Bride’s Entourage
Financial Plan
Bride’s Entourage expects to be profitable by the end of its second year of operations. To get the business up and running, we will need to obtain financing. The initial market share will be modest; however, significant growth in market share is expected due to the unique niche that the shop is targeting. The market share is expected to grow at a more modest rate after year three.
8.1 Important Assumptions
The following assumptions are key to understanding the profit and loss projections.
- We do not sell anything on credit – all items must be paid in full before they are taken from the store.
- We are estimating that 80% of the purchases will be made with credit cards. The credit card fees are calculated as 80% of the sales, times 1.8 percent (the fee rate).
- Cost of sales for the clothing items has a two month delay. This is because most clothing items will be custom ordered and, as a result, Bride’s Entourage will not have to pay for them until they arrive about two months after they are ordered.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 6.25% | 6.25% | 6.25% |
Long-term Interest Rate | 6.25% | 6.25% | 6.25% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
For the break-even analysis, the following assumptions were used:
- Fixed costs per month are estimated as total first year operating expenses divided by 12.
- For each item sold, there is a variable price equal to about 43% of the retail price of the item.

Break-even Analysis | |
Monthly Revenue Break-even | $21,445 |
Assumptions: | |
Average Percent Variable Cost | 43% |
Estimated Monthly Fixed Cost | $12,149 |
8.3 Projected Profit and Loss
We expect losses in the first year, because it will take time for the store to build momentum and generate traffic. However, once sales increase, the results are positive because many of the other expenses will remain fixed. In fact, we expect that sample inventory costs will actually go down in years to come. Some designers will provide sample inventory at deep discounts and/or provide the samples free of charge once good credit terms are established. As a result, the annual expenditures for sample inventory should decrease.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $252,788 | $394,373 | $622,855 |
Direct Cost of Sales | $109,581 | $172,183 | $271,404 |
Credit Card Fees | $3,640 | $3,155 | $4,983 |
Total Cost of Sales | $113,221 | $175,338 | $276,387 |
Gross Margin | $139,567 | $219,034 | $346,468 |
Gross Margin % | 55.21% | 55.54% | 55.63% |
Expenses | |||
Payroll | $30,720 | $41,000 | $45,000 |
Sales and Marketing and Other Expenses | $11,900 | $12,000 | $12,000 |
Depreciation | $2,160 | $2,160 | $2,160 |
Rent including triple nets | $52,800 | $54,750 | $66,900 |
Utilities | $9,000 | $9,500 | $10,000 |
Insurance | $4,200 | $4,600 | $5,100 |
Payroll Taxes | $4,608 | $6,150 | $6,750 |
Supplies | $3,600 | $4,000 | $4,300 |
Repairs and Maintenance | $2,400 | $2,600 | $2,800 |
Professional Fees | $3,300 | $3,500 | $4,000 |
Taxes and Licenses | $1,100 | $1,100 | $1,100 |
New Sample Inventory | $20,000 | $15,000 | $14,000 |
Total Operating Expenses | $145,788 | $156,360 | $174,110 |
Profit Before Interest and Taxes | ($6,221) | $62,674 | $172,358 |
EBITDA | ($4,061) | $64,834 | $174,518 |
Interest Expense | $3,622 | $2,843 | $2,030 |
Taxes Incurred | $0 | $17,950 | $51,098 |
Net Profit | ($9,842) | $41,882 | $119,230 |
Net Profit/Sales | -3.89% | 10.62% | 19.14% |
8.4 Projected Cash Flow
The cash flow of Bride’s Entourage is somewhat unique. For items that are sold off the floor, the cash flow and revenue recognition is traditional, in that full payment is received at the time of the sale, and the customer takes possession of the item at that time. This is how most of the shoe sales will take place, as well as some of the other accessory purchases.
However, most of the other items in the store have a different flow. Let’s use a dress as an example. The customer will try on a sample in the store, and when she decides to purchase the item, she will most likely have to order it in the size and color of her choosing. For this process to begin, the customer must provide a deposit of at least 50% of the total price of the item (note: while some customers may choose to pay the full amount at the time the order is placed, these illustrations assume that everyone will choose the 50% option). The remaining balance will be due within thirty days of when the item arrives in our store.
This timing issue has also been taken into consideration for the costs of goods sold. The store will be billed for items when the items are shipped, thus cash outflow for the cost of the item will closely match the cash inflow of the customer paying the balance on the item.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $252,788 | $394,373 | $622,855 |
Subtotal Cash from Operations | $252,788 | $394,373 | $622,855 |
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 | $252,788 | $394,373 | $622,855 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $30,720 | $41,000 | $45,000 |
Bill Payments | $194,477 | $302,314 | $450,411 |
Subtotal Spent on Operations | $225,197 | $343,314 | $495,411 |
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 | $13,020 | $13,000 | $13,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $238,217 | $356,314 | $508,411 |
Net Cash Flow | $14,571 | $38,058 | $114,444 |
Cash Balance | $36,471 | $74,529 | $188,973 |
8.5 Projected Balance Sheet
Bride’s Entourage maintains a strong current ratio throughout. While the net worth of the business is negative in year one, it makes steady gains and becomes positive in year two. By the end of year three, retained earnings is also close to being positive.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $36,471 | $74,529 | $188,973 |
Inventory | $6,878 | $10,808 | $17,036 |
Other Current Assets | $1,000 | $1,000 | $1,000 |
Total Current Assets | $44,349 | $86,337 | $207,009 |
Long-term Assets | |||
Long-term Assets | $8,500 | $8,500 | $8,500 |
Accumulated Depreciation | $2,160 | $4,320 | $6,480 |
Total Long-term Assets | $6,340 | $4,180 | $2,020 |
Total Assets | $50,689 | $90,517 | $209,029 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $14,802 | $25,747 | $38,030 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $14,802 | $25,747 | $38,030 |
Long-term Liabilities | $51,980 | $38,980 | $25,980 |
Total Liabilities | $66,782 | $64,727 | $64,010 |
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | ($36,250) | ($46,092) | ($4,210) |
Earnings | ($9,842) | $41,882 | $119,230 |
Total Capital | ($16,092) | $25,790 | $145,020 |
Total Liabilities and Capital | $50,689 | $90,517 | $209,029 |
Net Worth | ($16,092) | $25,790 | $145,020 |
8.6 Business Ratios
The following table breaks down some of the key financial ratios. Where available, industry averages for Bridal Shops – SIC code 5621.0102, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 56.01% | 57.94% | -0.02% |
Percent of Total Assets | ||||
Inventory | 13.57% | 11.94% | 8.15% | 50.91% |
Other Current Assets | 1.97% | 1.10% | 0.48% | 24.44% |
Total Current Assets | 87.49% | 95.38% | 99.03% | 85.49% |
Long-term Assets | 12.51% | 4.62% | 0.97% | 14.51% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 29.20% | 28.44% | 18.19% | 29.49% |
Long-term Liabilities | 102.55% | 43.06% | 12.43% | 11.18% |
Total Liabilities | 131.75% | 71.51% | 30.62% | 40.67% |
Net Worth | -31.75% | 28.49% | 69.38% | 59.33% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 55.21% | 55.54% | 55.63% | 40.07% |
Selling, General & Administrative Expenses | 59.10% | 44.92% | 36.48% | 21.95% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.92% |
Profit Before Interest and Taxes | -2.46% | 15.89% | 27.67% | 2.90% |
Main Ratios | ||||
Current | 3.00 | 3.35 | 5.44 | 2.64 |
Quick | 2.53 | 2.93 | 5.00 | 0.74 |
Total Debt to Total Assets | 131.75% | 71.51% | 30.62% | 5.31% |
Pre-tax Return on Net Worth | 61.16% | 232.00% | 117.45% | 47.92% |
Pre-tax Return on Assets | -19.42% | 66.10% | 81.49% | 10.20% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -3.89% | 10.62% | 19.14% | n.a |
Return on Equity | 0.00% | 162.40% | 82.22% | n.a |
Activity Ratios | ||||
Inventory Turnover | 6.78 | 19.47 | 19.49 | n.a |
Accounts Payable Turnover | 14.07 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 24 | 25 | n.a |
Total Asset Turnover | 4.99 | 4.36 | 2.98 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 2.51 | 0.44 | n.a |
Current Liab. to Liab. | 0.22 | 0.40 | 0.59 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $29,548 | $60,590 | $168,980 | n.a |
Interest Coverage | -1.72 | 22.05 | 84.91 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.20 | 0.23 | 0.34 | n.a |
Current Debt/Total Assets | 29% | 28% | 18% | n.a |
Acid Test | 2.53 | 2.93 | 5.00 | n.a |
Sales/Net Worth | 0.00 | 15.29 | 4.29 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |