Art Supply Store and Gallery Business Plan

• The growth of NALB will be moderate and the cash balance will always be positive.
• Being a retail environment we will not be selling on credit. We will accept cash, checks, Visa and MasterCard. 
• Marketing and advertising will remain at or below 5% of sales.
• We will finance growth mainly through cash flow. We recognize that this means we will have to grow slowly.
• It should be noted that the owners of NALB Creative Center do not intend to take any profits out of the business until the long-term debt has been satisfied. Whatever profits remain after the debt payments will be used to finance growth, mainly through the acquisition of additional inventory.

8.1 Start-up Funding

NALB’s start-up funds are summarized in the following table:

• $210,000 SBA loan
• $20,000 short-term/credit card
• $45,000 Owner investment

The additional capital is needed to fund salaries, inventory lags and other costs during the first months of the business year.

8.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• We do not sell anything on credit. We accept cash, checks, debit cards, Visa, MasterCard.
• A slow-growth economy/customer base, without major recession.
• Monthly sales are the largest indicator for this business. There are some seasonal variations, with the months October through January being the highest sales months.
• We assume access to capital and financing sufficient to maintain our financial plan as shown in the tables.

8.3 Break-even Analysis

Our break-even analysis is summarized by the following chart and table.

8.4 Projected Profit and Loss

We predict that during the second year of operation, our high level of customer service and strong assortment will allow us to generate approximately 5% profit. This will be above the normal two to three year period required for a start-up retailer. Our sales projections are conservative. Should sales increase as we anticipate, the profit-to-sales ratio could be as high as 10% by the end of year three.

The following chart and table will indicate projected profit and loss.

8.5 Projected Cash Flow

Our projected cash flow is outlined in the following chart and table.

8.6 Projected Balance Sheet

The table shows the annual balance sheet results, with a conservative projected increase in net worth. Detailed monthly projections are in the appendix.

8.7 Business Ratios

Business ratios for the years of this plan are shown below. The industry profile is from 2003, and based on the Standard Industrial Classification (SIC) code 5092.9901 for the Arts and crafts equipment and supplies industry.