Massage Products Business Plan

Financial Plan

The financial picture is quite encouraging. We have been slow to take on debt, but our credit line with the bank is supported by assets.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• We assume a slow-growth economy, without major recession.
• We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.

8.2 Break-even Analysis

The break-even analysis shows that Massage Tools has a good balance of fixed costs and sufficient sales strength to remain healthy. Our break-even point is just over $6,000 per month for the first year.

8.3 Projected Profit and Loss

We do expect a significant increase in profitability next year, and in the future, because we will have established ourselves in the market. Our higher sales volume will lower our cost of goods and increase our gross margin. This increase in gross margin is important to profitability.

8.4 Projected Cash Flow

We expect to manage cash flow over the next three years with new investment this year. The additional financing resources are required to finance the working capital of a growing business. However, the investment is small due to the low overhead.

8.5 Projected Balance Sheet

Although we will not begin making a profit until April of this year, we are pleased that we will begin to recoup our investment in only four months. The critical piece of this success is the large margin on each product sold as well as the low operational expenses.

8.6 Business Ratios

Standard business ratios for Health and Personal Care Stores (SIC 5047) are included in the following table. The ratios show a plan for balanced, healthy growth. Our return on sales and return on assets remain as strong as ever, actually increasing in percentage terms by the same year.