"Shave Ice Beverage" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Products
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
7.0 Financial Plan
 7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Break-even Analysis
7.4 Projected Profit and Loss
7.5 Projected Cash Flow
7.6 Projected Balance Sheet
 7.7 Business Ratios
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This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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7.0 Financial Plan
- We want to finance growth mainly through cash flow. We
recognized that this means we will have to grow slowly.
- The most important indicator in our case is that minimal
inventory will have to be stored for these products.
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7.1 Important Assumptions
Monthly sales are the largest indicator for this business. There
are some seasonal variations with the months of March through September being
the highest sales months.
|
| General Assumptions |
| |
2001 |
2002 |
2003 |
| Plan Month |
1 |
2 |
3 |
| Current Interest Rate |
13.50% |
13.50% |
13.50% |
| Long-term Interest Rate |
0.00% |
0.00% |
0.00% |
| Tax Rate |
30.00% |
30.00% |
30.00% |
| Other |
0 |
0 |
0 |
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7.2 Key Financial Indicators
The following Benchmark chart shows our key financial indicators.
Benchmarks
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7.3 Break-even Analysis
The following table and chart show the current break-even analysis.
The operation will require sales of approximately $2,900 to break even during
the first year of operation.
Break-even Analysis
|
| Break-even Analysis: |
| Monthly Units Break-even |
3,125 |
| Monthly Revenue Break-even |
$3,125 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$1.00 |
| Average Per-Unit Variable Cost |
$0.36 |
| Estimated Monthly Fixed Cost |
$2,000 |
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7.4 Projected Profit and Loss
We expect a profit of $10,000 in year one; $23,000 in year two; and
$37,000 in year three of operation.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$52,217 |
$77,383 |
$104,446 |
| Direct Cost of Goods |
$12,114 |
$17,772 |
$24,227 |
| Other |
$0 |
$0 |
$0 |
|
|
------------ |
------------ |
------------ |
| Cost of Goods Sold |
$12,114 |
$17,772 |
$24,227 |
| Gross Margin |
$40,103 |
$59,611 |
$80,219 |
| Gross Margin % |
76.80% |
77.03% |
76.80% |
| Expenses: |
| Payroll |
$10,800 |
$11,232 |
$11,681 |
| Sales and Marketing and Other Expenses |
$1,410 |
$1,466 |
$1,525 |
| Depreciation |
$2,196 |
$2,284 |
$2,375 |
| Leased Equipment |
$0 |
$0 |
$0 |
| Utilities |
$1,720 |
$1,789 |
$1,861 |
| Insurance |
$1,200 |
$1,248 |
$1,298 |
| Rent |
$0 |
$0 |
$0 |
| Payroll Taxes |
$2,484 |
$2,583 |
$2,687 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$19,810 |
$20,602 |
$21,427 |
| Profit Before Interest and Taxes |
$20,293 |
$39,009 |
$58,792 |
| Interest Expense |
$5,672 |
$5,672 |
$5,672 |
| Taxes Incurred |
$4,386 |
$10,001 |
$15,936 |
| Net Profit |
$10,235 |
$23,336 |
$37,184 |
| Net Profit/Sales |
19.60% |
30.16% |
35.60% |
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7.5 Projected Cash Flow
Projected cash flow is estimated as follows for the next three
years:
- 2001 - $24,000
- 2002 - $36,000
- 2003 - $50,000
Cash
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$52,217 |
$77,383 |
$104,446 |
| Cash from Receivables |
$0 |
$0 |
$0 |
| Subtotal Cash from Operations |
$52,217 |
$77,383 |
$104,446 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$3 |
$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 |
$52,220 |
$77,383 |
$104,446 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$0 |
$0 |
$0 |
| Payment of Accounts Payable |
$38,254 |
$51,652 |
$64,796 |
| Subtotal Spent on Operations |
$38,254 |
$51,652 |
$64,796 |
| |
| 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 |
$10,500 |
$10,500 |
$10,500 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$0 |
$0 |
$0 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$48,754 |
$62,152 |
$75,296 |
| |
| Net Cash Flow |
$3,466 |
$15,231 |
$29,150 |
| Cash Balance |
$13,466 |
$28,697 |
$57,847 |
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7.6 Projected Balance Sheet
The balance sheet shows a slow but steady upward growth in net
worth after initial start-up as follows:
- 2001: ($16,000) (Negative)
- 2002: $7,500
- 2003: $45,000
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$13,466 |
$28,697 |
$57,847 |
| Inventory |
$312 |
$458 |
$675 |
| Other Current Assets |
$675 |
$675 |
$675 |
| Total Current Assets |
$14,453 |
$29,830 |
$59,146 |
| Long-term Assets |
| Long-term Assets |
$4,000 |
$4,000 |
$4,000 |
| Accumulated Depreciation |
$2,196 |
$4,480 |
$6,855 |
| Total Long-term Assets |
$2,905,650 |
$2,689,650 |
$2,473,650 |
| Total Assets |
$16,257 |
$29,350 |
$56,291 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$519 |
$776 |
$1,032 |
| Current Borrowing |
$42,013 |
$42,013 |
$42,013 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$42,532 |
$42,789 |
$43,045 |
| |
Long-term Liabilities |
($10,500) |
($21,000) |
($31,500) |
| Total Liabilities |
$32,032 |
$21,789 |
$11,545 |
| |
| Paid-in Capital |
$10,000 |
$10,000 |
$10,000 |
| Retained Earnings |
($36,010) |
($25,775) |
($2,439) |
| Earnings |
$10,235 |
$23,336 |
$37,184 |
| Total Capital |
($15,775) |
$7,561 |
$44,745 |
| Total Liabilities and Capital |
$16,257 |
$29,350 |
$56,291 |
| Net Worth |
($15,775) |
$7,561 |
$44,745 |
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7.7 Business Ratios
Standard business ratios are included in the table that follows.
The ratios show a plan for balanced, healthy growth. The standard industry
indicators shown are for SIC 5812, eating places.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
0.00% |
48.20% |
34.97% |
7.60% |
| |
| Percent of Total Assets |
| Accounts Receivable |
0.00% |
0.00% |
0.00% |
4.50% |
| Inventory |
1.92% |
1.56% |
1.11% |
3.60% |
| Other Current Assets |
4.15% |
2.30% |
1.20% |
35.60% |
| Total Current Assets |
88.90% |
101.64% |
105.07% |
43.70% |
| Long-term Assets |
11.10% |
-1.64% |
-5.07% |
56.30% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
261.62% |
145.79% |
76.47% |
32.70% |
| Long-term Liabilities |
-64.59% |
-71.55% |
-55.96% |
28.50% |
| Total Liabilities |
197.03% |
74.24% |
20.51% |
61.20% |
| Net Worth |
-97.03% |
25.76% |
79.49% |
38.80% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
76.80% |
77.03% |
76.80% |
60.50% |
| Selling, General & Administrative Expenses |
57.20% |
46.88% |
41.20% |
39.80% |
| Advertising Expenses |
1.15% |
0.81% |
0.61% |
3.20% |
| Profit Before Interest and Taxes |
38.86% |
50.41% |
56.29% |
0.70% |
| |
| Main Ratios |
| Current |
0.34 |
0.70 |
1.73 |
0.98 |
| Quick |
0.33 |
0.69 |
1.36 |
0.65 |
| Total Debt to Total Assets |
197.03% |
74.24% |
20.51% |
61.20% |
| Pre-tax Return on Net Worth |
-92.69% |
440.92% |
118.72% |
1.70% |
| Pre-tax Return on Assets |
89.94% |
113.59% |
94.37% |
4.30% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
19.60% |
30.16% |
35.60% |
n.a |
| Return on Equity |
0.00% |
308.64% |
83.10% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Collection Days |
0 |
0 |
0 |
n.a |
| Inventory Turnover |
11.84 |
46.18 |
44.79 |
n.a |
| Accounts Payable Turnover |
74.69 |
66.90 |
63.02 |
n.a |
| Payment Days |
18 |
5 |
5 |
n.a |
| Total Asset Turnover |
3.21 |
2.64 |
1.86 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
0.00 |
2.88 |
0.26 |
n.a |
| Current Liab. to Liab. |
1.33 |
1.96 |
3.73 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
($28,079) |
($12,959) |
$16,100 |
n.a |
| Interest Coverage |
3.58 |
6.88 |
10.37 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
0.31 |
0.38 |
0.54 |
n.a |
| Current Debt/Total Assets |
262% |
146% |
76% |
n.a |
| Acid Test |
0.33 |
0.69 |
1.16 |
n.a |
| Sales/Net Worth |
0.00 |
10.23 |
2.23 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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