Wooderful Floors

Start your own business plan »

Hardwood Floor Refinisher Business Plan

Financial Plan

The following sections will outline important financial information.

8.1 Start-up Funding

Funds for start up will be a combination of owner investment and a long-term bank loan, with an interest rate of not more than 7% for seven years.

Start-up Funding
Start-up Expenses to Fund $19,900
Start-up Assets to Fund $18,100
Total Funding Required $38,000
Assets
Non-cash Assets from Start-up $8,000
Cash Requirements from Start-up $10,100
Additional Cash Raised $0
Cash Balance on Starting Date $10,100
Total Assets $18,100
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $15,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $15,000
Capital
Planned Investment
Owner $15,000
Other $0
Additional Investment Requirement $8,000
Total Planned Investment $23,000
Loss at Start-up (Start-up Expenses) ($19,900)
Total Capital $3,100
Total Capital and Liabilities $18,100
Total Funding $38,000

8.2 Important Assumptions

The following table details important Financial Assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.3 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $4,156
Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $3,325

8.4 Projected Profit and Loss

The following table and charts presents Projected Profit and Loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $50,908 $76,802 $93,717
Direct Cost of Sales $10,182 $15,360 $18,743
Other Costs of Sales $0 $0 $0
Total Cost of Sales $10,182 $15,360 $18,743
Gross Margin $40,726 $61,442 $74,974
Gross Margin % 80.00% 80.00% 80.00%
Expenses
Payroll $28,200 $25,833 $31,000
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $2,664 $2,666 $2,666
Utilities $1,200 $1,200 $1,200
Payroll Taxes $4,230 $0 $0
Insurance $2,400 $2,400 $2,400
Total Operating Expenses $39,894 $33,299 $38,466
Profit Before Interest and Taxes $832 $28,142 $36,508
EBITDA $3,496 $30,808 $39,174
Interest Expense $963 $803 $624
Taxes Incurred $0 $8,202 $10,765
Net Profit ($130) $19,138 $25,119
Net Profit/Sales -0.26% 24.92% 26.80%

8.5 Projected Cash Flow

The following table and chart displays the Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $50,908 $76,802 $93,717
Subtotal Cash from Operations $50,908 $76,802 $93,717
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 $50,908 $76,802 $93,717
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $28,200 $25,833 $31,000
Bill Payments $17,963 $28,979 $34,459
Subtotal Spent on Operations $46,163 $54,813 $65,459
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 $2,304 $2,460 $2,639
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $48,467 $57,273 $68,098
Net Cash Flow $2,441 $19,529 $25,620
Cash Balance $12,541 $32,071 $57,690

8.6 Projected Balance Sheet

The following table shows the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $12,541 $32,071 $57,690
Other Current Assets $0 $0 $0
Total Current Assets $12,541 $32,071 $57,690
Long-term Assets
Long-term Assets $8,000 $8,000 $8,000
Accumulated Depreciation $2,664 $5,330 $7,996
Total Long-term Assets $5,336 $2,670 $4
Total Assets $17,877 $34,741 $57,694
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,211 $2,397 $2,871
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,211 $2,397 $2,871
Long-term Liabilities $12,696 $10,236 $7,597
Total Liabilities $14,907 $12,633 $10,468
Paid-in Capital $23,000 $23,000 $23,000
Retained Earnings ($19,900) ($20,030) ($893)
Earnings ($130) $19,138 $25,119
Total Capital $2,970 $22,107 $47,226
Total Liabilities and Capital $17,877 $34,741 $57,694
Net Worth $2,970 $22,107 $47,226

8.7 Business Ratios

The following table displays common business ratios relevant to Wooderful Floors as well as the wood floor industry. Please note that there are some variances between Wooderful's ratios and the industry. Industry profile ratios are based on the Standard Industrial Classification (SIC) code 1752.

This can be explained by the fact that Wooderful is a small operation, with few employees and little capital expenses. Having the operation small helps them achieve above industry margins.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 50.86% 22.02% 5.11%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 32.94%
Total Current Assets 70.15% 92.31% 99.99% 75.88%
Long-term Assets 29.85% 7.69% 0.01% 24.12%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.37% 6.90% 4.98% 38.68%
Long-term Liabilities 71.02% 29.46% 13.17% 13.31%
Total Liabilities 83.39% 36.36% 18.14% 51.99%
Net Worth 16.61% 63.64% 81.86% 48.01%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.00% 80.00% 80.00% 29.46%
Selling, General & Administrative Expenses 88.28% 37.26% 34.91% 14.86%
Advertising Expenses 0.00% 0.00% 0.00% 0.47%
Profit Before Interest and Taxes 1.63% 36.64% 38.96% 2.37%
Main Ratios
Current 5.67 13.38 20.09 1.74
Quick 5.67 13.38 20.09 1.38
Total Debt to Total Assets 83.39% 36.36% 18.14% 6.96%
Pre-tax Return on Net Worth -4.39% 123.67% 75.98% 57.15%
Pre-tax Return on Assets -0.73% 78.70% 62.20% 16.25%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.26% 24.92% 26.80% n.a
Return on Equity -4.39% 86.57% 53.19% n.a
Activity Ratios
Accounts Payable Turnover 9.12 12.17 12.17 n.a
Payment Days 27 29 28 n.a
Total Asset Turnover 2.85 2.21 1.62 n.a
Debt Ratios
Debt to Net Worth 5.02 0.57 0.22 n.a
Current Liab. to Liab. 0.15 0.19 0.27 n.a
Liquidity Ratios
Net Working Capital $10,330 $29,673 $54,819 n.a
Interest Coverage 0.86 35.06 58.49 n.a
Additional Ratios
Assets to Sales 0.35 0.45 0.62 n.a
Current Debt/Total Assets 12% 7% 5% n.a
Acid Test 5.67 13.38 20.09 n.a
Sales/Net Worth 17.14 3.47 1.98 n.a
Dividend Payout 0.00 0.00 0.00 n.a