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Plan Outline
Horse Reseller Business Plan
GFX: Gravestat Farm eXchange
Financial Plan
As has been stated throughout the content of this document, the financial analysis charts and tables contained herein have been built with two primary factors at the forefront of consideration:
- To provide an extremely conservative outlook for GFX based on minimum performance expectations rather than a "blue sky" outlook.
- To provide a healthy foundation for a long term business operation while supporting the financial needs of the home portion of a home based business. Corners have not been cut, expenses have not been hidden. Rather, this document and loan request has been specifically designed to secure the right amount of start-up funding to ensure a long and successful future for GFX.
We intend to seek, and welcome, continued education, counseling, and adjustments to this Financial Plan throughout the future of GFX.
7.1 Important Assumptions
The accompanying table lists our main assumptions for developing our financial projections.
The majority of the assumptions are based on raw average estimates suggested by the software program used to create this business plan. As GFX moves into full operation these figures will be monitored and adjusted according to actual business conditions.
Three Key Factors:
- Personnel Burden is listed, and will remain, at 0. GFX will be owned and operated solely by immediate family.
- Inventory turnover is listed at 12 to reflect one month of inventory in stock at all times. However, horses are typically "turned" within seven days, and all but a very limited inventory of tack and equipment will be ordered and shipped directly from the source upon customer order.
- GFX does not sell on credit terms. This is the norm (almost without exception) in the horse industry. GFX will only offer credit card purchases as an alternative to cash/check payment.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 25.42% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.2 Break-even Analysis
The following table and chart show our break-even point.
| Break-even Analysis | |
| Monthly Units Break-even | 69 |
| Monthly Revenue Break-even | £21,312 |
| Assumptions: | |
| Average Per-Unit Revenue | £310.27 |
| Average Per-Unit Variable Cost | £209.63 |
| Estimated Monthly Fixed Cost | £6,913 |
7.3 Projected Profit and Loss
Two Critical Issues regarding the following GFX P&L Statement:
- The entire P&L statement, which stems from the Sales Forecast, is intended to reflect an extremely conservative projection. It does not indicate the full potential of GFX given the level of management and expertise that serves as the foundation of GFX. Rather, it has been created, by intent, to demonstrate the absolute minimum performance level expected during the period.
- It is of critical importance to note that, being a home based business and the sole source of income for our family, the expense portion of P&L contains virtually every expense, business and personal, conceivable. It does include such minute details as groceries, medicines, gas, daily cash, revolving credit, even "fast food," etc.
A note to the reviewer: It is a simple matter to inflate sales projections, deflate cost of goods sold, and hide expenses for purposes of a business plan. Rather, since we are relying on this venture to provide the livelihood for our family, we have chosen to evaluate and present it far below the best case scenario. We hope that the reviewer of this document will take this into full consideration.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | £299,100 | £411,000 | £510,000 |
| Direct Cost of Sales | £202,080 | £278,700 | £343,500 |
| Other | £0 | £0 | £0 |
| Total Cost of Sales | £202,080 | £278,700 | £343,500 |
| Gross Margin | £97,020 | £132,300 | £166,500 |
| Gross Margin % | 32.44% | 32.19% | 32.65% |
| Expenses | |||
| Payroll | £0 | £0 | £0 |
| Sales and Marketing and Other Expenses | £70,416 | £70,416 | £70,416 |
| Depreciation | £0 | £0 | £0 |
| Depreciation | £0 | £0 | £0 |
| Leased Equipment | £1,020 | £1,020 | £1,020 |
| Utilities | £5,520 | £5,520 | £5,520 |
| Insurance | £6,000 | £6,000 | £6,000 |
| Rent | £0 | £0 | £0 |
| Payroll Taxes | £0 | £0 | £0 |
| Other | £0 | £0 | £0 |
| Total Operating Expenses | £82,956 | £82,956 | £82,956 |
| Profit Before Interest and Taxes | £14,064 | £49,344 | £83,544 |
| EBITDA | £14,064 | £49,344 | £83,544 |
| Interest Expense | £11,904 | £10,850 | £9,750 |
| Taxes Incurred | £248 | £9,623 | £18,756 |
| Net Profit | £1,911 | £28,870 | £55,038 |
| Net Profit/Sales | 0.64% | 7.02% | 10.79% |
7.4 Projected Cash Flow
The healthy state of the attached Cash Flow Table and Charts are, in themselves, the primary justification for this business loan request.
This loan request is intended to provide a solid foundation for the start-up and continued health of GFX. As a home based business, virtually every personal and business expense has been factored in. This has been done to ensure that personal expenses (food & shelter) do not prevent GFX from continuing operation. Rather, every calculation has taken these variables into account to ensure that the "home side" of our home business does not inhibit the "business side" of the business.
The all important Cash Balance figure remains at a healthy level, and shows growth, for the full period of this business plan to guarantee continued operation. However it also provides for sufficient cash flow to take advantage of positive business opportunities as they present themselves, and/or to absorb unexpected negative influences.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | £299,100 | £411,000 | £510,000 |
| Subtotal Cash from Operations | £299,100 | £411,000 | £510,000 |
| 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 | £299,100 | £411,000 | £510,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | £0 | £0 | £0 |
| Bill Payments | £269,122 | £408,135 | £459,562 |
| Subtotal Spent on Operations | £269,122 | £408,135 | £459,562 |
| 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 | £11,000 | £11,000 | £11,000 |
| Purchase Other Current Assets | £0 | £0 | £0 |
| Purchase Long-term Assets | £0 | £0 | £0 |
| Dividends | £0 | £0 | £0 |
| Subtotal Cash Spent | £280,122 | £419,135 | £470,562 |
| Net Cash Flow | £18,978 | (£8,135) | £39,438 |
| Cash Balance | £60,978 | £52,844 | £92,281 |
7.5 Projected Balance Sheet
The following Projected Balance Sheet was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | £60,978 | £52,844 | £92,281 |
| Inventory | £32,527 | £44,860 | £55,290 |
| Other Current Assets | £0 | £0 | £0 |
| Total Current Assets | £93,505 | £97,704 | £147,571 |
| Long-term Assets | |||
| Long-term Assets | £0 | £0 | £0 |
| Accumulated Depreciation | £0 | £0 | £0 |
| Total Long-term Assets | £0 | £0 | £0 |
| Total Assets | £93,505 | £97,704 | £147,571 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | £46,094 | £32,422 | £38,251 |
| Current Borrowing | £0 | £0 | £0 |
| Other Current Liabilities | £0 | £0 | £0 |
| Subtotal Current Liabilities | £46,094 | £32,422 | £38,251 |
| Long-term Liabilities | £114,000 | £103,000 | £92,000 |
| Total Liabilities | £160,094 | £135,422 | £130,251 |
| Paid-in Capital | £0 | £0 | £0 |
| Retained Earnings | (£68,500) | (£66,589) | (£37,718) |
| Earnings | £1,911 | £28,870 | £55,038 |
| Total Capital | (£66,589) | (£37,718) | £17,320 |
| Total Liabilities and Capital | £93,505 | £97,704 | £147,571 |
| Net Worth | (£66,589) | (£37,718) | £17,320 |
7.6 Business Ratios
The following Business Ratios Table was generated by the software program used to generate this business plan. As called out in the Management Gaps section, we are not well versed in its purpose nor implications. We welcome consultation on this subject. As we fill the management gap in financial analysis, we will monitor and adjust this information accordingly. The Industry Profile column contains statistics from the Standard Industry Code (SIC) #0752, Animal Specialty Services.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 37.41% | 24.09% | -2.90% |
| Percent of Total Assets | ||||
| Inventory | 34.79% | 45.91% | 37.47% | 8.20% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 31.90% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 55.90% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 44.10% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 49.30% | 33.18% | 25.92% | 32.70% |
| Long-term Liabilities | 121.92% | 105.42% | 62.34% | 19.90% |
| Total Liabilities | 171.21% | 138.60% | 88.26% | 52.60% |
| Net Worth | -71.21% | -38.60% | 11.74% | 47.40% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 32.44% | 32.19% | 32.65% | 42.50% |
| Selling, General & Administrative Expenses | 32.05% | 25.47% | 22.20% | 26.40% |
| Advertising Expenses | 2.01% | 1.46% | 1.18% | 0.50% |
| Profit Before Interest and Taxes | 4.70% | 12.01% | 16.38% | 2.40% |
| Main Ratios | ||||
| Current | 2.03 | 3.01 | 3.86 | 2.19 |
| Quick | 1.32 | 1.63 | 2.41 | 1.48 |
| Total Debt to Total Assets | 171.21% | 138.60% | 88.26% | 52.60% |
| Pre-tax Return on Net Worth | -3.24% | -102.06% | 426.06% | 4.50% |
| Pre-tax Return on Assets | 2.31% | 39.40% | 50.01% | 9.40% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 0.64% | 7.02% | 10.79% | n.a |
| Return on Equity | 0.00% | 0.00% | 317.77% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 10.71 | 7.20 | 6.86 | n.a |
| Accounts Payable Turnover | 6.84 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 36 | 28 | n.a |
| Total Asset Turnover | 3.20 | 4.21 | 3.46 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.00 | 0.00 | 7.52 | n.a |
| Current Liab. to Liab. | 0.29 | 0.24 | 0.29 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | £47,412 | £65,282 | £109,320 | n.a |
| Interest Coverage | 1.18 | 4.55 | 8.57 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.31 | 0.24 | 0.29 | n.a |
| Current Debt/Total Assets | 49% | 33% | 26% | n.a |
| Acid Test | 1.32 | 1.63 | 2.41 | n.a |
| Sales/Net Worth | 0.00 | 0.00 | 29.45 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |