The Magnolia Inn expects business to grow steadily until we are at an average of over 90% capacity for the year 2004 with a conservative capacity rate of 50% expected at times. We will be growing slowly with profits growing at a rate of about 10%. Expenses will be well managed, allowing Magnolia to make a profit even if the capacity rate drops as low as 50%.
The following critical assumptions will determine the potential for future success.
The following chart and table summarize our break-even analysis. Our fixed costs will be $17,000 per month at the onset and we expect to reach the break-even point within the first few months of operation.
The following represents the Projected Profit and Loss for the Magnolia Inn based on sales and expense projections for 2004 and beyond.
The Cash Flow projections are outlined below. Again, these projections are based on our basic assumptions with revenue generation factors carrying the most significant weight regarding the outcome. We are anticipating that we will not need to invest any additional capital into the business with a healthy cash flow in place.
The Balance Sheet in the following table shows sufficient growth and a very acceptable financial position. The monthly estimates are included and shown in the appendix.
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7011.0401, Bed and Breakfast Inns are shown for comparison.
The following will enable us to keep on track. If we fail in any of these areas we will need to re-evaluate our business mode: