20% Discount on Business Plan Pro Premier Edition
Click here to buy now or call 0845 351 9924
 

Drapery Fabricator Business Plan

Cutting Edge Drapery

This sample business plan can be edited directly in Business Plan Pro software.

previous
next

Financial Plan

The business of Cutting Edge Drapery does not require substantial outlays for inventory and virtually all sales are on a cash basis, so increases in sales will not be accompanied by initial cash-flow deficits.

7.1 Break-even Analysis

Average per-unit revenue and variable costs are weighted averages based on sales/costs of each category of "products." It is assumed that each unit is a 15-hour job involving 2.5 installation hours.

Total fixed costs are a total of all other costs, not including production wages.

Monthly break-even is very achievable.

Break-even Analysis
Monthly Units Break-even 53
Monthly Revenue Break-even £12,153
Assumptions:
Average Per-Unit Revenue £231.37
Average Per-Unit Variable Cost £27.76
Estimated Monthly Fixed Cost £10,694

7.2 Projected Profit and Loss

Outlined below, and in the following table and chart, are some of the intrinsic facets of the projected profit and loss for Cutting Edge Drapery.

  • Cost of sales reflects direct materials needed to carry out the sewing services, such as thread, sewing supplies, etc.

  • Miscellaneous operating expenses are projected to remain flat at approximately £3,800 annually, based on historical numbers.

  • All sales and marketing is performed by the principal. Salary is not paid to her, as this is a sole proprietorship.

  • 1998 will require a substantial outlay in advertising and promotion. In 1999 and 2000 this can be cut back a bit.

  • Car expenses of £560 monthly consist of insurance (£1,000 annually), depreciation and maintenance, taxes and inspection, etc.(£3,000 annually) and fuel (£2,800 annually).

  • The various General and Administrative expenses are projected based on present actual expenses.
Pro Forma Profit and Loss
1998 1999 2000
Sales £293,380 £336,070 £357,275
Direct Cost of Sales £35,206 £40,328 £42,873
Production Payroll £100,296 £108,864 £108,864
Misc operating expenses £3,792 £3,792 £3,792
Total Cost of Sales £139,294 £152,984 £155,529
Gross Margin £154,086 £183,086 £201,746
Gross Margin % 52.52% 54.48% 56.47%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll £60,000 £60,000 £60,000
Advertising/Promotion £12,000 £8,000 £8,000
Car insurance/depreciation/maint./fuel £6,720 £6,720 £6,720
Miscellaneous £0 £0 £0
Total Sales and Marketing Expenses £78,720 £74,720 £74,720
Sales and Marketing % 26.83% 22.23% 20.91%
General and Administrative Expenses
General and Administrative Payroll £11,520 £11,520 £11,520
Sales and Marketing and Other Expenses £0 £0 £0
Depreciation £2,000 £2,000 £2,000
Accounting/consultants £3,000 £3,000 £3,000
Electricity £1,200 £1,200 £1,200
Heat £1,200 £1,200 £1,200
Postage £500 £500 £500
Telephone £3,000 £3,000 £3,000
Dues and Subscriptions £1,080 £1,080 £1,080
Bank Charges £204 £204 £204
Supplies/misc office expense £1,000 £1,000 £1,000
Rent £10,764 £10,764 £10,764
Payroll Taxes £14,145 £15,229 £15,229
Other General and Administrative Expenses £0 £0 £0
Total General and Administrative Expenses £49,613 £50,697 £50,697
General and Administrative % 16.91% 15.09% 14.19%
Other Expenses:
Other Payroll £0 £0 £0
Consultants £0 £0 £0
Contract/Consultants £0 £0 £0
Total Other Expenses £0 £0 £0
Other % 0.00% 0.00% 0.00%
Total Operating Expenses £128,333 £125,417 £125,417
Profit Before Interest and Taxes £25,754 £57,669 £76,330
EBITDA £27,754 £59,669 £78,330
Interest Expense £0 £0 £0
Taxes Incurred £9,083 £20,184 £26,397
Net Profit £16,671 £37,485 £49,932
Net Profit/Sales 5.68% 11.15% 13.98%

7.3 Projected Cash Flow

As can be seen from the Cash Flow chart and table below, Cutting Edge Drapery has a number of advantages that provide for a large amount of growth in the company's cash account. Because it is the policy of the company's clients to provide the fabric for the soft window treatment products, the company has a very low cost of goods sold account and therefore a high gross margin. Furthermore, the custom nature of the business means that there is no inventory cost to speak of or accounts payable. Finally, the company does not posess any debt or long term capital assets that would affect the cash flow. With the ability to generate so much cash flow, it is assumed that the company will seek to use this asset to expand its markets and production capacity in the near future.

Pro Forma Cash Flow
1998 1999 2000
Cash Received
Cash from Operations
Cash Sales £293,380 £336,070 £357,275
Subtotal Cash from Operations £293,380 £336,070 £357,275
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 £293,380 £336,070 £357,275
Expenditures 1998 1999 2000
Expenditures from Operations
Cash Spending £171,816 £180,384 £180,384
Bill Payments £96,856 £115,518 £124,504
Subtotal Spent on Operations £268,672 £295,902 £304,887
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 £268,672 £295,902 £304,887
Net Cash Flow £24,708 £40,168 £52,388
Cash Balance £26,708 £66,876 £119,263

7.4 Projected Balance Sheet

The following table shows our projected Balance Sheet.

Pro Forma Balance Sheet
1998 1999 2000
Assets
Current Assets
Cash £26,708 £66,876 £119,263
Inventory £3,380 £3,872 £4,116
Other Current Assets £0 £0 £0
Total Current Assets £30,087 £70,747 £123,379
Long-term Assets
Long-term Assets £30,000 £30,000 £30,000
Accumulated Depreciation £2,000 £4,000 £6,000
Total Long-term Assets £28,000 £26,000 £24,000
Total Assets £58,087 £96,747 £147,379
Liabilities and Capital 1998 1999 2000
Current Liabilities
Accounts Payable £8,416 £9,591 £10,291
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £8,416 £9,591 £10,291
Long-term Liabilities £0 £0 £0
Total Liabilities £8,416 £9,591 £10,291
Paid-in Capital £0 £0 £0
Retained Earnings £33,000 £49,671 £87,156
Earnings £16,671 £37,485 £49,932
Total Capital £49,671 £87,156 £137,089
Total Liabilities and Capital £58,087 £96,747 £147,379
Net Worth £49,671 £87,156 £137,089

7.5 Business Ratios

The following table outlines some of the more important ratios from the interior design/sewing industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7389.

Ratio Analysis
1998 1999 2000 Industry Profile
Sales Growth 58.58% 14.55% 6.31% 8.20%
Percent of Total Assets
Inventory 5.82% 4.00% 2.79% 3.80%
Other Current Assets 0.00% 0.00% 0.00% 44.20%
Total Current Assets 51.80% 73.13% 83.72% 74.30%
Long-term Assets 48.20% 26.87% 16.28% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.49% 9.91% 6.98% 49.00%
Long-term Liabilities 0.00% 0.00% 0.00% 13.80%
Total Liabilities 14.49% 9.91% 6.98% 62.80%
Net Worth 85.51% 90.09% 93.02% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 52.52% 54.48% 56.47% 0.00%
Selling, General & Administrative Expenses 37.59% 35.28% 35.01% 81.40%
Advertising Expenses 4.09% 2.38% 2.24% 1.70%
Profit Before Interest and Taxes 8.78% 17.16% 21.36% 2.10%
Main Ratios
Current 3.57 7.38 11.99 1.49
Quick 3.17 6.97 11.59 1.17
Total Debt to Total Assets 14.49% 9.91% 6.98% 62.80%
Pre-tax Return on Net Worth 51.85% 66.17% 55.68% 4.20%
Pre-tax Return on Assets 44.34% 59.61% 51.79% 11.30%
Additional Ratios 1998 1999 2000
Net Profit Margin 5.68% 11.15% 13.98% n.a
Return on Equity 33.56% 43.01% 36.42% n.a
Activity Ratios
Inventory Turnover 10.91 11.12 10.73 n.a
Accounts Payable Turnover 12.51 12.17 12.17 n.a
Payment Days 27 28 29 n.a
Total Asset Turnover 5.05 3.47 2.42 n.a
Debt Ratios
Debt to Net Worth 0.17 0.11 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital £21,671 £61,156 £113,089 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.20 0.29 0.41 n.a
Current Debt/Total Assets 14% 10% 7% n.a
Acid Test 3.17 6.97 11.59 n.a
Sales/Net Worth 5.91 3.86 2.61 n.a
Dividend Payout 0.00 0.00 0.00 n.a
previous
next
Break-even Analysis
Monthly Units Break-even 53
Monthly Revenue Break-even £12,153
Assumptions:
Average Per-Unit Revenue £231.37
Average Per-Unit Variable Cost £27.76
Estimated Monthly Fixed Cost £10,694
Pro Forma Profit and Loss
1998 1999 2000
Sales £293,380 £336,070 £357,275
Direct Cost of Sales £35,206 £40,328 £42,873
Production Payroll £100,296 £108,864 £108,864
Misc operating expenses £3,792 £3,792 £3,792
Total Cost of Sales £139,294 £152,984 £155,529
Gross Margin £154,086 £183,086 £201,746
Gross Margin % 52.52% 54.48% 56.47%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll £60,000 £60,000 £60,000
Advertising/Promotion £12,000 £8,000 £8,000
Car insurance/depreciation/maint./fuel £6,720 £6,720 £6,720
Miscellaneous £0 £0 £0
Total Sales and Marketing Expenses £78,720 £74,720 £74,720
Sales and Marketing % 26.83% 22.23% 20.91%
General and Administrative Expenses
General and Administrative Payroll £11,520 £11,520 £11,520
Sales and Marketing and Other Expenses £0 £0 £0
Depreciation £2,000 £2,000 £2,000
Accounting/consultants £3,000 £3,000 £3,000
Electricity £1,200 £1,200 £1,200
Heat £1,200 £1,200 £1,200
Postage £500 £500 £500
Telephone £3,000 £3,000 £3,000
Dues and Subscriptions £1,080 £1,080 £1,080
Bank Charges £204 £204 £204
Supplies/misc office expense £1,000 £1,000 £1,000
Rent £10,764 £10,764 £10,764
Payroll Taxes £14,145 £15,229 £15,229
Other General and Administrative Expenses £0 £0 £0
Total General and Administrative Expenses £49,613 £50,697 £50,697
General and Administrative % 16.91% 15.09% 14.19%
Other Expenses:
Other Payroll £0 £0 £0
Consultants £0 £0 £0
Contract/Consultants £0 £0 £0
Total Other Expenses £0 £0 £0
Other % 0.00% 0.00% 0.00%
Total Operating Expenses £128,333 £125,417 £125,417
Profit Before Interest and Taxes £25,754 £57,669 £76,330
EBITDA £27,754 £59,669 £78,330
Interest Expense £0 £0 £0
Taxes Incurred £9,083 £20,184 £26,397
Net Profit £16,671 £37,485 £49,932
Net Profit/Sales 5.68% 11.15% 13.98%
Pro Forma Cash Flow
1998 1999 2000
Cash Received
Cash from Operations
Cash Sales £293,380 £336,070 £357,275
Subtotal Cash from Operations £293,380 £336,070 £357,275
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 £293,380 £336,070 £357,275
Expenditures 1998 1999 2000
Expenditures from Operations
Cash Spending £171,816 £180,384 £180,384
Bill Payments £96,856 £115,518 £124,504
Subtotal Spent on Operations £268,672 £295,902 £304,887
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 £268,672 £295,902 £304,887
Net Cash Flow £24,708 £40,168 £52,388
Cash Balance £26,708 £66,876 £119,263
Pro Forma Balance Sheet
1998 1999 2000
Assets
Current Assets
Cash £26,708 £66,876 £119,263
Inventory £3,380 £3,872 £4,116
Other Current Assets £0 £0 £0
Total Current Assets £30,087 £70,747 £123,379
Long-term Assets
Long-term Assets £30,000 £30,000 £30,000
Accumulated Depreciation £2,000 £4,000 £6,000
Total Long-term Assets £28,000 £26,000 £24,000
Total Assets £58,087 £96,747 £147,379
Liabilities and Capital 1998 1999 2000
Current Liabilities
Accounts Payable £8,416 £9,591 £10,291
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £8,416 £9,591 £10,291
Long-term Liabilities £0 £0 £0
Total Liabilities £8,416 £9,591 £10,291
Paid-in Capital £0 £0 £0
Retained Earnings £33,000 £49,671 £87,156
Earnings £16,671 £37,485 £49,932
Total Capital £49,671 £87,156 £137,089
Total Liabilities and Capital £58,087 £96,747 £147,379
Net Worth £49,671 £87,156 £137,089
Ratio Analysis
1998 1999 2000 Industry Profile
Sales Growth 58.58% 14.55% 6.31% 8.20%
Percent of Total Assets
Inventory 5.82% 4.00% 2.79% 3.80%
Other Current Assets 0.00% 0.00% 0.00% 44.20%
Total Current Assets 51.80% 73.13% 83.72% 74.30%
Long-term Assets 48.20% 26.87% 16.28% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.49% 9.91% 6.98% 49.00%
Long-term Liabilities 0.00% 0.00% 0.00% 13.80%
Total Liabilities 14.49% 9.91% 6.98% 62.80%
Net Worth 85.51% 90.09% 93.02% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 52.52% 54.48% 56.47% 0.00%
Selling, General & Administrative Expenses 37.59% 35.28% 35.01% 81.40%
Advertising Expenses 4.09% 2.38% 2.24% 1.70%
Profit Before Interest and Taxes 8.78% 17.16% 21.36% 2.10%
Main Ratios
Current 3.57 7.38 11.99 1.49
Quick 3.17 6.97 11.59 1.17
Total Debt to Total Assets 14.49% 9.91% 6.98% 62.80%
Pre-tax Return on Net Worth 51.85% 66.17% 55.68% 4.20%
Pre-tax Return on Assets 44.34% 59.61% 51.79% 11.30%
Additional Ratios 1998 1999 2000
Net Profit Margin 5.68% 11.15% 13.98% n.a
Return on Equity 33.56% 43.01% 36.42% n.a
Activity Ratios
Inventory Turnover 10.91 11.12 10.73 n.a
Accounts Payable Turnover 12.51 12.17 12.17 n.a
Payment Days 27 28 29 n.a
Total Asset Turnover 5.05 3.47 2.42 n.a
Debt Ratios
Debt to Net Worth 0.17 0.11 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital £21,671 £61,156 £113,089 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.20 0.29 0.41 n.a
Current Debt/Total Assets 14% 10% 7% n.a
Acid Test 3.17 6.97 11.59 n.a
Sales/Net Worth 5.91 3.86 2.61 n.a
Dividend Payout 0.00 0.00 0.00 n.a