Vineyard Bed & Breakfast Business Plan

Enchanted Vineyard B & B

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Financial Plan

The following sections will detail important financial information.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions for The Enchanted Vineyard Bed & Breakfast.

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 25.00% 25.00% 25.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates that monthly revenue must exceed $8,600 to break even.

Break-even Analysis
Monthly Revenue Break-even $8,674
Assumptions:
Average Percent Variable Cost 54%
Estimated Monthly Fixed Cost $4,017

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $35,750 $148,000 $165,000
Direct Cost of Sales $19,193 $78,440 $87,450
Other $0 $0 $0
Total Cost of Sales $19,193 $78,440 $87,450
Gross Margin $16,557 $69,560 $77,550
Gross Margin % 46.31% 47.00% 47.00%
Expenses
Payroll $15,000 $24,000 $30,000
Sales and Marketing and Other Expenses $1,800 $3,200 $3,800
Depreciation $20,004 $20,004 $20,004
Leased Equipment $0 $0 $2,000
Utilities $2,400 $2,400 $2,400
Insurance $1,470 $1,470 $1,470
mortgage $5,280 $5,280 $5,280
Payroll Taxes $2,250 $3,600 $4,500
Other $0 $0 $0
Total Operating Expenses $48,204 $59,954 $69,454
Profit Before Interest and Taxes ($31,647) $9,606 $8,096
EBITDA ($11,643) $29,610 $28,100
Interest Expense $1,225 $1,265 $1,065
Taxes Incurred $0 $2,085 $1,758
Net Profit ($32,873) $6,256 $5,273
Net Profit/Sales -91.95% 4.23% 3.20%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $25,025 $103,600 $115,500
Cash from Receivables $6,978 $32,634 $47,718
Subtotal Cash from Operations $32,003 $136,234 $163,218
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $2,000 $0 $0
New Other Liabilities (interest-free) $3,800 $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 $37,803 $136,234 $163,218
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $15,000 $24,000 $30,000
Bill Payments $31,690 $102,287 $110,868
Subtotal Spent on Operations $46,690 $126,287 $140,868
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $1,000 $1,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $750 $1,000 $1,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $6,000 $10,000
Dividends $0 $0 $5,000
Subtotal Cash Spent $47,440 $134,287 $157,868
Net Cash Flow ($9,637) $1,947 $5,350
Cash Balance $1,563 $3,510 $8,860

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $1,563 $3,510 $8,860
Accounts Receivable $3,747 $15,513 $17,295
Inventory $3,573 $12,920 $14,404
Other Current Assets $1,500 $1,500 $1,500
Total Current Assets $10,383 $33,443 $42,059
Long-term Assets
Long-term Assets $200,000 $206,000 $216,000
Accumulated Depreciation $20,004 $40,008 $60,012
Total Long-term Assets $179,996 $165,992 $155,988
Total Assets $190,379 $199,435 $198,047
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $4,001 $8,802 $9,140
Current Borrowing $4,400 $3,400 $2,400
Other Current Liabilities $5,800 $5,800 $5,800
Subtotal Current Liabilities $14,201 $18,002 $17,340
Long-term Liabilities $9,250 $8,250 $7,250
Total Liabilities $23,451 $26,252 $24,590
Paid-in Capital $201,600 $201,600 $201,600
Retained Earnings ($1,800) ($34,673) ($33,417)
Earnings ($32,873) $6,256 $5,273
Total Capital $166,927 $173,183 $173,456
Total Liabilities and Capital $190,379 $199,435 $198,047
Net Worth $166,927 $173,183 $173,456

7.6 Business Ratios

The business ratios reflect both a cross-sectional analysis and time-series analysis of the company's risk and profitability. The cross-sectional analysis consists of a comparison of our firm's ratios and those of the hotel and motel industry averages. The reader will note that there are some significant differences in the ratios, especially in regards to the way our company is leveraged. This is due to the fact that industry averages also include very large hotel chains that usually have much higher capital costs and investments in long-term assets. Furthermore, Enchanted Vineyards B&B has lower SG&A costs than other hotels and motels since B&Bs usually provide fewer services than larger competitors.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 313.99% 11.49% 5.90%
Percent of Total Assets
Accounts Receivable 1.97% 7.78% 8.73% 5.00%
Inventory 1.88% 6.48% 7.27% 1.00%
Other Current Assets 0.79% 0.75% 0.76% 26.00%
Total Current Assets 5.45% 16.77% 21.24% 32.00%
Long-term Assets 94.55% 83.23% 78.76% 68.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.46% 9.03% 8.76% 19.40%
Long-term Liabilities 4.86% 4.14% 3.66% 34.60%
Total Liabilities 12.32% 13.16% 12.42% 54.00%
Net Worth 87.68% 86.84% 87.58% 46.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 46.31% 47.00% 47.00% 0.00%
Selling, General & Administrative Expenses 138.22% 42.64% 43.67% 75.10%
Advertising Expenses 5.03% 1.22% 1.09% 1.90%
Profit Before Interest and Taxes -88.52% 6.49% 4.91% 2.50%
Main Ratios
Current 0.73 1.86 2.43 1.45
Quick 0.48 1.14 1.59 1.05
Total Debt to Total Assets 12.32% 13.16% 12.42% 54.00%
Pre-tax Return on Net Worth -19.69% 4.82% 4.05% 1.70%
Pre-tax Return on Assets -17.27% 4.18% 3.55% 3.70%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -91.95% 4.23% 3.20% n.a
Return on Equity -19.69% 3.61% 3.04% n.a
Activity Ratios
Accounts Receivable Turnover 2.86 2.86 2.86 n.a
Collection Days 55 79 121 n.a
Inventory Turnover 8.85 9.51 6.40 n.a
Accounts Payable Turnover 8.92 12.17 12.17 n.a
Payment Days 27 22 29 n.a
Total Asset Turnover 0.19 0.74 0.83 n.a
Debt Ratios
Debt to Net Worth 0.14 0.15 0.14 n.a
Current Liab. to Liab. 0.61 0.69 0.71 n.a
Liquidity Ratios
Net Working Capital ($3,819) $15,441 $24,718 n.a
Interest Coverage -25.83 7.59 7.60 n.a
Additional Ratios
Assets to Sales 5.33 1.35 1.20 n.a
Current Debt/Total Assets 7% 9% 9% n.a
Acid Test 0.22 0.28 0.60 n.a
Sales/Net Worth 0.21 0.85 0.95 n.a
Dividend Payout 0.00 0.00 0.95 n.a
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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 25.00% 25.00% 25.00%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $8,674
Assumptions:
Average Percent Variable Cost 54%
Estimated Monthly Fixed Cost $4,017
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $35,750 $148,000 $165,000
Direct Cost of Sales $19,193 $78,440 $87,450
Other $0 $0 $0
Total Cost of Sales $19,193 $78,440 $87,450
Gross Margin $16,557 $69,560 $77,550
Gross Margin % 46.31% 47.00% 47.00%
Expenses
Payroll $15,000 $24,000 $30,000
Sales and Marketing and Other Expenses $1,800 $3,200 $3,800
Depreciation $20,004 $20,004 $20,004
Leased Equipment $0 $0 $2,000
Utilities $2,400 $2,400 $2,400
Insurance $1,470 $1,470 $1,470
mortgage $5,280 $5,280 $5,280
Payroll Taxes $2,250 $3,600 $4,500
Other $0 $0 $0
Total Operating Expenses $48,204 $59,954 $69,454
Profit Before Interest and Taxes ($31,647) $9,606 $8,096
EBITDA ($11,643) $29,610 $28,100
Interest Expense $1,225 $1,265 $1,065
Taxes Incurred $0 $2,085 $1,758
Net Profit ($32,873) $6,256 $5,273
Net Profit/Sales -91.95% 4.23% 3.20%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $25,025 $103,600 $115,500
Cash from Receivables $6,978 $32,634 $47,718
Subtotal Cash from Operations $32,003 $136,234 $163,218
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $2,000 $0 $0
New Other Liabilities (interest-free) $3,800 $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 $37,803 $136,234 $163,218
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $15,000 $24,000 $30,000
Bill Payments $31,690 $102,287 $110,868
Subtotal Spent on Operations $46,690 $126,287 $140,868
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $1,000 $1,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $750 $1,000 $1,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $6,000 $10,000
Dividends $0 $0 $5,000
Subtotal Cash Spent $47,440 $134,287 $157,868
Net Cash Flow ($9,637) $1,947 $5,350
Cash Balance $1,563 $3,510 $8,860
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $1,563 $3,510 $8,860
Accounts Receivable $3,747 $15,513 $17,295
Inventory $3,573 $12,920 $14,404
Other Current Assets $1,500 $1,500 $1,500
Total Current Assets $10,383 $33,443 $42,059
Long-term Assets
Long-term Assets $200,000 $206,000 $216,000
Accumulated Depreciation $20,004 $40,008 $60,012
Total Long-term Assets $179,996 $165,992 $155,988
Total Assets $190,379 $199,435 $198,047
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $4,001 $8,802 $9,140
Current Borrowing $4,400 $3,400 $2,400
Other Current Liabilities $5,800 $5,800 $5,800
Subtotal Current Liabilities $14,201 $18,002 $17,340
Long-term Liabilities $9,250 $8,250 $7,250
Total Liabilities $23,451 $26,252 $24,590
Paid-in Capital $201,600 $201,600 $201,600
Retained Earnings ($1,800) ($34,673) ($33,417)
Earnings ($32,873) $6,256 $5,273
Total Capital $166,927 $173,183 $173,456
Total Liabilities and Capital $190,379 $199,435 $198,047
Net Worth $166,927 $173,183 $173,456
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 313.99% 11.49% 5.90%
Percent of Total Assets
Accounts Receivable 1.97% 7.78% 8.73% 5.00%
Inventory 1.88% 6.48% 7.27% 1.00%
Other Current Assets 0.79% 0.75% 0.76% 26.00%
Total Current Assets 5.45% 16.77% 21.24% 32.00%
Long-term Assets 94.55% 83.23% 78.76% 68.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.46% 9.03% 8.76% 19.40%
Long-term Liabilities 4.86% 4.14% 3.66% 34.60%
Total Liabilities 12.32% 13.16% 12.42% 54.00%
Net Worth 87.68% 86.84% 87.58% 46.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 46.31% 47.00% 47.00% 0.00%
Selling, General & Administrative Expenses 138.22% 42.64% 43.67% 75.10%
Advertising Expenses 5.03% 1.22% 1.09% 1.90%
Profit Before Interest and Taxes -88.52% 6.49% 4.91% 2.50%
Main Ratios
Current 0.73 1.86 2.43 1.45
Quick 0.48 1.14 1.59 1.05
Total Debt to Total Assets 12.32% 13.16% 12.42% 54.00%
Pre-tax Return on Net Worth -19.69% 4.82% 4.05% 1.70%
Pre-tax Return on Assets -17.27% 4.18% 3.55% 3.70%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -91.95% 4.23% 3.20% n.a
Return on Equity -19.69% 3.61% 3.04% n.a
Activity Ratios
Accounts Receivable Turnover 2.86 2.86 2.86 n.a
Collection Days 55 79 121 n.a
Inventory Turnover 8.85 9.51 6.40 n.a
Accounts Payable Turnover 8.92 12.17 12.17 n.a
Payment Days 27 22 29 n.a
Total Asset Turnover 0.19 0.74 0.83 n.a
Debt Ratios
Debt to Net Worth 0.14 0.15 0.14 n.a
Current Liab. to Liab. 0.61 0.69 0.71 n.a
Liquidity Ratios
Net Working Capital ($3,819) $15,441 $24,718 n.a
Interest Coverage -25.83 7.59 7.60 n.a
Additional Ratios
Assets to Sales 5.33 1.35 1.20 n.a
Current Debt/Total Assets 7% 9% 9% n.a
Acid Test 0.22 0.28 0.60 n.a
Sales/Net Worth 0.21 0.85 0.95 n.a
Dividend Payout 0.00 0.00 0.95 n.a