"Coach House Bed and Breakfast" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Products and Services
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
7.0 Financial Plan
 7.1 Break-even Analysis
7.2 Projected Profit and Loss
7.3 Projected Cash Flow
7.4 Projected Balance Sheet
 7.5 Business Ratios
Business Ideas applicable for this business plan:
Bed and breakfast in Slovakia
This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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7.0 Financial Plan
Coach House will be acquired at $500,000 via an small business
administration (SBA) loan (CDC 504 Loan Program) with the buyers supplying 20%
down ($100,000), Ameribank supplying 50% ($250,000), and SBA supplying 30%
($150,000). The bank mortgage is for 20 years at ten percent and the SBA 504
loan is for ten years, also at ten percent. We are assuming an initial capital
start-up of $12,000 for operating expenses. In addition to the $12,000 of
start-up money available from Mr. Maesch's retirement, Mr. Williams will be
adding $30,000 by September 15, 2000.
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7.1 Break-even Analysis
We estimate average monthly fixed costs to be at $6,770 ($3,486 for
expenses and $3,283 for interest payments). Peak and off-season will have
significant impact on the monthly earnings. For the first year, on-season
revenues will offset off-season losses. As Coach House B&B builds its market
position among the local patrons, we anticipate that off-season revenues will be
enough to break even during that season. Further, a rate increase may be
considered in Fiscal Year 2001.
Break-even Analysis
|
| Break-even Analysis: |
| Monthly Units Break-even |
6,838 |
| Monthly Revenue Break-even |
$6,838 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$1.00 |
| Average Per-Unit Variable Cost |
$0.01 |
| Estimated Monthly Fixed Cost |
$6,770 |
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7.2 Projected Profit and Loss
Below is the Coach House's projected income statement for the next
three years. As mentioned above, earnings are subject to seasonal fluctuations.
The new ownership will, however, strengthen Coach House's market position among
the local community who will patronize the establishment during the low season,
and thus offset the negative impact of the season.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$124,718 |
$130,953 |
$137,501 |
| Direct Cost of Goods |
$0 |
$0 |
$0 |
| Other |
$0 |
$0 |
$0 |
|
------------ |
------------ |
------------ |
| Total Cost of Sales |
$0 |
$0 |
$0 |
| Gross Margin |
$124,718 |
$130,953 |
$137,501 |
| Gross Margin % |
100.00% |
100.00% |
100.00% |
| Expenses: |
| Payroll |
$15,000 |
$35,000 |
$40,000 |
| Sales and Marketing and Other Expenses |
$2,775 |
$3,900 |
$4,095 |
| Depreciation |
$4,440 |
$4,500 |
$473 |
| Insurance |
$2,580 |
$2,600 |
$210 |
| Telephone |
$2,400 |
$2,500 |
$10,500 |
| Security |
$420 |
$450 |
$368 |
| Duties & Subscriptions |
$175 |
$200 |
$2,100 |
| Rent |
$9,996 |
$10,000 |
$10,000 |
| Room/House cleaning |
$300 |
$350 |
$2,730 |
| Gloceries |
$1,500 |
$2,000 |
$2,625 |
| Payroll Taxes |
$2,250 |
$5,250 |
$6,000 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$41,836 |
$66,750 |
$79,100 |
| Profit Before Interest and Taxes |
$82,882 |
$64,203 |
$58,401 |
| Interest Expense |
$52,500 |
$51,750 |
$50,150 |
| Taxes Incurred |
$7,480 |
$3,113 |
$2,097 |
| Net Profit |
$22,902 |
$9,340 |
$6,154 |
| Net Profit/Sales |
18.36% |
7.13% |
4.48% |
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7.3 Projected Cash Flow
The table below outlines the projected cash flow and shows that the
company will have enough cash reserves to cover the off-season's low sales.
These projections are realistic in terms of the historical market of Tybee
Island and operations, based on current pricing research and the addition of a
fourth rental unit.
Cash
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$31,179 |
$32,738 |
$34,375 |
| Cash from Receivables |
$91,109 |
$97,894 |
$102,788 |
| Subtotal Cash from Operations |
$122,288 |
$130,632 |
$137,164 |
| |
| Additional Cash Received |
| Sales Tax, VAT |
$0 |
$0 |
$0 |
| HMRC VAT Repayments |
$0 |
$0 |
$0 |
| New Current Borrowing |
$0 |
$0 |
$0 |
| New Other Liabilities (interest-free) |
$0 |
$0 |
$0 |
| New Long-term Liabilities |
$525,000 |
$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 |
$647,288 |
$130,632 |
$137,164 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$8,024 |
$7,686 |
$8,484 |
| Payment of Accounts Payable |
$104,787 |
$109,619 |
$121,937 |
| Subtotal Spent on Operations |
$112,812 |
$117,305 |
$130,421 |
| |
| 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 |
$15,000 |
$17,000 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$500,000 |
$0 |
$0 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$612,812 |
$132,305 |
$147,421 |
| |
| Net Cash Flow |
$34,477 |
($1,674) |
($10,257) |
| Cash Balance |
$46,477 |
$44,803 |
$34,546 |
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7.4 Projected Balance Sheet
The table below outlines the projected balance sheet of Coach House for Fiscal Year 2001-2003.
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$46,477 |
$44,803 |
$34,546 |
| Accounts Receivable |
$6,429 |
$6,751 |
$7,088 |
| Other Current Assets |
$1,000 |
$1,000 |
$1,000 |
| Total Current Assets |
$53,906 |
$52,554 |
$42,634 |
| Long-term Assets |
| Long-term Assets |
$700,000 |
$700,000 |
$700,000 |
| Accumulated Depreciation |
$34,440 |
$38,940 |
$39,413 |
| Total Long-term Assets |
$665,560 |
$661,060 |
$660,588 |
| Total Assets |
$719,466 |
$713,614 |
$703,221 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$4,564 |
$4,372 |
$4,826 |
| Current Borrowing |
$0 |
$0 |
$0 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$4,564 |
$4,372 |
$4,826 |
| |
Long-term Liabilities |
$525,000 |
$510,000 |
$493,000 |
| Total Liabilities |
$529,564 |
$514,372 |
$497,826 |
| |
| Paid-in Capital |
$50,000 |
$50,000 |
$50,000 |
| Retained Earnings |
$117,000 |
$139,902 |
$149,242 |
| Earnings |
$22,902 |
$9,340 |
$6,154 |
| Total Capital |
$189,902 |
$199,242 |
$205,396 |
| Total Liabilities and Capital |
$719,466 |
$713,614 |
$703,221 |
| Net Worth |
$189,902 |
$199,242 |
$205,396 |
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7.5 Business Ratios
The following table provides industry information for Coach House
B&B based on the Standard Industry Classification (SIC) Index, 7011.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
340.39% |
5.00% |
5.00% |
5.90% |
| |
| Percent of Total Assets |
| Accounts Receivable |
0.89% |
0.95% |
1.01% |
5.00% |
| Inventory |
0.00% |
0.00% |
0.00% |
1.00% |
| Other Current Assets |
0.14% |
0.14% |
0.14% |
26.00% |
| Total Current Assets |
7.49% |
7.36% |
6.06% |
32.00% |
| Long-term Assets |
92.51% |
92.64% |
93.94% |
68.00% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
0.63 |
0.61% |
0.69% |
19.40% |
| Long-term Liabilities |
72.97% |
71.47% |
70.11% |
34.60% |
| Total Liabilities |
73.61% |
72.08% |
70.79% |
54.00% |
| Net Worth |
26.39% |
27.92% |
29.21% |
46.00% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
100.00% |
100.00% |
100.00% |
0.00% |
| Selling, General & Administrative Expenses |
81.73% |
92.87% |
95.50% |
75.10% |
| Advertising Expenses |
1.60% |
2.29% |
2.29% |
1.90% |
| Profit Before Interest and Taxes |
66.46% |
49.03% |
42.47% |
2.50% |
| |
| Main Ratios |
| Current |
11.81 |
12.02 |
8.83 |
1.45 |
| Quick |
11.81 |
12.02 |
8.83 |
1.05 |
| Total Debt to Total Assets |
73.61% |
72.08% |
70.79% |
54.00% |
| Pre-tax Return on Net Worth |
16.00% |
6.25% |
4.02% |
1.70% |
| Pre-tax Return on Assets |
4.22% |
1.75% |
1.17% |
3.70% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
18.36% |
7.13% |
4.48% |
n.a |
| Return on Equity |
12.06% |
4.69% |
3.00% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
14.55 |
14.55 |
14.55 |
n.a |
| Collection Days |
45 |
24 |
24 |
n.a |
| Inventory Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Accounts Payable Turnover |
19.58 |
25.03 |
25.36 |
n.a |
| Payment Days |
28 |
15 |
14 |
n.a |
| Total Asset Turnover |
0.17 |
0.18 |
0.20 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
2.79 |
2.58 |
2.42 |
n.a |
| Current Liab. to Liab. |
0.01 |
0.01 |
0.01 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$49,342 |
$48,182 |
$37,808 |
n.a |
| Interest Coverage |
1.58 |
1.24 |
1.16 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
5.77 |
5.45 |
5.11 |
n.a |
| Current Debt/Total Assets |
1% |
1% |
1% |
n.a |
| Acid Test |
10.40 |
10.48 |
7.37 |
n.a |
| Sales/Net Worth |
0.66 |
0.66 |
0.67 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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