UPer Crust Pies
Financial Plan
A bank relationship will be established as soon as possible. Sales could very well increase at a much sharper rate than assumed in these conservative projections. Sharper sales will result in a greater need for funds in support of inventory and store growth and a line of credit will need to be established.
We will set a budget for marketing and advertising and will continue to reinvest residual profits into company expansion and personnel.
Sales growth will be aggressive during the first 18 months as we sharpen our product line and inventory to better meet our customer’s requirements. Although we anticipate substantial growth in years two and three we are forecasting a very conservative 10% growth rate.
- Salaries and rent are two major expenses. Depreciation will also increase as the company develops.
- The owners will not take any profits out of the business and will be paid as an employees.
- Payoff of private investment is expected within four to five years.
9.1 Start-up Funding
Total startup funding amounts are shown in the table below. This includes initial start-up expenses, liquid cash for operating expenses, unforseen expenses, to help cover wages, and also includes start-up inventory. This inventory will include the purchase and storage costs of frozen products, purchasing of cold beverages and daily delivery of fresh salads and various other desserts.
The purchase of long-term assets that will include an oven, two pie warmers, an ambient display case, freezers and refrigerators, a dishwasher and microwave, a three-compartment sink, decor and furnishings, utensils, a cash register and Point-Of-Sale software and accessories.
A long-term loan has been secured for the purchase of the long-term assets.
A first round of private investment from outside investors and family members will begin in April 2005. A second round will commence at the end of April 2006 for the purchase of further inventory and long-term assets to service the next two stores.
Profits will be reinvested and the owners will be employees collecting a very modest wage. This will ensure that any operating debts incurred are paid for within the shortest possible time period.
Start-up Funding | |
Start-up Expenses to Fund | $45,000 |
Start-up Assets to Fund | $195,000 |
Total Funding Required | $240,000 |
Assets | |
Non-cash Assets from Start-up | $77,000 |
Cash Requirements from Start-up | $118,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $118,000 |
Total Assets | $195,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $170,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $170,000 |
Capital | |
Planned Investment | |
Investor 1 | $8,000 |
Investor 2 | $8,000 |
Investor 3 | $8,000 |
Investor 4 | $8,000 |
Investor 5 | $8,000 |
Investor 6 | $10,000 |
Investor 7 | $10,000 |
Investor 8 | $10,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $70,000 |
Loss at Start-up (Start-up Expenses) | ($45,000) |
Total Capital | $25,000 |
Total Capital and Liabilities | $195,000 |
Total Funding | $240,000 |
9.2 Important Assumptions
Payroll burden is calculated at an estimated 12.65% made up of 7.65% for social security and medicare, 2% for unemployment, and 3% for worker’s compensation.
The tax rate has been left at 0% in the first year plan due to accumulated losses carried forward and that as an LLC the the owners will be taxed personally.
Our long-term interest rate is 6%.
Our State Sales tax is 4%. This does not affect our total profitability, but monthly payments to the State does impact our cash flow and cash balance.
Our financial plan depends on important assumptions. Our key underlying assumptions are:
- A slow-growth economy without major recession.
- There are no unforeseen changes in public health perceptions of our general products.
- Access to sufficient capital to sustain the company’s projected growth plan.
9.3 Break-even Analysis
Our break-even analysis is summarized by the following chart and table.

Break-even Analysis | |
Monthly Revenue Break-even | $10,862 |
Assumptions: | |
Average Percent Variable Cost | 35% |
Estimated Monthly Fixed Cost | $7,060 |
9.4 Projected Profit and Loss
The following table and charts indicate projected profit and loss.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $123,589 | $407,853 | $679,746 |
Direct Cost of Sales | $43,256 | $136,257 | $227,095 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $43,256 | $136,257 | $227,095 |
Gross Margin | $80,333 | $271,596 | $452,651 |
Gross Margin % | 65.00% | 66.59% | 66.59% |
Expenses | |||
Payroll | $34,040 | $102,120 | $162,220 |
Marketing/Promotion | $3,000 | $9,000 | $15,000 |
Depreciation | $9,285 | $9,285 | $9,285 |
Rent | $24,000 | $72,000 | $120,000 |
Utilities | $2,700 | $8,100 | $13,500 |
Liability insurance | $2,400 | $7,200 | $12,000 |
Payroll Taxes | $0 | $0 | $0 |
Legal fees | $0 | $0 | $0 |
Accounting | $1,200 | $3,600 | $6,000 |
Bank Service Charges | $1,500 | $5,000 | $7,000 |
Telephone/Cell Phone | $900 | $1,500 | $2,100 |
License and Permits | $500 | $1,500 | $2,500 |
Cold Storage | $2,500 | $6,000 | $12,000 |
Office Supplies | $500 | $1,000 | $2,000 |
Repairs and Maintenance | $1,000 | $2,500 | $6,000 |
Gas/Auto Expenses | $1,000 | $2,000 | $5,000 |
Postage | $200 | $400 | $1,200 |
Total Operating Expenses | $84,725 | $231,205 | $375,805 |
Profit Before Interest and Taxes | ($4,392) | $40,391 | $76,846 |
EBITDA | $4,893 | $49,676 | $86,131 |
Interest Expense | $9,810 | $9,060 | $8,160 |
Taxes Incurred | $0 | $9,399 | $0 |
Net Profit | ($14,202) | $21,932 | $68,686 |
Net Profit/Sales | -11.49% | 5.38% | 10.10% |
9.5 Projected Cash Flow
Our projected cash flow is outlined in the following chart and table.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $123,589 | $407,853 | $679,746 |
Subtotal Cash from Operations | $123,589 | $407,853 | $679,746 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $4,944 | $16,314 | $27,190 |
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 | $60,000 | $60,000 |
Subtotal Cash Received | $128,533 | $484,167 | $766,936 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $34,040 | $102,120 | $162,220 |
Bill Payments | $89,311 | $294,893 | $461,222 |
Subtotal Spent on Operations | $123,351 | $397,013 | $623,442 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $4,466 | $16,314 | $27,190 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $12,000 | $14,000 | $16,000 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $65,000 | $30,000 | $30,000 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $204,817 | $457,327 | $696,631 |
Net Cash Flow | ($76,284) | $26,840 | $70,304 |
Cash Balance | $41,716 | $68,556 | $138,861 |
9.6 Projected Balance Sheet
The following table explains the projected balance sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $41,716 | $68,556 | $138,861 |
Inventory | $16,744 | $52,744 | $87,906 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $58,460 | $121,300 | $226,767 |
Long-term Assets | |||
Long-term Assets | $130,000 | $160,000 | $190,000 |
Accumulated Depreciation | $9,285 | $18,570 | $27,855 |
Total Long-term Assets | $120,715 | $141,430 | $162,145 |
Total Assets | $179,175 | $262,730 | $388,912 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $9,899 | $25,522 | $39,018 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $478 | $478 | $478 |
Subtotal Current Liabilities | $10,376 | $26,000 | $39,496 |
Long-term Liabilities | $158,000 | $144,000 | $128,000 |
Total Liabilities | $168,376 | $170,000 | $167,496 |
Paid-in Capital | $70,000 | $130,000 | $190,000 |
Retained Earnings | ($45,000) | ($59,202) | ($37,270) |
Earnings | ($14,202) | $21,932 | $68,686 |
Total Capital | $10,798 | $92,730 | $221,416 |
Total Liabilities and Capital | $179,175 | $262,730 | $388,912 |
Net Worth | $10,798 | $92,730 | $221,416 |
9.7 Business Ratios
Projected business ratios are provided in the table below. The final column, Industry Profile, shows ratios for the Fast-Food Restaurant, Independent industry, as determined by the Standard Industry Classification (SIC) Index code 7999.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 230.01% | 66.66% | 8.67% |
Percent of Total Assets | ||||
Inventory | 9.35% | 20.08% | 22.60% | 3.24% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 37.31% |
Total Current Assets | 32.63% | 46.17% | 58.31% | 45.97% |
Long-term Assets | 67.37% | 53.83% | 41.69% | 54.03% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 5.79% | 9.90% | 10.16% | 17.94% |
Long-term Liabilities | 88.18% | 54.81% | 32.91% | 22.26% |
Total Liabilities | 93.97% | 64.71% | 43.07% | 40.20% |
Net Worth | 6.03% | 35.29% | 56.93% | 59.80% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 65.00% | 66.59% | 66.59% | 59.05% |
Selling, General & Administrative Expenses | 76.49% | 61.21% | 56.49% | 39.24% |
Advertising Expenses | 7.51% | 0.00% | 0.00% | 1.96% |
Profit Before Interest and Taxes | -3.55% | 9.90% | 11.31% | 1.92% |
Main Ratios | ||||
Current | 5.63 | 4.67 | 5.74 | 1.04 |
Quick | 4.02 | 2.64 | 3.52 | 0.66 |
Total Debt to Total Assets | 93.97% | 64.71% | 43.07% | 50.22% |
Pre-tax Return on Net Worth | -131.51% | 33.79% | 31.02% | 6.90% |
Pre-tax Return on Assets | -7.93% | 11.93% | 17.66% | 13.87% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -11.49% | 5.38% | 10.10% | n.a |
Return on Equity | -131.51% | 23.65% | 31.02% | n.a |
Activity Ratios | ||||
Inventory Turnover | 2.78 | 3.92 | 3.23 | n.a |
Accounts Payable Turnover | 10.02 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 21 | 25 | n.a |
Total Asset Turnover | 0.69 | 1.55 | 1.75 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 15.59 | 1.83 | 0.76 | n.a |
Current Liab. to Liab. | 0.06 | 0.15 | 0.24 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $48,083 | $95,300 | $187,271 | n.a |
Interest Coverage | -0.45 | 4.46 | 9.42 | n.a |
Additional Ratios | ||||
Assets to Sales | 1.45 | 0.64 | 0.57 | n.a |
Current Debt/Total Assets | 6% | 10% | 10% | n.a |
Acid Test | 4.02 | 2.64 | 3.52 | n.a |
Sales/Net Worth | 11.45 | 4.40 | 3.07 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |