Integrity Auto Sales
Financial Plan
Forecast
Key Assumptions
We will accept credit cards and trade-ins of any value. Credit cards will have a negative affect on cash flow in that we may not be paid for several days. Trade-ins will also impact cash flow in that they are an asset and have no real value until sold. We will have to limit the number of credit transactions, and only take in quality trades at a wholesale price to facilitate turning a quick profit. The personnel burden is very low because benefits are not paid to part-timers. And the short-term interest rate is extraordinarily low because of current market rates.
We also assume conservative earnings from selling loans and extended warranties will be made.
The other assumption is that current market conditions will remain for the next two to three years. Low rates will have a positive impact on sales and lending for the short term.
Our cash forecast is extremely unrealistic at the far end of the forecast. We leave it like that knowing that we will revise over time. We call it a cushion, and reassurance, not an accurate forecast.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Almost 90% of start-up costs will go to assets. Start-up costs will be financed through a combination of owner’s investment, short-term loans (VA business loan), and long-term borrowing. The start-up chart shows the distribution of financing.
Other miscellaneous expenses include:
- Legal fees for business establishment (ownership, and no sell agreement).
- Stationary, office supplies.
- Marketing/advertising fees.
- Initial consultation to establish records with an accountant.
- Rent for lot and office.
- Establish a Web page for advertising.
- Expensed equipment (two computers, two desk, Fax/copier, phone lines, and office furniture).
- One month initial start-up investment in vehicles.
Sources of Funds
We will be needing $130,000 to start. $100,000 will be a long term business loan. Jonathan will give $20,000 and Don will give $10,000.
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $6,625,500 | $9,913,500 | $13,275,900 |
| Direct Costs | $5,113,150 | $7,702,390 | $10,407,481 |
| Gross Margin | $1,512,350 | $2,211,110 | $2,868,419 |
| Gross Margin % | 23% | 22% | 22% |
| Operating Expenses | |||
| Salaries & Wages | $190,800 | $194,616 | $198,507 |
| Employee Related Expenses | $38,160 | $38,923 | $39,702 |
| Leased equipment | $1,200 | $1,200 | $1,200 |
| Utilities | $6,000 | $6,000 | $6,000 |
| Insurance | $4,800 | $4,800 | $4,800 |
| Rent | $48,000 | $48,000 | $48,000 |
| Total Operating Expenses | $288,960 | $293,539 | $298,209 |
| Operating Income | $1,223,390 | $1,917,571 | $2,570,210 |
| Interest Incurred | $4,960 | $2,604 | $373 |
| Depreciation and Amortization | |||
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $182,764 | $287,246 | $385,475 |
| Total Expenses | $5,589,834 | $8,285,779 | $11,091,537 |
| Net Profit | $1,035,666 | $1,627,721 | $2,184,363 |
| Net Profit/Sales | 16% | 16% | 16% |
Projected Balance Sheet
| Starting Balances | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Cash | $67,800 | $987,635 | $2,502,599 | $4,749,528 |
| Accounts Receivable | $0 | $0 | $0 | |
| Inventory | $50,000 | $628,850 | $864,920 | $864,920 |
| Other Current Assets | ||||
| Total Current Assets | $117,800 | $1,616,485 | $3,367,519 | $5,614,448 |
| Long-Term Assets | ||||
| Accumulated Depreciation | ||||
| Total Long-Term Assets | ||||
| Total Assets | $117,800 | $1,616,485 | $3,367,519 | $5,614,448 |
| Accounts Payable | $447,538 | $593,423 | $652,440 | |
| Income Taxes Payable | $53,697 | $71,698 | $96,458 | |
| Sales Taxes Payable | $0 | $0 | $0 | |
| Short-Term Debt | $38,216 | $40,573 | $21,212 | |
| Prepaid Revenue | ||||
| Total Current Liabilities | $38,216 | $541,807 | $686,332 | $748,898 |
| Long-Term Debt | $61,784 | $21,212 | $0 | $0 |
| Long-Term Liabilities | $61,784 | $21,212 | $0 | $0 |
| Total Liabilities | $100,000 | $563,019 | $686,332 | $748,898 |
| Paid-In Capital | $30,000 | $30,000 | $30,000 | $30,000 |
| Retained Earnings | ($12,200) | ($12,200) | $1,023,466 | $2,651,187 |
| Earnings | $1,035,666 | $1,627,721 | $2,184,363 | |
| Total Owner’s Equity | $17,800 | $1,053,466 | $2,681,187 | $4,865,550 |
| Total Liabilities & Equity | $117,800 | $1,616,485 | $3,367,519 | $5,614,448 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $1,035,666 | $1,627,721 | $2,184,363 |
| Depreciation & Amortization | |||
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | ($578,850) | ($236,070) | $0 |
| Change in Accounts Payable | $447,538 | $145,885 | $59,018 |
| Change in Income Tax Payable | $53,697 | $18,001 | $24,760 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $958,050 | $1,555,537 | $2,268,140 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | $2,357 | ($19,361) | ($21,212) |
| Change in Long-Term Debt | ($40,573) | ($21,212) | $0 |
| Net Cash from Financing | ($38,216) | ($40,573) | ($21,212) |
| Cash at Beginning of Period | $67,800 | $987,635 | $2,502,599 |
| Net Change in Cash | $919,835 | $1,514,965 | $2,246,929 |
| Cash at End of Period | $987,635 | $2,502,599 | $4,749,528 |
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