Red, White & Bloom
Financial Plan
- Contracted Labor and Rent make up over 40% of the operating expenses.
- Red White & Bloom wants to finance growth through cash flow.
- Marketing will remain at or below 6% of sales.
- Company expansion, while not a necessity, will be an option if sales projections are met and/or exceeded.
7.1 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. The chart shows what we need to sell per month to break even, according to these assumptions.
| Break-even Analysis | |
| Monthly Revenue Break-even | $5,085 |
| Assumptions: | |
| Average Percent Variable Cost | 30% |
| Estimated Monthly Fixed Cost | $3,560 |
7.2 Projected Profit and Loss
This business plan assumes an eventual 10% profit and is built using the following allocations of gross revenue:
- 10% profit
- 30% labor (including owner’s draw)
- 10% inventory
- 27% overhead
- 23% cost of merchandise
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $79,600 | $137,200 | $166,600 |
| Direct Cost of Sales | $23,880 | $41,160 | $49,830 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $23,880 | $41,160 | $49,830 |
| Gross Margin | $55,720 | $96,040 | $116,770 |
| Gross Margin % | 70.00% | 70.00% | 70.09% |
| Expenses | |||
| Payroll | $0 | $0 | $0 |
| Marketing & Advertising | $4,640 | $6,860 | $8,330 |
| Depreciation | $1,150 | $1,150 | $1,150 |
| Rent | $4,800 | $7,800 | $8,400 |
| Delivery Labor | $5,000 | $8,500 | $10,200 |
| Temp Labor | $768 | $1,000 | $1,000 |
| Contracted Floral Designer | $0 | $17,000 | $18,200 |
| Insurance | $3,390 | $4,068 | $4,068 |
| Dues & Subscriptions | $250 | $300 | $300 |
| Repairs & Maintenance | $1,000 | $1,200 | $1,200 |
| Supplies | $2,650 | $5,488 | $6,944 |
| Taxes | $1,330 | $2,000 | $2,500 |
| Other Fees | $1,500 | $1,800 | $1,800 |
| Buildout Costs | $9,000 | $0 | $0 |
| Deposits | $1,000 | $0 | $0 |
| Utilities | $3,500 | $4,200 | $4,200 |
| Van | $1,410 | $1,692 | $1,692 |
| Merchant Fees | $1,330 | $2,744 | $3,472 |
| Total Operating Expenses | $42,718 | $65,802 | $73,456 |
| Profit Before Interest and Taxes | $13,002 | $30,238 | $43,314 |
| EBITDA | $14,152 | $31,388 | $44,464 |
| Interest Expense | $2,156 | $1,404 | $711 |
| Taxes Incurred | $3,254 | $8,650 | $12,781 |
| Net Profit | $7,592 | $20,184 | $29,822 |
| Net Profit/Sales | 9.54% | 14.71% | 17.90% |
7.3 Projected Cash Flow
The Cash Flow table, below, shows a solid cash balance from day one. Because Red White & Bloom will sell on a cash-basis only, and will stock only slightly more than one month’s inventory at any time, we do not anticipate any problems with cash flow, once we have obtained sufficient start-up funds.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $79,600 | $137,200 | $166,600 |
| Subtotal Cash from Operations | $79,600 | $137,200 | $166,600 |
| 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 | $79,600 | $137,200 | $166,600 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $0 | $0 | $0 |
| Bill Payments | $64,913 | $117,356 | $135,553 |
| Subtotal Spent on Operations | $64,913 | $117,356 | $135,553 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $15,000 | $13,860 | $13,860 |
| 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 | $79,913 | $131,216 | $149,413 |
| Net Cash Flow | ($313) | $5,984 | $17,187 |
| Cash Balance | $70,037 | $76,021 | $93,208 |
7.4 Projected Balance Sheet
The Balance Sheet, below, shows our projected assets and liabilities for the three years of the plan, including accumulated depreciation of long-term assets.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $70,037 | $76,021 | $93,208 |
| Inventory | $3,947 | $6,803 | $8,236 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $73,984 | $82,824 | $101,444 |
| Long-term Assets | |||
| Long-term Assets | $11,550 | $11,550 | $11,550 |
| Accumulated Depreciation | $1,150 | $2,300 | $3,450 |
| Total Long-term Assets | $10,400 | $9,250 | $8,100 |
| Total Assets | $84,384 | $92,074 | $109,544 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $8,392 | $9,758 | $11,265 |
| Current Borrowing | $35,000 | $21,140 | $7,280 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $43,392 | $30,898 | $18,545 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $43,392 | $30,898 | $18,545 |
| Paid-in Capital | $45,000 | $45,000 | $45,000 |
| Retained Earnings | ($11,600) | ($4,008) | $16,176 |
| Earnings | $7,592 | $20,184 | $29,822 |
| Total Capital | $40,992 | $61,176 | $90,999 |
| Total Liabilities and Capital | $84,384 | $92,074 | $109,544 |
| Net Worth | $40,992 | $61,176 | $90,999 |
7.5 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5992, Florists, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 72.36% | 21.43% | 0.24% |
| Percent of Total Assets | ||||
| Inventory | 4.68% | 7.39% | 7.52% | 36.28% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 24.49% |
| Total Current Assets | 87.68% | 89.95% | 92.61% | 76.91% |
| Long-term Assets | 12.32% | 10.05% | 7.39% | 23.09% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 51.42% | 33.56% | 16.93% | 39.45% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 11.77% |
| Total Liabilities | 51.42% | 33.56% | 16.93% | 51.22% |
| Net Worth | 48.58% | 66.44% | 83.07% | 48.78% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 70.00% | 70.00% | 70.09% | 38.48% |
| Selling, General & Administrative Expenses | #VALUE! | 68.09% | #VALUE! | 23.26% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.12% |
| Profit Before Interest and Taxes | 16.33% | 22.04% | 26.00% | 1.54% |
| Main Ratios | ||||
| Current | 1.71 | 2.68 | 5.47 | 1.68 |
| Quick | 1.61 | 2.46 | 5.03 | 0.68 |
| Total Debt to Total Assets | 51.42% | 33.56% | 16.93% | 57.66% |
| Pre-tax Return on Net Worth | 26.46% | 47.13% | 46.82% | 3.25% |
| Pre-tax Return on Assets | 12.85% | 31.32% | 38.89% | 7.68% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 9.54% | 14.71% | 17.90% | n.a |
| Return on Equity | 18.52% | 32.99% | 32.77% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 9.79 | 7.66 | 6.63 | n.a |
| Accounts Payable Turnover | 8.73 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 28 | n.a |
| Total Asset Turnover | 0.94 | 1.49 | 1.52 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 1.06 | 0.51 | 0.20 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $30,592 | $51,926 | $82,899 | n.a |
| Interest Coverage | 6.03 | 21.54 | 60.96 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 1.06 | 0.67 | 0.66 | n.a |
| Current Debt/Total Assets | 51% | 34% | 17% | n.a |
| Acid Test | 1.61 | 2.46 | 5.03 | n.a |
| Sales/Net Worth | 1.94 | 2.24 | 1.83 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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