Tablature Tattoo
Financial Plan
The financial plan for Tablature Tattoo is to raise $27,000 from a combination of personal savings, a long-term loan, and short-term borrowing to launch the business. The business will achieve cash flow and profit break-even in the seventh month of operation and net profit will be achieved in the first year, allowing for dividends to be paid to the owners beyond their salaries starting in year two.
Start-up Funding
The start-up funding will be primarily from investment by the co-owners and founders, Julie and Jake Hunt, who will each contribute $7,500. They will borrow $2,000 on credit cards and seek a three-year loan of $10,000 for the remaining cash, with their home equity as collateral. This will cover the required $27,000 in funding needed to launch.
Start-up Funding | |
Start-up Expenses to Fund | $8,700 |
Start-up Assets to Fund | $18,300 |
Total Funding Required | $27,000 |
Assets | |
Non-cash Assets from Start-up | $8,500 |
Cash Requirements from Start-up | $9,800 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $9,800 |
Total Assets | $18,300 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $2,000 |
Long-term Liabilities | $10,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $12,000 |
Capital | |
Planned Investment | |
Jake Hunt | $7,500 |
Julie Hunt | $7,500 |
Additional Investment Requirement | $0 |
Total Planned Investment | $15,000 |
Loss at Start-up (Start-up Expenses) | ($8,700) |
Total Capital | $6,300 |
Total Capital and Liabilities | $18,300 |
Total Funding | $27,000 |
Important Assumptions
The table below presents assumptions used in the financial calculations of the business plan.
Break-even Analysis
The monthly break-even is shown below. The units break-even represents an average between the different business services and products and is not as helpful as a target.

Break-even Analysis | |
Monthly Units Break-even | 131 |
Monthly Revenue Break-even | $16,386 |
Assumptions: | |
Average Per-Unit Revenue | $124.90 |
Average Per-Unit Variable Cost | $8.98 |
Estimated Monthly Fixed Cost | $15,207 |
Projected Profit and Loss
Gross margins will improve slightly as sales of full sessions increase relative to other services.
The marketing budget includes $150 per month to cover website hosting and maintenance and periodic runs of flyers or new business cards. Depreciation is for the long-term assets of the business over three years. Rent is $1,500 per month and utilities $150 per month (electricity, phone and internet). Insurance is not expected to rise significantly as the business will stay within its insurance bracket during this period. Payroll taxes of 15% and employee benefits of 10% (health insurance) are applied to payroll for the Hunts and the second artist’s wages. Tattoo supplies of $100 per month are anticipated to replenish items purchased before the launch. Inflationary increases are applied to most items and to prices charged to customers.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $202,461 | $293,434 | $327,078 |
Direct Cost of Sales | $14,561 | $21,673 | $24,109 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $14,561 | $21,673 | $24,109 |
Gross Margin | $187,900 | $271,761 | $302,970 |
Gross Margin % | 92.81% | 92.61% | 92.63% |
Expenses | |||
Payroll | $136,192 | $163,187 | $178,716 |
Marketing/Promotion | $1,800 | $1,890 | $1,985 |
Depreciation | $1,866 | $2,466 | $3,466 |
Rent | $18,000 | $18,540 | $19,096 |
Utilities | $1,800 | $1,854 | $1,910 |
Insurance | $1,200 | $1,236 | $1,273 |
Payroll Taxes | $20,429 | $24,478 | $26,807 |
Tattoo Supplies | $1,200 | $1,200 | $1,200 |
Total Operating Expenses | $182,487 | $214,851 | $234,452 |
Profit Before Interest and Taxes | $5,413 | $56,910 | $68,517 |
EBITDA | $7,279 | $59,376 | $71,983 |
Interest Expense | $932 | $500 | $167 |
Taxes Incurred | $1,344 | $16,923 | $20,505 |
Net Profit | $3,137 | $39,487 | $47,846 |
Net Profit/Sales | 1.55% | 13.46% | 14.63% |
Projected Cash Flow
The business will reach cash flow break-even mid-year, and be able to pay dividends in year two while keeping a cash balance of around $20,000 for unexpected needs. The short-term debt will be paid off in the first year and the long-term loan will be paid off over the first three years of operation. Some additional long-term assets (replacements of equipment and additional tools) will be purchased over these years as well.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $202,461 | $293,434 | $327,078 |
Subtotal Cash from Operations | $202,461 | $293,434 | $327,078 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $16,197 | $23,475 | $26,166 |
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 | $218,658 | $316,909 | $353,245 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $136,192 | $163,187 | $178,716 |
Bill Payments | $53,597 | $89,359 | $95,998 |
Subtotal Spent on Operations | $189,790 | $252,546 | $274,714 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $16,197 | $23,475 | $26,166 |
Principal Repayment of Current Borrowing | $2,000 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $3,336 | $3,333 | $3,331 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $600 | $1,200 | $1,200 |
Dividends | $0 | $30,000 | $40,000 |
Subtotal Cash Spent | $211,922 | $310,554 | $345,411 |
Net Cash Flow | $6,736 | $6,355 | $7,833 |
Cash Balance | $16,536 | $22,891 | $30,724 |
Projected Balance Sheet
The business will create a healthier position as it pays off its long-term and short-term debt, even while accounts payable will increase due to a greater volume of sales.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $16,536 | $22,891 | $30,724 |
Inventory | $1,624 | $2,746 | $2,283 |
Other Current Assets | $1,500 | $1,500 | $1,500 |
Total Current Assets | $19,659 | $27,136 | $34,506 |
Long-term Assets | |||
Long-term Assets | $5,600 | $6,800 | $8,000 |
Accumulated Depreciation | $1,866 | $4,332 | $7,798 |
Total Long-term Assets | $3,734 | $2,468 | $202 |
Total Assets | $23,393 | $29,604 | $34,708 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $7,292 | $7,349 | $7,939 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $7,292 | $7,349 | $7,939 |
Long-term Liabilities | $6,664 | $3,331 | $0 |
Total Liabilities | $13,956 | $10,680 | $7,939 |
Paid-in Capital | $15,000 | $15,000 | $15,000 |
Retained Earnings | ($8,700) | ($35,563) | ($36,076) |
Earnings | $3,137 | $39,487 | $47,846 |
Total Capital | $9,437 | $18,924 | $26,770 |
Total Liabilities and Capital | $23,393 | $29,604 | $34,708 |
Net Worth | $9,437 | $18,924 | $26,770 |
Business Ratios
The business ratios here are compared against “other personal care services,” NAICS 812199, which includes tattoo parlors.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 44.93% | 11.47% | -6.55% |
Percent of Total Assets | ||||
Inventory | 6.94% | 9.28% | 6.58% | 3.80% |
Other Current Assets | 6.41% | 5.07% | 4.32% | 45.54% |
Total Current Assets | 84.04% | 91.66% | 99.42% | 55.32% |
Long-term Assets | 15.96% | 8.34% | 0.58% | 44.68% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 31.17% | 24.82% | 22.87% | 20.71% |
Long-term Liabilities | 28.49% | 11.25% | 0.00% | 74.98% |
Total Liabilities | 59.66% | 36.08% | 22.87% | 95.69% |
Net Worth | 40.34% | 63.92% | 77.13% | 4.31% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 92.81% | 92.61% | 92.63% | 75.39% |
Selling, General & Administrative Expenses | 91.26% | 79.16% | 78.00% | 30.08% |
Advertising Expenses | 0.89% | 0.64% | 0.61% | 2.46% |
Profit Before Interest and Taxes | 2.67% | 19.39% | 20.95% | 6.21% |
Main Ratios | ||||
Current | 2.70 | 3.69 | 4.35 | 1.46 |
Quick | 2.47 | 3.32 | 4.06 | 1.28 |
Total Debt to Total Assets | 59.66% | 36.08% | 22.87% | 95.69% |
Pre-tax Return on Net Worth | 47.49% | 298.09% | 255.33% | 476.96% |
Pre-tax Return on Assets | 19.16% | 190.55% | 196.93% | 20.53% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 1.55% | 13.46% | 14.63% | n.a |
Return on Equity | 33.24% | 208.66% | 178.73% | n.a |
Activity Ratios | ||||
Inventory Turnover | 11.75 | 9.92 | 9.59 | n.a |
Accounts Payable Turnover | 8.35 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 29 | n.a |
Total Asset Turnover | 8.65 | 9.91 | 9.42 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 1.48 | 0.56 | 0.30 | n.a |
Current Liab. to Liab. | 0.52 | 0.69 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $12,367 | $19,787 | $26,568 | n.a |
Interest Coverage | 5.81 | 113.88 | 411.39 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.12 | 0.10 | 0.11 | n.a |
Current Debt/Total Assets | 31% | 25% | 23% | n.a |
Acid Test | 2.47 | 3.32 | 4.06 | n.a |
Sales/Net Worth | 21.45 | 15.51 | 12.22 | n.a |
Dividend Payout | 0.00 | 0.76 | 0.84 | n.a |