The following sections will outline the Financial Plan of Gymnastics Jump-Start.
Total start-up expenses and assets required will be funded as shown in the Start-up Funding table, below. Wanda Bounce will invest $25,000. Bea Flip will invest $25,000. In addition, gym will secure a $36,600 long-term loan (7 years at 10% interest).
Table 7.3 summarizes the break-even analysis. The Break-even Analysis is based on the average of the first-year figures for total sales, and by operating expenses. Our variable costs are relatively low and our main operating costs are salaries for teachers.
As the Profit and Loss table shows, the company expects to continue its steady growth in profitability over the next three years of operations. Aside from payroll, Rent and Insurance are our largest expenses. The rent for the studio we have chosen is reasonable for the square footage, which will allow us to conduct multiple classes (or classes and birthday parties) at the same time. Insurance demands when dealing with young children and physical activity are high, but the owners' prior experience will keep these costs affordable.
Payroll taxes are based on wages and salaries for all employees, including hourly teachers (shown here as direct cost of sales).
The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company as the business generates sufficient cash flow to support operations. The table shows the planned repayment of our long-term loan over seven years.
The following table presents the Balance Sheet for Gymnastics Jump-Start. Our cash, retained earnings, and net worth will increase steadily as we establish a stable, returning customer base.
The following table outlines some of the more important ratios from the Gymnastic instruction industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7999.1109.