McKenzie Tackle and Bait Shop

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Fishing Shop Business Plan

Financial Plan

The following sections will outline the important financial assumptions, break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Break-even Analysis

The break-even analysis indicates what is needed in monthly revenue to break even.

Break-even Analysis
Monthly Revenue Break-even $4,595
Assumptions:
Average Percent Variable Cost 15%
Estimated Monthly Fixed Cost $3,898

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss. The appendices include first year monthly P & L estimates.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $56,000 $68,000 $79,000
Direct Cost of Sales $8,500 $10,750 $12,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $8,500 $10,750 $12,000
Gross Margin $47,500 $57,250 $67,000
Gross Margin % 84.82% 84.19% 84.81%
Expenses
Payroll $24,000 $28,000 $35,000
Sales and Marketing and Other Expenses $8,000 $10,000 $11,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $1,470 $1,800 $1,800
Insurance $0 $0 $0
Rent $9,700 $9,700 $9,700
Payroll Taxes $3,600 $4,200 $5,250
Other $0 $0 $0
Total Operating Expenses $46,770 $53,700 $62,750
Profit Before Interest and Taxes $730 $3,550 $4,250
EBITDA $730 $3,550 $4,250
Interest Expense $0 $0 $0
Taxes Incurred $219 $1,065 $1,275
Net Profit $511 $2,485 $2,975
Net Profit/Sales 0.91% 3.65% 3.77%

7.3 Projected Cash Flow

The following is the projected cash flow for three years. First year monthlies are in the appendix.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $56,000 $68,000 $79,000
Subtotal Cash from Operations $56,000 $68,000 $79,000
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 $56,000 $68,000 $79,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $24,000 $28,000 $35,000
Bill Payments $32,132 $35,243 $40,920
Subtotal Spent on Operations $56,132 $63,243 $75,920
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 $56,132 $63,243 $75,920
Net Cash Flow ($132) $4,757 $3,080
Cash Balance $12,568 $17,325 $20,405

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years. The first year monthly projections can be seen in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $12,568 $17,325 $20,405
Inventory $1,170 $1,480 $1,652
Other Current Assets $0 $0 $0
Total Current Assets $13,738 $18,805 $22,057
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $13,738 $18,805 $22,057
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $527 $3,109 $3,386
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $527 $3,109 $3,386
Long-term Liabilities $0 $0 $0
Total Liabilities $527 $3,109 $3,386
Paid-in Capital $25,000 $25,000 $25,000
Retained Earnings ($12,300) ($11,789) ($9,304)
Earnings $511 $2,485 $2,975
Total Capital $13,211 $15,696 $18,671
Total Liabilities and Capital $13,738 $18,805 $22,057
Net Worth $13,211 $15,696 $18,671

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5091, Sporting & Recreational Goods, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 21.43% 16.18% 11.50%
Percent of Total Assets
Inventory 8.52% 7.87% 7.49% 28.00%
Other Current Assets 0.00% 0.00% 0.00% 29.00%
Total Current Assets 100.00% 100.00% 100.00% 88.70%
Long-term Assets 0.00% 0.00% 0.00% 11.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 3.83% 16.53% 15.35% 38.00%
Long-term Liabilities 0.00% 0.00% 0.00% 9.00%
Total Liabilities 3.83% 16.53% 15.35% 47.00%
Net Worth 96.17% 83.47% 84.65% 53.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.82% 84.19% 84.81% 23.00%
Selling, General & Administrative Expenses 83.91% 80.54% 81.04% 14.80%
Advertising Expenses 14.29% 14.71% 13.92% 0.70%
Profit Before Interest and Taxes 1.30% 5.22% 5.38% 2.00%
Main Ratios
Current 26.08 6.05 6.51 2.19
Quick 23.86 5.57 6.03 1.22
Total Debt to Total Assets 3.83% 16.53% 15.35% 47.00%
Pre-tax Return on Net Worth 5.53% 22.62% 22.76% 5.30%
Pre-tax Return on Assets 5.31% 18.88% 19.27% 10.10%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.91% 3.65% 3.77% n.a
Return on Equity 3.87% 15.83% 15.93% n.a
Activity Ratios
Inventory Turnover 9.23 8.11 7.66 n.a
Accounts Payable Turnover 61.99 12.17 12.17 n.a
Payment Days 27 18 29 n.a
Total Asset Turnover 4.08 3.62 3.58 n.a
Debt Ratios
Debt to Net Worth 0.04 0.20 0.18 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $13,211 $15,696 $18,671 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.28 0.28 n.a
Current Debt/Total Assets 4% 17% 15% n.a
Acid Test 23.86 5.57 6.03 n.a
Sales/Net Worth 4.24 4.33 4.23 n.a
Dividend Payout 0.00 0.00 0.00 n.a