Convenience Store Soda Fountain Business Plan

The Coffee Break

Financial Plan

The following sections will outline the important financial assumptions, key financial indicators, break-even analysis, profit and loss, cash flow, balance sheet, and key ratios.

7.1 Important Assumptions

The following table highlights some of the more important financial assumptions for The Coffee Break.

General Assumptions
	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	25.42%	25.00%	25.42%
Other	0	0	0

7.2 Break-even Analysis

The Break-even Analysis can be seen in the chart and table below.

Convenience store soda fountain business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$12,904

Assumptions:
Average Percent Variable Cost	45%
Estimated Monthly Fixed Cost	$7,044

7.3 Projected Profit and Loss

The Coffee Break’s profit and loss statement can be found in the table below.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$218,000	$250,000	$269,000
Direct Cost of Sales	$99,000	$105,000	$110,000
Other	$0	$0	$0
Total Cost of Sales	$99,000	$105,000	$110,000

Gross Margin	$119,000	$145,000	$159,000
Gross Margin %	54.59%	58.00%	59.11%


Expenses
Payroll	$49,440	$53,629	$56,220
Sales and Marketing and Other Expenses	$4,572	$5,550	$6,800
Depreciation	$0	$0	$0
Insurance	$5,100	$5,200	$5,400
Rent	$18,000	$19,800	$21,780
Utilities	$0	$0	$0
Leased Equipment	$0	$0	$0
Payroll Taxes	$7,416	$8,044	$8,433
Other	$0	$0	$0

Total Operating Expenses	$84,528	$92,223	$98,633

Profit Before Interest and Taxes	$34,472	$52,777	$60,367
EBITDA	$34,472	$52,777	$60,367
Interest Expense	$4,323	$3,125	$1,875
Taxes Incurred	$7,406	$12,413	$14,867

Net Profit	$22,743	$37,239	$43,626
Net Profit/Sales	10.43%	14.90%	16.22%

7.4 Projected Cash Flow

The following chart and table present the cash flow assumptions for The Coffee Break.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$218,000	$250,000	$269,000
Subtotal Cash from Operations	$218,000	$250,000	$269,000

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	$218,000	$250,000	$269,000

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$49,440	$53,629	$56,220
Bill Payments	$105,740	$160,580	$168,839
Subtotal Spent on Operations	$155,180	$214,209	$225,059

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$12,500	$12,500	$12,500
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$167,680	$226,709	$237,559

Net Cash Flow	$50,320	$23,291	$31,441
Cash Balance	$52,820	$76,111	$107,552

7.5 Business Ratios

The following table contains important ratios for the convenience stores industry, as determined by the Standard Industry Classification (SIC) Index code, 5411, Grocery Store (convenience).

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	14.68%	7.60%	5.50%

Percent of Total Assets
Inventory	15.78%	12.12%	9.28%	24.20%
Other Current Assets	0.00%	0.00%	0.00%	29.80%
Total Current Assets	100.00%	100.00%	100.00%	59.40%
Long-term Assets	0.00%	0.00%	0.00%	40.60%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	82.07%	44.02%	22.31%	33.90%
Long-term Liabilities	0.00%	0.00%	0.00%	23.20%
Total Liabilities	82.07%	44.02%	22.31%	57.10%
Net Worth	17.93%	55.98%	77.69%	42.90%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	54.59%	58.00%	59.11%	21.90%
Selling, General & Administrative Expenses	45.39%	44.54%	44.56%	14.70%
Advertising Expenses	1.98%	2.10%	2.40%	0.90%
Profit Before Interest and Taxes	15.81%	21.11%	22.44%	0.70%

Main Ratios
Current	1.22	2.27	4.48	1.57
Quick	1.03	2.00	4.07	0.60
Total Debt to Total Assets	82.07%	44.02%	22.31%	57.10%
Pre-tax Return on Net Worth	268.15%	102.41%	63.50%	3.60%
Pre-tax Return on Assets	48.07%	57.33%	49.34%	8.50%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	10.43%	14.90%	16.22%	n.a
Return on Equity	202.28%	76.81%	47.36%	n.a

Activity Ratios
Inventory Turnover	8.34	10.29	10.23	n.a
Accounts Payable Turnover	8.57	12.17	12.17	n.a
Payment Days	27	31	29	n.a
Total Asset Turnover	3.48	2.89	2.27	n.a

Debt Ratios
Debt to Net Worth	4.58	0.79	0.29	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$11,243	$48,482	$92,108	n.a
Interest Coverage	7.97	16.89	32.20	n.a

Additional Ratios
Assets to Sales	0.29	0.35	0.44	n.a
Current Debt/Total Assets	82%	44%	22%	n.a
Acid Test	1.03	2.00	4.07	n.a
Sales/Net Worth	19.39	5.16	2.92	n.a
Dividend Payout	0.00	0.00	0.00	n.a

7.6 Projected Balance Sheet

The Balance Sheet below provides numbers that are important to the financial well-being of The Coffee Break.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$52,820	$76,111	$107,552
Inventory	$9,900	$10,500	$11,000
Other Current Assets	$0	$0	$0
Total Current Assets	$62,720	$86,611	$118,552

Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$62,720	$86,611	$118,552

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$13,977	$13,129	$13,944
Current Borrowing	$37,500	$25,000	$12,500
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$51,477	$38,129	$26,444

Long-term Liabilities	$0	$0	$0
Total Liabilities	$51,477	$38,129	$26,444

Paid-in Capital	$216,000	$216,000	$216,000
Retained Earnings	($227,500)	($204,757)	($167,518)
Earnings	$22,743	$37,239	$43,626
Total Capital	$11,243	$48,482	$92,108
Total Liabilities and Capital	$62,720	$86,611	$118,552

Net Worth	$11,243	$48,482	$92,108