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Table of Contents

1.0 Executive Summary...............................................................................................................................1


Chart: Highlights..................................................................................................................................1
1.1 Objectives..........................................................................................................................................2
1.2 Mission...............................................................................................................................................2
1.3 Keys to Success..................................................................................................................................2
2.0 Company Summary...............................................................................................................................2
2.1 Company Ownership.........................................................................................................................2
2.2 Start-up Summary..............................................................................................................................3
Table: Start-up.....................................................................................................................................3
..............................................................................................................................................................3
Chart: Start-up......................................................................................................................................5
3.0 Products and Services............................................................................................................................5
4.0 Market Analysis Summary....................................................................................................................5
4.1 Market Segmentation.........................................................................................................................5
Chart: Market Analysis (Pie)...............................................................................................................6
Table: Market Analysis........................................................................................................................6
4.2 Target Market Segment Strategy.......................................................................................................7
4.3 Service Business Analysis.................................................................................................................7
4.3.1 Competition and Buying Patterns...............................................................................................7
5.0 Competitive Edge...................................................................................................................................7
5.1 Marketing Strategy.............................................................................................................................8
5.2 Sales Strategy.....................................................................................................................................8
5.2.1 Sales Forecast..............................................................................................................................8
Table: Sales Forecast.......................................................................................................................9
Chart: Sales Monthly.......................................................................................................................9
Chart: Sales by Year......................................................................................................................10
5.3 Milestones........................................................................................................................................10
6.0 Management Summary........................................................................................................................10
6.1 Personnel Plan..................................................................................................................................10
Table: Personnel.................................................................................................................................11
7.0 Financial Plan.......................................................................................................................................11
7.1 Important Assumptions....................................................................................................................11
Table: General Assumptions..............................................................................................................11
................................................................................................................................................................11
7.2 Break-even Analysis........................................................................................................................12
Chart: Break-even Analysis...............................................................................................................12
Table: Break-even Analysis...............................................................................................................12
................................................................................................................................................................12
7.3 Projected Profit and Loss.................................................................................................................13
Table: Profit and Loss........................................................................................................................13
Chart: Profit Monthly.........................................................................................................................14
Chart: Profit Yearly............................................................................................................................14
Page 1

Table of Contents

Chart: Gross Margin Monthly............................................................................................................15


Chart: Gross Margin Yearly...............................................................................................................15
7.4 Projected Cash Flow........................................................................................................................16
Table: Cash Flow...............................................................................................................................16
Chart: Cash.........................................................................................................................................17
7.5 Projected Balance Sheet...................................................................................................................18
Table: Balance Sheet..........................................................................................................................18
................................................................................................................................................................18
7.6 Business Ratios................................................................................................................................19
Table: Ratios......................................................................................................................................19
Table: Sales Forecast...................................................................................................................................1
......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2
......................................................................................................................................................................2
Table: General Assumptions........................................................................................................................3
......................................................................................................................................................................3
Table: Profit and Loss..................................................................................................................................4
......................................................................................................................................................................4
Table: Cash Flow.........................................................................................................................................5
Table: Balance Sheet....................................................................................................................................6

Page 2

Rutabaga Sweets

1.0 Executive Summary


Rutabaga Sweets is a dessert bar and bakery located in the Business Improvement District
(BID) of Washington DC. We can loosely be described as a quick-service restaurant where
customers sit around a bar and watch their desserts being made. The show, as well as the
dessert, is our main selling point.
Rutabaga Sweets will hold true to its vision of being a new concept with an old fashioned feel in
order to become a favorite spot for DC natives. As the reported national leader in money
spent in restaurants, Washington DC is an optimal location for launching a new restaurant
concept. Rutabaga Sweets also hopes to become a destination for the thousands of tourists,
both American and foreign, who visit DC every year.
We plan to manipulate our location in the Business Improvement District to our utmost
advantage. Both tax incentives and high traffic due to the MCI Center will give us an edge as a
new business. As the BID fills up with new businesses over the next few years Rutabaga
Sweets will receive an added boost of increased traffic. Therefore, we are aggressively
planning for a 50% increase in sales the second year of business.
By creating a new niche in the restaurant industry, Rutabaga Sweets will increase sales
by more than $145,000 over three years while maintaining a gross margin of 80%. Through a
philosophy of "nothing but the best" regarding both product and service, Rutabaga Sweets will
establish itself as an exceptional dessert bar in Washington DC. We also will gain a competitive
advantage in take out and catered desserts.
This plan outlines our company concept, philosophy and forecasted financials. Rutabaga
Sweets hopes to find seed money of $300,000 to launch our business in June of this year.

Chart: Highlights

Highlights
$300,000
$270,000
$240,000
$210,000

Sales

$180,000

Gross Margin

$150,000

Net Profit

$120,000
$90,000
$60,000
$30,000
$0
Year 1

Year 2

Year 3

Page 1

Rutabaga Sweets

1.1 Objectives
1. Attain sales of $166,000 in the first year.
2. Increase second year sales by 50% and third year by 30%.
3. Expand to two stores by the third year of business.
1.2 Mission
Rutabaga Sweets is a hospitality company dedicated to providing high-quality desserts in a
comfortable atmosphere for clients who seek a fun "gourmet" experience outside restaurants.
We intend to make enough profit to generate a fair return for our investors and to finance
continued growth and development in quality products. We also maintain a friendly, fair, and
creative work environment, which respects diversity, new ideas, and hard work.
1.3 Keys to Success

Dedication to the finest quality ingredients and "make it happen no matter what" customer
service.
Ongoing employee education and recognition programs.
Give back to the community.

2.0 Company Summary


Rutabaga Sweets is a dessert bar concept based in the Business Improvement District of
Washington DC. It emphasizes handmade gourmet desserts in a casual atmosphere. Watching
your dessert be prepared right in front of you is the unique selling point of our business.
2.1 Company Ownership
Rutabaga Sweets is a sole proprietorship seeking seed money. Incorporation will be decided at
a later date as investors are secured.

Page 2

Rutabaga Sweets

2.2 Start-up Summary


Our start-up costs come to $300,000 which is mostly kitchen equipment, store furnishings and
construction, and starting inventory expenses associated with opening our first store. The startup costs are to be financed by outside investment. The assumptions are shown in Table 1 and
Illustration 2.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Office Supplies
Beginning Inventory
Sommelier consulting
Menus, etc
Insurance
Rent
Design & Construction
Research and Development
Furnishings
Expensed Equipment
Dishes, silverware, glassware, etc
Total Start-up Expenses

$1,000
$2,000
$5,000
$500
$1,000
$500
$5,000
$125,000
$1,000
$10,000
$125,000
$5,000
$281,000

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$19,000
$0
$0
$0
$19,000

Total Requirements

$300,000

Page 3

Rutabaga Sweets

Table: Start-up Funding


Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$281,000
$19,000
$300,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$0
$19,000
$0
$19,000
$19,000

Liabilities and Capital


Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

Total Capital and Liabilities


Total Funding

$300,000
$0
$0
$300,000
($281,000)
$19,000

$19,000
$300,000

Page 4

Rutabaga Sweets

Chart: Start-up

Start-up
$300,000
$270,000
$240,000
$210,000
$180,000
$150,000
$120,000
$90,000
$60,000
$30,000
$0
Expenses

Assets

Investment

Loans

3.0 Products and Services


Rutabaga Sweets sells gourmet desserts coupled with exceptional customer service in a
comforting atmosphere. Customers can dine-in and watch the chef create their dessert. We
also offer carry-out to prepare our desserts at home or have a special cake for a celebration.
And every month customers can join in the fun and take a cooking class taught by a Cordon
Bleu trained chef.
We will also offer special promotions such as After School Cookie Club. Moms will be
encouraged to bring in their children for milk and cookies they help prepare! Or moms can
come in with friends for some relaxing time away during our Tea Time. And to promote
Rutabaga Sweets as a choice for celebrating, we will offer a large table that can be reserved for
parties.
4.0 Market Analysis Summary
Rutabaga Sweets focuses on local markets, with a special focus on restaurant and ice cream
shop customers. Washington DC provides an excellent climate for our dessert bar as
households there spend more money dining out than anywhere else in the country.
4.1 Market Segmentation
Our market is divided into four different psychographics: Comfort Creatures, Celebrators,
Soccer Moms, and Gourmet Wanna-bes. They represent groups of people sharing similar
behavior patterns and reasons for patronizing Rutabaga Sweets.
Comfort Creatures are mainly white collar workers who are driven by success and prestige yet
miss homemade comfort foods of their childhood. They may stop in on their own or bring
clients in for a gourmet dessert experience.

Page 5

Rutabaga Sweets

Celebrators are just that - people celebrating special occasions. Birthday, anniversary,
graduation, valentine's day, etc., families and loved ones will gather at Rutabaga Sweets over
sumptuous desserts and a festive atmosphere.
Soccer Moms actually encompasses all family members. Rutabaga Sweets is a gathering place
where families are welcome and feel comfortable. "Moms" can come in for after school
milk and cookies with their children and relax while we pamper the little ones. Or they can
meet up with friends for our Tea Time - a little civilized time stolen in the midst of a busy day.
Gourmet Wanna-bes watch the Food Network and easily spend $50 for the latest cookbook.
They'll be the adventuresome diners at Rutabaga Sweets, as well as the first to sign up for our
cooking classes.

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Comfort Creatures
Celebrators
Gourmet Wanna-bes
Soccer Mom's

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Comfort Creatures
Celebrators
Gourmet Wanna-bes
Soccer Mom's
Total

10%
15%
15%
10%
12.59%

Year 1

Year 2

Year 3

Year 4

Year 5

5,000
5,000
5,000
5,000
20,000

5,500
5,750
5,750
5,500
22,500

6,050
6,613
6,613
6,050
25,326

6,655
7,605
7,605
6,655
28,520

7,321
8,746
8,746
7,321
32,134

CAGR
10.00%
15.00%
15.00%
10.00%
12.59%

Page 6

Rutabaga Sweets

4.2 Target Market Segment Strategy


We have specifically targeted segments of people with an appreciation for delicious desserts
and a need for comfort and relaxation. Rutabaga Sweets is a haven for the busy & successful
who want to treat themselves to something soothing and a little sinful! It doesn't take a lot of
time, yet is so rewarding. These people will value the high quality product presented without
pretension. Our customers will also appreciate the fun and fast service - whether celebrating a
birthday or stopping in before a concert at the MCI Center.
4.3 Service Business Analysis
Although Rutabaga Sweets is creating a new niche in the food service industry, we do share
similarities, and therefore compete with several kinds of quick-service dessert businesses:
1. Restaurants: any restaurant offering dessert.
2. Ice Cream Shops: Baskin & Robbins, Ben & Jerry's, etc.
3. Donut and Coffee Shops: any place coffee and pastries are available for carry-out or dine-in
consumption.
4. Supermarket: in-store bakeries as well as frozen specialty desserts offer some competition.
5. Bakeries: free-standing traditional bakeries.
4.3.1 Competition and Buying Patterns
Although Rutabaga Sweets is opening up a new niche in the restaurant industry, there is no
doubt that we are competing with a variety of similar businesses. We need to compete against
the ideas that dessert is something that only follows a special dinner and needn't be any better
than a frozen cake. We want every day to be a reason to celebrate. And being able to watch
your gourmet dessert be prepared by a chef is a treat that appeals to everyone.
While price may be a factor when competing against Ice Cream and Coffee Shops, these same
consumers who are willing to pay five dollars for a latte or a scoop of ice cream are already
conscious of a better quality product. We believe they will be equally as willing to spend a little
extra for an extraordinary dessert in a warm and friendly setting.
The comfort factor also plays an important role in consumer decisions about sweets. Both the
atmosphere and staff of Rutabaga Sweets excel at warm & friendly. And the menu will reflect
"comfort food" desserts as opposed to intimidating desserts that resemble architectural collosi.
We will use the highest quality products; sometimes paring the ordinary with the exotic, but we
will always present our desserts in a unintimidating manner.
5.0 Competitive Edge
Our competitive edge is our unique niche in an old market. Although restaurants, cafes,
bakeries, ice cream shops, etc have an established position in the marketplace, none are quite
like Rutabaga Sweets. We are offering the customers a completely new experience and far
higher quality product. No where else will they find a professional chef preparing gourmet
desserts right in front of them. The amazing popularity of the Food Network is proof of the
public's new-found interest in being a spectator in the kitchen.

Page 7

Rutabaga Sweets

5.1 Marketing Strategy


Rutabaga Sweets' marketing strategy will be education of the consumer and subsequent wordof-mouth. We will become known as a unique dining experience as well as a superior pastry
shop. Customers will be reached through fliers, newspaper advertisements and special holiday
promotions.
Location will also play a crucial role in marketing and promotion. The business will be located in
high-traffic retail area in Washington, DC known as the BID. Washington DC's Business
Improvement District offers many incentives to businesses operating there. Additionally, there
is the traffic that will come from being located near the MCI Center.
Rutabaga Sweets will target progressive and generally well-educated and affluent consumers
who are interested in trying new products and experiences and are dissatisfied with the limited
selection and lack of personal service found in grocery store bakeries, neighborhood cafes and
ice cream shops and area restaurants.
5.2 Sales Strategy
1. We need to sell the company as well as the product. Just as Starbucks
became synonymous with great coffee drinks, Rutabaga Sweets will come to be known as a
gathering place with spectacular desserts.
2. We have to sell not only an amazing "show" as the desserts are created, but also an above
and beyond service team who are knowledgeable and friendly. People will always feel
welcome and at home at Rutabaga Sweets.
The Yearly Total Sales chart summarizes our ambitious sales forecast.
5.2.1 Sales Forecast
Our Sales Forecast shows modest estimates for the first year of operations beginning in May of
2003. After establishing Rutabaga Sweets as 'the' place for sweets and celebrations, we project
aggressive sales increases for the following years. In the second year of operation we estimate
sales increase of 30% and of 50% in the third year for desserts, POP and carry-out. We are
planning a 10% increase in Weekly Lesson fees each of the two following years while keeping
costs constant.
Our cost of sales is based on an average food cost of 20% for dine in desserts and 15% for
point of purchase items, carry-out and weekly lessons. We project a consistent food cost
percentage of these amounts for the following two years. Keeping food costs low while sales
increase is vital to the profitability of Rutabaga Sweets.

Page 8

Rutabaga Sweets

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$144,000
$2,650
$5,100
$14,400
$166,150

$216,000
$3,445
$6,240
$15,840
$241,525

$280,800
$5,167
$9,360
$17,424
$312,751

Year 1
$28,800
$398
$765
$2,160
$32,123

Year 2
$43,200
$936
$936
$2,160
$47,232

Year 3
$56,160
$775
$1,404
$2,160
$60,499

Sales
Dessert Sales
POP Sales
Carry Out
Weekly Lessons
Total Sales
Direct Cost of Sales
Dessert Sales
POP Sales
Carry Out
Weekly Lessons
Subtotal Direct Cost of Sales

Chart: Sales Monthly

Sales Monthly
$20,000
$18,000
$16,000
$14,000

Dessert Sales

$12,000

POP Sales

$10,000

Carry Out

$8,000

Weekly Lessons

$6,000
$4,000
$2,000
Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

Page 9

Rutabaga Sweets

Chart: Sales by Year

Sales by Year
$320,000
$280,000
$240,000

Dessert Sales

$200,000

POP Sales

$160,000

Carry Out

$120,000

Weekly Lessons

$80,000
$40,000
$0
Year 1

Year 2

Year 3

5.3 Milestones
Rutabaga Sweets plans to be profitable within the first year of operation. Our goal is to
reinvest in the company and expand to three stores by the third year. From that point we hope
to establish partnerships with each store's chef; similar to Outback's proprietor program. They
will each invest in their store and be directly rewarded for its profitability.
6.0 Management Summary
Rutabaga Sweets will be slow to hire people in the first few years of operation, but very loyal to
those who are hired. Initially all employees will be part-time as the majority of the work will be
done by the chef-proprietor. As the company grows, new employees will be trained and
supervised by original employees who have been promoted to a leadership position. It is our
belief that employees who are dedicated to the success of Rutabaga Sweets should be
rewarded. They will be leaders in our future store developments.
6.1 Personnel Plan
Our Personnel Plan begins at ground zero with the founder being the only employee. Wendi
James, the chef and proprietor, will initially serve as the only dessert bar chef, as well as
the store manager and the instructor for the weekly lessons. Being a graduate of Le Cordon
Bleu in Paris, France with experience in three five-star restaurants she is well prepared for the
jobs of chef and instructor. In addition, her degree from the University of Illinois, C-U in
Restaurant Management equally prepares her for the managerial aspects of the business.
Rutabaga Sweets intends to promote from within and reward the best employees with
leadership roles. Our opening employment goal is 4 with a goal to increase to 7 by the end of
the first year, 10 the second year and 12 the third year. We realize that this is very aggressive
staffing, but intend to hire culinary professionals who are used to the demands of the
restaurant business. By this hiring philosophy, we will be able to operate with fewer, but more

Page 10

Rutabaga Sweets

productive employees and reward them accordingly. From that point we intend to increase the
responsibilities of each employee as opposed to hiring more people. Thereby rewarding those
who have worked hard to establish Rutabaga Sweets as a superior dessert shop. These people
will then be vital in our expansion as we open new stores.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Chef/Proprietor
Baker
Host
Dessert Bar Assistants
Dishwasher/Busser
Total People

$28,800
$3,920
$4,347
$7,200
$5,796
7

$31,680
$4,312
$4,347
$7,920
$5,760
10

$34,848
$6,720
$4,347
$8,712
$5,760
12

Total Payroll

$50,063

$54,019

$60,387

7.0 Financial Plan


It is key to our financial success to grow Rutabaga Sweets not just as a dessert bar, but as a
company. We are looking for an investment of $300,000 seed money with the hopes of
eventually selling an established chain of dessert bars or establishing our company as a
gourmet franchise. This means we must always be reinvesting in the future of Rutabaga
Sweets.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following
table. The key underlying assumptions are:

We assume a slow-growth economy, without major recession.


We assume of course that there are no unforeseen changes in technology to make products
immediately obsolete.
We assume access to equity capital and financing sufficient to maintain our financial plan as
shown in the tables.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
30.00%
0

2
10.00%
10.00%
30.00%
0

3
10.00%
10.00%
30.00%
0

Page 11

Rutabaga Sweets

7.2 Break-even Analysis


For our break-even analysis, we assume running costs including our full payroll, rent, and
utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is only
about $4,000.
Margins are harder to assume that far in the future.

Chart: Break-even Analysis

Break-even Analysis
$8,000
$6,000
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)
($8,000)
($10,000)
$0

$4,000
$2,000

$8,000
$6,000

$12,000
$16,000
$20,000
$10,000
$14,000
$18,000
$22,000

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$13,251

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

19%
$10,689

Page 12

Rutabaga Sweets

7.3 Projected Profit and Loss


An important assumption when calculating our P&L is the increase in sales from year to year.
We are basing our assumptions on the financial success of Finale Dessertery in Boston,
Massachusetts. They reported a 50% increase in sales the second year of business followed by
a 30% increase the next year. We feel Rutabaga Sweets can match, if not beat those sales,
considering the National Restaurant Association's analysis of the Bureau of Labor Statistics
Consumer Expenditure Survey states that Washington DC households spend the most at
restaurants per year.
It is also vital that we hold our food cost at 20% and 15% respectively for dine-in desserts and
POP, carry-out and weekly lessons. That will assure our gross margin remains high.
Table: Profit and Loss

Pro Forma Profit and Loss


Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other Production Expenses
Total Cost of Sales

$166,150
$32,123
$0
$32,123

$241,525
$47,232
$0
$47,232

$312,751
$60,499
$0
$60,499

Gross Margin
Gross Margin %

$134,028
80.67%

$194,293
80.44%

$252,252
80.66%

$50,063
$2,300
$0
$0
$6,000
$2,400
$60,000
$7,509
$0

$54,019
$2,500
$0
$0
$6,000
$2,400
$60,000
$8,103
$0

$60,387
$2,500
$0
$0
$6,000
$2,400
$60,000
$9,058
$0

$128,272

$133,022

$140,345

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$5,755
$5,755
$0
$1,727

$61,271
$61,271
$0
$18,381

$111,907
$111,907
$0
$33,572

Net Profit
Net Profit/Sales

$4,029
2.42%

$42,890
17.76%

$78,335
25.05%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Page 13

Rutabaga Sweets

Chart: Profit Monthly

Profit Monthly
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
($500)
($1,000)
($1,500)
($2,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Chart: Profit Yearly

Profit Yearly

$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Year 1

Year 2

Year 3

Page 14

Rutabaga Sweets

Chart: Gross Margin Monthly

Gross Margin Monthly


$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Chart: Gross Margin Yearly

Gross Margin Yearly

$240,000
$210,000
$180,000
$150,000
$120,000
$90,000
$60,000
$30,000
$0
Year 1

Year 2

Year 3

Page 15

Rutabaga Sweets

7.4 Projected Cash Flow


Being a quick-service oriented business, our cash flow depends on sales assumptions. It is
critical to keep our food cost low. We also need to be careful to balance slow (non-holiday)
months with busy months with big holidays such as Christmas, Valentine's Day and Mother's
Day.
Table: Cash Flow

Pro Forma Cash Flow


Year 1

Year 2

Year 3

$166,150
$166,150

$241,525
$241,525

$312,751
$312,751

$0
$0
$0
$0
$0
$0
$0
$166,150

$0
$0
$0
$0
$0
$0
$0
$241,525

$0
$0
$0
$0
$0
$0
$0
$312,751

Year 1

Year 2

Year 3

$50,063
$104,118
$154,181

$54,019
$146,921
$200,940

$60,387
$172,515
$232,902

$0
$0
$0
$0
$0
$0
$0
$154,181

$0
$0
$0
$0
$0
$0
$0
$200,940

$0
$0
$0
$0
$0
$0
$0
$232,902

$11,969
$30,969

$40,585
$71,554

$79,849
$151,403

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 16

Rutabaga Sweets

Chart: Cash

Cash
$32,000
$28,000
$24,000
$20,000
$16,000

Net Cash Flow

$12,000

Cash Balance

$8,000
$4,000
$0
($4,000)
($8,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

Page 17

Rutabaga Sweets

7.5 Projected Balance Sheet


The balance sheet is quite solid. We do not project any real trouble meeting our debt
obligations - as long as we can achieve our specific objectives. We realize we've projected
aggressively, but are confident the location we've chosen for Rutabaga Sweets, as well as the
dessert bar concept itself , will be very successful.
At this point we haven't included any assets or depreciation in our calculations. Whether we
purchase new or used kitchen equipment will determine those numbers at a later date.
Table: Balance Sheet

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

$30,969
$3,834
$0
$34,802

$71,554
$6,467
$0
$78,021

$151,403
$7,216
$0
$158,619

$0
$0
$0
$34,802

$0
$0
$0
$78,021

$0
$0
$0
$158,619

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$11,774
$0
$0
$11,774

$12,103
$0
$0
$12,103

$14,365
$0
$0
$14,365

Long-term Liabilities
Total Liabilities

$0
$11,774

$0
$12,103

$0
$14,365

$300,000
($281,000)
$4,029
$23,029
$34,802

$300,000
($276,971)
$42,890
$65,918
$78,021

$300,000
($234,082)
$78,335
$144,253
$158,619

$23,029

$65,918

$144,253

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 18

Rutabaga Sweets

7.6 Business Ratios


Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

45.37%

29.49%

4.56%

Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

11.02%
0.00%
100.00%
0.00%
100.00%

8.29%
0.00%
100.00%
0.00%
100.00%

4.55%
0.00%
100.00%
0.00%
100.00%

13.08%
33.35%
54.27%
45.73%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

33.83%
0.00%
33.83%
66.17%

15.51%
0.00%
15.51%
84.49%

9.06%
0.00%
9.06%
90.94%

24.73%
27.23%
51.96%
48.04%

100.00%
80.67%
78.24%
1.38%
3.46%

100.00%
80.44%
62.69%
1.04%
25.37%

100.00%
80.66%
55.61%
0.80%
35.78%

100.00%
24.26%
12.12%
0.98%
1.92%

2.96
2.63
33.83%
24.99%
16.54%

6.45
5.91
15.51%
92.95%
78.53%

11.04
10.54
9.06%
77.58%
70.55%

1.37
0.74
59.26%
4.93%
12.10%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin


Return on Equity

2.42%
17.49%

17.76%
65.07%

25.05%
54.30%

n.a
n.a

10.74
9.84
27
4.77

9.17
12.17
30
3.10

8.84
12.17
28
1.97

n.a
n.a
n.a
n.a

0.51
1.00

0.18
1.00

0.10
1.00

n.a
n.a

$23,029
0.00

$65,918
0.00

$144,253
0.00

n.a
n.a

0.21
34%
2.63
7.21
0.00

0.32
16%
5.91
3.66
0.00

0.51
9%
10.54
2.17
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 19

Appendix
Table: Sales Forecast

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

$12,000
$300
$500
$900
$13,700

$16,000
$500
$500
$900
$17,900

Month 11

Month 12

Sales
Dessert Sales
POP Sales
Carry Out
Weekly Lessons
Total Sales

0%
0%
0%
0%

$12,000
$200
$300
$1,800
$14,300

$12,000
$200
$300
$1,800
$14,300

$12,000
$200
$300
$1,800
$14,300

$12,000
$100
$300
$900
$13,300

$12,000
$100
$300
$900
$13,300

$12,000
$100
$500
$900
$13,500

$16,000
$300
$1,000
$1,800
$19,100

$8,000
$50
$200
$900
$9,150

$12,000
$500
$700
$900
$14,100

$8,000
$100
$200
$900
$9,200

Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Dessert Sales

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$3,200

$1,600

$2,400

$1,600

$2,400

$3,200

POP Sales

$30

$30

$30

$15

$15

$15

$45

$8

$75

$15

$45

$75

Carry Out

$45

$45

$45

$45

$45

$75

$150

$30

$105

$30

$75

$75

$270

$270

$270

$135

$135

$135

$270

$135

$135

$135

$135

$135

$2,745

$2,745

$2,745

$2,595

$2,595

$2,625

$3,665

$1,773

$2,715

$1,780

$2,655

$3,485

Weekly Lessons
Subtotal Direct Cost of Sales

Month 10

Page 1

Appendix
Table: Personnel

Personnel Plan

Chef/Proprietor
Baker
Host
Dessert Bar Assistants
Dishwasher/Busser
Total People
Total Payroll

0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9
$2,400
$560
$483
$600
$483
5

Month
10
$2,400
$560
$483
$600
$483
7

Month
11
$2,400
$560
$483
$600
$483
7

Month
12
$2,400
$560
$483
$600
$483
7

$2,400
$0
$483
$600
$483
4

$2,400
$0
$0
$600
$483
4

$2,400
$0
$0
$600
$483
4

$2,400
$0
$0
$600
$483
4

$2,400
$0
$483
$600
$483
4

$2,400
$560
$483
$600
$483
5

$2,400
$560
$483
$600
$483
5

$2,400
$560
$483
$600
$483
5

$3,966

$3,483

$3,483

$3,483

$3,966

$4,526

$4,526

$4,526

$4,526

$4,526

$4,526

$4,526

Page 2

Appendix
Table: General Assumptions

General Assumptions
Plan Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
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
Tax 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%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

Other

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and


Loss
Month 11

Month 12

$14,300

Month 1

$14,300

$14,300

$13,300

$13,300

$13,500

$19,100

$9,150

$14,100

$9,200

$13,700

$17,900

$2,745

$2,745

$2,745

$2,595

$2,595

$2,625

$3,665

$1,773

$2,715

$1,780

$2,655

$3,485

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,745

$2,745

$2,745

$2,595

$2,595

$2,625

$3,665

$1,773

$2,715

$1,780

$2,655

$3,485

$11,555

$11,555

$11,555

$10,705

$10,705

$10,875

$15,435

$7,378

$11,385

$7,420

$11,045

$14,415

80.80%

80.80%

80.80%

80.49%

80.49%

80.56%

80.81%

80.63%

80.74%

80.65%

80.62%

80.53%

Payroll

$3,966

$3,483

$3,483

$3,483

$3,966

$4,526

$4,526

$4,526

$4,526

$4,526

$4,526

$4,526

Sales and Marketing and


Other Expenses
Depreciation

$1,000

$0

$0

$0

$0

$300

$500

$0

$0

$0

$0

$500

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

Sales
Direct Cost of Sales
Other Production
Expenses
Total Cost of Sales
Gross Margin
Gross Margin %

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Expenses

Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating
Expenses
Profit Before Interest and
Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

15%

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$595
$0

$522
$0

$522
$0

$522
$0

$595
$0

$679
$0

$679
$0

$679
$0

$679
$0

$679
$0

$679
$0

$679
$0

$11,261

$9,705

$9,705

$9,705

$10,261

$11,205

$11,405

$10,905

$10,905

$10,905

$10,905

$11,405

$294

$1,850

$1,850

$1,000

$444

($330)

$4,030

($3,527)

$480

($3,485)

$140

$3,010

$294

$1,850

$1,850

$1,000

$444

($330)

$4,030

($3,527)

$480

($3,485)

$140

$3,010

$0

$0

$0

$0

$0

$88

$555

$555

$300

$133

$206

$1,295

$1,295

$700

$311

1.44%

9.05%

9.05%

5.26%

2.34%

$0
($99)
($231)
-1.71%

$0
$1,209

$0
($1,058)

$2,821

($2,469)

14.77%

-26.99%

$0
$144
$336
2.38%

$0
($1,045)
($2,439)
-26.52%

$0

$0

$42

$903

$98

$2,107

0.72%

11.77%

Page 4

Appendix
Table: Cash Flow

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

$14,300

$14,300

$14,300

$13,300

$13,300

$13,500

$19,100

$9,150

$14,100

$9,200

$13,700

$17,900

Subtotal Cash from Operations

$14,300

$14,300

$14,300

$13,300

$13,300

$13,500

$19,100

$9,150

$14,100

$9,200

$13,700

$17,900

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interestfree)


New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$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

$14,300

$14,300

$14,300

$13,300

$13,300

$13,500

$19,100

$9,150

$14,100

$9,200

$13,700

$17,900

Additional Cash Received


Sales Tax, VAT, HST/GST Received
New Current Borrowing

Subtotal Cash Received


Expenditures

0.00%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

$3,966

$3,483

$3,483

$3,483

$3,966

$4,526

$438

$13,027

$9,522

$9,503

$8,955

$9,030

$4,404

$16,510

$13,005

$12,986

$12,921

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

Principal Repayment of Current


Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

Dividends

Month
10

Month
11

Month
12

$4,526

$4,526

$4,526

$4,526

$4,526

$9,360

$12,644

$5,476

$9,844

$6,449

$9,870

$13,556

$13,886

$17,170

$10,002

$14,370

$10,975

$14,396

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$4,404

$16,510

$13,005

$12,986

$12,921

$13,556

$13,886

$17,170

$10,002

$14,370

$10,975

$14,396

Expenditures from Operations


Cash Spending
Bill Payments
Subtotal Spent on Operations

$4,526

Additional Cash Spent

Subtotal Cash Spent

Page 5

Appendix
Net Cash Flow

$9,896

Cash Balance

$28,896

($2,210)
$26,686

$1,295

$314

$379

$27,981

$28,294

$28,674

($56)
$28,617

$5,214
$33,831

($8,020)
$25,811

$4,098
$29,910

($5,170)
$24,739

$2,725

$3,504

$27,465

$30,969

Table: Balance Sheet

Pro Forma Balance Sheet


Month 1
Assets

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Starting
Balances

Month
10

Month
11

Month
12

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

$19,000
$0
$0
$19,000

$28,896
$3,020
$0
$31,915

$26,686
$3,020
$0
$29,705

$27,981
$3,020
$0
$31,000

$28,294
$2,855
$0
$31,149

$28,674
$2,855
$0
$31,528

$28,617
$2,888
$0
$31,505

$33,831
$4,032
$0
$37,863

$25,811
$2,259
$0
$28,070

$29,910
$2,987
$0
$32,896

$24,739
$2,207
$0
$26,946

$27,465
$2,921
$0
$30,385

$30,969
$3,834
$0
$34,802

$0
$0
$0
$19,000

$0
$0
$0
$31,915

$0
$0
$0
$29,705

$0
$0
$0
$31,000

$0
$0
$0
$31,149

$0
$0
$0
$31,528

$0
$0
$0
$31,505

$0
$0
$0
$37,863

$0
$0
$0
$28,070

$0
$0
$0
$32,896

$0
$0
$0
$26,946

$0
$0
$0
$30,385

$0
$0
$0
$34,802

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
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
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$12,709
$0
$0
$12,709

$9,205
$0
$0
$9,205

$9,205
$0
$0
$9,205

$8,654
$0
$0
$8,654

$8,722
$0
$0
$8,722

$8,930
$0
$0
$8,930

$12,467
$0
$0
$12,467

$5,143
$0
$0
$5,143

$9,633
$0
$0
$9,633

$6,122
$0
$0
$6,122

$9,464
$0
$0
$9,464

$11,774
$0
$0
$11,774

Long-term Liabilities
Total Liabilities

$0
$0

$0
$12,709

$0
$9,205

$0
$9,205

$0
$8,654

$0
$8,722

$0
$8,930

$0
$12,467

$0
$5,143

$0
$9,633

$0
$6,122

$0
$9,464

$0
$11,774

Paid-in Capital
Retained Earnings

$300,000
($281,000)

Earnings
Total Capital
Total Liabilities and Capital

$0
$19,000
$19,000

$300,000
($281,00
0)
$206
$19,206
$31,915

Net Worth

$19,000

$19,206

$300,000
($281,00
0)
$1,501
$20,501
$29,705

$300,000
($281,00
0)
$2,795
$21,795
$31,000

$300,000
($281,00
0)
$3,495
$22,495
$31,149

$300,000
($281,00
0)
$3,806
$22,806
$31,528

$300,000
($281,00
0)
$3,575
$22,575
$31,505

$300,000
($281,00
0)
$6,396
$25,396
$37,863

$300,000
($281,00
0)
$3,927
$22,927
$28,070

$300,000
($281,00
0)
$4,263
$23,263
$32,896

$300,000
($281,00
0)
$1,823
$20,823
$26,946

$300,000
($281,00
0)
$1,921
$20,921
$30,385

$300,000
($281,00
0)
$4,029
$23,029
$34,802

$20,501

$21,795

$22,495

$22,806

$22,575

$25,396

$22,927

$23,263

$20,823

$20,921

$23,029

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