Entrrepreneurship Paper

Financial Projections for Business Plan

10-year Term Loan Payback Plan

In the business, it is projected that more revenue will be generated at about 30% more during the summer and spring when people are willing to do more outdoor exercise and ride bikes to work to experience the good weather. On the contrary, the winter season will generate about 30% less revenue due to the conditions of the roads as they will be covered in snow and ice. In addition, owing to the potential that OMW has as well as the management expertise, it is projected that the growth of the firm should be at the minimum rate of 15% per annum. It is crucial to note at this stage that the projections of the monthly profit in this plan have already accounted for the monthly m amount of loan payback. The plan is to have all the remaining profit being paid towards the loan in form of an extra payback.

The loan amounting to $150,000 will be paid at $3,508 per month because it is a long-term loan spanning for 10 years. The interest rate for the loan is 11.5%, and repayment may be shortened to less than 3 years if it is lowered. If the business performs better that expected, the term for paying the loan could further be shortened. The main objective is to pay the loan off as soon as possible in order to reduce the cost involved in the interest while paying the loan. On the basis of the profitability projections and the cash flow projections in this financial plan, the accelerated payment scheme can start at the beginning of the second financial year in operation. The monthly interest payment is shown in the income statement (Profit and Loss) as the Interest Expense.

Table: payback plan

Loan amount (Total)	$150,000
Payback + Interest (per month)	$2,109.00
Extra payback (taken from the net profit for the month)	$2,838.00
Net profit for each month ($13,100.00 -$2617.25- $5402.00)	$5,081.00
Payback for each month (total)	$4,946.00

Break-even Analysis

The break-even analysis of the company shows that the business possesses a good balance of the adequate sales strength and fixed costs to stay afloat and thrive. The break-even point for OMW stands at only seven hundred and forty-five clients each month. The number was gotten through the use of average of $8 per client (revenue) and a fixed cost of maintaining the bicycles and retracting them to collection points mounting to nearly $4,900. Additionally, the cost includes the amount of money spend on the bicycles and their spare parts, parking fees to the local governments, insurance, and other costs relating to impound for abandoning of the bicycles by rogue clients.

Break-Even Analysis
Break-even Monthly Revenue	$5,961.00
Assumptions:
Average Variable Cost (Percent)	19%
Projected Fixed Cost (per month)	$4,821.00

Sales Prediction

The table below shows the predictions of the sales. The first year presents a precise illustration of the conditions of the current sales on the basis of the last two years of expansion. The cost of sales for the firm or the variable cost is made up of the utility expenses, which are just dependent on the number of clients who hire the bicycle or buy other related sporting gear. This is usually regarded as the fixed cost in the documents of most corporations.

Sales Forecast
	First 1 ($)	Second 2 ($)	Third 3 ($)
Sales
Sales of hire services (normal)	132 000.00	165 600.00	190 440.00
Subletting Sale (lease out/temporary ownership)	5 500.00	6 600.00	7 200.00
Sales of sporting gears and related bicycle games	12 100.00	15 180.00	17 457.00
Total Sales	149 600.00	187 380.00	215 097.00
Cost of Sales (Direct)	First Yea($)r	Second Year($)	Third Year($)
Sales of hire services (normal)	25 300.00	29 095.00	33,459.00
Subletting Sale (lease out/temporary ownership)	-	-	-
Sales of sporting gears and related bicycle games	3 300.00	4 000.00	4 500.00
Subtotal Cost of Sales (Direct)	28 600.00	33 095.00	37 959.00

Income Statement Forecast

The projections of the profit in the table below are after taking into account all the expenses and the payback of the loan (for each month). The total net profit will also be paid back into the additional amount that will be used to significantly shorten the term used to repay the loan.

Pro Forma Statement of Comprehensive Income
	FISRT YR($)	Second YR($)	Third YR($)
Sales	149 600.00	187 380.00	215 097.00
Cost of Sales (Direct)	28 600.00	33 095.00	37 959.00
Payroll (Service Production)	1 650.00	1 650.00	1 650.00
Other	-	-	-
Cost of Sales (Total)	30 250.00	34 745.00	39 609.00
Gross Margin	119 350.00	152 635.00	175 488.00
Percentage Margin (Gross)	80%	81%	82%
Operational Expenses
Sales and Marketing
Payroll	-	-	-
Insurance	1 177.00	1 177.00	1 177.00
Miscellaneous	-	-	-
Sales And Marketing Expenses (Total)	1 177.00	1 177.00	1 177.00
Percentage (Sales and Marketing)	0.80%	0.65%	0.55%
General and Administrative (G&A) Expenses
G&A Payroll	29 700.00	32 400.00	32 400.00
Depreciation	550.00	550.00	550.00
Rent	21 725.00	23 700.00	24 300.00
Taxes (on Payroll)	4 703.00	5 108.00	5 108.00
Other G&A	-	-	-
G&A Expenses (Total)	56 678.00	61 758.00	62 358.00
Percentage G&A Expenses	38%	33%	29%
Total Operating Expenses	57 854.00	62 935.00	63 535.00
PBT (Profit Before Tax and Interest)	61 496.00	89 701.00	111 954.00
Payment to Bicycle Ownership License (Company)	61 496.00	89 701.00	111 954.00
Interest Expense	16 826.00	13 981.00	9 140.00
Incurred Tax	11 096.00	18 930.00	26 132.00
Net Profit	33 574.00	56 790.00	76 682.00
Net Profit divide by Sales (Percentage)	22%	30%	36%