Canine Critter College

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Dog Obedience School Business Plan

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 Break-even Analysis

The Break-even Analysis indicates that approximately $3,600 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $3,668
Assumptions:
Average Percent Variable Cost 4%
Estimated Monthly Fixed Cost $3,535

7.3 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 $40,198 $77,089 $91,269
Direct Cost of Sales $1,460 $771 $913
Other Production Expenses $0 $0 $0
Total Cost of Sales $1,460 $771 $913
Gross Margin $38,739 $76,318 $90,357
Gross Margin % 96.37% 99.00% 99.00%
Expenses
Payroll $24,000 $36,000 $36,000
Sales and Marketing and Other Expenses $960 $960 $960
Depreciation $0 $0 $0
Utilities $900 $900 $900
Insurance $1,560 $1,560 $1,560
Rent $9,600 $9,600 $9,600
Payroll Taxes $5,400 $5,400 $5,400
Other $0 $0 $0
Total Operating Expenses $42,420 $54,420 $54,420
Profit Before Interest and Taxes ($3,681) $21,898 $35,937
EBITDA ($3,681) $21,898 $35,937
Interest Expense $333 $293 $99
Taxes Incurred $0 $6,481 $10,751
Net Profit ($4,014) $15,123 $25,086
Net Profit/Sales -9.99% 19.62% 27.49%

7.4 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 $40,198 $77,089 $91,269
Subtotal Cash from Operations $40,198 $77,089 $91,269
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $5,000 $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 $45,198 $77,089 $91,269
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $24,000 $36,000 $36,000
Bill Payments $18,110 $25,934 $29,836
Subtotal Spent on Operations $42,110 $61,934 $65,836
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,120 $1,900 $1,980
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 $43,230 $63,834 $67,816
Net Cash Flow $1,968 $13,255 $23,453
Cash Balance $16,168 $29,423 $52,876

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 $16,168 $29,423 $52,876
Other Current Assets $0 $0 $0
Total Current Assets $16,168 $29,423 $52,876
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $16,168 $29,423 $52,876
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,103 $2,134 $2,481
Current Borrowing $3,880 $1,980 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,983 $4,114 $2,481
Long-term Liabilities $0 $0 $0
Total Liabilities $5,983 $4,114 $2,481
Paid-in Capital $15,000 $15,000 $15,000
Retained Earnings ($800) ($4,814) $10,309
Earnings ($4,014) $15,123 $25,086
Total Capital $10,186 $25,309 $50,395
Total Liabilities and Capital $16,168 $29,423 $52,876
Net Worth $10,186 $25,309 $50,395

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 0752, Animal Specialty Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 91.77% 18.40% 6.64%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 29.75%
Total Current Assets 100.00% 100.00% 100.00% 55.50%
Long-term Assets 0.00% 0.00% 0.00% 44.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 37.00% 13.98% 4.69% 23.28%
Long-term Liabilities 0.00% 0.00% 0.00% 22.37%
Total Liabilities 37.00% 13.98% 4.69% 45.65%
Net Worth 63.00% 86.02% 95.31% 54.35%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 96.37% 99.00% 99.00% 27.10%
Selling, General & Administrative Expenses 56.10% 79.68% 71.92% 12.51%
Advertising Expenses 0.41% 0.78% 0.66% 0.29%
Profit Before Interest and Taxes -9.16% 28.41% 39.37% 1.91%
Main Ratios
Current 2.70 7.15 21.31 1.72
Quick 2.70 7.15 21.31 0.94
Total Debt to Total Assets 37.00% 13.98% 4.69% 56.36%
Pre-tax Return on Net Worth -39.41% 85.36% 71.11% 5.58%
Pre-tax Return on Assets -24.83% 73.43% 67.78% 12.78%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.99% 19.62% 27.49% n.a
Return on Equity -39.41% 59.75% 49.78% n.a
Activity Ratios
Accounts Payable Turnover 9.61 12.17 12.17 n.a
Payment Days 27 30 28 n.a
Total Asset Turnover 2.49 2.62 1.73 n.a
Debt Ratios
Debt to Net Worth 0.59 0.16 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $10,186 $25,309 $50,395 n.a
Interest Coverage -11.06 74.74 363.00 n.a
Additional Ratios
Assets to Sales 0.40 0.38 0.58 n.a
Current Debt/Total Assets 37% 14% 5% n.a
Acid Test 2.70 7.15 21.31 n.a
Sales/Net Worth 3.95 3.05 1.81 n.a
Dividend Payout 0.00 0.00 0.00 n.a