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Women's Shoe Store Business Plan

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

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 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates that approximately $13,000 is needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $12,369
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $7,421

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss. We estimate purchase of new shoe display inventory, primarily for the seasonal changes in styles. Because these are displays, we are tracking them as expenses. It is estimated that new styles (especially around the change in seasons) will require regular purchase of shoe displays as part of the normal course of business.

 

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $139,263 $207,929 $237,549
Direct Cost of Sales $55,705 $83,172 $95,020
Other Production Expenses $0 $0 $0
Total Cost of Sales $55,705 $83,172 $95,020
Gross Margin $83,558 $124,757 $142,529
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $55,200 $78,400 $80,400
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $1,056 $1,056 $1,056
Shoe Display Inventory $7,000 $5,000 $5,000
Utilities $1,200 $1,200 $1,200
Insurance $1,800 $1,800 $1,800
Rent $21,600 $21,600 $21,600
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $89,056 $110,256 $112,256
Profit Before Interest and Taxes ($5,498) $14,501 $30,273
EBITDA ($4,442) $15,557 $31,329
Interest Expense $255 $224 $37
Taxes Incurred $0 $4,283 $9,071
Net Profit ($5,753) $9,994 $21,165
Net Profit/Sales -4.13% 4.81% 8.91%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow. We anticipate borrowing $5,000 in June to cover shoe display inventory purchases and other expenses.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $139,263 $207,929 $237,549
Subtotal Cash from Operations $139,263 $207,929 $237,549
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $5,000 $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 $0 $0 $0
Subtotal Cash Received $144,263 $207,929 $237,549
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $55,200 $78,400 $80,400
Bill Payments $78,704 $118,797 $133,576
Subtotal Spent on Operations $133,904 $197,197 $213,976
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,260 $3,000 $740
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 $135,164 $200,197 $214,716
Net Cash Flow $9,099 $7,732 $22,833
Cash Balance $29,131 $36,863 $59,697

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 $29,131 $36,863 $59,697
Other Current Assets $0 $0 $0
Total Current Assets $29,131 $36,863 $59,697
Long-term Assets
Long-term Assets $9,368 $9,368 $9,368
Accumulated Depreciation $1,056 $2,112 $3,168
Total Long-term Assets $8,312 $7,256 $6,200
Total Assets $37,443 $44,119 $65,897
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $10,056 $9,738 $11,090
Current Borrowing $3,740 $740 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,796 $10,478 $11,090
Long-term Liabilities $0 $0 $0
Total Liabilities $13,796 $10,478 $11,090
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($600) ($6,353) $3,641
Earnings ($5,753) $9,994 $21,165
Total Capital $23,647 $33,641 $54,807
Total Liabilities and Capital $37,443 $44,119 $65,897
Net Worth $23,647 $33,641 $54,807

7.6 Business Ratios

The following table compares our ratios to Standard Industry Code #3144 (Women's footwear, except athletic).

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 49.31% 14.25% 10.45%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 33.22%
Total Current Assets 77.80% 83.55% 90.59% 85.17%
Long-term Assets 22.20% 16.45% 9.41% 14.83%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 36.85% 23.75% 16.83% 26.82%
Long-term Liabilities 0.00% 0.00% 0.00% 25.97%
Total Liabilities 36.85% 23.75% 16.83% 52.79%
Net Worth 63.15% 76.25% 83.17% 47.21%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 22.01%
Selling, General & Administrative Expenses 74.12% 49.27% 48.20% 10.93%
Advertising Expenses 0.43% 0.23% 0.21% 1.05%
Profit Before Interest and Taxes -3.95% 6.97% 12.74% 2.49%
Main Ratios
Current 2.11 3.52 5.38 2.58
Quick 2.11 3.52 5.38 1.37
Total Debt to Total Assets 36.85% 23.75% 16.83% 57.34%
Pre-tax Return on Net Worth -24.33% 42.44% 55.17% 6.10%
Pre-tax Return on Assets -15.36% 32.36% 45.88% 14.29%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.13% 4.81% 8.91% n.a
Return on Equity -24.33% 29.71% 38.62% n.a
Activity Ratios
Accounts Payable Turnover 8.83 12.17 12.17 n.a
Payment Days 27 30 28 n.a
Total Asset Turnover 3.72 4.71 3.60 n.a
Debt Ratios
Debt to Net Worth 0.58 0.31 0.20 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $15,335 $26,385 $48,607 n.a
Interest Coverage -21.57 64.74 818.20 n.a
Additional Ratios
Assets to Sales 0.27 0.21 0.28 n.a
Current Debt/Total Assets 37% 24% 17% n.a
Acid Test 2.11 3.52 5.38 n.a
Sales/Net Worth 5.89 6.18 4.33 n.a
Dividend Payout 0.00 0.00 0.00 n.a