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Shaved Ice Beverage Business Plan

Ice Dreams

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Financial Plan

7.0 Financial Plan

• We want to finance growth mainly through cash flow. We recognised that this means we will have to grow slowly.
• The most important indicator in our case is that minimal stock will have to be stored for these products.

7.1 Important Assumptions

Monthly sales are the largest indicator for this business. There are some seasonal variations with the months of March through September being the highest sales months.

General Assumptions

General Assumptions
	1997	1998	1999
Plan Month	1	2	3
Current Interest Rate	13.50%	13.50%	13.50%
Long-term Interest Rate	0.00%	0.00%	0.00%
Tax Rate	30.00%	30.00%	30.00%
Other	0	0	0

7.2 Key Financial Indicators

The following Benchmark chart shows our key financial indicators.

Benchmarks



7.3 Break-even Analysis

The following table and chart show the current break-even analysis. The operation will require sales of approximately £2,900 to break even during the first year of operation.

Break-even Analysis



Break-even Analysis

Break-even Analysis:
Monthly Units Break-even	3,125
Monthly Revenue Break-even	£3,125
Assumptions:
Average Per-Unit Revenue	£1.00
Average Per-Unit Variable Cost	£0.36
Estimated Monthly Fixed Cost	£2,000

7.4 Projected Profit and Loss

We expect a profit of £10,000 in year one; £23,000 in year two; and £37,000 in year three of operation.

Profit and Loss

Pro Forma Profit and Loss
	1997	1998	1999
Sales	£52,217	£77,383	£104,446
Direct Costs of Goods	£12,114	£17,772	£24,227
Other	£0	£0	£0
	------------	------------	------------
Cost of Goods Sold	£12,114	£17,772	£24,227
Gross Margin	£40,103	£59,611	£80,219
Gross Margin %	76.80%	77.03%	76.80%
Expenses:
Payroll	£10,800	£11,232	£11,681
Sales and Marketing and Other Expenses	£1,410	£1,466	£1,525
Depreciation	£2,196	£2,284	£2,375
Leased Equipment	£0	£0	£0
Utilities	£1,720	£1,789	£1,861
Insurance	£1,200	£1,248	£1,298
Rent	£0	£0	£0
Other	£0	£0	£0
Payroll Taxes (National Insurance)	£2,484	£2,583	£2,687
Other	£0	£0	£0
	------------	------------	------------
Total Operating Expenses	£19,810	£20,602	£21,427
Profit Before Interest and Taxes	£20,293	£39,009	£58,792
Interest Expense	£5,672	£5,672	£5,672
Taxes Incurred	£4,386	£10,001	£15,936
Net Profit	£10,235	£23,336	£37,184
Net Profit/Sales	19.60%	30.16%	35.60%

7.5 Projected Cash Flow

Projected cash flow is estimated as follows for the next three years:

• 1997 - £24,000
• 1998 - £36,000
• 1999 - £50,000

Cash



Cash Flow

Pro Forma Cash Flow
	1997	1998	1999
Cash Received
Cash from Operations:
Cash Sales	£52,217	£77,383	£104,446
Cash from Receivables	£0	£0	£0
Subtotal Cash from Operations	£52,217	£77,383	£104,446
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£3	£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	£52,220	£77,383	£104,446
Expenditures	1997	1998	1999
Expenditures from Operations:
Cash Spending	£0	£0	£0
Payment of Accounts Payable	£38,254	£51,652	£64,796
Subtotal Spent on Operations	£38,254	£51,652	£64,796
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	£10,500	£10,500	£10,500
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£0	£0	£0
Dividends	£0	£0	£0
Subtotal Cash Spent	£48,754	£62,152	£75,296
Net Cash Flow	£3,466	£15,231	£29,150
Cash Balance	£13,466	£28,697	£57,847

7.6 Projected Balance Sheet

The balance sheet shows a slow but steady upward growth in net worth after initial start-up as follows:

• 1997: (£16,000) (Negative)
• 1998: £7,500
• 1999: £45,000

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	1997	1998	1999
Cash	£13,466	£28,697	£57,847
Stock	£312	£458	£624
Other Current Assets	£675	£675	£675
Total Current Assets	£14,453	£29,830	£59,146
Fixed assets
Fixed assets	£4,000	£4,000	£4,000
Accumulated Depreciation	£2,196	£4,480	£6,855
Total Fixed assets	£1,804	(£480)	(£2,855)
Total Assets	£16,257	£29,350	£56,291
Liabilities and Capital
Current Liabilities	1997	1998	1999
Accounts Payable	£519	£776	£1,032
Current Borrowing	£42,013	£42,013	£42,013
Other Current Liabilities	£0	£0	£0
Subtotal Current Liabilities	£42,532	£42,789	£43,045
Fixed liabilities	(£10,500)	(£21,000)	(£31,500)
Total Liabilities	£32,032	£21,789	£11,545
Paid-in Capital	£10,000	£10,000	£10,000
Retained Earnings	(£36,010)	(£25,775)	(£2,439)
Earnings	£10,235	£23,336	£37,184
Total Capital	(£15,775)	£7,561	£44,745
Total Liabilities and Capital	£16,257	£29,350	£56,291
Net Worth	(£15,775)	£7,561	£44,745

7.7 Business Ratios

Standard business ratios are included in the table that follows. The ratios show a plan for balanced, healthy growth. The standard industry indicators shown are for SIC 5812, eating places.

Ratios

Ratio Analysis
	1997	1998	1999	Industry Profile
Sales Growth	0.00%	48.20%	34.97%	7.60%
Percent of Total Assets
Accounts Receivable	0.00%	0.00%	0.00%	4.50%
Stock	1.92%	1.56%	1.11%	3.60%
Other Current Assets	4.15%	2.30%	1.20%	35.60%
Total Current Assets	88.90%	101.64%	105.07%	43.70%
Fixed assets	11.10%	-1.64%	-5.07%	56.30%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	261.62%	145.79%	76.47%	32.70%
Fixed liabilities	-64.59%	-71.55%	-55.96%	28.50%
Total Liabilities	197.03%	74.24%	20.51%	61.20%
Net Worth	-97.03%	25.76%	79.49%	38.80%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	76.80%	77.03%	76.80%	60.50%
Selling, General & Administrative Expenses	57.20%	46.88%	41.20%	39.80%
Advertising Expenses	1.15%	0.81%	0.62%	3.20%
Profit Before Interest and Taxes	38.86%	50.41%	56.29%	0.70%
Main Ratios
Current	0.34	0.70	1.37	0.98
Quick	0.33	0.69	1.36	0.65
Total Debt to Total Assets	197.03%	74.24%	20.51%	61.20%
Pre-tax Return on Net Worth	-92.69%	440.92%	118.72%	1.70%
Pre-tax Return on Assets	89.94%	113.59%	94.37%	4.30%
Additional Ratios	1997	1998	1999
Net Profit Margin	19.60%	30.16%	35.60%	n.a
Return on Equity	0.00%	308.64%	83.10%	n.a
Activity Ratios
Accounts Receivable Turnover	0.00	0.00	0.00	n.a
Collection Days	0	0	0	n.a
Stock Turnover	11.84	46.18	44.79	n.a
Accounts Payable Turnover	74.69	66.90	63.02	n.a
Payment Days	18	5	5	n.a
Total Asset Turnover	3.21	2.64	1.86	n.a
Debt Ratios
Debt to Net Worth	0.00	2.88	0.26	n.a
Current Liab. to Liab.	1.33	1.96	3.73	n.a
Liquidity Ratios
Net Working Capital	(£28,079)	(£12,959)	£16,100	n.a
Interest Coverage	3.58	6.88	10.37	n.a
Additional Ratios
Assets to Sales	0.31	0.38	0.54	n.a
Current Debt/Total Assets	262%	146%	76%	n.a
Acid Test	0.33	0.69	1.36	n.a
Sales/Net Worth	0.00	10.23	2.33	n.a
Dividend Payout	0.00	0.00	0.00	n.a