GFX: Gravestat Farm eXchange

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Horse Reseller Business Plan

Financial Plan

As has been stated throughout the content of this document, the financial analysis charts and tables contained herein have been built with two primary factors at the forefront of consideration:

  1. To provide an extremely conservative outlook for GFX based on minimum performance expectations rather than a "blue sky" outlook.
  2. To provide a healthy foundation for a long term business operation while supporting the financial needs of the home portion of a home based business. Corners have not been cut, expenses have not been hidden. Rather, this document and loan request has been specifically designed to secure the right amount of start-up funding to ensure a long and successful future for GFX.

We intend to seek, and welcome, continued education, counseling, and adjustments to this Financial Plan throughout the future of GFX.

7.1 Important Assumptions

The accompanying table lists our main assumptions for developing our financial projections.

The majority of the assumptions are based on raw average estimates suggested by the software program used to create this business plan. As GFX moves into full operation these figures will be monitored and adjusted according to actual business conditions.

Three Key Factors:

  1. Personnel Burden is listed, and will remain, at 0. GFX will be owned and operated solely by immediate family.
  2. Inventory turnover is listed at 12 to reflect one month of inventory in stock at all times. However, horses are typically "turned" within seven days, and all but a very limited inventory of tack and equipment will be ordered and shipped directly from the source upon customer order.
  3. GFX does not sell on credit terms. This is the norm (almost without exception) in the horse industry. GFX will only offer credit card purchases as an alternative to cash/check payment.
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 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

The following table and chart show our break-even point.

Break-even Analysis
Monthly Units Break-even 69
Monthly Revenue Break-even $21,312
Assumptions:
Average Per-Unit Revenue $310.27
Average Per-Unit Variable Cost $209.63
Estimated Monthly Fixed Cost $6,913

7.3 Projected Profit and Loss

Two Critical Issues regarding the following GFX P&L Statement:

  1. The entire P&L statement, which stems from the Sales Forecast, is intended to reflect an extremely conservative projection. It does not indicate the full potential of GFX given the level of management and expertise that serves as the foundation of GFX. Rather, it has been created, by intent, to demonstrate the absolute minimum performance level expected during the period.
  2. It is of critical importance to note that, being a home based business and the sole source of income for our family, the expense portion of P&L contains virtually every expense, business and personal, conceivable. It does include such minute details as groceries, medicines, gas, daily cash, revolving credit, even "fast food," etc.

A note to the reviewer: It is a simple matter to inflate sales projections, deflate cost of goods sold, and hide expenses for purposes of a business plan. Rather, since we are relying on this venture to provide the livelihood for our family, we have chosen to evaluate and present it far below the best case scenario. We hope that the reviewer of this document will take this into full consideration.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $299,100 $411,000 $510,000
Direct Cost of Sales $202,080 $278,700 $343,500
Other $0 $0 $0
Total Cost of Sales $202,080 $278,700 $343,500
Gross Margin $97,020 $132,300 $166,500
Gross Margin % 32.44% 32.19% 32.65%
Expenses
Payroll $0 $0 $0
Sales and Marketing and Other Expenses $70,416 $70,416 $70,416
Depreciation $0 $0 $0
Depreciation $0 $0 $0
Leased Equipment $1,020 $1,020 $1,020
Utilities $5,520 $5,520 $5,520
Insurance $6,000 $6,000 $6,000
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $82,956 $82,956 $82,956
Profit Before Interest and Taxes $14,064 $49,344 $83,544
EBITDA $14,064 $49,344 $83,544
Interest Expense $11,904 $10,850 $9,750
Taxes Incurred $248 $9,623 $18,756
Net Profit $1,911 $28,870 $55,038
Net Profit/Sales 0.64% 7.02% 10.79%

7.4 Projected Cash Flow

The healthy state of the attached Cash Flow Table and Charts are, in themselves, the primary justification for this business loan request.

This loan request is intended to provide a solid foundation for the start-up and continued health of GFX. As a home based business, virtually every personal and business expense has been factored in. This has been done to ensure that personal expenses (food & shelter) do not prevent GFX from continuing operation. Rather, every calculation has taken these variables into account to ensure that the "home side" of our home business does not inhibit the "business side" of the business.

The all important Cash Balance figure remains at a healthy level, and shows growth, for the full period of this business plan to guarantee continued operation. However it also provides for sufficient cash flow to take advantage of positive business opportunities as they present themselves, and/or to absorb unexpected negative influences.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $299,100 $411,000 $510,000
Subtotal Cash from Operations $299,100 $411,000 $510,000
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 $299,100 $411,000 $510,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $0 $0 $0
Bill Payments $269,122 $408,135 $459,562
Subtotal Spent on Operations $269,122 $408,135 $459,562
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 $11,000 $11,000 $11,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $280,122 $419,135 $470,562
Net Cash Flow $18,978 ($8,135) $39,438
Cash Balance $60,978 $52,844 $92,281

7.5 Projected Balance Sheet

The following Projected Balance Sheet was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $60,978 $52,844 $92,281
Inventory $32,527 $44,860 $55,290
Other Current Assets $0 $0 $0
Total Current Assets $93,505 $97,704 $147,571
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $93,505 $97,704 $147,571
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $46,094 $32,422 $38,251
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $46,094 $32,422 $38,251
Long-term Liabilities $114,000 $103,000 $92,000
Total Liabilities $160,094 $135,422 $130,251
Paid-in Capital $0 $0 $0
Retained Earnings ($68,500) ($66,589) ($37,718)
Earnings $1,911 $28,870 $55,038
Total Capital ($66,589) ($37,718) $17,320
Total Liabilities and Capital $93,505 $97,704 $147,571
Net Worth ($66,589) ($37,718) $17,320

7.6 Business Ratios

The following Business Ratios Table was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its purpose nor implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly. The Industry Profile column contains statistics from the Standard Industry Code (SIC) #0752, Animal Specialty Services.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 37.41% 24.09% -2.90%
Percent of Total Assets
Inventory 34.79% 45.91% 37.47% 8.20%
Other Current Assets 0.00% 0.00% 0.00% 31.90%
Total Current Assets 100.00% 100.00% 100.00% 55.90%
Long-term Assets 0.00% 0.00% 0.00% 44.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 49.30% 33.18% 25.92% 32.70%
Long-term Liabilities 121.92% 105.42% 62.34% 19.90%
Total Liabilities 171.21% 138.60% 88.26% 52.60%
Net Worth -71.21% -38.60% 11.74% 47.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 32.44% 32.19% 32.65% 42.50%
Selling, General & Administrative Expenses 32.05% 25.47% 22.20% 26.40%
Advertising Expenses 2.01% 1.46% 1.18% 0.50%
Profit Before Interest and Taxes 4.70% 12.01% 16.38% 2.40%
Main Ratios
Current 2.03 3.01 3.86 2.19
Quick 1.32 1.63 2.41 1.48
Total Debt to Total Assets 171.21% 138.60% 88.26% 52.60%
Pre-tax Return on Net Worth -3.24% -102.06% 426.06% 4.50%
Pre-tax Return on Assets 2.31% 39.40% 50.01% 9.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.64% 7.02% 10.79% n.a
Return on Equity 0.00% 0.00% 317.77% n.a
Activity Ratios
Inventory Turnover 10.71 7.20 6.86 n.a
Accounts Payable Turnover 6.84 12.17 12.17 n.a
Payment Days 27 36 28 n.a
Total Asset Turnover 3.20 4.21 3.46 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 7.52 n.a
Current Liab. to Liab. 0.29 0.24 0.29 n.a
Liquidity Ratios
Net Working Capital $47,412 $65,282 $109,320 n.a
Interest Coverage 1.18 4.55 8.57 n.a
Additional Ratios
Assets to Sales 0.31 0.24 0.29 n.a
Current Debt/Total Assets 49% 33% 26% n.a
Acid Test 1.32 1.63 2.41 n.a
Sales/Net Worth 0.00 0.00 29.45 n.a
Dividend Payout 0.00 0.00 0.00 n.a