Barney's Bullpen
Financial Plan
The following section outlines the financial plan for Barney’s Bullpen:
- Start-up funding of $78,000 is required. $36,000 of the start-up is for the purchase of the Iron Mike Pitching equipment and associated netting, control panel, other required equipment. Rent, utilities, and advertising are the only monthly expenses listed in the start-up requirements. Insurance will be an annual expense.
- The start-up capital will be obtained through a combination of investor contributions ($8,000) and an SBA long-term loan ($70,000).
8.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendices. From the beginning, we recognize that repeat business, weather, economic conditions, and growth of youth sports will determine our success. These reasons are why we have chosen a conservative revenue stream.
Two of the more important underlying assumptions are:
- We assume a strong economy, without major recession.
- We assume, of course, that there are no unforeseen changes in the growth of classic baseball participation to make our services immediately obsolete.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.00% | 8.00% | 8.00% |
Long-term Interest Rate | 8.00% | 8.00% | 8.00% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The following chart and table summarize our break-even analysis. This projection is based on very conservative estimates of revenue.

Break-even Analysis | |
Monthly Revenue Break-even | $14,659 |
Assumptions: | |
Average Percent Variable Cost | 2% |
Estimated Monthly Fixed Cost | $14,313 |
8.3 Projected Profit and Loss
Our projected profit and loss is shown on the following table, with sales increasing from more than $200K the first year to more than $300K the third year. We show a profit in the first year with a relatively low sales forecast.
We are projecting very conservatively. The detailed monthly projections are included in the appendices.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $237,884 | $270,273 | $312,852 |
Direct Cost of Sales | $5,620 | $5,710 | $6,250 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $5,620 | $5,710 | $6,250 |
Gross Margin | $232,264 | $264,563 | $306,602 |
Gross Margin % | 97.64% | 97.89% | 98.00% |
Expenses | |||
Payroll | $56,000 | $61,400 | $63,600 |
Marketing/Promotion | $4,600 | $5,500 | $6,000 |
Depreciation | $5,143 | $5,143 | $5,143 |
Rent | $86,004 | $88,000 | $92,000 |
Utilities | $6,000 | $6,000 | $6,000 |
Insurance | $0 | $10,000 | $10,000 |
Payroll Taxes | $0 | $0 | $0 |
Equipment Repair and Maintenance | $3,034 | $4,225 | $4,858 |
Ball and bat replacement | $1,050 | $1,811 | $2,082 |
Other (incl. property taxes) | $9,925 | $10,000 | $10,000 |
Total Operating Expenses | $171,755 | $192,078 | $199,683 |
Profit Before Interest and Taxes | $60,509 | $72,485 | $106,919 |
EBITDA | $65,652 | $77,628 | $112,062 |
Interest Expense | $5,250 | $4,200 | $3,080 |
Taxes Incurred | $16,578 | $20,485 | $31,152 |
Net Profit | $38,681 | $47,799 | $72,687 |
Net Profit/Sales | 16.26% | 17.69% | 23.23% |
8.4 Projected Cash Flow
The following section shows the cash flow projections for Barney’s Bullpen for the first three years. These include repayment of the principal on a 5-year $70,000 SBA loan in equal monthly payments of $1,167, which we start repaying after the first three months of operations.
Cash flow projections are critical to our success. Our cash balance will reach its minimum in mid-2004, during a low season in the first year of operations. We believe that if we manage our cash wisely during this critical period, the following months’ cash flows should be sufficient to cover all our expenses.
The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $214,096 | $243,246 | $281,567 |
Cash from Receivables | $18,150 | $26,260 | $30,276 |
Subtotal Cash from Operations | $232,245 | $269,505 | $311,843 |
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 | $0 | $0 | $0 |
Subtotal Cash Received | $232,245 | $269,505 | $311,843 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $56,000 | $61,400 | $63,600 |
Bill Payments | $124,245 | $156,929 | $170,149 |
Subtotal Spent on Operations | $180,245 | $218,329 | $233,749 |
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 | $10,500 | $14,000 | $14,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $4,600 | $7,200 |
Subtotal Cash Spent | $190,745 | $236,929 | $254,949 |
Net Cash Flow | $41,500 | $32,576 | $56,894 |
Cash Balance | $44,500 | $77,076 | $133,970 |
8.5 Projected Balance Sheet
The balance sheet in the following table shows conservative growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendices.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $44,500 | $77,076 | $133,970 |
Accounts Receivable | $5,639 | $6,406 | $7,416 |
Other Current Assets | $11,150 | $11,150 | $11,150 |
Total Current Assets | $61,289 | $94,633 | $152,536 |
Long-term Assets | |||
Long-term Assets | $36,000 | $36,000 | $36,000 |
Accumulated Depreciation | $5,143 | $10,286 | $15,429 |
Total Long-term Assets | $30,857 | $25,714 | $20,571 |
Total Assets | $92,146 | $120,347 | $173,108 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $13,815 | $12,816 | $14,089 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $13,815 | $12,816 | $14,089 |
Long-term Liabilities | $59,500 | $45,500 | $31,500 |
Total Liabilities | $73,315 | $58,316 | $45,589 |
Paid-in Capital | $8,000 | $8,000 | $8,000 |
Retained Earnings | ($27,850) | $6,231 | $46,831 |
Earnings | $38,681 | $47,799 | $72,687 |
Total Capital | $18,831 | $62,031 | $127,518 |
Total Liabilities and Capital | $92,146 | $120,347 | $173,108 |
Net Worth | $18,831 | $62,031 | $127,518 |
8.6 Business Ratios
The following table shows the projected businesses ratios along with comparisons for our industry, baseball batting cages (SIC Code 7999.9903). We expect to maintain healthy ratios for profitability, risk, and return.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 13.62% | 15.75% | 5.73% |
Percent of Total Assets | ||||
Accounts Receivable | 6.12% | 5.32% | 4.28% | 7.08% |
Other Current Assets | 12.10% | 9.26% | 6.44% | 33.26% |
Total Current Assets | 66.51% | 78.63% | 88.12% | 43.21% |
Long-term Assets | 33.49% | 21.37% | 11.88% | 56.79% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 14.99% | 10.65% | 8.14% | 21.91% |
Long-term Liabilities | 64.57% | 37.81% | 18.20% | 28.81% |
Total Liabilities | 79.56% | 48.46% | 26.34% | 50.72% |
Net Worth | 20.44% | 51.54% | 73.66% | 49.28% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 97.64% | 97.89% | 98.00% | 100.00% |
Selling, General & Administrative Expenses | 63.80% | 76.90% | 76.28% | 76.43% |
Advertising Expenses | 2.16% | 1.90% | 1.64% | 2.77% |
Profit Before Interest and Taxes | 25.44% | 26.82% | 34.18% | 1.89% |
Main Ratios | ||||
Current | 4.44 | 7.38 | 10.83 | 1.18 |
Quick | 4.44 | 7.38 | 10.83 | 0.80 |
Total Debt to Total Assets | 79.56% | 48.46% | 26.34% | 1.76% |
Pre-tax Return on Net Worth | 293.44% | 110.08% | 81.43% | 61.12% |
Pre-tax Return on Assets | 59.97% | 56.74% | 59.99% | 4.52% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 16.26% | 17.69% | 23.23% | n.a |
Return on Equity | 205.41% | 77.06% | 57.00% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 4.22 | 4.22 | 4.22 | n.a |
Collection Days | 57 | 81 | 81 | n.a |
Accounts Payable Turnover | 9.99 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 31 | 29 | n.a |
Total Asset Turnover | 2.58 | 2.25 | 1.81 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 3.89 | 0.94 | 0.36 | n.a |
Current Liab. to Liab. | 0.19 | 0.22 | 0.31 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $47,474 | $81,816 | $138,447 | n.a |
Interest Coverage | 11.53 | 17.26 | 34.71 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.39 | 0.45 | 0.55 | n.a |
Current Debt/Total Assets | 15% | 11% | 8% | n.a |
Acid Test | 4.03 | 6.88 | 10.30 | n.a |
Sales/Net Worth | 12.63 | 4.36 | 2.45 | n.a |
Dividend Payout | 0.00 | 0.10 | 0.10 | n.a |