The Bottlecap

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Microbrew Bar Business Plan

Financial Plan

The following section will lay out the general financial plan including our break-even analysis, profit and loss, cash flow, general assumptions, the balance sheet, and the business ratios.

7.1 Important Assumptions

The following table summarizes important assumptions necessary for good financial planning.

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 summarize our break-even analysis. To break even we must sell at least 5,300 beers based upon the per unit cost. Therefore, customer traffic will become a big factor when it comes to the success of The Bottlecap.

Break-even Analysis
Monthly Units Break-even 5,335
Monthly Revenue Break-even $15,713
Assumptions:
Average Per-Unit Revenue $2.94
Average Per-Unit Variable Cost $0.66
Estimated Monthly Fixed Cost $12,192

7.3 Key Financial Indicators

The following chart compares five key indicators in regards to how much they change over the course of the first three years of plan implementation.

7.4 Projected Profit and Loss

One of the keys to success with a beer tavern such as The Bottlecap is the gross margin because of the low cost of buying beer in bulk. The profit-per-unit becomes very important because of the relatively high costs associated with running such an establishment.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $390,456 $429,496 $512,552
Direct Cost of Sales $87,478 $96,225 $113,868
Production Payroll $58,056 $66,152 $68,236
Other $24,000 $30,000 $40,000
Total Cost of Sales $169,534 $192,377 $222,104
Gross Margin $220,922 $237,119 $290,447
Gross Margin % 56.58% 55.21% 56.67%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $0 $0 $0
Advertising/Promotion $39,000 $50,000 $75,000
Miscellaneous $6,000 $9,000 $12,000
Total Sales and Marketing Expenses $45,000 $59,000 $87,000
Sales and Marketing % 11.52% 13.74% 16.97%
General and Administrative Expenses
General and Administrative Payroll $48,000 $50,000 $52,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $9,000 $11,000 $12,000
Insurance $8,400 $9,500 $11,000
Rent $18,000 $12,000 $12,000
Payroll Taxes $15,908 $17,423 $18,035
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $99,308 $99,923 $105,035
General and Administrative % 25.43% 23.27% 20.49%
Other Expenses:
Other Payroll $0 $0 $0
Consultants $0 $0 $0
Contract/Consultants $2,000 $0 $0
Total Other Expenses $2,000 $0 $0
Other % 0.51% 0.00% 0.00%
Total Operating Expenses $146,308 $158,923 $192,035
Profit Before Interest and Taxes $74,613 $78,196 $98,412
EBITDA $74,613 $78,196 $98,412
Interest Expense $75 $0 $0
Taxes Incurred $18,262 $19,549 $25,013
Net Profit $56,276 $58,647 $73,399
Net Profit/Sales 14.41% 13.65% 14.32%

7.5 Projected Cash Flow

The following chart and table explain the key elements of the pro forma cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $390,456 $429,496 $512,552
Subtotal Cash from Operations $390,456 $429,496 $512,552
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $2,000 $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 $3,000 $0 $0
Subtotal Cash Received $395,456 $429,496 $512,552
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $106,056 $116,152 $120,236
Bill Payments $212,551 $262,072 $316,120
Subtotal Spent on Operations $318,607 $378,224 $436,356
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $2,000 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $50,000 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $370,607 $378,224 $436,356
Net Cash Flow $24,849 $51,272 $76,195
Cash Balance $32,769 $84,040 $160,236

7.6 Projected Balance Sheet

The table below is the complete balance sheet which includes all assets, liabilities, and capital.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $32,769 $84,040 $160,236
Inventory $12,839 $14,122 $16,712
Other Current Assets $50,000 $50,000 $50,000
Total Current Assets $95,607 $148,163 $226,947
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $95,607 $148,163 $226,947
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $27,131 $21,039 $26,425
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $27,131 $21,039 $26,425
Long-term Liabilities $0 $0 $0
Total Liabilities $27,131 $21,039 $26,425
Paid-in Capital $78,000 $78,000 $78,000
Retained Earnings ($65,800) ($9,524) $49,123
Earnings $56,276 $58,647 $73,399
Total Capital $68,476 $127,123 $200,522
Total Liabilities and Capital $95,607 $148,163 $226,947
Net Worth $68,476 $127,123 $200,522

7.7 Business Ratios

The Ratios table shows important ratios for The Bottlecap. These ratios are derived from the Standard Industry Classification (SIC) Index, code 5813.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 10.00% 19.34% 1.90%
Percent of Total Assets
Inventory 13.43% 9.53% 7.36% 3.10%
Other Current Assets 52.30% 33.75% 22.03% 44.60%
Total Current Assets 100.00% 100.00% 100.00% 52.30%
Long-term Assets 0.00% 0.00% 0.00% 47.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 28.38% 14.20% 11.64% 28.20%
Long-term Liabilities 0.00% 0.00% 0.00% 23.10%
Total Liabilities 28.38% 14.20% 11.64% 51.30%
Net Worth 71.62% 85.80% 88.36% 48.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 56.58% 55.21% 56.67% 42.30%
Selling, General & Administrative Expenses 42.26% 41.55% 42.27% 23.40%
Advertising Expenses 9.99% 11.64% 14.63% 2.40%
Profit Before Interest and Taxes 19.11% 18.21% 19.20% 2.80%
Main Ratios
Current 3.52 7.04 8.59 1.14
Quick 3.05 6.37 7.96 0.74
Total Debt to Total Assets 28.38% 14.20% 11.64% 51.30%
Pre-tax Return on Net Worth 108.85% 61.51% 49.08% 5.20%
Pre-tax Return on Assets 77.96% 52.78% 43.36% 10.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 14.41% 13.65% 14.32% n.a
Return on Equity 82.18% 46.13% 36.60% n.a
Activity Ratios
Inventory Turnover 10.91 7.14 7.39 n.a
Accounts Payable Turnover 8.83 12.17 12.17 n.a
Payment Days 27 34 27 n.a
Total Asset Turnover 4.08 2.90 2.26 n.a
Debt Ratios
Debt to Net Worth 0.40 0.17 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $68,476 $127,123 $200,522 n.a
Interest Coverage 994.84 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.24 0.34 0.44 n.a
Current Debt/Total Assets 28% 14% 12% n.a
Acid Test 3.05 6.37 7.96 n.a
Sales/Net Worth 5.70 3.38 2.56 n.a
Dividend Payout 0.00 0.00 0.00 n.a