Bowl Weevil

Start your own business plan »

Bowling Center Business Plan

Financial Plan

Bowl Weevil's financial plan is conservative. With sufficient start-up funding, we will be able to not only complete renovations on time for opening, but hire enough staff to provide a full-service, fun, safe, and clean environment for our bowlers. Although we are asking for a very large loan, we should be easily able to repay it within seven years, even after hiring an additional manager in year two.

The first two years will be the slimmest, as we establish our reputation among our target groups and build market share. However, our sales forecasts are based on sound research, and are conservative. We will focus on aggressive marketing and limiting expenses during these early years to achieve our long-term goals.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. Bowling league participation rates are based on conservative assumptions.

Two of the more important underlying assumptions are:

  1. We assume youths, seniors, and adult bowlers will congregate together at Bowl Weevil Bowling Lanes given separate environments to listen to their own preferences in music.
  2. We assume that there are no unforeseen changes in the local bowling community to increase competition in Anytown.
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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The following chart and table summarize our break-even analysis.

Break-even Analysis
Monthly Revenue Break-even $37,928
Assumptions:
Average Percent Variable Cost 29%
Estimated Monthly Fixed Cost $26,896

7.3 Projected Profit and Loss

The following table indicates the projected profit and loss. We plan to take a hit in net profit in the second year in order to hire an assistant manager, and to increase personnel payments for our employees. This additional hiring and the raises are subject to cash flow meeting projections.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $523,075 $568,300 $608,953
Direct Cost of Sales $152,148 $165,624 $180,828
Other $0 $0 $0
Total Cost of Sales $152,148 $165,624 $180,828
Gross Margin $370,927 $402,676 $428,126
Gross Margin % 70.91% 70.86% 70.31%
Expenses
Payroll $181,800 $212,620 $216,620
Marketing/Promotion $3,000 $3,000 $3,000
Depreciation $7,788 $7,788 $7,788
Rent $110,000 $112,000 $112,000
Utilities $3,360 $3,600 $3,900
Insurance $2,400 $2,500 $2,600
Payroll Taxes $0 $0 $0
Shoe Repair and maintenance $2,400 $2,500 $2,500
Pull Tabs $6,000 $6,000 $6,000
Video Game Rentals $6,000 $6,000 $6,000
Total Operating Expenses $322,748 $356,008 $360,408
Profit Before Interest and Taxes $48,179 $46,668 $67,718
EBITDA $55,967 $54,456 $75,506
Interest Expense $15,123 $12,850 $10,450
Taxes Incurred $9,917 $10,145 $17,180
Net Profit $23,140 $23,673 $40,087
Net Profit/Sales 4.42% 4.17% 6.58%

7.4 Projections

7.5 Projected Cash Flow

Our business is a retail-oriented business with clients who will pay primarily with cash and credit cards. Our cash flow is shown below, including repayment of the requested loan. Hiring a second manager will make an impact on cash flow in the second year, but we anticipate greater sales and efficiency to make up this difference by year three.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $523,075 $568,300 $608,953
Subtotal Cash from Operations $523,075 $568,300 $608,953
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 $523,075 $568,300 $608,953
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $181,800 $212,620 $216,620
Bill Payments $292,004 $325,965 $344,355
Subtotal Spent on Operations $473,804 $538,585 $560,975
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 $23,400 $24,000 $24,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $497,204 $562,585 $584,975
Net Cash Flow $25,872 $5,715 $23,978
Cash Balance $65,872 $71,587 $95,565

7.6 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $65,872 $71,587 $95,565
Inventory $15,768 $17,165 $18,740
Other Current Assets $35,000 $35,000 $35,000
Total Current Assets $116,640 $123,751 $149,305
Long-term Assets
Long-term Assets $77,900 $77,900 $77,900
Accumulated Depreciation $7,788 $15,576 $23,364
Total Long-term Assets $70,112 $62,324 $54,536
Total Assets $186,752 $186,075 $203,841
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $27,112 $26,763 $28,441
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $27,112 $26,763 $28,441
Long-term Liabilities $140,500 $116,500 $92,500
Total Liabilities $167,612 $143,263 $120,941
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($64,000) ($40,860) ($17,188)
Earnings $23,140 $23,673 $40,087
Total Capital $19,140 $42,812 $82,900
Total Liabilities and Capital $186,752 $186,075 $203,841
Net Worth $19,140 $42,812 $82,900

7.7 Business Ratios

The following table shows the projected businesses ratios, and standard comparison ratios for our industry, Bowling Centers (SIC Code 7933). We expect to maintain healthy ratios for profitability, risk, and return.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 8.65% 7.15% 0.22%
Percent of Total Assets
Inventory 8.44% 9.22% 9.19% 4.61%
Other Current Assets 18.74% 18.81% 17.17% 35.98%
Total Current Assets 62.46% 66.51% 73.25% 45.58%
Long-term Assets 37.54% 33.49% 26.75% 54.42%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.52% 14.38% 13.95% 13.21%
Long-term Liabilities 75.23% 62.61% 45.38% 24.12%
Total Liabilities 89.75% 76.99% 59.33% 37.33%
Net Worth 10.25% 23.01% 40.67% 62.67%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.91% 70.86% 70.31% 100.00%
Selling, General & Administrative Expenses 46.09% 47.32% 36.86% 72.94%
Advertising Expenses 1.49% 1.37% 1.28% 3.33%
Profit Before Interest and Taxes 9.21% 8.21% 11.12% 2.79%
Main Ratios
Current 4.30 4.62 5.25 2.20
Quick 3.72 3.98 4.59 1.43
Total Debt to Total Assets 89.75% 76.99% 59.33% 56.31%
Pre-tax Return on Net Worth 172.71% 78.99% 69.08% 2.83%
Pre-tax Return on Assets 17.70% 18.17% 28.09% 6.48%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 4.42% 4.17% 6.58% n.a
Return on Equity 120.90% 55.29% 48.36% n.a
Activity Ratios
Inventory Turnover 10.91 10.06 10.07 n.a
Accounts Payable Turnover 11.77 12.17 12.17 n.a
Payment Days 27 30 29 n.a
Total Asset Turnover 2.80 3.05 2.99 n.a
Debt Ratios
Debt to Net Worth 8.76 3.35 1.46 n.a
Current Liab. to Liab. 0.16 0.19 0.24 n.a
Liquidity Ratios
Net Working Capital $89,528 $96,988 $120,864 n.a
Interest Coverage 3.19 3.63 6.48 n.a
Additional Ratios
Assets to Sales 0.36 0.33 0.33 n.a
Current Debt/Total Assets 15% 14% 14% n.a
Acid Test 3.72 3.98 4.59 n.a
Sales/Net Worth 27.33 13.27 7.35 n.a
Dividend Payout 0.00 0.00 0.00 n.a