Sports Equipment Cafe Business Plan

Boulder Stop

Start your own business plan

Rate this plan ►
(3.7/5, 3 votes)

Financial Plan

  • Growth will be moderate, cash balance always positive.
  • Marketing will remain at or below 15% of sales.
  • The company will invest residual profits into company expansion and personnel.

7.1 Important Assumptions

We do not sell anything on credit. The personnel burden is very low because benefits are not paid to part-timers. And the short-term interest rate is extra ordinarily low because of the owner's long-standing relationship with the USAA Credit Union.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 7.00% 7.00% 7.00%
Long-term Interest Rate 7.50% 7.50% 7.50%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Key Financial Indicators

The following chart shows that inventory turns speed up as sales increase. This correlation is important when evaluating past inventory control techniques.

7.3 Break-even Analysis

The chart and table below show our projected break-even point.

Break-even Analysis
Monthly Revenue Break-even $9,336
Assumptions:
Average Percent Variable Cost 36%
Estimated Monthly Fixed Cost $6,016

7.4 Projected Cash Flow

We are positioning ourselves in the market as a medium risk concern with steady cash flows. Accounts payable is paid at the end of each month while sales are in cash, this gives The Boulder Stop an excellent cash flow structure. Solid Net Working Capital and intelligent marketing will secure a strong cash balance by January 1, 2000. Any amounts above $10,000 will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held. The interest will show up as - Dividends in the Cash Flow table and will be updated quarterly.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $122,936 $151,158 $196,029
Subtotal Cash from Operations $122,936 $151,158 $196,029
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 $2,000 $0 $0
Subtotal Cash Received $124,936 $151,158 $196,029
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $45,400 $45,870 $50,364
Bill Payments $63,201 $94,460 $108,279
Subtotal Spent on Operations $108,601 $140,330 $158,643
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 $2,640 $2,640 $2,640
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $111,241 $142,970 $161,283
Net Cash Flow $13,695 $8,188 $34,746
Cash Balance $16,695 $24,882 $59,629

7.5 Projected Profit and Loss

We predict advertising costs and consulting costs will go up in the next three years. This will give The Boulder Stop a strong profit-to-sales ratio % by the year 2000. Normally, a start-up concern will operate with negative profits through the first two years. We will avoid that kind of operating loss by knowing our competitors, our target markets, industry direction, and the products we sell.

Note that we predict we will exceed our gross margin % objective by the year 2000.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $122,936 $151,158 $196,029
Direct Cost of Sales $43,723 $61,577 $66,089
Other Costs of Sales $0 $0 $0
Total Cost of Sales $43,723 $61,577 $66,089
Gross Margin $79,213 $89,581 $129,940
Gross Margin % 64.43% 59.26% 66.29%
Expenses
Payroll $45,400 $45,870 $50,364
Marketing/Promotion $4,040 $3,100 $3,500
Depreciation $0 $0 $0
Rent $20,400 $21,012 $21,642
Utilities $1,569 $1,616 $1,665
Insurance $780 $803 $828
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $72,189 $72,401 $77,999
Profit Before Interest and Taxes $7,024 $17,180 $51,941
EBITDA $7,024 $17,180 $51,941
Interest Expense ($107) ($297) ($495)
Taxes Incurred $2,139 $5,243 $15,731
Net Profit $4,992 $12,234 $36,705
Net Profit/Sales 4.06% 8.09% 18.72%

7.6 Projected Balance Sheet

All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in Net Worth beyond the year 2000.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $16,695 $24,882 $59,629
Inventory $4,882 $6,876 $7,380
Other Current Assets $1,000 $1,000 $1,000
Total Current Assets $22,577 $32,758 $68,008
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $22,577 $32,758 $68,008
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $7,225 $7,812 $8,997
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $7,225 $7,812 $8,997
Long-term Liabilities ($2,640) ($5,280) ($7,920)
Total Liabilities $4,585 $2,532 $1,077
Paid-in Capital $29,000 $29,000 $29,000
Retained Earnings ($16,000) ($11,008) $1,226
Earnings $4,992 $12,234 $36,705
Total Capital $17,992 $30,226 $66,931
Total Liabilities and Capital $22,577 $32,758 $68,008
Net Worth $17,992 $30,226 $66,931

7.7 Business Ratios

We expect our net profit margin, gross margin, and ROA to increase steadily over the three-year period. ROE will decrease due to lower equity needs and higher cash inflow. Our net working capital will increase significantly by year three, proving that we have the cash flows to remain a going concern. The following table shows these important financial ratios. NAICS code 451110, Sporting Goods Stores, used for industry profile comparisons.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 22.96% 29.68% 6.95%
Percent of Total Assets
Inventory 21.63% 20.99% 10.85% 32.04%
Other Current Assets 4.43% 3.05% 1.47% 23.52%
Total Current Assets 100.00% 100.00% 100.00% 89.81%
Long-term Assets 0.00% 0.00% 0.00% 10.19%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 32.00% 23.85% 13.23% 36.90%
Long-term Liabilities -11.69% -16.12% -11.65% 9.38%
Total Liabilities 20.31% 7.73% 1.58% 46.28%
Net Worth 79.69% 92.27% 98.42% 53.72%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 64.43% 59.26% 66.29% 31.30%
Selling, General & Administrative Expenses 60.37% 51.17% 47.56% 16.09%
Advertising Expenses 0.00% 0.00% 0.00% 1.20%
Profit Before Interest and Taxes 5.71% 11.37% 26.50% 2.45%
Main Ratios
Current 3.12 4.19 7.56 2.16
Quick 2.45 3.31 6.74 1.18
Total Debt to Total Assets 20.31% 7.73% 1.58% 51.78%
Pre-tax Return on Net Worth 39.64% 57.82% 78.34% 7.58%
Pre-tax Return on Assets 31.59% 53.35% 77.10% 15.72%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 4.06% 8.09% 18.72% n.a
Return on Equity 27.75% 40.47% 54.84% n.a
Activity Ratios
Inventory Turnover 10.66 10.47 9.27 n.a
Accounts Payable Turnover 9.75 12.17 12.17 n.a
Payment Days 27 29 28 n.a
Total Asset Turnover 5.45 4.61 2.88 n.a
Debt Ratios
Debt to Net Worth 0.25 0.08 0.02 n.a
Current Liab. to Liab. 1.58 3.09 8.35 n.a
Liquidity Ratios
Net Working Capital $15,352 $24,946 $59,011 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.18 0.22 0.35 n.a
Current Debt/Total Assets 32% 24% 13% n.a
Acid Test 2.45 3.31 6.74 n.a
Sales/Net Worth 6.83 5.00 2.93 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Page

Your business plan can look as polished and professional as this sample plan. It's fast and easy, with LivePlan.

Click here to get started.