The following financial plan includes our projected Break Even Analysis, Profit and Loss, Cash Flow and Balance Sheet.
Our break-even analysis table shows that we will need $7,667 per month to meet our regular expenses and salary costs.
As the following table describes, it will take several months before the store can realistically turn a profit. This is in part due to the time it takes to get the word out that the store is open for business and that what it offers for local scrappers is more than what our competition offers.
Although the winter time frame can be the best for class participation, these first monthly estimates were set conservatively, when, in fact, it is hoped that the initial advertising campaign will stimulate more sales and class sign-ups than what has been projected.
Although payroll costs are high for a start-up, the owner feels it is essential to have two part-time employees to help cover the store during its open hours. If necessary, the owner is prepared to reduce her monthly salary to ease the cash flow throughout the first year of operation.
Although the initial profit margins are small, the cash flow is sufficient to cover estimated monthly expenses and inventory purchases. As additional back-up, a personal loan equal to the initial cost of inventory will be secured so It's Scrappy! can adapt to changes in supply costs over the first year and be more able to make special-order purchases of new supplies and materials.
Estimated sales are expected to increase during the Fall and into the second winter of operation, while costs will be held as close to the same levels as possible.
The balance sheet shows are estimated assets and liabilities.
The following comparison Ratios are taken from the Standard Industry Code for "Hobby and Craft Supplies," Standard Industrial Classification (SIC) code 5945. As the following tables shows, are estimates are within the standard ratios for this industry.