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Falls River Theatre

Executive Summary

Falls River is a smaller town that lost its only movie theatre over 10 years ago. Since then, residents wishing to enjoy a night out at the movies have to drive about 30 miles to a theatre. And once they get to the theatre, it is usually a large antiseptic mega-plex, void of character.

The Falls River Theatre will provide the residents of Falls River with a long-awaited, hometown movie theatre. The films shown will be second run releases of the most popular movies in two target markets: families and young adults. The building that will house the facility is the historic old theatre building, built in 1936 and long-time home to the town’s acting companies. Since its closing it has been used only occassionally for community functions. Before its grand re-opening, the owners will restore the building to its former glory as one of the town’s main destinations for evening entertainment.

The two owners, Samantha Farmer and Steve Brinksman have the skills, expertise and capital to make this theatre succeed. Samantha has successfully managed a large movie house for seven years, developing skills in theatre management and movie selection while establishing important relationships with key people in the industry. Steve has the skills and ability to restore and upgrade the building so that it will be comfortable and welcoming.

With an substantial initial investment by the owners, we see modest profits by year two.

Movie theater business plan, executive summary chart image

1.1 Keys to Success

  • Proper film selection for the audience and the theater’s environment.
  • Revenues from a mix of both traditional movie fare and other quality snacks and beverages.
  • Careful management of internal finances to control costs.
  • Great customer service.

1.2 Objectives

  • Healthy sales in the first year, more than doubling by year three.
  • Excellent revenues from concessions.
  • Modest by stable profit margin by year two.

1.3 Mission

Falls River Theatre’s mission is to give our customers a big city entertainment experience in a small town. Our customers will relax in comfort and watch high-quality presentations of popular second-run movies, all within a short walk or drive from home. This is a convenience that Falls River residents have had to do without since the local theatre closed eleven years ago.

We aim to please the local community (who can wait a few weeks to see their favorite movies and don’t want to pay big city, new release prices). We will also provide our customers with satisfying and reasonably priced snack foods and beverages.

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Company Summary

The Falls River Theatre, a movie house with two screens and a capacity of 400, is located on Main Street in downtown Falls River, Wisconsin. Falls River, population 12,000, has been without a local movie theatre since 1992 when the old theatre, The Kinnick, closed down due to the death of its long time owner and the lack of an interested successor. Since that time, interested movie-goers in Falls River have had to drive 45 miles to the outskirts of Madison to go to a movie.

2.1 Company Ownership

The Falls River Theatre will begin operations as a sole proprietorship, owned and operated by its two founders: Samantha Farmer and Steve Brinksman.

2.2 Start-up Summary

Samantha Farmer and Steve Brinksman will be the main investors and operators of the Falls River Theatre. Samantha has been managing a multiplex theatre in Madison for the past seven years, gaining valuable experience while she looked for an opportunity to run her own theatre. Steve has been working part-time as a contractor/handy man in the local community.

The building where the theatre will be housed has been vacant, except for the occasional rental to a community group, since the closing of the former business. This has made the building’s owners anxious to collect a regular check, so they have agreed to rent the entire building for $900 per month for the first three years. There are some repairs and upgrades needed, especially in the balcony and snack bar areas. The founders will be responsible for those repairs and those estimates are included in the start-up expenses.

Movie theater business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $21,900
Start-up Assets to Fund $23,100
Total Funding Required $45,000
Assets
Non-cash Assets from Start-up $10,700
Cash Requirements from Start-up $12,400
Additional Cash Raised $0
Cash Balance on Starting Date $12,400
Total Assets $23,100
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
Samatha Farmer $30,000
Steve Brinksman $15,000
Additional Investment Requirement $0
Total Planned Investment $45,000
Loss at Start-up (Start-up Expenses) ($21,900)
Total Capital $23,100
Total Capital and Liabilities $23,100
Total Funding $45,000
Start-up
Requirements
Start-up Expenses
Legal $800
Stationery etc. $800
Marketing materials and Advertising $1,200
Insurance (8 months) $1,400
Rent (8 months) $2,700
Counter/kitchen retrofit $2,000
Sound and Projection Equipment $500
Theatre repairs $12,000
Other $500
Total Start-up Expenses $21,900
Start-up Assets
Cash Required $12,400
Start-up Inventory $700
Other Current Assets $0
Long-term Assets $10,000
Total Assets $23,100
Total Requirements $45,000

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Services

The Falls River Theatre will provide comfortable seating for its customers to view high quality, second run movies. The theatre’s management will be aided in movie selection by being able to see how movies have fared in their initial run, especially those that have shown success in the theatre’s two target markets: families and young adults. With two theatres in which to show movies, both markets can be targeted at the same time with minimal cannibalization.

A variety of quality, reasonably priced snack items and beverages will keep customers satisfied during their movie experience. The founders understand that the entire experience can be jeopardized by poor customer service and will seek to hire only the most customer service oriented personnel.

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Market Analysis Summary

The Falls River Theatre is located in downtown Falls River, the shopping and entertainment center of town. This provides easy access for every resident of Falls River and a viable entertainment option any night of the week. The local business community has shown great support for a theatre since it would keep residents, and their spending dollars, in the community instead of one of the surrounding communities. A typical family (there are about 2,300 on Falls River) can expect to save approximately $48 for a night out at the movies by coming to a local theatre. This savings, along with quality movie selection, should keep people coming back regularly.

4.1 Market Segmentation

  • Families – this segment focuses on adults and parents with younger children who don’t need to see the latest movies on release and seek an inexpensive, quality, family-oriented entertainment experience.
  • Young adults – this segment is comprised of the 16-24 year old age group. This group is interested in seeing comedy and action/adventure type movies that are not directed at the younger and family markets.
Movie theater business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Family 4% 8,000 8,320 8,653 8,999 9,359 4.00%
Young adult 4% 4,000 4,160 4,326 4,499 4,679 4.00%
Other 0% 0 0 0 0 0 0.00%
Total 4.00% 12,000 12,480 12,979 13,498 14,038 4.00%

4.2 Service Business Analysis

The Falls River community has been in need of a local movie house since the closure of its only theatre eleven years ago. With the closest movie complex located 45 miles away, movie goers options are limited – either a round trip drive of over 90 miles or in home rentals. For people who enjoy the big screen, neither offers a satisfying experience. The Falls River Theatre can satisfy those needs with quality movies in a comfortable, old-style movie theatre.

4.2.1 Competition and Buying Patterns

Competition for movie theatres comes in a number of different forms. In general you can describe the indirect competition as any entertainment alternative in the local area. Competition comes from the local skate park, pool hall and various restaurants. Restaurants also present a potential complimentary offering that we might exploit later through strategic alliances. As mention before, the direct competitor is the movie theater located 45 miles from Falls River. The inconvenience this presents for Falls River locals presents a tremendous opportunity for our theater.

4.3 Target Market Segment Strategy

These two market segments, families and young adults, are targeted specifically because they comprise the two largest segments of Falls River’s population. The Falls River Theatre is determined to be a community-oriented business and seeks to serve as much of the population as possible. With a small college in town, there is an ample student market, consumers who often have limited transportation options.

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Strategy and Implementation Summary

The strategy is simple: provide fair-priced, quality entertainment close to home for the two markets that comprise the bulk of Falls River’s population.

5.1 Competitive Edge

Falls River Theatre has a distinct competitive edge in that it is the only movie theatre within 45 miles of Falls River. There are no plans at this time to build a theatre complex in the town and, since the theatre will occupy the town’s only building capable of effectively housing a theatre, there is limited direct competition. Competition will come mainly from several multi-plex theatres located in Madison, the closest being 45 miles from Falls River.

To ensure that Falls River residents are pleased with the products offered, the theatre will rely on the expertise of Samantha, who has seven years of successful theatre management experience. Since she began managing the theatre in Madison ticket sales have grown at a consistent 4% annually. This is in part due to her skills in movie selection and her emphasis on customer service. Once the theatre is up and running, her time will be devoted to movie selection, staff hiring and supervision, theatre marketing, and ordering for the snack bar.

Samantha has also developed strong relationships with several movie booking agents serving the Wisconsin area and has already negotiated an agreement. The agreement has the booking agents collecting 60% of the first year’s admission revenues. Each year after that the percentage will be reduced by 1.5% through year 5 when it stabilizes at 54%.

Steve has strong construction skills and is considered a craftsman by his peers. Initially his talents will be used to restore the theatre from its current state of slight disrepair into the town’s main attraction for evening entertainment. Once the restoration is complete, Steve will transition into a part-time role, maintaining the facility and equipment, working the counter and ticket booth, and eventually, ordering concession items.

5.2 Marketing Strategy

Falls River is a small enough town that word gets around quickly. We anticipate that a buzz will be created once the renovations begin. Excitement will build as the grand opening approaches. To encourage that excitement, we will have a countdown to opening on the building’s marquee. Concurrently, advertisements in both the local newspaper and the college’s daily will promote the opening with coupons for free items from the snack bar. Since a large share of profits will come from concessions, we want to let people know about our tasty snacks. Finally, we will use our website to keep our customers, especially the more web salvy college students, updated on the movie selection, which will change every two weeks.

5.3 Sales Strategy

The Falls River Theatre will appeal to two segments of the market:

  • Adults and parents with children who seek local, fair-priced evening entertainment aimed at the whole family.
  • Young adults who are interested in seeing recent releases but are constrained by an inability or unwillingness to travel.

The main sales strategy is to provide recent successful movie releases that appeal to both audiences. With two theatres, we will be able to target both segments simultaneously.

Ticket prices will be $5 for adults and $3 for children under 12.

5.3.1 Sales Forecast

Sales will increase among both target segments as word spreads around town and to the surrounding communities. The increase in concession sales reflects the increased attendance. Concession sales are based on an average of $2.50 spent per ticket purchase.

Movie theater business plan, strategy and implementation summary chart image

Movie theater business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Family movies $86,661 $129,992 $194,988
Young adult movies $30,331 $45,497 $68,246
Concessions $70,196 $105,293 $157,940
Total Sales $187,188 $280,782 $421,173
Direct Cost of Sales Year 1 Year 2 Year 3
Movies $70,196 $105,293 $157,940
Concessions $21,059 $31,588 $47,382
Subtotal Direct Cost of Sales $91,254 $136,881 $205,322

5.4 Milestones

Steve will begin the theatre’s restoration in mid-January. Samantha will still be working with the theatre in Madison but will be able to contribute as-needed. Steve’s work will start inside, repairing and upgrading the facility as necessary. The main theatre’s balcony needs reinforcement. Repairs and upgrades to the concession area are also necessary. Painting will put the finishing touches on the interior of the structure. Finally, the interior should be fully restored by mid-March, once the upholstery repairs are finished.

By that time Samantha will have more time to begin work on the website, marketing materials and film selection. The weather should be turning better which will allow Steve to move outdoors to work on the front of the building. Minor repairs are needed on the marquee. A fresh coat of paint will prepare the building for customers. Samantha will also order any equipment for the concession area (some equipment is already in place and is useable), begin the hiring process and start the marketing. Finally, Steve will install the projection equipment and prepare for the grand opening.

Movie theater business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Repairs and painting of interior 1/18/2003 2/15/2003 $11,000 Steve Marketing
Reupholstering theatre furniture 2/25/2003 3/15/2003 $5,000 Steve Marketing
Website design 3/20/2003 3/25/2003 $0 Samantha Marketing
Marketing materials design 3/20/2003 3/25/2003 $0 Samantha Web
Repairs and painting of exterior 3/20/2003 3/25/2003 $6,000 Steve Web
Set up projection equipment 3/28/2003 4/2/2003 $15,000 Steve Department
Film selection and scheduling 3/28/2003 4/2/2003 $250 Samantha Department
Concession equipment ordering 4/5/2003 4/10/2003 $4,000 Samantha Department
Staff hiring and scheduling 4/5/2003 4/15/2003 $200 Samantha Department
Initial marketing 4/5/2003 4/20/2003 $500 Samantha Department
Grand opening 4/20/2003 4/20/2003 $1,000 Both Department
Totals $42,950

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Web Plan Summary

The website will be very simple. Its main purpose is to communicate to our customers what movies are showing at what times with links to each movie’s website and reviews. The design will feature an image of the theatre along with the a list of current movies and those that are coming soon and will be small enough to quickly load on most home computers. Since the movies will change every other week, maintenance should be fairly straight-forward. Arrangements have been made with both the local and college newspapers for links to our web site from theirs.

6.1 Website Marketing Strategy

The website address will be printed on tickets and it will be prominently placed on advertisements that we will run in the local paper.

6.2 Development Requirements

Development requirements are minimal, since the site will only be a few pages. The site will be built by a local website development firm. Once it has been created, the founders will be responsible for updating it with the latest movie listing each week. It is expected that this will take no longer than 1 -2 hours each week.

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Management Summary

Samantha’s experience in theatre operations and management will be invaluable, she will manage the key tasks that represent the theatre once it’s up and running: film selection, marketing, and personnel. She will also initially take care of the selection and ordering of all the theatre’s supplies, including the concessions. Steve will eventually take over this role, once Sam has established the relationships and things have settled down somewhat.

Steve’s main responsibility will be to manage and execute the theatre’s restoration. Once that task is complete and the theatre is open for business, Steve will manage the maintenance of the building and work part-time in customer service (selling concessions) and ordering.

7.1 Personnel Plan

We believe that the key to customer service is happy employees. We will invest in a good team by compensating our part-time employees fairly.

Personnel Plan
Year 1 Year 2 Year 3
Samantha Farmer $33,600 $35,280 $37,044
Steve Brinksman $35,200 $36,960 $38,808
Customer Service (4 part-time employees) $9,350 $9,818 $10,308
Other $0 $0 $0
Total People 6 6 6
Total Payroll $78,150 $82,058 $86,160

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Financial Plan

The following sections outline the financial analysis for Falls River Theatre.

8.1 Important Assumptions

The following shows the important General Assumptions for Falls River Theatre.

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

8.2 Break-even Analysis

The following Break-even Analysis shows the monthly break-even point.

Movie theater business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $23,758
Assumptions:
Average Percent Variable Cost 49%
Estimated Monthly Fixed Cost $12,176

8.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss for Falls River Theatre.

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Movie theater business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $187,188 $280,782 $421,173
Direct Cost of Sales $91,254 $136,881 $205,322
Other Costs of Sales $0 $0 $0
Total Cost of Sales $91,254 $136,881 $205,322
Gross Margin $95,934 $143,901 $215,851
Gross Margin % 51.25% 51.25% 51.25%
Expenses
Payroll $78,150 $82,058 $86,160
Sales and Marketing and Other Expenses $3,300 $0 $400
Depreciation $1,992 $0 $0
Rent $10,800 $0 $900
Utilities $30,000 $0 $2,750
Insurance $10,150 $0 $1,100
Payroll Taxes $11,723 $0 $1,138
Other $0 $0 $0
Total Operating Expenses $146,115 $82,058 $92,448
Profit Before Interest and Taxes ($50,181) $61,843 $123,403
EBITDA ($48,189) $61,843 $123,403
Interest Expense $0 $0 $0
Taxes Incurred $0 $18,553 $37,021
Net Profit ($50,181) $43,290 $86,382
Net Profit/Sales -26.81% 15.42% 20.51%

8.4 Projected Cash Flow

The two founders will be the sole investors. Samantha Farmer and Steve Brinksman will invest, both in early January.

Movie theater business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $187,188 $280,782 $421,173
Subtotal Cash from Operations $187,188 $280,782 $421,173
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 $60,000 $0 $0
Subtotal Cash Received $247,188 $280,782 $421,173
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $78,150 $82,058 $86,160
Bill Payments $152,553 $178,262 $256,786
Subtotal Spent on Operations $230,703 $260,320 $342,946
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 $230,703 $260,320 $342,946
Net Cash Flow $16,485 $20,462 $78,227
Cash Balance $28,885 $49,347 $127,574

8.5 Projected Balance Sheet

The following table illustrates Falls River Theatre’s Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $28,885 $49,347 $127,574
Inventory $21,681 $32,521 $48,782
Other Current Assets $0 $0 $0
Total Current Assets $50,565 $81,868 $176,356
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $1,992 $1,992 $1,992
Total Long-term Assets $8,008 $8,008 $8,008
Total Assets $58,573 $89,876 $184,364
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $25,654 $13,666 $21,772
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,654 $13,666 $21,772
Long-term Liabilities $0 $0 $0
Total Liabilities $25,654 $13,666 $21,772
Paid-in Capital $105,000 $105,000 $105,000
Retained Earnings ($21,900) ($72,081) ($28,790)
Earnings ($50,181) $43,290 $86,382
Total Capital $32,919 $76,210 $162,592
Total Liabilities and Capital $58,573 $89,876 $184,364
Net Worth $32,919 $76,210 $162,592

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios are based on the Standard Industrial Classification (SIC) code 7832, [motion picture theatres, except drive-ins].

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 50.00% 50.00% 4.18%
Percent of Total Assets
Inventory 37.01% 36.18% 26.46% 0.54%
Other Current Assets 0.00% 0.00% 0.00% 27.25%
Total Current Assets 86.33% 91.09% 95.66% 32.96%
Long-term Assets 13.67% 8.91% 4.34% 67.04%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 43.80% 15.21% 11.81% 23.77%
Long-term Liabilities 0.00% 0.00% 0.00% 30.06%
Total Liabilities 43.80% 15.21% 11.81% 53.83%
Net Worth 56.20% 84.79% 88.19% 46.17%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 51.25% 51.25% 51.25% 100.00%
Selling, General & Administrative Expenses 76.99% 0.00% 40.59% 76.64%
Advertising Expenses 0.00% 0.00% 0.00% 3.12%
Profit Before Interest and Taxes -26.81% 22.03% 29.30% 2.78%
Main Ratios
Current 1.97 5.99 8.10 0.93
Quick 1.13 3.61 5.86 0.63
Total Debt to Total Assets 43.80% 15.21% 11.81% 2.70%
Pre-tax Return on Net Worth -152.43% 81.15% 75.90% 61.15%
Pre-tax Return on Assets -85.67% 68.81% 66.93% 6.94%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -26.81% 15.42% 20.51% n.a
Return on Equity -152.43% 56.80% 53.13% n.a
Activity Ratios
Inventory Turnover 10.40 5.05 5.05 n.a
Accounts Payable Turnover 6.95 12.17 12.17 n.a
Payment Days 27 43 24 n.a
Total Asset Turnover 3.20 3.12 2.28 n.a
Debt Ratios
Debt to Net Worth 0.78 0.18 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $24,911 $68,202 $154,584 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.31 0.32 0.44 n.a
Current Debt/Total Assets 44% 15% 12% n.a
Acid Test 1.13 3.61 5.86 n.a
Sales/Net Worth 5.69 3.68 2.59 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
Family movies 0% $0 $0 $0 $0 $0 $0 $0 $16,000 $16,640 $17,306 $17,998 $18,718
Young adult movies 0% $0 $0 $0 $0 $0 $0 $0 $5,600 $5,824 $6,057 $6,299 $6,551
Concessions 0% $0 $0 $0 $0 $0 $0 $0 $12,960 $13,478 $14,018 $14,578 $15,161
Total Sales $0 $0 $0 $0 $0 $0 $0 $34,560 $35,942 $37,380 $38,875 $40,430
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
Movies $0 $0 $0 $0 $0 $0 $0 $12,960 $13,478 $14,018 $14,578 $15,161
Concessions $0 $0 $0 $0 $0 $0 $0 $3,888 $4,044 $4,205 $4,373 $4,548
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $16,848 $17,522 $18,223 $18,952 $19,710
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
Samantha Farmer 0% $1,600 $1,600 $1,600 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200
Steve Brinksman 0% $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $2,400 $2,400 $2,400 $2,400
Customer Service (4 part-time employees) 0% $0 $0 $0 $0 $0 $0 $850 $1,700 $1,700 $1,700 $1,700 $1,700
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 2 2 2 2 2 2 4 6 6 6 6 6
Total Payroll $4,800 $4,800 $4,800 $6,400 $6,400 $6,400 $7,250 $8,100 $7,300 $7,300 $7,300 $7,300

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 $0 $0 $0 $0 $34,560 $35,942 $37,380 $38,875 $40,430
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $16,848 $17,522 $18,223 $18,952 $19,710
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $16,848 $17,522 $18,223 $18,952 $19,710
Gross Margin $0 $0 $0 $0 $0 $0 $0 $17,712 $18,420 $19,157 $19,924 $20,721
Gross Margin % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 51.25% 51.25% 51.25% 51.25% 51.25%
Expenses
Payroll $4,800 $4,800 $4,800 $6,400 $6,400 $6,400 $7,250 $8,100 $7,300 $7,300 $7,300 $7,300
Sales and Marketing and Other Expenses $0 $0 $0 $0 $0 $0 $600 $1,100 $400 $400 $400 $400
Depreciation $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166
Rent $900 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900
Utilities $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Insurance $700 $700 $700 $700 $700 $700 $700 $850 $1,100 $1,100 $1,100 $1,100
Payroll Taxes 15% $720 $720 $720 $960 $960 $960 $1,088 $1,215 $1,095 $1,095 $1,095 $1,095
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $9,786 $9,786 $9,786 $11,626 $11,626 $11,626 $13,204 $14,831 $13,461 $13,461 $13,461 $13,461
Profit Before Interest and Taxes ($9,786) ($9,786) ($9,786) ($11,626) ($11,626) ($11,626) ($13,204) $2,881 $4,959 $5,696 $6,463 $7,260
EBITDA ($9,620) ($9,620) ($9,620) ($11,460) ($11,460) ($11,460) ($13,038) $3,047 $5,125 $5,862 $6,629 $7,426
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($9,786) ($9,786) ($9,786) ($11,626) ($11,626) ($11,626) ($13,204) $2,881 $4,959 $5,696 $6,463 $7,260
Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 8.34% 13.80% 15.24% 16.62% 17.96%

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 $0 $0 $0 $0 $34,560 $35,942 $37,380 $38,875 $40,430
Subtotal Cash from Operations $0 $0 $0 $0 $0 $0 $0 $34,560 $35,942 $37,380 $38,875 $40,430
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 $60,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $60,000 $0 $0 $0 $0 $0 $0 $34,560 $35,942 $37,380 $38,875 $40,430
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 $4,800 $4,800 $4,800 $6,400 $6,400 $6,400 $7,250 $8,100 $7,300 $7,300 $7,300 $7,300
Bill Payments $161 $4,820 $4,820 $4,828 $5,060 $5,060 $5,084 $6,969 $40,680 $24,283 $25,014 $25,775
Subtotal Spent on Operations $4,961 $9,620 $9,620 $11,228 $11,460 $11,460 $12,334 $15,069 $47,980 $31,583 $32,314 $33,075
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 $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 $4,961 $9,620 $9,620 $11,228 $11,460 $11,460 $12,334 $15,069 $47,980 $31,583 $32,314 $33,075
Net Cash Flow $55,039 ($9,620) ($9,620) ($11,228) ($11,460) ($11,460) ($12,334) $19,491 ($12,037) $5,798 $6,561 $7,355
Cash Balance $67,439 $57,819 $48,199 $36,971 $25,511 $14,051 $1,717 $21,208 $9,170 $14,968 $21,529 $28,885
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 $12,400 $67,439 $57,819 $48,199 $36,971 $25,511 $14,051 $1,717 $21,208 $9,170 $14,968 $21,529 $28,885
Inventory $700 $700 $700 $700 $700 $700 $700 $700 $18,533 $19,274 $20,045 $20,847 $21,681
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $13,100 $68,139 $58,519 $48,899 $37,671 $26,211 $14,751 $2,417 $39,740 $28,445 $35,013 $42,376 $50,565
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Accumulated Depreciation $0 $166 $332 $498 $664 $830 $996 $1,162 $1,328 $1,494 $1,660 $1,826 $1,992
Total Long-term Assets $10,000 $9,834 $9,668 $9,502 $9,336 $9,170 $9,004 $8,838 $8,672 $8,506 $8,340 $8,174 $8,008
Total Assets $23,100 $77,973 $68,187 $58,401 $47,007 $35,381 $23,755 $11,255 $48,412 $36,951 $43,353 $50,550 $58,573
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 $4,659 $4,659 $4,659 $4,891 $4,891 $4,891 $5,595 $39,871 $23,450 $24,156 $24,890 $25,654
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 $4,659 $4,659 $4,659 $4,891 $4,891 $4,891 $5,595 $39,871 $23,450 $24,156 $24,890 $25,654
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $4,659 $4,659 $4,659 $4,891 $4,891 $4,891 $5,595 $39,871 $23,450 $24,156 $24,890 $25,654
Paid-in Capital $45,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000
Retained Earnings ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900) ($21,900)
Earnings $0 ($9,786) ($19,572) ($29,358) ($40,984) ($52,610) ($64,236) ($77,440) ($74,559) ($69,599) ($63,903) ($57,440) ($50,181)
Total Capital $23,100 $73,314 $63,528 $53,742 $42,116 $30,490 $18,864 $5,661 $8,542 $13,501 $19,197 $25,660 $32,919
Total Liabilities and Capital $23,100 $77,973 $68,187 $58,401 $47,007 $35,381 $23,755 $11,255 $48,412 $36,951 $43,353 $50,550 $58,573
Net Worth $23,100 $73,314 $63,528 $53,742 $42,116 $30,490 $18,864 $5,660 $8,542 $13,501 $19,197 $25,660 $32,919

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