E-commerce Internet Business Plan

FireStarters

Financial Plan

The following is the financial plan for FireStarters.

7.1 Break-even Analysis

The monthly break-even point, based on forecasted monthly expenses and costs, is shown in the table and chart below.

E-commerce internet business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$27,657

Assumptions:
Average Percent Variable Cost	25%
Estimated Monthly Fixed Cost	$20,615

7.2 Projected Profit and Loss

The following table and charts present the projected profit and loss for three years. First year monthlies are in the appendix.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$395,650	$610,000	$750,000
Direct Cost of Sales	$100,740	$164,000	$210,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$100,740	$164,000	$210,000

Gross Margin	$294,910	$446,000	$540,000
Gross Margin %	74.54%	73.11%	72.00%


Expenses
Payroll	$177,600	$192,600	$212,000
Sales and Marketing and Other Expenses	$0	$130,000	$150,000
Depreciation	$7,140	$7,140	$7,140
Leased Equipment	$0	$0	$0
Utilities	$6,000	$6,000	$6,000
Insurance	$6,000	$6,000	$6,000
Rent	$24,000	$24,000	$24,000
Payroll Taxes	$26,640	$28,890	$31,800
Other	$0	$0	$0

Total Operating Expenses	$247,380	$394,630	$436,940

Profit Before Interest and Taxes	$47,530	$51,370	$103,060
EBITDA	$54,670	$58,510	$110,200
Interest Expense	$13,830	$12,750	$12,570
Taxes Incurred	$10,110	$11,586	$27,147

Net Profit	$23,590	$27,034	$63,343
Net Profit/Sales	5.96%	4.43%	8.45%

7.3 Projected Cash Flow

The following table and chart is detail the projected cash flow for three years. The appendices include first year cash flow monthly estimates.

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

Cash from Operations
Cash Sales	$395,650	$610,000	$750,000
Subtotal Cash from Operations	$395,650	$610,000	$750,000

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	$395,650	$610,000	$750,000

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$177,600	$192,600	$212,000
Bill Payments	$103,957	$364,975	$463,540
Subtotal Spent on Operations	$281,557	$557,575	$675,540

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$21,600	$1,800	$1,800
Purchase Other Current Assets	$19,800	$19,800	$19,800
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$322,957	$579,175	$697,140

Net Cash Flow	$72,693	$30,825	$52,860
Cash Balance	$137,293	$168,118	$220,978

7.4 Projected Balance Sheet

The following table shows the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$137,293	$168,118	$220,978
Inventory	$6,270	$10,207	$13,070
Other Current Assets	$19,800	$39,600	$59,400
Total Current Assets	$163,363	$217,926	$293,448

Long-term Assets
Long-term Assets	$50,000	$50,000	$50,000
Accumulated Depreciation	$7,140	$14,280	$21,420
Total Long-term Assets	$42,860	$35,720	$28,580
Total Assets	$206,223	$253,646	$322,028

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$9,633	$31,822	$38,661
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$9,633	$31,822	$38,661

Long-term Liabilities	$128,400	$126,600	$124,800
Total Liabilities	$138,033	$158,422	$163,461

Paid-in Capital	$200,000	$200,000	$200,000
Retained Earnings	($155,400)	($131,810)	($104,776)
Earnings	$23,590	$27,034	$63,343
Total Capital	$68,190	$95,224	$158,567
Total Liabilities and Capital	$206,223	$253,646	$322,028

Net Worth	$68,190	$95,224	$158,567

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 454111, Electronic Shopping, a subcategory of the Retail Trade, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	54.18%	22.95%	7.56%

Percent of Total Assets
Inventory	3.04%	4.02%	4.06%	37.60%
Other Current Assets	9.60%	15.61%	18.45%	29.04%
Total Current Assets	79.22%	85.92%	91.13%	78.59%
Long-term Assets	20.78%	14.08%	8.87%	21.41%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	4.67%	12.55%	12.01%	38.50%
Long-term Liabilities	62.26%	49.91%	38.75%	19.42%
Total Liabilities	66.93%	62.46%	50.76%	57.92%
Net Worth	33.07%	37.54%	49.24%	42.08%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	74.54%	73.11%	72.00%	34.85%
Selling, General & Administrative Expenses	68.58%	68.68%	63.55%	16.95%
Advertising Expenses	0.00%	21.31%	20.00%	2.50%
Profit Before Interest and Taxes	12.01%	8.42%	13.74%	1.10%

Main Ratios
Current	16.96	6.85	7.59	1.79
Quick	16.31	6.53	7.25	0.70
Total Debt to Total Assets	66.93%	62.46%	50.76%	65.04%
Pre-tax Return on Net Worth	49.42%	40.56%	57.07%	2.65%
Pre-tax Return on Assets	16.34%	15.23%	28.10%	7.59%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	5.96%	4.43%	8.45%	n.a
Return on Equity	34.59%	28.39%	39.95%	n.a

Activity Ratios
Inventory Turnover	2.45	19.91	18.04	n.a
Accounts Payable Turnover	11.79	12.17	12.17	n.a
Payment Days	27	20	27	n.a
Total Asset Turnover	1.92	2.40	2.33	n.a

Debt Ratios
Debt to Net Worth	2.02	1.66	1.03	n.a
Current Liab. to Liab.	0.07	0.20	0.24	n.a

Liquidity Ratios
Net Working Capital	$153,730	$186,104	$254,787	n.a
Interest Coverage	3.44	4.03	8.20	n.a

Additional Ratios
Assets to Sales	0.52	0.42	0.43	n.a
Current Debt/Total Assets	5%	13%	12%	n.a
Acid Test	16.31	6.53	7.25	n.a
Sales/Net Worth	5.80	6.41	4.73	n.a
Dividend Payout	0.00	0.00	0.00	n.a