Personal Event Planning Business Plan

Occasions

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Financial Plan

Service-based businesses require little funds to start-up, and as they grow and expand, less funds to maintain. The charts and graphs that follow will show that investment up front allows Occasions to function debt-free with little overhead. This gives Occasions a quicker break-even point and increased profit margins from the start. As Occasions grows, the debt-free philosophy will be maintained until it is impossible to function during growth periods without financial assistance.

7.1 Important Assumptions

Tax rates are noted for information. We carry no loan burden that would be effected by these rates. What hits Occasions the hardest (but not nearly are bad as other service businesses), is the tax rate of 24%, which is nearly one quarter of the total sales. As Occasions continues to grow, these numbers will be reference rather than influence.

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 24.00% 24.00% 24.00%
Other 0 0 0

7.2 Key Financial Indicators

The break-even point for Occasions is based on the assumption that we will produce 22 events per month and average approximately $521 per event. In the current situation, we average more than this assumption for our public and private organization events. These currently make up 18 of the 22 average events hosted per month.

7.3 Break-even Analysis

The break-even point is based on the assumption that we will produce 22 events per month and average approximately $521 per event. In the current situation, we average more than this assumption for our public and private organization events. These currently make up 18 of the 22 average events hosted per month.

The break-even point will appear more rapidly for Occasions than for other types of home-based businesses. Start-up costs are limited to minimal equipment, there is little or no staff to pay in the beginning, and contracted companies will handle any additional equipment required for the planned events.

Break-even Analysis
Monthly Revenue Break-even $19,313
Assumptions:
Average Percent Variable Cost 12%
Estimated Monthly Fixed Cost $17,023

7.4 Projected Profit and Loss

Leading the industry in event planning requires the use of the resources available at the lowest cost. As noted in the table, we spend less money on overhead than another event planners with an outside office or office space in their own facility. This savings allows us to market in creative ways and spend funds on expansion into other areas when the time is right.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $353,149 $494,670 $554,779
Direct Cost of Sales $41,872 $58,507 $64,299
Other Costs of Sales $196 $203 $221
Total Cost of Sales $42,068 $58,710 $64,520
Gross Margin $311,081 $435,960 $490,259
Gross Margin % 88.09% 88.13% 88.37%
Expenses
Payroll $56,044 $63,310 $66,560
Sales & Marketing & Other Expenses $146,013 $68,400 $73,400
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $516 $750 $800
Insurance $264 $750 $1,000
Rent $1,440 $1,800 $1,800
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $204,277 $135,010 $143,560
Profit Before Interest and Taxes $106,804 $300,950 $346,699
EBITDA $106,804 $300,950 $346,699
Interest Expense $406 $279 $362
Taxes Incurred $25,535 $72,161 $83,121
Net Profit $80,862 $228,510 $263,216
Net Profit/Sales 22.90% 46.19% 47.45%

7.5 Projected Cash Flow

Our cash situation is great. Although we begin with little extra cash, our increased growth allows us to make up for lost time. Our cash balance is always above the mark with the cash flow not too far behind. We have no negatives in our cash analysis.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $141,260 $197,868 $221,912
Cash from Receivables $178,271 $283,330 $327,145
Subtotal Cash from Operations $319,531 $481,198 $549,057
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $4,000 $1,080 $1,080
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 $323,531 $482,278 $550,137
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $56,044 $63,310 $66,560
Bill Payments $199,964 $209,268 $223,979
Subtotal Spent on Operations $256,008 $272,578 $290,539
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $3,500 $500 $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 $259,508 $273,078 $290,539
Net Cash Flow $64,023 $209,200 $259,598
Cash Balance $66,323 $275,523 $535,121

7.6 Projected Balance Sheet

Occasions is set up for success. According to the numbers, we start out fair and end up amazing. By FY2000, we will be worth over $125,000 with a profit margin of over 30%. We are operating with little to zero debt, boosting the net worth even higher. Our only weakness is the products to be released in FY2000 have not been accounted for as an investment of funds. This will effect the cash flow in a moderate way, and is undetermined how it will effect the profit ratio of the business.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $66,323 $275,523 $535,121
Accounts Receivable $33,618 $47,090 $52,812
Inventory $4,991 $6,975 $7,665
Other Current Assets $0 $0 $0
Total Current Assets $104,933 $329,588 $595,598
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $104,933 $329,588 $595,598
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,270 $16,836 $18,550
Current Borrowing $2,500 $3,080 $4,160
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $23,770 $19,916 $22,710
Long-term Liabilities $0 $0 $0
Total Liabilities $23,770 $19,916 $22,710
Paid-in Capital $3,665 $3,665 $3,665
Retained Earnings ($3,365) $77,497 $306,007
Earnings $80,862 $228,510 $263,216
Total Capital $81,162 $309,672 $572,888
Total Liabilities and Capital $104,933 $329,588 $595,598
Net Worth $81,162 $309,672 $572,888

7.7 Business Ratios

Data on our business ratios is shown in the table below. Industry Profile ratios are based on Standard Industry Classification (SIC) Index code 7299.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 40.07% 12.15% 11.37%
Percent of Total Assets
Accounts Receivable 32.04% 14.29% 8.87% 10.40%
Inventory 4.76% 2.12% 1.29% 3.83%
Other Current Assets 0.00% 0.00% 0.00% 48.41%
Total Current Assets 100.00% 100.00% 100.00% 62.64%
Long-term Assets 0.00% 0.00% 0.00% 37.36%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 22.65% 6.04% 3.81% 23.10%
Long-term Liabilities 0.00% 0.00% 0.00% 24.97%
Total Liabilities 22.65% 6.04% 3.81% 48.07%
Net Worth 77.35% 93.96% 96.19% 51.93%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 88.09% 88.13% 88.37% 100.00%
Selling, General & Administrative Expenses 69.22% 35.37% 34.65% 65.24%
Advertising Expenses 0.51% 0.44% 0.47% 2.43%
Profit Before Interest and Taxes 30.24% 60.84% 62.49% 4.31%
Main Ratios
Current 4.41 16.55 26.23 1.83
Quick 4.20 16.20 25.89 1.31
Total Debt to Total Assets 22.65% 6.04% 3.81% 58.52%
Pre-tax Return on Net Worth 131.09% 97.09% 60.45% 7.33%
Pre-tax Return on Assets 101.40% 91.23% 58.15% 17.66%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 22.90% 46.19% 47.45% n.a
Return on Equity 99.63% 73.79% 45.95% n.a
Activity Ratios
Accounts Receivable Turnover 6.30 6.30 6.30 n.a
Collection Days 43 50 55 n.a
Inventory Turnover 10.91 9.78 8.78 n.a
Accounts Payable Turnover 10.40 12.17 12.17 n.a
Payment Days 27 34 29 n.a
Total Asset Turnover 3.37 1.50 0.93 n.a
Debt Ratios
Debt to Net Worth 0.29 0.06 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $81,162 $309,672 $572,888 n.a
Interest Coverage 262.90 1,078.67 957.73 n.a
Additional Ratios
Assets to Sales 0.30 0.67 1.07 n.a
Current Debt/Total Assets 23% 6% 4% n.a
Acid Test 2.79 13.83 23.56 n.a
Sales/Net Worth 4.35 1.60 0.97 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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