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Financial Sample for Sports Bar Business Plan

Financial Plan

The over-all financial plan for growth allows for use of the significant cash flow generated by operations.

Equity/debt infusion of $1.5 to $2 million allows for more rapid expansion of store starts than could be accomplished from cash flow alone. Outside investment capital also allows a buffer of excess cash so that the expansion plan can be revised on short notice. Every opportunity will be seized to accelerate expansion past the critical dates in this plan if cash flow from new stores exceeds projections.

It is management’s intent to build equity in the brand name and in its franchise. Other models exists in the recent past of successful IPO’s on similar concepts.

6.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.
  • We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
  • We assume the continued popularity of sports in America and the growing demand for sports theme venues.
General Assumptions
FY 1996 FY 1997 FY 1998
Plan Month 1 2 3
Current Interest Rate 8.50% 8.50% 8.50%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 33.00% 33.00% 33.00%
Other 0 0 0

6.2 Key Financial Indicators

The most important indicator in our case is inventory turnover. In the restaurant business turnover exceeds 50, with product being purchased and sold often within the week.

Food costs must be kept below 32%.

Beverage costs must be kept below 21%.

Above all, controls must be instituted and maintained over multiple store locations.

Take Five now uses state-of-the-art restaurant management control and inventory systems. All systems are computer based that allow for accurate off-premises control of all aspects of food and beverage service business. The systems used are point-of-sale from HSI and inventory and recipe management from VIP. Both systems are PC based and have become industry standards.

Management’s background in corporate finance indicates understanding of the importance of these control systems.


6.3 Break-even Analysis

The break even analysis is based upon fixed costs at the Medlock Bridge location. This location exceeded required volume to break even in only its second month of operation.

At $15 per average ticket the break even volume at Medlock Bridge is attained less than one full seating per day. The industry average is between 3 and 4 turns of seating capacity.


Break-even Analysis
Monthly Revenue Break-even $86,205
Assumptions:
Average Percent Variable Cost 28%
Estimated Monthly Fixed Cost $61,825

6.4 Projected Profit and Loss

We project rapid expansion of sales and profits. Net profits remain above 16% of sales even in the most aggressive expansion period.





Pro Forma Profit and Loss
FY 1996 FY 1997 FY 1998
Sales $2,042,444 $9,198,000 $16,084,000
Direct Cost of Sales $577,638 $2,531,380 $4,435,640
Other Costs of Sales $0 $0 $0
Total Cost of Sales $577,638 $2,531,380 $4,435,640
Gross Margin $1,464,806 $6,666,620 $11,648,360
Gross Margin % 71.72% 72.48% 72.42%
Expenses
Payroll $484,800 $2,800,000 $4,850,000
Marketing/Promotion $69,500 $512,000 $860,000
Depreciation $69,996 $280,000 $320,000
Rent $52,800 $197,000 $460,000
Utilities $28,800 $150,000 $180,000
Insurance $36,000 $96,000 $125,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $741,896 $4,035,000 $6,795,000
Profit Before Interest and Taxes $722,910 $2,631,620 $4,853,360
EBITDA $792,906 $2,911,620 $5,173,360
Interest Expense $0 $0 $0
Taxes Incurred $238,560 $868,435 $1,601,609
Net Profit $484,350 $1,763,185 $3,251,751
Net Profit/Sales 23.71% 19.17% 20.22%

6.5 Projected Cash Flow

We expect to manage cash flow with an additional investment totaling $1.5 to $2 million. All additional requirements can be met from internally generated funds. With investment coming in during late 1996 and mid 1997 there is no point at which future cash flow appears to be in danger.


Pro Forma Cash Flow
FY 1996 FY 1997 FY 1998
Cash Received
Cash from Operations
Cash Sales $2,042,444 $9,198,000 $16,084,000
Subtotal Cash from Operations $2,042,444 $9,198,000 $16,084,000
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 $625,000 $0 $0
Subtotal Cash Received $2,667,444 $9,198,000 $16,084,000
Expenditures FY 1996 FY 1997 FY 1998
Expenditures from Operations
Cash Spending $484,800 $2,800,000 $4,850,000
Bill Payments $956,310 $4,387,636 $7,663,212
Subtotal Spent on Operations $1,441,110 $7,187,636 $12,513,212
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 $600,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $2,041,110 $7,187,636 $12,513,212
Net Cash Flow $626,334 $2,010,364 $3,570,788
Cash Balance $693,470 $2,703,833 $6,274,621

6.6 Projected Balance Sheet

As shown in the balance sheet in the table, we expect a healthy growth in net worth, from approximately $1 million at present to more than $8 million by the end of the third year of operations.

Pro Forma Balance Sheet
FY 1996 FY 1997 FY 1998
Assets
Current Assets
Cash $693,470 $2,703,833 $6,274,621
Inventory $82,577 $361,877 $634,103
Other Current Assets $17,310 $17,310 $17,310
Total Current Assets $793,357 $3,083,020 $6,926,034
Long-term Assets
Long-term Assets $1,075,495 $1,075,495 $1,075,495
Accumulated Depreciation $99,709 $379,709 $699,709
Total Long-term Assets $975,786 $695,786 $375,786
Total Assets $1,769,143 $3,778,806 $7,301,820
Liabilities and Capital FY 1996 FY 1997 FY 1998
Current Liabilities
Accounts Payable $134,408 $380,886 $652,149
Current Borrowing $0 $0 $0
Other Current Liabilities $40,826 $40,826 $40,826
Subtotal Current Liabilities $175,234 $421,712 $692,975
Long-term Liabilities $0 $0 $0
Total Liabilities $175,234 $421,712 $692,975
Paid-in Capital $1,250,000 $1,250,000 $1,250,000
Retained Earnings ($140,441) $343,909 $2,107,094
Earnings $484,350 $1,763,185 $3,251,751
Total Capital $1,593,909 $3,357,094 $6,608,845
Total Liabilities and Capital $1,769,143 $3,778,806 $7,301,820
Net Worth $1,593,909 $3,357,094 $6,608,845

6.7 Business Ratios

These business ratios are future estimates based upon current assumptions. Industry Ratios are based on Standard Industry Classification code, 5813, Drinking Places.

Ratio Analysis
FY 1996 FY 1997 FY 1998 Industry Profile
Sales Growth 221.70% 350.34% 74.86% 5.96%
Percent of Total Assets
Inventory 4.67% 9.58% 8.68% 3.68%
Other Current Assets 0.98% 0.46% 0.24% 45.65%
Total Current Assets 44.84% 81.59% 94.85% 54.09%
Long-term Assets 55.16% 18.41% 5.15% 45.91%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.91% 11.16% 9.49% 16.08%
Long-term Liabilities 0.00% 0.00% 0.00% 25.02%
Total Liabilities 9.91% 11.16% 9.49% 41.10%
Net Worth 90.09% 88.84% 90.51% 58.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 71.72% 72.48% 72.42% 31.07%
Selling, General & Administrative Expenses 48.00% 53.31% 52.20% 10.33%
Advertising Expenses 3.43% 3.04% 1.99% 3.13%
Profit Before Interest and Taxes 35.39% 28.61% 30.18% 3.91%
Main Ratios
Current 4.53 7.31 9.99 1.70
Quick 4.06 6.45 9.08 1.14
Total Debt to Total Assets 9.91% 11.16% 9.49% 53.41%
Pre-tax Return on Net Worth 45.35% 78.39% 73.44% 7.14%
Pre-tax Return on Assets 40.86% 69.64% 66.47% 15.34%
Additional Ratios FY 1996 FY 1997 FY 1998
Net Profit Margin 23.71% 19.17% 20.22% n.a
Return on Equity 30.39% 52.52% 49.20% n.a
Activity Ratios
Inventory Turnover 10.91 11.39 8.91 n.a
Accounts Payable Turnover 7.97 12.17 12.17 n.a
Payment Days 28 20 24 n.a
Total Asset Turnover 1.15 2.43 2.20 n.a
Debt Ratios
Debt to Net Worth 0.11 0.13 0.10 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $618,123 $2,661,308 $6,233,059 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.87 0.41 0.45 n.a
Current Debt/Total Assets 10% 11% 9% n.a
Acid Test 4.06 6.45 9.08 n.a
Sales/Net Worth 1.28 2.74 2.43 n.a
Dividend Payout 0.00 0.00 0.00 n.a

 

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