Hardwood Floor Refinisher Business Plan

Wooderful Floors

Financial Plan

The following sections will outline important financial information.

8.1 Start-up Funding

Funds for start up will be a combination of owner investment and a long-term bank loan, with an interest rate of not more than 7% for seven years.

Start-up Funding

Start-up Expenses to Fund	$19,900
Start-up Assets to Fund	$18,100
Total Funding Required	$38,000

Assets
Non-cash Assets from Start-up	$8,000
Cash Requirements from Start-up	$10,100
Additional Cash Raised	$0
Cash Balance on Starting Date	$10,100
Total Assets	$18,100


Liabilities and Capital

Liabilities
Current Borrowing	$0
Long-term Liabilities	$15,000
Accounts Payable (Outstanding Bills)	$0
Other Current Liabilities (interest-free)	$0
Total Liabilities	$15,000

Capital

Planned Investment
Owner	$15,000
Other	$0
Additional Investment Requirement	$8,000
Total Planned Investment	$23,000

Loss at Start-up (Start-up Expenses)	($19,900)
Total Capital	$3,100


Total Capital and Liabilities	$18,100

Total Funding	$38,000

8.2 Important Assumptions

The following table details important Financial Assumptions.

General Assumptions
	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	7.00%	7.00%	7.00%
Tax Rate	30.00%	30.00%	30.00%
Other	0	0	0

8.3 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Hardwood floor refinisher business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$4,156

Assumptions:
Average Percent Variable Cost	20%
Estimated Monthly Fixed Cost	$3,325

8.4 Projected Profit and Loss

The following table and charts presents Projected Profit and Loss.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$50,908	$76,802	$93,717
Direct Cost of Sales	$10,182	$15,360	$18,743
Other Costs of Sales	$0	$0	$0
Total Cost of Sales	$10,182	$15,360	$18,743

Gross Margin	$40,726	$61,442	$74,974
Gross Margin %	80.00%	80.00%	80.00%


Expenses
Payroll	$28,200	$25,833	$31,000
Sales and Marketing and Other Expenses	$1,200	$1,200	$1,200
Depreciation	$2,664	$2,666	$2,666
Utilities	$1,200	$1,200	$1,200
Payroll Taxes	$4,230	$0	$0
Insurance	$2,400	$2,400	$2,400

Total Operating Expenses	$39,894	$33,299	$38,466

Profit Before Interest and Taxes	$832	$28,142	$36,508
EBITDA	$3,496	$30,808	$39,174
Interest Expense	$963	$803	$624
Taxes Incurred	$0	$8,202	$10,765

Net Profit	($130)	$19,138	$25,119
Net Profit/Sales	-0.26%	24.92%	26.80%

8.5 Projected Cash Flow

The following table and chart displays the Projected Cash Flow.

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

Cash from Operations
Cash Sales	$50,908	$76,802	$93,717
Subtotal Cash from Operations	$50,908	$76,802	$93,717

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	$50,908	$76,802	$93,717

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$28,200	$25,833	$31,000
Bill Payments	$17,963	$28,979	$34,459
Subtotal Spent on Operations	$46,163	$54,813	$65,459

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	$2,304	$2,460	$2,639
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$48,467	$57,273	$68,098

Net Cash Flow	$2,441	$19,529	$25,620
Cash Balance	$12,541	$32,071	$57,690

8.6 Projected Balance Sheet

The following table shows the Projected Balance Sheet.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$12,541	$32,071	$57,690
Other Current Assets	$0	$0	$0
Total Current Assets	$12,541	$32,071	$57,690

Long-term Assets
Long-term Assets	$8,000	$8,000	$8,000
Accumulated Depreciation	$2,664	$5,330	$7,996
Total Long-term Assets	$5,336	$2,670	$4
Total Assets	$17,877	$34,741	$57,694

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$2,211	$2,397	$2,871
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$2,211	$2,397	$2,871

Long-term Liabilities	$12,696	$10,236	$7,597
Total Liabilities	$14,907	$12,633	$10,468

Paid-in Capital	$23,000	$23,000	$23,000
Retained Earnings	($19,900)	($20,030)	($893)
Earnings	($130)	$19,138	$25,119
Total Capital	$2,970	$22,107	$47,226
Total Liabilities and Capital	$17,877	$34,741	$57,694

Net Worth	$2,970	$22,107	$47,226

8.7 Business Ratios

The following table displays common business ratios relevant to Wooderful Floors as well as the wood floor industry. Please note that there are some variances between Wooderful’s ratios and the industry. Industry profile ratios are based on the Standard Industrial Classification (SIC) code 1752.

This can be explained by the fact that Wooderful is a small operation, with few employees and little capital expenses. Having the operation small helps them achieve above industry margins.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	50.86%	22.02%	5.11%

Percent of Total Assets
Other Current Assets	0.00%	0.00%	0.00%	32.94%
Total Current Assets	70.15%	92.31%	99.99%	75.88%
Long-term Assets	29.85%	7.69%	0.01%	24.12%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	12.37%	6.90%	4.98%	38.68%
Long-term Liabilities	71.02%	29.46%	13.17%	13.31%
Total Liabilities	83.39%	36.36%	18.14%	51.99%
Net Worth	16.61%	63.64%	81.86%	48.01%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	80.00%	80.00%	80.00%	29.46%
Selling, General & Administrative Expenses	88.28%	37.26%	34.91%	14.86%
Advertising Expenses	0.00%	0.00%	0.00%	0.47%
Profit Before Interest and Taxes	1.63%	36.64%	38.96%	2.37%

Main Ratios
Current	5.67	13.38	20.09	1.74
Quick	5.67	13.38	20.09	1.38
Total Debt to Total Assets	83.39%	36.36%	18.14%	6.96%
Pre-tax Return on Net Worth	-4.39%	123.67%	75.98%	57.15%
Pre-tax Return on Assets	-0.73%	78.70%	62.20%	16.25%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	-0.26%	24.92%	26.80%	n.a
Return on Equity	-4.39%	86.57%	53.19%	n.a

Activity Ratios
Accounts Payable Turnover	9.12	12.17	12.17	n.a
Payment Days	27	29	28	n.a
Total Asset Turnover	2.85	2.21	1.62	n.a

Debt Ratios
Debt to Net Worth	5.02	0.57	0.22	n.a
Current Liab. to Liab.	0.15	0.19	0.27	n.a

Liquidity Ratios
Net Working Capital	$10,330	$29,673	$54,819	n.a
Interest Coverage	0.86	35.06	58.49	n.a

Additional Ratios
Assets to Sales	0.35	0.45	0.62	n.a
Current Debt/Total Assets	12%	7%	5%	n.a
Acid Test	5.67	13.38	20.09	n.a
Sales/Net Worth	17.14	3.47	1.98	n.a
Dividend Payout	0.00	0.00	0.00	n.a