Stained Glass Gallery Business Plan

Glass Dreams

Financial Plan

The following sections outline the financial plan for Glass Dreams.

7.1 Break-even Analysis

The following table and chart show our monthly break-even point for the next year.

Stained glass gallery business plan, financial plan chart image

Break-even Analysis


Monthly Revenue Break-even	$23,353

Assumptions:
Average Percent Variable Cost	20%
Estimated Monthly Fixed Cost	$18,735

7.2 Projected Profit and Loss

The following table and charts are the projected profit and loss for three years.

Pro Forma Profit and Loss
	2002	2003	2004
Sales	$332,500	$360,000	$400,000
Direct Cost of Sales	$65,750	$75,000	$88,000
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$65,750	$75,000	$88,000

Gross Margin	$266,750	$285,000	$312,000
Gross Margin %	80.23%	79.17%	78.00%


Expenses
Payroll	$154,800	$160,000	$166,000
Sales and Marketing and Other Expenses	$6,000	$6,000	$6,000
Depreciation	$0	$0	$0
Leased Equipment	$0	$0	$0
Utilities	$4,800	$4,800	$4,800
Insurance	$0	$0	$0
Rent	$36,000	$36,000	$36,000
Payroll Taxes	$23,220	$24,000	$24,900
Other	$0	$0	$0

Total Operating Expenses	$224,820	$230,800	$237,700

Profit Before Interest and Taxes	$41,930	$54,200	$74,300
EBITDA	$41,930	$54,200	$74,300
Interest Expense	$4,415	$3,380	$2,300
Taxes Incurred	$11,255	$15,246	$21,600

Net Profit	$26,260	$35,574	$50,400
Net Profit/Sales	7.90%	9.88%	12.60%

7.3 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Pro Forma Cash Flow
	2002	2003	2004
Cash Received

Cash from Operations
Cash Sales	$332,500	$360,000	$400,000
Subtotal Cash from Operations	$332,500	$360,000	$400,000

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	$332,500	$360,000	$400,000

Expenditures	2002	2003	2004

Expenditures from Operations
Cash Spending	$154,800	$160,000	$166,000
Bill Payments	$111,511	$164,044	$183,256
Subtotal Spent on Operations	$266,311	$324,044	$349,256

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	$10,800	$10,800	$10,800
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$277,111	$334,844	$360,056

Net Cash Flow	$55,389	$25,156	$39,944
Cash Balance	$105,389	$130,545	$170,490

7.4 Projected Balance Sheet

The following table is the projected balance sheet for three years.

Pro Forma Balance Sheet
	2002	2003	2004
Assets

Current Assets
Cash	$105,389	$130,545	$170,490
Inventory	$6,380	$7,278	$8,539
Other Current Assets	$0	$0	$0
Total Current Assets	$111,769	$137,823	$179,029

Long-term Assets
Long-term Assets	$20,000	$20,000	$20,000
Accumulated Depreciation	$3,000	$3,000	$3,000
Total Long-term Assets	$17,000	$17,000	$17,000
Total Assets	$128,769	$154,823	$196,029

Liabilities and Capital	2002	2003	2004

Current Liabilities
Accounts Payable	$12,309	$13,588	$15,194
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$12,309	$13,588	$15,194

Long-term Liabilities	$39,200	$28,400	$17,600
Total Liabilities	$51,509	$41,988	$32,794

Paid-in Capital	$0	$0	$0
Retained Earnings	$51,000	$77,261	$112,835
Earnings	$26,260	$35,574	$50,400
Total Capital	$77,261	$112,835	$163,235
Total Liabilities and Capital	$128,769	$154,823	$196,029

Net Worth	$77,260	$112,835	$163,235

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7336, Commercial Art and Graphic Design, are shown for comparison.

Ratio Analysis
	2002	2003	2004	Industry Profile
Sales Growth	27.88%	8.27%	11.11%	8.50%

Percent of Total Assets
Inventory	4.95%	4.70%	4.36%	5.30%
Other Current Assets	0.00%	0.00%	0.00%	44.20%
Total Current Assets	86.80%	89.02%	91.33%	69.00%
Long-term Assets	13.20%	10.98%	8.67%	31.00%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	9.56%	8.78%	7.75%	43.70%
Long-term Liabilities	30.44%	18.34%	8.98%	19.40%
Total Liabilities	40.00%	27.12%	16.73%	63.10%
Net Worth	60.00%	72.88%	83.27%	36.90%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	80.23%	79.17%	78.00%	0.00%
Selling, General & Administrative Expenses	72.33%	69.29%	65.40%	81.30%
Advertising Expenses	1.80%	1.67%	1.50%	1.00%
Profit Before Interest and Taxes	12.61%	15.06%	18.58%	1.70%

Main Ratios
Current	9.08	10.14	11.78	1.60
Quick	8.56	9.61	11.22	1.23
Total Debt to Total Assets	40.00%	27.12%	16.73%	63.10%
Pre-tax Return on Net Worth	48.56%	45.04%	44.11%	3.60%
Pre-tax Return on Assets	29.13%	32.82%	36.73%	9.80%

Additional Ratios	2002	2003	2004
Net Profit Margin	7.90%	9.88%	12.60%	n.a
Return on Equity	33.99%	31.53%	30.88%	n.a

Activity Ratios
Inventory Turnover	2.93	10.98	11.13	n.a
Accounts Payable Turnover	8.76	12.17	12.17	n.a
Payment Days	31	29	28	n.a
Total Asset Turnover	2.58	2.33	2.04	n.a

Debt Ratios
Debt to Net Worth	0.67	0.37	0.20	n.a
Current Liab. to Liab.	0.24	0.32	0.46	n.a

Liquidity Ratios
Net Working Capital	$99,460	$124,235	$163,835	n.a
Interest Coverage	9.50	16.04	32.30	n.a

Additional Ratios
Assets to Sales	0.39	0.43	0.49	n.a
Current Debt/Total Assets	10%	9%	8%	n.a
Acid Test	8.56	9.61	11.22	n.a
Sales/Net Worth	4.30	3.19	2.45	n.a
Dividend Payout	0.00	0.00	0.00	n.a