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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................1
1.1 Objectives ...................................................................................................................................1
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 ......................................................................................................................2
Table: Start-up .........................................................................................................................4
Table: Start-up Funding ..........................................................................................................5
2.2.1 Start-up Current & Long-term Asset Listing ...............................................................5
2.3 Location: Proposed ...................................................................................................................6
3.0 Products ...............................................................................................................................................7
4.0 Market Analysis Summary..................................................................................................................8
4.1 Market Segmentation ................................................................................................................8
4.2 Industry Analysis .........................................................................................................................8
4.2.1 Competition and Buying Patterns................................................................................8
5.0 Strategy and Imlpementation Summary ............................................................................................9
5.1 Marketing Strategy.....................................................................................................................9
5.2 Sales Strategy............................................................................................................................9
5.2.1 Sales Forecast ..............................................................................................................9
Table: Sales Forecast.................................................................................................10
Chart: Sales Monthly ...................................................................................................10
Chart: Sales by Year ...................................................................................................11
5.3 Competitive Edge....................................................................................................................11
5.4 Milestones ................................................................................................................................11
Table: Milestones..................................................................................................................11
6.0 Management Summary ....................................................................................................................12
6.1 Personnel Plan.........................................................................................................................12
Table: Personnel ...................................................................................................................12
7.0 Financial Plan ....................................................................................................................................13
7.1 Important Assumptions............................................................................................................13
Table: General Assumptions ...............................................................................................13
7.2 Projected Profit and Loss .......................................................................................................14
Table: Profit and Loss ..........................................................................................................14
Chart: Profit Monthly .............................................................................................................15
Chart: Profit Yearly................................................................................................................15
Chart: Gross Margin Monthly ...............................................................................................16
Chart: Gross Margin Yearly..................................................................................................16
7.3 Break-even Analysis................................................................................................................17
Table: Break-even Analysis .................................................................................................17
Chart: Break-even Analysis .................................................................................................17
7.4 Projected Cash Flow...............................................................................................................18
Chart: Cash ...........................................................................................................................18
Table: Cash Flow..................................................................................................................19
7.5 Projected Balance Sheet ........................................................................................................20
Table: Balance Sheet ...........................................................................................................20
Page 1

Table of Contents
7.6 Business Ratios .......................................................................................................................21
Table: Ratios .........................................................................................................................22
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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Classique Gifts Etc.


1.0 Executive Summary
Classique Gifts Etc. is a start-up retail store offering fine gifts, collectible dolls and doll
ac cessories. The store will be loc ated in Lexington, Kentucky, catering to the middle- and
upper-class consumers who look beyond the congested retail malls for the special shopping
experience. In addition to offering a wide array of unique, quality products, the consumer will
enjoy friendly and knowledgeable customer service and a convenient, uncongested loc ation.
This business plan is prepared to obtain financing in the amount of $50,000 to
purchase inventory and to help cover expenses in the first year of operations. We are also
asking for a credit line of $10,000 to be used as nec essary in low cash flow periods. Brenda
and Charles Gajdik will own and operate the store together as a team. They will provide
$40,000 in c ash as an equity investment to be used in start-up costs, equipment purchases, and
operating capital.
The sales forecasts used in this plan are very conservative compared to a similar business now
operating in Lexington. Brenda has observed the strengths and weaknesses of this store and is
convinced it can be done better.

1.1 Objectives

To develop Classique Gifts Etc. into the premier gift retail store in Central Kentucky.
To begin and maintain a gross profit margin above 40% for the first year.
To ac quire a customer base of 4,000 by the end of the second year by using personal
customer service and marketing.
To ac hieve a substantial net profit by the end of Year 3.

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1.2 Mission
Classique Gifts Etc.will be a retail gift store specializing in fine gifts, collectible dolls and doll
ac cessories. We want to provide products from quality suppliers and provide professional
customer service in a friendly environment.

1.3 Keys to Success


To succeed in this business we must:

Sell products the customer desires and are of the highest quality.
Provide friendly customer service.
Establish excellent vendor/supplier relations that will fac ilitate quick shipment of orders.
Advertise and promote our store immediately to take advantage of the current
Christmas shopping season.
Continuously review our inventory and sales and adjust our inventory levels based on
detailed records.

2.0 Company Summary


Classique Gifts Etc. is proposed to be a sole-proprietorship company operated by Brenda and
Charles Gajdik and is a newly established retail store offering unique gifts and elegant
collectible dolls.
Located in Lexington, Kentucky, we will cater to special consumers who are interested in
finding unique items to supplement their doll collection or finding a gift that cannot be found in
the national chain store in the very busy, very congested shopping mall.
We intend to expand our business by carefully building a repeat customer base and provide the
products and merchandise they wish to purchase. We feel it is important to offer personal
customer support and services to ac hieve our business philosophy.

2.1 Company Ownership


Classique Gifts Etc. will begin operation as a sole-proprietorship. The company will be owned
by Charles and Brenda Gajdik.

2.2 Start-up Summary


Total current and long-term assets will make up 78% of start-up requirements. Start-up
expenses, which are detailed in the following start-up table comprise the remaining 22% at
$20,058
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Classique Gifts Etc.


Funding
As detailed in the start-up funding table, $90,000 with a $10,000 line of credit will be required to
fund Classique Gifts Etc. This proposal is to be ac complished as follows:

Owners' investment from Charles and Brenda of $40,000


Commercial loan of $50,000, calculated at 7% for seven years
Line of credit of $10,000 to be used as nec essary

Details of other start-up expenses include:

Research and Development:


Buying trip expenses to
Columbus, OH.

$133

Buying trip expenses to


Atlanta, GA.

$430

Internet provider service paid


in July, for the Year 1

$120

Total

$683

1st Month Rent & Deposit (proposed loc ation):


Rent = $9.50/square
foot

$1425/mo.

$17,100/yr.

Common Area
$225/mo.
Maintenance (CAM) =
$1.50/square foot

$2700/yr.

Total Rent and CAM

$19,800/yr.

$1650/mo.

Leasehold Improvements:
Slatwall Panels and
Ac cessories

50 panels @ $50
eac h

$2500

Ceiling Tiles

1,400 sq ft @ $.50/sq $700


ft

Carpet with Pad

1,400 sq ft @ 2.50/sq $3500


ft

Carpenter Estimate

Display Risers and


Counter

$300

Total

$7,000

Phone line installation: Single line installation $100


Insurance: Medical insurance for Brenda and Charles $650 first month

Advertising & Promotion:

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Classique Gifts Etc.


Newspaper

$76/week for 26
weeks (Community
Section on
Wednesday)

$1976

TV

Shopping with Santa


in the Bluegrass

$1500

Total

$3476

Table: Start-up
Start-up
Requirements
Start-up Expenses
Utility Deposits (gas, water, electric)
Legal
Advertising & Promotion
Consultants
Insurance: Store Liability
Medical Insurance 1st Month
Office Supplies, Gift Wrap and Packaging
Leasehold Improvements
1st Month Rent & Deposit
Phone line installation
Research and Development

$600
$250
$3,500
$200
$2,400
$650
$1,500
$7,000
$3,075
$100
$683

Business Plan Development


Total Start-up Expenses

$100
$20,058

Start-up Assets
Cash Required
Start-up Inventory

$12,185
$45,000

Other Current Assets


Long-term Assets
Total Assets

$12,757
$0
$69,942

Total Requirements

$90,000

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

$20,058
$69,942
$90,000

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

$57,757
$12,185
$0
$12,185

Total Assets

$69,942

Liabilities and Capital


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

$0
$50,000
$0
$0
$50,000

Capital
Planned Investment
Charles & Brenda Gajdik
Other
Additional Investment Requirement

$40,000
$0
$0

Total Planned Investment

$40,000

Loss at Start-up (Start-up Expenses)

($20,058)

Total Capital

$19,942

Total Capital and Liabilities

$69,942

Total Funding

$90,000

2.2.1 Start-up Current & Long-term Asset Listing

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Classique Gifts Etc.


Description of
Asset

Brand

Display
Cases and
Furniture

various

Cash Register

Penny

800

Phone System

Radio Shac k

* 250

Office Furniture

Office Depot

desk, chair,
cabinets

Computer System Dell


Additional SW
and Services

Quantity

*$2,000

Quickbooks

Storefront Channel Gabbard


Sign

* 750
2,261
** 700

TOTAL
*budgeted
amounts

Cost

5,996
$12,757

**including annual
payroll service

2.3 Location: Proposed


The most desirable loc ation we have found is in Imperial Plaza Shopping Center loc ated on Waller
Avenue. The center will soon be renamed to Waller Center. The property manager estimates that
20,000 c ars pass this center daily.
Imperial Plaza: This loc ation has 1,800 sq. ft. and is priced at $9.50 per sq. ft. The CAM expense
is $1.50 per sq. ft. and is adjustable and refundable at the end of the year. In other words, if
the common area maintenance fund has not been fully used during the year, the remaining
portion of the fund will be credited toward the tenant's lease payment.
Approximately 350 sq ft in the bac k room can be used as work space and storage. The sales
counter is adequate but could use some paint. The drop-down c eiling panels need to be
replac ed. The floor needs carpet and the walls need to have the pegboard panels removed or
covered with slatwall. The window display risers are adequate but could use some carpet.
Monthly rent is $1,425 and the Common Area Maintenance (CAM) is $225 for a total of $1,650
per month. However, the owner's representative said he would consider taking less. All
appropriate insurance for liability and inventory is the tenant's responsibility. The owner
appears to be very flexible and helpful. The start-up leasehold expenses have been based on this
property.
Other potential sites we have looked at are as follows:
Southland Drive: The loc ation has 2,000 sq. ft. at the very end of Southland Drive close to
Lane Allen Rd. It was previously oc cupied by Southland Florists, which moved to a new loc ation.
The property has been available for about three years. The space is one of 4 or 5 spac es of
the same size in a stand-alone building at the end of Southland Shopping Center.
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The bac k room, which serves as a work and storage area, has a bathroom and will need
remodeling. The floor will need new tile and some of the walls in back need repair.
There is an office area with a separate ceiling which should be removed for additional ventilation.
An additional small room is adjac ent to the office and should be removed to provide additional
retail floor spac e.
The retail portion of the property needs the carpet replac ed. The sales counter and the
display window risers need to be replac ed. The front door needs advertising material removed
and the walls throughout the front and bac k need painting. The entire ceiling must be repaired.
The business sign must be flat against the outside surfac e. The existing sign with a new fac e
can be utilized. However, the signs cannot be seen from Southland Drive bec ause of three very
large pine trees bloc king the view. Parking is small but probably adequate for these shops.
The rent is $1,800 per month with the first month free for renovation. There is no common
area maintenance (CAM) charge. The deposit is $1,800 and is due along with the first month's
rent. The tenant must provide the appropriate insurance for liability and protection of his assets.
The owner said he would repair the ceiling and walls. The tenant is responsible for all other
leasehold improvements.
This spac e will need considerable leasehold improvements. An existing tenant next door is not
happy with the owner or her current situation and has only been in the loc ation for six months.
Chinoe Center: The loc ation has 2,280 sq ft in an upsc ale strip center with a mix of office
space and retail outlets anchored by Kroger Supermarket Groc ery Store. The property is
loc ated next to Kroger and with the right sign will receive a tremendous amount of visual
advertisement exposure with the Kroger traffic. However, there is no display window, which
explains the relatively inexpensive rent and CAM expenses. We have not seen the inside space.
The door leading to the space is loc ated between a carryout Pizza store and Kroger. The door
leads to a hallway about 25 to 30 feet long into a spac e which turns into three separate oddly
shaped rooms. The spac e was previously used as a modern dance studio.
The space is priced at $8 per sq ft and $1.65 per sq ft CAM fee. That is $1,833.50 per month.
The tenant assumes full insurance responsibility for inventory and liability.

3.0 Products
Classique Gifts Etc. plans to carry special oc casion gifts and merchandise from the San Francisc o
Music Box Company, Swarovski crystal, Lennox crystal, Outbac k Chair Company, Traditions
Artglass Company, children's books from Harvest House and other suppliers who display their
products at the Atlanta International Gift Market or the Columbus Marketplac e for Gift, Garden
and Home.
We will also purchase merchandise from the most well-known c ollectible doll manufacturers and
suppliers in the United States, including Steiff, Madame Alexander, Turner Dolls, Lee
Middleton, Wendy Lawton, Susan Wakeen, Kish Dolls, Lloyd Middleton and others that provide
the quality products that our customers wish to purchase.

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Classique Gifts Etc.


4.0 Market Analysis Summary
Ac cording to Pam Danziger, President of Unity Marketing, the collectible doll industry generated
$3 billion in retail sales in 2000. The gift industry, which includes general gifts, collectibles,
stationery and greeting cards, generated $54 billion in sales in 2002. As predicted by Unity
Marketing, "the future of the gifts and home ac cents market is positive for the next several
years." Source:Unity Marketing, The Home Report 2001:The Market, The Competitors, The
Trends

4.1 Market Segmentation


The ideal customer we expec t to serve is:

Middle to Upper Class


Primarily Female
30-75 Years of Age
Educated
Homeowner
Quality Consc ious
Value Consc ious
Family Oriented

We will attrac t these customers by offering unique and uncommon product selections not found
in the mass-market retail stores.

4.2 Industry Analysis

More and more consumers are seeking independent retailers that offer them the feel of
home with a more personalized shopping experience.
As consumers bec ome more time-deprived, they are looking to shop at stores whose
service offerings are as equal in quality and value to their products.

4.2.1 Competition and Buying Patterns


Brand name products sell well in stores that maintain a good selection, good loc ation, and
knowledgeable, friendly employees. These are the most important fac tors when selling
collectibles and gifts.
There is only one store in the Lexington area that carries a wide variety of collectible dolls.
However, the doll inventory only makes up about 25% of the total inventory. We do not
consider this store serious competition bec ause their lease for the 4800 sq. ft. store expires in
March, 2004, and it is rumored the business will not renew the lease.
Other stores in the Central Kentucky area carry one or two lines of dolls but do not offer a
wide variety of collectible doll lines. We intend to offer many different doll lines, doll ac cessories,
personalized knowledgeable service, and a variety of other unique gift merchandise.
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Classique Gifts Etc.


The Internet offers dolls at disc ount prices. However, most of the merchandise is retired or
disc ontinued lines that the manufacturers sell in bulk at disc ount wholesale prices. These are not
the products we intend to carry in Classique Gifts Etc.
We intend to develop a web page at some point, probably in year three to market
our merchandise on the Internet.

5.0 Strategy and Imlpementation Summary


Classique Gifts Etc. will develop product offerings and marketing strategy to increase its
customer base while driving sales and profit. The following sections review the various strategies
that will support this effort.

5.1 Marketing Strategy


Classique Gifts Etc. will foc us its marketing efforts by advertising in the Lexington HeraldLeader and Insight Media Advertising on cable TV.
We will also increase consumer awareness, retain the existing customer base and promote
sales via seasonal postcard and newsletter mailings. The mailings will announce special events or
holiday spec ials during the year. These events will be used to sell slow-moving products and
vendor spec ial promotions. This means our marketing resources will be centered around both
sales promotions (events, displays) and personal sales (c ustomer service, friendly atmosphere).
Classique Gifts Etc. will offer $5 coupons for every $100 spent. The coupon c an be used by
the customer on future visits to the store.

5.2 Sales Strategy


Classique Gifts Etc. will approach sales from a salesperson-customer relationship basis. All
customers will be assisted in a very personal manner. Gathering key customer information and
seeking performance feedback on the products and services offered will assist us in the following
ways:

Targeting our marketing efforts more effectively.


Developing product offers and merchandising formats that will increase sales.
Developing services that enhance the shopping experience.
Increase awareness of Classique Gifts Etc. within the retail consumer marketplac e.
Develop future sales opportunities that allow for continued growth of the business.

5.2.1 Sales Forecast


Sales in the retail gift and collectible doll industry is enhanced by seasonal holidays and special
gift giving oc casions. The following sales forecast is from direct retail sales and does not
include misc ellaneous income. The figures also include dips in sales for those slow periods the
business usually experiences in the summer months.

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Classique Gifts Etc.


Table: Sales Forecast
Sales Forecast
Sales
Dolls & Accessories
Gifts
Total Sales
Direct Cost of Sales
Dolls & Accessories
Gifts
Subtotal Direct Cost of Sales

Year 1

Year 2

Year 3

$72,105
$71,405
$143,510

$80,758
$79,974
$160,731

$90,449
$89,570
$180,019

Year 1
$40,871
$40,885
$81,756

Year 2
$42,915
$42,929
$85,844

Year 3
$45,060
$45,076
$90,136

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Classique Gifts Etc.

5.3 Competitive Edge


Classique Gifts Etc. will establish itself competitively as a unique retail environment through
product offering and friendly, personal customer service. With St. Joseph Hospital, medical
offices, the Kentucky Inn, the University of Kentucky and the Campbell House all loc ated within
1/2 mile of the proposed site, we will attempt to offer items that appeal to this diverse
population as well as the doll collector.

5.4 Milestones
The following table lists important milestone dates.

Table: Milestones
Milestones
Milestone
Business Plan
Secure Funding
Negotiate and Sign Lease
Business Setup
Leasehold Improvements
Purchase Start-up Equipment
Advertising Developed
Store Open For Business
Totals

Start Date
11/1/2003
11/18/2003
11/18/2003
11/18/2003
11/18/2003
11/18/2003

End Date
11/18/2003
12/31/2003
12/31/2003
12/31/2003
12/31/2003
12/31/2003

Budget
$0
$0
$0
$0
$0
$0

Manager
Charles
Charles
Charles
Charles
Charles
Charles

Department
Department
Department
Department
Department
Department
Department

1/1/2004
2/1/2004

2/1/2004
2/2/2004

$0
$0
$0

Charles/Brenda
Charles/Brenda

Department
Department

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Classique Gifts Etc.


6.0 Management Summary
Classique Gifts Etc. will be managed and operated on a daily basis by Brenda and Charles
Gajdik, a husband and wife team.
Brenda will manage merchandising, sales, customer relations, and all part-time staff. She will also
provide the information nec essary to develop a marketing plan to attrac t repeat customers.
Brenda has been employed for three years at Sc hwab's Collectibles, a retail collectible and gift
store in Lexington. She is currently the assistant store manager which she has held for two
years. Some of her management duties include shipping and receiving, merchandising, and
sales. She has always served the public in most every position she has previously held. She
understands what customer service is and has a loyal following of repeat customers.
Charles will manage the finances and financial records, operations, data proc essing and assist
in all other areas of the business. Charles has 14 years experience in accounting and nearly 15
years experience in information technology as an Information Systems (IS) Support Specialist.
He also maintains the financial records for a family owned business and has some experience in
retail sales.

6.1 Personnel Plan


The personnel plan is included in the following table. It shows the owners' salaries along with one
part-time employee used as needed.

Table: Personnel
Personnel Plan
Year 1
$14,600
$9,000
$3,120

Year 2
$16,000
$14,000
$4,120

Year 3
$16,000
$14,000
$5,120

Total People

Total Payroll

$26,720

$34,120

$35,120

Brenda Owner/Manager-Sales & Merchandising


Charles Owner/Manager-Operations & Finance
Part-Time as Needed ($7 per hour)

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Classique Gifts Etc.


7.0 Financial Plan

Growth will be moderate.


Costs will be managed and forecasts for future needs will be performed on a regular basis.
Finding the right product, at the right price will enable the business to meet planned
margins and maintain inventory at an ac ceptable level.

7.1 Important Assumptions


Key assumptions are:

We do not sell anything on credit.


We assume the continued popularity of collectibles.
We assume ac cess to 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
1
6.00%

Year 2
2
6.00%

Year 3
3
6.00%

7.00%
30.00%
0

7.00%
30.00%
0

7.00%
30.00%
0

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Classique Gifts Etc.


7.2 Projected Profit and Loss
The following table shows our planned three-year profit and loss estimates. We expec t to have a
gross margin percent above 40% our first year, which will continue to grow in years two and
three.
The associated charts show that we will have a negative profit/sales percentage for the first
two years with a positive net profit by year three.

Table: Profit and Loss


Pro Forma Profit and Loss
Year 1
$143,510
$81,756
$0
$81,756

Year 2
$160,731
$85,844
$0
$85,844

Year 3
$180,019
$90,136
$0
$90,136

Gross Margin
Gross Margin %

$61,754
43.03%

$74,887
46.59%

$89,883
49.93%

Expenses
Payroll

$26,720

$34,120

$35,120

Sales and Marketing and Other Expenses


Depreciation
Rent and CAM Expense
Utilities
Liability Insurance:Store
Insurance (medical Brenda & Charles)

$600
$0
$18,150
$3,600
$0
$7,800

$1,200
$0
$18,150
$3,600
$2,400
$7,150

$2,400
$0
$18,150
$3,600
$2,400
$7,150

$0
$0

$0
$0

$0
$0

$56,870

$66,620

$68,820

Profit Before Interest and Taxes

$4,884

$8,267

$21,063

EBITDA
Interest Expense
Taxes Incurred

$4,884
$3,156
$518

$8,267
$2,549
$1,716

$21,063
$1,915
$5,745

Net Profit
Net Profit/Sales

$1,209
0.84%

$4,003
2.49%

$13,404
7.45%

Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales

Payroll Taxes
Other
Total Operating Expenses

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Classique Gifts Etc.

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7.3 Break-even Analysis
The following table and chart show our estimated monthly revenue break-even point.

Table: Break-even Analysis


Break-even Analysis
Monthly Revenue Break-even
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

$11,013

57%
$4,739

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7.4 Projected Cash Flow
The following table and chart represents the projected cash flow.

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Table: Cash Flow
Pro Forma Cash Flow
Year 1

Year 2

Year 3

$143,510
$143,510

$160,731
$160,731

$180,019
$180,019

$0

$0

$0

$0
$0
$0
$0
$0
$0
$143,510

$0
$0
$0
$0
$0
$0
$160,731

$0
$0
$0
$0
$0
$0
$180,019

Year 1

Year 2

Year 3

$26,720
$67,291
$94,011

$34,120
$130,902
$165,022

$35,120
$132,065
$167,185

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing

$0
$0

$0
$0

$0
$0

Other Liabilities Principal Repayment


Long-term Liabilities Principal Repayment
Purchase Other Current Assets

$0
$9,060
$0

$0
$9,060
$0

$0
$9,060
$0

$0
$0
$103,071

$0
$0
$174,082

$0
$0
$176,245

$40,439
$52,624

($13,351)
$39,273

$3,774
$43,047

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

Purchase Long-term Assets


Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 19

Classique Gifts Etc.


7.5 Projected Balance Sheet
The following table shows our projected Balance Sheet.

Table: Balance Sheet


Pro Forma Balance Sheet
Year 1

Year 2

Year 3

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

$52,624
$8,583
$12,757
$73,964

$39,273
$15,664
$12,757
$67,694

$43,047
$16,447
$12,757
$72,250

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$0
$0
$0
$73,964

$0
$0
$0
$67,694

$0
$0
$0
$72,250

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities

$11,873
$0
$0

$10,659
$0
$0

$10,872
$0
$0

Subtotal Current Liabilities

$11,873

$10,659

$10,872

Long-term Liabilities
Total Liabilities

$40,940
$52,813

$31,880
$42,539

$22,820
$33,692

Assets

Liabilities and Capital


Current Liabilities

Paid-in Capital

$40,000

$40,000

$40,000

($20,058)
$1,209
$21,151

($18,849)
$4,003
$25,154

($14,846)
$13,404
$38,558

Total Liabilities and Capital

$73,964

$67,694

$72,250

Net Worth

$21,151

$25,154

$38,558

Retained Earnings
Earnings
Total Capital

Page 20

Classique Gifts Etc.


7.6 Business Ratios
The following table outlines some of the more important ratios from the Gift Shop industry. The
final column, Industry Profile, details specific ratios based on the industry as it is classified by
the Standard Industry Classification (SIC) code 5947.

Page 21

Classique Gifts Etc.


Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
12.00%

Year 3
12.00%

Industry Profile
3.34%

11.60%
17.25%
100.00%
0.00%
100.00%

23.14%
18.85%
100.00%
0.00%
100.00%

22.76%
17.66%
100.00%
0.00%
100.00%

40.42%
23.99%
80.29%
19.71%
100.00%

16.05%
55.35%
71.40%
28.60%

15.75%
47.09%
62.84%
37.16%

15.05%
31.58%
46.63%
53.37%

36.19%
15.42%
51.61%
48.39%

100.00%
43.03%

100.00%
46.59%

100.00%
49.93%

100.00%
37.74%

44.22%
0.00%
3.40%

47.15%
0.00%
5.14%

45.12%
0.00%
11.70%

23.72%
2.14%
1.65%

6.23

6.35

6.65

1.98

5.51
71.40%
8.17%
2.34%

4.88
62.84%
22.73%
8.45%

5.13
46.63%
49.66%
26.50%

0.74
3.65%
58.19%
8.72%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin


Return on Equity

0.84%
5.72%

2.49%
15.91%

7.45%
34.76%

n.a
n.a

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover

5.75
6.67
27
1.94

7.08
12.17
32
2.37

5.61
12.17
30
2.49

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

Debt Ratios
Debt to Net Worth
Current Liab. to Liab.

2.50
0.22

1.69
0.25

0.87
0.32

n.a
n.a

$62,091
1.55

$57,034
3.24

$61,378
11.00

n.a
n.a

0.52
16%
5.51
6.78
0.00

0.42
16%
4.88
6.39
0.00

0.40
15%
5.13
4.67
0.00

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

Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
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

Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 22

Appendix
Table: Sales Forecast
Sales Forecast
Sales
Dolls & Accessories
Gifts
Total Sales
Direct Cost of Sales
Dolls & Accessories
Gifts
Subtotal Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

0%

$7,400

$7,900

$5,350

$5,230

$5,600

$5,850

$6,475

$5,500

$5,400

$5,450

$5,700

$6,250

0%

$7,400
$14,800

$7,900
$15,800

$5,250
$10,600

$5,230
$10,460

$5,500
$11,100

$5,750
$11,600

$6,375
$12,850

$5,400
$10,900

$5,300
$10,700

$5,450
$10,900

$5,600
$11,300

$6,250
$12,500

Month 1
$3,900
$3,900
$7,800

Month 2
$4,243
$4,250
$8,493

Month 3
$2,690
$2,690
$5,380

Month 4
$2,759
$2,759
$5,518

Month 5
$3,425
$3,425
$6,850

Month 6
$3,550
$3,550
$7,100

Month 7
$3,988
$3,998
$7,986

Month 8
$2,988
$2,988
$5,976

Month 9
$3,150
$3,150
$6,300

Month 10
$3,125
$3,125
$6,250

Month 11
$3,150
$3,150
$6,300

Month 12
$3,903
$3,900
$7,803

Page 1

Appendix
Table: Personnel
Personnel Plan
Month 1
$1,200
$0
$280

Month 2
$1,200
$0
$560

Month 3
$1,200
$900
$0

Month 4
$1,200
$900
$0

Month 5
$1,200
$900
$0

Month 6
$1,200
$900
$300

Month 7
$1,200
$900
$300

Month 8
$1,200
$900
$320

Month 9
$1,200
$900
$320

Month 10
$1,200
$900
$320

Month 11
$1,300
$900
$320

Month 12
$1,300
$900
$400

Total People

Total Payroll

$1,480

$1,760

$2,100

$2,100

$2,100

$2,400

$2,400

$2,420

$2,420

$2,420

$2,520

$2,600

Brenda Owner/Manager-Sales & Merchandising


Charles Owner/Manager-Operations & Finance
Part-Time as Needed ($7 per hour)

0%
0%
0%

Page 2

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

Month 1
1
6.00%

Month 2
2
6.00%

Month 3
3
6.00%

Month 4
4
6.00%

Month 5
5
6.00%

Month 6
6
6.00%

Month 7
7
6.00%

Month 8
8
6.00%

Month 9
9
6.00%

Month 10
10
6.00%

Month 11
11
6.00%

Month 12
12
6.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$14,800
$7,800

Sales
Direct Cost of Sales
Other Costs of Goods

Month 2
$15,800
$8,493

Month 3
$10,600
$5,380

Month 4
$10,460
$5,518

Month 5
$11,100
$6,850

Month 6
$11,600
$7,100

Month 7
$12,850
$7,986

Month 8
$10,900
$5,976

Month 9
$10,700
$6,300

Month 10
$10,900
$6,250

Month 11
$11,300
$6,300

Month 12
$12,500
$7,803

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$7,800

$8,493

$5,380

$5,518

$6,850

$7,100

$7,986

$5,976

$6,300

$6,250

$6,300

$7,803

$7,000
47.30%

$7,307
46.25%

$5,220
49.25%

$4,942
47.25%

$4,250
38.29%

$4,500
38.79%

$4,864
37.85%

$4,924
45.17%

$4,400
41.12%

$4,650
42.66%

$5,000
44.25%

$4,697
37.58%

$1,480

$1,760

$2,100

$2,100

$2,100

$2,400

$2,400

$2,420

$2,420

$2,420

$2,520

$2,600

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$300

$300

$0
$0

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$0
$1,650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$300
$0
$650

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Operating Expenses

$2,430

$4,360

$4,700

$4,700

$4,700

$5,000

$5,000

$5,020

$5,020

$5,020

$5,420

$5,500

Profit Before Interest and Taxes

$4,570

$2,947

$520

$242

($450)

($500)

($136)

($96)

($620)

($370)

($420)

($803)

EBITDA
Interest Expense

$4,570
$287

$2,947
$283

$520
$278

$242
$274

($450)
$270

($500)
$265

($136)
$261

($96)
$256

($620)
$252

($370)
$248

($420)
$243

($803)
$239

Taxes Incurred

$1,285

$799

$72

($10)

($216)

($230)

($119)

($106)

($262)

($185)

($199)

($313)

$2,998
20.26%

$1,865
11.80%

$169
1.60%

($22)
-0.21%

($504)
-4.54%

($536)
-4.62%

($278)
-2.16%

($247)
-2.26%

($610)
-5.70%

($432)
-3.97%

($464)
-4.11%

($729)
-5.83%

Total Cost of Sales


Gross Margin
Gross Margin %

Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Rent and CAM Expense
Utilities
Liability Insurance:Store
Insurance (medical Brenda &
Charles)
Payroll Taxes
Other

Net Profit
Net Profit/Sales

15%

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

$14,800
$14,800

$15,800
$15,800

$10,600
$10,600

$10,460
$10,460

$11,100
$11,100

$11,600
$11,600

$12,850
$12,850

$10,900
$10,900

$10,700
$10,700

$10,900
$10,900

$11,300
$11,300

$12,500
$12,500

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Current Borrowing


New Other Liabilities (interest-free)

$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 Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets


Sales of Long-term Assets
New Investment Received

$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

Subtotal Cash Received

$14,800

$15,800

$10,600

$10,460

$11,100

$11,600

$12,850

$10,900

$10,700

$10,900

$11,300

$12,500

Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations


Cash Spending

$1,480

$1,760

$2,100

$2,100

$2,100

$2,400

$2,400

$2,420

$2,420

$2,420

$2,520

$2,600

Bill Payments
Subtotal Spent on Operations

$84
$1,564

$2,561
$4,321

$3,658
$5,758

$2,948
$5,048

$2,857
$4,957

$2,785
$5,185

$6,757
$9,157

$11,529
$13,949

$6,607
$9,027

$9,234
$11,654

$8,872
$11,392

$9,399
$11,999

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

$755
$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,319

$5,076

$6,513

$5,803

$5,712

$5,940

$9,912

$14,704

$9,782

$12,409

$12,147

$12,754

Net Cash Flow

$12,481

$10,724

$4,087

$4,657

$5,388

$5,660

$2,938

($3,804)

$918

($1,509)

($847)

($254)

Cash Balance

$24,666

$35,390

$39,477

$44,134

$49,522

$55,182

$58,120

$54,315

$55,234

$53,725

$52,878

$52,624

Long-term Liabilities Principal Repayment


Purchase Other Current Assets

Subtotal Cash Spent

0.00%

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Inventory

$12,185
$45,000

$24,666
$37,200

$35,390
$28,707

$39,477
$23,327

$44,134
$17,809

$49,522
$10,959

$55,182
$7,810

$58,120
$8,785

$54,315
$6,574

$55,234
$6,930

$53,725
$6,875

$52,878
$6,930

$52,624
$8,583

Other Current Assets


Total Current Assets

$12,757
$69,942

$12,757
$74,623

$12,757
$76,854

$12,757
$75,561

$12,757
$74,700

$12,757
$73,238

$12,757
$75,749

$12,757
$79,662

$12,757
$73,646

$12,757
$74,921

$12,757
$73,357

$12,757
$72,565

$12,757
$73,964

Long-term Assets
Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Accumulated Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$69,942

$0
$74,623

$0
$76,854

$0
$75,561

$0
$74,700

$0
$73,238

$0
$75,749

$0
$79,662

$0
$73,646

$0
$74,921

$0
$73,357

$0
$72,565

$0
$73,964

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Total Long-term Assets


Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable

$0

$2,438

$3,559

$2,853

$2,769

$2,565

$6,367

$11,312

$6,299

$8,939

$8,562

$8,989

$11,873

Current Borrowing
Other Current 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

$0
$0

Subtotal Current Liabilities

$0

$2,438

$3,559

$2,853

$2,769

$2,565

$6,367

$11,312

$6,299

$8,939

$8,562

$8,989

$11,873

Long-term Liabilities

$50,000

$49,245

$48,490

$47,735

$46,980

$46,225

$45,470

$44,715

$43,960

$43,205

$42,450

$41,695

$40,940

Total Liabilities

$50,000

$51,683

$52,049

$50,588

$49,749

$48,790

$51,837

$56,027

$50,259

$52,144

$51,012

$50,684

$52,813

Paid-in Capital

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

($20,058)

Earnings
Total Capital

$0
$19,942

$2,998
$22,940

$4,863
$24,805

$5,032
$24,974

$5,009
$24,951

$4,506
$24,448

$3,970
$23,912

$3,692
$23,634

$3,446
$23,388

$2,835
$22,777

$2,403
$22,345

$1,939
$21,881

$1,209
$21,151

Total Liabilities and Capital

$69,942

$74,623

$76,854

$75,561

$74,700

$73,238

$75,749

$79,662

$73,646

$74,921

$73,357

$72,565

$73,964

Net Worth

$19,942

$22,940

$24,805

$24,974

$24,951

$24,448

$23,912

$23,634

$23,388

$22,777

$22,345

$21,881

$21,151

Retained Earnings

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