Used Sports Equipment Store Business Plan

Nine Lives Outdoor Gear Consignment Shop

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.

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