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10/17/20, 10:31 PMLivePlan Sample Business Plans

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Sample Business Plans > Personal Services Business Plans >

Photographic Studio, Portrait Phoebe's Photo Studio

Financial Plan

Phoebe's Photo Studio will become profitable in its fifth month of operation, by May 2006. It will grow vigorously each year after that to its optimum level during 2008. This optimum level will produce sales sufficient for a generous net profit, even with the owner's and employee's salaries.

The business will be funded with an investment by the owner and loan secured by real estate.

Start-up Funding

The start-up requirements for Phoebe's Photo Studio including start-up expenses, current assets, cash on hand, and long-term assets were presented earlier in this plan. Start-up funding is presented in the table below.

The owner, Phoebe Peters will provide a seed investment. A loan for the balance will be secured by real estate.

START-UP FUNDING Start-up Expenses to Fund $28,730

Start-up Assets to Fund $81,270

Total Funding Required $110,000 ASSETS Non-cash Assets from Start-up $70,500

Cash Requirements from Start-up $10,770

Additional Cash Raised $0

Cash Balance on Starting Date $10,770

Total Assets $81,270 LIABILITIES AND CAPITAL Liabilities

Current Borrowing $0

Long-term Liabilities $100,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $100,000 Capital

Planned Investment

8.0 Financial Plan

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Important Assumptions

We assume a stable economy with reasonable growth and a steady rise in interest rates. We also assume that our competitors won't adopt our strategy within the first two years. After that, our approach is likely to make a change in what our competitors charge for digital files, because they'll see it's effective in bringing in repeat business as well as new business.

Key Financial Indicators

The benchmarks chart, below, shows a quick comparison of Sales, Gross Margin %, and Operating Expenses over the next three years. Although Operating Expenses will rise slightly in future years, they are not rising proportionally with sales growth. The higher operating cost ratio in the first reflects the higher costs of advertising to establish visibility at the start of the business.

Projected Profit and Loss

This business is projected to become profitable in May 2006, after the start-up advertising is completed and customers begin to discover the service. For the year 2006, the business will be profitable. It will grow at a

Owner $10,000

Investor $0

Additional Investment Requirement $0

Total Planned Investment $10,000 Loss at Start-up (Start-up Expenses) ($28,730)

Total Capital ($18,730) Total Capital and Liabilities $81,270 Total Funding $110,000

Chart illustrating the data

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vigorous rate over the next two years.

Our utility costs include monthly charges for high-speed Internet access via a corporate account, which will essential to delivering our finished images to most of our customers.

The optimum level of profitability for this one-photographer shop is reached in 2008. Our profit margins are much higher than the industry average because of our innovative product-delivery options - digital images require no film, no paper, and no chemicals, just storage units (CDs and DVDs) and delivery (computer and Internet access).

Chart illustrating the data

Chart illustrating the data

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Chart illustrating the data

Chart illustrating the data

PRO FORMA PROFIT AND LOSS YEAR 1 YEAR 2 YEAR 3

SALES $131,800 $188,600 $267,200 Direct Cost of Sales $21,180 $27,360 $35,720

Other Costs of Sales $0 $0 $0

Total Cost of Sales $21,180 $27,360 $35,720 Gross Margin $110,620 $161,240 $231,480

Gross Margin % 83.93% 85.49% 86.63%

EXPENSES Payroll $42,000 $44,000 $50,000

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Projected Cash Flow

Cash reserves reach the minimum point in March 2006. From that point, cash flow is positive, reaching a robust level by the end of 2008.

As sales increase, we will supplement our prop and furniture inventory with the purchase of new items as current assets.

Marketing/Promotion $7,100 $4,800 $4,800

Depreciation $15,960 $15,960 $15,960

Rent $9,600 $10,000 $10,400

Utilities $1,200 $1,200 $1,200

Maintenance of Cameras and Equipment $600 $800 $1,000

Offsite file backups and support $720 $1,000 $1,000

Software upgrades $0 $500 $800

Insurance $300 $300 $300

Payroll Taxes $0 $0 $0

Other $1,200 $1,200 $1,200

TOTAL OPERATING EXPENSES $78,680 $79,760 $86,660 Profit Before Interest and Taxes $31,940 $81,480 $144,820

EBITDA $47,900 $97,440 $160,780

Interest Expense $9,376 $8,223 $6,923

Taxes Incurred $6,769 $21,977 $41,369

NET PROFIT $15,795 $51,280 $96,528 Net Profit/Sales 11.98% 27.19% 36.13%

Chart illustrating the data

PRO FORMA CASH FLOW

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Projected Balance Sheet

Net worth becomes positive in the second year. It then steadily builds through the end of this plan, in 2008. There is an excellent return on equity by the third year.

YEAR 1 YEAR 2 YEAR 3 CASH RECEIVED Cash from Operations

Cash Sales $131,800 $188,600 $267,200

Subtotal Cash from Operations $131,800 $188,600 $267,200 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 $131,800 $188,600 $267,200 EXPENDITURES YEAR 1 YEAR 2 YEAR 3 Expenditures from Operations

Cash Spending $42,000 $44,000 $50,000

Bill Payments $52,845 $76,202 $102,464

Subtotal Spent on Operations $94,845 $120,202 $152,464 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 $11,520 $12,500 $13,500

Purchase Other Current Assets $0 $0 $2,000

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $106,365 $132,702 $167,964 NET CASH FLOW $25,435 $55,898 $99,236 Cash Balance $36,205 $92,103 $191,339

PRO FORMA BALANCE SHEET YEAR 1 YEAR 2 YEAR 3

ASSETS Current Assets

Cash $36,205 $92,103 $191,339

Other Current Assets $10,000 $10,000 $12,000

Total Current Assets $46,205 $102,103 $203,339

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Business Ratios

Phoebe's Photo Studios is part of the photographic portrait studio industry (SIC Code 7221). Industry standard growth is currently 7.3% annually. Phoebe's Photo Studio is projected to grow weed-like annually by seizing its target market early and building on it.

Long-term assets are a smaller percentage of this business because expensive printing equipment isn't required. High resolution printing will be outsourced and is included under Cost of Goods Sold.

Long-term Assets

Long-term Assets $60,500 $60,500 $60,500

Accumulated Depreciation $15,960 $31,920 $47,880

Total Long-term Assets $44,540 $28,580 $12,620 Total Assets $90,745 $130,683 $215,959 LIABILITIES AND CAPITAL YEAR 1 YEAR 2 YEAR 3 Current Liabilities

Accounts Payable $5,200 $6,358 $8,606

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $5,200 $6,358 $8,606 Long-term Liabilities $88,480 $75,980 $62,480

Total Liabilities $93,680 $82,338 $71,086 Paid-in Capital $10,000 $10,000 $10,000

Retained Earnings ($28,730) ($12,935) $38,345

Earnings $15,795 $51,280 $96,528

Total Capital ($2,935) $48,345 $144,873 Total Liabilities and Capital $90,745 $130,683 $215,959 Net Worth ($2,935) $48,345 $144,873

RATIO ANALYSIS YEAR 1 YEAR 2 YEAR 3 INDUSTRY

PROFILE Sales Growth n.a. 43.10% 41.68% 7.32%

PERCENT OF TOTAL ASSETS Other Current Assets 11.02% 7.65% 5.56% 51.55%

Total Current Assets 50.92% 78.13% 94.16% 71.67%

Long-term Assets 49.08% 21.87% 5.84% 28.33%

Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 5.73% 4.87% 3.99% 24.01%

Long-term Liabilities 97.50% 58.14% 28.93% 21.85%

Total Liabilities 103.23% 63.01% 32.92% 45.86%

Net Worth -3.23% 36.99% 67.08% 54.14% PERCENT OF SALES Sales 100.00% 100.00% 100.00% 100.00%

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Gross Margin 83.93% 85.49% 86.63% 100.00%

Selling, General & Administrative Expenses 71.95% 58.30% 50.51% 76.37%

Advertising Expenses 0.00% 0.00% 0.00% 1.11%

Profit Before Interest and Taxes 24.23% 43.20% 54.20% 5.49%

MAIN RATIOS Current 8.89 16.06 23.63 1.89

Quick 8.89 16.06 23.63 1.37

Total Debt to Total Assets 103.23% 63.01% 32.92% 53.64%

Pre-tax Return on Net Worth -768.74% 151.53% 95.19% 11.50%

Pre-tax Return on Assets 24.87% 56.06% 63.85% 24.81%

ADDITIONAL RATIOS YEAR 1 YEAR 2 YEAR 3 Net Profit Margin 11.98% 27.19% 36.13% n.a

Return on Equity 0.00% 106.07% 66.63% n.a

ACTIVITY RATIOS Accounts Payable Turnover 11.16 12.17 12.17 n.a

Payment Days 27 27 26 n.a

Total Asset Turnover 1.45 1.44 1.24 n.a

DEBT RATIOS Debt to Net Worth 0.00 1.70 0.49 n.a

Current Liab. to Liab. 0.06 0.08 0.12 n.a

LIQUIDITY RATIOS Net Working Capital $41,005 $95,745 $194,733 n.a

Interest Coverage 3.41 9.91 20.92 n.a

ADDITIONAL RATIOS Assets to Sales 0.69 0.69 0.81 n.a

Current Debt/Total Assets 6% 5% 4% n.a

Acid Test 8.89 16.06 23.63 n.a

Sales/Net Worth 0.00 3.90 1.84 n.a

Dividend Payout 0.00 0.00 0.00 n.a