ArtSphere Gallery School of Art (ArtSphere) expanded into a 787 square foot facility on Main and 1st Streets in Birmingham, AL. This business plan aims to establish a rational framework for growth and maximize profit potential. The plan focuses on key success factors, listed in order of importance:
1. Penetrating the day-time art lessons market.
2. Completing premises alterations.
3. Improving operational and pricing practices.
4. Generating additional profit from art supply sales.
Contents
1.1 Objectives
The greatest opportunity for ArtSphere is teaching art to paying customers. Capacity is limited to approximately eight persons at one time. The most important objective is to penetrate the 9 A.M. to 3 P.M. day-time market, which represents 61% of teaching capacity. The goal is to increase penetration of this market sector from near zero to 90% capacity by the end of second year.
The afternoon market sector (22% of total capacity) is already nearly fully booked, so the objective is to fill the evening hours (Monday through Thursday) 7:30 P.M. to 9:30 P.M., which should be reached by the end of Month 5.
Another objective is to separate art supplies from art lessons to make the sale of art supplies a separate profit center.
A final objective is to maintain the present level of portrait work produced under contract by clients and the level of art sales created by the owners of ArtSphere.
1.2 Mission
ArtSphere is dedicated to providing competent, professional art instruction in friendly surroundings. It aims to create personal, long-term relationships with customers. The product sold is different for each buyer, such as help with portfolios, fun-filled activities, or stress relief. The goal is to tailor the "real" product sought by customers and maintain a high level of sales.
1.3 Keys to Success
The key to success is tailoring the product to suit the emotional, psychological, and technical needs of customers. Limited spaces must be signed up for on a monthly basis, and "walk-ins" can be accommodated based on availability. Encouraging "heavy users" who work for longer periods and being flexible with policies are also important. Additionally, creating and maintaining a customer-friendly environment is essential.
Company Summary
ArtSphere was registered DBA jointly in the names of Paul and Hannah Nash. It is located in Birmingham, AL. Approximately 75 students are signed up for lessons at $10/hour including materials. Lessons are offered a total of 49 hours weekly with a maximum capacity of eight at a time. As penetration into the 9 A.M. to 3 P.M. market increases, Hannah will focus full-time on ArtSphere while also continuing portrait work on weekends. Paul’s artwork will continue as well, also with concentration on weekends. Weekends are when students’ and owners’ artwork is displayed in the gallery for visitors and potential students.
2.1 Company Ownership
ArtSphere is registered DBA jointly under Paul and Hannah Nash. Earnings are taxed according to the personal tax rate schedule. Paul Nash graduated with a BFA degree from Boston University in 1977 and has been painting since 1970 and teaching since 1980. Hannah Rogerson Nash graduated from Bessemer High and attended Bessemer State College, Rhode Island School of Design. She has extensive experience in painting and teaching. They have sold a combined total of 18 pieces of their work in the past 12 months.
2.2 Start-up Summary
Planned expenses for the first year are shown in the following chart and table.
Start-up Funding
Start-up Expenses to Fund: $2,065
Start-up Assets to Fund: $6,200
Total Funding Required: $8,265
Assets
Non-cash Assets from Start-up: $6,200
Cash Requirements from Start-up: $0
Additional Cash Raised: $0
Cash Balance on Starting Date: $0
Total Assets: $6,200
Liabilities and Capital
Liabilities
Current Borrowing: $0
Long-term Liabilities: $0
Accounts Payable (Outstanding Bills): $0
Other Current Liabilities (interest-free): $0
Total Liabilities: $0
Capital
Planned Investment
Principals: $8,265
Investor 2: $0
Other: $0
Additional Investment Requirement: $0
Total Planned Investment: $8,265
Loss at Start-up (Start-up Expenses): ($2,065)
Total Capital: $6,200
Total Capital and Liabilities: $6,200
Total Funding: $8,265
Start-up
Requirements
Start-up Expenses
Legal (DBA Register): $25
Stationery, etc.: $500
Brochures: $300
Consultants: $950
Coffee Maker: $200
Cordless Phone: $90
Expensed Equipment: $0
Other: $0
Total Start-up Expenses: $2,065
Start-up Assets
Cash Required: $0
Start-up Inventory: $0
Other Current Assets: $0
Long-term Assets: $6,200
Total Assets: $6,200
Total Requirements: $8,265
Company Locations and Facilities
The ArtSphere is located on the corner of Main and 1st Streets in Birmingham, AL. Total square footage comes to 787, with two doors onto the street. The facilities at this location are leased from the owners, John Smith and Andrew Abbot, at a monthly rate of $1,225. Electricity runs about $50/month, and gas about $600 annually. The lessors have indicated their intentions to sell the property and have entered into negotiations with the owners of the ArtSphere. The asking price is $148,000. The unit is one of six units of 1st Street Wharf Condominium Trust which has recently undertaken an extensive condition-of-building study prepared by professional consultants. Current plans are to renovate the 1st Street side of the building including new siding, new corner boards, and paint. The Trustees of FSWCT are committed to a high standard of maintenance.
Products and Services
The ArtSphere is expanding its offerings. Our primary focus is now on offering art instruction classes. We will tailor our classes by market segment and time of day, providing instructional opportunities during the morning and mid-day, after school sessions, and evening classes.
We will have a wide range of art supplies available to complement student sessions as well as for sale to the general public.
Additionally, the owners will continue to show and sell their own work in the Gallery, as well as produce commission portraits and other work.
Market Analysis Summary
The offerings by ArtSphere require an investment of time on the part of the purchaser. Three customer groups have been identified based on their availability of time:
-School-aged (over 10 yrs)
-Retired/non-working
-Working/evening class
This accounts for virtually everyone in Birmingham, AL older than 10 yet younger than 75. These people will seek, during their respective free hours, some hobby, pleasant activity, or relaxation.
Market Segmentation
Market Group Time Slot Size of Market
School-Aged (Over 10 years) 3:30 P.M. to 5:30 P.M. 1,666
Retired/Non-Working 9 A.M. to 3 P.M. 2,645
Working/Evening Class 7 P.M. to 9 P.M. 12,042
Total All time slots 16,353
The total figure of 16,353 accounts for virtually everyone in Birmingham, AL older than 10 yet younger than 75. Even though some people older than 75 and younger than 10 may take art lessons, the market analysis should not be interpreted as if 16,353 persons in Birmingham, AL are in search of art instruction.
Market Analysis
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| School-aged | 1% | 1,666 | 1,683 | 1,700 | 1,717 | 1,734 | 1.01% |
| Retired/Non-work | 7% | 2,645 | 2,830 | 3,028 | 3,240 | 3,467 | 7.00% |
| Working/Evening Class | 9% | 12,042 | 13,126 | 14,307 | 15,595 | 16,999 | 9.00% |
| Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Total | 7.94% | 16,353 | 17,639 | 19,035 | 20,552 | 22,200 | 7.94% |
4.2 Target Market Segment Strategy
Our goal is to fill all scheduled class offerings and fully utilize our expanded teaching space. We have identified the market segment most likely to seek art instruction at the times we wish to teach. We have tailored our class offerings to appeal to the interests and lifestyles of those people.
We have priced the classes competitively for adults and children, and grouped the lessons into monthly blocks to fit various budgetary needs.
4.2.1 Market Needs
There is a need in Birmingham for regularly scheduled, moderately priced, locally sited art instruction classes available at different times of the day. Existing venues are either fully booked and unable to serve a larger market segment, or are sideline businesses.
The people of Birmingham need more art instructional opportunities, especially ones focused and tailored to the interests, skill levels, and time availabilities of the students.
4.3 Service Business Analysis
Art instruction is offered in several ways:
Artists who teach classes:
- To supplement their own fine art endeavors.
- Classes taught in poor settings, usually taught in crowded spaces.
- Limited class offerings with varying prices.
Schools and Colleges:
- Classes focused on academia.
- Travel may be necessary.
- Limited time slot offerings.
- Long-term commitment to class.
- Prices may vary.
4.3.1 Main Competitors
Outside of the ArtSphere, there are other locations in Birmingham where art lessons are available:
ART SCHOOL OF BIRMINGHAM
This school is located in a room of the Professional Building at 1331 Milgray Lane. Paul Nash has been teaching there in the evenings and Saturday mornings since 1975. He has room for about 12-15 students and teaches a structured approach. Paul is well-known within the town, having taught art on the local TV channel. The main focus of his business appears to be his portrait business located on School Street. Lessons are sold in blocks of four for $56. Each lesson is an hour and a half.
Paul mentioned that his classes are generally booked up. He does not offer lessons during the day.
The Art School of Birmingham is listed in the Yellow Pages and Nash’s artwork is shown in several local galleries.
BIRMINGHAM ART WORKS
Hannah Rogerson Nash has a studio located on the second floor of the same School Street building which houses Paul Nash’s portrait studio. Hannah has a very unstructured approach to teaching art. She is willing to teach anything a person might want to learn. Her Friday afternoons are completely occupied with children, but other than that, she is wide open. She did mention teaching two women and a 12-year-old. No schedule of classes or fees is posted outside her studio door and she is not listed in the Yellow Pages. She has placed a small ad in the local paper offering an "Art Workshop." Within the same ad, she offers "orchids, plants, & plant care" indicating that art lessons are not her main focus. She mentioned on the phone a price of $20 for a two-hour group lesson and $30 for a private lesson.
BIRMINGHAM ARTS ASSOCIATION
Birmingham Arts offers a selection of four art classes during the day. They are described in their newsletter, which is mailed out only to members. Enrollment in the classes does not always reach the cut-off point of six, in which case the class is cancelled. A typical class is two hours one morning a week, and runs for six weeks. Cost is $84 for members, slightly more for non-members. This works out to $7.00 per instruction hour.
There are also some courses offered in nearby Bessemer:
BESSEMER STATE COLLEGE
The Bessemer State College Community Enrichment Program offers several art classes in the evenings. A typical class (Introduction to Drawing) is offered Thursday evenings from 7:00 P.M. to 9:30 P.M. and costs $68 for six sessions. Average cost works out to be about $4.50 per instruction hour. Notification of these courses is mailed to all residential addresses in Birmingham.
Strategy and Implementation Summary
The ArtSphere recognizes that the real product it sells is different from the art instruction given. The owners of the ArtSphere recognize that art lessons can be had at less than $5.00 per hour in some state college evening courses. It is only by tailoring the "real" product sought by customers that we will create and maintain a high level of sales.
5.1 Competitive Edge
There are several factors that make the ArtSphere a top-notch competitor in the art class business:
- All-day multi-time slot schedule.
- Classes tailored to market segment.
- Two instructors.
- Dedicated instructional space.
- Art supplies available on-site.
- Gallery venue for student artwork exhibits.
- High-profile location.
5.2 Marketing Strategy
When comparing the market segment table below with ArtSphere’s available capacity, it is evident which direction the marketing thrust should take:
88 (11 hrs X 8 easels)
9 A.M. to 3 P.M.
2,645
The school-age market group with its potential market size of 1,666 has within the space of a couple months of operation taken up nearly all the limited 88 teaching hours of capacity for that time slot with some spill-over into the smaller evening class time period. This latter time period in the evening should be the easiest to fill considering its potential market of 12,042.
Clearly, the marketing strategy at ArtSphere needs to be concentrated on the biggest time slot, the 9 A.M. to 3 P.M. period. As of this writing, nearly all of the 8 easels are unoccupied Monday through Friday.
5.3 Sales Strategy
The ArtSphere has no sales force outside of its owners, Paul and Hannah, who will close deals with interested customers created by actions of the marketing strategy. Many initial contacts will come via telephone inquiries responding to the offer of a free art lesson. Developing a sixth sense for the goals of the customer is key. If a customer is looking for stress-relief, then peaceful surroundings are essential. That potential customer should not be given their first free lesson during a crowded time slot, but rather when the studio is less active. Someone looking to escape boredom, on the other hand, should be scheduled when there are more people in the studio. A conscious decision also needs to be made concerning which teacher the caller is likely to relate to. If a caller does not come in for the offered free lesson, a follow-up call should be made by one of the owners. There is a direct relationship between the number of free lessons given and the number of people who will sign up.
Directly upon completion of the free lesson, an unabrasive effort should be made to effect a sign-up. If the person does not sign up, a follow-up call should be made. If Paul gave the free lesson, Hannah should make the follow-up call. It could be that the potential customer will respond better to the other teacher.
Walk-in inquiries should be handled in a similar fashion. Brochures should be available in a box by the door. Because of the studio’s high-profile location, it is common for passers-by to look in. Good salesmanship will result in developing an ability to differentiate the interested from the merely curious. It is important not to be shy with interested parties. If the same person is noticed frequently looking in the window or picks up a brochure and scans it, one of the owners must make a sales approach, even if it means opening the door and inviting the person in. Offer a cup of coffee, try to form a rough profile, and offer to set up a time for a free lesson.
5.3.1 Sales Forecast
Assume Hannah’s portrait contracts will continue at historical levels (1/month @ ave. price $650).
Sale of Paul Nash’s artwork will continue at historical levels ($3,600 annually, spread out evenly).
School-aged art lessons represent only 88 instruction hours/week taking up the 3:30 P.M. to 5:30 P.M. time slots each day (6:30 P.M. on Fridays). These slots are nearly all filled now. Assume 75 of the possible 88 will be filled each week, four weeks/month at a sales price of $10/hour lesson.
The retired/non-work art classes will begin to grow after the planned renovations scheduled for January. Projections assume that the price for four 90 minute instruction sessions will be $79. Sales to begin in March starting with the one fully booked 90-minute lesson daily Monday-Friday. These classes will have eight students each. A second daily class will be formed six months later, and after one year, there will be a third. This will bring this section of ArtSphere capacity up to 75% (four and one half of six hrs/day, or 180 instruction hours out of 240 possible). Assume each month to contain four weeks exactly.
This sector at the moment is practically nil. Growth depends on completion of modifications to premises and success in ArtSphere’s marketing approach to this group.
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Portrait Sales (HRN) | $7,800 | $7,800 | $7,800 |
| Artwork Sales (PN) | $3,600 | $3,600 | $3,600 |
| School-aged Classes | $42,600 | $42,600 | $42,600 |
| Retired/non-work Classes | $25,280 | $97,960 | $113,760 |
| Evening/working Classes | $35,840 | $43,008 | $43,008 |
| Sale of Art Supplies | $14,800 | $37,080 | $40,080 |
| Other | $0 | $0 | $0 |
| Total Sales | $129,920 | $232,048 | $250,848 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| Portrait Sales (HRN) | $1,170 | $1,170 | $1,170 |
| Artwork Sales (PN) | $540 | $540 | $540 |
| School-aged Classes | $2,160 | $0 | $0 |
| Retired/non-work Classes | $0 | $0 | $0 |
| Evening/working Classes | $0 | $0 | $0 |
| Sale of Art Supplies | $10,360 | $25,956 | $28,056 |
| Other | $0 | $0 | $0 |
| Subtotal Direct Cost of Sales | $14,230 | $27,666 | $29,766 |
5.3.2 Sales Programs
- Classes will be offered in various time slots throughout the day and evening, with tailored instruction.
- A wide variety of art supplies will be available for purchase by students during classes and by the public.
- Hannah will continue commission portrait work and exhibit in the gallery.
- Paul will continue producing artwork, exhibiting, and selling in the gallery.
- Weekend gallery exhibitions of owners’ and students’ work will encourage sales and registration.
5.4 Milestones
We have established milestones to guide our projects and maintain progress.
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| New Flooring | 9/1/1997 | 9/1/1997 | $2,800 | PN & HRN | N/A |
| Storage Racks for Canvases | 4/1/1997 | 4/1/1997 | $1,000 | PN & HRN | N/A |
| Yellow Pages Ad | 3/9/1997 | 3/9/1997 | $65 | PN & HRN | N/A |
| Seating for Seniors | 4/1/1997 | 4/1/1997 | $750 | PN & HRN | N/A |
| Printing, L-head, Brochure | 2/15/1997 | 2/15/1997 | $800 | PN & HRN | N/A |
| Brochure at Yankee D., etc. | 4/1/1997 | 4/1/1997 | $0 | PN & HRN | N/A |
| Open House Plans | 4/1/1997 | 4/1/1997 | $0 | PN & HRN | N/A |
| Ads Formulation (Spring Off) | 4/15/1997 | 4/15/1997 | $0 | PN & HRN | N/A |
| Finished Ads (Two Types) | 5/1/1997 | 5/1/1997 | $0 | PN & HRN | N/A |
| Finalize Spring Offensive | 5/1/1997 | 5/1/1997 | $0 | PN & HRN | N/A |
| Totals | $5,415 | ||||
Management Summary
The ArtSphere is owned and operated by Paul Nash and Hannah Rogerson Nash. No plans to hire employees exist.
Initially, Paul will provide most of the instruction. While ArtSphere’s class offerings increase, Hannah plans to leave her current job to focus solely on ArtSphere.
Hannah and Paul will receive minimal salaries during the start-up period to ensure sufficient cash flow.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Hannah | $16,000 | $26,400 | $22,990 |
| Paul | $20,000 | $26,400 | $29,040 |
| Other | $0 | $0 | $0 |
| Total People | 0 | 0 | 0 |
| Total Payroll | $36,000 | $52,800 | $52,030 |
Financial Plan
The following subtopics present our financial plan.
7.1 Break-even Analysis
The following table and chart summarize our break-even analysis.
Break-even Analysis
Monthly Revenue Break-even: $6,673
Assumptions:
– Average Percent Variable Cost: 11%
– Estimated Monthly Fixed Cost: $5,942
7.2 Projected Profit and Loss
Our projected profit and loss is shown in the table and charts below.
Pro Forma Profit and Loss:
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $129,920 | $232,048 | $250,848 |
| Direct Cost of Sales | $14,230 | $27,666 | $29,766 |
| Other | $0 | $0 | $0 |
| Total Cost of Sales | $14,230 | $27,666 | $29,766 |
| Gross Margin | $115,690 | $204,382 | $221,082 |
| Gross Margin % | 89.05% | 88.08% | 88.13% |
| Expenses | |||
| Payroll | $36,000 | $52,800 | $52,030 |
| Sales and Marketing and Other Expenses | $11,129 | $21,626 | $23,876 |
| Depreciation | $1,892 | $2,067 | $2,067 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities (Gas & Elec.) | $1,642 | $1,642 | $1,642 |
| Insurance | $540 | $540 | $540 |
| Rent | $14,700 | $14,700 | $14,700 |
| Payroll Taxes | $5,400 | $7,920 | $7,805 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $71,303 | $101,295 | $102,660 |
| Profit Before Interest and Taxes | $44,387 | $103,087 | $118,423 |
| EBITDA | $46,279 | $105,154 | $120,490 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $15,508 | $36,080 | $40,954 |
| Net Profit | $28,879 | $67,007 | $77,468 |
| Net Profit/Sales | 22.23% | 28.88% | 30.88% |
Projected Cash Flow:
7.3 Projected Cash Flow
The following chart and table show our projected cash flow.
Pro Forma Cash Flow
| Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $129,920 | $232,048 | $250,848 |
| Subtotal Cash from Operations | $129,920 | $232,048 | $250,848 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $129,920 | $232,048 | $250,848 |
| Expenditures | |||
| Expenditures from Operations | |||
| Cash Spending | $36,000 | $52,800 | $52,030 |
| Bill Payments | $57,136 | $111,363 | $119,017 |
| Subtotal Spent on Operations | $93,136 | $164,163 | $171,047 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $93,136 | $164,163 | $171,047 |
| Net Cash Flow | $36,784 | $67,885 | $79,801 |
| Cash Balance | $36,784 | $104,669 | $184,470 |
Projected Balance Sheet
| Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $36,784 | $104,669 | $184,470 |
| Inventory | $2,267 | $4,407 | $4,741 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $39,050 | $109,076 | $189,211 |
| Long-term Assets | |||
| Long-term Assets | $6,200 | $6,200 | $6,200 |
| Accumulated Depreciation | $1,892 | $3,959 | $6,026 |
| Total Long-term Assets | $4,308 | $2,241 | $174 |
| Total Assets | $43,358 | $111,317 | $189,385 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $8,280 | $9,231 | $9,832 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $8,280 | $9,231 | $9,832 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $8,280 | $9,231 | $9,832 |
| Paid-in Capital | $8,265 | $8,265 | $8,265 |
| Retained Earnings | ($2,065) | $26,814 | $93,820 |
| Earnings | $28,879 | $67,007 | $77,468 |
| Total Capital | $35,079 | $102,085 | $179,553 |
| Total Liabilities and Capital | $43,358 | $111,317 | $189,385 |
| Net Worth | $35,079 | $102,085 | $179,553 |
| Industry Comparison | |||||||||||||
| Year 1 | Year 2 | Year 3 | Industry Profile | ||||||||||
| Sales Growth | 0.00% | 78.61% | 8.10% | 4.59% | |||||||||
| Percent of Total Assets | |||||||||||||
| Inventory | 5.23% | 3.96% | 2.50% | 2.25% | |||||||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 36.99% | |||||||||
| Total Current Assets | 90.06% | 97.99% | 99.91% | 44.98% | |||||||||
| Long-term Assets | 9.94% | 2.01% | 0.09% | 55.02% | |||||||||
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||
| Current Liabilities | |||||||||||||
| Accounts Payable | 8.28% | 9.23% | 9.83% | 23.64% | |||||||||
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 33.36% | |||||||||
| Total Liabilities | 8.28% | 9.23% | 9.83% | 57.00% | |||||||||
| Net Worth | 80.90% | 91.71% | 94.81% | 43.00% | |||||||||
| Percent of Sales | |||||||||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||
| Gross Margin | 89.05% | 88.08% | 88.13% | 100.00% | |||||||||
| Selling, General & Administrative Expenses | 66.84% | 59.20% | 57.45% | 63.44% | |||||||||
| Advertising Expenses | 2.10% | 1.24% | 1.15% | 4.51% | |||||||||
| Profit Before Interest and Taxes | 34.16% | 44.42% | 47.21% | 3.46% | |||||||||
| Main Ratios | |||||||||||||
| Current | 4.72 | 11.82 | 19.25 | 1.20 | |||||||||
| Quick | 4.44 | 11.34 | 18.76 | 0.82 | |||||||||
| Total Debt to Total Assets | 19.10% | 8.29% | 5.19% | 59.16% | |||||||||
| Pre-tax Return on Net Worth | 126.54% | 100.98% | 65.95% | 4.27% | |||||||||
| Pre-tax Return on Assets | 102.37% | 92.61% | 62.53% | 10.46% | |||||||||
| Additional Ratios | Year 1 | Year 2 | Year 3 | ||||||||||
| Net Profit Margin | 22.23% | 28.88% | 30.88% | n.a | |||||||||
| Return on Equity | 82.33% | 65.64% | 43.14% | n.a | |||||||||
| Activity Ratios | |||||||||||||
| Inventory Turnover | 9.47 | 8.29 | 6.51 | n.a | |||||||||
| Accounts Payable Turnover | 7.90 | 12.17 | 12.17 | ||||||||||
| Personnel Plan | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Hannah | $0 | $0 | $500 | $500 | $1,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
| Paul | $0 | $1,000 | $1,000 | $1,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
| Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total People | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total Payroll | $1,000 | $1,000 | $1,500 | $1,500 | $3,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
| General Assumptions | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 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 | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
| Tax Rate | 30.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | 35.00% | |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Pro Forma Profit and Loss | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Sales | $3,950 | $4,550 | $8,774 | $8,774 | $8,774 | $12,534 | $12,534 | $12,534 | $13,434 | $13,434 | $13,434 | $17,194 | |
| Direct Cost of Sales | $413 | $413 | $861 | $861 | $861 | $1,281 | $1,281 | $1,281 | $1,641 | $1,641 | $1,641 | $2,061 | |
| Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Cost of Sales | $413 | $413 | $861 | $861 | $861 | $1,281 | $1,281 | $1,281 | $1,641 | $1,641 | $1,641 | $2,061 | |
| Gross Margin | $3,538 | $4,138 | $7,914 | $7,914 | $7,914 | $11,254 | $11,254 | $11,254 | $11,794 | $11,794 | $11,794 | $15,134 | |
| Gross Margin % | 89.56% | 90.93% | 90.19% | 90.19% | 90.19% | 89.78% | 89.78% | 89.78% | 87.79% | 87.79% | 87.79% | 88.02% | |
| Expenses | |||||||||||||
| Payroll | $1,000 | $1,000 | $1,500 | $1,500 | $3,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
| Sales and Marketing and Other Expenses | $400 | $400 | $400 | $449 | $1,593 | $899 | $899 | $899 | $2,043 | $899 | $899 | $1,349 | |
| Depreciation | $0 | $172 | $172 | $172 | $172 | $172 | $172 | $172 | $172 | $172 | $172 | $172 | |
| Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Utilities (Gas & Elec.) | $175 | $175 | $175 | $175 | $95 | $75 | $75 | $75 | $97 | $175 | $175 | $175 | |
| Insurance | $45 | $45 | $45 | $45 | $45 | $45 | $45 | $45 | $45 | $45 | $45 | $45 | |
| Rent | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | $1,225 | |
| Payroll Taxes | $150 | $150 | $225 | $225 | $450 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | |
| Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Operating Expenses | $2,995 | $3,167 | $3,742 | $3,791 | $6,580 | $7,016 | $7,016 | $7,016 | $8,182 | $7,116 | $7,116 | $7,566 | |
| Profit Before Interest and Taxes | $543 | $971 | $4,172 | $4,123 | $1,334 | $4,238 | $4,238 | ||||||
| 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 | $3,950 | $4,550 | $8,774 | $8,774 | $8,774 | $12,534 | $12,534 | $12,534 | $13,434 | $13,434 | $13,434 | $17,194 | |
| Subtotal Cash from Operations | $3,950 | $4,550 | $8,774 | $8,774 | $8,774 | $12,534 | $12,534 | $12,534 | $13,434 | $13,434 | $13,434 | $17,194 | |
| Additional Cash Received | |||||||||||||
| Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| New Other Liabilities (interest-free) | $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 | $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 | |
| Subtotal Cash Received | $3,950 | $4,550 | $8,774 | $8,774 | $8,774 | $12,534 | $12,534 | $12,534 | $13,434 | $13,434 | $13,434 | $17,194 | |
| 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 | $1,000 | $1,000 | $1,500 | $1,500 | $3,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
| Bill Payments | $105 | $3,164 | $3,375 | $4,531 | $4,572 | $4,893 | $5,429 | $5,608 | $5,664 | $7,274 | $6,222 | $6,300 | |
| Subtotal Spent on Operations | $1,105 | $4,164 | $4,875 | $6,031 | $7,572 | $8,893 | $9,429 | $9,608 | $9,664 | $11,274 | $10,222 | $10,300 | |
| 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 | ||
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $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 | |
| Subtotal Cash Spent | $1,105 | $4,164 | $4,875 | $6,031 | $7,572 | $8,893 | $9,429 | $9,608 | $9,664 | $11,274 | $10,222 | $10,300 | |
| Net Cash Flow | $2,845 | $386 | $3,899 | $2,743 | $1,202 | $3,641 | $3,105 | $2,926 | $3,770 | $2,160 | $3,212 | $6,894 | |
| Cash Balance | $2,845 | $3,231 | $7,131 | $9,873 | $11,075 | $14,716 | $17,821 | $20,748 | $24,517 | $26,677 | $29,889 | $36,784 | |
Pro Forma Balance Sheet:
| Pro Forma Balance Sheet | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $0 | $2,845 | $3,231 | $7,131 | $9,873 | $11,075 | $14,716 | $17,821 | $20,748 | $24,517 | $26,677 | $29,889 | $36,784 |
| Inventory | $0 | $588 | $1,175 | $1,315 | $1,454 | $1,594 | $1,409 | $1,409 | $1,409 | $1,805 | $1,805 | $1,805 | $2,267 |
| Other Current Assets | $0 | $0 | $0
Business Plan Outline
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Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!