The Nightclub

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Nightclub Saloon 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 financial plan depends on important assumptions, most of which are illustrated in the following table.

The key underlying assumptions are:

  • We assume a slow-growth economy of five percent the first year, and three percent thereafter, without major recession.
  • We assume that we will grow as managers during the process, this growth will manifest itself as flat line expense growth over the five-year period, leading to increased annual cash flow.
  • We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
  • We assume continued popularity of nightclubs in America and the growing demand for high-energy themed and casual dining venues.
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

Example Break-Even Analysis formulas are presented in the text below. Business Plan Pro's interactive table and chart are still linked to the program spreadsheets.

Fixed Costs $X,xxx,xxx
Variable Costs $Xxx,xxx
Revenue (Estimated)$X,xxx,xxx

*S = Gross Sales

S = $ + [($Xxx,xxx/ $X,xxx,xxx) x S]

S = $X,xxx,xxx + [(.xxxx) x S]

S = $X,xxx,xxx

Break Even Point = $X,xxx,xxx

Average Nightly Break Even Revenues – approximately $ X,xxx
Minimum Nightly Required Spending Per Person - $8.75 + $9.75 = $18.50
Minimum Nightly Required Incoming Traffic – Xxx

Break-even Analysis
Monthly Revenue Break-even $140,703
Assumptions:
Average Percent Variable Cost 16%
Estimated Monthly Fixed Cost $117,995

7.3 Projected Profit and Loss

Projected profit and loss statement for the nightclub follows. Three years' annual totals are shown below. Monthly breakdown for year one appears in the appendix. 

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $2,276,340 $2,503,974 $2,754,371
Direct Cost of Sales $367,380 $404,119 $444,531
Other Production Expenses $0 $0 $0
Total Cost of Sales $367,380 $404,119 $444,531
Gross Margin $1,908,960 $2,099,855 $2,309,840
Gross Margin % 83.86% 83.86% 83.86%
Expenses
Payroll $391,936 $411,528 $432,104
Sales and Marketing and Other Expenses $411,576 $430,574 $451,284
Depreciation $0 $0 $0
Fees--Credit Card $10,764 $10,982 $11,202
Fees--Professional $7,500 $7,650 $7,803
Taxes--Admission $0 $0 $0
Taxes--Excise $391,536 $399,368 $407,355
Taxes--Property $0 $0 $0
Leased Equipment $2,496 $2,550 $2,601
Utilities $36,000 $36,720 $37,454
Insurance $22,500 $22,950 $23,409
Rent $75,000 $75,000 $76,500
Payroll Taxes $66,629 $69,960 $73,458
Other $0 $0 $0
Total Operating Expenses $1,415,937 $1,467,282 $1,523,170
Profit Before Interest and Taxes $493,023 $632,573 $786,670
EBITDA $493,023 $632,573 $786,670
Interest Expense $0 $0 $0
Taxes Incurred $121,122 $158,143 $199,945
Net Profit $371,901 $474,430 $586,725
Net Profit/Sales 16.34% 18.95% 21.30%

7.4 Projected Cash Flow

The following chart illustrates our monthly cash flow for year one. The table shows three years of annual totals. First year monthly figures as presented in the appendix. The months are weighted according to the amount of weeks in that month in a typical calendar year.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $2,048,706 $2,253,577 $2,478,934
Cash from Receivables $205,193 $248,153 $272,969
Subtotal Cash from Operations $2,253,899 $2,501,730 $2,751,903
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 $2,253,899 $2,501,730 $2,751,903
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $391,936 $411,528 $432,104
Bill Payments $1,445,416 $1,583,120 $1,731,944
Subtotal Spent on Operations $1,837,352 $1,994,648 $2,164,048
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,837,352 $1,994,648 $2,164,048
Net Cash Flow $416,547 $507,082 $587,855
Cash Balance $491,547 $998,629 $1,586,484

7.5 Projected Balance Sheet

The following Balance Sheet indicates healthy growth of net worth and a strong financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $491,547 $998,629 $1,586,484
Accounts Receivable $22,441 $24,685 $27,153
Inventory $12,653 $40,820 $44,902
Other Current Assets $0 $0 $0
Total Current Assets $526,640 $1,064,134 $1,658,539
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $526,640 $1,064,134 $1,658,539
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $72,239 $135,303 $142,983
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $72,239 $135,303 $142,983
Long-term Liabilities $0 $0 $0
Total Liabilities $72,239 $135,303 $142,983
Paid-in Capital $567,750 $567,750 $567,750
Retained Earnings ($485,250) ($113,349) $361,081
Earnings $371,901 $474,430 $586,725
Total Capital $454,401 $928,831 $1,515,556
Total Liabilities and Capital $526,640 $1,064,134 $1,658,539
Net Worth $454,401 $928,831 $1,515,556

7.6 Business Ratios

The Ratios table below outlines important ratios for this Nightclub. 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 n.a. 10.00% 10.00% 1.90%
Percent of Total Assets
Accounts Receivable 4.26% 2.32% 1.64% 4.60%
Inventory 2.40% 3.84% 2.71% 3.10%
Other Current Assets 0.00% 0.00% 0.00% 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 13.72% 12.71% 8.62% 28.20%
Long-term Liabilities 0.00% 0.00% 0.00% 23.10%
Total Liabilities 13.72% 12.71% 8.62% 51.30%
Net Worth 86.28% 87.29% 91.38% 48.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 83.86% 83.86% 83.86% 42.30%
Selling, General & Administrative Expenses 67.36% 64.67% 62.20% 23.40%
Advertising Expenses 8.79% 8.39% 8.01% 2.40%
Profit Before Interest and Taxes 21.66% 25.26% 28.56% 2.80%
Main Ratios
Current 7.29 7.86 11.60 1.14
Quick 7.12 7.56 11.29 0.74
Total Debt to Total Assets 13.72% 12.71% 8.62% 51.30%
Pre-tax Return on Net Worth 108.50% 68.10% 51.91% 5.20%
Pre-tax Return on Assets 93.62% 59.44% 47.43% 10.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 16.34% 18.95% 21.30% n.a
Return on Equity 81.84% 51.08% 38.71% n.a
Activity Ratios
Accounts Receivable Turnover 10.14 10.14 10.14 n.a
Collection Days 59 34 34 n.a
Inventory Turnover 10.89 15.12 10.37 n.a
Accounts Payable Turnover 21.01 12.17 12.17 n.a
Payment Days 27 23 29 n.a
Total Asset Turnover 4.32 2.35 1.66 n.a
Debt Ratios
Debt to Net Worth 0.16 0.15 0.09 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $454,401 $928,831 $1,515,556 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.23 0.42 0.60 n.a
Current Debt/Total Assets 14% 13% 9% n.a
Acid Test 6.80 7.38 11.10 n.a
Sales/Net Worth 5.01 2.70 1.82 n.a
Dividend Payout 0.00 0.00 0.00 n.a