7.0 Financial Plan
The financial plan contains these essential factors:
- A growth rate in sales of 5% for the year 2005, to $786,000 in total revenues.
- An average sales per business day (340 days per year) in excess of $2,300.
Difficulties and Risks:
- Slow sales resulting in less-than projected cash flow.
- A parallel entry into the market by another competitor.
- Unexpected cost increases compared with the forecasted sales.
7.1 Important Assumptions
The following assumptions will determine the potential for future success.
- A healthy economy that supports a moderate level of growth in our market.
- The ability to maintain at least a 5% growth each year.
- Keeping operating costs low, particularly in the area of personnel and ongoing monthly expenses.
Table: General Assumptions
7.2 Break-even Analysis
The following chart and table summarize our break-even analysis. We don't really expect to reach break-even until a few months into the business operation. We will be charging $4.00 for a bucket of balls and we speculate that if for every two buckets of balls purchased we sell one drink at a cost of $2.00 we will have an average cost per unit of 25%.
Table: Break-even Analysis
|Monthly Revenue Break-even||$43,860|
|Average Percent Variable Cost||6%|
|Estimated Monthly Fixed Cost||$41,242|
Chart: Break-even Analysis
7.3 Projected Profit and Loss