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Big Hoss Barbershop and Lounge Financial Plan

The following Financial plan was conducted for Big Hoss Barbershop and Lounge. The numbers and
information were based off of other competitors in the industry and projections that the owners believe to
be feasible.

Sources and Uses of Funds

Before operations can begin, Big Hoss Barbershop and Lounge must first have a location, employees,
equipment, and other materials necessary, ready to go. In order to make this happen, we decided that
two loans from Bank of America, one for $100,000, and the other for $200,000, along with the $200,000
we believe we could collect from owners, investors, family, and friends, would give us $500,000. This
would be more than sufficient for startup because as stated in the Sources and Uses of Funds statement
below, Total Startup expenses are $383,200, giving us a substantial amount of capital to work with.

Sources of Capital

Owners' Investment (name and percent


ownership)
Sam Henig (40%) $ 80,000
Ryan Holland (35%) $70,000
Toan Huynh (25%) $50,000
Other investor -
Total Investment $ 200,000

Bank Loans
Bank 1 $ 100,000
Bank 2 $200,000
Total Bank Loans $ 300,000

Startup Expenses

Buildings/Real Estate
Purchase $ 250,000
Construction
Remodeling $15,000
Other $5,000
Total Buildings/Real Estate $ 270,000

Capital Equipment List


Furniture $ 50,000
Equipment $15,000
Fixtures $5,000
Other -
Total Capital Equipment $ 70,000

Location and Admin Expenses


Utility deposits -
Business License $200
Owners License $250
Barber License $150
Liquor License $20,000
Legal and accounting fees -
Prepaid insurance $4,000
Pre-opening salaries -
Other -
Total Location and Admin Expenses $ 24,600

Opening Inventory
Bar Materials $ 16,000
Hair Products $200
Barbershop Materials $200
Total Inventory $ 16,400

Advertising and Promotional Expenses


Advertising $ 1,200
Signage $1,000
Other/additional categories -
Total Advertising/Promotional Expenses $ 2,200

Summary Statement

Sources of Capital
Owners' and other investments $ 200,000
Bank loans $300,000
Other loans -
Total Source of Funds $ 500,000

Startup Expenses
Buildings/real estate $ 270,000
Leasehold improvements -
Capital equipment $70,000
Location/administration expenses $24,600
Opening inventory $16,400
Advertising/promotional expenses $2,200
Other expenses -
Contingency fund -
Working capital -
Total Startup Expenses $ 383,200

Important Assumptions

In order to project the first three years of operation for Big Hoss Barbershop and Lounge we had to make
the following assumptions:

Sales
Year 1:

19,584 Haircuts given


13,536 Drinks sold
2,016 Massage Chair uses
864 Movie/Show plays
4,320 Jukebox plays

Year 2:

24,768 Haircuts given


19,584 Drinks sold
3,744 Massage Chair uses
576 Movie/Show plays
5,472 Jukebox plays

Year 3:
28,512 Haircuts given
26,208 Drinks sold
4,896 Massage Chair uses
288 Movie/Show plays
6,048 Jukebox plays
Business Assumptions:
At least 5 Barbers are employed
Big Hoss Barbershop is open up to 6 days a week

These numbers are based off of local barber responses, which is further explained in the Market and
Industry Analysis section, and off of the assumption that Big Hoss Barbershop has up to 5 Barbers and
respective chairs.

Projected Cash Flow

Big Hoss Barbershop and Lounge plans to maintain a positively growing cash flow over the next three
years and therefore will be able to cover its expenses within that time period.

Projected Balance Sheet

Balance Sheet
Year 0 Year 1 Year 2 Year 3
Assets

Cash $116,800 $96,800 $81,800 $86,800


Inventory $10,000 $15,000 $20,000
Total Current $116,800 $106,800 $96,800 $106,800
Assets

Long-term Assets $383,200 $383,200 $368,200 $348,200


Accumulated
Depreciation ($15,000) ($20,000) ($45,000)
Total Long-term
Assets $383,200 $368,200 $348,200 $303,200
Total Assets $500,000 $475,000 $445,000 $410,000

Liabilities and
Capital

Current Liabilities $100,000 $50,000 - -


Other Current
Liabilities
Long-Term
Liabilities $200,000 $200,000 $200,000 $170,000
Total Liabilities $300,000 $250,000 $200,000 $170,000

Paid-in Capital $200,000 $200,000 $200,000 $200,000


Retained Earnings - $25,000 $45,000 $40,000
Total Capital $200,000 $225,000 $245,000 $240,000
Total Liabilities and
Capital $500,000 $475,000 $445,000 $410,000

Net Worth $200,000 $225,000 $245,000 $240,000

Projected Income Statement

Big Hoss
Barbershop Income Statement
3 Year Projection Year 1 Year 2 Year 3

Revenue Year 1 Year 2 Year 3

Sales revenue $445,248 $583,776 $704,160


Total Revenues
Expenses
Advertising $2,400 $2,400 $2,400
Commissions $176,688 $224,496 $265,392
Cost of goods sold $20,000 $30,000 $40,000
Depreciation
Employee benefits
Furniture and
equipment
Insurance $4,000 $4,000 $4,000
Interest expense $17,000 $14,900 $10,350
Maintenance and
repairs $5,000 $7,000 $10,000
Office supplies $200 $200 $200
Salaries and wages $69,600 $69,600 $69,600
Utilities $28,800 $28,800 $28,800
Web hosting and
domains
Other
Total Expenses $323,688 $381,396 $430,742

Net Income Before


Earning before Tax Taxes $121,560 $202,380 $273,418
Income tax expense $36,468 $60,714 $82,025
Payroll taxes
Income from
Continuing
Operations

Below-the-Line
Items
Income from
discontinued
operations
Effect of accounting
changes
Extraordinary items

Net Income $85,092 $141,666 $191,393

Ratio Analysis
Ratio Analysis Year 0 Year 1 Year 2

Total Current Assets $116800 $106800 $96800


Long-term assets $383200 $368200 $348200
Total Assets $500000 $475000 $445000
Current Liabilities $100000 $50000 $0
Long-term liabilities $200000 $200000 $200000
Total Liabilities $300000 $250000 $200000
Net Worth $200000 $225000 $245000

Percent of Sales
Net Income 85092 141666 191393
Sales 445248 583776 704160
Growth Margin 0.2037516171 0.1361618155
Selling, General, and
administrative Expenses 69600 69600 69600
Commissions 176688 224496 265392
Advertising Expenses 2400 2400 2400
Interest Expense 17000 14900 10350
Profit Before Interest and
Taxes 196560 287280 366768

Main Ratios
Current 1.168 2.136
Quick 1.168 2.136
Total Debt to Total
Assets 0.6 0.5263157895 0.4494382022
Pre-tax Return on Net
Worth 0.9828 1.2768 1.497012245
Pre-tax Return on Assets 0.39312 0.6048 0.8241977528

Additional Ratios
Net Profit Margin 0.1911114705 0.2426718467 0.2718032833

Debt Ratios
Debt to Net Worth 1.5 1.111111111 0.8163265306

Liquidity Ratios
Net Working Capital 16800 56800 96800
Interest Coverage 11.56235294 19.28053691 35.43652174

Additional Ratios
Assets to Sales 1.122969671 0.8136682563 0.6319586458
Current Debt/Total
Assets 0.6 0.5263157895 0.4494382022
Sales/Net Worth 2.22624 2.59456 2.874122449

As you can see in the chart below, our projected Net Income and Sales Revenue have a strong positive
growth rate.