Bakery Business Plan

Jolly's Java and Bakery

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Financial Plan

7.0 Financial Plan

JJB expects to raise £110,000 of its own capital, and to borrow £100,000 guaranteed by the SBA as a ten-year loan. This provides the bulk of the current financing required.

7.1 Break-even Analysis

JJB's Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk. JJB should break even by the fourth month of its operation as it steadily increases its sales.

Break-even Analysis



Break-even Analysis

Break-even Analysis
Monthly Units Break-even	17,255
Monthly Revenue Break-even	£38,336
Assumptions:
Average Per-Unit Revenue	£2.22
Average Per-Unit Variable Cost	£0.35
Estimated Monthly Fixed Cost	£32,343

7.2 Projected Profit and Loss

As the Profit and Loss table shows, JJB expects to continue its steady growth in profitability over the next three years of operations.

Profit and Loss

Pro Forma Profit and Loss
	2001	2002	2003
Sales	£491,000	£567,105	£655,006
Direct Costs of Goods	£76,750	£88,646	£102,386
Other	£0	£0	£0
	------------	------------	------------
Cost of Goods Sold	£76,750	£88,646	£102,386
Gross Margin	£414,250	£478,459	£552,620
Gross Margin %	84.37%	84.37%	84.37%
Expenses
Payroll	£260,800	£273,840	£287,532
Sales and Marketing and Other Expenses	£27,000	£35,200	£71,460
Depreciation	£60,000	£69,000	£79,350
Utilities	£1,200	£1,260	£1,323
Payroll Taxes (National Insurance)	£39,120	£41,076	£43,130
Other	£0	£0	£0
	------------	------------	------------
Total Operating Expenses	£388,120	£420,376	£482,795
Profit Before Interest and Taxes	£26,130	£58,083	£69,825
EBITDA	£86,130	£127,083	£149,175
Interest Expense	£10,000	£9,500	£8,250
Taxes Incurred	£3,111	£12,146	£15,650
Net Profit	£13,019	£36,437	£45,925
Net Profit/Sales	2.65%	6.43%	7.01%

7.3 Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet JJB's needs as the business generates cash flow sufficient to support operations.

Cash



Cash Flow

Pro Forma Cash Flow
	2001	2002	2003
Cash Received
Cash from Operations
Cash Sales	£491,000	£567,105	£655,006
Subtotal Cash from Operations	£491,000	£567,105	£655,006
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£0	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£0	£0	£0
Sales of Other Current Assets	£0	£0	£0
Sales of Fixed assets	£0	£0	£0
New Investment Received	£0	£0	£0
Subtotal Cash Received	£491,000	£567,105	£655,006
Expenditures	2001	2002	2003
Expenditures from Operations
Cash Spending	£260,800	£273,840	£287,532
Bill Payments	£143,607	£186,964	£237,731
Subtotal Spent on Operations	£404,407	£460,804	£525,263
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£0	£0	£0
Other Liabilities Principal Repayment	£0	£0	£0
Fixed liabilities Principal Repayment	£0	£10,000	£15,000
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£0	£20,000	£20,000
Dividends	£0	£0	£0
Subtotal Cash Spent	£404,407	£490,804	£560,263
Net Cash Flow	£86,593	£76,301	£94,744
Cash Balance	£156,593	£232,894	£327,637

7.4 Balance Sheet

The following is a projected Balance Sheet for JJB.

Balance Sheet

Pro Forma Balance Sheet
	2001	2002	2003
Assets
Current Assets
Cash	£156,593	£232,894	£327,637
Other Current Assets	£12,000	£12,000	£12,000
Total Current Assets	£168,593	£244,894	£339,637
Fixed assets
Fixed assets	£65,000	£85,000	£105,000
Accumulated Depreciation	£60,000	£129,000	£208,350
Total Fixed assets	£5,000	(£44,000)	(£103,350)
Total Assets	£173,593	£200,894	£236,287
Liabilities and Capital	2001	2002	2003
Current Liabilities
Accounts Payable	£14,574	£15,438	£19,907
Current Borrowing	£0	£0	£0
Other Current Liabilities	£0	£0	£0
Subtotal Current Liabilities	£14,574	£15,438	£19,907
Fixed liabilities	£100,000	£90,000	£75,000
Total Liabilities	£114,574	£105,438	£94,907
Paid-in Capital	£110,000	£110,000	£110,000
Retained Earnings	(£64,000)	(£50,981)	(£14,544)
Earnings	£13,019	£36,437	£45,925
Total Capital	£59,019	£95,456	£141,381
Total Liabilities and Capital	£173,593	£200,894	£236,287
Net Worth	£59,019	£95,456	£141,381

7.5 Business Ratios

The following table represents key ratios for the retail bakery and coffee shop industry. These ratios are determined by the Standard Industry Classification (SIC) Index code 5812, Eating Places.

Ratios

Ratio Analysis
	2001	2002	2003	Industry Profile
Sales Growth	0.00%	15.50%	15.50%	7.60%
Percent of Total Assets
Other Current Assets	6.91%	5.97%	5.08%	35.60%
Total Current Assets	97.12%	121.90%	143.74%	43.70%
Fixed assets	2.88%	-21.90%	-43.74%	56.30%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	8.40%	7.68%	8.42%	32.70%
Fixed liabilities	57.61%	44.80%	31.74%	28.50%
Total Liabilities	66.00%	52.48%	40.17%	61.20%
Net Worth	34.00%	47.52%	59.83%	38.80%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	84.37%	84.37%	84.37%	60.50%
Selling, General & Administrative Expenses	74.74%	71.43%	71.39%	39.80%
Advertising Expenses	0.49%	1.76%	6.87%	3.20%
Profit Before Interest and Taxes	5.32%	10.24%	10.66%	0.70%
Main Ratios
Current	11.57	15.86	17.06	0.98
Quick	11.57	15.86	17.06	0.65
Total Debt to Total Assets	66.00%	52.48%	40.17%	61.20%
Pre-tax Return on Net Worth	27.33%	50.90%	43.55%	1.70%
Pre-tax Return on Assets	9.29%	24.18%	26.06%	4.30%
Additional Ratios	2001	2002	2003
Net Profit Margin	2.65%	6.43%	7.01%	n.a
Return on Equity	22.06%	38.17%	32.48%	n.a
Activity Ratios
Accounts Payable Turnover	10.79	12.17	12.17	n.a
Payment Days	27	29	27	n.a
Total Asset Turnover	2.83	2.82	2.77	n.a
Debt Ratios
Debt to Net Worth	1.94	1.10	0.67	n.a
Current Liab. to Liab.	0.13	0.15	0.21	n.a
Liquidity Ratios
Net Working Capital	£154,019	£229,456	£319,731	n.a
Interest Coverage	2.61	6.11	8.46	n.a
Additional Ratios
Assets to Sales	0.35	0.35	0.36	n.a
Current Debt/Total Assets	8%	8%	8%	n.a
Acid Test	11.57	15.86	17.06	n.a
Sales/Net Worth	8.32	5.94	4.63	n.a
Dividend Payout	0.00	0.00	0.00	n.a