"Stretch'r Wings" 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 Break-even Analysis
7.3 Projected Profit and Loss Important Assumptions
7.4 Projected Cash Flow
7.5 Projected Balance Sheet
 7.6 Business Ratios
Business Ideas applicable for this business plan:
Aircraft Manufacturing
Building Amphibian Aircraft
This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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7.0 Financial Plan
The following topics summarize the financial
information of Stretch'r Wings.
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7.1 Important Assumptions
General assumptions for this plan are on the following
table.
|
| General Assumptions |
| |
2001 |
2002 |
2003 |
| 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 |
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7.2 Break-even Analysis
The following chart and table summarize the break-even
analysis, including monthly units and sales break-even points.
Break-even Analysis
|
| Break-even Analysis: |
| Monthly Units Break-even |
0.27 |
| Monthly Revenue Break-even |
$7,041 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$26,495.00 |
| Average Per-Unit Variable Cost |
$5.800 |
| Estimated Monthly Fixed Cost |
$5,500 |
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7.3 Projected Profit and Loss
The detailed monthly pro forma income statement for
the first year is included in the appendix. The annual estimates are included
here.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$29,690 |
$230,740 |
$357,915 |
| Direct Cost of Goods |
$6,475 |
$49,150 |
$77,625 |
|
|
------------ |
------------ |
------------ |
| Cost of Goods Sold |
$6,475 |
$49,150 |
$77,625 |
| Gross Margin |
$23,215 |
$181,590 |
$280,290 |
| Gross Margin % |
78.19% |
78.70% |
78.31% |
| Sales and Marketing Expenses: |
| Sales and Marketing Payroll |
$20,000 |
$117,640 |
$126,000 |
| Sales and Marketing and Other Expenses |
$15,300 |
$28,400 |
$30,000 |
| Depreciation |
$0 |
$1,200 |
$1,200 |
| Utilities |
$350 |
$1,200 |
$1,400 |
| Phone |
$950 |
$2,500 |
$3,000 |
| Rent |
$2,625 |
$6,000 |
$6,500 |
| Payroll Taxes |
$3,000 |
$17,646 |
$18,900 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$42,225 |
$174,586 |
$187,000 |
| Profit Before Interest and Taxes |
($19,010) |
$7,004 |
$93,290 |
| Interest Expense |
$1,946 |
$2,354 |
$2,579 |
| Taxes Incurred |
$0 |
$1,162 |
$23,056 |
| Net Profit |
($20,956) |
$3,487 |
$67,655 |
| Net Profit/Sales |
-70.58% |
1.51% |
18.90% |
Profit Yearly
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7.4 Projected Cash Flow
Cash flow projections are critical to our success. The
monthly cash flow is shown in the illustration, with one bar representing the
cash flow per month and the other representing the monthly balance. The annual
cash flow figures are included here. Detailed monthly numbers are included in
the appendix. Payments on the three-year $20,000 loan will start in September,
2000. Further, to increase the cash balance in FY 2001, a one-year, $20,000 loan
will be secured from the bank.
Cash
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$29,690 |
$230,740 |
$357,915 |
| Cash from Receivables |
$0 |
$0 |
$0 |
| Subtotal Cash from Operations |
$29,690 |
$230,740 |
$357,915 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$0 |
$20,000 |
$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 |
$29,690 |
$250,740 |
$357,915 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$2,412 |
$13,344 |
$17,226 |
| Payment of Accounts Payable |
$41,125 |
$239,138 |
$294,541 |
| Subtotal Spent on Operations |
$43,537 |
$252,482 |
$311,767 |
| |
| 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 |
$21,000 |
| Long-term Liabilities Principal Repayment |
$2,584 |
$7,750 |
$7,750 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$0 |
$0 |
$0 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$46,121 |
$260,232 |
$340,517 |
| |
| Net Cash Flow |
($16,431) |
($9,492) |
$17,398 |
| Cash Balance |
$33,569 |
$24,077 |
$41,476 |
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7.5 Projected Balance Sheet
The projected balance sheet is quite solid. We do not
project any trouble meeting our debt obligations, as long as we can achieve our
specified objectives.
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$33,569 |
$24,077 |
$41,476 |
| Inventory |
$6,475 |
$49,150 |
$77,625 |
| Other Current Assets |
$10,000 |
$10,000 |
$10,000 |
| Total Current Assets |
$50,044 |
$83,227 |
$129,101 |
| Long-term Assets |
| Long-term Assets |
$0 |
$0 |
$0 |
| Accumulated Depreciation |
$0 |
$1,200 |
$2,400 |
| Total Long-term Assets |
$0 |
($1,200) |
($2,400) |
| Total Assets |
$50,044 |
$82,027 |
$126,701 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$3,585 |
$19,830 |
$25,598 |
| Current Borrowing |
$0 |
$20,000 |
$20,000 |
| Other Current Liabilities |
$0 |
$0 |
($21,000) |
| Subtotal Current Liabilities |
$3,585 |
$39,830 |
$24,598 |
| |
Long-term Liabilities |
$17,416 |
$9,666 |
$1,916 |
| Total Liabilities |
$21,001 |
$49,496 |
$26,514 |
| |
| Paid-in Capital |
$62,000 |
$62,000 |
$62,000 |
| Retained Earnings |
($12,000) |
($32,956) |
($29,469) |
| Earnings |
($20,956) |
$3,487 |
$67,655 |
| Total Capital |
$29,044 |
$32,531 |
$100,186 |
| Total Liabilities and Capital |
$50,044 |
$82,027 |
$126,701 |
| Net Worth |
$29,730 |
$32,531 |
$100,186 |
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7.6 Business Ratios
The following table outlines important ratios from the
laboratory apparatus and furniture industry, as determined by the Standard
Industrial Classification (SIC) Index code 3821, Laboratory Equipment and
Furniture.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
0.00% |
677.16% |
55.12% |
5.10% |
| |
| Percent of Total Assets |
| Accounts Receivable |
0.0% |
0.0% |
0.0% |
0.0% |
| Inventory |
12.94% |
59.92% |
61.27% |
28.60% |
| Other Current Assets |
19.98% |
12.19% |
7.89% |
25.10% |
| Total Current Assets |
100.00% |
101.46% |
101.89% |
83.70% |
| Long-term Assets |
0.00% |
-1.46% |
-1.89% |
16.30% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
7.16% |
48.56% |
19.41% |
37.80% |
| Long-term Liabilities |
34.80% |
11.78% |
1.51 |
14.30% |
| Total Liabilities |
41.96% |
60.34% |
20.93% |
52.10% |
| Net Worth |
58.04% |
39.66% |
79.07% |
47.90% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
78.19% |
78.70% |
78.31% |
38.90% |
| Selling, General & Administrative Expenses |
148.77% |
77.19% |
59.30% |
25.40% |
| Advertising Expenses |
8.42% |
6.50% |
4.19% |
1.40% |
| Profit Before Interest and Taxes |
-64.03% |
3.04% |
26.06% |
2.00% |
| |
| Main Ratios |
| Current |
13.96 |
2.09 |
5.25 |
2.36 |
| Quick |
12.15 |
0.86 |
2.09 |
1.33 |
| Total Debt to Total Assets |
41.96% |
60.34% |
20.93% |
52.10% |
| Pre-tax Return on Net Worth |
-72.15% |
14.29% |
90.54% |
3.80% |
| Pre-tax Return on Assets |
-41.88% |
5.67% |
71.59% |
8.00% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
-70.58% |
-1.51% |
18.90% |
n.a |
| Return on Equity |
-72.58% |
10.72% |
67.53% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Collection Days |
0 |
0 |
0 |
n.a |
| Inventory Turnover |
0.67 |
1.77 |
1.22 |
n.a |
| Accounts Payable Turnover |
12.47 |
12.88 |
11.73 |
n.a |
| Payment Days |
13 |
17 |
28 |
n.a |
| Total Asset Turnover |
0.59 |
1.81 |
2.82 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
0.72 |
1.52 |
0.26 |
n.a |
| Current Liab. to Liab. |
0.17 |
0.80 |
0.93 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$46,460 |
$43,397 |
$104,502 |
n.a |
| Interest Coverage |
-9.7 |
-2.98 |
36.17 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
1.69 |
0.36 |
0.35 |
n.a |
| Current Debt/Total Assets |
7% |
49% |
19% |
n.a |
| Acid Test |
12.15 |
0.86 |
2.09 |
n.a |
| Sales/Net Worth |
1.02 |
7.09 |
3.57 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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