,500 $45,000 $51,500
Sales and Marketing and Other Expenses $3,200 $3,875 $4,550
Depreciation $0 $0 $0
Rent $5,400 $5,800 $6,200
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $44,100 $54,675 $62,250
Profit Before Interest and Taxes $14,990 $12,881 $12,064
EBITDA $14,990 $12,881 $12,064
Interest Expense $0 $0 $0
Taxes Incurred $3,748 $3,220 $3,016
Net Profit $11,243 $9,661 $9,048
Net Profit/Sales 16.32% 12.32% 10.49%

7.5 Projected Cash Flow

The annual cash flow figures are included below and the more important detailed monthly numbers are included in the appendix. Cash flow will depend on the amount of time I spend in the field providing my service to customers, so projections may vary.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $68,900 $78,414 $86,255
Subtotal Cash from Operations $68,900 $78,414 $86,255
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 $68,900 $78,414 $86,255
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $35,500 $45,000 $51,500
Bill Payments $19,845 $24,113 $25,547
Subtotal Spent on Operations $55,345 $69,113 $77,047
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $55,345 $69,113 $77,047
Net Cash Flow $13,555 $9,301 $9,208
Cash Balance $13,755 $23,056 $32,264

7.6 Projected Balance Sheet

The Balance Sheet in the following table shows managed but sufficient growth of net worth, and a healthy financial position. The monthly estimates are included in the appendices.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $13,755 $23,056 $32,264
Other Current Assets $1,000 $1,000 $1,000
Total Current Assets $14,755 $24,056 $33,264
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $14,755 $24,056 $33,264
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,313 $1,952 $2,113
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,313 $1,952 $2,113
Long-term Liabilities $0 $0 $0
Total Liabilities $2,313 $1,952 $2,113
Paid-in Capital $1,870 $1,870 $1,870
Retained Earnings ($670) $10,573 $20,234
Earnings $11,243 $9,661 $9,048
Total Capital $12,443 $22,104 $31,151
Total Liabilities and Capital $14,755 $24,056 $33,264
Net Worth $12,442 $22,104 $31,151

7.7 Business Ratios

The following table contains ratios from the entertainment industry, as determined by the Standard Industry Classification (SIC) Index #7299, Personal Services.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 13.81% 10.00% 8.15%
Percent of Total Assets
Other Current Assets 6.78% 4.16% 3.01% 35.03%
Total Current Assets 100.00% 100.00% 100.00% 55.79%
Long-term Assets 0.00% 0.00% 0.00% 44.21%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 15.67% 8.12% 6.35% 25.11%
Long-term Liabilities 0.00% 0.00% 0.00% 22.00%
Total Liabilities 15.67% 8.12% 6.35% 47.11%
Net Worth 84.33% 91.88% 93.65% 52.89%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 85.76% 86.15% 86.16% 100.00%
Selling, General & Administrative Expenses 75.24% 80.29% 82.38% 77.99%
Advertising Expenses 3.48% 3.83% 4.06% 1.85%
Profit Before Interest and Taxes 21.76% 16.43% 13.99% 3.35%
Main Ratios
Current 6.38 12.32 15.74 1.73
Quick 6.38 12.32 15.74 1.30
Total Debt to Total Assets 15.67% 8.12% 6.35% 6.16%
Pre-tax Return on Net Worth 120.47% 58.28% 38.73% 59.92%
Pre-tax Return on Assets 101.59% 53.55% 36.27% 15.38%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 16.32% 12.32% 10.49% n.a
Return on Equity 90.36% 43.71% 29.04% n.a
Activity Ratios
Accounts Payable Turnover 9.58 12.17 12.17 n.a
Payment Days 27 33 29 n.a
Total Asset Turnover 4.67 3.26 2.59 n.a
Debt Ratios
Debt to Net Worth 0.19 0.09 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $12,442 $22,104 $31,151 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.21 0.31 0.39 n.a
Current Debt/Total Assets 16% 8% 6% n.a
Acid Test 6.38 12.32 15.74 n.a
Sales/Net Worth 5.54 3.55 2.77 n.a
Dividend Payout 0.00 0.00 0.00 n.a