Motorcycle Shop Business Plan

Recycled Riding Dreams

Financial Plan

The following is the financial plan for Recycled Riding Dreams.

7.1 Break-even Analysis

The monthly break-even point is approximately $16,000.

Motorcycle shop business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$16,638

Assumptions:
Average Percent Variable Cost	46%
Estimated Monthly Fixed Cost	$9,027

7.2 Projected Profit and Loss

The following table and charts shows projected profit and loss for three years.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$235,000	$252,000	$271,000
Direct Cost of Sales	$107,500	$117,000	$127,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$107,500	$117,000	$127,000

Gross Margin	$127,500	$135,000	$144,000
Gross Margin %	54.26%	53.57%	53.14%


Expenses
Payroll	$69,600	$74,000	$79,000
Sales and Marketing and Other Expenses	$6,000	$6,000	$6,000
Depreciation	$4,284	$4,284	$4,284
Leased Equipment	$0	$0	$0
Utilities	$2,400	$2,400	$2,400
Insurance	$0	$0	$0
Rent	$15,600	$15,600	$15,600
Payroll Taxes	$10,440	$11,100	$11,850
Other	$0	$0	$0

Total Operating Expenses	$108,324	$113,384	$119,134

Profit Before Interest and Taxes	$19,176	$21,616	$24,866
EBITDA	$23,460	$25,900	$29,150
Interest Expense	$2,000	$2,000	$2,000
Taxes Incurred	$5,153	$5,885	$6,860

Net Profit	$12,023	$13,731	$16,006
Net Profit/Sales	5.12%	5.45%	5.91%

7.3 Projected Cash Flow

The table and chart show the projected cash flow for three years.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$94,000	$100,800	$108,400
Cash from Receivables	$116,820	$149,451	$160,645
Subtotal Cash from Operations	$210,820	$250,251	$269,045

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	$210,820	$250,251	$269,045

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$69,600	$74,000	$79,000
Bill Payments	$108,864	$153,470	$171,723
Subtotal Spent on Operations	$178,464	$227,470	$250,723

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	$178,464	$227,470	$250,723

Net Cash Flow	$32,356	$22,780	$18,322
Cash Balance	$36,356	$59,137	$77,459

7.4 Projected Balance Sheet

The table shows the projected balance sheet for three years.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$36,356	$59,137	$77,459
Accounts Receivable	$24,180	$25,929	$27,884
Inventory	$10,550	$11,482	$12,464
Other Current Assets	$0	$0	$0
Total Current Assets	$71,086	$96,548	$117,806

Long-term Assets
Long-term Assets	$15,000	$15,000	$15,000
Accumulated Depreciation	$4,284	$8,568	$12,852
Total Long-term Assets	$10,716	$6,432	$2,148
Total Assets	$81,802	$102,980	$119,954

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$5,779	$13,226	$14,194
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$5,779	$13,226	$14,194

Long-term Liabilities	$20,000	$20,000	$20,000
Total Liabilities	$25,779	$33,226	$34,194

Paid-in Capital	$55,000	$55,000	$55,000
Retained Earnings	($11,000)	$1,023	$14,754
Earnings	$12,023	$13,731	$16,006
Total Capital	$56,023	$69,754	$85,761
Total Liabilities and Capital	$81,802	$102,980	$119,954

Net Worth	$56,023	$69,754	$85,761

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5015, Motor Vehicle Parts Used, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	7.23%	7.54%	12.20%

Percent of Total Assets
Accounts Receivable	29.56%	25.18%	23.25%	28.00%
Inventory	12.90%	11.15%	10.39%	38.90%
Other Current Assets	0.00%	0.00%	0.00%	16.40%
Total Current Assets	86.90%	93.75%	98.21%	83.30%
Long-term Assets	13.10%	6.25%	1.79%	16.70%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	7.06%	12.84%	11.83%	38.90%
Long-term Liabilities	24.45%	19.42%	16.67%	12.30%
Total Liabilities	31.51%	32.26%	28.51%	51.20%
Net Worth	68.49%	67.74%	71.49%	48.80%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	54.26%	53.57%	53.14%	23.10%
Selling, General & Administrative Expenses	49.14%	48.12%	47.23%	14.00%
Advertising Expenses	2.55%	2.38%	2.21%	0.70%
Profit Before Interest and Taxes	8.16%	8.58%	9.18%	2.00%

Main Ratios
Current	12.30	7.30	8.30	2.16
Quick	10.47	6.43	7.42	0.96
Total Debt to Total Assets	31.51%	32.26%	28.51%	51.20%
Pre-tax Return on Net Worth	30.66%	28.12%	26.66%	5.30%
Pre-tax Return on Assets	21.00%	19.05%	19.06%	10.90%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	5.12%	5.45%	5.91%	n.a
Return on Equity	21.46%	19.69%	18.66%	n.a

Activity Ratios
Accounts Receivable Turnover	5.83	5.83	5.83	n.a
Collection Days	57	60	60	n.a
Inventory Turnover	6.76	10.62	10.61	n.a
Accounts Payable Turnover	19.84	12.17	12.17	n.a
Payment Days	27	22	29	n.a
Total Asset Turnover	2.87	2.45	2.26	n.a

Debt Ratios
Debt to Net Worth	0.46	0.48	0.40	n.a
Current Liab. to Liab.	0.22	0.40	0.42	n.a

Liquidity Ratios
Net Working Capital	$65,307	$83,322	$103,613	n.a
Interest Coverage	9.59	10.81	12.43	n.a

Additional Ratios
Assets to Sales	0.35	0.41	0.44	n.a
Current Debt/Total Assets	7%	13%	12%	n.a
Acid Test	6.29	4.47	5.46	n.a
Sales/Net Worth	4.19	3.61	3.16	n.a
Dividend Payout	0.00	0.00	0.00	n.a