A Mother's Place

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Parenting Center Business Plan

Financial Plan

The following sections will outline the important information on the financial aspects of A Mother's Place.

8.1 Break-even Analysis

The following table and chart show our Break-even Analysis.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.00% 8.00% 8.00%
Long-term Interest Rate 8.50% 8.50% 8.50%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $41,323
Assumptions:
Average Percent Variable Cost 44%
Estimated Monthly Fixed Cost $22,983

8.2 Important Assumptions

Retail sales based on the following assumptions:

  1. Start-up growth
    • Slow steady growth from September - December.
    • The marketing strategies in this plan will be implemented prior to grand opening to build customer base for this period.
    • Growth will slow down slightly post holiday season during the month of January.
    • Steady growth will begins to pick up from February - August with the implementation of new class. sessions, and more marketing tools.

  2. Each time a new class begins each month, it's assumed that the class participants will bring in additional sales revenue (see additional details below).
    • StrollerFit® will begin in September.
    • Children's classes and birthday parties will begin in October.
    • Holiday children's parties will begin during the holiday season (Nov - Dec).

  3. These starting projections are based on the actual sales of opening month of a woman-owned shoe store in Capitola, and recent sales of a church/religious store in Santa Cruz. The starting projections are estimated lower than these two stores.

Classes sales based on the following assumptions:

  1. StrollerFit®
    • StrollerFit® will begin in September at two locations (Westlake Elementary, and at Lighthouse, WestCliff Drive) and continue through December.
    • During the holidays, there is no projection of increased enrollment.
    • It's a common trend that enrollment for exercise programs increases in January, and one more class will be added at A Mother's Place.
    • As the weather warms up again in March, we project increased enrollment will begin and stay steady throughout the summer months.
    • One class revenue is based on $7.50 fee per person, 8 participants per class, and 3 sessions per week which equals $780/month.  StrollerFitâ requires a 15% royalty fee of all sales which brings A Mother's Place a total sales of $662/month.
    • There is no direct cost of sales involved for StrollerFitâ

  2. Children's Classes:
    • Each children's class is a 10-week session (Sept - mid Nov).
    • One session will begin in September, restart every 10 weeks continuously.
    • Another session will begin in October, restart every 10 weeks continuously.
    • A total of 3 sessions will be offered starting in January.
    • A total of 4 sessions will be offered starting in March.
    • Each children's class revenue is based on $9.00 per class, 11 participants, one class per week which is a total of $467/month. 
    • In addition, a Winter Playgroup will be offered each month from November - March (during the cold weather months). We project that each month will bring in an additional $200/month. This is based on $10 per month per child, 10 children each Playgroup session which equals $100/month. Each month will have 2 groups.
    • Cost of all children's classes combined is projected at $50/per class per month to maintain play and activity equipment.

  3. Pregnancy Classes:
    • One childbirthing/pregnancy class will begin a 6-week session in October and restart continuously every 6 weeks. A second session will begin in November, and restart continuously every 6 weeks.

Birthday Parties sales based on the following assumptions:

  1. Several packages will be offered for Birthday parties, ranging from $500 - $800 per party.
  2. No birthday parties will be offered during the month of September.
  3. Two birthday parties will be offered during the month of October, and three parties in November.
  4. Holiday parties will be offered during the month of December, and a total of 5 parties is projected.
  5. We project that a total of 6 parties per month will be held from January - May. During summer months, a maximum of 7 per month will be offered.

Payroll is based on the following assumptions:

  1. In addition to the principal owner, a full-time manager (40hr/wk) and part-time manager (16hr/wk) will begin employment in September to cover a 7 day work week schedule.   Due to the owner's deafness, it's vital for a manager to be on-staff at all times to provide customer service on the telephone.
  2. A part-time retail employee will be hired in March, when total gross sales reach $45,000, to work during busiest hours.
  3. A full-time employee will not be hired until total gross sales exceed $50,000, projected to occur in May.
  4. All instructors for StrollerFitâ are part-time, and work one hour per class at $20/hr.
  5. All instructors and party coordinators are part-time, and work per class/party at $12.75/hr. The party coordinator will be employed additional hour per party for set-up/clean-up, and planning. The additional hours in October are for training. 

Expenses are based on the following assumptions:

  1. Loan repayment is estimated at $163,000 total borrowing, at 8.5% with 6 year term, equaling payments of $2897 per month (principal repayment listed in the Cash Flow, and interest expenses in the Profit and Loss, below).
  2. POS System, insurance, payroll processing fees, website, StrollerFit manual, shelving, tumbling equipment and all other equipment are based on actual bids from vendors.
  3. We do not expect to hire janitorial services during the first year of operation.  The retail employee will assume the janitorial responsibilities to minimize cost.
  4. Rent is estimated at $5,000 per month for a 3,550 square foot space at $1.40 NNN.
  5. Space is estimated to provide 1600 sq ft for retail, 1150 sq ft for class/gym room, 400 sq ft for inventory storage and 400 sq ft for office, nursing room and bathroom. 

8.3 Projected Profit and Loss

The following table and chart show the profit and loss projections for the first three years of operation.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $513,375 $669,718 $863,541
Direct Cost of Sales $227,850 $301,352 $388,632
Other Costs of Goods $2 $0 $0
Total Cost of Sales $227,852 $301,352 $388,632
Gross Margin $285,523 $368,366 $474,909
Gross Margin % 55.62% 55.00% 55.00%
Expenses
Payroll $123,038 $172,916 $185,891
Sales and Marketing and Other Expenses $2,700 $3,000 $3,100
Depreciation $0 $0 $0
Rent $60,000 $60,000 $60,000
Phone & DSL $900 $900 $900
Utilities $4,800 $4,800 $4,800
Insurance $2,100 $2,400 $2,600
Payroll Taxes $24,608 $34,583 $37,178
Payroll Processing fees $1,280 $1,290 $1,300
Loan payment $33,600 $33,600 $33,600
Bookkeeper $1,000 $1,000 $1,500
Office Supplies $1,200 $1,200 $1,500
Janitorial Service $0 $1,000 $1,200
Janitorial Supplies & Paper Products $4,200 $5,000 $5,200
Interest Expense $13,020 $11,097 $9,005
Other $3,350 $3,600 $4,000
Total Operating Expenses $275,796 $336,386 $351,774
Profit Before Interest and Taxes $9,727 $31,979 $123,135
EBITDA $9,727 $31,979 $123,135
Interest Expense $12,853 $10,999 $8,898
Taxes Incurred $0 $6,294 $34,271
Net Profit ($3,126) $14,686 $79,966
Net Profit/Sales -0.61% 2.19% 9.26%

8.4 Projected Cash Flow

The following table and chart show the projected cash flow for the first three years of operation. Please note that A Mother's Place will receive cash for all purchases and services. All classes and birthday parties will be paid in advance upon registration.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $513,375 $669,718 $863,541
Subtotal Cash from Operations $513,375 $669,718 $863,541
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 $513,375 $669,718 $863,541
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $123,038 $172,916 $185,891
Bill Payments $316,884 $493,097 $599,570
Subtotal Spent on Operations $439,922 $666,013 $785,461
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 $21,756 $23,677 $25,770
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $461,678 $689,690 $811,231
Net Cash Flow $51,697 ($19,972) $52,310
Cash Balance $51,697 $31,725 $84,035

8.5 Projected Balance Sheet

The following table indicates the Projected Balance for the first three years of operation.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $51,697 $31,725 $84,035
Inventory $30,113 $39,826 $51,361
Other Current Assets $47,360 $47,360 $47,360
Total Current Assets $129,170 $118,911 $182,756
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $129,170 $118,911 $182,756
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $41,692 $40,424 $50,073
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $41,692 $40,424 $50,073
Long-term Liabilities $141,244 $117,567 $91,797
Total Liabilities $182,936 $157,991 $141,870
Paid-in Capital $70,000 $70,000 $70,000
Retained Earnings ($120,640) ($123,766) ($109,080)
Earnings ($3,126) $14,686 $79,966
Total Capital ($53,766) ($39,080) $40,886
Total Liabilities and Capital $129,170 $118,911 $182,756
Net Worth ($53,766) ($39,080) $40,886

8.6 Business Ratios

A Mother's Place does not fit neatly into any one existing industry. We are a fitness and educational center; we offer children's entertainment (birthday parties, playgroups), and social space for mothers; and we have a retail component, in our gift store. It is, therefore, difficult to compare our projected overall business ratios to any one industry standard, because our revenue stream and costs are mixed.

The following table lists our business ratios, and includes a comparison with standard ratios from the "Children's Goods," Industry (SIC Code 5137.05). These industry ratios obviously reflect only the retail side of our operations.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 30.45% 28.94% 3.65%
Percent of Total Assets
Inventory 23.31% 33.49% 28.10% 34.08%
Other Current Assets 36.66% 39.83% 25.91% 27.86%
Total Current Assets 100.00% 100.00% 100.00% 89.32%
Long-term Assets 0.00% 0.00% 0.00% 10.68%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 32.28% 34.00% 27.40% 37.41%
Long-term Liabilities 109.35% 98.87% 50.23% 9.72%
Total Liabilities 141.62% 132.86% 77.63% 47.13%
Net Worth -41.62% -32.86% 22.37% 52.87%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.62% 55.00% 55.00% 26.48%
Selling, General & Administrative Expenses 56.23% 52.81% 45.74% 16.06%
Advertising Expenses 0.00% 0.00% 0.00% 0.69%
Profit Before Interest and Taxes 1.89% 4.78% 14.26% 1.40%
Main Ratios
Current 3.10 2.94 3.65 2.16
Quick 2.38 1.96 2.62 0.95
Total Debt to Total Assets 141.62% 132.86% 77.63% 52.09%
Pre-tax Return on Net Worth 5.81% -53.68% 279.40% 3.86%
Pre-tax Return on Assets -2.42% 17.64% 62.51% 8.05%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -0.61% 2.19% 9.26% n.a
Return on Equity 0.00% 0.00% 195.58% n.a
Activity Ratios
Inventory Turnover 7.78 8.62 8.52 n.a
Accounts Payable Turnover 8.60 12.17 12.17 n.a
Payment Days 27 30 27 n.a
Total Asset Turnover 3.97 5.63 4.73 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 3.47 n.a
Current Liab. to Liab. 0.23 0.26 0.35 n.a
Liquidity Ratios
Net Working Capital $87,478 $78,487 $132,683 n.a
Interest Coverage 0.76 2.91 13.84 n.a
Additional Ratios
Assets to Sales 0.25 0.18 0.21 n.a
Current Debt/Total Assets 32% 34% 27% n.a
Acid Test 2.38 1.96 2.62 n.a
Sales/Net Worth 0.00 0.00 21.12 n.a
Dividend Payout 0.00 0.00 0.00 n.a