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Custom Printed T-Shirts Business Plan

Financial Plan

The following sections outline important financial information.

8.1 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

8.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $16,826
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $8,413

8.3 Projected Profit and Loss

The following table presents projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $117,882 $290,581 $334,145
Direct Cost of Sales $58,941 $145,291 $167,072
Other Costs of Goods $0 $0 $0
Total Cost of Sales $58,941 $145,291 $167,072
Gross Margin $58,941 $145,291 $167,072
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $68,400 $83,000 $87,000
Sales and Marketing and Other Expenses $2,500 $3,000 $3,000
Depreciation $996 $996 $996
Rent $11,000 $12,000 $12,000
Utilities $3,300 $3,600 $3,600
Insurance $3,000 $3,600 $3,600
Payroll Taxes $10,260 $12,450 $13,050
Other $1,500 $1,800 $1,800
Total Operating Expenses $100,956 $120,446 $125,046
Profit Before Interest and Taxes ($42,015) $24,845 $42,026
EBITDA ($41,019) $25,841 $43,022
Interest Expense $6,045 $5,700 $5,120
Taxes Incurred $0 $5,743 $11,072
Net Profit ($48,060) $13,401 $25,834
Net Profit/Sales -40.77% 4.61% 7.73%

8.4 Projected Cash Flow

The following chart and table display projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $117,882 $290,581 $334,145
Subtotal Cash from Operations $117,882 $290,581 $334,145
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $10,000 $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 $117,882 $300,581 $334,145
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $68,400 $83,000 $87,000
Bill Payments $80,550 $194,234 $218,664
Subtotal Spent on Operations $148,950 $277,234 $305,664
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $200 $2,400
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $8,400 $9,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $157,350 $286,434 $318,064
Net Cash Flow ($39,468) $14,147 $16,081
Cash Balance $16,932 $31,079 $47,160

8.5 Projected Balance Sheet

The following table shows the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $16,932 $31,079 $47,160
Inventory $2,702 $6,659 $7,658
Other Current Assets $1,500 $1,500 $1,500
Total Current Assets $21,133 $39,238 $56,317
Long-term Assets
Long-term Assets $5,000 $5,000 $5,000
Accumulated Depreciation $996 $1,992 $2,988
Total Long-term Assets $4,004 $3,008 $2,012
Total Assets $25,137 $42,246 $58,329
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $18,697 $21,605 $24,253
Current Borrowing $0 $9,800 $7,400
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $18,697 $31,405 $31,653
Long-term Liabilities $56,600 $47,600 $37,600
Total Liabilities $75,297 $79,005 $69,253
Paid-in Capital $15,000 $15,000 $15,000
Retained Earnings ($17,100) ($65,160) ($51,759)
Earnings ($48,060) $13,401 $25,834
Total Capital ($50,160) ($36,759) ($10,924)
Total Liabilities and Capital $25,137 $42,246 $58,329
Net Worth ($50,160) ($36,759) ($10,924)

8.6 Business Ratios

The following table displays many business ratios specific to Your T-Shirt! as well as industry ratios. Our SIC industry class is currently T-shirts, custom printed - 5699.0406. The following ratios are in variance to the industry ratios, please review the following explanations detailing the nature of the variance:

  • Accounts receivable -- Your T-Shirt! does not extend credit
  • Inventory -- Your T-Shirt! uses just-in-time (JIT) inventory management significantly lowering overhead
  • Liabilities -- This business is being financed by debt, a long term bank loan
  • Gross margin --  By leveraging the power of computer technology, labor costs are significantly decreased boosting the gross margin
  • Sales/administrative expenses -- These expenses are higher due to the national reach of this organization and its target market
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 146.50% 14.99% 3.13%
Percent of Total Assets
Inventory 10.75% 15.76% 13.13% 51.22%
Other Current Assets 5.97% 3.55% 2.57% 19.48%
Total Current Assets 84.07% 92.88% 96.55% 81.29%
Long-term Assets 15.93% 7.12% 3.45% 18.71%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 74.38% 74.34% 54.27% 34.98%
Long-term Liabilities 225.16% 112.67% 64.46% 14.42%
Total Liabilities 299.54% 187.01% 118.73% 49.40%
Net Worth -199.54% -87.01% -18.73% 50.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 38.96%
Selling, General & Administrative Expenses 90.68% 45.20% 42.02% 20.47%
Advertising Expenses 0.00% 0.00% 0.00% 2.95%
Profit Before Interest and Taxes -35.64% 8.55% 12.58% 2.20%
Main Ratios
Current 1.13 1.25 1.78 2.11
Quick 0.99 1.04 1.54 0.57
Total Debt to Total Assets 299.54% 187.01% 118.73% 4.52%
Pre-tax Return on Net Worth 95.81% -52.08% -337.84% 53.69%
Pre-tax Return on Assets -191.19% 45.32% 63.27% 9.75%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -40.77% 4.61% 7.73% n.a
Return on Equity 0.00% 0.00% 0.00% n.a
Activity Ratios
Inventory Turnover 48.00 31.04 23.34 n.a
Accounts Payable Turnover 5.31 9.12 9.12 n.a
Payment Days 35 37 38 n.a
Total Asset Turnover 4.69 6.88 5.73 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 0.00 n.a
Current Liab. to Liab. 0.25 0.40 0.46 n.a
Liquidity Ratios
Net Working Capital $2,436 $7,833 $24,664 n.a
Interest Coverage -6.95 4.36 8.21 n.a
Additional Ratios
Assets to Sales 0.21 0.15 0.17 n.a
Current Debt/Total Assets 74% 74% 54% n.a
Acid Test 0.99 1.04 1.54 n.a
Sales/Net Worth 0.00 0.00 0.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a