By 
Our biggest savings of the year
Gastronome Gander's Gatherings
Financial Plan
Our financial plan is based on conservative estimates and assumptions. Owner investment and a short-term business loan provide start-up financing.
8.1 Important Assumptions
We examined the local market for Recreation Services (SIC 7999.9912) but because of low numbers (12 companies in Washbourne and 17 companies in Gourmandeville/Cuisineburg) we evaluated a wider surrounding region (290 companies). From this analysis the following table provides annual sales during the first three years of operation.
| Firms | Small Business | Start-ups | |
| Year 1 Average Sales | $157,500 | $130,061 | $100,000 |
| Year 2 Average Sales | $168,354 | $123,570 | $112,500 |
| Year 3 Average Sales | $185,882 | $145,885 | $100,000 |
Gastronome Gander’s Gatherings is classified in the ‘Small Business’ category for purposes of this table.
Data obtained from Bizminer (local marketing research profile for our region, Gourmandeville area, and Washbourne area) 2004.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 5.00% | 5.00% | 5.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The Break-even Analysis table and chart indicate what will be needed in monthly revenue to achieve the Break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $3,492 |
| Assumptions: | |
| Average Percent Variable Cost | 46% |
| Estimated Monthly Fixed Cost | $1,891 |
8.3 Projected Profit and Loss
The profit and loss numbers are estimates for this year, due in part to being a start-up company. We anticipate generation of revenue starting in April 2004. Some expenses are known and include utilities, phone, and Internet hosting/DSL. Other numbers are based in part on estimates from other similar membership event companies.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $56,250 | $91,875 | $169,290 |
| Direct Cost of Sales | $25,800 | $28,140 | $28,984 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $25,800 | $28,140 | $28,984 |
| Gross Margin | $30,450 | $63,735 | $140,306 |
| Gross Margin % | 54.13% | 69.37% | 82.88% |
| Expenses | |||
| Payroll | $2,500 | $26,500 | $40,000 |
| Sales and Marketing and Related Expenses | $9,050 | $2,000 | $2,000 |
| Depreciation | $0 | $0 | $0 |
| Rent | $0 | $0 | $0 |
| Utilities | $360 | $400 | $450 |
| Insurance | $4,180 | $4,300 | $4,500 |
| Payroll Taxes | $0 | $0 | $0 |
| Mailing Expense | $726 | $800 | $900 |
| Credit Card Merchant Fees | $1,688 | $2,756 | $5,079 |
| Website Maintanence – Web Master | $0 | $0 | $0 |
| Website Hosting & Fees | $1,323 | $1,418 | $2,579 |
| Telecomm & DSL | $960 | $1,000 | $1,100 |
| Office Expenses | $1,900 | $2,100 | $2,500 |
| Total Operating Expenses | $22,687 | $41,274 | $59,108 |
| Profit Before Interest and Taxes | $7,763 | $22,461 | $81,198 |
| EBITDA | $7,763 | $22,461 | $81,198 |
| Interest Expense | $750 | $750 | $750 |
| Taxes Incurred | $2,104 | $6,513 | $24,134 |
| Net Profit | $4,909 | $15,197 | $56,313 |
| Net Profit/Sales | 8.73% | 16.54% | 33.26% |
8.4 Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company as the business generates sufficient cash flow to support operations.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $56,250 | $91,875 | $169,290 |
| Subtotal Cash from Operations | $56,250 | $91,875 | $169,290 |
| 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 | $56,250 | $91,875 | $169,290 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $2,500 | $26,500 | $40,000 |
| Bill Payments | $43,834 | $51,176 | $71,103 |
| Subtotal Spent on Operations | $46,334 | $77,676 | $111,103 |
| 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 | $0 | $0 |
| Subtotal Cash Spent | $46,334 | $77,676 | $111,103 |
| Net Cash Flow | $9,916 | $14,199 | $58,187 |
| Cash Balance | $21,800 | $35,999 | $94,186 |
8.5 Projected Balance Sheet
The balance sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $21,800 | $35,999 | $94,186 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $21,800 | $35,999 | $94,186 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $21,800 | $35,999 | $94,186 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $5,122 | $4,124 | $5,998 |
| Current Borrowing | $15,000 | $15,000 | $15,000 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $20,122 | $19,124 | $20,998 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $20,122 | $19,124 | $20,998 |
| Paid-in Capital | $10,000 | $10,000 | $10,000 |
| Retained Earnings | ($13,232) | ($8,323) | $6,875 |
| Earnings | $4,909 | $15,197 | $56,313 |
| Total Capital | $1,677 | $16,875 | $73,188 |
| Total Liabilities and Capital | $21,800 | $35,999 | $94,186 |
| Net Worth | $1,677 | $16,875 | $73,188 |
8.6 Business Ratios
Our sales growth, as a percentage, is exceptionally high due to the figures being the first two years of operation. Therefore, by virtue of comparison to low first-year numbers our percent increase will seem extraordinary. Our assets are lower than industry averages due to the initial investment being small, most of the equipment being expensed, and that the size of Gastronome Gander’s Gatherings is small in relation to other companies within this sector: Recreation Services, SIC Code 7999.9912. Our total liabilities are higher than other companies, but improve rapidly. If additional investment is acquired instead of secured loans, this will help us meet our goal of keeping liabilities to a minimum.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 63.33% | 84.26% | 4.94% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 36.35% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 43.63% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 56.37% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 92.31% | 53.12% | 22.29% | 21.68% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 31.17% |
| Total Liabilities | 92.31% | 53.12% | 22.29% | 52.85% |
| Net Worth | 7.69% | 46.88% | 77.71% | 47.15% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 54.13% | 69.37% | 82.88% | 100.00% |
| Selling, General & Administrative Expenses | 37.94% | 45.18% | 40.18% | 76.74% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 2.84% |
| Profit Before Interest and Taxes | 13.80% | 24.45% | 47.96% | 2.11% |
| Main Ratios | ||||
| Current | 1.08 | 1.88 | 4.49 | 1.05 |
| Quick | 1.08 | 1.88 | 4.49 | 0.69 |
| Total Debt to Total Assets | 92.31% | 53.12% | 22.29% | 62.49% |
| Pre-tax Return on Net Worth | 418.12% | 128.66% | 109.92% | 2.98% |
| Pre-tax Return on Assets | 32.17% | 60.31% | 85.41% | 7.95% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 8.73% | 16.54% | 33.26% | n.a |
| Return on Equity | 292.69% | 90.06% | 76.94% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 9.53 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 34 | 25 | n.a |
| Total Asset Turnover | 2.58 | 2.55 | 1.80 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 12.00 | 1.13 | 0.29 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $1,677 | $16,875 | $73,188 | n.a |
| Interest Coverage | 10.35 | 29.95 | 108.26 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.39 | 0.39 | 0.56 | n.a |
| Current Debt/Total Assets | 92% | 53% | 22% | n.a |
| Acid Test | 1.08 | 1.88 | 4.49 | n.a |
| Sales/Net Worth | 33.54 | 5.44 | 2.31 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |