The Spot

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Nightclub Business Plan

Financial Plan

The financial projections for this plan are presented in the tables and charts of the following subtopics.

7.1 Important Assumptions

The table below presents the assumptions used in the financial calculations of this business plan.

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 0.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

Our Break-even Analsysis is shown in the following table and chart.

Break-even Analysis
Monthly Units Break-even 10,220
Monthly Revenue Break-even $56,482
Assumptions:
Average Per-Unit Revenue $5.53
Average Per-Unit Variable Cost $1.27
Estimated Monthly Fixed Cost $43,527

7.3 Projected Profit and Loss

The following table and chart will show the projected profit and loss for The Spot.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $569,800 $875,000 $1,052,000
Direct Cost of Sales $130,700 $192,868 $257,717
Other Production Expenses $0 $0 $0
Total Cost of Sales $130,700 $192,868 $257,717
Gross Margin $439,100 $682,133 $794,283
Gross Margin % 77.06% 77.96% 75.50%
Expenses
Payroll $348,000 $388,000 $412,000
Sales and Marketing and Other Expenses $22,900 $25,000 $27,300
Depreciation $2,618 $2,856 $2,856
Leased Equipment $33,000 $40,000 $40,000
Utilities $3,600 $3,600 $3,600
Insurance $12,000 $12,000 $12,000
Rent $48,000 $40,000 $40,000
Payroll Taxes $52,200 $58,200 $61,800
Other $0 $0 $0
Total Operating Expenses $522,318 $569,656 $599,556
Profit Before Interest and Taxes ($83,218) $112,477 $194,727
EBITDA ($80,600) $115,333 $197,583
Interest Expense $42 $250 $0
Taxes Incurred $0 $33,668 $58,418
Net Profit ($83,260) $78,559 $136,309
Net Profit/Sales -14.61% 8.98% 12.96%

7.4 Projected Cash Flow

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

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $512,820 $787,500 $946,800
Cash from Receivables $45,082 $81,127 $101,504
Subtotal Cash from Operations $557,902 $868,627 $1,048,304
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $5,000 $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 $0 $0 $0
Subtotal Cash Received $562,902 $868,627 $1,048,304
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $348,000 $388,000 $412,000
Bill Payments $289,115 $407,976 $500,717
Subtotal Spent on Operations $637,115 $795,976 $912,717
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $5,000 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $637,115 $800,976 $912,717
Net Cash Flow ($74,213) $67,651 $135,587
Cash Balance $3,287 $70,938 $206,525

7.5 Projected Balance Sheet

The following is the projected balance sheet for the three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $3,287 $70,938 $206,525
Accounts Receivable $11,898 $18,271 $21,967
Inventory $15,593 $23,009 $30,746
Other Current Assets $0 $0 $0
Total Current Assets $30,778 $112,218 $259,238
Long-term Assets
Long-term Assets $20,000 $20,000 $20,000
Accumulated Depreciation $2,618 $5,474 $8,330
Total Long-term Assets $17,382 $14,526 $11,670
Total Assets $48,160 $126,744 $270,908
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $28,919 $33,945 $41,800
Current Borrowing $5,000 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $33,919 $33,945 $41,800
Long-term Liabilities $0 $0 $0
Total Liabilities $33,919 $33,945 $41,800
Paid-in Capital $210,000 $210,000 $210,000
Retained Earnings ($112,500) ($195,760) ($117,201)
Earnings ($83,260) $78,559 $136,309
Total Capital $14,240 $92,799 $229,108
Total Liabilities and Capital $48,160 $126,744 $270,908
Net Worth $14,240 $92,799 $229,108

7.6 Business Ratios

The Ratios table below outlines important ratios for this night club. The last column, Industry Profile, is derived from the Standard Industrial Classification (SIC) Index code 5813, for Drinking Places.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 53.56% 20.23% 1.90%
Percent of Total Assets
Accounts Receivable 24.71% 14.42% 8.11% 4.60%
Inventory 32.38% 18.15% 11.35% 3.10%
Other Current Assets 0.00% 0.00% 0.00% 44.60%
Total Current Assets 63.91% 88.54% 95.69% 52.30%
Long-term Assets 36.09% 11.46% 4.31% 47.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 70.43% 26.78% 15.43% 28.20%
Long-term Liabilities 0.00% 0.00% 0.00% 23.10%
Total Liabilities 70.43% 26.78% 15.43% 51.30%
Net Worth 29.57% 73.22% 84.57% 48.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 77.06% 77.96% 75.50% 42.30%
Selling, General & Administrative Expenses 91.67% 68.98% 62.55% 23.40%
Advertising Expenses 3.86% 2.74% 2.47% 2.40%
Profit Before Interest and Taxes -14.60% 12.85% 18.51% 2.80%
Main Ratios
Current 0.91 3.31 6.20 1.14
Quick 0.45 2.63 5.47 0.74
Total Debt to Total Assets 70.43% 26.78% 15.43% 51.30%
Pre-tax Return on Net Worth -584.67% 120.94% 84.99% 5.20%
Pre-tax Return on Assets -172.88% 88.55% 71.88% 10.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -14.61% 8.98% 12.96% n.a
Return on Equity -584.67% 84.65% 59.50% n.a
Activity Ratios
Accounts Receivable Turnover 4.79 4.79 4.79 n.a
Collection Days 57 63 70 n.a
Inventory Turnover 10.91 9.99 9.59 n.a
Accounts Payable Turnover 11.00 12.17 12.17 n.a
Payment Days 27 28 27 n.a
Total Asset Turnover 11.83 6.90 3.88 n.a
Debt Ratios
Debt to Net Worth 2.38 0.37 0.18 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital ($3,142) $78,273 $217,438 n.a
Interest Coverage -1,997.23 449.91 0.00 n.a
Additional Ratios
Assets to Sales 0.08 0.14 0.26 n.a
Current Debt/Total Assets 70% 27% 15% n.a
Acid Test 0.10 2.09 4.94 n.a
Sales/Net Worth 40.01 9.43 4.59 n.a
Dividend Payout 0.00 0.00 0.00 n.a