Interior Design Business Plan

The initial funding of $25,000 will be invested by the owner.  The goal is to fund the growth of the business from its earnings.  The financial plan contains these essential factors:

1. A growth rate in sales of 47% for the year 2002 and 15% for 2003.
2. An average sales per month that increases each year, averaging $3,870 in the first year, $5,720 the second, and $6,600 in the third year.
3. Continue to fund the growth of the business from the revenues it generates.

<p size="4" Financial difficulties and risks

• Slow sales resulting in less-than-projected cash flow.
• Unexpected and excessive cost increases compared to the planned expenses.
• Overly aggressive and debilitating actions by competing designers.
• A parallel entry by a new competitor further diminishing revenue generation potential.

Worst case risks might include

• Determining the business cannot support itself on an ongoing basis.
• Dealing with the financial, business, and personal devastation of the venture’s failure.  Survivable but painful.

Break-even Analysis

The break-even analysis below is expressed as a per-client unit. This is based on average hourly billing, product sales, and costs per transaction.

Important Assumptions

The following captured critical assumptions will determine the potential for future success.

• A healthy economy that supports a moderate level of growth in the market.
• The ability to support a gross margin percentage in excess of 65%.
• Keeping operating costs low, particularly in the areas of product purchases ongoing monthly expenses.
• Receiving an initial payment for each project of 50% of estimated time and product purchases and collecting the balance of these revenues within 45 days of completing each project.

Key Financial Indicators

The key financial indicators focus on cash flow.  There is virtually no inventory but late payments for completed jobs will be a concern.  Timely billing and collection will be critical.  All expenses are tracked on a monthly basis, recorded in the accounting software, and will be compared to our business plan budget.

Start-up Summary

The following details the initial start-up expenses for Barton Interiors.  Most equipment costs are office related.  Sample and display costs include books, samples and resources necessary to promote furniture, fabric and other home accessory products.

Projected Profit and Loss

The following represents the projected profit and loss for Barton Interiors based on sales and expense projections for 2002 through 2004.

Projected Cash Flow

The cash flow projections are outlined below.  These cash flow projects are based on our basic assumptions and expense and revenue projections. 

Projected Balance Sheet

Barton Interiors’ balance sheet is outlined below. 

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7389, Business Services–Interior Design Services, are shown for comparison. If we fail in any of these areas, we will need to re-evaluate our business model:

• Gross margins at, or above, 65%.
• Month-to-month and annual increases to meet the expected growth requirements.
• Self-fund growth not dependant on the credit line to meet cash requirements.