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Martin Cove Brewing Company

Executive Summary

Martin Cove Brewing Company has been a successful microbrewery in southern Oregon for the past three years. Located in the city of Medford, the company has increased sales by 15% each year. The company’s product lines are Martin Cove Pilsner and Red Ale. This year, Martin Cove Brewing Company, will gross $520,000 in sales. This was generated from an initial investment of $150,000.

Martin Cove Brewing Company handcrafts its beers in small 20 barrel batches under the close personal attention of our brewers. The latest brewing equipment and technologies are seamlessly combined with traditional brewing methods to ensure consistently excellent taste, whether packaged in bottles or draft kegs.

Martin Cove Brewing Company is planning to expand its distribution to selected metro areas within the state of Oregon. Over the last three years, Martin Cove Brewing Company has become one of the city’s most popular microbreweries, and aims to repeat this Oregon-wide. In addition, the company will introduce a new product, a traditional German Marzen style lager. Owner funding and internally generated cash flow will enable the expansion plan. Sales projections for the next three years are based on current sales success with the target customer base in southern Oregon. The effective implementation of this plan will result in sales revenues growing to $1.2 million by Year 3.

Martin Cove Brewing Company will apply the same sales strategy that built sales in Medford: remove all obstacles between you and the customer. Once the customer tastes the product, he or she will know the quality and craftsmanship that goes into every bottle of Martin Cove.

Martin Cove Microbrews will be available in bars as well as retail outlets, such as local markets and corner stores. It will also aim to distribute through supermarkets, but it is envisioned that getting shelf space in national supermarkets will be more difficult and more expensive.

Microbrewery business plan, executive summary chart image

1.1 Objectives

The objectives of Martin Cove Brewing Company are the following:

  • Establish strong relationships with local beer distributors in selected sales areas.
  • Maintain tight control of cost and operation during expansion.
  • Maintain the high-quality product that the company has become known for.
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Company Summary

Martin Cove Brewing Company has built a reputation for handcrafted care, time-honored methodology, and the finest natural ingredients from around the world.

Martin Cove Brewing Company has been a successful microbrewery in southern Oregon for the past three years. Located in the city of Medford, the company has increased sales by 15% each year. The company’s product lines are Martin Cove Pilsner and Red Ale.

Martin Cove Brewing Company handcrafts its beers in small 20 barrel batches under the close personal attention of our brewers. The latest brewing equipment and technologies are seamlessly combined with traditional brewing methods to ensure consistently excellent taste, whether packaged in bottles or draft kegs.

Martin Cove Brewing Company is planning to expand its distribution to selected metro areas within the state of Oregon. Over the last three years, Martin Cove Brewing Company has become one of the city’s most popular microbreweries, and aims to repeat this Oregon-wide. In addition, the company will introduce a new product, a traditional German Marzen style lager. Owner funding and internally generated cash flow will enable the expansion plan.

2.1 Company History

Martin Cove Brewing Company was started in the city of Medford in 1996. John Wilson was bartending at two local establishments in Medford for ten years before starting Martin Cove Brewing Company. Brewmasters Bob Taft and Jeffery Calson had worked for Portland Brewery Company for six and eight years, respectively, before starting Martin Cove Brewing Company. Felix Henderson had twelve years of experience in retail sales and marketing when he joined as co-owner/marketing director for Martin Cove Brewing Company.

Martin Cove Brewing Company handcrafts its beer in small 20 barrel batches under the close personal attention of our brewers. The latest brewing equipment and technologies are seamlessly combined with traditional brewing methods to ensure consistently excellent taste, whether packaged in bottles or draft kegs.

The beers proved to be so popular that Martin Cove Brewing Company soon could be found in almost every market and pub in Medford. Over the next three years, Martin Cove Brewing Company has become one of the city’s most popular microbreweries.

Martin Cove Brewing Company’s operations has expanded dramatically over the past three years. Currently, the company has a staff of eleven in production, delivery, and sales.

Microbrewery business plan, company summary chart image

Past Performance
FY 2000 FY 2001 FY 2002
Sales $350,000 $420,000 $520,000
Gross Margin $245,000 $294,000 $364,000
Gross Margin % 70.00% 70.00% 70.00%
Operating Expenses $200,000 $260,000 $320,000
Collection Period (days) 0 49 57
Inventory Turnover 52.00 52.00 52.00
Balance Sheet
FY 2000 FY 2001 FY 2002
Current Assets
Cash $10,000 $30,000 $80,000
Accounts Receivable $49,000 $58,000 $80,000
Inventory $10,000 $10,000 $20,000
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $74,000 $103,000 $185,000
Long-term Assets
Long-term Assets $100,000 $100,000 $100,000
Accumulated Depreciation $4,000 $8,000 $12,000
Total Long-term Assets $96,000 $92,000 $88,000
Total Assets $170,000 $195,000 $273,000
Current Liabilities
Accounts Payable $30,000 $20,000 $20,000
Current Borrowing $0 $0 $0
Other Current Liabilities (interest free) $0 $0 $0
Total Current Liabilities $30,000 $20,000 $20,000
Long-term Liabilities $60,000 $40,000 $40,000
Total Liabilities $90,000 $60,000 $60,000
Paid-in Capital $30,000 $40,000 $80,000
Retained Earnings $38,000 $80,000 $109,000
Earnings $12,000 $15,000 $24,000
Total Capital $80,000 $135,000 $213,000
Total Capital and Liabilities $170,000 $195,000 $273,000
Other Inputs
Payment Days 12 12 12
Sales on Credit $0 $400,000 $440,000
Receivables Turnover 0.00 6.90 5.50

2.2 Company Ownership

Martin Cove Brewing is owned by John Wilson, Bob Taft, Jeffery Calson, and Felix Henderson.

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Products

Martin Cove Brewing Company has three beer product lines:

  • Roaring River Red is an Irish style ale made the traditional way, with
    roasted specialty malts that give it that deep, ruby-colored hue.
  • Martin Cove Pilsner is light, crisp and crystal clear, with a pure white foamy head. It’s a blend of the very finest domestic and imported malts, hops and bottom-fermented lager yeast, delicately balanced.
  • Martin Cove Lager is brewed in the traditional German Marzen style and is malty and full-bodied. We combine imported German hops and a special European yeast strain with the finest two row malted barley from the Pacific Northwest to give Martin Cove Lager its unique character and warm, light amber color.
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Market Analysis Summary

Over the past ten years, regional microbreweries have gained market share of beer sales in the state of Oregon. A number of regional brands have moved from speciality market to the supermarket. The numbers have been impressive. At present, regional microbrews represent 10% of beer sales in Oregon. This represents a 35% increase over sales numbers for the year 2000. Most importantly, the increased sales have occurred in the affluent communities in Oregon’s metro areas.

Oregon’s population has grown by 15% annually for the past ten years. Most of the growth has been in response to the explosion of hiring in the high-tech industry. The growth has added to the customer base that purchases regional microbrews. Traditionally, microbrews have been favored by young professional men and women in their late twenties and early thirties.

Another growth area that has had an impact on microbrew sales is the dramatic enrollment increase in the state’s colleges and universities. Currently, there are 60,000 college students in the cities of Eugene, Corvallis and Portland. Microbrews represent 35% of beers sales in the campus communities.

4.1 Market Segmentation

Martin Cove Brewing Company plans to focus on the following market segments:

  • Customers in university campus communities.
  • Professional men and women aged 25 – 35 living in affluent metro communities.

Marketing and promotional activities will be grassroots based, rather than more expensive mass marketing. Martin Cove will reach these people through sponsorship of local entertainment of cultural events, advertising in small niche magazines targeted towards young “fashionable” professionals and sponsorship of activity groups.

Microbrewery business plan, market analysis summary chart image

Market Analysis
2002 2003 2004 2005 2006
Potential Customers Growth CAGR
University Communities 15% 100,000 115,000 132,250 152,088 174,901 15.00%
Affluent Metro Communities 10% 400,000 440,000 484,000 532,400 585,640 10.00%
Total 11.06% 500,000 555,000 616,250 684,488 760,541 11.06%

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Strategy and Implementation Summary

The first step in the expansion plan is to introduce the Martin Cove Brewing Company product line into the selected areas. New sales representatives will be assigned to the Portland tri-county area and the lower Willamette Valley area (Corvallis and Eugene). The retail marketing focus will be on speciality stores that carry regional microbrews. Martin Cove Brewing Company will promote sales by reducing wholesale prices 12% for the first three months of sales.

Martin Cove Brewing Company products will be distributed in the Portland tri-county area by Cascade Distribution. In the lower Willamette Valley area, McKenzie Distribution will carry Martin Cove Brewing Company products.

Martin Cove Brewing Company’s new product, a traditional German Marzen style lager, is unique enough in taste and processing to be attractive to any business that serves beers to customers. The added advantage is that the lager has no competitors. Martin Cove Brewing Company will promote sales by reducing wholesale prices 12% for the first three months of sales.

5.1 Sales Strategy

Martin Cove Brewing Company will apply the same sales strategy that built sales in Medford: remove all obstacles between you and the customer. Once the customer tastes the product, he or she will know the quality and craftsmanship that goes into every bottle of Martin Cove.

Martin Cove Microbrews will be available in bars as well as retail outlets, such as local markets and corner stores. It will also aim to distribute through supermarkets, but it is envisioned that getting shelf space in national supermarkets will be more difficult and more expensive.

5.1.1 Sales Forecast

The following is the sales forecast for the next three years.

Microbrewery business plan, strategy and implementation summary chart image

Microbrewery business plan, strategy and implementation summary chart image

Sales Forecast
FY 2003 FY 2004 FY 2005
Sales
Microbrews $890,000 $1,068,000 $1,281,600
Other $0 $0 $0
Total Sales $890,000 $1,068,000 $1,281,600
Direct Cost of Sales FY 2003 FY 2004 FY 2005
Microbrews $267,000 $320,400 $384,480
Other $0 $0 $0
Subtotal Direct Cost of Sales $267,000 $320,400 $384,480

5.2 Competitive Edge

Martin Cove Brewing Company’s competitive edge is as follows:

  • Quality Process and Ingredients: Our beers are the highest quality and include only the finest natural ingredients. Carefully selected for their distinctive flavor profile, the beers are classically fermented and cold lagered for a smooth, bold taste. We use fine North American two row barley malt in addition to imported Belgian specialty malts, generally regarded as among the finest malts in the world. We use hops from the Pacific Northwest in our ales, and use imported German hops to give our Martin Cove Lagers their distinctive taste.
  • Handcrafted: Our beers are stored in small 20 barrel batches under the close personal attention of our brewers. The latest brewing equipment and technologies are seamlessly combined with traditional brewing methods to ensure consistently excellent taste, whether packaged in bottles or draft kegs.
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Management Summary

The following is the management summary for Martin Cove Brewing Company:

  • John Wilson will manage the bottling and shipping operation.
  • Brewmasters Bob Taft and Jeffery Calson will manage the brewing process.
  • Felix Henderson will manage marketing and sales.

6.1 Personnel Plan

Martin Cove Brewing Company’s personnel plan is as follows:

  • Bottling and shipping manager;
  • Brewing managers (2);
  • Marketing/sales manager;
  • Bottling staff (4);
  • Shipping staff (3).
Personnel Plan
FY 2003 FY 2004 FY 2005
Bottling and Shipping Mgr $48,000 $50,000 $52,000
Brewing Mgrs (2) $96,000 $100,000 $104,000
Marketing and Sales Mgr $48,000 $50,000 $52,000
Bottling Staff $108,000 $112,000 $116,000
Shipping Staff $72,000 $75,000 $78,000
Total People 11 11 11
Total Payroll $372,000 $387,000 $402,000

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Financial Plan

The following is the financial plan for Martin Cove Brewing Company.

7.1 Break-even Analysis

The monthly break-even point is $67,036.

Microbrewery business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $67,036
Assumptions:
Average Percent Variable Cost 30%
Estimated Monthly Fixed Cost $46,925

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for the next three years.

Microbrewery business plan, financial plan chart image

Microbrewery business plan, financial plan chart image

Pro Forma Profit and Loss
FY 2003 FY 2004 FY 2005
Sales $890,000 $1,068,000 $1,281,600
Direct Cost of Sales $267,000 $320,400 $384,480
Other Production Expenses $0 $0 $0
Total Cost of Sales $267,000 $320,400 $384,480
Gross Margin $623,000 $747,600 $897,120
Gross Margin % 70.00% 70.00% 70.00%
Expenses
Payroll $372,000 $387,000 $402,000
Sales and Marketing and Other Expenses $63,000 $83,000 $105,000
Depreciation $14,400 $14,400 $14,400
Sales Commission $26,700 $32,040 $38,448
Utilities $12,000 $12,000 $12,000
Insurance $2,400 $2,600 $2,800
Rent $16,800 $16,800 $16,800
Payroll Taxes $55,800 $58,050 $60,300
Other $0 $0 $0
Total Operating Expenses $563,100 $605,890 $651,748
Profit Before Interest and Taxes $59,900 $141,710 $245,372
EBITDA $74,300 $156,110 $259,772
Interest Expense $3,782 $3,398 $2,998
Taxes Incurred $16,835 $41,494 $72,712
Net Profit $39,282 $96,818 $169,662
Net Profit/Sales 4.41% 9.07% 13.24%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for the next three years.

Microbrewery business plan, financial plan chart image

Pro Forma Cash Flow
FY 2003 FY 2004 FY 2005
Cash Received
Cash from Operations
Cash Sales $222,500 $267,000 $320,400
Cash from Receivables $622,500 $776,000 $931,200
Subtotal Cash from Operations $845,000 $1,043,000 $1,251,600
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 $845,000 $1,043,000 $1,251,600
Expenditures FY 2003 FY 2004 FY 2005
Expenditures from Operations
Cash Spending $372,000 $387,000 $402,000
Bill Payments $461,903 $552,706 $690,670
Subtotal Spent on Operations $833,903 $939,706 $1,092,670
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 $4,020 $4,000 $4,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $837,923 $943,706 $1,096,670
Net Cash Flow $7,077 $99,294 $154,930
Cash Balance $87,077 $186,372 $341,302

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for the next three years.

Pro Forma Balance Sheet
FY 2003 FY 2004 FY 2005
Assets
Current Assets
Cash $87,077 $186,372 $341,302
Accounts Receivable $125,000 $150,000 $180,000
Inventory $23,100 $27,720 $33,264
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $240,177 $369,092 $559,566
Long-term Assets
Long-term Assets $100,000 $100,000 $100,000
Accumulated Depreciation $26,400 $40,800 $55,200
Total Long-term Assets $73,600 $59,200 $44,800
Total Assets $313,777 $428,292 $604,366
Liabilities and Capital FY 2003 FY 2004 FY 2005
Current Liabilities
Accounts Payable $25,515 $47,211 $57,623
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,515 $47,211 $57,623
Long-term Liabilities $35,980 $31,980 $27,980
Total Liabilities $61,495 $79,191 $85,603
Paid-in Capital $80,000 $80,000 $80,000
Retained Earnings $133,000 $172,282 $269,101
Earnings $39,282 $96,818 $169,662
Total Capital $252,282 $349,101 $518,763
Total Liabilities and Capital $313,777 $428,292 $604,366
Net Worth $252,282 $349,101 $518,763

7.5 Business Ratios

Industry profile ratios based on the Standard Industrial Classification(SIC) code 5181, Beer and Ale, are shown for comparison.

Ratio Analysis
FY 2003 FY 2004 FY 2005 Industry Profile
Sales Growth 71.15% 20.00% 20.00% 6.20%
Percent of Total Assets
Accounts Receivable 39.84% 35.02% 29.78% 19.00%
Inventory 7.36% 6.47% 5.50% 28.70%
Other Current Assets 1.59% 1.17% 0.83% 31.50%
Total Current Assets 76.54% 86.18% 92.59% 79.20%
Long-term Assets 23.46% 13.82% 7.41% 20.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 8.13% 11.02% 9.53% 32.00%
Long-term Liabilities 11.47% 7.47% 4.63% 18.40%
Total Liabilities 19.60% 18.49% 14.16% 50.40%
Net Worth 80.40% 81.51% 85.84% 49.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.00% 70.00% 70.00% 24.60%
Selling, General & Administrative Expenses 65.60% 60.97% 56.82% 15.60%
Advertising Expenses 6.74% 7.49% 7.80% 0.60%
Profit Before Interest and Taxes 6.73% 13.27% 19.15% 2.80%
Main Ratios
Current 9.41 7.82 9.71 2.24
Quick 8.51 7.23 9.13 1.07
Total Debt to Total Assets 19.60% 18.49% 14.16% 50.40%
Pre-tax Return on Net Worth 22.24% 39.62% 46.72% 9.10%
Pre-tax Return on Assets 17.88% 32.29% 40.10% 18.40%
Additional Ratios FY 2003 FY 2004 FY 2005
Net Profit Margin 4.41% 9.07% 13.24% n.a
Return on Equity 15.57% 27.73% 32.71% n.a
Activity Ratios
Accounts Receivable Turnover 5.34 5.34 5.34 n.a
Collection Days 59 63 63 n.a
Inventory Turnover 10.91 12.61 12.61 n.a
Accounts Payable Turnover 18.32 12.17 12.17 n.a
Payment Days 28 23 27 n.a
Total Asset Turnover 2.84 2.49 2.12 n.a
Debt Ratios
Debt to Net Worth 0.24 0.23 0.17 n.a
Current Liab. to Liab. 0.41 0.60 0.67 n.a
Liquidity Ratios
Net Working Capital $214,662 $321,881 $501,943 n.a
Interest Coverage 15.84 41.70 81.85 n.a
Additional Ratios
Assets to Sales 0.35 0.40 0.47 n.a
Current Debt/Total Assets 8% 11% 10% n.a
Acid Test 3.61 4.05 6.01 n.a
Sales/Net Worth 3.53 3.06 2.47 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Sales
Microbrews 0% $55,000 $55,000 $60,000 $65,000 $75,000 $85,000 $85,000 $80,000 $80,000 $80,000 $100,000 $70,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $55,000 $55,000 $60,000 $65,000 $75,000 $85,000 $85,000 $80,000 $80,000 $80,000 $100,000 $70,000
Direct Cost of Sales Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Microbrews $16,500 $16,500 $18,000 $19,500 $22,500 $25,500 $25,500 $24,000 $24,000 $24,000 $30,000 $21,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $16,500 $16,500 $18,000 $19,500 $22,500 $25,500 $25,500 $24,000 $24,000 $24,000 $30,000 $21,000
Personnel Plan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Bottling and Shipping Mgr 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Brewing Mgrs (2) 0% $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Marketing and Sales Mgr 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Bottling Staff 0% $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000
Shipping Staff 0% $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Total People 11 11 11 11 11 11 11 11 11 11 11 11
Total Payroll $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000

General Assumptions
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
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
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Sales $55,000 $55,000 $60,000 $65,000 $75,000 $85,000 $85,000 $80,000 $80,000 $80,000 $100,000 $70,000
Direct Cost of Sales $16,500 $16,500 $18,000 $19,500 $22,500 $25,500 $25,500 $24,000 $24,000 $24,000 $30,000 $21,000
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $16,500 $16,500 $18,000 $19,500 $22,500 $25,500 $25,500 $24,000 $24,000 $24,000 $30,000 $21,000
Gross Margin $38,500 $38,500 $42,000 $45,500 $52,500 $59,500 $59,500 $56,000 $56,000 $56,000 $70,000 $49,000
Gross Margin % 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00%
Expenses
Payroll $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000
Sales and Marketing and Other Expenses $5,000 $6,000 $6,000 $5,000 $5,000 $5,000 $5,000 $5,000 $6,000 $5,000 $5,000 $5,000
Depreciation $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Sales Commission $1,650 $1,650 $1,800 $1,950 $2,250 $2,550 $2,550 $2,400 $2,400 $2,400 $3,000 $2,100
Utilities $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Rent $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400
Payroll Taxes 15% $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650 $4,650
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $46,100 $47,100 $47,250 $46,400 $46,700 $47,000 $47,000 $46,850 $47,850 $46,850 $47,450 $46,550
Profit Before Interest and Taxes ($7,600) ($8,600) ($5,250) ($900) $5,800 $12,500 $12,500 $9,150 $8,150 $9,150 $22,550 $2,450
EBITDA ($6,400) ($7,400) ($4,050) $300 $7,000 $13,700 $13,700 $10,350 $9,350 $10,350 $23,750 $3,650
Interest Expense $331 $328 $325 $322 $319 $317 $314 $311 $308 $305 $303 $300
Taxes Incurred ($2,379) ($2,678) ($1,672) ($367) $1,644 $3,655 $3,656 $2,652 $2,353 $2,653 $6,674 $645
Net Profit ($5,551) ($6,249) ($3,902) ($856) $3,836 $8,528 $8,530 $6,187 $5,489 $6,191 $15,573 $1,505
Net Profit/Sales -10.09% -11.36% -6.50% -1.32% 5.12% 10.03% 10.04% 7.73% 6.86% 7.74% 15.57% 2.15%

Pro Forma Cash Flow
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Cash Received
Cash from Operations
Cash Sales $13,750 $13,750 $15,000 $16,250 $18,750 $21,250 $21,250 $20,000 $20,000 $20,000 $25,000 $17,500
Cash from Receivables $40,000 $41,375 $41,250 $41,375 $45,125 $49,000 $56,500 $63,750 $63,625 $60,000 $60,000 $60,500
Subtotal Cash from Operations $53,750 $55,125 $56,250 $57,625 $63,875 $70,250 $77,750 $83,750 $83,625 $80,000 $85,000 $78,000
Additional Cash Received
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 $53,750 $55,125 $56,250 $57,625 $63,875 $70,250 $77,750 $83,750 $83,625 $80,000 $85,000 $78,000
Expenditures Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Expenditures from Operations
Cash Spending $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000 $31,000
Bill Payments $20,883 $26,586 $29,193 $33,418 $35,537 $42,440 $47,462 $44,126 $40,041 $42,287 $42,183 $57,746
Subtotal Spent on Operations $51,883 $57,586 $60,193 $64,418 $66,537 $73,440 $78,462 $75,126 $71,041 $73,287 $73,183 $88,746
Additional Cash Spent
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 $335 $335 $335 $335 $335 $335 $335 $335 $335 $335 $335 $335
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 $52,218 $57,921 $60,528 $64,753 $66,872 $73,775 $78,797 $75,461 $71,376 $73,622 $73,518 $89,081
Net Cash Flow $1,532 ($2,796) ($4,278) ($7,128) ($2,997) ($3,525) ($1,047) $8,289 $12,249 $6,378 $11,482 ($11,081)
Cash Balance $81,532 $78,735 $74,457 $67,330 $64,332 $60,807 $59,760 $68,049 $80,298 $86,676 $98,158 $87,077
Pro Forma Balance Sheet
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Assets Starting Balances
Current Assets
Cash $80,000 $81,532 $78,735 $74,457 $67,330 $64,332 $60,807 $59,760 $68,049 $80,298 $86,676 $98,158 $87,077
Accounts Receivable $80,000 $81,250 $81,125 $84,875 $92,250 $103,375 $118,125 $125,375 $121,625 $118,000 $118,000 $133,000 $125,000
Inventory $20,000 $18,150 $18,150 $19,800 $21,450 $24,750 $28,050 $28,050 $26,400 $26,400 $26,400 $33,000 $23,100
Other Current Assets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Current Assets $185,000 $185,932 $183,010 $184,132 $186,030 $197,457 $211,982 $218,185 $221,074 $229,698 $236,076 $269,158 $240,177
Long-term Assets
Long-term Assets $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Accumulated Depreciation $12,000 $13,200 $14,400 $15,600 $16,800 $18,000 $19,200 $20,400 $21,600 $22,800 $24,000 $25,200 $26,400
Total Long-term Assets $88,000 $86,800 $85,600 $84,400 $83,200 $82,000 $80,800 $79,600 $78,400 $77,200 $76,000 $74,800 $73,600
Total Assets $273,000 $272,732 $268,610 $268,532 $269,230 $279,457 $292,782 $297,785 $299,474 $306,898 $312,076 $343,958 $313,777
Liabilities and Capital Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Current Liabilities
Accounts Payable $20,000 $25,618 $28,081 $32,241 $34,129 $40,855 $45,986 $42,794 $38,631 $40,900 $40,222 $56,866 $25,515
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 $20,000 $25,618 $28,081 $32,241 $34,129 $40,855 $45,986 $42,794 $38,631 $40,900 $40,222 $56,866 $25,515
Long-term Liabilities $40,000 $39,665 $39,330 $38,995 $38,660 $38,325 $37,990 $37,655 $37,320 $36,985 $36,650 $36,315 $35,980
Total Liabilities $60,000 $65,283 $67,411 $71,236 $72,789 $79,180 $83,976 $80,449 $75,951 $77,885 $76,872 $93,181 $61,495
Paid-in Capital $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000
Retained Earnings $109,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000 $133,000
Earnings $24,000 ($5,551) ($11,801) ($15,703) ($16,559) ($12,722) ($4,194) $4,336 $10,524 $16,013 $22,204 $37,777 $39,282
Total Capital $213,000 $207,449 $201,199 $197,297 $196,441 $200,278 $208,806 $217,336 $223,524 $229,013 $235,204 $250,777 $252,282
Total Liabilities and Capital $273,000 $272,732 $268,610 $268,532 $269,230 $279,457 $292,782 $297,785 $299,474 $306,898 $312,076 $343,958 $313,777
Net Worth $213,000 $207,449 $201,199 $197,297 $196,441 $200,278 $208,806 $217,336 $223,524 $229,013 $235,204 $250,777 $252,282

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