Java Culture
Financial Plan
Forecast
Key Assumptions
- We assume a steadily growing potential market in line with growth at the university, trends.
- We assume industry standard gross margins
- We assume relative status quo regarding technology and trends in the coffee industry
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
The start-up expenses include an estimated $17,000 consisting of several items:
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium of $1,500.
- Premises remodeling in the amount of $10,000.
- Other start-up expenses including website ($4,000) and phone and utility deposits ($2,500).
The required start-up assets of $71,000 include:
- Plates, glasses, etc. worth approximately $2,000
- Equipment for the total amount of approximately $69,000
- Espresso machine
- Coffee maker
- Coffee grinder
- Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.)
- Storage hardware (bins, utensil rack, shelves, food case)
- Counter area equipment (counter top, sink, ice machine, etc.)
- Serving area equipment (plates, glasses, flatware)
- Store equipment (cash register, security, ventilation, signage)
- Office equipment (PC, fax/printer, phone, furniture, file cabinets)
- Other miscellaneous expenses
Sources of Funds
Funding for the company comes from two major sources–owners’ investments and bank loans. Two major owners, Arthur Garfield and James Polk, have contributed $70,000 and $30,00 respectively. All other investors have contributed $40,000, which brings the total investments to $140,000. The remaining $30,000 needed to cover the start-up expenses and assets came from the two bank loans–a one-year loan in the amount of $10,000 and a long-term (five years) loan of $20,000. Both loans were secured through the Bank of America. Thus, total start-up loss is assumed in the amount of $27,680.
Statements
Projected Profit & Loss
| FY2019 | FY2020 | FY2021 | |
|---|---|---|---|
| Revenue | $561,010 | $654,500 | $743,000 |
| Direct Costs | $224,404 | $261,800 | $297,200 |
| Gross Margin | $336,606 | $392,700 | $445,800 |
| Gross Margin % | 60% | 60% | 60% |
| Operating Expenses | |||
| Salaries & Wages | $193,200 | $205,860 | $219,453 |
| Employee Related Expenses | $38,640 | $41,172 | $43,891 |
| Rent | $36,000 | $38,000 | $42,000 |
| Marketing | $28,051 | $32,725 | $37,150 |
| Utilities, phones, Internet etc. | $6,000 | $6,000 | $6,000 |
| Total Operating Expenses | $301,891 | $323,757 | $348,493 |
| Operating Income | $34,716 | $68,943 | $97,306 |
| Interest Incurred | $951 | $583 | $427 |
| Depreciation and Amortization | $12,000 | $12,000 | $12,000 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $3,265 | $8,454 | $12,732 |
| Total Expenses | $542,511 | $606,593 | $670,853 |
| Net Profit | $18,499 | $47,907 | $72,147 |
| Net Profit/Sales | 3% | 7% | 10% |
Projected Balance Sheet
| Starting Balances | FY2019 | FY2020 | FY2021 | |
|---|---|---|---|---|
| Cash | $67,000 | $80,234 | $133,240 | $214,467 |
| Accounts Receivable | $0 | $0 | $0 | $0 |
| Inventory | $16,000 | $21,815 | $24,765 | $24,765 |
| Other Current Assets | ||||
| Total Current Assets | $83,000 | $102,048 | $158,005 | $239,232 |
| Long-Term Assets | $60,000 | $60,000 | $60,000 | $60,000 |
| Accumulated Depreciation | ($12,000) | ($24,000) | ($36,000) | |
| Total Long-Term Assets | $60,000 | $48,000 | $36,000 | $24,000 |
| Total Assets | $143,000 | $150,048 | $194,005 | $263,232 |
| Accounts Payable | $0 | $0 | $0 | |
| Income Taxes Payable | $2,232 | $2,116 | $3,184 | |
| Sales Taxes Payable | $0 | $0 | $0 | |
| Short-Term Debt | $13,683 | $3,833 | $3,989 | $4,152 |
| Prepaid Revenue | ||||
| Total Current Liabilities | $13,683 | $6,065 | $6,105 | $7,336 |
| Long-Term Debt | $16,317 | $12,484 | $8,495 | $4,343 |
| Long-Term Liabilities | $16,317 | $12,484 | $8,495 | $4,343 |
| Total Liabilities | $30,000 | $18,549 | $14,600 | $11,679 |
| Paid-In Capital | $140,000 | $140,000 | $140,000 | $140,000 |
| Retained Earnings | ($27,000) | ($27,000) | ($8,501) | $39,406 |
| Earnings | $18,499 | $47,906 | $72,148 | |
| Total Owner’s Equity | $113,000 | $131,499 | $179,406 | $251,553 |
| Total Liabilities & Equity | $143,000 | $150,048 | $194,005 | $263,232 |
Projected Cash Flow Statement
| FY2019 | FY2020 | FY2021 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $18,499 | $47,907 | $72,147 |
| Depreciation & Amortization | $12,000 | $12,000 | $12,000 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | ($5,815) | ($2,950) | $0 |
| Change in Accounts Payable | $0 | $0 | $0 |
| Change in Income Tax Payable | $2,232 | ($116) | $1,068 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $26,917 | $56,840 | $85,216 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | ($9,850) | $156 | $163 |
| Change in Long-Term Debt | ($3,833) | ($3,989) | ($4,152) |
| Net Cash from Financing | ($13,683) | ($3,833) | ($3,989) |
| Cash at Beginning of Period | $67,000 | $80,234 | $133,240 |
| Net Change in Cash | $13,234 | $53,007 | $81,226 |
| Cash at End of Period | $80,234 | $133,240 | $214,467 |
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