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Sporting Goods Retail icon Used Sports Equipment Store Business Plan

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Nine Lives Outdoor Gear Consignment Shop

Executive Summary

Nine Lives – An Outdoor Clothing & Gear Consignment Store is a new business in Eugene, Oregon. Nine Lives will be run by Jim Gearboy, a veteran of the outdoor industry. Additionally, Jim is very familiar with the outdoor community in Eugene and has leveraged his regionally specific industry insights into a niche store that has no direct competition.

With a selection of used goods not replicated in the city, superior customer service, and reasonable prices, Nine Lives will capitalize on this incredible opportunity. The owner, Jim Gearboy, has secured a location that offers very good foot traffic and easy accessibility. Jim will efficiently lay out the store to increase sales and give the customers the utmost in attention. This attention to detail, combined with Jim’s passion and knowledge of the outdoor recreation industry, will help the store reach a profitable level quickly.

The  projected growth rate for Nine Lives is quite steady, with profitability estimated by month six and revenue of $45,000 by year three.

Used sports equipment store business plan, executive summary chart image

1.1 Mission

Nine Lives’ mission is to provide the customer with quality outdoor clothing and gear at reasonable prices. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

1.2 Objectives

The objectives for the first three years of operation include:

  • To create a retail store whose primary goal is to exceed customer’s expectations.
  • To increase the number of clients served by at least 20% per year through superior performance and selection.
  • To decrease dependence on nonrenewable resources through the use of reused goods.
  • To obtain annual revenues exceeding $50,000.
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Company Summary

Nine Lives, to be located in Eugene, OR will be a consignment shop for outdoor clothing and gear. Nine Lives will offer used outdoor clothing and gear for reasonable prices, allowing a wider range of people to enjoy the outdoors. Nine Lives will sell the items on consignment, meaning Nine Lives will sell other owner’s items and pay for them when sold. Typically the items on consignment will be used. They will also consist of new manufacturers’ closeouts and seconds. Occassionally, Nine Lives will purchase outright manufacturers’ closeouts and seconds. This will only occur when the savings are large and the items are likely to be sold quickly.

The business will make a profit in month six, and will grow steadily each consecutive month.

2.1 Company Ownership

Nine Lives will be an Oregon corporation. Its founder and sole stock holder is Jim Gearboy.

2.2 Start-up Summary

Nine Lives’ start-up costs will include:

  • Computer system, with CD-RW, printer, Internet connection.
  • Copier, fax.
  • Assorted office supplies.
  • Office furniture (used).
  • Display equipment including racks, hangers, and shelves (these will be purchased used from a recent retailer bankruptcy.
  • Mirrors (for theft protection, also to be found used).
  • Bar code label printer, scanner and corresponding inventory management software.
  • Advertising- in local outdoors publications and general newspaper in the outdoor section.
  • Legal fees for the creation of the corporation and general business forms.

The items appropriate for depreciation will be depreciated using the straight-line method.

Used sports equipment store business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $1,000
Advertising $1,000
Office supplies $150
Other $0
Total Start-up Expenses $2,150
Start-up Assets
Cash Required $14,150
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $3,700
Total Assets $17,850
Total Requirements $20,000
Start-up Funding
Start-up Expenses to Fund $2,150
Start-up Assets to Fund $17,850
Total Funding Required $20,000
Assets
Non-cash Assets from Start-up $3,700
Cash Requirements from Start-up $14,150
Additional Cash Raised $0
Cash Balance on Starting Date $14,150
Total Assets $17,850
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 $20,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $20,000
Loss at Start-up (Start-up Expenses) ($2,150)
Total Capital $17,850
Total Capital and Liabilities $17,850
Total Funding $20,000

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Products

Nine Lives will sell a wide range of outdoor clothing and gear. The following is a partial list of the offerings at any one time:

  • Fleece outerwear.
  • Rain gear, waterproof as well as coated nylon.
  • Thermal underwear.
  • Synthetic clothing for sports or travel.
  • Hats.
  • Gloves.
  • Gaiters.
  • Shorts.
  • Pants.
  • Shirts.
  • Packs.
  • Sleeping bags.
  • Sleeping pads.
  • Tents.
  • Duffel bags.
  • Bicycles.
  • Kayaks.
  • Roof racks.
  • Canoes.
  • GPS.
  • Cookware and stoves, and much much more.
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Market Analysis Summary

The market for an outdoor clothing and gear consignment shop in Eugene is wide open. Eugene is the perfect community to support Nine Lives as it is a hotbed for outdoor activities. Additionally, there are no other used outdoor clothing and gear stores. By analogy, the used outdoor stores in Bend (half the size of Eugene) and Portland have done very well. For these reasons the market is ripe in Eugene for a store like Nine Lives.

4.1 Market Segmentation

Nine Lives will be focusing on three distinct groups of people that purchase outdoor clothing and gear:

  1. Outdoor participants with limited financial resources. This group of people has some discretionary income and enjoys spending time participating in outdoor activities. These customers however must maximize their limited money to be able to participate in the wide range of outdoor activities. For them, an outdoor consignment shop is ideal because for the same amount of money it allows them to have more or better equipment than they could get through traditional retail outlets.

  2. Gearheads. This is a group of people that collects outdoor gear. This is not a “poser” group; they actually use the stuff, they just like to have the right piece of clothing or gear for each individual occasion/ activity. Offering better prices than regular retail outlets allows them to buy more stuff for the same amount of money.
  3. Bargain hunters. This group will buy things because it is a good deal, not because they really need the item. While some of the used items will appeal to them, the manufacturers’ closeouts and seconds will really excite this group.
Used sports equipment store business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Outdoor participants with limited financial resources 9% 27,014 27,014 29,445 32,095 34,984 6.68%
Gearheads 8% 14,025 14,025 15,147 16,359 17,668 5.94%
Bargain hunters 8% 10,584 11,431 12,345 13,333 14,400 8.00%
Total 6.76% 51,623 52,470 56,937 61,787 67,052 6.76%

4.2 Target Market Segment Strategy

Nine Lives intends to target people that have a need for outdoor clothing and gear but do not have unlimited financial resources. Many or most outdoor enthusiasts do not have unlimited financial resources. This is a somewhat intuitive conclusion, these people value quality of life, and one aspect of this is free time in the outdoors. Spending a decent amount of time in the outdoors precludes being at the office making money concurrently. This is even more consistent with the choice of the market segment groups that live in Eugene. People typically choose to live in Eugene for its quality of life and wonderful outdoor activities, and people are willing to make significantly less (relatively) than in Portland because quality of life is so important.

With a large population of outdoor enthusiasts, particularly those that sacrifice financial gains for quality of life, Nine Lives has a large population base to draw off of. The University of Oregon is located in Eugene and has an active outdoor student body. Additionally, the U of O has a large Outdoor Program which will be a large source of buyers and sellers.

4.3 Industry Analysis

Nine Lives will be procuring the merchandise from a variety of sources:

  • Individuals– These people believe that it is preferable to receive something for their goods rather than packing them up to a thrift store. Alternatively, these people might want the newest generation piece of gear or clothing and the way they finance this desire is by selling off their old stuff.
  • Manufacturers– Sometimes the manufacturer will want to get rid of some of their inventory, whether because the merchandise is last year’s model or they have an overstock. In any case, they sometimes look to consignment shops to allow them to lower inventory.
  • Retail store closeouts–  Same rationale as the manufacturers.
  • Manufacturer representatives– The representatives often have a large number of samples from many different manufacturers. After they no longer need the samples they will typically get rid of them as there is little purpose in holding onto the samples.

4.3.1 Competition and Buying Patterns

Currently there are no true direct competitors in Eugene. There are two Oregon competitors that have very similar product offerings although one is a consignment shop and the other is a normal retailer. The normal retailer (they buy new and used equipment and sell it to the public) is located in Portland and is doing well, and the similar style consignment shop is located in Bend, another outdoor friendly town, but with a much smaller population base (around 50,000 people instead of Eugene’s 130,000 people) and they are also doing well.

Nine Lives’ competition is present in Eugene in the form of new, retail outdoor stores, such as R.E.I. and McKenzie Outfitters. These retailers have a wider selection of goods, but have normal retail prices and no used merchandise.

Another form of competition is thrift stores that sell used clothing and equipment. The amount of decent used outdoor clothing and equipment floating around thrift stores is pretty small and it is hit and miss. In order to score the deals you have to regularly make the rounds at several thrift stores.

Although some outdoor enthusiasts, like so many other segments of the population, are fashion conscious, meaning the aesthetics of the item is truly important, many, if not a majority of outdoor enthusiasts are more concerned about performance then appearance. This may be explained because when you are in the woods there are not too many people watching you; Also, as long as the stuff holds up to abuse fashion does not really matter. Basically in outdoor clothing and gear, functionality or utility is suddenly more important then fashion. For these reasons people from many different economic levels will purchase used equipment as long as the element of functionality is met.

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Strategy and Implementation Summary

Nine Lives will be heavily promoting the store early on to drive in both buyers as well as suppliers. Having a wide range of inventory is important and this can be best achieved through a two prong approach. The first is advertisements in local outdoor magazines/journals announcing the store and requesting people to bring in their extra clothing and gear to sell. The second approach will be by contacting outdoor manufacturers, retail outlets, and manufacturer representatives and alerting them to the option of selling their excess products at Nine Lives.

Nine Lives will be attempting to turn over inventory often to promote people coming in often to find some new bargains. This will be done through reasonable prices so customers feel that they are getting a good value.

5.1 Competitive Edge

Nine Lives competitive advantage is two-fold:

  • A selection of used clothing and gear not replicated in the city. Although there are many different outdoor retailers in Eugene, there are none that sell used merchandise. Used merchandise can be up to 60% less expensive than the new counterpart, so there is definitely a draw to the product, particularly in a town where people enjoy their outdoor activities at the expense of making money.

  • Superior, personalized customer service- although Nine Lives’ product  is used clothing and gear, there is no reason to assume that the patrons of a used store deserve any less quality of customer service that you would expect from a top shelf retailer. Even consignment shop retailers have expectations of high service. At Nine Lives the customer will be treated with very personalized service. It is not unusual that consignment shops have regulars who visit often. With this in mind Nine Lives  will have a database of customers and purchasing history so when they enter the store the sales person will have very personal information about the customer.

5.2 Sales Strategy

Nine Lives’ sales strategy will be based on solid retailing techniques of proper display and proper lighting. The store will be set up so that the floor space is divided up in thirds with the best sellers in the most accessible front third, and then the next best sellers in the second third, and so on. This will help highlight Nine Lives’s best offerings. In addition to this strategy for retail, the store will be well lit with natural lighting.

The clothing will be tagged with bar code price labels, providing inventory control as well as discouraging the modification of the prices by unethical customers.

Nine Lives will also be rotating their unsold stock every 90 days. This means that if an item is not sold within 90 days the owner will pick it up. Having forced inventory turnover provides an incentive for people to come in frequently in order to view the new items.

5.2.1 Sales Forecast

The first month will be used to get the store ready for business and there will be no sales activity. To prepare the store, display counters will be set up as will all of the racks. Dressing rooms will then be built. Month two will mark when the store is officially open, and business will be slow. During month two Nine Lives will begin to build up inventory. This will be done through advertising in the many different local outdoor magazines/ journals, as well as advertising at the University of Oregon generally, as well as through their Outdoor Program.

Month four will finally have a decent amount of sales activity and it should steadily improve from there.

Used sports equipment store business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Outdoor participants-limited $$$ $135,152 $185,214 $210,412
Gearheads $50,048 $63,541 $68,547
Bargain hunters $49,570 $62,545 $65,122
Total Sales $234,770 $311,300 $344,081
Direct Cost of Sales Year 1 Year 2 Year 3
Outdoor participants-limited $$$ $67,576 $92,607 $105,206
Gearheads $25,024 $31,771 $34,274
Bargain hunters $24,785 $31,273 $32,561
Subtotal Direct Cost of Sales $117,385 $155,650 $172,041

5.3 Milestones

Nine Lives will have several milestones early on:

  1. Business plan completion. This will be done as a road map for the organization. While we do not need a business plan to raise capital, it will be an indispensable tool for the ongoing performance and improvement of the company.
  2. Completion of the store redesign and back office set up.
  3. Profitability.
  4. Year to date sales exceeding $100,000.
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 $0 Jim Marketing
Completion of the store redesign and back office set up 1/1/2001 2/1/2001 $0 Jim Department
Profitability 1/1/2001 6/30/2001 $0 everyone Department
Y-T-D Sales exceed $100,000 1/1/2001 6/30/2001 $0 everyone Department
Totals $0

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Management Summary

Nine Lives is an Oregon corporation founded and owned by Jim Gearboy. Jim has a business degree from the University of Oregon. While pursuing his undergraduate degree, Jim had two different jobs. The first was as President of U of O’s Outdoor Program. For the program, Jim was their leader motivating the large number of members to pursue organizational goals. Additionally, Jim was responsible for the overall management of the organization. This experience was very valuable because it gave Jim some insight to, and experience in, running a company.

Jim, concurrently, was working at R.E.I. as a sales associate. Jim very much enjoyed this job as it allowed him to work with all of these toys that he enjoyed playing with, it was like being a kid in a candy store. Upon graduation, Jim became manager of the R.E.I. and suddenly his tasks went from sales and interacting with customers to managing the store which did not have much customer interaction. The management and training aspects were good skills to learn, but he longed to be closer to the customers.

These experiences gave Jim the confidence that he had the necessary skills sets to open his own store. He already knew that he had the passion for the outdoor industry and was confident that he would be thoroughly happy to work in the outdoor industry.

6.1 Personnel Plan

Jim will be working for Nine Lives full time as owner/general manager. By month two Nine Lives will bring on board one full-time sales associate. By month four Nine Lives will be in need of a second sales associate. The final employee will be another sales associate by month seven.

Personnel Plan
Year 1 Year 2 Year 3
Jim $24,000 $30,000 $36,000
Sales associate $15,840 $17,500 $18,000
Sales associate $12,960 $17,500 $18,000
Sales associate $8,640 $17,500 $18,000
Total People 4 4 4
Total Payroll $61,440 $82,500 $90,000

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Financial Plan

The following sections will outline the important financial details.

7.1 Important Assumptions

The following table highlights some of the 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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates that monthly revenue will need to be $15,760 to break even.

Used sports equipment store business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $15,760
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $7,880

7.3 Projected Profit and Loss

The following table indicates the projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $234,770 $311,300 $344,081
Direct Cost of Sales $117,385 $155,650 $172,041
Other $0 $0 $0
Total Cost of Sales $117,385 $155,650 $172,041
Gross Margin $117,385 $155,650 $172,041
Gross Margin % 50.00% 50.00% 50.00%
Expenses
Payroll $61,440 $82,500 $90,000
Sales and Marketing and Other Expenses $2,400 $2,400 $2,400
Depreciation $1,200 $1,200 $1,300
Rent $18,000 $1,800 $1,800
Rent $804 $804 $804
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
Payroll Taxes $9,216 $12,375 $13,500
Other $0 $0 $0
Total Operating Expenses $94,560 $102,579 $111,304
Profit Before Interest and Taxes $22,825 $53,071 $60,737
EBITDA $24,025 $54,271 $62,037
Interest Expense $0 $0 $0
Taxes Incurred $5,492 $13,268 $15,437
Net Profit $17,333 $39,803 $45,299
Net Profit/Sales 7.38% 12.79% 13.17%

7.4 Projected Cash Flow

The following chart and table indicates projected cash flow.

Used sports equipment store business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $234,770 $311,300 $344,081
Subtotal Cash from Operations $234,770 $311,300 $344,081
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 $234,770 $311,300 $344,081
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $61,440 $82,500 $90,000
Bill Payments $150,306 $203,071 $208,991
Subtotal Spent on Operations $211,746 $285,571 $298,991
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $211,746 $285,571 $298,991
Net Cash Flow $23,024 $25,729 $45,090
Cash Balance $37,174 $62,903 $107,993

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $37,174 $62,903 $107,993
Inventory $20,181 $26,760 $29,578
Other Current Assets $0 $0 $0
Total Current Assets $57,355 $89,663 $137,571
Long-term Assets
Long-term Assets $3,700 $3,700 $3,700
Accumulated Depreciation $1,200 $2,400 $3,700
Total Long-term Assets $2,500 $1,300 $0
Total Assets $59,855 $90,963 $137,571
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $24,672 $15,976 $17,285
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $24,672 $15,976 $17,285
Long-term Liabilities $0 $0 $0
Total Liabilities $24,672 $15,976 $17,285
Paid-in Capital $20,000 $20,000 $20,000
Retained Earnings ($2,150) $15,183 $54,987
Earnings $17,333 $39,803 $45,299
Total Capital $35,183 $74,987 $120,286
Total Liabilities and Capital $59,855 $90,963 $137,571
Net Worth $35,183 $74,987 $120,286

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5932, Used Merchandise Stores, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 32.60% 10.53% 6.20%
Percent of Total Assets
Inventory 33.72% 29.42% 21.50% 40.70%
Other Current Assets 0.00% 0.00% 0.00% 23.80%
Total Current Assets 95.82% 98.57% 100.00% 80.80%
Long-term Assets 4.18% 1.43% 0.00% 19.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 41.22% 17.56% 12.56% 47.60%
Long-term Liabilities 0.00% 0.00% 0.00% 12.00%
Total Liabilities 41.22% 17.56% 12.56% 59.60%
Net Worth 58.78% 82.44% 87.44% 40.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 31.00%
Selling, General & Administrative Expenses 43.09% 37.50% 37.00% 17.10%
Advertising Expenses 1.02% 0.77% 0.70% 1.80%
Profit Before Interest and Taxes 9.72% 17.05% 17.65% 1.40%
Main Ratios
Current 2.32 5.61 7.96 2.11
Quick 1.51 3.94 6.25 0.80
Total Debt to Total Assets 41.22% 17.56% 12.56% 59.60%
Pre-tax Return on Net Worth 64.87% 70.77% 50.49% 3.40%
Pre-tax Return on Assets 38.13% 58.34% 44.15% 8.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 7.38% 12.79% 13.17% n.a
Return on Equity 49.27% 53.08% 37.66% n.a
Activity Ratios
Inventory Turnover 10.91 6.63 6.11 n.a
Accounts Payable Turnover 7.09 12.17 12.17 n.a
Payment Days 27 38 29 n.a
Total Asset Turnover 3.92 3.42 2.50 n.a
Debt Ratios
Debt to Net Worth 0.70 0.21 0.14 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $32,683 $73,687 $120,286 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.29 0.40 n.a
Current Debt/Total Assets 41% 18% 13% n.a
Acid Test 1.51 3.94 6.25 n.a
Sales/Net Worth 6.67 4.15 2.86 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
Outdoor participants-limited $$$ 0% $0 $4,125 $4,987 $7,845 $8,325 $9,458 $13,545 $14,995 $15,855 $17,458 $18,545 $20,014
Gearheads 0% $0 $1,325 $1,514 $2,125 $2,514 $3,250 $4,654 $5,002 $6,511 $7,545 $7,254 $8,354
Bargain hunters 0% $0 $1,300 $1,499 $2,147 $2,503 $3,215 $4,512 $5,000 $6,474 $7,454 $7,141 $8,325
Total Sales $0 $6,750 $8,000 $12,117 $13,342 $15,923 $22,711 $24,997 $28,840 $32,457 $32,940 $36,693
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Outdoor participants-limited $$$ $0 $2,063 $2,494 $3,923 $4,163 $4,729 $6,773 $7,498 $7,928 $8,729 $9,273 $10,007
Gearheads $0 $663 $757 $1,063 $1,257 $1,625 $2,327 $2,501 $3,256 $3,773 $3,627 $4,177
Bargain hunters $0 $650 $750 $1,074 $1,252 $1,608 $2,256 $2,500 $3,237 $3,727 $3,571 $4,163
Subtotal Direct Cost of Sales $0 $3,375 $4,000 $6,059 $6,671 $7,962 $11,356 $12,499 $14,420 $16,229 $16,470 $18,347
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
Jim 0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Sales associate 0% $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Sales associate 0% $0 $0 $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Sales associate 0% $0 $0 $0 $0 $0 $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Total People 1 2 2 3 3 3 4 4 4 4 4 4
Total Payroll $2,000 $3,440 $3,440 $4,880 $4,880 $4,880 $6,320 $6,320 $6,320 $6,320 $6,320 $6,320

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% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
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 $6,750 $8,000 $12,117 $13,342 $15,923 $22,711 $24,997 $28,840 $32,457 $32,940 $36,693
Direct Cost of Sales $0 $3,375 $4,000 $6,059 $6,671 $7,962 $11,356 $12,499 $14,420 $16,229 $16,470 $18,347
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $3,375 $4,000 $6,059 $6,671 $7,962 $11,356 $12,499 $14,420 $16,229 $16,470 $18,347
Gross Margin $0 $3,375 $4,000 $6,059 $6,671 $7,962 $11,356 $12,499 $14,420 $16,229 $16,470 $18,347
Gross Margin % 0.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
Expenses
Payroll $2,000 $3,440 $3,440 $4,880 $4,880 $4,880 $6,320 $6,320 $6,320 $6,320 $6,320 $6,320
Sales and Marketing and Other Expenses $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Depreciation $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
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
Rent $67 $67 $67 $67 $67 $67 $67 $67 $67 $67 $67 $67
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125
Payroll Taxes 15% $300 $516 $516 $732 $732 $732 $948 $948 $948 $948 $948 $948
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $4,292 $5,948 $5,948 $7,604 $7,604 $7,604 $9,260 $9,260 $9,260 $9,260 $9,260 $9,260
Profit Before Interest and Taxes ($4,292) ($2,573) ($1,948) ($1,546) ($933) $358 $2,096 $3,239 $5,160 $6,969 $7,210 $9,087
EBITDA ($4,192) ($2,473) ($1,848) ($1,446) ($833) $458 $2,196 $3,339 $5,260 $7,069 $7,310 $9,187
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($1,288) ($643) ($487) ($386) ($233) $89 $524 $810 $1,290 $1,742 $1,803 $2,272
Net Profit ($3,004) ($1,930) ($1,461) ($1,159) ($700) $268 $1,572 $2,429 $3,870 $5,226 $5,408 $6,815
Net Profit/Sales 0.00% -28.59% -18.26% -9.57% -5.24% 1.68% 6.92% 9.72% 13.42% 16.10% 16.42% 18.57%

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 $6,750 $8,000 $12,117 $13,342 $15,923 $22,711 $24,997 $28,840 $32,457 $32,940 $36,693
Subtotal Cash from Operations $0 $6,750 $8,000 $12,117 $13,342 $15,923 $22,711 $24,997 $28,840 $32,457 $32,940 $36,693
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 $6,750 $8,000 $12,117 $13,342 $15,923 $22,711 $24,997 $28,840 $32,457 $32,940 $36,693
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 $2,000 $3,440 $3,440 $4,880 $4,880 $4,880 $6,320 $6,320 $6,320 $6,320 $6,320 $6,320
Bill Payments $30 $1,169 $8,777 $6,740 $10,533 $9,814 $12,306 $18,418 $17,514 $20,735 $22,753 $21,516
Subtotal Spent on Operations $2,030 $4,609 $12,217 $11,620 $15,413 $14,694 $18,626 $24,738 $23,834 $27,055 $29,073 $27,836
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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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 $2,030 $4,609 $12,217 $11,620 $15,413 $14,694 $18,626 $24,738 $23,834 $27,055 $29,073 $27,836
Net Cash Flow ($2,030) $2,141 ($4,217) $497 ($2,071) $1,229 $4,085 $259 $5,006 $5,402 $3,867 $8,857
Cash Balance $12,120 $14,261 $10,043 $10,540 $8,469 $9,698 $13,782 $14,041 $19,047 $24,450 $28,317 $37,174
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 $14,150 $12,120 $14,261 $10,043 $10,540 $8,469 $9,698 $13,782 $14,041 $19,047 $24,450 $28,317 $37,174
Inventory $0 $0 $3,713 $4,400 $6,664 $7,338 $8,758 $12,491 $13,748 $15,862 $17,851 $18,117 $20,181
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $14,150 $12,120 $17,973 $14,443 $17,204 $15,807 $18,455 $26,273 $27,790 $34,909 $42,301 $46,434 $57,355
Long-term Assets
Long-term Assets $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700
Accumulated Depreciation $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200
Total Long-term Assets $3,700 $3,600 $3,500 $3,400 $3,300 $3,200 $3,100 $3,000 $2,900 $2,800 $2,700 $2,600 $2,500
Total Assets $17,850 $15,720 $21,473 $17,843 $20,504 $19,007 $21,555 $29,273 $30,690 $37,709 $45,001 $49,034 $59,855
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 $874 $8,557 $6,388 $10,208 $9,411 $11,691 $17,838 $16,825 $19,975 $22,040 $20,666 $24,672
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 $874 $8,557 $6,388 $10,208 $9,411 $11,691 $17,838 $16,825 $19,975 $22,040 $20,666 $24,672
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $874 $8,557 $6,388 $10,208 $9,411 $11,691 $17,838 $16,825 $19,975 $22,040 $20,666 $24,672
Paid-in Capital $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Retained Earnings ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150) ($2,150)
Earnings $0 ($3,004) ($4,934) ($6,395) ($7,554) ($8,254) ($7,986) ($6,414) ($3,985) ($115) $5,111 $10,518 $17,333
Total Capital $17,850 $14,846 $12,916 $11,455 $10,296 $9,596 $9,864 $11,436 $13,865 $17,735 $22,961 $28,368 $35,183
Total Liabilities and Capital $17,850 $15,720 $21,473 $17,843 $20,504 $19,007 $21,555 $29,273 $30,690 $37,709 $45,001 $49,034 $59,855
Net Worth $17,850 $14,846 $12,916 $11,455 $10,296 $9,596 $9,864 $11,436 $13,865 $17,735 $22,961 $28,368 $35,183

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