Florist Business Plan

Red, White & Bloom

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Financial Plan

  • Contracted Labor and Rent make up over 40% of the operating expenses.
  • Red White & Bloom wants to finance growth through cash flow.
  • Marketing will remain at or below 6% of sales.
  • Company expansion, while not a necessity, will be an option if sales projections are met and/or exceeded.

7.1 Break-even Analysis

For our break-even analysis, we assume running costs which include our full payroll, rent, and utilities, and an estimation of other running costs. The chart shows what we need to sell per month to break even, according to these assumptions.

Break-even Analysis
Monthly Revenue Break-even $5,085
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $3,560

7.2 Projected Profit and Loss

This business plan assumes an eventual 10% profit and is built using the following allocations of gross revenue:

  • 10% profit
  • 30% labor (including owner's draw)
  • 10% inventory
  • 27% overhead
  • 23% cost of merchandise
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $79,600 $137,200 $166,600
Direct Cost of Sales $23,880 $41,160 $49,830
Other Costs of Goods $0 $0 $0
Total Cost of Sales $23,880 $41,160 $49,830
Gross Margin $55,720 $96,040 $116,770
Gross Margin % 70.00% 70.00% 70.09%
Expenses
Payroll $0 $0 $0
Marketing & Advertising $4,640 $6,860 $8,330
Depreciation $1,150 $1,150 $1,150
Rent $4,800 $7,800 $8,400
Delivery Labor $5,000 $8,500 $10,200
Temp Labor $768 $1,000 $1,000
Contracted Floral Designer $0 $17,000 $18,200
Insurance $3,390 $4,068 $4,068
Dues & Subscriptions $250 $300 $300
Repairs & Maintenance $1,000 $1,200 $1,200
Supplies $2,650 $5,488 $6,944
Taxes $1,330 $2,000 $2,500
Other Fees $1,500 $1,800 $1,800
Buildout Costs $9,000 $0 $0
Deposits $1,000 $0 $0
Utilities $3,500 $4,200 $4,200
Van $1,410 $1,692 $1,692
Merchant Fees $1,330 $2,744 $3,472
Total Operating Expenses $42,718 $65,802 $73,456
Profit Before Interest and Taxes $13,002 $30,238 $43,314
EBITDA $14,152 $31,388 $44,464
Interest Expense $2,156 $1,404 $711
Taxes Incurred $3,254 $8,650 $12,781
Net Profit $7,592 $20,184 $29,822
Net Profit/Sales 9.54% 14.71% 17.90%

7.3 Projected Cash Flow

The Cash Flow table, below, shows a solid cash balance from day one. Because Red White & Bloom will sell on a cash-basis only, and will stock only slightly more than one month's inventory at any time, we do not anticipate any problems with cash flow, once we have obtained sufficient start-up funds.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $79,600 $137,200 $166,600
Subtotal Cash from Operations $79,600 $137,200 $166,600
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 $79,600 $137,200 $166,600
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $0 $0 $0
Bill Payments $64,913 $117,356 $135,553
Subtotal Spent on Operations $64,913 $117,356 $135,553
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $15,000 $13,860 $13,860
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 $79,913 $131,216 $149,413
Net Cash Flow ($313) $5,984 $17,187
Cash Balance $70,037 $76,021 $93,208

7.4 Projected Balance Sheet

The Balance Sheet, below, shows our projected assets and liabilities for the three years of the plan, including accumulated depreciation of long-term assets.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $70,037 $76,021 $93,208
Inventory $3,947 $6,803 $8,236
Other Current Assets $0 $0 $0
Total Current Assets $73,984 $82,824 $101,444
Long-term Assets
Long-term Assets $11,550 $11,550 $11,550
Accumulated Depreciation $1,150 $2,300 $3,450
Total Long-term Assets $10,400 $9,250 $8,100
Total Assets $84,384 $92,074 $109,544
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $8,392 $9,758 $11,265
Current Borrowing $35,000 $21,140 $7,280
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $43,392 $30,898 $18,545
Long-term Liabilities $0 $0 $0
Total Liabilities $43,392 $30,898 $18,545
Paid-in Capital $45,000 $45,000 $45,000
Retained Earnings ($11,600) ($4,008) $16,176
Earnings $7,592 $20,184 $29,822
Total Capital $40,992 $61,176 $90,999
Total Liabilities and Capital $84,384 $92,074 $109,544
Net Worth $40,992 $61,176 $90,999

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 5992, Florists, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 72.36% 21.43% 0.24%
Percent of Total Assets
Inventory 4.68% 7.39% 7.52% 36.28%
Other Current Assets 0.00% 0.00% 0.00% 24.49%
Total Current Assets 87.68% 89.95% 92.61% 76.91%
Long-term Assets 12.32% 10.05% 7.39% 23.09%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 51.42% 33.56% 16.93% 39.45%
Long-term Liabilities 0.00% 0.00% 0.00% 11.77%
Total Liabilities 51.42% 33.56% 16.93% 51.22%
Net Worth 48.58% 66.44% 83.07% 48.78%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.09% 38.48%
Selling, General & Administrative Expenses #VALUE! 68.09% #VALUE! 23.26%
Advertising Expenses 0.00% 0.00% 0.00% 2.12%
Profit Before Interest and Taxes 16.33% 22.04% 26.00% 1.54%
Main Ratios
Current 1.71 2.68 5.47 1.68
Quick 1.61 2.46 5.03 0.68
Total Debt to Total Assets 51.42% 33.56% 16.93% 57.66%
Pre-tax Return on Net Worth 26.46% 47.13% 46.82% 3.25%
Pre-tax Return on Assets 12.85% 31.32% 38.89% 7.68%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 9.54% 14.71% 17.90% n.a
Return on Equity 18.52% 32.99% 32.77% n.a
Activity Ratios
Inventory Turnover 9.79 7.66 6.63 n.a
Accounts Payable Turnover 8.73 12.17 12.17 n.a
Payment Days 27 28 28 n.a
Total Asset Turnover 0.94 1.49 1.52 n.a
Debt Ratios
Debt to Net Worth 1.06 0.51 0.20 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $30,592 $51,926 $82,899 n.a
Interest Coverage 6.03 21.54 60.96 n.a
Additional Ratios
Assets to Sales 1.06 0.67 0.66 n.a
Current Debt/Total Assets 51% 34% 17% n.a
Acid Test 1.61 2.46 5.03 n.a
Sales/Net Worth 1.94 2.24 1.83 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $5,085
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $3,560
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $79,600 $137,200 $166,600
Direct Cost of Sales $23,880 $41,160 $49,830
Other Costs of Goods $0 $0 $0
Total Cost of Sales $23,880 $41,160 $49,830
Gross Margin $55,720 $96,040 $116,770
Gross Margin % 70.00% 70.00% 70.09%
Expenses
Payroll $0 $0 $0
Marketing & Advertising $4,640 $6,860 $8,330
Depreciation $1,150 $1,150 $1,150
Rent $4,800 $7,800 $8,400
Delivery Labor $5,000 $8,500 $10,200
Temp Labor $768 $1,000 $1,000
Contracted Floral Designer $0 $17,000 $18,200
Insurance $3,390 $4,068 $4,068
Dues & Subscriptions $250 $300 $300
Repairs & Maintenance $1,000 $1,200 $1,200
Supplies $2,650 $5,488 $6,944
Taxes $1,330 $2,000 $2,500
Other Fees $1,500 $1,800 $1,800
Buildout Costs $9,000 $0 $0
Deposits $1,000 $0 $0
Utilities $3,500 $4,200 $4,200
Van $1,410 $1,692 $1,692
Merchant Fees $1,330 $2,744 $3,472
Total Operating Expenses $42,718 $65,802 $73,456
Profit Before Interest and Taxes $13,002 $30,238 $43,314
EBITDA $14,152 $31,388 $44,464
Interest Expense $2,156 $1,404 $711
Taxes Incurred $3,254 $8,650 $12,781
Net Profit $7,592 $20,184 $29,822
Net Profit/Sales 9.54% 14.71% 17.90%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $79,600 $137,200 $166,600
Subtotal Cash from Operations $79,600 $137,200 $166,600
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 $79,600 $137,200 $166,600
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $0 $0 $0
Bill Payments $64,913 $117,356 $135,553
Subtotal Spent on Operations $64,913 $117,356 $135,553
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $15,000 $13,860 $13,860
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 $79,913 $131,216 $149,413
Net Cash Flow ($313) $5,984 $17,187
Cash Balance $70,037 $76,021 $93,208
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $70,037 $76,021 $93,208
Inventory $3,947 $6,803 $8,236
Other Current Assets $0 $0 $0
Total Current Assets $73,984 $82,824 $101,444
Long-term Assets
Long-term Assets $11,550 $11,550 $11,550
Accumulated Depreciation $1,150 $2,300 $3,450
Total Long-term Assets $10,400 $9,250 $8,100
Total Assets $84,384 $92,074 $109,544
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $8,392 $9,758 $11,265
Current Borrowing $35,000 $21,140 $7,280
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $43,392 $30,898 $18,545
Long-term Liabilities $0 $0 $0
Total Liabilities $43,392 $30,898 $18,545
Paid-in Capital $45,000 $45,000 $45,000
Retained Earnings ($11,600) ($4,008) $16,176
Earnings $7,592 $20,184 $29,822
Total Capital $40,992 $61,176 $90,999
Total Liabilities and Capital $84,384 $92,074 $109,544
Net Worth $40,992 $61,176 $90,999
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 72.36% 21.43% 0.24%
Percent of Total Assets
Inventory 4.68% 7.39% 7.52% 36.28%
Other Current Assets 0.00% 0.00% 0.00% 24.49%
Total Current Assets 87.68% 89.95% 92.61% 76.91%
Long-term Assets 12.32% 10.05% 7.39% 23.09%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 51.42% 33.56% 16.93% 39.45%
Long-term Liabilities 0.00% 0.00% 0.00% 11.77%
Total Liabilities 51.42% 33.56% 16.93% 51.22%
Net Worth 48.58% 66.44% 83.07% 48.78%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.09% 38.48%
Selling, General & Administrative Expenses #VALUE! 68.09% #VALUE! 23.26%
Advertising Expenses 0.00% 0.00% 0.00% 2.12%
Profit Before Interest and Taxes 16.33% 22.04% 26.00% 1.54%
Main Ratios
Current 1.71 2.68 5.47 1.68
Quick 1.61 2.46 5.03 0.68
Total Debt to Total Assets 51.42% 33.56% 16.93% 57.66%
Pre-tax Return on Net Worth 26.46% 47.13% 46.82% 3.25%
Pre-tax Return on Assets 12.85% 31.32% 38.89% 7.68%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 9.54% 14.71% 17.90% n.a
Return on Equity 18.52% 32.99% 32.77% n.a
Activity Ratios
Inventory Turnover 9.79 7.66 6.63 n.a
Accounts Payable Turnover 8.73 12.17 12.17 n.a
Payment Days 27 28 28 n.a
Total Asset Turnover 0.94 1.49 1.52 n.a
Debt Ratios
Debt to Net Worth 1.06 0.51 0.20 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $30,592 $51,926 $82,899 n.a
Interest Coverage 6.03 21.54 60.96 n.a
Additional Ratios
Assets to Sales 1.06 0.67 0.66 n.a
Current Debt/Total Assets 51% 34% 17% n.a
Acid Test 1.61 2.46 5.03 n.a
Sales/Net Worth 1.94 2.24 1.83 n.a
Dividend Payout 0.00 0.00 0.00 n.a