A bank relationship will be established as soon as possible. Sales could very well increase at a much sharper rate than assumed in these conservative projections. Sharper sales will result in a greater need for funds in support of inventory and store growth and a line of credit will need to be established.
We will set a budget for marketing and advertising and will continue to reinvest residual profits into company expansion and personnel.
Sales growth will be aggressive during the first 18 months as we sharpen our product line and inventory to better meet our customer's requirements. Although we anticipate substantial growth in years two and three we are forecasting a very conservative 10% growth rate.
Total startup funding amounts are shown in the table below. This includes initial start-up expenses, liquid cash for operating expenses, unforseen expenses, to help cover wages, and also includes start-up inventory. This inventory will include the purchase and storage costs of frozen products, purchasing of cold beverages and daily delivery of fresh salads and various other desserts.
The purchase of long-term assets that will include an oven, two pie warmers, an ambient display case, freezers and refrigerators, a dishwasher and microwave, a three-compartment sink, decor and furnishings, utensils, a cash register and Point-Of-Sale software and accessories.
A long-term loan has been secured for the purchase of the long-term assets.
A first round of private investment from outside investors and family members will begin in April 2005. A second round will commence at the end of April 2006 for the purchase of further inventory and long-term assets to service the next two stores.
Profits will be reinvested and the owners will be employees collecting a very modest wage. This will ensure that any operating debts incurred are paid for within the shortest possible time period.
Payroll burden is calculated at an estimated 12.65% made up of 7.65% for social security and medicare, 2% for unemployment, and 3% for worker's compensation.
The tax rate has been left at 0% in the first year plan due to accumulated losses carried forward and that as an LLC the the owners will be taxed personally.
Our long-term interest rate is 6%.
Our State Sales tax is 4%. This does not affect our total profitability, but monthly payments to the State does impact our cash flow and cash balance.
Our financial plan depends on important assumptions. Our key underlying assumptions are:
Our break-even analysis is summarized by the following chart and table.
The following table and charts indicate projected profit and loss.
Our projected cash flow is outlined in the following chart and table.
The following table explains the projected balance sheet.
Projected business ratios are provided in the table below. The final column, Industry Profile, shows ratios for the Fast-Food Restaurant, Independent industry, as determined by the Standard Industry Classification (SIC) Index code 7999.