We want to finance growth mainly through cash flow. We recognize that this means we will have to grow slowly, adding machines one at a time, not in bulk. The most important indicator in our case is that minimal inventory will have to be stored for these rentals; this translates into very low overhead.
There are some seasonal variations, with the months of March through September being the hottest months in Texas. This will, as expected, mean a high rate of rentals for events such as pool parties, Fourth of July celebrations, and barbecues. However, we expect the winter months to be just as lucrative due to the number of holiday parties, football gatherings, and fundraising events. We expect a light seasonal variation, with sales increasing slightly during the cooler months. For the most part, Margarita Momma will experience a high rate of sales, regardless of weather variations.
The financial assumptions for Margarita Momma are included in the following table.
The following table and chart summarize our break-even analysis. With estimated fixed costs as shown in the following table, we need to have 16 rentals by the end of the year to cover our costs.
We expect net profits, and gross margins for FY 2001 through FY2003 as shown in the following table.
The following cash flow projections show the annual amounts only. For a monthly breakdown, please see the appendix at the end of the business plan.
The following table represents our financial position at the end of each of the three upcoming fiscal years.
The following table shows standard ratios and industry comparison for SIC code 7359, rental businesses.