Avant-Garde Shop
Financial Plan
The initial funding from investors (ABC Company and XYZ Company) will enable us to renovate the space and buy initial inventory. With heavy marketing and outreach to customers who work outside the Avant-garde Building, we expect to pass the break-even point early in the second year of this plan.
We will keep costs to a minimum: 2 full-time employees will run the shop, while advisors and directors from AMC Company will oversee operations under their existing duties at PT. ABC Company. We will begin paying dividends to these investors in the second year.
Please note that all tables and charts show data in 1,000’s of Indonesian Rupiah (Rp.).
8.1 Start-up Funding
Approximately Rp. 166,597,000 will be needed from the shareholders for these purposes. Some of the funding is priority as it’s crucially important to go on to the next step of development. The remainder of the start-up capital required, for the continuation of operations, will be provided by the end of the project. We will start paying dividends to the investors in year two of operations (see Cash Flow table for details).
Start-up Funding | |
Start-up Expenses to Fund | $72,000 |
Start-up Assets to Fund | $94,597 |
Total Funding Required | $166,597 |
Assets | |
Non-cash Assets from Start-up | $25,282 |
Cash Requirements from Start-up | $69,315 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $69,315 |
Total Assets | $94,597 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $0 |
Capital | |
Planned Investment | |
PT. XYZ (32%) | $63,307 |
PT. ABC Indonesia (62%) | $103,290 |
Additional Investment Requirement | $0 |
Total Planned Investment | $166,597 |
Loss at Start-up (Start-up Expenses) | ($72,000) |
Total Capital | $94,597 |
Total Capital and Liabilities | $94,597 |
Total Funding | $166,597 |
8.2 Important Assumptions
- We assume that we at least secured our purchase of merchandise in the first two years of operation.
- All employees except Store Staff are working under Interim Management Team.
- The Avant-Garde Shop assumes a medium growth in the beginning, without major recession.
- The Avant-Garde Shop assumes of course that there are no unforeseen significant increase of the retail space.
8.3 Key Financial Indicators
The key indicators of financial success are all positive in our plan: increasing sales, increasing control over costs, and increasing profit margins.

8.4 Break-even Analysis
Our break-even analysis is summarized by the following chart and table (all numbers in 1,000’s of Rupiah). At a 28% variable (direct) cost of goods, we will break-even when monthly sales hit Rp. 8,022,000. We will reach the break-even point early in our second year.

Break-even Analysis | |
Monthly Revenue Break-even | $8,022 |
Assumptions: | |
Average Percent Variable Cost | 28% |
Estimated Monthly Fixed Cost | $5,776 |
8.5 Projected Profit and Loss
The following chart and table indicates projected profit and loss. Our rent is the highest operating expense, at Rp. 28,000,000 per month, because of the high cost per square meter inside the Avant-Garde Building.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $90,299 | $95,717 | $101,460 |
Direct Cost of Sales | $25,282 | $22,530 | $22,980 |
Other Costs of Sales | $0 | Rp.0 | Rp.0 |
Total Cost of Sales | $25,282 | $22,530 | $22,980 |
Gross Margin | $65,017 | $73,187 | $78,480 |
Gross Margin % | 72.00% | 76.46% | 77.35% |
Expenses | |||
Payroll | $21,600 | $23,400 | $23,400 |
Marketing/Promotion | $4,515 | $4,786 | $5,073 |
Depreciation | $0 | $0 | $0 |
Rent | $28,800 | $28,800 | $28,800 |
Utilities | $12,000 | $12,000 | $12,000 |
Other | $2,400 | $2,400 | $2,400 |
Total Operating Expenses | $69,315 | $71,386 | $71,673 |
Profit Before Interest and Taxes | ($4,297) | $1,801 | $6,807 |
EBITDA | ($4,297) | $1,801 | $6,807 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $0 | $0 |
Net Profit | ($4,297) | $1,801 | $6,807 |
Net Profit/Sales | -4.76% | 1.88% | 6.71% |
8.6 Projected Cash Flow
Cash flow projections are critical to our success. The following table shows cash flow for the first three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are included in the appendix. This table shows our planned dividends paid out to investors in the second and third years.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $90,299 | $95,717 | $101,460 |
Subtotal Cash from Operations | $90,299 | $95,717 | $101,460 |
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 | $90,299 | $95,717 | $101,460 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $21,600 | $23,400 | $23,400 |
Bill Payments | $59,711 | $66,981 | $71,309 |
Subtotal Spent on Operations | $81,311 | $90,381 | $94,709 |
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 | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $3,000 | $3,000 |
Subtotal Cash Spent | $81,311 | $93,381 | $97,709 |
Net Cash Flow | $8,988 | $2,336 | $3,751 |
Cash Balance | $78,303 | $80,639 | $84,390 |
8.7 Projected Balance Sheet
The table shows the annual balance sheet results. After the first year, when we establish profitability, we project a steady growth in net worth despite dividend payments to initial investors. Detailed monthly projections are in the appendix.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $78,303 | $80,639 | $84,390 |
Inventory | $15,840 | $14,116 | $14,398 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $94,143 | $94,755 | $98,787 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $94,143 | $94,755 | $98,787 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $3,844 | $5,654 | $5,880 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $3,844 | $5,654 | $5,880 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $3,844 | $5,654 | $5,880 |
Paid-in Capital | $166,597 | $166,597 | $166,597 |
Retained Earnings | ($72,000) | ($79,297) | ($80,496) |
Earnings | ($4,297) | $1,801 | $6,807 |
Total Capital | $90,300 | $89,101 | $92,908 |
Total Liabilities and Capital | $94,143 | $94,755 | $98,787 |
Net Worth | $90,300 | $89,101 | $92,908 |
8.8 Business Ratios
The following table outlines some of the more important ratios from the Gift, Novelty, and Souvenir Shop industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5947.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 6.00% | 6.00% | 0.44% |
Percent of Total Assets | ||||
Inventory | 16.83% | 14.90% | 14.57% | 34.88% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 23.80% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 76.55% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 23.45% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 4.08% | 5.97% | 5.95% | 34.24% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 15.29% |
Total Liabilities | 4.08% | 5.97% | 5.95% | 49.53% |
Net Worth | 95.92% | 94.03% | 94.05% | 50.47% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 72.00% | 76.46% | 77.35% | 39.04% |
Selling, General & Administrative Expenses | 76.76% | 74.58% | 70.64% | 24.17% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.96% |
Profit Before Interest and Taxes | -4.76% | 1.88% | 6.71% | 1.36% |
Main Ratios | ||||
Current | 24.49 | 16.76 | 16.80 | 1.99 |
Quick | 20.37 | 14.26 | 14.35 | 0.81 |
Total Debt to Total Assets | 4.08% | 5.97% | 5.95% | 51.50% |
Pre-tax Return on Net Worth | -4.76% | 2.02% | 7.33% | 2.37% |
Pre-tax Return on Assets | -4.56% | 1.90% | 6.89% | 4.90% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -4.76% | 1.88% | 6.71% | n.a |
Return on Equity | -4.76% | 2.02% | 7.33% | n.a |
Activity Ratios | ||||
Inventory Turnover | 1.78 | 1.50 | 1.61 | n.a |
Accounts Payable Turnover | 16.53 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 25 | 29 | n.a |
Total Asset Turnover | 0.96 | 1.01 | 1.03 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.04 | 0.06 | 0.06 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $90,300 | $89,101 | $92,908 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 1.04 | 0.99 | 0.97 | n.a |
Current Debt/Total Assets | 4% | 6% | 6% | n.a |
Acid Test | 20.37 | 14.26 | 14.35 | n.a |
Sales/Net Worth | 1.00 | 1.07 | 1.09 | n.a |
Dividend Payout | 0.00 | 1.67 | 0.44 | n.a |