Convenience Store Cafe Business Plan

Luna's Convenience Store

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Financial Plan

  1. Growth will be moderate, cash flows steady.
  2. Marketing will be minimal, since Luna's will rely on convenient location and will not buy any advertising.
  3. The company will use tight inventory controls to manage costs.
  4. The company will gain higher grow margins than industry averages, since it is targeting women and professionals.

7.1 Important Assumptions

Luna's does not sell anything on credit. The personnel burden is very low because Luna's will employee only part time staff in addition to the owners salaries.  Benefits are not paid to part-timers.
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 table and chart show the Break-even Analysis for Luna's.

Break-even Analysis
Monthly Revenue Break-even $33,735
Assumptions:
Average Percent Variable Cost 62%
Estimated Monthly Fixed Cost $12,710

7.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss and Gross Margin for Luna's.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $374,380 $482,839 $572,176
Direct Cost of Sales $233,328 $298,943 $352,240
Other Costs of Goods $0 $0 $0
Total Cost of Sales $233,328 $298,943 $352,240
Gross Margin $141,052 $183,896 $219,936
Gross Margin % 37.68% 38.09% 38.44%
Expenses
Payroll $91,200 $101,000 $110,000
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $6,000 $6,000 $6,000
Rent $36,000 $36,000 $36,000
Utilities $6,000 $7,000 $8,000
Insurance $1,800 $1,900 $2,000
Payroll Taxes $9,120 $10,100 $11,000
Other $0 $0 $0
Total Operating Expenses $152,520 $164,400 $175,400
Profit Before Interest and Taxes ($11,468) $19,496 $44,536
EBITDA ($5,468) $25,496 $50,536
Interest Expense $4,805 $4,460 $4,100
Taxes Incurred $0 $4,511 $12,131
Net Profit ($16,273) $10,525 $28,305
Net Profit/Sales -4.35% 2.18% 4.95%

7.4 Projected Cash Flow

The following table shows the cash flow totals for three years. As you can see by the table and chart, the cash flow remains healthy.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $374,380 $482,839 $572,176
Subtotal Cash from Operations $374,380 $482,839 $572,176
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 $374,380 $482,839 $572,176
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $91,200 $101,000 $110,000
Bill Payments $191,178 $365,820 $427,957
Subtotal Spent on Operations $282,378 $466,820 $537,957
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $3,600 $3,600 $3,600
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 $30,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $315,978 $470,420 $541,557
Net Cash Flow $58,402 $12,419 $30,619
Cash Balance $116,502 $128,921 $159,540

7.5 Projected Balance Sheet

The following table is the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $116,502 $128,921 $159,540
Inventory $22,460 $28,777 $33,907
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $143,962 $162,698 $198,447
Long-term Assets
Long-term Assets $60,000 $60,000 $60,000
Accumulated Depreciation $6,000 $12,000 $18,000
Total Long-term Assets $54,000 $48,000 $42,000
Total Assets $197,962 $210,698 $240,447
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $24,735 $30,545 $35,589
Current Borrowing $46,400 $42,800 $39,200
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $71,135 $73,345 $74,789
Long-term Liabilities $0 $0 $0
Total Liabilities $71,135 $73,345 $74,789
Paid-in Capital $150,000 $150,000 $150,000
Retained Earnings ($6,900) ($23,173) ($12,647)
Earnings ($16,273) $10,525 $28,305
Total Capital $126,827 $137,353 $165,658
Total Liabilities and Capital $197,962 $210,698 $240,447
Net Worth $126,827 $137,353 $165,658

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5411, [Convenience Stores, Independent], are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 28.97% 18.50% 2.27%
Percent of Total Assets
Inventory 11.35% 13.66% 14.10% 22.18%
Other Current Assets 2.53% 2.37% 2.08% 26.81%
Total Current Assets 72.72% 77.22% 82.53% 56.12%
Long-term Assets 27.28% 22.78% 17.47% 43.88%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 35.93% 34.81% 31.10% 26.39%
Long-term Liabilities 0.00% 0.00% 0.00% 24.87%
Total Liabilities 35.93% 34.81% 31.10% 51.26%
Net Worth 64.07% 65.19% 68.90% 48.74%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 37.68% 38.09% 38.44% 23.55%
Selling, General & Administrative Expenses 42.02% 35.91% 33.49% 16.21%
Advertising Expenses 0.00% 0.00% 0.00% 0.85%
Profit Before Interest and Taxes -3.06% 4.04% 7.78% 1.02%
Main Ratios
Current 2.02 2.22 2.65 1.68
Quick 1.71 1.83 2.20 0.71
Total Debt to Total Assets 35.93% 34.81% 31.10% 57.28%
Pre-tax Return on Net Worth -12.83% 10.95% 24.41% 4.63%
Pre-tax Return on Assets -8.22% 7.14% 16.82% 10.83%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.35% 2.18% 4.95% n.a
Return on Equity -12.83% 7.66% 17.09% n.a
Activity Ratios
Inventory Turnover 6.59 11.67 11.24 n.a
Accounts Payable Turnover 8.73 12.17 12.17 n.a
Payment Days 27 27 28 n.a
Total Asset Turnover 1.89 2.29 2.38 n.a
Debt Ratios
Debt to Net Worth 0.56 0.53 0.45 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $72,827 $89,353 $123,658 n.a
Interest Coverage -2.39 4.37 10.86 n.a
Additional Ratios
Assets to Sales 0.53 0.44 0.42 n.a
Current Debt/Total Assets 36% 35% 31% n.a
Acid Test 1.71 1.83 2.20 n.a
Sales/Net Worth 2.95 3.52 3.45 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $33,735
Assumptions:
Average Percent Variable Cost 62%
Estimated Monthly Fixed Cost $12,710
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $374,380 $482,839 $572,176
Direct Cost of Sales $233,328 $298,943 $352,240
Other Costs of Goods $0 $0 $0
Total Cost of Sales $233,328 $298,943 $352,240
Gross Margin $141,052 $183,896 $219,936
Gross Margin % 37.68% 38.09% 38.44%
Expenses
Payroll $91,200 $101,000 $110,000
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $6,000 $6,000 $6,000
Rent $36,000 $36,000 $36,000
Utilities $6,000 $7,000 $8,000
Insurance $1,800 $1,900 $2,000
Payroll Taxes $9,120 $10,100 $11,000
Other $0 $0 $0
Total Operating Expenses $152,520 $164,400 $175,400
Profit Before Interest and Taxes ($11,468) $19,496 $44,536
EBITDA ($5,468) $25,496 $50,536
Interest Expense $4,805 $4,460 $4,100
Taxes Incurred $0 $4,511 $12,131
Net Profit ($16,273) $10,525 $28,305
Net Profit/Sales -4.35% 2.18% 4.95%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $374,380 $482,839 $572,176
Subtotal Cash from Operations $374,380 $482,839 $572,176
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 $374,380 $482,839 $572,176
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $91,200 $101,000 $110,000
Bill Payments $191,178 $365,820 $427,957
Subtotal Spent on Operations $282,378 $466,820 $537,957
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $3,600 $3,600 $3,600
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 $30,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $315,978 $470,420 $541,557
Net Cash Flow $58,402 $12,419 $30,619
Cash Balance $116,502 $128,921 $159,540
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $116,502 $128,921 $159,540
Inventory $22,460 $28,777 $33,907
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $143,962 $162,698 $198,447
Long-term Assets
Long-term Assets $60,000 $60,000 $60,000
Accumulated Depreciation $6,000 $12,000 $18,000
Total Long-term Assets $54,000 $48,000 $42,000
Total Assets $197,962 $210,698 $240,447
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $24,735 $30,545 $35,589
Current Borrowing $46,400 $42,800 $39,200
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $71,135 $73,345 $74,789
Long-term Liabilities $0 $0 $0
Total Liabilities $71,135 $73,345 $74,789
Paid-in Capital $150,000 $150,000 $150,000
Retained Earnings ($6,900) ($23,173) ($12,647)
Earnings ($16,273) $10,525 $28,305
Total Capital $126,827 $137,353 $165,658
Total Liabilities and Capital $197,962 $210,698 $240,447
Net Worth $126,827 $137,353 $165,658
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 28.97% 18.50% 2.27%
Percent of Total Assets
Inventory 11.35% 13.66% 14.10% 22.18%
Other Current Assets 2.53% 2.37% 2.08% 26.81%
Total Current Assets 72.72% 77.22% 82.53% 56.12%
Long-term Assets 27.28% 22.78% 17.47% 43.88%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 35.93% 34.81% 31.10% 26.39%
Long-term Liabilities 0.00% 0.00% 0.00% 24.87%
Total Liabilities 35.93% 34.81% 31.10% 51.26%
Net Worth 64.07% 65.19% 68.90% 48.74%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 37.68% 38.09% 38.44% 23.55%
Selling, General & Administrative Expenses 42.02% 35.91% 33.49% 16.21%
Advertising Expenses 0.00% 0.00% 0.00% 0.85%
Profit Before Interest and Taxes -3.06% 4.04% 7.78% 1.02%
Main Ratios
Current 2.02 2.22 2.65 1.68
Quick 1.71 1.83 2.20 0.71
Total Debt to Total Assets 35.93% 34.81% 31.10% 57.28%
Pre-tax Return on Net Worth -12.83% 10.95% 24.41% 4.63%
Pre-tax Return on Assets -8.22% 7.14% 16.82% 10.83%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.35% 2.18% 4.95% n.a
Return on Equity -12.83% 7.66% 17.09% n.a
Activity Ratios
Inventory Turnover 6.59 11.67 11.24 n.a
Accounts Payable Turnover 8.73 12.17 12.17 n.a
Payment Days 27 27 28 n.a
Total Asset Turnover 1.89 2.29 2.38 n.a
Debt Ratios
Debt to Net Worth 0.56 0.53 0.45 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $72,827 $89,353 $123,658 n.a
Interest Coverage -2.39 4.37 10.86 n.a
Additional Ratios
Assets to Sales 0.53 0.44 0.42 n.a
Current Debt/Total Assets 36% 35% 31% n.a
Acid Test 1.71 1.83 2.20 n.a
Sales/Net Worth 2.95 3.52 3.45 n.a
Dividend Payout 0.00 0.00 0.00 n.a