The premier element in our financial plan is initiating, maintaining, and improving the factors that create, stabilize, and increase our cash flow:
The key underlying assumptions of our financial plan shown in the following general assumptions table are:
Our most important Key Financial Indicator is when each stylist averages seven customers per day and each therapist averages three customers per day.
For our Break-even Analysis we assume estimated monthly operational costs which include payroll, rent, utilities, and other running costs (not including employee draw fund considerations). Payroll alone is only estimated to about 1/2 of those costs.
The analysis shows what we need to generate in revenues per month to break even. This total is 13% less than estimated monthly store gross. This estimation does not include revenue from any other store sources, and is based on a salon customer average of $36 and spa customer average of $60.
Our average per customer revenue is estimated at $39. Considering our minimal assumptions show a monthly total customer average of 1,922, we therefore believe our break-even figures can be readily maintained.
There are two important assumptions with our Projected Profit and Loss statement:
Considering our business is a luxury, retail-oriented business with customers who will pay primarily with credit cards, our cash flow is not dependant on the issuance of invoices and the vagaries of Accounts Payable. We will need a minimum of financing to cover the cash flows of the first year of operations. After that, the cash flow becomes continual.
Our Projected Balance Sheet shows we will not have any difficulty meeting our debt obligations as long as our revenue projections are met.
The follow table contains important business ratios for the physical fitness facilities industry, as determined by the Standard Industry Classification (SIC) code, 7991.