Outdoor Gear Designer Business Plan

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Financial Plan

The following sections will outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

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 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis indicates the break-even point.

Break-even Analysis
Monthly Revenue Break-even $4,081
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $3,673

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $41,565 $59,743 $67,100
Direct Cost of Sales $4,157 $5,974 $6,710
Other Production Expenses $0 $0 $0
Total Cost of Sales $4,157 $5,974 $6,710
Gross Margin $37,409 $53,769 $60,390
Gross Margin % 90.00% 90.00% 90.00%
Expenses
Payroll $36,000 $40,000 $50,000
Sales and Marketing and Other Expenses $4,580 $2,280 $1,980
Depreciation $1,272 $1,272 $0
Leased Equipment $0 $0 $0
Utilities $1,440 $1,440 $1,440
Insurance $780 $780 $780
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $44,072 $45,772 $54,200
Profit Before Interest and Taxes ($6,664) $7,997 $6,190
EBITDA ($5,392) $9,269 $6,190
Interest Expense $0 $0 $0
Taxes Incurred $0 $2,399 $1,857
Net Profit ($6,664) $5,598 $4,333
Net Profit/Sales -16.03% 9.37% 6.46%

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $41,565 $59,743 $67,100
Subtotal Cash from Operations $41,565 $59,743 $67,100
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 $41,565 $59,743 $67,100
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $36,000 $40,000 $50,000
Bill Payments $10,029 $12,742 $12,776
Subtotal Spent on Operations $46,029 $52,742 $62,776
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 $46,029 $52,742 $62,776
Net Cash Flow ($4,464) $7,001 $4,324
Cash Balance $6,986 $13,986 $18,311

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $6,986 $13,986 $18,311
Other Current Assets $0 $0 $0
Total Current Assets $6,986 $13,986 $18,311
Long-term Assets
Long-term Assets $6,350 $6,350 $6,350
Accumulated Depreciation $1,272 $2,544 $2,544
Total Long-term Assets $5,078 $3,806 $3,806
Total Assets $12,064 $17,792 $22,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $927 $1,058 $1,049
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $927 $1,058 $1,049
Long-term Liabilities $0 $0 $0
Total Liabilities $927 $1,058 $1,049
Paid-in Capital $18,000 $18,000 $18,000
Retained Earnings ($200) ($6,864) ($1,266)
Earnings ($6,664) $5,598 $4,333
Total Capital $11,137 $16,734 $21,067
Total Liabilities and Capital $12,064 $17,792 $22,117
Net Worth $11,136 $16,734 $21,067

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8711 (or NAICS 541330), Engineering Servicse, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 43.73% 12.31% 7.10%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 38.30%
Total Current Assets 57.91% 78.61% 82.79% 77.40%
Long-term Assets 42.09% 21.39% 17.21% 22.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.68% 5.95% 4.74% 44.50%
Long-term Liabilities 0.00% 0.00% 0.00% 11.70%
Total Liabilities 7.68% 5.95% 4.74% 56.20%
Net Worth 92.32% 94.05% 95.26% 43.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 0.00%
Selling, General & Administrative Expenses 112.82% 78.99% 71.95% 81.80%
Advertising Expenses 4.61% 2.67% 1.92% 0.20%
Profit Before Interest and Taxes -16.03% 13.39% 9.23% 2.50%
Main Ratios
Current 7.54 13.22 17.45 1.69
Quick 7.54 13.22 17.45 1.37
Total Debt to Total Assets 7.68% 5.95% 4.74% 56.20%
Pre-tax Return on Net Worth -59.83% 47.79% 29.38% 6.00%
Pre-tax Return on Assets -55.24% 44.94% 27.99% 13.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -16.03% 9.37% 6.46% n.a
Return on Equity -59.83% 33.45% 20.57% n.a
Activity Ratios
Accounts Payable Turnover 11.82 12.17 12.17 n.a
Payment Days 27 28 30 n.a
Total Asset Turnover 3.45 3.36 3.03 n.a
Debt Ratios
Debt to Net Worth 0.08 0.06 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $6,058 $12,928 $17,261 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.29 0.30 0.33 n.a
Current Debt/Total Assets 8% 6% 5% n.a
Acid Test 7.54 13.22 17.45 n.a
Sales/Net Worth 3.73 3.57 3.19 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $4,081
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $3,673
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $41,565 $59,743 $67,100
Direct Cost of Sales $4,157 $5,974 $6,710
Other Production Expenses $0 $0 $0
Total Cost of Sales $4,157 $5,974 $6,710
Gross Margin $37,409 $53,769 $60,390
Gross Margin % 90.00% 90.00% 90.00%
Expenses
Payroll $36,000 $40,000 $50,000
Sales and Marketing and Other Expenses $4,580 $2,280 $1,980
Depreciation $1,272 $1,272 $0
Leased Equipment $0 $0 $0
Utilities $1,440 $1,440 $1,440
Insurance $780 $780 $780
Rent $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $44,072 $45,772 $54,200
Profit Before Interest and Taxes ($6,664) $7,997 $6,190
EBITDA ($5,392) $9,269 $6,190
Interest Expense $0 $0 $0
Taxes Incurred $0 $2,399 $1,857
Net Profit ($6,664) $5,598 $4,333
Net Profit/Sales -16.03% 9.37% 6.46%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $41,565 $59,743 $67,100
Subtotal Cash from Operations $41,565 $59,743 $67,100
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 $41,565 $59,743 $67,100
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $36,000 $40,000 $50,000
Bill Payments $10,029 $12,742 $12,776
Subtotal Spent on Operations $46,029 $52,742 $62,776
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 $46,029 $52,742 $62,776
Net Cash Flow ($4,464) $7,001 $4,324
Cash Balance $6,986 $13,986 $18,311
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $6,986 $13,986 $18,311
Other Current Assets $0 $0 $0
Total Current Assets $6,986 $13,986 $18,311
Long-term Assets
Long-term Assets $6,350 $6,350 $6,350
Accumulated Depreciation $1,272 $2,544 $2,544
Total Long-term Assets $5,078 $3,806 $3,806
Total Assets $12,064 $17,792 $22,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $927 $1,058 $1,049
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $927 $1,058 $1,049
Long-term Liabilities $0 $0 $0
Total Liabilities $927 $1,058 $1,049
Paid-in Capital $18,000 $18,000 $18,000
Retained Earnings ($200) ($6,864) ($1,266)
Earnings ($6,664) $5,598 $4,333
Total Capital $11,137 $16,734 $21,067
Total Liabilities and Capital $12,064 $17,792 $22,117
Net Worth $11,136 $16,734 $21,067
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 43.73% 12.31% 7.10%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 38.30%
Total Current Assets 57.91% 78.61% 82.79% 77.40%
Long-term Assets 42.09% 21.39% 17.21% 22.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.68% 5.95% 4.74% 44.50%
Long-term Liabilities 0.00% 0.00% 0.00% 11.70%
Total Liabilities 7.68% 5.95% 4.74% 56.20%
Net Worth 92.32% 94.05% 95.26% 43.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 0.00%
Selling, General & Administrative Expenses 112.82% 78.99% 71.95% 81.80%
Advertising Expenses 4.61% 2.67% 1.92% 0.20%
Profit Before Interest and Taxes -16.03% 13.39% 9.23% 2.50%
Main Ratios
Current 7.54 13.22 17.45 1.69
Quick 7.54 13.22 17.45 1.37
Total Debt to Total Assets 7.68% 5.95% 4.74% 56.20%
Pre-tax Return on Net Worth -59.83% 47.79% 29.38% 6.00%
Pre-tax Return on Assets -55.24% 44.94% 27.99% 13.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -16.03% 9.37% 6.46% n.a
Return on Equity -59.83% 33.45% 20.57% n.a
Activity Ratios
Accounts Payable Turnover 11.82 12.17 12.17 n.a
Payment Days 27 28 30 n.a
Total Asset Turnover 3.45 3.36 3.03 n.a
Debt Ratios
Debt to Net Worth 0.08 0.06 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $6,058 $12,928 $17,261 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.29 0.30 0.33 n.a
Current Debt/Total Assets 8% 6% 5% n.a
Acid Test 7.54 13.22 17.45 n.a
Sales/Net Worth 3.73 3.57 3.19 n.a
Dividend Payout 0.00 0.00 0.00 n.a