Workout Gym Business Plan

Mountain Brook Fitness Center

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Financial Plan

The following is the financial plan for the Mountain Brook Fitness Center.

7.1 Break-even Analysis

The table and chart below show the monthly break-even point.

Break-even Analysis
Monthly Revenue Break-even $71,739
Assumptions:
Average Percent Variable Cost 15%
Estimated Monthly Fixed Cost $60,763

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for three years.

Pro Forma Profit and Loss
2002 2003 2004
Sales $1,098,000 $1,249,000 $1,425,000
Direct Cost of Sales $168,000 $181,500 $193,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $168,000 $181,500 $193,000
Gross Margin $930,000 $1,067,500 $1,232,000
Gross Margin % 84.70% 85.47% 86.46%
Expenses
Payroll $561,000 $624,000 $694,000
Sales and Marketing and Other Expenses $48,000 $55,000 $60,000
Depreciation $12,000 $12,000 $12,000
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $12,000 $12,000 $12,000
Rent $0 $0 $0
Payroll Taxes $84,150 $93,600 $104,100
Other $0 $0 $0
Total Operating Expenses $729,150 $808,600 $894,100
Profit Before Interest and Taxes $200,850 $258,900 $337,900
EBITDA $212,850 $270,900 $349,900
Interest Expense $29,255 $35,051 $36,752
Taxes Incurred $51,479 $67,155 $90,344
Net Profit $120,117 $156,694 $210,804
Net Profit/Sales 10.94% 12.55% 14.79%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Pro Forma Cash Flow
2002 2003 2004
Cash Received
Cash from Operations
Cash Sales $823,500 $936,750 $1,068,750
Cash from Receivables $219,908 $304,742 $347,499
Subtotal Cash from Operations $1,043,408 $1,241,492 $1,416,249
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $70,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $120,000 $50,000 $30,000
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 $1,233,408 $1,291,492 $1,446,249
Expenditures 2002 2003 2004
Expenditures from Operations
Cash Spending $561,000 $624,000 $694,000
Bill Payments $425,735 $457,950 $503,931
Subtotal Spent on Operations $986,735 $1,081,950 $1,197,931
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $13,392 $13,392 $13,392
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $9,600 $9,600 $9,600
Purchase Other Current Assets $72,000 $40,000 $30,000
Purchase Long-term Assets $0 $50,000 $50,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,081,727 $1,194,942 $1,300,923
Net Cash Flow $151,682 $96,551 $145,326
Cash Balance $201,682 $298,232 $443,558

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet
2002 2003 2004
Assets
Current Assets
Cash $201,682 $298,232 $443,558
Accounts Receivable $54,592 $62,099 $70,850
Other Current Assets $122,000 $162,000 $192,000
Total Current Assets $378,273 $522,332 $706,408
Long-term Assets
Long-term Assets $200,000 $250,000 $300,000
Accumulated Depreciation $60,000 $72,000 $84,000
Total Long-term Assets $140,000 $178,000 $216,000
Total Assets $518,273 $700,332 $922,408
Liabilities and Capital 2002 2003 2004
Current Liabilities
Accounts Payable $39,148 $37,505 $41,770
Current Borrowing $126,608 $113,216 $99,824
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $165,756 $150,721 $141,594
Long-term Liabilities $210,400 $250,800 $271,200
Total Liabilities $376,156 $401,521 $412,794
Paid-in Capital $0 $0 $0
Retained Earnings $22,000 $142,117 $298,811
Earnings $120,117 $156,694 $210,804
Total Capital $142,117 $298,811 $509,615
Total Liabilities and Capital $518,273 $700,332 $922,408
Net Worth $142,117 $298,811 $509,615

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7997, Membership Sports and Recreation Clubs, are shown for comparison.

Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 48.26% 13.75% 14.09% 15.20%
Percent of Total Assets
Accounts Receivable 10.53% 8.87% 7.68% 5.10%
Other Current Assets 23.54% 23.13% 20.82% 31.80%
Total Current Assets 72.99% 74.58% 76.58% 40.90%
Long-term Assets 27.01% 25.42% 23.42% 59.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 31.98% 21.52% 15.35% 31.60%
Long-term Liabilities 40.60% 35.81% 29.40% 28.00%
Total Liabilities 72.58% 57.33% 44.75% 59.60%
Net Worth 27.42% 42.67% 55.25% 40.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.70% 85.47% 86.46% 0.00%
Selling, General & Administrative Expenses 73.76% 72.92% 71.66% 72.30%
Advertising Expenses 4.37% 4.40% 4.21% 2.70%
Profit Before Interest and Taxes 18.29% 20.73% 23.71% 2.60%
Main Ratios
Current 2.28 3.47 4.99 1.23
Quick 2.28 3.47 4.99 0.83
Total Debt to Total Assets 72.58% 57.33% 44.75% 59.60%
Pre-tax Return on Net Worth 120.74% 74.91% 59.09% 2.80%
Pre-tax Return on Assets 33.11% 31.96% 32.65% 6.90%
Additional Ratios 2002 2003 2004
Net Profit Margin 10.94% 12.55% 14.79% n.a
Return on Equity 84.52% 52.44% 41.37% n.a
Activity Ratios
Accounts Receivable Turnover 5.03 5.03 5.03 n.a
Collection Days 57 68 68 n.a
Accounts Payable Turnover 10.34 12.17 12.17 n.a
Payment Days 31 31 28 n.a
Total Asset Turnover 2.12 1.78 1.54 n.a
Debt Ratios
Debt to Net Worth 2.65 1.34 0.81 n.a
Current Liab. to Liab. 0.44 0.38 0.34 n.a
Liquidity Ratios
Net Working Capital $212,517 $371,611 $564,815 n.a
Interest Coverage 6.87 7.39 9.19 n.a
Additional Ratios
Assets to Sales 0.47 0.56 0.65 n.a
Current Debt/Total Assets 32% 22% 15% n.a
Acid Test 1.95 3.05 4.49 n.a
Sales/Net Worth 7.73 4.18 2.80 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $71,739
Assumptions:
Average Percent Variable Cost 15%
Estimated Monthly Fixed Cost $60,763
Pro Forma Profit and Loss
2002 2003 2004
Sales $1,098,000 $1,249,000 $1,425,000
Direct Cost of Sales $168,000 $181,500 $193,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $168,000 $181,500 $193,000
Gross Margin $930,000 $1,067,500 $1,232,000
Gross Margin % 84.70% 85.47% 86.46%
Expenses
Payroll $561,000 $624,000 $694,000
Sales and Marketing and Other Expenses $48,000 $55,000 $60,000
Depreciation $12,000 $12,000 $12,000
Leased Equipment $0 $0 $0
Utilities $12,000 $12,000 $12,000
Insurance $12,000 $12,000 $12,000
Rent $0 $0 $0
Payroll Taxes $84,150 $93,600 $104,100
Other $0 $0 $0
Total Operating Expenses $729,150 $808,600 $894,100
Profit Before Interest and Taxes $200,850 $258,900 $337,900
EBITDA $212,850 $270,900 $349,900
Interest Expense $29,255 $35,051 $36,752
Taxes Incurred $51,479 $67,155 $90,344
Net Profit $120,117 $156,694 $210,804
Net Profit/Sales 10.94% 12.55% 14.79%
Pro Forma Cash Flow
2002 2003 2004
Cash Received
Cash from Operations
Cash Sales $823,500 $936,750 $1,068,750
Cash from Receivables $219,908 $304,742 $347,499
Subtotal Cash from Operations $1,043,408 $1,241,492 $1,416,249
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $70,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $120,000 $50,000 $30,000
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 $1,233,408 $1,291,492 $1,446,249
Expenditures 2002 2003 2004
Expenditures from Operations
Cash Spending $561,000 $624,000 $694,000
Bill Payments $425,735 $457,950 $503,931
Subtotal Spent on Operations $986,735 $1,081,950 $1,197,931
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $13,392 $13,392 $13,392
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $9,600 $9,600 $9,600
Purchase Other Current Assets $72,000 $40,000 $30,000
Purchase Long-term Assets $0 $50,000 $50,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,081,727 $1,194,942 $1,300,923
Net Cash Flow $151,682 $96,551 $145,326
Cash Balance $201,682 $298,232 $443,558
Pro Forma Balance Sheet
2002 2003 2004
Assets
Current Assets
Cash $201,682 $298,232 $443,558
Accounts Receivable $54,592 $62,099 $70,850
Other Current Assets $122,000 $162,000 $192,000
Total Current Assets $378,273 $522,332 $706,408
Long-term Assets
Long-term Assets $200,000 $250,000 $300,000
Accumulated Depreciation $60,000 $72,000 $84,000
Total Long-term Assets $140,000 $178,000 $216,000
Total Assets $518,273 $700,332 $922,408
Liabilities and Capital 2002 2003 2004
Current Liabilities
Accounts Payable $39,148 $37,505 $41,770
Current Borrowing $126,608 $113,216 $99,824
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $165,756 $150,721 $141,594
Long-term Liabilities $210,400 $250,800 $271,200
Total Liabilities $376,156 $401,521 $412,794
Paid-in Capital $0 $0 $0
Retained Earnings $22,000 $142,117 $298,811
Earnings $120,117 $156,694 $210,804
Total Capital $142,117 $298,811 $509,615
Total Liabilities and Capital $518,273 $700,332 $922,408
Net Worth $142,117 $298,811 $509,615
Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 48.26% 13.75% 14.09% 15.20%
Percent of Total Assets
Accounts Receivable 10.53% 8.87% 7.68% 5.10%
Other Current Assets 23.54% 23.13% 20.82% 31.80%
Total Current Assets 72.99% 74.58% 76.58% 40.90%
Long-term Assets 27.01% 25.42% 23.42% 59.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 31.98% 21.52% 15.35% 31.60%
Long-term Liabilities 40.60% 35.81% 29.40% 28.00%
Total Liabilities 72.58% 57.33% 44.75% 59.60%
Net Worth 27.42% 42.67% 55.25% 40.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.70% 85.47% 86.46% 0.00%
Selling, General & Administrative Expenses 73.76% 72.92% 71.66% 72.30%
Advertising Expenses 4.37% 4.40% 4.21% 2.70%
Profit Before Interest and Taxes 18.29% 20.73% 23.71% 2.60%
Main Ratios
Current 2.28 3.47 4.99 1.23
Quick 2.28 3.47 4.99 0.83
Total Debt to Total Assets 72.58% 57.33% 44.75% 59.60%
Pre-tax Return on Net Worth 120.74% 74.91% 59.09% 2.80%
Pre-tax Return on Assets 33.11% 31.96% 32.65% 6.90%
Additional Ratios 2002 2003 2004
Net Profit Margin 10.94% 12.55% 14.79% n.a
Return on Equity 84.52% 52.44% 41.37% n.a
Activity Ratios
Accounts Receivable Turnover 5.03 5.03 5.03 n.a
Collection Days 57 68 68 n.a
Accounts Payable Turnover 10.34 12.17 12.17 n.a
Payment Days 31 31 28 n.a
Total Asset Turnover 2.12 1.78 1.54 n.a
Debt Ratios
Debt to Net Worth 2.65 1.34 0.81 n.a
Current Liab. to Liab. 0.44 0.38 0.34 n.a
Liquidity Ratios
Net Working Capital $212,517 $371,611 $564,815 n.a
Interest Coverage 6.87 7.39 9.19 n.a
Additional Ratios
Assets to Sales 0.47 0.56 0.65 n.a
Current Debt/Total Assets 32% 22% 15% n.a
Acid Test 1.95 3.05 4.49 n.a
Sales/Net Worth 7.73 4.18 2.80 n.a
Dividend Payout 0.00 0.00 0.00 n.a