Financial What If Scenarios

Breakeven Analysis in Units and Dollars

Fixed cost = $85,000 per year

Variable cost = $20 per hour

Topgolf receives approximately $35 per hour

Unit contribution margin = unit sale price - unit variable cost

UCM = $35 - $20 = $15

Break even point in units (hours)

= total fixed costs/unit contribution margin

= $85,000/$15 = 5,666.67 hours

Break even point in money

= break even point in units * unit sale price

= 5,666.67 * $35 = $198,333

Therefore, in order for our Topgolf facility to break even, they need to bring in a yearly revenue of at least $198,333.

Projected Five-Year Income Statement (Profit-and-Loss Statement)

Sources:

See Accounting texts for examples and/or view the following:

http://www.businessplans.org/Airex/Airex07.html

http://www.thebusinessplanstore.com/business_plan_financial_projections.htm

Make sure you include sales, cost of goods sold, gross profit, operating expenses, operating profit, net income before tax, and net income after tax. Provide as much detail as possible. Use a 40% corporate tax bracket. Please note that costs are expected to be researched and close to being accurate.

Projected 5 Year Income Statement

TopGolf

	2018	2019	2020	2021	2022
Sales	$1,510,000	$1,585,500	$1,664,775	$1,748,013	$1,835,413
Cost of Goods Sold	$110,000	$115,500	$121,275	$127,338	$133,704
Gross profit	$1,400,000	$1,470,000	$1,543,500	$1,620,675	$1,701,709
Operating Expenses	$400,000	$448,000	$501,760	$561,971	$629,407
Operating Profit	$1,000,000	$1,022,000	$1,041,740	$1,058,704	$1,072,302
Marketing	$651,400	$651,400	$651,400	$651,400	$651,400
Net Income Before Tax	$348,600	$370,600	$390,340	$407,304	$420,902
Net Income After Tax	$209,160	$222,360	$234,204	$244,382	$252,541

Contingency Plans

Contingency Plan Overview:

If we see threats to the TopGolf market materialize as outlined in the SWOT analysis (i.e. lack of locations, golf becomes less appealing to the younger generation, competitors draw customers away, economy is slowed and less consumers have money to spend on leisure activities, etc.) we will implement our contingency plan for when sales fall below 50% below expected. Resources will be prioritized, and only allocated towards if high on the priority list. If we see sales reach over 50% more than expected then we will implement a different contingency plan in order to handle the influx of sales.

Contingency Plan A (Sales 50% below expected):

Cut Funds to Three least important Resources in time of crisis

1. New locations that have not shown demonstrated interest in golf.

2. Technology for golf games (do not modernize and keep up with most up to date technology, stick with status quo)

3. Eliminate annual tournament held in Las Vegas from promotion tactics.

Contingency Plan B (Sales 50% above expected):

Increase Funds to Most Important Resources to keep up with expansion

1. Hire more employees to keep up with increased customer base (TopGolf employees, customer service support, location managers)

2. New locations/expansions to new locations to capitalize on growing sales and so current locations will not be overwhelmed will excessive wait lines.

3. Upgrade systems to be able to handle more sales and customers in efficient way, and handle data from sales and overall market.