Bicycle Art Business Plan

BikeArt

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Financial Plan

The following sections will outline the important financial assumptions, key financial indicators, Break-even Analysis, profit and loss, cash flow, and balance sheet.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions for BikeArt.

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

The Break-even Analysis indicates $15,212 is needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $15,212
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $7,606

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $145,760 $294,220 $316,332
Direct Cost of Sales $72,880 $147,110 $158,166
Other $0 $0 $0
Total Cost of Sales $72,880 $147,110 $158,166
Gross Margin $72,880 $147,110 $158,166
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $66,300 $72,400 $76,400
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $624 $624 $624
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $1,200 $1,200 $1,200
Rent $12,000 $12,000 $12,000
Payroll Taxes $9,945 $10,860 $11,460
Other $0 $0 $0
Total Operating Expenses $91,269 $98,284 $102,884
Profit Before Interest and Taxes ($18,389) $48,826 $55,282
EBITDA ($17,765) $49,450 $55,906
Interest Expense $1,745 $1,258 $703
Taxes Incurred $0 $11,892 $13,872
Net Profit ($20,134) $35,676 $40,706
Net Profit/Sales -13.81% 12.13% 12.87%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $145,760 $294,220 $316,332
Subtotal Cash from Operations $145,760 $294,220 $316,332
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 $145,760 $294,220 $316,332
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $66,300 $72,400 $76,400
Bill Payments $97,938 $194,917 $200,247
Subtotal Spent on Operations $164,238 $267,317 $276,647
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 $4,783 $5,270 $5,825
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $169,021 $272,586 $282,472
Net Cash Flow ($23,261) $21,634 $33,860
Cash Balance $18,339 $39,973 $73,833

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $18,339 $39,973 $73,833
Inventory $12,204 $24,634 $26,485
Other Current Assets $0 $0 $0
Total Current Assets $30,543 $64,607 $100,319
Long-term Assets
Long-term Assets $3,100 $3,100 $3,100
Accumulated Depreciation $624 $1,248 $1,872
Total Long-term Assets $2,476 $1,852 $1,228
Total Assets $33,019 $66,459 $101,547
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,236 $16,270 $16,476
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,236 $16,270 $16,476
Long-term Liabilities $15,217 $9,947 $4,123
Total Liabilities $28,453 $26,217 $20,598
Paid-in Capital $25,000 $25,000 $25,000
Retained Earnings ($300) ($20,434) $15,242
Earnings ($20,134) $35,676 $40,706
Total Capital $4,566 $40,242 $80,948
Total Liabilities and Capital $33,019 $66,459 $101,547
Net Worth $4,566 $40,242 $80,948
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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
Break-even Analysis
Monthly Revenue Break-even $15,212
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $7,606
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $145,760 $294,220 $316,332
Direct Cost of Sales $72,880 $147,110 $158,166
Other $0 $0 $0
Total Cost of Sales $72,880 $147,110 $158,166
Gross Margin $72,880 $147,110 $158,166
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $66,300 $72,400 $76,400
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $624 $624 $624
Leased Equipment $0 $0 $0
Utilities $1,200 $1,200 $1,200
Insurance $1,200 $1,200 $1,200
Rent $12,000 $12,000 $12,000
Payroll Taxes $9,945 $10,860 $11,460
Other $0 $0 $0
Total Operating Expenses $91,269 $98,284 $102,884
Profit Before Interest and Taxes ($18,389) $48,826 $55,282
EBITDA ($17,765) $49,450 $55,906
Interest Expense $1,745 $1,258 $703
Taxes Incurred $0 $11,892 $13,872
Net Profit ($20,134) $35,676 $40,706
Net Profit/Sales -13.81% 12.13% 12.87%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $145,760 $294,220 $316,332
Subtotal Cash from Operations $145,760 $294,220 $316,332
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 $145,760 $294,220 $316,332
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $66,300 $72,400 $76,400
Bill Payments $97,938 $194,917 $200,247
Subtotal Spent on Operations $164,238 $267,317 $276,647
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 $4,783 $5,270 $5,825
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $169,021 $272,586 $282,472
Net Cash Flow ($23,261) $21,634 $33,860
Cash Balance $18,339 $39,973 $73,833
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $18,339 $39,973 $73,833
Inventory $12,204 $24,634 $26,485
Other Current Assets $0 $0 $0
Total Current Assets $30,543 $64,607 $100,319
Long-term Assets
Long-term Assets $3,100 $3,100 $3,100
Accumulated Depreciation $624 $1,248 $1,872
Total Long-term Assets $2,476 $1,852 $1,228
Total Assets $33,019 $66,459 $101,547
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,236 $16,270 $16,476
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,236 $16,270 $16,476
Long-term Liabilities $15,217 $9,947 $4,123
Total Liabilities $28,453 $26,217 $20,598
Paid-in Capital $25,000 $25,000 $25,000
Retained Earnings ($300) ($20,434) $15,242
Earnings ($20,134) $35,676 $40,706
Total Capital $4,566 $40,242 $80,948
Total Liabilities and Capital $33,019 $66,459 $101,547
Net Worth $4,566 $40,242 $80,948