Sports Equipment Cafe Business Plan

• Growth will be moderate, cash balance always positive.
• Marketing will remain at or below 15% of sales.
• The company will invest residual profits into company expansion and personnel.

7.1 Important Assumptions

We do not sell anything on credit. The personnel burden is very low because benefits are not paid to part-timers. And the short-term interest rate is extra ordinarily low because of the owner’s long-standing relationship with the USAA Credit Union.

7.2 Key Financial Indicators

The following chart shows that inventory turns speed up as sales increase. This correlation is important when evaluating past inventory control techniques.

7.3 Break-even Analysis

The chart and table below show our projected break-even point.

7.4 Projected Cash Flow

We are positioning ourselves in the market as a medium risk concern with steady cash flows. Accounts payable is paid at the end of each month while sales are in cash, this gives The Boulder Stop an excellent cash flow structure. Solid Net Working Capital and intelligent marketing will secure a strong cash balance by January 1, 2000. Any amounts above $10,000 will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held. The interest will show up as – Dividends in the Cash Flow table and will be updated quarterly.

7.5 Projected Profit and Loss

We predict advertising costs and consulting costs will go up in the next three years. This will give The Boulder Stop a strong profit-to-sales ratio % by the year 2000. Normally, a start-up concern will operate with negative profits through the first two years. We will avoid that kind of operating loss by knowing our competitors, our target markets, industry direction, and the products we sell.

Note that we predict we will exceed our gross margin % objective by the year 2000.

7.6 Projected Balance Sheet

All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in Net Worth beyond the year 2000.

7.7 Business Ratios

We expect our net profit margin, gross margin, and ROA to increase steadily over the three-year period. ROE will decrease due to lower equity needs and higher cash inflow. Our net working capital will increase significantly by year three, proving that we have the cash flows to remain a going concern. The following table shows these important financial ratios. NAICS code 451110, Sporting Goods Stores, used for industry profile comparisons.