Garbles Cellular Phones
Financial Plan
Forecast
Important advisory
[This sample business plan is based on one from several years ago, valid then, and still useful as an illustration of what a business plan contains and what issues it covers. It is not valid for information purposes today.]
Key Assumptions
It is assumed that the owner’s private resources will be sufficient to finance any monthly cash-flow shortage. However, it would be advisable to establish a bank relationship as soon as possible. Sales could very well increase at a much sharper rate than assumed in these conservative projections. Sharper sales will result in a greater need for funds in support of inventory and receivables. An over-draft line of credit with the bank will be an excellent cushion to fall back on.
This is considered a very good time to start a new business. The economy is beginning its trek up, and consumer spending is up. The Commerce Department reported, "Consumers had increased their spending, the largest advance in nine months."
A shorter learning curve will be brought to the business by the owner due to his extensive background and in-depth market knowledge. He has a clear understanding of the need to manage costs and forecast future needs so that the business is not "broadsided" by the unexpected.
One other component on which the financial plan is based is wise purchases. Finding the right product, at the right price will enable the business to meet planned margins and maintain inventory at an attractive level with a high turn rate.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Our Start-up expenses are:
Legal $5,000
Insurance $1,000
Rent $2,000
Equipment $2,000
Other $1,000
TOTAL START-UP EXPENSES$11,000
In addition we will have the following Start-up Assets:
Cash Required $2,000
Start-up Inventory $30,000
TOTAL ASSETS$32,000
This brings our total required to $43,000
Sources of Funds
Mr. Seramed Garbles will invest $43,000 in Garbles Cellular Phones, Inc. to cover start-up costs. He will also invest an additional $50,000 when operation takes off for a total of $93,000
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $394,500 | $608,000 | $865,000 |
| Direct Costs | $169,635 | $261,440 | $371,950 |
| Gross Margin | $224,865 | $346,560 | $493,050 |
| Gross Margin % | 57% | 57% | 57% |
| Operating Expenses | |||
| Salaries & Wages | $207,600 | $211,752 | $215,986 |
| Employee Related Expenses | $41,520 | $42,350 | $43,198 |
| Rent | $24,000 | $24,000 | $24,000 |
| Insurance | $12,000 | $12,000 | $12,000 |
| Utilities | $3,600 | $3,600 | $3,600 |
| Marketing / Promo | $7,200 | $7,200 | $7,200 |
| Total Operating Expenses | $295,920 | $300,902 | $305,984 |
| Operating Income | ($71,055) | $45,658 | $187,066 |
| Interest Incurred | |||
| Depreciation and Amortization | |||
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $0 |
| Total Expenses | $465,555 | $562,342 | $677,934 |
| Net Profit | ($71,055) | $45,658 | $187,066 |
| Net Profit/Sales | (18%) | 8% | 22% |
Projected Balance Sheet
| Starting Balances | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Cash | $2,000 | $101 | $49,195 | $242,961 |
| Accounts Receivable | $4,100 | $5,067 | $7,208 | |
| Inventory | $30,000 | $30,000 | $30,000 | $30,000 |
| Other Current Assets | ||||
| Total Current Assets | $32,000 | $34,201 | $84,262 | $280,169 |
| Long-Term Assets | ||||
| Accumulated Depreciation | ||||
| Total Long-Term Assets | ||||
| Total Assets | $32,000 | $34,201 | $84,262 | $280,169 |
| Accounts Payable | $20,256 | $24,659 | $33,500 | |
| Income Taxes Payable | $0 | $0 | $0 | |
| Sales Taxes Payable | $0 | $0 | $0 | |
| Short-Term Debt | ||||
| Prepaid Revenue | ||||
| Total Current Liabilities | $20,256 | $24,659 | $33,500 | |
| Long-Term Debt | ||||
| Long-Term Liabilities | ||||
| Total Liabilities | $20,256 | $24,659 | $33,500 | |
| Paid-In Capital | $43,000 | $96,000 | $96,000 | $96,000 |
| Retained Earnings | ($11,000) | ($11,000) | ($82,055) | ($36,397) |
| Earnings | ($71,055) | $45,658 | $187,067 | |
| Total Owner’s Equity | $32,000 | $13,945 | $59,603 | $246,669 |
| Total Liabilities & Equity | $32,000 | $34,201 | $84,262 | $280,169 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | ($71,055) | $45,658 | $187,066 |
| Depreciation & Amortization | |||
| Change in Accounts Receivable | ($4,100) | ($967) | ($2,142) |
| Change in Inventory | $0 | $0 | $0 |
| Change in Accounts Payable | $20,256 | $4,403 | $8,841 |
| Change in Income Tax Payable | $0 | $0 | $0 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | ($54,899) | $49,094 | $193,766 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | $53,000 | ||
| Dividends & Distributions | |||
| Change in Short-Term Debt | |||
| Change in Long-Term Debt | |||
| Net Cash from Financing | $53,000 | ||
| Cash at Beginning of Period | $2,000 | $101 | $49,195 |
| Net Change in Cash | ($1,899) | $49,094 | $193,766 |
| Cash at End of Period | $101 | $49,195 | $242,961 |
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