Double Decker Tours of Washington's financial plan is detailed in the following sections. Preliminary estimates suggest a substantial profit after our first two quarters of operations. Income estimates are based on garnering 2% of the tourist/sightseeing business in Washington with a growth rate of 20% for the next three years and a growth of 10% after that.
All our financial projections present a conservative but realistic depiction of DDTOW's financial position based on loans and financing of $800,000.
DDTOW, LLC assumes the following:
The break-even analysis is based on an average monthly fixed cost of approximately $121,200. By placing our ticket price between Tourmobile's price and Old town Trolley's, we needed only4,000 riders per month to break even. On a thirty-day basis that comes to about 134 riders per day or 12 riders per bus per day. During the fall, spring and summer months, we will more than surpass that number of riders.
Our projected profit and loss is shown on the following table, with sales increasing from more than $14 million the first year to more than $21 million the third, and profits varying substantially for the start-up phase of this business. We show a profit in the first year on 2% of 22 million visitors to the city or 453,000 customers which equals 1,286 customers per day or making two tours per day for 12 buses.
As with the break-even analysis, we are projecting very conservatively regarding cost of sales and gross margin. Our cost of sales should be much lower, and gross margin higher, than in this projection. We prefer to project conservatively so that we make sure we have enough cash.
The detailed monthly projections are included in the appendices.
Cash flow projections are critical to our success. Our analysis shows strong cash generation over the projected period. Some of our assumptions for the cash flow table below are as follows:
The monthly cash is shown in the illustration below, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendices.