Burly's growth will be moderate and the cash balance will always be positive. As a retailer, we will not be selling on credit. We will accept cash, checks, and all major credit cards. TeleCheck Services will be used as the check guaranty system to help reduce the percentage of loss on bad checks. Marketing and advertising will range from 15% to 20% of sales. We will continue to reinvest residual profits into company expansion, and personnel.
Burly does not sell on credit; however, layaway is an option. We accept cash and checks, Visa, MasterCard, Discover and American Express. All sales paid via credit cards will be deposited in our business checking account within 48 hours. Our business checking account will be with a local bank. Our assumptions about loan and tax rates are listed below.
Our break-even analysis is summarized by the following chart and table. With average monthly fixed costs for the first year of $7,284, we need to sell $13,243 of merchandise each month to break even. We will surpass this minimum amount in most months of the first year.
The following chart and table indicate our projected profit and loss. We expect to make a modest profit in the first year, as we build name recognition and a loyal local clientele, with higher profits thereafter, despite increasing the personnel payments for all employees and offering health insurance by year 3.
The following table shows projected cash flow. It includes repayment of the short-term loan principal, but does not list owners' dividends - these are included as regular payments in the personnel table, for the purposes of this plan.
The following table shows the projected balance sheet. It shows a steadily increasing net worth, as we gain market share and pay off our loan.
Business ratios for the years of this plan are shown below. Industry profile ratios, for comparison, are based on the Standard Industrial Classification (SIC) code 5941, Sporting Goods and Bicycle Shops.