Catering Company Business Plan

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Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

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 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 $178,439 $367,535 $395,008
Subtotal Cash from Operations $178,439 $367,535 $395,008
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 $178,439 $367,535 $395,008
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $132,120 $158,400 $162,400
Bill Payments $75,198 $160,615 $175,363
Subtotal Spent on Operations $207,318 $319,015 $337,763
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 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $207,318 $319,015 $337,763
Net Cash Flow ($28,879) $48,521 $57,245
Cash Balance $7,821 $56,342 $113,586

7.3 Break-even Analysis

The following table and chart show our Break-even Analysis.

Break-even Analysis
Monthly Revenue Break-even $20,362
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $14,254

7.4 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 $178,439 $367,535 $395,008
Direct Cost of Sales $53,532 $110,261 $118,502
Other Production Expenses $0 $0 $0
Total Cost of Sales $53,532 $110,261 $118,502
Gross Margin $124,907 $257,275 $276,505
Gross Margin % 70.00% 70.00% 70.00%
Expenses
Payroll $132,120 $158,400 $162,400
Sales and Marketing and Other Expenses $1,800 $1,600 $1,500
Depreciation $6,504 $6,504 $6,504
Leased Equipment $0 $0 $0
Utilities $600 $600 $600
Insurance/ licenses $1,800 $1,800 $1,800
Rent $8,400 $8,400 $8,400
Payroll Taxes $19,818 $23,760 $24,360
Other $0 $0 $0
Total Operating Expenses $171,042 $201,064 $205,564
Profit Before Interest and Taxes ($46,135) $56,211 $70,941
EBITDA ($39,631) $62,715 $77,445
Interest Expense $0 $0 $0
Taxes Incurred $0 $16,863 $21,282
Net Profit ($46,135) $39,348 $49,659
Net Profit/Sales -25.85% 10.71% 12.57%

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 $7,821 $56,342 $113,586
Other Current Assets $0 $0 $0
Total Current Assets $7,821 $56,342 $113,586
Long-term Assets
Long-term Assets $32,500 $32,500 $32,500
Accumulated Depreciation $6,504 $13,008 $19,512
Total Long-term Assets $25,996 $19,492 $12,988
Total Assets $33,817 $75,834 $126,574
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $10,752 $13,421 $14,502
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $10,752 $13,421 $14,502
Long-term Liabilities $0 $0 $0
Total Liabilities $10,752 $13,421 $14,502
Paid-in Capital $70,000 $70,000 $70,000
Retained Earnings ($800) ($46,935) ($7,587)
Earnings ($46,135) $39,348 $49,659
Total Capital $23,065 $62,413 $112,072
Total Liabilities and Capital $33,817 $75,834 $126,574
Net Worth $23,065 $62,413 $112,072

7.6 Business Ratios

The following table outlines some of the more important ratios from the Catering industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5812 (NAICS code 722320).

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 105.97% 7.47% 6.61%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 36.38%
Total Current Assets 23.13% 74.30% 89.74% 45.37%
Long-term Assets 76.87% 25.70% 10.26% 54.63%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 31.79% 17.70% 11.46% 18.54%
Long-term Liabilities 0.00% 0.00% 0.00% 23.40%
Total Liabilities 31.79% 17.70% 11.46% 41.94%
Net Worth 68.21% 82.30% 88.54% 58.06%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.00% 48.89%
Selling, General & Administrative Expenses 95.85% 59.29% 57.43% 25.03%
Advertising Expenses 0.67% 0.27% 0.23% 2.52%
Profit Before Interest and Taxes -25.85% 15.29% 17.96% 1.70%
Main Ratios
Current 0.73 4.20 7.83 1.09
Quick 0.73 4.20 7.83 0.69
Total Debt to Total Assets 31.79% 17.70% 11.46% 51.63%
Pre-tax Return on Net Worth -200.02% 90.06% 63.30% 5.84%
Pre-tax Return on Assets -136.42% 74.12% 56.05% 12.06%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -25.85% 10.71% 12.57% n.a
Return on Equity -200.02% 63.04% 44.31% n.a
Activity Ratios
Accounts Payable Turnover 7.99 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 5.28 4.85 3.12 n.a
Debt Ratios
Debt to Net Worth 0.47 0.22 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($2,931) $42,921 $99,084 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.19 0.21 0.32 n.a
Current Debt/Total Assets 32% 18% 11% n.a
Acid Test 0.73 4.20 7.83 n.a
Sales/Net Worth 7.74 5.89 3.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a