Laser Dreams

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Hair Removal Business Plan

Financial Plan

The following is the financial plan for Laser Dreams.

7.1 Break-even Analysis

The monthly break-even point is approximately $13,300.

Break-even Analysis
Monthly Revenue Break-even $13,329
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $13,329

7.2 Projected Cash Flow

The following table and chart highlights the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $135,300 $190,000 $245,000
Subtotal Cash from Operations $135,300 $190,000 $245,000
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 $135,300 $190,000 $245,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $93,600 $105,000 $118,000
Bill Payments $62,348 $72,440 $87,565
Subtotal Spent on Operations $155,948 $177,440 $205,565
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 $5,160 $5,160 $5,160
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $161,108 $182,600 $210,725
Net Cash Flow ($25,808) $7,400 $34,275
Cash Balance $16,092 $23,492 $57,767

7.3 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $135,300 $190,000 $245,000
Direct Cost of Sales $0 $0 $0
Other Production Expenses $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $135,300 $190,000 $245,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $93,600 $105,000 $118,000
Sales and Marketing and Other Expenses $6,000 $8,000 $10,000
Depreciation $8,568 $8,568 $8,568
Leased Equipment $0 $0 $0
Utilities $3,300 $3,300 $3,300
Insurance $2,400 $2,400 $2,400
Rent $36,000 $36,000 $36,000
Payroll Taxes $10,080 $13,050 $15,750
Other $0 $0 $0
Total Operating Expenses $159,948 $176,318 $194,018
Profit Before Interest and Taxes ($24,648) $13,682 $50,982
EBITDA ($16,080) $22,250 $59,550
Interest Expense $9,721 $9,226 $8,710
Taxes Incurred $0 $1,337 $12,682
Net Profit ($34,369) $3,119 $29,590
Net Profit/Sales -25.40% 1.64% 12.08%

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $16,092 $23,492 $57,767
Other Current Assets $20,000 $20,000 $20,000
Total Current Assets $36,092 $43,492 $77,767
Long-term Assets
Long-term Assets $30,000 $30,000 $30,000
Accumulated Depreciation $8,568 $17,136 $25,704
Total Long-term Assets $21,432 $12,864 $4,296
Total Assets $57,524 $56,356 $82,063
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,153 $6,026 $7,302
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $5,153 $6,026 $7,302
Long-term Liabilities $94,840 $89,680 $84,520
Total Liabilities $99,993 $95,706 $91,822
Paid-in Capital $60,000 $60,000 $60,000
Retained Earnings ($68,100) ($102,469) ($99,349)
Earnings ($34,369) $3,119 $29,590
Total Capital ($42,469) ($39,349) ($9,759)
Total Liabilities and Capital $57,524 $56,356 $82,063
Net Worth ($42,468) ($39,349) ($9,759)

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 7231, Beauty Shops, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 40.43% 28.95% 7.50%
Percent of Total Assets
Other Current Assets 34.77% 35.49% 24.37% 36.10%
Total Current Assets 62.74% 77.17% 94.77% 52.40%
Long-term Assets 37.26% 22.83% 5.23% 47.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.96% 10.69% 8.90% 31.90%
Long-term Liabilities 164.87% 159.13% 102.99% 26.80%
Total Liabilities 173.83% 169.82% 111.89% 58.70%
Net Worth -73.83% -69.82% -11.89% 41.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 105.89% 91.73% 84.21% 73.40%
Advertising Expenses 4.43% 4.21% 4.08% 2.50%
Profit Before Interest and Taxes -18.22% 7.20% 20.81% 3.20%
Main Ratios
Current 7.00 7.22 10.65 1.79
Quick 7.00 7.22 10.65 1.34
Total Debt to Total Assets 173.83% 169.82% 111.89% 58.70%
Pre-tax Return on Net Worth 80.93% -11.32% -433.16% 5.20%
Pre-tax Return on Assets -59.75% 7.91% 51.51% 12.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -25.40% 1.64% 12.08% n.a
Return on Equity 0.00% 0.00% 0.00% n.a
Activity Ratios
Accounts Payable Turnover 13.10 12.17 12.17 n.a
Payment Days 27 28 27 n.a
Total Asset Turnover 2.35 3.37 2.99 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 0.00 n.a
Current Liab. to Liab. 0.05 0.06 0.08 n.a
Liquidity Ratios
Net Working Capital $30,940 $37,467 $70,465 n.a
Interest Coverage -2.54 1.48 5.85 n.a
Additional Ratios
Assets to Sales 0.43 0.30 0.33 n.a
Current Debt/Total Assets 9% 11% 9% n.a
Acid Test 7.00 7.22 10.65 n.a
Sales/Net Worth 0.00 0.00 0.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a