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Financial Plan

Our financial plan is based on raising approximately $349,000 by way of private equity investment.

We will achieve profitability in just over two years and due to the nature of the exponential growth of access charges, we will realize an excellent percentage net profit on sales by year one.

8.1 Start-up Funding

Total start-up requirements are listed. The start-up costs are to be financed by direct investment and owner investment. The details are included in the following tables.

Start-up Funding
Start-up Expenses to Fund $315,431
Start-up Assets to Fund $63,878
Total Funding Required $379,309
Assets
Non-cash Assets from Start-up $23,878
Cash Requirements from Start-up $40,000
Additional Cash Raised $0
Cash Balance on Starting Date $40,000
Total Assets $63,878
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner Equity $30,009
Investor $349,300
Additional Investment Requirement $0
Total Planned Investment $379,309
Loss at Start-up (Start-up Expenses) ($315,431)
Total Capital $63,878
Total Capital and Liabilities $63,878
Total Funding $379,309

8.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual figures.  The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.  We assume that The Greensward will open in October with it’s 12,000 people per day traffic.
  • We assume that there are no unforseen changes in the expectancy in the popularity of our restaurant.
  • We assume access to investments and financing which are sufficient to maintain and fulfill our financial plan as shown in the tables.
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0

8.3 Break-even Analysis

The following table and chart show our Break-even Analysis.

Italian renaissance theme restaurant business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 4,054
Monthly Revenue Break-even $45,231
Assumptions:
Average Per-Unit Revenue $11.16
Average Per-Unit Variable Cost $3.64
Estimated Monthly Fixed Cost $30,487

8.4 Projected Profit and Loss

Our Pro Forma Profit and Loss statement was constructed from a conservative point-of-view, and is based in large part on past performance of other restaurants.  By strengthening our service position, and rebuilding our customer relationships, we will widen our customer base and increase sales.

Month-to-month assumptions for profit and loss are included in the appendices.

Italian renaissance theme restaurant business plan, financial plan chart image

Italian renaissance theme restaurant business plan, financial plan chart image

Italian renaissance theme restaurant business plan, financial plan chart image

Italian renaissance theme restaurant business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $1,150,746 $2,244,555 $2,468,611 $2,714,986 $2,985,766
Direct Cost of Sales $375,103 $700,340 $770,238 $847,101 $931,564
Staff Meals $2,800 $5,000 $5,000 $5,000 $5,000
Other Costs of Goods/DESCOMM/Bank $24,000 $50,000 $55,000 $60,000 $65,000
Total Cost of Sales $401,903 $755,340 $830,238 $912,101 $1,001,564
Gross Margin $748,843 $1,489,215 $1,638,373 $1,802,885 $1,984,201
Gross Margin % 65.07% 66.35% 66.37% 66.40% 66.46%
Expenses
Payroll $204,360 $393,200 $411,860 $431,453 $451,717
Marketing/Promotion $50,000 $52,500 $52,500 $52,500 $52,500
Depreciation $0 $0 $0 $0 $0
Employee Healthcare $21,000 $40,000 $41,000 $40,000 $40,000
Rent $16,500 $72,000 $72,000 $72,000 $72,000
Utilities and Security Services $22,700 $34,680 $36,414 $38,234 $40,146
Ceramic, Glass and Silver Upkeep $1,000 $9,000 $9,000 $9,000 $9,000
Accounting Fees $2,500 $5,000 $5,000 $5,000 $5,000
Manager Comps & Grease Handouts $17,500 $30,000 $30,000 $30,000 $30,000
Dues and Subscriptions $600 $2,000 $2,000 $2,000 $2,000
Legal Expenses $0 $5,000 $5,000 $5,000 $5,000
Flowers $2,400 $2,000 $2,000 $2,000 $2,000
Travel Expense $0 $4,000 $4,000 $4,000 $4,000
Exterminating $150 $300 $300 $300 $300
Fines and Penalties $100 $300 $300 $300 $300
Payroll Processing $610 $1,200 $1,250 $1,300 $1,350
Insurance, Licensure & RE Taxes $4,900 $20,500 $21,500 $22,500 $23,500
Payroll Taxes $0 $56,964 $53,844 $53,844 $53,844
Maintenance Costs/Repairs $12,000 $49,500 $49,500 $49,500 $49,500
Linen and Dry Cleaning $1,125 $1,800 $1,800 $1,800 $1,800
Computer Upkeep/Upgrade $0 $12,200 $12,000 $12,200 $12,200
Dish and Cleaning Supplies $2,400 $13,800 $14,000 $14,200 $14,400
Office Products Upkeep $1,200 $7,000 $7,000 $7,000 $7,000
Paper Product Deliveries $4,800 $9,600 $10,000 $10,400 $10,800
Total Operating Expenses $365,845 $822,544 $842,268 $864,531 $888,357
Profit Before Interest and Taxes $382,998 $666,671 $796,105 $938,354 $1,095,844
EBITDA $382,998 $666,671 $796,105 $938,354 $1,095,844
Interest Expense $0 $0 $0 $0 $0
Taxes Incurred $114,899 $200,001 $238,831 $281,506 $328,753
Net Profit $268,099 $466,670 $557,273 $656,848 $767,091
Net Profit/Sales 23.30% 20.79% 22.57% 24.19% 25.69%

8.5 Projected Cash Flow

Because we are treating the new company as a start-up, the cash balance for FY2005 is somewhat exaggerated by the instant influx of new capital. Subsequent years however show a healthy growth in cash flow, mainly due to increased sales.

Italian renaissance theme restaurant business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $1,150,746 $2,244,555 $2,468,611 $2,714,986 $2,985,766
Subtotal Cash from Operations $1,150,746 $2,244,555 $2,468,611 $2,714,986 $2,985,766
Additional Cash Received
Sales Tax, VAT, HST/GST Received $69,045 $134,673 $148,117 $162,899 $179,146
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $10,300 $12,000 $13,000 $14,000 $15,000
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $1,230,091 $2,391,228 $2,629,727 $2,891,885 $3,179,912
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $204,360 $393,200 $411,860 $431,453 $451,717
Bill Payments $570,420 $1,380,599 $1,493,514 $1,619,145 $1,758,632
Subtotal Spent on Operations $774,780 $1,773,799 $1,905,374 $2,050,598 $2,210,349
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0
Subtotal Cash Spent $774,780 $1,773,799 $1,905,374 $2,050,598 $2,210,349
Net Cash Flow $455,311 $617,429 $724,353 $841,288 $969,562
Cash Balance $495,311 $1,112,740 $1,837,093 $2,678,380 $3,647,942

8.6 Projected Balance Sheet

The Projected Balance Sheet is quite solid. We do not project any real trouble meeting our debt obligations–as long as we can achieve our specific objectives.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $495,311 $1,112,740 $1,837,093 $2,678,380 $3,647,942
Inventory $14,331 $26,756 $29,427 $32,364 $35,591
Other Current Assets ($10,300) ($22,300) ($35,300) ($49,300) ($64,300)
Total Current Assets $499,342 $1,117,196 $1,831,219 $2,661,444 $3,619,234
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0
Total Assets $499,342 $1,117,196 $1,831,219 $2,661,444 $3,619,234
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $98,320 $114,831 $123,464 $133,942 $145,495
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $69,045 $203,718 $351,835 $514,734 $693,880
Subtotal Current Liabilities $167,364 $318,549 $475,299 $648,675 $839,374
Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $167,364 $318,549 $475,299 $648,675 $839,374
Paid-in Capital $379,309 $379,309 $379,309 $379,309 $379,309
Retained Earnings ($315,431) ($47,332) $419,338 $976,611 $1,633,459
Earnings $268,099 $466,670 $557,273 $656,848 $767,091
Total Capital $331,977 $798,647 $1,355,920 $2,012,768 $2,779,859
Total Liabilities and Capital $499,342 $1,117,196 $1,831,219 $2,661,444 $3,619,234
Net Worth $331,977 $798,647 $1,355,920 $2,012,768 $2,779,859

8.7 Business Ratios

The company’s projected business ratios are provided in the table below. The final column, Industry Profile, shows significant ratios for the Restaurant industry, as determined by the Standard Industry Classification (SIC) Index code 5812.0108, Italian Restaurants.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth 0.00% 95.05% 9.98% 9.98% 9.97% 7.41%
Percent of Total Assets
Inventory 2.87% 2.39% 1.61% 1.22% 0.98% 3.70%
Other Current Assets -2.06% -2.00% -1.93% -1.85% -1.78% 33.73%
Total Current Assets 100.00% 100.00% 100.00% 100.00% 100.00% 41.73%
Long-term Assets 0.00% 0.00% 0.00% 0.00% 0.00% 58.27%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 33.52% 28.51% 25.96% 24.37% 23.19% 17.03%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 22.99%
Total Liabilities 33.52% 28.51% 25.96% 24.37% 23.19% 40.02%
Net Worth 66.48% 71.49% 74.04% 75.63% 76.81% 59.98%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.07% 66.35% 66.37% 66.40% 66.46% 63.75%
Selling, General & Administrative Expenses 41.78% 45.56% 43.79% 42.21% 40.76% 42.43%
Advertising Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 2.93%
Profit Before Interest and Taxes 33.28% 29.70% 32.25% 34.56% 36.70% 2.33%
Main Ratios
Current 2.98 3.51 3.85 4.10 4.31 1.31
Quick 2.90 3.42 3.79 4.05 4.27 0.84
Total Debt to Total Assets 33.52% 28.51% 25.96% 24.37% 23.19% 49.91%
Pre-tax Return on Net Worth 115.37% 83.48% 58.71% 46.62% 39.42% 5.87%
Pre-tax Return on Assets 76.70% 59.67% 43.47% 35.26% 30.28% 11.73%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 23.30% 20.79% 22.57% 24.19% 25.69% n.a
Return on Equity 80.76% 58.43% 41.10% 32.63% 27.59% n.a
Activity Ratios
Inventory Turnover 19.19 34.09 27.42 27.42 27.42 n.a
Accounts Payable Turnover 6.80 12.17 12.17 12.17 12.17 n.a
Payment Days 27 28 29 29 29 n.a
Total Asset Turnover 2.30 2.01 1.35 1.02 0.82 n.a
Debt Ratios
Debt to Net Worth 0.50 0.40 0.35 0.32 0.30 n.a
Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $331,977 $798,647 $1,355,920 $2,012,768 $2,779,859 n.a
Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.43 0.50 0.74 0.98 1.21 n.a
Current Debt/Total Assets 34% 29% 26% 24% 23% n.a
Acid Test 2.90 3.42 3.79 4.05 4.27 n.a
Sales/Net Worth 3.47 2.81 1.82 1.35 1.07 n.a
Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a