What's For Dinner?
Financial Plan
What’s For Dinner expects strong sales, based on research into our target market, similar businesses in other parts of the country, lack of direct competition, and the experience, reputations, and know-how of its owners/managers. By steadily repaying our long-term loan and holding down costs, we will generate a net profit midway through the first year and increase net worth dramatically by year 3. Our major fixed expenses are payroll and rent.
8.1 Important Assumptions
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 appendices.
Three of the more important underlying assumptions are:
- We assume a relatively strong economy, without major new recessions. Although an ailing economy would not allow us the growth that we anticipate, we believe that it would not drastically hurt the business because the service is economically feasible. The $175 session fee breaks down to $14.58 per meal – a deal hard to beat at even a fast-food restaurant for a family of four to six.
- We assume that our market needs will be seasonal, with a decrease in sales during the summer months.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 7.00% | 7.00% | 7.00% |
Long-term Interest Rate | 7.00% | 7.00% | 7.00% |
Tax Rate | 24.00% | 24.00% | 24.00% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The following chart and table summarize our break-even analysis. With fixed costs of $10,520 per month at the outset (to cover payroll and other operating costs), and variable costs (inventory) at 74% of sales, we need to bill $41,167 to cover our costs. We do not expect to reach break-even until the sixth month into the business operation.

Break-even Analysis | |
Monthly Revenue Break-even | $39,503 |
Assumptions: | |
Average Percent Variable Cost | 74% |
Estimated Monthly Fixed Cost | $10,095 |
8.3 Projected Profit and Loss
What’s For Dinner?’s projected profit and loss is shown in the following table, with sales increasing from $10K the first month to close to $1.4M by the third year. We will reach profitability in the middle of our first year.
We are projecting very conservatively regarding cost of sales and gross margin. Our costs of sales are based on grocery store prices, which will decrease once we are to consistently able to buy our food in larger quantities from a food distributor. This will significantly lower our cost of sales, and increase our gross margin more than in this projection. We prefer to project conservatively so that we make sure we have enough cash.
The Sales and Marketing Expenses vary from the food preparation industry norms. Our Sales and Marketing Expenses will be to consistently maintain our advertising and promotions, while our biggest marketing will be word of mouth from our customers. We are budgeting for a high level of service from our website hosting company and payment processor, since the website is a key component of our Sales and Marketing Strategies.
The detailed monthly projections are included in the appendices.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $882,179 | $1,102,724 | $1,378,405 |
Direct Cost of Sales | $656,733 | $820,917 | $1,026,146 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $656,733 | $820,917 | $1,026,146 |
Gross Margin | $225,446 | $281,807 | $352,259 |
Gross Margin % | 25.56% | 25.56% | 25.56% |
Expenses | |||
Payroll | $34,000 | $45,000 | $60,000 |
Sales and Marketing and Other Expenses | $3,000 | $3,000 | $3,000 |
Depreciation | $4,200 | $4,200 | $4,200 |
Rent | $53,304 | $54,000 | $54,500 |
Utilities | $13,160 | $14,476 | $15,924 |
Office Supplies | $1,200 | $1,200 | $1,200 |
Insurance | $3,000 | $3,000 | $3,000 |
Payroll Taxes | $0 | $0 | $0 |
Accountant | $3,000 | $3,200 | $3,500 |
Lawyer | $1,000 | $1,100 | $1,100 |
Bank Charges | $180 | $180 | $180 |
Website Payment Fees | $600 | $700 | $800 |
Website Hosting & Support | $1,500 | $1,600 | $1,650 |
Repairs and Maintenance | $3,000 | $3,000 | $3,000 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $121,144 | $134,656 | $152,054 |
Profit Before Interest and Taxes | $104,302 | $147,151 | $200,205 |
EBITDA | $108,502 | $151,351 | $204,405 |
Interest Expense | $17,342 | $15,861 | $14,316 |
Taxes Incurred | $20,870 | $31,510 | $44,614 |
Net Profit | $66,089 | $99,780 | $141,276 |
Net Profit/Sales | 7.49% | 9.05% | 10.25% |
8.4 Projected Cash Flow
The following cash flow projections show the annual amounts only. Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $882,179 | $1,102,724 | $1,378,405 |
Subtotal Cash from Operations | $882,179 | $1,102,724 | $1,378,405 |
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 | $882,179 | $1,102,724 | $1,378,405 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $34,000 | $45,000 | $60,000 |
Bill Payments | $758,414 | $1,055,142 | $1,197,241 |
Subtotal Spent on Operations | $792,414 | $1,100,142 | $1,257,241 |
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 | $22,080 | $22,080 | $22,080 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $814,494 | $1,122,222 | $1,279,321 |
Net Cash Flow | $67,685 | ($19,498) | $99,083 |
Cash Balance | $101,685 | $82,187 | $181,270 |
8.5 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. Our negative net worth, due to borrowed capital for start-up, makes a significant increase by the second year, and becomes positive in year three. It is common for start-up businesses to have a negative net worth their first few years.
The monthly estimates are included in the appendices.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $101,685 | $82,187 | $181,270 |
Inventory | $137,714 | $172,142 | $215,178 |
Other Current Assets | $8,000 | $8,000 | $8,000 |
Total Current Assets | $247,399 | $262,329 | $404,448 |
Long-term Assets | |||
Long-term Assets | $42,000 | $42,000 | $42,000 |
Accumulated Depreciation | $4,200 | $8,400 | $12,600 |
Total Long-term Assets | $37,800 | $33,600 | $29,400 |
Total Assets | $285,199 | $295,929 | $433,848 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $148,189 | $81,220 | $99,942 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $148,189 | $81,220 | $99,942 |
Long-term Liabilities | $237,628 | $215,548 | $193,468 |
Total Liabilities | $385,817 | $296,768 | $293,410 |
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | ($196,708) | ($130,619) | ($30,838) |
Earnings | $66,089 | $99,780 | $141,276 |
Total Capital | ($100,619) | ($838) | $140,438 |
Total Liabilities and Capital | $285,199 | $295,929 | $433,848 |
Net Worth | ($100,619) | ($838) | $140,438 |
8.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2099, Food Preparation, are shown for comparison.
The following table outlines some of the more important ratios from the Food Preparation industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 2099.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 25.00% | 25.00% | 5.54% |
Percent of Total Assets | ||||
Inventory | 48.29% | 58.17% | 49.60% | 11.58% |
Other Current Assets | 2.81% | 2.70% | 1.84% | 22.16% |
Total Current Assets | 86.75% | 88.65% | 93.22% | 53.03% |
Long-term Assets | 13.25% | 11.35% | 6.78% | 46.97% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 51.96% | 27.45% | 23.04% | 27.29% |
Long-term Liabilities | 83.32% | 72.84% | 44.59% | 20.18% |
Total Liabilities | 135.28% | 100.28% | 67.63% | 47.47% |
Net Worth | -35.28% | -0.28% | 32.37% | 52.53% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 25.56% | 25.56% | 25.56% | 30.90% |
Selling, General & Administrative Expenses | 17.88% | 16.00% | 15.03% | 16.61% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.28% |
Profit Before Interest and Taxes | 11.82% | 13.34% | 14.52% | 1.33% |
Main Ratios | ||||
Current | 1.67 | 3.23 | 4.05 | 1.54 |
Quick | 0.74 | 1.11 | 1.89 | 0.98 |
Total Debt to Total Assets | 135.28% | 100.28% | 67.63% | 55.42% |
Pre-tax Return on Net Worth | -86.42% | -15658.38% | 132.36% | 2.12% |
Pre-tax Return on Assets | 30.49% | 44.37% | 42.85% | 4.76% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 7.49% | 9.05% | 10.25% | n.a |
Return on Equity | 0.00% | 0.00% | 100.60% | n.a |
Activity Ratios | ||||
Inventory Turnover | 10.91 | 5.30 | 5.30 | n.a |
Accounts Payable Turnover | 6.12 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 42 | 27 | n.a |
Total Asset Turnover | 3.09 | 3.73 | 3.18 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.00 | 2.09 | n.a |
Current Liab. to Liab. | 0.38 | 0.27 | 0.34 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $99,209 | $181,110 | $304,506 | n.a |
Interest Coverage | 6.01 | 9.28 | 13.99 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.32 | 0.27 | 0.31 | n.a |
Current Debt/Total Assets | 52% | 27% | 23% | n.a |
Acid Test | 0.74 | 1.11 | 1.89 | n.a |
Sales/Net Worth | 0.00 | 0.00 | 9.82 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |