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Rockin Roll

Executive Summary

Rockin’ Roll is a classic bowling alley, karaoke lounge, gaming parlor and restaurant owned by the king of Rockin’ Roll, Pelvis Restley. Rockin’ Roll specializes in legendary bowling and rocking harder than the rest, as well as quality food and extensive collection of video games.

Bowling is an entertainment industry in Seattle with a customer base that has diminished over the past few decades. Today’s senior citizen’s were once yesterday’s avid bowlers. As the Baby-Boomers questioned the actions of their elders, they also turned away from bowling. Eventually, without innovation, bowling lost popularity as America’s favorite athletic event.

As competition increased amongst bowling alleys for a dwindling customer base, Seattle lost bowling alleys. Fewer bowling alleys further diminished the number of future bowlers. The loss of bowling alleys has meant the loss of community centers and athletic events.

Seattle needs no replacement for the athletic and social event bowling once offered, it simply needs innovation and reminder of the forgotten culture of bowling. Pelvis Restley understands the trend of revitalization in the bowling culture from his youthful participation in bowling and through his work in the Professional Bowling Association.

These clients are on limited income and will come to Rockin’ Roll for the prices. Senior discounts will play a large role in the food and drink menu preparation. Once the seniors are in the door they will be reminded of their childhood by the bowling alley’s plastic molded seats and the King’s music.

Seniors will also be stimulated by the youths in the game room and the adults competing to be champions of the bowling leagues. The comfort and excitement will continue to draw these customers back in. Rockin’ Roll will acknowledge their value and leadership potential by asking seniors to participate in organizing the adult and teenage bowling leagues.

Customers in the entertainment industry flock to the most comfortable and affordable place they know. Rockin’ Roll offers the comfort of separate Rockin’ Roll environments for seniors, youths, and bowling leaguers, in the visible, but not audible rooms of the restaurant and lounge, the gaming room and the bowling alley.

Rockin’ Roll also offers affordable prices to seniors through senior citizen discounts, to youths through low-cost foods and video games, and to bowling leaguers by offering tournament rates for nine games at a time.

Pelvis has experience as a bowler in the local community and as a marketing and business analyst for the Professional Bowling Association. Pelvis’ experience will give him the ability to contact local and national bowlers for recruiting leaguers.

New customers are likely to be introduced to Rockin’ Roll bowling by friends. The reason for this is that most people only go out to their regular hang-outs, to places they feel comfortable, or to places where they will find their friends. Bowling leaguers will find the Rockin’ Roll bowling alley when their friends ask them to meet for a Rockin’ Roll nine game bowling league.

Once in the door, these customers will be greeted by Pelvis Restley and will be treated like kings and queens in the bowling alley, restaurant and lounge. Then, they will come back to meet their friends or to find their comfort zone in the Rockin’ Roll bowling alley.

Pelvis will also be able to access his contacts within the Professional Bowling Association to stimulate televised touring tournaments. By year two, bowling leaguers will introduce their friends to Rockin’ Roll. During year two, Rockin’ Roll will thank its regular bowling leaguers by offering them fame and fortune in the Bowling for Dollars televised tournament.

Youths will be interested in finding a fun place where they can spend time outside of the house with people their age. The attraction for teenagers of similar age groups will be two-fold. First, Saturday mornings, Rockin’ Roll will host a teenagers bowling league. Second, Rockin’ Roll will have all the latest video games the youths love in a sound-proofed fishbowl room where they can play their favorite tunes on the jukebox and their parents can see them from the bowling lanes.

The youths will be encouraged by their parents to frequent Rockin’ Roll because the parents can come listen to their Rockin’ Roll and bowl while feeling the security of knowing their children are safely near by. The restaurant will also cater to the youthful palate, offering the breadth of fryer food and low-fat fruit and veggie snacks.

After three years of sales Rockin’ Roll Bowling Lanes will generate approximately $718,000 in total sales. As Rockin’ Roll rises up the charts as the most popular entertainment spot in Fremont, the business will become more efficient, making more money per dollar spent. The progression of profit margin will steadily increase. Rockin’ Roll Bowling Lanes is an exciting opportunity to bring athleticism and entertainment together in one community center and to put bowling back on the map.

Karaoke bar - bowling alley business plan, executive summary chart image

1.1 Mission

The mission of Rockin’ Roll is to provide the highest forms of entertainment and quality dining to the Seattle community. We offer the best bowling, gambling, gaming, drinking, and singing around.

1.2 Objectives

  1. Sales of $437,570 in year one and $718,370 by year three.
  2. Gross margin higher than 65%.
  3. Net income more than 10% of sales by the third year.

1.3 Keys to Success

  1. Excellence in entertainment.
  2. Developing a community of regulars.
  3. Leveraging from a single league of bowlers into a city of bowling lovers.
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Company Summary

Rockin’ Roll is a classic bowling alley, karaoke lounge, gaming parlor and restaurant owned by the king of Rockin’ Roll, Pelvis Restley. Rockin’ Roll specializes in legendary bowling and rocking harder than the rest, as well as quality food and extensive collection of video games.

2.1 Company Ownership

Rockin’ Roll is a closely held corporation-owned, incorporated in the state of Washington and operating in King County, whose principal shareholder is Pelvis Restley.

2.2 Start-up Summary

Rockin’ Roll’s start-up costs will include all equipment needed for the bowling alley, the restaurant, inventory and daily bank to cover the total winnings of all pull-tabs.

The bowling alley lanes and restaurant equipment will be the largest chunk of the start-up expenses. These long-term assets include 16 hardwood bowling lanes, 180 pins, 8 electronic scoring terminals, a commercial range and oven, a walk-in refrigerator, video games, pull tab equipment, a sink and dishwasher.

Start-up expenses will also include advertising. The two methods will include television ads and advertisement in the Yellow Pages.

Karaoke bar - bowling alley business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal Costs $1,000
Consulting $1,000
Construction $20,000
Advertising $3,000
Rent $40,000
Total Start-up Expenses $65,000
Start-up Assets
Cash Required $50,000
Start-up Inventory $7,000
Other Current Assets $0
Long-term Assets $77,900
Total Assets $134,900
Total Requirements $199,900
Start-up Funding
Start-up Expenses to Fund $65,000
Start-up Assets to Fund $134,900
Total Funding Required $199,900
Assets
Non-cash Assets from Start-up $84,900
Cash Requirements from Start-up $50,000
Additional Cash Raised $100
Cash Balance on Starting Date $50,100
Total Assets $135,000
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
Investor 1 $100,000
Investor 2 $100,000
Additional Investment Requirement $0
Total Planned Investment $200,000
Loss at Start-up (Start-up Expenses) ($65,000)
Total Capital $135,000
Total Capital and Liabilities $135,000
Total Funding $200,000

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Services

Rockin’ Roll will provide services to three different groups of customers.

  1. Bowling Leaguers. Rockin’ Roll bowling will provide a quality bowling experience to bowling league clients, both local and touring. Rockin’ Roll will offer nine game leagues to local bowling teams.

    While Rockin’ Roll specializes in providing the local community with bowling facilities, the bowling alley will also be built fully equipped to host televised bowling tournaments. Through bowling leagues and tournaments, Rockin’ Roll will establish itself as a local community center and entertainment capitol for King County.

  2. Youths. Rockin’ Roll will also introduce the bowling league experience to youths through its Saturday morning teen leagues. Rockin’ Roll bowling will attract youths under the age of 21 on evenings or weekends to roll on the lanes, snack on their favorite foods, or to play video games.
  3. Elders. Our community leaders, fathers and mothers, grandfathers and grandmothers will all be welcomed with senior discounts on food, drink and lane prices. Once seniors experience the comfortable seating and the mixed age crowd while listening to the King sing songs of their youth, they will make themselves at home in the alley, become regulars at the restaurant and may volunteer at league events.
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Market Analysis Summary

Rockin’ Roll customers can be divided into three groups: bowling leaguers, youths and seniors.

  1. Bowling Leaguers. New customers are likely to be introduced to Rockin’ Roll bowling by friends. The reason for this is that most people only go out to their regular hang-outs, to places they feel comfortable, or to places where they will find their friends.

    This type of customer will find the Rockin’ Roll bowling alley when their friends ask them to meet for a Rockin’ Roll nine game bowling league. Once in the door, these customers will be greeted by Pelvis Restley and will be treated like kings and queens in the bowling alley, restaurant and lounge.

    Then, they will come back to meet their friends or to find their comfort zone in the Rockin’ Roll bowling alley. Pelvis will also be able to access his contacts within the Professional Bowling Association to stimulate televised touring tournaments. By year two, bowling leaguers will introduce their friends to Rockin’ Roll. During year two, Rockin’ Roll will thank its regular bowling leaguers by offering them fame and fortune in the Bowling for Dollars televised tournament.

  2. Youths. These clients will be interested in finding a fun place where they can spend time outside of the house with people their age. The attraction for teenagers of similar age groups will be two-fold.

    First, Saturday mornings, Rockin’ Roll will host a teenagers bowling league. Second, Rockin’ Roll will have all the latest video games the youths love in a sound-proofed fishbowl room where they can play their favorite tunes on the jukebox and their parents can see them from the bowling lanes.

    The youths will be encouraged by their parents to frequent Rockin’ Roll because the parents can come listen to their Rockin’ Roll and bowl while feeling the security of knowing their children are safely near by. The restaurant will also cater to the youthful palate, offering the breadth of fryer food and low-fat fruit and veggie snacks.

  3. Seniors. These clients are on limited income and will come to Rockin’ Roll for the prices. Senior discounts will play a large role in the food and drink menu preparation.

    Once the seniors are in the door they will be reminded of their childhood by the bowling alley’s plastic molded seats and the King’s music.

    Seniors will also be stimulated by the youths in the game room and the adults competing to be champions of the bowling leagues. The comfort and excitement will continue to draw these customers back in. Rockin’ Roll will acknowledge their value and leadership potential by asking seniors to participate in organizing the adult and teenage bowling leagues.

4.1 Market Segmentation

Bowling Leaguers will be of varying age ranges and will be identified through workplaces, social events, and clubs. A core league of bowlers will be recruited from Pelvis’ local and Professional Bowling Association contacts for the first nine game bowling league tournament. After the first tournament the core league of bowlers will be cultivated for future participants and league organizers.

Youths will be under twenty-one years of age. They will provide a consistent customer base during non-league hours.

Seniors citizens will be over sixty-two years old and will contribute a consistent customer base to the restaurant and lounge and a source of low-cost organizers for the bowling league.

Karaoke bar - bowling alley business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Senior Citizens 50% 15,000 22,500 33,750 50,625 75,938 50.00%
League Participants 50% 11,000 16,500 24,750 37,125 55,688 50.00%
Youths 8% 23,000 24,840 26,827 28,973 31,291 8.00%
Total 35.03% 49,000 63,840 85,327 116,723 162,917 35.03%

4.2 Target Market Segment Strategy

Rockin’ Roll Bowling Lanes will be targeting bowling leaguers for two reasons.

  1. Bowling leagues develop a core group of customers. These customers will begin to identify their social and athletic events with Rockin’ Roll bowling. Once one group of friends begins congregating together at Rockin’ Roll Bowling Lanes for league events, they will bring other friends to join them for other occasions.
  2. Bowling packaged with Rockin’ Roll flavor is Pelvis’ area of expertise. Rockin’ Roll bowling will cater to everyone’s desire for fame, fitness and fortune. Beginning with a nine game bowling league tournament will give participants the flavor of athletic competition and will give the winners a little extra spending cash and fame. Those feelings will stimulate more interest, and more interest will support more tournaments, which will in turn stimulate more reward. The tournaments will culminate in a Bowling for Dollars televised tournament by the end of year two.

Rockin’ Roll will focus on youths for two reasons.

  1. Bowling alleys are one of few places that under age customers can go to congregate and find entertainment.
  2. Catering to youths and teaching them to bowl now will develop a future customer base for years to come.

Rockin’ Roll will cater to senior citizens because they are consistent customers. Once they find an affordable, comfortable place, seniors will come back for more.  Seniors also tend to congregate together. Therefore, accommodating a small core group will lead to potentially exponential growth as the Baby-Boomers become a majority of the population and they introduce each other to Rockin’ Roll’s senior citizen discounts. An added value is that senior citizens, shown the importance of their time, may be encouraged to contribute low-cost labor as volunteers for youth and adult bowling league events.

4.3 Service Business Analysis

Bowling is an entertainment industry in Seattle with a customer base that has diminished over the past few decades. Today’s senior citizen’s were once yesterday’s avid bowlers. As the Baby-Boomers questioned the actions of their elders, they also turned away from bowling. Eventually, without innovation, bowling lost popularity as America’s favorite athletic event. As competition increased amongst bowling alleys for a dwindling customer base, Seattle lost bowling alleys. Fewer bowling alleys further diminished the number of future bowlers. The loss of bowling alleys has meant the loss of community centers and athletic events. Seattle needs no replacement for the athletic and social event bowling once offered, it simply needs innovation and reminder of the forgotten culture of bowling. Pelvis Restley understands the trend of revitalization in the bowling culture from his youthful participation in bowling and through his work in the Professional Bowling Association.

Customers in the entertainment industry flock to the most comfortable and affordable place they know. Rockin’ Roll offers the comfort of separate Rockin’ Roll environments for seniors, youths, and bowlers, in the visible, but not audible rooms of the restaurant and lounge, the gaming room and the bowling alley. Rockin’ Roll also offers affordable prices to seniors through senior citizen discounts, to youths through low-cost foods and video games, and to bowling leaguers by offering tournament rates for nine games at a time.

Pelvis also has the advantage of bringing contacts in the local bowling community and the Professional Bowling Association.

4.3.1 Competition and Buying Patterns

The competition for local customers amongst bowling alleys is localized, meaning each urban district can support its own bowling alley. Customers will choose the provider they think offers the most comfortable, affordable and convenient location. Due to the decline in the number of bowling alleys, many districts are without bowling facilities. Fremont currently does not have a bowling alley. Being located in Fremont, Rockin’ Roll will enjoy the advantage of having no local competition in a densely populated, mixed-age area with good public transportation making it conveniently accessible for locals.

Bowling leaguers will contribute to the success and reputation of Rockin’ Roll Bowling Lanes as they consistently choose Rockin’ Roll for their social events and athletic activities.

Seniors will provide a consistent customer base as they purchase discounted food and drink and gamble.

Youths will come for the video games and the Saturday morning teenager bowling leagues and they will bring their parents with them.

The competition for tournaments city-wide and nationally depends on the bowling alley’s reputation and the reputation of the bowlers. Pelvis has the advantage of working in the Professional Bowling Association and playing in local bowling championship tournaments for many years. This advantage may lead to televised bowling tournaments, which will in turn contribute to Rockin’ Roll’s reputation.

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Strategy and Implementation Summary

Rockin’ Roll will focus on Fremont, one urban district in Seattle, and then promote itself on a nationwide level as a venue for televised tournaments in succeeding years.

The target customers are bowling leaguers, senior citizens, and youths.

5.1 Competitive Edge

Rockin’ Roll’s competitive edge will be based on two factors, experience and reputation:

  1. Pelvis has experience as a bowler in the local community and as a marketing and business analyst for the Professional Bowling Association. Pelvis’ experience will give him the ability to contact local and national bowlers for recruiting leaguers.
  2. Rockin’ Roll will have the reputation of being the most affordable, comfortable and convenient place of entertainment in town.

5.2 Marketing Strategy

Marketing in a bowling business depends on reputation for quality bowling facilities and entertainment. It starts with Pelvis’ known contacts in the bowling industry, and continues with long-term efforts to develop reputation in local communities.

Rockin’ Roll will develop and maintain a database of people in the bowling leagues. The database starts with the contacts we bring in with our first nine game bowling league tournament. From there we add inquiries and participants, and bowling league newsletters. Rockin’ Roll will use the database to make regular contact with mailings for additional bowling league tournaments, possibly group studies and market research reports.

5.3 Sales Strategy

Organizing the nine game league tournaments will form the cornerstone of Rockin’ Roll’s sales strategy, advertising the senior citizen discounts and the games will broaden the market to customers outside traditional bowling market. The bowling league organizer will be paid part-time to contact local workplaces, clubs, and bowlers to participate in the nine game league tournament. Participants in the tournament will be rewarded with trophies for the first three teams and the champion will receive a cash prize equal to half of all the entry fees. The bowling league organizer will maintain a database of contact information and sales data about regular bowling leaguers to optimize services to our target customers during league hours. Reduced prices will be offered to senior citizens on a daily basis between certain low-volume hours and on certain food and drink items all day long. Advertisements to teenagers will be placed in local college and weekly papers, highlighting their favorite video games, their favorite tunes on the jukebox, and the Saturday morning teenager tournaments.

5.3.1 Sales Forecast

The first month will be spent setting up the bowling alley, the gaming room, the restaurant and lounge. This will include building the bowling lanes setting up the pins and connecting the scoring terminals. During the first four months Pelvis will recruit bowling leaguers for his first nine game bowling league tournament and begin advertising in local papers for the opening and senior discounts.

By month four, Rockin’ Roll Bowling Lanes will be servicing actual customers and hosting bowling leagues.

Karaoke bar - bowling alley business plan, strategy and implementation summary chart image

Karaoke bar - bowling alley business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Youths $26,200 $28,296 $30,560
Senior Citizens $25,920 $38,880 $58,320
Food $135,250 $169,063 $211,328
Video Games $23,100 $28,875 $36,094
Pull Tabs $112,500 $140,625 $175,781
Liquor $75,000 $93,750 $117,188
Leaguers $39,600 $59,400 $89,100
Total Sales $437,570 $558,889 $718,370
Direct Cost of Sales Year 1 Year 2 Year 3
Youths $4,320 $7,074 $7,640
Senior Citizens $3,816 $9,720 $14,580
Food $90,000 $84,531 $105,664
Video Games $4,500 $7,219 $9,023
Pull Tabs $3,600 $35,156 $43,945
Liquor $864 $23,438 $29,297
Leaguers $5,850 $14,850 $22,275
Subtotal Direct Cost of Sales $112,950 $181,988 $232,425

5.4 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

What the table doesn’t show is the commitment behind it. Our business plan includes complete provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings to discuss the variance and course corrections.

Milestones
Milestone Start Date End Date Budget Manager Department
Business Plan Completion 1/1/2003 2/1/2003 $0 President Pelvis Executive
Lease Complete for Property 1/1/2003 4/1/2003 $0 President Pelvis Executive
Completion of First Nine Game League 4/1/2003 6/15/2003 $0 President Pelvis Marketing
Completion of First Marketing Campaign 1/1/2003 4/1/2003 $500 Bowling League Organizer Marketing
Profitability 1/1/2003 1/1/2004 $0 President Pelvis Accounting
First 1,000 Customers 4/1/2003 6/1/2003 $0 President Pelvis Marketing
Totals $500

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Management Summary

Rockin’ Roll Bowling Lanes is a Washington Corporation founded and run by Pelvis Restley. Pelvis Restley graduated from the University of Washington with degrees in both Business and Communications. While at the University of Washington, Pelvis was president of both the bowling club and his fraternity, Delta Tau Delta. Through the University of Washington bowling club Pelvis gained local notoriety as a champion bowler. Since graduation, Pelvis joined the Professional Bowler’s Association and worked as its treasurer for three years. While working for the Professional Bowler’s Association, Pelvis developed budgets and marketing campaigns with a number of television networks and well-known bowling leagues.

One of Pelvis Restley’s strengths was his ability to draw crowds. Another strength was Pelvis’s talent for increasing local league membership. Pelvis spent a fair amount of time with bowling leagues nationwide. After three years however, Pelvis was feeling spread too thin and wanted to center himself in one sweet spot. Pelvis decided to retire from the Professional Bowling Association and start his own bowling alley. Pelvis was able to bring a number of fellow leaguers over to his alley, helping Rockin’ Roll Bowling Lanes start from the beginning.

6.1 Personnel Plan

Initially, the staff will consist of Pelvis working full-time. In addition to Pelvis, a full-time bartender, a full-time kitchen manager, a full-time cashier, a part-time lane maintenance specialist, and a part-time league manager will join Pelvis for the opening of the bowling alley, restaurant and lounge.

Personnel Plan
Year 1 Year 2 Year 3
Pelvis $36,000 $36,000 $36,000
Kitchen Manager $18,000 $24,000 $24,000
Lane Maintenance $5,760 $7,680 $7,680
League Manager $5,760 $7,680 $7,680
Cashier $10,080 $13,440 $13,440
Bartender $10,080 $13,440 $13,440
Total People 6 6 6
Total Payroll $85,680 $102,240 $102,240

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Financial Plan

  • Rockin’ Roll Bowling Lanes wants to attract local bowling leaguers, youths and senior citizens. This will require advertising on local radio shows and cable networks as well as reaching out to businesses, clubs and bowlers.
  • The most important factor in our case is getting them in the door. Once our customers come in the door they will be personally greeted by Pelvis Restley and made to feel comfortable so that they keep coming back.
  • We are also assuming start-up capital of $200,000.

7.1 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 appendix. From the beginning, we recognize that youths and seniors are critical, but not a factor we can influence easily. At least we are planning on advertising to seniors and youths and dealing with it. Bowling league participation rates are based on conservative assumptions.

Two of the more important underlying assumptions are:

  1. We assume youths, seniors, and adult bowlers will congregate together at Rockin’ Roll Bowling Lanes given separate environments to listen to their own preferences in music.
  2. We assume that there are no unforeseen changes in the local bowling community to increase competition in Fremont.
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 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The following chart and table summarize our break-even analysis. With fixed costs of $16,000 per month at the outset (a bare minimum), we need to generate approximately $21,600 to break even, but don’t really expect to reach break-even until a few months into the business operation.

The break-even assumes variable costs of 25 percent of revenue.

Karaoke bar - bowling alley business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $21,644
Assumptions:
Average Percent Variable Cost 26%
Estimated Monthly Fixed Cost $16,057

7.3 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $174,603 $260,324 $431,807
Inventory $13,805 $22,243 $28,407
Other Current Assets $0 $0 $0
Total Current Assets $188,408 $282,567 $460,214
Long-term Assets
Long-term Assets $77,900 $77,900 $77,900
Accumulated Depreciation $7,788 $15,576 $23,364
Total Long-term Assets $70,112 $62,324 $54,536
Total Assets $258,520 $344,891 $514,750
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $31,162 $30,427 $37,094
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $31,162 $30,427 $37,094
Long-term Liabilities $0 $0 $0
Total Liabilities $31,162 $30,427 $37,094
Paid-in Capital $200,000 $200,000 $200,000
Retained Earnings ($65,000) $27,358 $114,464
Earnings $92,358 $87,106 $163,192
Total Capital $227,358 $314,464 $477,656
Total Liabilities and Capital $258,520 $344,891 $514,750
Net Worth $227,358 $314,464 $477,656

7.4 Projected Profit and Loss

The following table indicates the projected profit and loss.

Karaoke bar - bowling alley business plan, financial plan chart image

Karaoke bar - bowling alley business plan, financial plan chart image

Karaoke bar - bowling alley business plan, financial plan chart image

Karaoke bar - bowling alley business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $437,570 $558,889 $718,370
Direct Cost of Sales $112,950 $181,988 $232,425
Hidden Row $0 $0 $0
Total Cost of Sales $112,950 $181,988 $232,425
Gross Margin $324,620 $376,901 $485,946
Gross Margin % 74.19% 67.44% 67.65%
Expenses
Payroll $85,680 $102,240 $102,240
Sales and Marketing and Other Expenses $3,000 $3,000 $3,000
Depreciation $7,788 $7,788 $7,788
Rent $80,000 $120,000 $120,000
Utilities $3,360 $3,600 $3,900
Insurance $0 $500 $550
Payroll Taxes $12,852 $15,336 $15,336
Total Operating Expenses $192,680 $252,464 $252,814
Profit Before Interest and Taxes $131,940 $124,437 $233,132
EBITDA $139,728 $132,225 $240,920
Interest Expense $0 $0 $0
Taxes Incurred $39,582 $37,331 $69,940
Other Income
Interest Income $0 $0 $0
Other Income Account Name $0 $0 $0
Total Other Income $0 $0 $0
Other Expense
Account Name $0 $0 $0
Other Expense Account Name $0 $0 $0
Total Other Expense $0 $0 $0
Net Other Income $0 $0 $0
Net Profit $92,358 $87,106 $163,192
Net Profit/Sales 21.11% 15.59% 22.72%

7.5 Projected Cash Flow

The following cash flow projections show the initial investment ($200,000).

Cash flow projections are critical to Rockin’ Roll’s 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 appendix.

Karaoke bar - bowling alley business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $437,570 $558,889 $718,370
Subtotal Cash from Operations $437,570 $558,889 $718,370
Additional Cash Received
Non Operating (Other) Income $0 $0 $0
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 $437,570 $558,889 $718,370
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $85,680 $102,240 $102,240
Bill Payments $227,387 $370,928 $444,647
Subtotal Spent on Operations $313,067 $473,168 $546,887
Additional Cash Spent
Non Operating (Other) Expense $0 $0 $0
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 $0 $0
Subtotal Cash Spent $313,067 $473,168 $546,887
Net Cash Flow $124,503 $85,721 $171,483
Cash Balance $174,603 $260,324 $431,807

7.6 Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 27.73% 28.54% 0.11%
Percent of Total Assets
Inventory 5.34% 6.45% 5.52% 3.48%
Other Current Assets 0.00% 0.00% 0.00% 36.21%
Total Current Assets 72.88% 81.93% 89.41% 46.12%
Long-term Assets 27.12% 18.07% 10.59% 53.88%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 12.05% 8.82% 7.21% 15.99%
Long-term Liabilities 0.00% 0.00% 0.00% 26.89%
Total Liabilities 12.05% 8.82% 7.21% 42.88%
Net Worth 87.95% 91.18% 92.79% 57.12%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 74.19% 67.44% 67.65% 100.00%
Selling, General & Administrative Expenses 46.09% 47.32% 36.86% 75.02%
Advertising Expenses 0.00% 0.00% 0.00% 3.53%
Profit Before Interest and Taxes 30.15% 22.27% 32.45% 1.62%
Main Ratios
Current 6.05 9.29 12.41 1.74
Quick 5.60 8.56 11.64 1.18
Total Debt to Total Assets 12.05% 8.82% 7.21% 54.33%
Pre-tax Return on Net Worth 58.03% 39.57% 48.81% 1.54%
Pre-tax Return on Assets 51.04% 36.08% 45.29% 3.37%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 21.11% 15.59% 22.72% n.a
Return on Equity 40.62% 27.70% 34.17% n.a
Activity Ratios
Inventory Turnover 9.33 10.10 9.18 n.a
Accounts Payable Turnover 8.30 12.17 12.17 n.a
Payment Days 28 30 27 n.a
Total Asset Turnover 1.69 1.62 1.40 n.a
Debt Ratios
Debt to Net Worth 0.14 0.10 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $157,246 $252,140 $423,120 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.59 0.62 0.72 n.a
Current Debt/Total Assets 12% 9% 7% n.a
Acid Test 5.60 8.56 11.64 n.a
Sales/Net Worth 1.92 1.78 1.50 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Youths 0% $0 $0 $0 $1,200 $1,200 $4,200 $4,200 $4,200 $2,800 $2,800 $2,800 $2,800
Senior Citizens 0% $0 $0 $0 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880
Food 0% $0 $0 $0 $14,000 $15,750 $16,000 $14,000 $14,000 $14,000 $15,750 $15,750 $16,000
Video Games 0% $0 $0 $0 $1,500 $1,800 $2,000 $2,800 $3,400 $2,800 $2,800 $2,800 $3,200
Pull Tabs 0% $0 $0 $0 $12,000 $12,000 $12,000 $12,000 $12,000 $7,500 $15,000 $15,000 $15,000
Liquor 0% $0 $0 $0 $8,000 $7,000 $7,000 $10,000 $7,000 $7,000 $12,000 $7,000 $10,000
Leaguers 0% $0 $0 $0 $4,400 $4,400 $4,400 $2,200 $2,200 $2,200 $6,600 $6,600 $6,600
Total Sales $0 $0 $0 $43,980 $45,030 $48,480 $48,080 $45,680 $39,180 $57,830 $52,830 $56,480
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Youths $0 $0 $0 $480 $480 $480 $480 $480 $480 $480 $480 $480
Senior Citizens $0 $0 $0 $424 $424 $424 $424 $424 $424 $424 $424 $424
Food $0 $0 $0 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Video Games $0 $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500
Pull Tabs $0 $0 $0 $400 $400 $400 $400 $400 $400 $400 $400 $400
Liquor $0 $0 $0 $96 $96 $96 $96 $96 $96 $96 $96 $96
Leaguers $0 $0 $0 $650 $650 $650 $650 $650 $650 $650 $650 $650
Subtotal Direct Cost of Sales $0 $0 $0 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Pelvis 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Kitchen Manager 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Lane Maintenance 0% $0 $0 $0 $640 $640 $640 $640 $640 $640 $640 $640 $640
League Manager 0% $0 $0 $0 $640 $640 $640 $640 $640 $640 $640 $640 $640
Cashier 0% $0 $0 $0 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120
Bartender 0% $0 $0 $0 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120
Total People 1 1 5 5 5 6 6 6 6 6 6 6
Total Payroll $3,000 $3,000 $3,000 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $0 $43,980 $45,030 $48,480 $48,080 $45,680 $39,180 $57,830 $52,830 $56,480
Direct Cost of Sales $0 $0 $0 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550
Hidden Row $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550 $12,550
Gross Margin $0 $0 $0 $31,430 $32,480 $35,930 $35,530 $33,130 $26,630 $45,280 $40,280 $43,930
Gross Margin % 0.00% 0.00% 0.00% 71.46% 72.13% 74.11% 73.90% 72.53% 67.97% 78.30% 76.24% 77.78%
Expenses
Payroll $3,000 $3,000 $3,000 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520
Sales and Marketing and Other Expenses $3,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $649 $649 $649 $649 $649 $649 $649 $649 $649 $649 $649 $649
Rent $0 $0 $0 $0 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Utilities $280 $280 $280 $280 $280 $280 $280 $280 $280 $280 $280 $280
Insurance 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 15% $450 $450 $450 $1,278 $1,278 $1,278 $1,278 $1,278 $1,278 $1,278 $1,278 $1,278
Total Operating Expenses $7,379 $4,379 $4,379 $10,727 $20,727 $20,727 $20,727 $20,727 $20,727 $20,727 $20,727 $20,727
Profit Before Interest and Taxes ($7,379) ($4,379) ($4,379) $20,703 $11,753 $15,203 $14,803 $12,403 $5,903 $24,553 $19,553 $23,203
EBITDA ($6,730) ($3,730) ($3,730) $21,352 $12,402 $15,852 $15,452 $13,052 $6,552 $25,202 $20,202 $23,852
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($2,214) ($1,314) ($1,314) $6,211 $3,526 $4,561 $4,441 $3,721 $1,771 $7,366 $5,866 $6,961
Other Income
Interest Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Income Account Name $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Expense
Account Name $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Expense Account Name $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Other Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($5,165) ($3,065) ($3,065) $14,492 $8,227 $10,642 $10,362 $8,682 $4,132 $17,187 $13,687 $16,242
Net Profit/Sales 0.00% 0.00% 0.00% 32.95% 18.27% 21.95% 21.55% 19.01% 10.55% 29.72% 25.91% 28.76%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $43,980 $45,030 $48,480 $48,080 $45,680 $39,180 $57,830 $52,830 $56,480
Subtotal Cash from Operations $0 $0 $0 $43,980 $45,030 $48,480 $48,080 $45,680 $39,180 $57,830 $52,830 $56,480
Additional Cash Received
Non Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $43,980 $45,030 $48,480 $48,080 $45,680 $39,180 $57,830 $52,830 $56,480
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $3,000 $3,000 $3,000 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520 $8,520
Bill Payments $51 $882 ($1,148) $340 $27,141 $27,668 $28,665 $28,525 $27,764 $26,065 $31,424 $30,010
Subtotal Spent on Operations $3,051 $3,882 $1,852 $8,860 $35,661 $36,188 $37,185 $37,045 $36,284 $34,585 $39,944 $38,530
Additional Cash Spent
Non Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $3,051 $3,882 $1,852 $8,860 $35,661 $36,188 $37,185 $37,045 $36,284 $34,585 $39,944 $38,530
Net Cash Flow ($3,051) ($3,882) ($1,852) $35,120 $9,369 $12,292 $10,895 $8,635 $2,896 $23,245 $12,886 $17,950
Cash Balance $47,049 $43,167 $41,315 $76,435 $85,805 $98,096 $108,991 $117,626 $120,522 $143,767 $156,653 $174,603
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $50,100 $47,049 $43,167 $41,315 $76,435 $85,805 $98,096 $108,991 $117,626 $120,522 $143,767 $156,653 $174,603
Inventory $7,000 $7,000 $7,000 $7,000 $13,805 $13,805 $13,805 $13,805 $13,805 $13,805 $13,805 $13,805 $13,805
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $57,100 $54,049 $50,167 $48,315 $90,240 $99,610 $111,901 $122,796 $131,431 $134,327 $157,572 $170,458 $188,408
Long-term Assets
Long-term Assets $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900 $77,900
Accumulated Depreciation $0 $649 $1,298 $1,947 $2,596 $3,245 $3,894 $4,543 $5,192 $5,841 $6,490 $7,139 $7,788
Total Long-term Assets $77,900 $77,251 $76,602 $75,953 $75,304 $74,655 $74,006 $73,357 $72,708 $72,059 $71,410 $70,761 $70,112
Total Assets $135,000 $131,300 $126,769 $124,268 $165,544 $174,265 $185,907 $196,153 $204,139 $206,386 $228,982 $241,219 $258,520
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $1,466 $0 $564 $27,348 $27,841 $28,842 $28,726 $28,030 $26,145 $31,553 $30,103 $31,162
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,466 $0 $564 $27,348 $27,841 $28,842 $28,726 $28,030 $26,145 $31,553 $30,103 $31,162
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,466 $0 $564 $27,348 $27,841 $28,842 $28,726 $28,030 $26,145 $31,553 $30,103 $31,162
Paid-in Capital $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000
Retained Earnings ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000) ($65,000)
Earnings $0 ($5,165) ($8,231) ($11,296) $3,196 $11,423 $22,065 $32,428 $41,110 $45,242 $62,429 $76,116 $92,358
Total Capital $135,000 $129,835 $126,769 $123,704 $138,196 $146,423 $157,065 $167,428 $176,110 $180,242 $197,429 $211,116 $227,358
Total Liabilities and Capital $135,000 $131,300 $126,769 $124,268 $165,544 $174,265 $185,907 $196,153 $204,139 $206,386 $228,982 $241,219 $258,520
Net Worth $135,000 $129,835 $126,769 $123,704 $138,196 $146,423 $157,065 $167,427 $176,110 $180,242 $197,429 $211,116 $227,358

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