Kiln Creek Bowling Center

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Bowling Entertainment Center Business Plan

Financial Plan

The commercial loan that the company expects to secure shortly will cover the start-up expenses and provide operating cash. The company needs to attract additional investor capital to cover the remaining long-term assets. The following sections show in detail that Kiln Creek Bowling Center will be profitable from the beginning. Its healthy profits will be sufficient to pay back the loan and provide return to the owners.

7.1 Important Assumptions

NOTES FOR PROJECTIONS

  1. League Bowler Revenue (see table below)
    • Fall/Winter Long Season--35 Weeks
    • Fall/Winter Short Season--16 Weeks
    • Summer Season--13 Weeks
  2. Food and Beverage Revenue will be 50% of total bowling revenue.
  3. There will be 600 lockers rented at $3.00 each per month.
  4. Shoes will rent for $2.50 per pair.
  5. Food and Beverage Cost will be 27% of Food and Beverage Sales.
  6. Apparel and Pro Shop items cost will be 25% of sales.
  7. Open Bowling is 50% of League Bowling.
  8. Sales / Food tax is not included in revenue.
  9. Contract Services include pest control, trash removal, cable TV, uniform rental
  10. for maintenance and bar towel rental.
  11. York County tax rates are:
    • Real Estate tax $8.60 per $1,000.00 of assessed value.
    • Personal Property tax base is 25% of cost of equipment at 4% per thousand.
    • Business License is $.20 per $100 for Food & Beverage Revenue and $.36 per $100 for Bowling and Billiards.

Fall and Winter Seasons - Total: $493,800

  • Adult Night:  35 Weeks, 1,200 people, $8.00/person, League Revenue: $336,000
  • Adult Day:  35 Weeks, 400 people, $7.50/person,  League Revenue: $105,000
  • Youth: 35 Weeks, 160 people, $6.00/person, League Revenue: $33,600
  • Adult Night:  16 Weeks, 150 people, $8.00/person, League Revenue: $19,200

Summer Season - Total: $101,400

  • Adult Night:  13 Weeks, 600 people, $8.00/person, League Revenue:  $62,400
  • Adult Day:  13 Weeks, 200 people, $7.50/person, League Revenue:  $19,500
  • Youth and Day Care:  13 Weeks, 250 people, $6.00/person, League Revenue:  $19,500

Total League Revenue: $595,200

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 9.50% 9.50% 9.50%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Key Financial Indicators

These benchmark indicators give Kiln Creek Bowling Center a sense of relative comparison for three years of projections.

7.3 Break-even Analysis

With the average monthly fixed costs and projected profit margin, Kiln Creek Bowling Center will break even with the monthly sales revenue shown in the table and chart following.

Break-even Analysis
Monthly Units Break-even 24,564
Monthly Revenue Break-even $78,432
Assumptions:
Average Per-Unit Revenue $3.19
Average Per-Unit Variable Cost $0.08
Estimated Monthly Fixed Cost $76,485

7.4 Projected Profit and Loss

One should note that the company is making a profit in the first month of operation. The yearly analysis is indicated in the table below, monthly analyses can be found in the appendix.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $1,824,831 $1,915,900 $2,011,665
Direct Cost of Sales $45,304 $45,923 $48,219
Food and Beverage $153,076 $153,076 $153,076
Total Cost of Sales $198,380 $198,999 $201,295
Gross Margin $1,626,451 $1,716,901 $1,810,370
Gross Margin % 89.13% 89.61% 89.99%
Expenses
Payroll $422,000 $443,100 $465,255
Sales and Marketing and Other Expenses $150,840 $175,328 $184,102
Depreciation $204,996 $204,996 $204,996
Leased Equipment $0 $0 $0
Utilities $52,680 $55,314 $58,079
Insurance $24,000 $0 $0
Rent $0 $0 $0
Payroll Taxes $63,300 $66,465 $69,788
Other $0 $0 $0
Total Operating Expenses $917,816 $945,203 $982,220
Profit Before Interest and Taxes $708,635 $771,698 $828,150
EBITDA $913,631 $976,694 $1,033,146
Interest Expense $285,000 $282,242 $276,451
Taxes Incurred $108,624 $122,364 $140,223
Net Profit $315,012 $367,092 $411,475
Net Profit/Sales 17.26% 19.16% 20.45%

7.5 Projected Cash Flow

The company's estimated cash flow analysis is outlined in the following table. Kiln Creek Bowling's profitability will ensure positive cash balance.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $1,824,831 $1,915,900 $2,011,665
Subtotal Cash from Operations $1,824,831 $1,915,900 $2,011,665
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 $1,824,831 $1,915,900 $2,011,665
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $422,000 $443,100 $465,255
Bill Payments $815,752 $903,301 $928,904
Subtotal Spent on Operations $1,237,752 $1,346,401 $1,394,159
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 $58,071 $63,835
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,237,752 $1,404,472 $1,457,994
Net Cash Flow $587,079 $511,428 $553,671
Cash Balance $852,079 $1,363,507 $1,917,178

7.6 Projected Balance Sheet

Estimated balance sheets for the years 2001-2003 are provided below.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $852,079 $1,363,507 $1,917,178
Inventory $3,354 $10,104 $10,989
Other Current Assets $970,000 $970,000 $970,000
Total Current Assets $1,825,433 $2,343,610 $2,898,167
Long-term Assets
Long-term Assets $3,000,000 $3,000,000 $3,000,000
Accumulated Depreciation $204,996 $409,992 $614,988
Total Long-term Assets $2,795,004 $2,590,008 $2,385,012
Total Assets $4,620,437 $4,933,618 $5,283,179
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $70,425 $74,586 $76,506
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $70,425 $74,586 $76,506
Long-term Liabilities $3,000,000 $2,941,929 $2,878,094
Total Liabilities $3,070,425 $3,016,515 $2,954,600
Paid-in Capital $1,500,000 $1,500,000 $1,500,000
Retained Earnings ($265,000) $50,012 $417,104
Earnings $315,012 $367,092 $411,475
Total Capital $1,550,012 $1,917,104 $2,328,579
Total Liabilities and Capital $4,620,437 $4,933,618 $5,283,179
Net Worth $1,550,012 $1,917,104 $2,328,579

7.7 Business Ratios

The company's projected business ratios are provided in the table below. The final column, Industry Profile, shows significant ratios for the Bowling Center industry, as determined by the Standard Industry Classification (SIC) Index code 7933.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 4.99% 5.00% 0.30%
Percent of Total Assets
Inventory 0.07% 0.20% 0.21% 4.10%
Other Current Assets 20.99% 19.66% 18.36% 34.80%
Total Current Assets 39.51% 47.50% 54.86% 44.30%
Long-term Assets 60.49% 52.50% 45.14% 55.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.52% 1.51% 1.45% 30.10%
Long-term Liabilities 64.93% 59.63% 54.48% 23.30%
Total Liabilities 66.45% 61.14% 55.92% 53.40%
Net Worth 33.55% 38.86% 44.08% 46.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 89.13% 89.61% 89.99% 0.00%
Selling, General & Administrative Expenses 71.72% 70.45% 69.42% 73.90%
Advertising Expenses 3.70% 3.70% 3.70% 3.40%
Profit Before Interest and Taxes 38.83% 40.28% 41.17% 2.30%
Main Ratios
Current 25.92 31.42 37.88 1.59
Quick 25.87 31.29 37.74 1.08
Total Debt to Total Assets 66.45% 61.14% 55.92% 53.40%
Pre-tax Return on Net Worth 27.33% 25.53% 23.69% 2.50%
Pre-tax Return on Assets 9.17% 9.92% 10.44% 5.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.26% 19.16% 20.45% n.a
Return on Equity 20.32% 19.15% 17.67% n.a
Activity Ratios
Inventory Turnover 4.61 6.82 4.57 n.a
Accounts Payable Turnover 12.58 12.17 12.17 n.a
Payment Days 27 29 30 n.a
Total Asset Turnover 0.39 0.39 0.38 n.a
Debt Ratios
Debt to Net Worth 1.98 1.57 1.27 n.a
Current Liab. to Liab. 0.02 0.02 0.03 n.a
Liquidity Ratios
Net Working Capital $1,755,008 $2,269,025 $2,821,661 n.a
Interest Coverage 2.49 2.73 3.00 n.a
Additional Ratios
Assets to Sales 2.53 2.58 2.63 n.a
Current Debt/Total Assets 2% 2% 1% n.a
Acid Test 25.87 31.29 37.74 n.a
Sales/Net Worth 1.18 1.00 0.86 n.a
Dividend Payout 0.00 0.00 0.00 n.a