The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize that collection of payments for dance lesson packages is critical, however, not a factor we can influence easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Three of the more important underlying assumptions are:
We will need an average of thirty new students each month taking the introductory classes. Of these thirty students, we are anticipating that 25% will stay to take additional classes (i.e. Social Foundation, Bronze, etc.). We realize that we may have a slow start, until the word gets out about our business, and therefore, will take a few months to "ramp up" to thirty new students.
Our projected profit and loss is shown on the following table, with sales increasing at a rate of 15% year over year. If we are able to meet our sales forecast, we will begin making a profit almost immediately. Traditionally in the dance business the slower months are in the mid-summer. However, the facility rental is higher in the Summer and should, therefore, supplement the slower teaching months.
The detailed monthly projections are included in the appendix.
Cash flow projections are critical to our success. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendix. The business will generate more than enough cash flow to cover all of its expenses. The monthly cash flow is shown in the following chart, with one bar representing the cash flow per month, and the other the monthly cash balance.
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
The following table outlines some of the more important ratios from the Fine Art Schools industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7911.