Computer Software Retailer Business Plan

The following subtopics help present the financial plan for Eagle Computers.

7.1 Important Assumptions

The key underlying assumptions of our financial plan shown in the following general assumption table are:

• We assume access to the start-up funding necessary to provide adequate initial capitalization and establish our company.
• We assume continued steady economic growth in Hawaii as predicted by Bank of Hawaii, and other Hawaii economists.
• We assume continued steady population growth of the West Hawaii community.
• We assume continued steady increase in tourism to the Kona area as predicted by the Department of Business, Economic Development and Tourism for the State of Hawaii.
• We assume continued usage of IBM-compatible computers in the home and at work.

7.2 Break-even Analysis

For our break-even analysis, we assume running costs which include our full payroll, rent and utilities, and an estimation of other running costs.

We will monitor gross margins very closely, and maintain them at or above 50% by taking advantage of all promotions and discounts offered by our manufacturers and by our higher-profit revenue generators of computer service and Computer Rental Stations.

The chart shows what we need to sell per month to break even, according to these assumptions. This is about 6% of our projected sales for our first year.

7.3 Projected Profit and Loss

There are two important assumptions with our Projected Profit and Loss statement:

1. Our revenue is based on minimum estimated averages against highest expense expectations.
2. Our major expense of rent is fixed for the next three years.

7.4 Projected Cash Flow

Our projected cash flow includes planned borrowing to increase our capital and thereby ensure a positive cash balance while our business is becoming established. Though the cash flow is negative on and off throughout the year, we will maintain a healthy cash balance, which steadily increases in both the second and third years.

7.5 Projected Balance Sheet

Our Projected Balance Sheet shows we will not have any difficulty meeting our debt obligations as long as our revenue projections are met.

7.6 Business Ratios

The company’s projected business ratios are provided in the table below. The final column, Industry Profile, shows the industry profile ratios based on the Standard Industrial Classification (SIC) code 5734, Computer and Software Stores.