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Maternity Clothing Online Business Plan

ExpectingUcom

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Financial Plan

ExpectingU.com projects the gross margin to be healthy percent. Sales projections for FY2006 are at over £1 million. A monthly breakdown of the cash-flow analysis, balance sheet, business ratio, break-even analysis, and other financial details are shown in the appendix. Annual projections will be highlighted in the following sub-topics.

8.2 Start-up Funding

The company owner, Mary Lenton, will use personal funds to finance the start of this business. Since a home office is already established and there is a large area in the basement available for inventory storage, the primary start-up costs are associated with website store design, starting inventory, and licensing approval.

Start-up Funding
Start-up Expenses to Fund £23,750
Start-up Assets to Fund £40,000
Total Funding Required £63,750
Assets
Non-cash Assets from Start-up £35,000
Cash Requirements from Start-up £5,000
Additional Cash Raised £0
Cash Balance on Starting Date £5,000
Total Assets £40,000
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
Owner £63,750
Investor £0
Additional Investment Requirement £0
Total Planned Investment £63,750
Loss at Start-up (Start-up Expenses) (£23,750)
Total Capital £40,000
Total Capital and Liabilities £40,000
Total Funding £63,750

8.3 Projected Balance Sheet

The following table is the Projected Balance Sheet.
Pro Forma Balance Sheet
FY 2006 FY 2007 FY 2008
Assets
Current Assets
Cash £416,055 £945,773 £1,508,865
Inventory £22,493 £23,617 £24,798
Other Current Assets £0 £0 £0
Total Current Assets £438,548 £969,391 £1,533,663
Long-term Assets
Long-term Assets £0 £0 £0
Accumulated Depreciation £0 £0 £0
Total Long-term Assets £0 £0 £0
Total Assets £438,548 £969,391 £1,533,663
Liabilities and Capital FY 2006 FY 2007 FY 2008
Current Liabilities
Accounts Payable £51,365 £43,190 £45,273
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £51,365 £43,190 £45,273
Long-term Liabilities £0 £0 £0
Total Liabilities £51,365 £43,190 £45,273
Paid-in Capital £63,750 £63,750 £63,750
Retained Earnings (£23,750) £323,433 £862,451
Earnings £347,183 £539,018 £562,188
Total Capital £387,183 £926,201 £1,488,389
Total Liabilities and Capital £438,548 £969,391 £1,533,663
Net Worth £387,183 £926,201 £1,488,389

8.4 Break-even Analysis

The following Break-even Analysis shows what is needed in monthly sales to break even.
Break-even Analysis
Monthly Units Break-even 982
Monthly Revenue Break-even £29,444
Assumptions:
Average Per-Unit Revenue £29.99
Average Per-Unit Variable Cost £7.50
Estimated Monthly Fixed Cost £22,083

8.5 Projected Profit and Loss

The following table and charts show the projected profit and loss. Monthly projections are included in the appendix.

Pro Forma Profit and Loss
FY 2006 FY 2007 FY 2008
Sales £1,094,635 £1,149,367 £1,206,835
Direct Cost of Sales £273,659 £287,342 £301,709
Other Costs of Sales £60,000 £6,000 £7,000
Total Cost of Sales £333,659 £293,342 £308,709
Gross Margin £760,976 £856,025 £898,126
Gross Margin % 69.52% 74.48% 74.42%
Expenses
Payroll £58,000 £86,000 £95,000
Marketing/Promotion £180,000 £0 £0
Depreciation £0 £0 £0
Web Design and Maintenance £3,000 £0 £0
Payroll Taxes £0 £0 £0
Other £24,000 £0 £0
Total Operating Expenses £265,000 £86,000 £95,000
Profit Before Interest and Taxes £495,976 £770,025 £803,126
EBITDA £495,976 £770,025 £803,126
Interest Expense £0 £0 £0
Taxes Incurred £148,793 £231,008 £240,938
Net Profit £347,183 £539,018 £562,188
Net Profit/Sales 31.72% 46.90% 46.58%

8.6 Projected Cash Flow

The monthly cash flow is shown in the illustration, with one bar representing cash flow per month and the other representing the monthly balance. The annual cash flow figures are included in the following table.

Pro Forma Cash Flow
FY 2006 FY 2007 FY 2008
Cash Received
Cash from Operations
Cash Sales £1,094,635 £1,149,367 £1,206,835
Subtotal Cash from Operations £1,094,635 £1,149,367 £1,206,835
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 £1,094,635 £1,149,367 £1,206,835
Expenditures FY 2006 FY 2007 FY 2008
Expenditures from Operations
Cash Spending £58,000 £86,000 £95,000
Bill Payments £625,580 £533,649 £548,744
Subtotal Spent on Operations £683,580 £619,649 £643,744
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 £683,580 £619,649 £643,744
Net Cash Flow £411,055 £529,718 £563,091
Cash Balance £416,055 £945,773 £1,508,865

8.7 Business Ratios

The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. Industry profile ratios based on the Standard Industrial Classification (SIC) of the Maternity Wear industry.

Ratio Analysis
FY 2006 FY 2007 FY 2008 Industry Profile
Sales Growth 0.00% 5.00% 5.00% -17.40%
Percent of Total Assets
Inventory 5.13% 2.44% 1.62% 38.82%
Other Current Assets 0.00% 0.00% 0.00% 28.73%
Total Current Assets 100.00% 100.00% 100.00% 90.64%
Long-term Assets 0.00% 0.00% 0.00% 9.36%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 11.71% 4.46% 2.95% 24.75%
Long-term Liabilities 0.00% 0.00% 0.00% 5.78%
Total Liabilities 11.71% 4.46% 2.95% 30.53%
Net Worth 88.29% 95.54% 97.05% 69.47%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 69.52% 74.48% 74.42% 24.54%
Selling, General & Administrative Expenses 37.80% 27.58% 27.84% 13.39%
Advertising Expenses 0.00% 0.00% 0.00% 0.79%
Profit Before Interest and Taxes 45.31% 67.00% 66.55% 1.00%
Main Ratios
Current 8.54 22.44 33.88 3.27
Quick 8.10 21.90 33.33 1.38
Total Debt to Total Assets 11.71% 4.46% 2.95% 34.77%
Pre-tax Return on Net Worth 128.10% 83.14% 53.96% 2.50%
Pre-tax Return on Assets 113.10% 79.43% 52.37% 3.83%
Additional Ratios FY 2006 FY 2007 FY 2008
Net Profit Margin 31.72% 46.90% 46.58% n.a
Return on Equity 89.67% 58.20% 37.77% n.a
Activity Ratios
Inventory Turnover 10.99 12.46 12.46 n.a
Accounts Payable Turnover 13.18 12.17 12.17 n.a
Payment Days 27 33 29 n.a
Total Asset Turnover 2.50 1.19 0.79 n.a
Debt Ratios
Debt to Net Worth 0.13 0.05 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital £387,183 £926,201 £1,488,389 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.40 0.84 1.27 n.a
Current Debt/Total Assets 12% 4% 3% n.a
Acid Test 8.10 21.90 33.33 n.a
Sales/Net Worth 2.83 1.24 0.81 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Start-up Funding
Start-up Expenses to Fund £23,750
Start-up Assets to Fund £40,000
Total Funding Required £63,750
Assets
Non-cash Assets from Start-up £35,000
Cash Requirements from Start-up £5,000
Additional Cash Raised £0
Cash Balance on Starting Date £5,000
Total Assets £40,000
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
Owner £63,750
Investor £0
Additional Investment Requirement £0
Total Planned Investment £63,750
Loss at Start-up (Start-up Expenses) (£23,750)
Total Capital £40,000
Total Capital and Liabilities £40,000
Total Funding £63,750
Pro Forma Balance Sheet
FY 2006 FY 2007 FY 2008
Assets
Current Assets
Cash £416,055 £945,773 £1,508,865
Inventory £22,493 £23,617 £24,798
Other Current Assets £0 £0 £0
Total Current Assets £438,548 £969,391 £1,533,663
Long-term Assets
Long-term Assets £0 £0 £0
Accumulated Depreciation £0 £0 £0
Total Long-term Assets £0 £0 £0
Total Assets £438,548 £969,391 £1,533,663
Liabilities and Capital FY 2006 FY 2007 FY 2008
Current Liabilities
Accounts Payable £51,365 £43,190 £45,273
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £51,365 £43,190 £45,273
Long-term Liabilities £0 £0 £0
Total Liabilities £51,365 £43,190 £45,273
Paid-in Capital £63,750 £63,750 £63,750
Retained Earnings (£23,750) £323,433 £862,451
Earnings £347,183 £539,018 £562,188
Total Capital £387,183 £926,201 £1,488,389
Total Liabilities and Capital £438,548 £969,391 £1,533,663
Net Worth £387,183 £926,201 £1,488,389
Break-even Analysis
Monthly Units Break-even 982
Monthly Revenue Break-even £29,444
Assumptions:
Average Per-Unit Revenue £29.99
Average Per-Unit Variable Cost £7.50
Estimated Monthly Fixed Cost £22,083
Pro Forma Profit and Loss
FY 2006 FY 2007 FY 2008
Sales £1,094,635 £1,149,367 £1,206,835
Direct Cost of Sales £273,659 £287,342 £301,709
Other Costs of Sales £60,000 £6,000 £7,000
Total Cost of Sales £333,659 £293,342 £308,709
Gross Margin £760,976 £856,025 £898,126
Gross Margin % 69.52% 74.48% 74.42%
Expenses
Payroll £58,000 £86,000 £95,000
Marketing/Promotion £180,000 £0 £0
Depreciation £0 £0 £0
Web Design and Maintenance £3,000 £0 £0
Payroll Taxes £0 £0 £0
Other £24,000 £0 £0
Total Operating Expenses £265,000 £86,000 £95,000
Profit Before Interest and Taxes £495,976 £770,025 £803,126
EBITDA £495,976 £770,025 £803,126
Interest Expense £0 £0 £0
Taxes Incurred £148,793 £231,008 £240,938
Net Profit £347,183 £539,018 £562,188
Net Profit/Sales 31.72% 46.90% 46.58%
Pro Forma Cash Flow
FY 2006 FY 2007 FY 2008
Cash Received
Cash from Operations
Cash Sales £1,094,635 £1,149,367 £1,206,835
Subtotal Cash from Operations £1,094,635 £1,149,367 £1,206,835
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 £1,094,635 £1,149,367 £1,206,835
Expenditures FY 2006 FY 2007 FY 2008
Expenditures from Operations
Cash Spending £58,000 £86,000 £95,000
Bill Payments £625,580 £533,649 £548,744
Subtotal Spent on Operations £683,580 £619,649 £643,744
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 £683,580 £619,649 £643,744
Net Cash Flow £411,055 £529,718 £563,091
Cash Balance £416,055 £945,773 £1,508,865
Ratio Analysis
FY 2006 FY 2007 FY 2008 Industry Profile
Sales Growth 0.00% 5.00% 5.00% -17.40%
Percent of Total Assets
Inventory 5.13% 2.44% 1.62% 38.82%
Other Current Assets 0.00% 0.00% 0.00% 28.73%
Total Current Assets 100.00% 100.00% 100.00% 90.64%
Long-term Assets 0.00% 0.00% 0.00% 9.36%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 11.71% 4.46% 2.95% 24.75%
Long-term Liabilities 0.00% 0.00% 0.00% 5.78%
Total Liabilities 11.71% 4.46% 2.95% 30.53%
Net Worth 88.29% 95.54% 97.05% 69.47%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 69.52% 74.48% 74.42% 24.54%
Selling, General & Administrative Expenses 37.80% 27.58% 27.84% 13.39%
Advertising Expenses 0.00% 0.00% 0.00% 0.79%
Profit Before Interest and Taxes 45.31% 67.00% 66.55% 1.00%
Main Ratios
Current 8.54 22.44 33.88 3.27
Quick 8.10 21.90 33.33 1.38
Total Debt to Total Assets 11.71% 4.46% 2.95% 34.77%
Pre-tax Return on Net Worth 128.10% 83.14% 53.96% 2.50%
Pre-tax Return on Assets 113.10% 79.43% 52.37% 3.83%
Additional Ratios FY 2006 FY 2007 FY 2008
Net Profit Margin 31.72% 46.90% 46.58% n.a
Return on Equity 89.67% 58.20% 37.77% n.a
Activity Ratios
Inventory Turnover 10.99 12.46 12.46 n.a
Accounts Payable Turnover 13.18 12.17 12.17 n.a
Payment Days 27 33 29 n.a