EbonySun

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Nightclub Resort Complex Business Plan

Financial Plan

EbonySun will be a vast undertaking, requiring extensive start-up funding, but paying off handsomely within a short period.

The project funding is done by collecting $5.96 million dollars through equity financing from venture capitalists, private investors etc. The company owners will invest a portion of the money for initial startup. The company is managed by experienced professionals in the entertainment and casino industry.

Start-up Funding

The startup funding for EbonySun Entertainment Resort comes from investors and venture capitalists. The resort project requires a start-up investment of $5.96 million dollars.

Start-up Funding
Start-up Expenses to Fund $5,250,000
Start-up Assets to Fund $2,710,000
Total Funding Required $7,960,000
Assets
Non-cash Assets from Start-up $2,210,000
Cash Requirements from Start-up $500,000
Additional Cash Raised $0
Cash Balance on Starting Date $500,000
Total Assets $2,710,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner $2,000,000
Investor $5,960,000
Additional Investment Requirement $0
Total Planned Investment $7,960,000
Loss at Start-up (Start-up Expenses) ($5,250,000)
Total Capital $2,710,000
Total Capital and Liabilities $2,710,000
Total Funding $7,960,000

Break-even Analysis

The Break-even analysis shows the number of units of sales required for the facility to make profit over the fixed costs.

Break-even Analysis
Monthly Units Break-even 246,142
Monthly Revenue Break-even $2,911,155
Assumptions:
Average Per-Unit Revenue $11.83
Average Per-Unit Variable Cost $1.66
Estimated Monthly Fixed Cost $2,501,750

Projected Profit and Loss

The following table and charts show the projected Profit and Loss for EbonySun. We expect to become profitable in the second year, as satisfied customers become repeat customers, and word-of-mouth about the resort spreads. We expect an increase in the tourist contingent, especially. As the Profit and Loss table shows, the company expects to see a steady growth in profitability over the next five years of operations.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $35,159,544 $39,058,876 $44,977,008 $53,338,312 $66,469,488
Direct Cost of Sales $4,944,606 $5,666,424 $6,617,189 $7,901,189 $9,906,492
Other Costs of Sales $137,060 $147,000 $152,000 $160,000 $170,000
Total Cost of Sales $5,081,666 $5,813,424 $6,769,189 $8,061,189 $10,076,492
Gross Margin $30,077,878 $33,245,452 $38,207,819 $45,277,123 $56,392,996
Gross Margin % 85.55% 85.12% 84.95% 84.89% 84.84%
Expenses
Payroll $3,210,600 $3,319,000 $3,416,000 $3,514,000 $3,612,000
Sales and Marketing $1,040,000 $1,100,000 $1,200,000 $1,300,000 $1,400,000
Depreciation $60,000 $60,000 $60,000 $60,000 $60,000
Advertising $8,800,000 $9,000,000 $10,000,000 $11,000,000 $12,000,000
Professional-Fees $3,210,600 $3,310,600 $3,410,600 $3,510,600 $3,610,600
Office Supplies $840,000 $880,000 $900,000 $920,000 $930,000
Excise Taxes paid out $9,643,296 $10,843,296 $11,843,296 $12,843,296 $12,843,296
Utilities $1,200,000 $1,240,000 $1,260,000 $1,280,000 $1,300,000
Telephone $960,000 $950,000 $960,000 $968,000 $978,000
Insurance $840,000 $845,000 $850,000 $855,000 $860,000
Property Taxes $96,000 $101,000 $107,000 $111,000 $115,000
Web Development $48,000 $50,000 $52,000 $54,000 $56,000
House Keeping Supplies $72,500 $80,000 $90,000 $100,000 $110,000
Payroll Taxes $0 $0 $0 $0 $0
Total Operating Expenses $30,020,996 $31,778,896 $34,148,896 $36,515,896 $37,874,896
Profit Before Interest and Taxes $56,882 $1,466,556 $4,058,923 $8,761,227 $18,518,100
EBITDA $116,882 $1,526,556 $4,118,923 $8,821,227 $18,578,100
Interest Expense $0 $0 $0 $0 $0
Taxes Incurred $17,065 $439,967 $1,217,677 $2,628,368 $5,555,430
Net Profit $39,817 $1,026,589 $2,841,246 $6,132,859 $12,962,670
Net Profit/Sales 0.11% 2.63% 6.32% 11.50% 19.50%

Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company, as the business generates sufficient cash flow to support operations. The table also shows dividends paid out to all investors in later years; dividends will be distributed according to equity percent owned.

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $35,159,544 $39,058,876 $44,977,008 $53,338,312 $66,469,488
Subtotal Cash from Operations $35,159,544 $39,058,876 $44,977,008 $53,338,312 $66,469,488
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $35,159,544 $39,058,876 $44,977,008 $53,338,312 $66,469,488
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $3,210,600 $3,319,000 $3,416,000 $3,514,000 $3,612,000
Bill Payments $29,823,471 $34,349,588 $38,437,107 $43,361,819 $49,565,055
Subtotal Spent on Operations $33,034,071 $37,668,588 $41,853,107 $46,875,819 $53,177,055
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $2,000,000 $5,000,000 $10,000,000
Subtotal Cash Spent $33,034,071 $37,668,588 $43,853,107 $51,875,819 $63,177,055
Net Cash Flow $2,125,473 $1,390,288 $1,123,901 $1,462,493 $3,292,433
Cash Balance $2,625,473 $4,015,761 $5,139,662 $6,602,154 $9,894,587

Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The net worth grows over the years as shown in the following table.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $2,625,473 $4,015,761 $5,139,662 $6,602,154 $9,894,587
Inventory $391,812 $541,134 $643,957 $786,195 $1,035,061
Other Current Assets $200,000 $200,000 $200,000 $200,000 $200,000
Total Current Assets $3,217,285 $4,756,895 $5,983,619 $7,588,349 $11,129,648
Long-term Assets
Long-term Assets $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
Accumulated Depreciation $60,000 $120,000 $180,000 $240,000 $300,000
Total Long-term Assets $1,940,000 $1,880,000 $1,820,000 $1,760,000 $1,700,000
Total Assets $5,157,285 $6,636,895 $7,803,619 $9,348,349 $12,829,648
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $2,407,468 $2,860,488 $3,185,966 $3,597,838 $4,116,467
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $2,407,468 $2,860,488 $3,185,966 $3,597,838 $4,116,467
Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $2,407,468 $2,860,488 $3,185,966 $3,597,838 $4,116,467
Paid-in Capital $7,960,000 $7,960,000 $7,960,000 $7,960,000 $7,960,000
Retained Earnings ($5,250,000) ($5,210,183) ($6,183,593) ($8,342,347) ($12,209,489)
Earnings $39,817 $1,026,589 $2,841,246 $6,132,859 $12,962,670
Total Capital $2,749,817 $3,776,407 $4,617,653 $5,750,511 $8,713,181
Total Liabilities and Capital $5,157,285 $6,636,895 $7,803,619 $9,348,349 $12,829,648
Net Worth $2,749,817 $3,776,407 $4,617,653 $5,750,511 $8,713,181

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5813.02, Night Clubs, are shown for comparison. We expect to maintain healthy ratios for profitability, risk, and return.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 11.09% 15.15% 18.59% 24.62% 1.81%
Percent of Total Assets
Inventory 7.60% 8.15% 8.25% 8.41% 8.07% 3.76%
Other Current Assets 3.88% 3.01% 2.56% 2.14% 1.56% 45.60%
Total Current Assets 62.38% 71.67% 76.68% 81.17% 86.75% 53.77%
Long-term Assets 37.62% 28.33% 23.32% 18.83% 13.25% 46.23%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 46.68% 43.10% 40.83% 38.49% 32.09% 17.55%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 27.98%
Total Liabilities 46.68% 43.10% 40.83% 38.49% 32.09% 45.53%
Net Worth 53.32% 56.90% 59.17% 61.51% 67.91% 54.47%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 85.55% 85.12% 84.95% 84.89% 84.84% 47.12%
Selling, General & Administrative Expenses 85.43% 82.49% 78.63% 73.39% 65.34% 27.00%
Advertising Expenses 9.13% 8.48% 7.58% 6.58% 5.43% 3.86%
Profit Before Interest and Taxes 0.16% 3.75% 9.02% 16.43% 27.86% 2.83%
Main Ratios
Current 1.34 1.66 1.88 2.11 2.70 1.05
Quick 1.17 1.47 1.68 1.89 2.45 0.58
Total Debt to Total Assets 46.68% 43.10% 40.83% 38.49% 32.09% 50.35%
Pre-tax Return on Net Worth 2.07% 38.83% 87.90% 152.36% 212.53% 4.76%
Pre-tax Return on Assets 1.10% 22.10% 52.01% 93.72% 144.34% 9.59%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 0.11% 2.63% 6.32% 11.50% 19.50% n.a
Return on Equity 1.45% 27.18% 61.53% 106.65% 148.77% n.a
Activity Ratios
Inventory Turnover 12.00 12.15 11.17 11.05 10.88 n.a
Accounts Payable Turnover 13.39 12.17 12.17 12.17 12.17 n.a
Payment Days 27 28 28 28 28 n.a
Total Asset Turnover 6.82 5.89 5.76 5.71 5.18 n.a
Debt Ratios
Debt to Net Worth 0.88 0.76 0.69 0.63 0.47 n.a
Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $809,817 $1,896,407 $2,797,653 $3,990,511 $7,013,181 n.a
Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.15 0.17 0.17 0.18 0.19 n.a
Current Debt/Total Assets 47% 43% 41% 38% 32% n.a
Acid Test 1.17 1.47 1.68 1.89 2.45 n.a
Sales/Net Worth 12.79 10.34 9.74 9.28 7.63 n.a
Dividend Payout 0.00 0.00 0.70 0.82 0.77 n.a