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Cyclist Repair Center

Executive Summary

Cyclist Repair Center (CRC) is a cycling specific sports clinic serving the Boulder, Colorado community. Cyclist Repair Center has been founded by Arthur Mendosa-Cadiz. Arthur created the center as a Colorado registered corporation in January 2004. Cyclist Repair Center is expected to quickly gain market penetration through a focused strategy, doing what they do best, serving cyclists.

The Market
Cyclist Repair Center has identified two distinct customer segments which they will target. The first segment is the competitive cyclist. Within this segment there are two subgroups, those that are professionals and those that are experts. There are a total of 4,500 potential competitive cyclists with an annual growth rate of 4%. This group is seeking therapeutic repair/recovery services or training services to make them more competitive in their races.

The second group is composed of recreational cyclists. This group has 32,090 potential customers and a 5% growth rate. These cyclists may race occassionally, but generally they are just people with a passion/enjoyment for cycling. The demographics for the recreational cyclist indicate a more affluent group relative to the competitive cyclist since cycling is not one of the more economically rewarding professions.

Cyclist Repair Center has chosen to locate their center in Boulder, CO. Boulder is renowned as a high mountain sports town and cycling is one of its favorite sports. Boulder offers hundreds of miles of road cycling directly out of town. As for mountain biking, there are too many trails to count, all within a few minutes drive or ride from town. Recognizing the importance of Boulder relative to cycling, the United States Cycling Federation has located their olympic training center here.

Services
Cyclist Repair Center offers a wide range of cycling specific sports medicine and training services that range from the proactive to the reactive. Offered services include:

  • Sports massage- for greater comfort as well faster recovery.
  • Personal training- for weight loss, increased speed, or increased endurance.
  • Bike fit- for increased comfort, power, or speed.
  • Fitness assessment- includes such tests as: VO2 max, lactate threshold, aerobic threshold, anaerobic threshold.
  • Cycling related injuries- diagnosis and treatment by physicians and physical therapists.

Cyclist Repair Center will have on staff a USCF Category I or II racer turned personal coach/trainer, a sports medicine physician, massage therapists, physical therapists, as well as a wide range of cycling specific equipment to assist these service providers.

Management
Cyclist Repair Center has been founded and will be led by Arthur Mendosa-Cadiz. Arthur has been immersed in cycling for years. Starting after undergraduate schooling, Arthur was a competitive cyclist for several years while working in the bicycle industry. These years racing provided him with tremendous insight regarding cycling and its effects on the cyclist’s body. Arthur then earned a Master’s in Sports Physical Therapy and practiced physical therapy for several years. Arthur will be able to leverage his passion and experience for bicycles, as well as his empirical experience as a physical therapist to offer Boulder a wonderful cycling service.

By locating in Boulder, a cycling town, and offering focused services targeting different types of cyclist, Cyclist Repair Center will quickly generate customers and revenue. Revenue for years two and three is $369,000 and $443,000 respectively.

1.1 Objectives

  • To reach profitability by the end of year two.
  • Generate revenue exceeding $400,000 by year three.
  • Achieve a net profit of at least 10% by year three.
Sports therapy business plan, executive summary chart image

1.2 Mission

The Cyclist Repair Center’s mission is to provide clients with individualized, cycling specific assessment, diagnosis, treatment, and training programs. Clients will receive national class service with an emphasis on education, empowering each athlete.

1.3 Keys to Success

  • Maintain our focus on cycling specific injuries and training.
  • Offer a wide range of services meeting all of the cyclist’s needs.
  • Design and employ strict financial controls, a requisite for an efficiently run organization.
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Company Summary

Cyclist Repair Center has been formed as a Colorado corporation. The company was formed in January 2004 by Arthur Mendosa-Cadiz.

2.1 Company Ownership

Cyclist Repair Center is a privately held corporation. The majority shareholder is Arthur Mendosa-Cadiz. Equity in the corporation has been issued to two investors.

2.2 Start-up Summary

Cyclist Repair Center will require the following equipment and services at start up:

  • Professional service provider fees including legal fees and accounting fees (to set up QuickBooks Pro).
  • Four computer terminals each with Microsoft Office and one computer with QuickBooks Pro. A central file server. The office will be networked and have a broadband Internet connection.
  • Four examination beds.
  • Exercise bicycle.
  • Three CompuTrainers with two computers.
  • Treadmill.
  • Portable ultrasound unit.
  • Various massage equipment.
  • Various medical examining tools.
  • Telephone system.
Sports therapy business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $3,000
Accounting service provider $2,000
Brochures $500
Insurance $1,500
Rent $1,500
Total Start-up Expenses $8,500
Start-up Assets
Cash Required $121,500
Other Current Assets $0
Long-term Assets $22,000
Total Assets $143,500
Total Requirements $152,000
Start-up Funding
Start-up Expenses to Fund $8,500
Start-up Assets to Fund $143,500
Total Funding Required $152,000
Assets
Non-cash Assets from Start-up $22,000
Cash Requirements from Start-up $121,500
Additional Cash Raised $0
Cash Balance on Starting Date $121,500
Total Assets $143,500
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $30,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $30,000
Capital
Planned Investment
Arthur Mendosa-Cadiz $25,000
Investor 1 $52,000
Investor 2 $45,000
Additional Investment Requirement $0
Total Planned Investment $122,000
Loss at Start-up (Start-up Expenses) ($8,500)
Total Capital $113,500
Total Capital and Liabilities $143,500
Total Funding $152,000

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Services

Cyclist Repair Center offers a wide range of cycling specific proactive and reactive solutions for both the competitive and recreation athlete. Specific services include:

  • Sports massage- the massages can be either full body or cycling specific. Massages are valuable for recovery, greater flexibility, and increased comfort.
  • Personal training– this service will fully customize a training program for a cyclist. The trainers are very good at addressing the needs of the cyclist whether it is for weight loss, increase in cardiovascular efficiency, increase in muscle strength, increase in comfort, or race specific training.
  • Bike fit/ergonomic services– Cyclists will bring in their bicycles and shoes for this assessment. Posture/positioning on the bicycle, bicycle sizing, pedal spin cycle analysis, strength and flexibility will be evaluated.
  • Fitness evaluation– the following tests are offered:
    • VO2 max
    • Lactate threshold
    • Aerobic threshold
    • Anaerobic threshold
    • Wattage output

  • Cycling related injuries– this includes assessment, diagnosis, treatment, rehabilitation. A physician and physical therapists are available for these services.

Cyclist Repair Center accepts most major insurance plans for therapy and reactive services. Other more proactive services like training and massage are often not accepted for insurance, but this is a function of the insurance plan, not the unwillingness of Cyclist Repair Center to accept insurance.

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Market Analysis Summary

Cyclist Repair Center has identified two distinct market segments which they will target: competitive and recreational cyclists. The two different segments will be attending Cyclist Repair Center for distinct reasons and therefore will be targeted specifically. The sports clinic industry typically is not sports specific, a facility generally does not focus on a single sport.

4.1 Market Segmentation

Cyclist Repair Center has chosen to target two distinct customer segments; competitive cyclists and recreational cyclists.

Competitive Cyclists– these are cyclists that compete either at the professional or expert level. For the cyclist at the professional level cycling/racing is a full time activity where the individual’s income is from cycling. The expert level cyclist is competitive within his or her racing class but does not earn their livelihood by racing. Some compete every week, others compete several times a season. They are competitive in either their cycling class or in their age group.

  • Some demographics of Boulder based professional cyclists:
    • ages 23-33.
    • educational level- 67% have an undergraduate degree, 8% have a graduate degree.
    • individual income range is $24,000- $50,000. This range does not include other sources of income such as product sponsorship/endorsement.
    • the average number of bicycles owned by the professional is six.
    • the average length of a professional career is six years.
    • 17% of the professionals have trained with the olympic national team.
    • 77% of the cyclists are road cyclists, 12% are track cyclists, the remaining percentage are both.

  • Demographic information for expert level competitive cyclists:
    • ages 26-54.
    • educational level- 75% have an undergraduate degree, 26% have a graduate degree.
    • individual median income is $55,000.
    • the average number of bicycles owned is 3.5.

Recreational Cyclists– these cyclists enjoy cycling, ride a lot, but are seeking services to make them faster in general or more comfortable when they ride, not to be more competitive. They may also be seeking clinic services to address a cycling specific problem that they have.

  • Demographic data:
    • ages- 29-62.
    • educational level- 79% have an undergraduate degree, 28% have a graduate degree.
    • individual median income is $62,000.
    • the average number of bicycles is 4.
Sports therapy business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Competitive cyclists 4% 4,500 4,680 4,867 5,062 5,264 4.00%
Recreational cyclists 5% 32,090 33,695 35,380 37,149 39,006 5.00%
Total 4.88% 36,590 38,375 40,247 42,211 44,270 4.88%

4.2 Target Market Segment Strategy

Cyclist Repair Center has identified and targeted these two segments because they are the most likely cyclists who would be in need of a wide range of cycling specific therapeutic and training services. The competitive cyclists are in need of these services to remain competitive. Cycling over the last decade or so has become increasingly more competitive. A larger degree of this increased competition is the development of junior programs which seek to introduce cycling to younger children. As cycling completions have beguin to introduce drug controls and testing over the last few years, cyclists have begun to compete on a more level playing field.

At the recreational level there has been a surge in participation over the last decade as well. This surge is due in part to American’s recent focus on health and fitness, to a large degree a reaction to the obesity epidemic. Another driver of increased participation is the low impact nature of cycling. Many athletes have moved from other sports such as running, tennis, etc. to cycling as a form of excellent cardiovascular and aerobic fitness that has a low impact on the body.

The two different segments, competitive cyclists and recreational cyclists participate for different reasons, additionally their level of participation is different. This makes the decision to target each one separately intuitive.

4.3 Service Business Analysis

Cyclist Repair Center participates within the sports medicine/therapy industry. The industry participants are characterized by clinics that specialize in sports related injuries. It is very rare for a clinic to specialize on one specific sport. Sports clinics are a huge industry, especially in a sports town such as Boulder where a large percentage of the population lives in Boulder because of its incredible access to various individual sports.

On a national level the sports medicine/therapy generates over $576 million in revenue. Approximately 17% of this revenue is from professional team (primarily) sports with the remaining percentage coming from individual athletes. Revenue from the nonprofessional side comes primarily from reactive treatments, meaning the assessment, diagnosis, and treatment of known problems. A smaller percentage of revenue comes from proactive activities like increasing strength, speed, and cardiovascular efficiency.

On a national level, it is not uncommon for sports medicine clinics to also offer the following services:

  • Chiropractic work.
  • Podiatry services.
  • Orthopedic surgical repair.

4.3.1 Competition and Buying Patterns

Cyclist Repair Center faces competition from several different sources:

  • University of Colorado (Boulder) Sports Medicine Center– This is a large clinic that is based on campus but is available to all athletes. Because of its connection with the University, this is an educational research/training center which means many of the service providers are shadowed by students, or have students assisting clients.
  • USA Cycling Olympic Training Center- This facility is only available to invited cyclists who are participating on the team or in Olympic trials.
  • Boulder Sports Center– this is a large sports clinic that specializes in orthopedic procedures.
  • Colorado Mountain Sports Facility– This facility has a wide range of available services with a concentration on high altitude training, offering several large training rooms with oxygen concentrations set up to simulate 12,000 feet. In addition to the training rooms, there are several “high altitude” sleeping rooms for athletes. The concentration on high altitude training is based on the theory that there is value in having the athlete train and even sleep in environments of decreased oxygen, forcing the body to become more efficient with the available oxygen concentration.
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Strategy and Implementation Summary

Cyclist Repair Center intends to leverage their competitive edge of cycling specific services. This should be effective because of its location in Boulder, a true cycling town. Cyclist Repair Center’s marketing strategy will seek to develop an awareness of the cycling specific services offered to both competitive and recreational cyclists. The sales strategy has been designed to convert clients of one service into recipients of multiple services provided by Cyclist Repair Center.

5.1 Milestones

Cyclist Repair Center has established several milestones for the organization as a whole as well as for departments within the organization. The milestones have been chosen as identifiable and achievable objectives. The following table provides the time frames needed to complete each milestone.

Sports therapy business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2004 2/15/2004 $0 Arthur Business Development
Lease secured 2/15/2004 4/1/2004 $0 Arthur Operations
Hiring completed 3/15/2004 4/15/2004 $0 Arthur HR
Facility open 4/1/2004 5/1/2004 $0 Arthur Operatons
Profitability 5/1/2004 3/15/2005 $0 Arthur Accounting/ Sales
Totals $0

5.2 Competitive Edge

Cyclist Repair Center’s competitive edge is their specialization on one sport, cycling. No other facility in Boulder serves only cyclists, all are general sports clinics. This is of significant value to Cyclist Repair Center’s clients. All of Cyclist Repair Center’s staff are cycling enthusiasts. This is quite important because it provides each service provider with a unique and instrumental cycling perspective. This is valuable to the clients because it provides insight to the providers of the problems the clients may be facing. Additionally, as cycling enthusiasts, the staff’s excitement regarding cycling is contagious and apparent.

Having a cycling specific service also allows Cyclist Repair Center to offer more specific training and therapy, including the use of a specialized array of cycling specific equipment. One example of this is the use of the CompuTrainer. While some facilities may have a CompuTrainer, Cyclist Repair Center has three and uses them extensively. A CompuTrainer is a type of cycling trainer where the client mounts their own bicycle to the unit and the CompuTrainer allows the person to ride indoors. What makes the CompuTrainer especially useful is the ability to set it to test physiological functions such as aerobic threshold, lactate threshold, etc., on pre-established, consistent courses. In addition to these functions the CompuTrainer has the ability to measure wattage as well as analyzing the pedal spin cycle.

5.3 Marketing Strategy

Cyclist Repair Center’s marketing strategy has been designed to increase the awareness of Cyclist Repair Center’s cycling specific services amongst the Boulder community. Several different efforts will be undertaken to generate brand awareness.

  • Sponsorship– This effort takes several forms.
    • The first form of sponsorship is for local tours and races. This will be quite helpful in developing visibility for the organization to a very specific and targeted crowd.
    • Sponsorship will also take the form of specific athletes. Chosen athletes will receive free services from Cyclist Repair Center. In return for the sponsorship, Cyclist Repair Center gets visibility on the athlete’s uniform and the athlete is asked to talk up the positive benefits that he/she has received.

  • Advertisements– The advertisements will also take several forms.
    • The most broad is an advertisement in the Yellow Pages. The Yellow Pages are an indispensible resource for individuals who are looking for service providers.
    • Advertisements will also be placed in several cycling specific and local Boulder journals. These advertisements will again be targeted toward the cycling community.

5.4 Sales Strategy

The sales strategy will be piggybacked on the marketing strategy. The marketing strategy will be used to generate visibility for the organization while the sales strategy will be used to generate increased sales. The most significant way (relative to increased revenue) is to convert current clients who are using only one service from Cyclist Repair Center to using multiple services. This may take the form of a client who came in for sports massage services who then becomes a user of the training services. This will be done through “upselling” by the various service providers as well as written information dissemination. Economic incentives in the form of discounts will be used to convert current single service clients into multi service users.

5.4.1 Sales Forecast

Cyclist Repair Center has developed a conservative sales forecast as a means of increasing the likelihood of achieving the sales goals. This also will assist Cyclist Repair Center in its relationship with investors who will want the sales goals to be met. If the sales forecast was too aggressive then the investors are likely to be disappointed. Sales will grow incrementally. As a start-up organization, it is anticipated that the first year will be relatively slow as the organization develops awareness and brand equity. Year one to two sales are expected to have the largest increase with the growth rate decreasing a bit from year two to year three.

Sports therapy business plan, strategy and implementation summary chart image

Sports therapy business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Sports massage $26,770 $72,279 $86,734
Personal trainer $25,571 $69,042 $82,851
Fitness assessment $21,576 $58,254 $69,905
Bike fit $22,774 $61,491 $73,789
Cycling related injuries $39,955 $107,879 $129,454
Total Sales $136,646 $368,944 $442,733
Direct Cost of Sales Year 1 Year 2 Year 3
Sports massage $1,338 $3,614 $4,337
Personal trainer $1,279 $3,452 $4,143
Fitness assessment $1,079 $2,913 $3,495
Bike fit $1,139 $3,075 $3,689
Cycling related injuries $1,998 $5,394 $6,473
Subtotal Direct Cost of Sales $6,832 $18,447 $22,137

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Web Plan Summary

A website will be developed for Cyclist Repair Center as an efficient source of information dissemination. The site provide Internet surfers with a wealth of information regarding the various services that Cyclist Repair Center offers. Also detailed on the site are bios of the different staff members, displaying the years of cycling specific experience. For questions that are not answered on the site, viewers will be encouraged to call the center and inquire. The goal of the website is to impress upon the reader that Cyclist Repair Center is the premier cycling specific sports clinic addressing any need a competitive or recreational cyclist may have.

6.1 Website Marketing Strategy

Cyclist Repair Center will employ two types of marketing for the website. The first is submission to various search engines. This will be quite important as there are many people that use search engines to locate information. If someone is unfamiliar with Cyclist Repair Center and their services, all they need to do is is type in a few key words into a search engine and they are brought to Cyclist Repair Center’s site.

Another source of marketing will be inclusion of Cyclist Repair Center’s URL on all printed material. This will direct current or prospective customers to check out the site for additional information.

6.2 Development Requirements

A computer science student has been informally contacted and has agreed to be responsible for the design and development of the site. The time frame for development is six to eight weeks.

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Management Summary

Arthur Mendosa-Cadiz comes from a cycling background with an educational emphasis in sports physical therapy. Arthur received his undergraduate degree in philosophy from Colorado College. After graduation he moved to Boulder and worked in a bicycle shop to support his cycling habit. This habit took the form of both road and mountain bike racing. On the road Arthur was a Category II racer, competing every other week. When he was not competing on the road Arthur raced mountain bikes in the pro/expert class. Arthur spent four years racing. This provided Arthur with incredible insight to cycling and the needs of a cyclist.

Recognizing that he could not sustain his racing throughout his life, at least not at this intensity, Arthur decided to go back to school to provide himself with skills for another profession. Wanting to remain within the sport industry, Arthur entered the University of Colorado’s Master of Sport Physical Therapy. This program was for two years and Arthur would be able to practice sports physical therapy when he was done.

This is exactly what he did, he practiced physical therapy for six years at a large clinic. While Arthur found this rewarding, the constant interaction with clients and assisting them with their sport, something was lacking. At this point Arthur began to contemplate a business venture that would leverage his existing skills of physical therapy, allowing him to focus on cycling, his passion. Arthur spent a total of a year in contemplation and writing a business plan. When Arthur began to show the plan around looking for investors, he found them reasonably quick. He was told that they were interested because they thought Boulder had a wonderful market and that Arthur was the right person to execute on the plan, he had the passion and skills to make it work.

7.1 Personnel Plan

The following personnel will be required:

  • Arthur- business development, physical therapy, cycling trainer, marketing, sales, some accounting and finance.
  • Physician- part time physician that comes in as needed for diagnosis and treatment.
  • Massage therapists (2)
  • Physical therapists (2)
  • Coach/trainer
  • Receptionist
  • Accounting clerk/receptionist
Personnel Plan
Year 1 Year 2 Year 3
Arthur $20,000 $24,000 $30,000
Physician $22,500 $30,000 $30,000
Massage therapist $18,000 $24,000 $24,000
Massage therapist $16,000 $24,000 $24,000
Physical therapist $31,500 $42,000 $42,000
Physical therapist $28,000 $42,000 $42,000
Coach/trainer $18,000 $24,000 $30,000
Receptionist $18,000 $24,000 $24,000
Accounting clerk/receptionist $18,000 $24,000 $24,000
Total People 9 9 9
Total Payroll $190,000 $258,000 $270,000

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Financial Plan

The following sections outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis is shown below.

Sports therapy business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $21,753
Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $20,665

8.3 Projected Profit and Loss

The following table and charts illustrate the projected profit and loss.

Sports therapy business plan, financial plan chart image

Sports therapy business plan, financial plan chart image

Sports therapy business plan, financial plan chart image

Sports therapy business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $136,646 $368,944 $442,733
Direct Cost of Sales $6,832 $18,447 $22,137
Other Costs of Sales $0 $0 $0
Total Cost of Sales $6,832 $18,447 $22,137
Gross Margin $129,814 $350,497 $420,597
Gross Margin % 95.00% 95.00% 95.00%
Expenses
Payroll $190,000 $258,000 $270,000
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $4,404 $4,404 $4,404
Rent $18,000 $18,000 $19,000
Utilities $1,680 $1,680 $1,680
Insurance $3,000 $3,000 $3,500
Payroll Taxes $28,500 $38,700 $40,500
Total Operating Expenses $247,984 $326,184 $341,484
Profit Before Interest and Taxes ($118,170) $24,313 $79,113
EBITDA ($113,766) $28,717 $83,517
Interest Expense $2,740 $2,270 $1,783
Taxes Incurred $0 $6,613 $23,199
Net Profit ($120,911) $15,430 $54,131
Net Profit/Sales -88.48% 4.18% 12.23%

8.4 Projected Cash Flow

The following chart and table show the projected cash flow.

Sports therapy business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $136,646 $368,944 $442,733
Subtotal Cash from Operations $136,646 $368,944 $442,733
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 $0 $0 $0
Subtotal Cash Received $136,646 $368,944 $442,733
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $190,000 $258,000 $270,000
Bill Payments $56,687 $90,087 $112,301
Subtotal Spent on Operations $246,687 $348,087 $382,301
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 $4,868 $4,868 $4,868
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $251,556 $352,955 $387,169
Net Cash Flow ($114,909) $15,990 $55,564
Cash Balance $6,591 $22,580 $78,145

8.5 Projected Balance Sheet

The following table presents the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $6,591 $22,580 $78,145
Other Current Assets $0 $0 $0
Total Current Assets $6,591 $22,580 $78,145
Long-term Assets
Long-term Assets $22,000 $22,000 $22,000
Accumulated Depreciation $4,404 $8,808 $13,212
Total Long-term Assets $17,596 $13,192 $8,788
Total Assets $24,187 $35,772 $86,933
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $6,465 $7,488 $9,386
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $6,465 $7,488 $9,386
Long-term Liabilities $25,132 $20,264 $15,396
Total Liabilities $31,597 $27,752 $24,782
Paid-in Capital $122,000 $122,000 $122,000
Retained Earnings ($8,500) ($129,411) ($113,980)
Earnings ($120,911) $15,430 $54,131
Total Capital ($7,411) $8,020 $62,151
Total Liabilities and Capital $24,187 $35,772 $86,933
Net Worth ($7,411) $8,020 $62,151

8.6 Business Ratios

The following table offers many business ratios specific to this business. The U.S. Standard Industrial Classifications (SIC) currently classifies sports therapy and training clinics as: Offices of health practitioners, nec. – 8049.9900. The industry profile ratios are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 170.00% 20.00% 3.71%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 44.76%
Total Current Assets 27.25% 63.12% 89.89% 80.71%
Long-term Assets 72.75% 36.88% 10.11% 19.29%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 26.73% 20.93% 10.80% 27.67%
Long-term Liabilities 103.91% 56.65% 17.71% 14.39%
Total Liabilities 130.64% 77.58% 28.51% 42.06%
Net Worth -30.64% 22.42% 71.49% 57.94%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 100.00%
Selling, General & Administrative Expenses 183.48% 90.82% 82.77% 77.50%
Advertising Expenses 0.00% 0.00% 0.00% 1.52%
Profit Before Interest and Taxes -86.48% 6.59% 17.87% 3.26%
Main Ratios
Current 1.02 3.02 8.33 2.29
Quick 1.02 3.02 8.33 2.00
Total Debt to Total Assets 130.64% 77.58% 28.51% 55.30%
Pre-tax Return on Net Worth 1631.60% 274.86% 124.42% 10.01%
Pre-tax Return on Assets -499.91% 61.62% 88.95% 22.39%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -88.48% 4.18% 12.23% n.a
Return on Equity 0.00% 192.40% 87.10% n.a
Activity Ratios
Accounts Payable Turnover 9.77 12.17 12.17 n.a
Payment Days 27 28 27 n.a
Total Asset Turnover 5.65 10.31 5.09 n.a
Debt Ratios
Debt to Net Worth 0.00 3.46 0.40 n.a
Current Liab. to Liab. 0.20 0.27 0.38 n.a
Liquidity Ratios
Net Working Capital $125 $15,092 $68,759 n.a
Interest Coverage -43.12 10.71 44.37 n.a
Additional Ratios
Assets to Sales 0.18 0.10 0.20 n.a
Current Debt/Total Assets 27% 21% 11% n.a
Acid Test 1.02 3.02 8.33 n.a
Sales/Net Worth 0.00 46.00 7.12 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Sports massage 0% $0 $0 $0 $804 $1,474 $2,446 $2,613 $3,015 $3,618 $3,953 $4,288 $4,559
Personal trainer 0% $0 $0 $0 $768 $1,408 $2,336 $2,496 $2,880 $3,456 $3,776 $4,096 $4,355
Fitness assessment 0% $0 $0 $0 $648 $1,188 $1,971 $2,106 $2,430 $2,916 $3,186 $3,456 $3,675
Bike fit 0% $0 $0 $0 $684 $1,254 $2,081 $2,223 $2,565 $3,078 $3,363 $3,648 $3,879
Cycling related injuries 0% $0 $0 $0 $1,200 $2,200 $3,650 $3,900 $4,500 $5,400 $5,900 $6,400 $6,805
Total Sales $0 $0 $0 $4,104 $7,524 $12,483 $13,338 $15,390 $18,468 $20,178 $21,888 $23,273
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sports massage $0 $0 $0 $40 $74 $122 $131 $151 $181 $198 $214 $228
Personal trainer $0 $0 $0 $38 $70 $117 $125 $144 $173 $189 $205 $218
Fitness assessment $0 $0 $0 $32 $59 $99 $105 $122 $146 $159 $173 $184
Bike fit $0 $0 $0 $34 $63 $104 $111 $128 $154 $168 $182 $194
Cycling related injuries $0 $0 $0 $60 $110 $183 $195 $225 $270 $295 $320 $340
Subtotal Direct Cost of Sales $0 $0 $0 $205 $376 $624 $667 $770 $923 $1,009 $1,094 $1,164
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Arthur 0% $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Physician 0% $0 $0 $0 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Massage therapist 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Massage therapist 0% $0 $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Physical therapist 0% $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Physical therapist 0% $0 $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Coach/trainer 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Receptionist 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Accounting clerk/receptionist 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Total People 0 0 0 7 9 9 9 9 9 9 9 9
Total Payroll $0 $0 $2,000 $16,000 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $0 $4,104 $7,524 $12,483 $13,338 $15,390 $18,468 $20,178 $21,888 $23,273
Direct Cost of Sales $0 $0 $0 $205 $376 $624 $667 $770 $923 $1,009 $1,094 $1,164
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $205 $376 $624 $667 $770 $923 $1,009 $1,094 $1,164
Gross Margin $0 $0 $0 $3,899 $7,148 $11,859 $12,671 $14,621 $17,545 $19,169 $20,794 $22,109
Gross Margin % 0.00% 0.00% 0.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00%
Expenses
Payroll $0 $0 $2,000 $16,000 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500
Sales and Marketing and Other Expenses $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Depreciation $367 $367 $367 $367 $367 $367 $367 $367 $367 $367 $367 $367
Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Utilities $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140
Insurance 15% $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Payroll Taxes 15% $0 $0 $300 $2,400 $3,225 $3,225 $3,225 $3,225 $3,225 $3,225 $3,225 $3,225
Total Operating Expenses $2,457 $2,457 $4,757 $20,857 $27,182 $27,182 $27,182 $27,182 $27,182 $27,182 $27,182 $27,182
Profit Before Interest and Taxes ($2,457) ($2,457) ($4,757) ($16,958) ($20,034) ($15,323) ($14,511) ($12,562) ($9,637) ($8,013) ($6,388) ($5,073)
EBITDA ($2,090) ($2,090) ($4,390) ($16,591) ($19,667) ($14,956) ($14,144) ($12,195) ($9,270) ($7,646) ($6,021) ($4,706)
Interest Expense $247 $244 $240 $237 $234 $230 $227 $223 $220 $216 $213 $209
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($2,704) ($2,701) ($4,997) ($17,195) ($20,268) ($15,553) ($14,738) ($12,785) ($9,857) ($8,229) ($6,601) ($5,282)
Net Profit/Sales 0.00% 0.00% 0.00% -418.98% -269.38% -124.60% -110.49% -83.07% -53.38% -40.78% -30.16% -22.70%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $4,104 $7,524 $12,483 $13,338 $15,390 $18,468 $20,178 $21,888 $23,273
Subtotal Cash from Operations $0 $0 $0 $4,104 $7,524 $12,483 $13,338 $15,390 $18,468 $20,178 $21,888 $23,273
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $4,104 $7,524 $12,483 $13,338 $15,390 $18,468 $20,178 $21,888 $23,273
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $0 $0 $2,000 $16,000 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500 $21,500
Bill Payments $78 $2,337 $2,343 $2,707 $4,965 $5,933 $6,171 $6,212 $6,313 $6,461 $6,543 $6,625
Subtotal Spent on Operations $78 $2,337 $4,343 $18,707 $26,465 $27,433 $27,671 $27,712 $27,813 $27,961 $28,043 $28,125
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $387 $391 $394 $397 $400 $404 $407 $411 $414 $417 $421 $424
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $465 $2,727 $4,737 $19,104 $26,866 $27,837 $28,078 $28,123 $28,227 $28,379 $28,464 $28,549
Net Cash Flow ($465) ($2,727) ($4,737) ($15,000) ($19,342) ($15,354) ($14,740) ($12,733) ($9,759) ($8,201) ($6,576) ($5,276)
Cash Balance $121,035 $118,307 $113,570 $98,570 $79,228 $63,874 $49,135 $36,402 $26,643 $18,443 $11,866 $6,591
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $121,500 $121,035 $118,307 $113,570 $98,570 $79,228 $63,874 $49,135 $36,402 $26,643 $18,443 $11,866 $6,591
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $121,500 $121,035 $118,307 $113,570 $98,570 $79,228 $63,874 $49,135 $36,402 $26,643 $18,443 $11,866 $6,591
Long-term Assets
Long-term Assets $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000
Accumulated Depreciation $0 $367 $734 $1,101 $1,468 $1,835 $2,202 $2,569 $2,936 $3,303 $3,670 $4,037 $4,404
Total Long-term Assets $22,000 $21,633 $21,266 $20,899 $20,532 $20,165 $19,798 $19,431 $19,064 $18,697 $18,330 $17,963 $17,596
Total Assets $143,500 $142,668 $139,573 $134,469 $119,102 $99,393 $83,672 $68,566 $55,466 $45,340 $36,773 $29,829 $24,187
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $2,259 $2,256 $2,543 $4,768 $5,727 $5,964 $6,002 $6,098 $6,243 $6,322 $6,402 $6,465
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $2,259 $2,256 $2,543 $4,768 $5,727 $5,964 $6,002 $6,098 $6,243 $6,322 $6,402 $6,465
Long-term Liabilities $30,000 $29,613 $29,222 $28,828 $28,431 $28,030 $27,627 $27,219 $26,809 $26,395 $25,977 $25,556 $25,132
Total Liabilities $30,000 $31,871 $31,478 $31,371 $33,199 $33,758 $33,590 $33,221 $32,906 $32,638 $32,300 $31,958 $31,597
Paid-in Capital $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000 $122,000
Retained Earnings ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500) ($8,500)
Earnings $0 ($2,704) ($5,404) ($10,402) ($27,597) ($47,864) ($63,418) ($78,156) ($90,940) ($100,798) ($109,027) ($115,629) ($120,911)
Total Capital $113,500 $110,796 $108,096 $103,098 $85,903 $65,636 $50,082 $35,344 $22,560 $12,702 $4,473 ($2,129) ($7,411)
Total Liabilities and Capital $143,500 $142,668 $139,573 $134,469 $119,102 $99,393 $83,672 $68,566 $55,466 $45,340 $36,773 $29,829 $24,187
Net Worth $113,500 $110,796 $108,096 $103,098 $85,903 $65,636 $50,082 $35,344 $22,560 $12,702 $4,473 ($2,129) ($7,411)

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