As our Sales Forecast made clear, profits will initially be seasonal. We expect to sustain small losses in the winter months for the first year, until our local clientele is fully established. Summer sales increases are based on the much larger number of potential customers in Moab then, and the trend for visitors to spend more per purchase than the locals.
We have planned for this seasonal variance, and the funding we are requesting will help to maintain a positive cash balance throughout the first three years, until we become fully profitable. The owners are receiving no dividends, and have some margin to reduce their own salaries from what is projected to cushion any unexpected short-term shortfalls.
Our partnership agreement includes an exit plan (see topic 9.0, below), with clear agreements on what constitutes "success" or "failure" in each timeframe. If the businesses sustains larger than acceptable losses, our chief priority will be repaying our creditors, with recouping of owner investments as the last item on the payback list.
Our estimated monthly revenue break-even point includes payroll, rent, utilities, cost of goods, and other operating costs. We expect summer sales to make up for the slow winter months.
Being a family-run business will be an asset, because we will have the flexibility to adjust our expenses each month in order to maintain a positive cash flow.
Projected profit and loss illustrated in the following table and charts. Sarrica's Market will be profitable early in the first year, with net profit rising over the next two years.
Below is our projected cash flow. Sarrica's will maintain a positive cash balance while covering expenses and repaying our loan.
Our projected Balance Sheet, based on well-researched sales and expense forecasts, shows a steadily increasing net worth.
The following table outlines some of the more important ratios from the Gourmet Food Stores industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5499.