Organic Food Store Business Plan

Last Frontier Market

Financial Plan

The following is the Financial Plan for the Last Frontier Market.

7.1 Break-even Analysis

The monthly break-even point is $32,277.

Organic food store business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$32,277

Assumptions:
Average Percent Variable Cost	30%
Estimated Monthly Fixed Cost	$22,493

7.2 Projected Profit and Loss

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

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$423,000	$470,000	$520,000
Direct Cost of Sales	$128,220	$150,000	$175,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$128,220	$150,000	$175,000

Gross Margin	$294,780	$320,000	$345,000
Gross Margin %	69.69%	68.09%	66.35%


Expenses
Payroll	$199,200	$218,000	$236,000
Sales and Marketing and Other Expenses	$7,000	$10,000	$13,000
Depreciation	$1,440	$1,440	$1,440
Leased Equipment	$0	$0	$0
Utilities	$4,800	$4,800	$4,800
Insurance	$6,000	$6,000	$6,000
Rent	$21,600	$21,600	$21,600
Payroll Taxes	$29,880	$32,700	$35,400
Other	$0	$0	$0

Total Operating Expenses	$269,920	$294,540	$318,240

Profit Before Interest and Taxes	$24,860	$25,460	$26,760
EBITDA	$26,300	$26,900	$28,200
Interest Expense	$4,459	$3,501	$2,501
Taxes Incurred	$6,120	$6,588	$7,278

Net Profit	$14,281	$15,372	$16,981
Net Profit/Sales	3.38%	3.27%	3.27%

7.3 Projected Cash Flow

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

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

Cash from Operations
Cash Sales	$105,750	$117,500	$130,000
Cash from Receivables	$251,575	$345,203	$382,237
Subtotal Cash from Operations	$357,325	$462,703	$512,237

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	$4,000	$0	$0
Subtotal Cash Received	$361,325	$462,703	$512,237

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$199,200	$218,000	$236,000
Bill Payments	$186,715	$237,222	$263,081
Subtotal Spent on Operations	$385,915	$455,222	$499,081

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	$9,996	$9,996	$9,996
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$395,911	$465,218	$509,077

Net Cash Flow	($34,586)	($2,515)	$3,160
Cash Balance	$7,614	$5,099	$8,259

7.4 Projected Balance Sheet

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

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$7,614	$5,099	$8,259
Accounts Receivable	$65,675	$72,972	$80,735
Other Current Assets	$0	$0	$0
Total Current Assets	$73,289	$78,071	$88,994

Long-term Assets
Long-term Assets	$10,000	$10,000	$10,000
Accumulated Depreciation	$1,440	$2,880	$4,320
Total Long-term Assets	$8,560	$7,120	$5,680
Total Assets	$81,849	$85,191	$94,674

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$21,364	$19,331	$21,828
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$21,364	$19,331	$21,828

Long-term Liabilities	$40,004	$30,008	$20,012
Total Liabilities	$61,368	$49,339	$41,840

Paid-in Capital	$84,000	$84,000	$84,000
Retained Earnings	($77,800)	($63,519)	($48,147)
Earnings	$14,281	$15,372	$16,981
Total Capital	$20,481	$35,853	$52,834
Total Liabilities and Capital	$81,849	$85,191	$94,674

Net Worth	$20,481	$35,853	$52,834

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 5149, Groceries and Related Products, are shown for comparison.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	11.11%	10.64%	4.60%

Percent of Total Assets
Accounts Receivable	80.24%	85.66%	85.28%	33.30%
Other Current Assets	0.00%	0.00%	0.00%	20.90%
Total Current Assets	89.54%	91.64%	94.00%	80.20%
Long-term Assets	10.46%	8.36%	6.00%	19.80%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	26.10%	22.69%	23.06%	45.20%
Long-term Liabilities	48.88%	35.22%	21.14%	10.00%
Total Liabilities	74.98%	57.92%	44.19%	55.20%
Net Worth	25.02%	42.08%	55.81%	44.80%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	69.69%	68.09%	66.35%	44.10%
Selling, General & Administrative Expenses	66.31%	64.81%	63.08%	26.70%
Advertising Expenses	1.65%	2.13%	2.50%	0.70%
Profit Before Interest and Taxes	5.88%	5.42%	5.15%	0.80%

Main Ratios
Current	3.43	4.04	4.08	1.69
Quick	3.43	4.04	4.08	1.01
Total Debt to Total Assets	74.98%	57.92%	44.19%	55.20%
Pre-tax Return on Net Worth	99.61%	61.25%	45.92%	3.60%
Pre-tax Return on Assets	24.93%	25.78%	25.62%	8.00%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	3.38%	3.27%	3.27%	n.a
Return on Equity	69.73%	42.87%	32.14%	n.a

Activity Ratios
Accounts Receivable Turnover	4.83	4.83	4.83	n.a
Collection Days	57	72	72	n.a
Accounts Payable Turnover	9.74	12.17	12.17	n.a
Payment Days	27	32	28	n.a
Total Asset Turnover	5.17	5.52	5.49	n.a

Debt Ratios
Debt to Net Worth	3.00	1.38	0.79	n.a
Current Liab. to Liab.	0.35	0.39	0.52	n.a

Liquidity Ratios
Net Working Capital	$51,925	$58,741	$67,166	n.a
Interest Coverage	5.58	7.27	10.70	n.a

Additional Ratios
Assets to Sales	0.19	0.18	0.18	n.a
Current Debt/Total Assets	26%	23%	23%	n.a
Acid Test	0.36	0.26	0.38	n.a
Sales/Net Worth	20.65	13.11	9.84	n.a
Dividend Payout	0.00	0.00	0.00	n.a