Confidentiality Agreement

 

 

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by [YOUR COMPANY NAME]  in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of [YOUR COMPANY NAME] .

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader may cause serious harm or damage to [YOUR COMPANY NAME] .

Upon request, this document is to be immediately returned to [YOUR COMPANY NAME] .

 

___________________
Signature

 

___________________
Name (typed or printed)

 

___________________
Date

 

 

This is a business plan. It does not imply an offering of securities.

 

1.0       Executive Summary                                                                                                                  1

Chart: Highlights                                                                                                                            2

1.1 Objectives                                                                                                                                     2

1.2 Mission                                                                                                                                           2

1.3 Keys to Success                                                                                                                          3

2.0 Company Summary                                                                                                                      3

2.1 Company Ownership                                                                                                                3

2.2 Company History                                                                                                                       3

Table: Past Performance                                                                                                             4

Chart: Past Performance                                                                                                            6

3.0 Services                                                                                                                                             6

4.0 Market Analysis Summary                                                                                                         6

Table: Market Analysis                                                                                                                7

Chart: Market Analysis (Pie)                                                                                                     7

4.2 Target Market Segment Strategy                                                                                        8

4.3 Service Business Analysis                                                                                                      8

4.3.1 Competition and Buying Patterns                                                                               8

5.0 Strategy and Implementation Summary                                                                              8

5.1 SWOT Analysis                                                                                                                            9

5.1.1 Strengths                                                                                                                              9

5.1.2 Weaknesses                                                                                                                         9

5.1.3 Opportunities                                                                                                                       9

5.1.4 Threats                                                                                                                                   9

5.2 Competitive Edge                                                                                                                    10

5.3 Marketing Strategy                                                                                                                 10

5.4 Sales Strategy                                                                                                                           10

5.4.1 Sales Forecast                                                                                                                   10

Table: Sales Forecast                                                                                                                     10

Chart: Sales Monthly                                                                                                              11

Chart: Sales by Year                                                                                                              11

5.5 Milestones                                                                                                                                   12

Table: Milestones                                                                                                                         12

6.0 Management Summary                                                                                                             12

6.1 Personnel Plan                                                                                                                           12

Table: Personnel                                                                                                                          13

7.0 Financial Plan                                                                                                                                 13

7.1 Important Assumptions                                                                                                         13

7.2 Break-even Analysis                                                                                                               13

Table: Break-even Analysis                                                                                                     14

Chart: Break-even Analysis                                                                                                     14

7.3 Projected Profit and Loss                                                                                                      14

Table: Profit and Loss                                                                                                                15

Chart: Profit Monthly                                                                                                                  16

Chart: Profit Yearly                                                                                                                     16

Chart: Gross Margin Monthly                                                                                                  17

Chart: Gross Margin Yearly                                                                                                     17

7.4 Projected Cash Flow                                                                                                               18

Table: Cash Flow                                                                                                                         18

Chart: Cash                                                                                                                                    19

7.5 Projected Balance Sheet                                                                                                       19

Table: Balance Sheet                                                                                                                 19

7.6 Business Ratios                                                                                                                         20

Table: Ratios                                                                                                                                 20

Table: Sales Forecast                                                                                                                           1

Table: Personnel                                                                                                                                    2

Table: Personnel                                                                                                                                    2

Table: Profit and Loss                                                                                                                          3

Table: Cash Flow                                                                                                                                   4

Table: Balance Sheet                                                                                                                           5

 

1.0  Executive Summary

[YOUR COMPANY NAME]

Owner:  [YOUR NAME]

[YOUR ADDRESS]

Phone:

Email:

 

Introduction: At [YOUR COMPANY NAME] , our goal is to assist you in reaching your fitness and nutritional goals.  Our job is to provide safe and effective exercises that will enable you to lose those unwanted pounds, gain muscle tone and simply improve your overall appearance and health.

Location: [YOUR COMPANY NAME]  is conveniently located downtown in [YOUR CITY]

.

The Company: The focus of the [YOUR COMPANY NAME]  is to keep the whole family involved in the club by exposing everyone to the variety of activities and services the club offers. In addition, there is a childcare center that will keep members’ children happy and entertained while members take part in any of the center’s activities and services.

Our Services: [YOUR COMPANY NAME]  offers wellness and fitness programs as well as the following.

  • Brand new Precor Treadmills and Elliptical
  • Full line of York rubberized dumbbells up to 50 lbs.
  • 3-way free weight bench with rack for flat, incline and decline press
  • Highly educated and experienced Wellness Coaches who can assist you in reaching your fitness and nutritional goals
  • Over 30 fun, energetic and creative group fitness classes a week for you to choose from
  • Fit Kids program
  • Nutrition and Cooking classes
  • Fitness center with cardiovascular and weight training equipment.

The Market: Even in the midst of the economic downturn, the industry has maintained steady growth, with membership rates growing consistently and profits remaining solid. Demand for gyms and health and fitness clubs will continue to rise over the next five years, as the general public becomes more health conscious and the aging population places a greater value on staying fit. Additionally, the amount of leisure time and growth in household incomes will positively affect businesses, leading operators to expand into larger facilities.

Financial Considerations: [YOUR COMPANY NAME]  envisions for the business is to not only to offer a fitness and gymnastics center, but to incorporate other realms of wellness in to the business model. The Company will purchase a building to have room to offer a complete medically integrated facility that offers a physical therapy and a massage therapy center, a structured obesity program, and much more. A complete wellness group with medically integrated programs would be completely overseen by doctors.  The grant of $350,000 would help purchase a building and allow the capability to set this plan in motion.

 

The major focus for grant funding is as follows:

  • Hire new employees
  • Implement Wellness and Nutritional Program
  • Community involvement for obesity and diabetes in youth
  • Increase building capacity
  • Add new products to our existing business

 

Chart: Highlights

1.1 Objectives

The company’s objective is to build a quality, full-service facility that will command the approval of the local community which it serves.

Our goals include:

  1. A 10% market share in are local market.
  2. An increase our gross margins.

 

  1. Maintain and grow our position as one of the only clubs in the [YOUR CITY] area that caters to families.

1.2 Mission

[YOUR COMPANY NAME]  our goal is to assist you in reaching your fitness and nutritional goals.  Our job is to provide safe and effective exercises that will enable you to lose those unwanted pounds, gain muscle tone and simply improve your overall appearance and health.  Your job is to commit to making exercise and good nutrition a priority in order to achieve success.  By working together on changing the way you think and feel about fitness and nutrition, we can help you not only transform your body, but also transform your life!

1.3 Keys to Success

Keys to success for the company will include:

  1. Maintaining a reputable and untarnished reputation in the community.
  2. Quality service.
  3. Competitive pricing.
  4. Flexible hours.

 

2.0 Company Summary

The focus of the [YOUR COMPANY NAME]  is to keep the whole family involved in the club by exposing everyone to the variety of activities and services the club offers. In addition, there is a childcare center that will keep members’ children happy and entertained while members take part in any of the center’s activities and services. [YOUR COMPANY NAME]  is conveniently located downtown in London, KY. [YOUR COMPANY NAME]  was created in 2008 and has continued strong since inception.

Upon receipt of the grant funds in the amount of $350,000 [YOUR COMPANY NAME]  would proceed with plans to buy a building to have room to offer a complete medically integrated facility that offers a physical therapy and a massage therapy center, a structured obesity program.

Our Services and guarantee:

  • 100% Satisfaction Guaranteed
  • The Customer’s Satisfaction is Our #1 Concern
  • Committed to Quality and Service

 

2.1 Company Ownership

[YOUR COMPANY NAME]  is a sole proprietor, which was created in 2008 and fully operational in 2009. [YOUR NAME]  is 100% owner and manager and will manage the daily operation.

 

2.2 Company History

[YOUR COMPANY NAME]  was created under the ownership of [YOUR NAME]  in October of 2008 [YOUR NAME]  remains 100% sole owner. [YOUR NAME]  has spent years dedicating her life to wellbeing and fitness. In 2008 she took her ideas of creating a fitness center that can help create a lifestyle for others that are looking to have healthier lives. The goal is to exceed our customers’ expectations with quality, value and professional service.

The 2010 Profit and Loss Statement is estimated based on the actual activity through October 30, 2010. As the Company is a sole proprietorship, the Balance Sheet for year end 2010 is estimated based on average balances at the end of each month for cash, amount of inventory in stock, accounts payable and fixed assets which are fully depreciated.

The Company’s growth will come from its strength’s; 100% customer guarantee, commitment to quality and service, design and arrangement capabilities, experience and a loyal satisfied customer base.

Table: Past Performance

Past Performance    
  2009 2010
Sales $120,882 $216,000
Gross Margin $120,882 $216,000
Gross Margin % 100.00% 100.00%
Operating Expenses $148,466 $165,000
     
  2009 2010
Current Assets    
Cash $50,000 $20,000
Other Current Assets $25,000 $10,000
Total Current Assets $75,000 $30,000
     
Long-term Assets    
Long-term Assets $35,000 $28,000
Accumulated Depreciation $17,000 $17,000
Total Long-term Assets $18,000 $11,000
     
Total Assets $93,000 $41,000
     

 

Current Liabilities    
Accounts Payable $0 $0
Current Borrowing $0 $0
Other Current Liabilities (interest free) $0 $0
Total Current Liabilities $0 $0
     
Long-term Liabilities $120,000 $117,000
Total Liabilities $120,000 $117,000
     
Paid-in Capital $0 $0
Retained Earnings ($27,000) ($76,000)
Earnings $0 $0
Total Capital ($27,000) ($76,000)
     
Total Capital and Liabilities $93,000 $41,000
Other Inputs    
Payment Days 0 0

Chart: Past Performance

3.0 Services

The Fitness Center has the following activities and services:

  • Brand new Precor Treadmills and Elliptical
  • Full line of York rubberized dumbbells up to 50 lbs.
  • 3-way free weight bench with rack for flat, incline and decline press
  • Highly educated and experienced Wellness Coaches who can assist you in reaching your fitness and nutritional goals
  • Over 30 fun, energetic and creative group fitness classes a week for you to choose from
  • Fit Kids program
  • Nutrition and Cooking classes
  • Fitness center with cardiovascular and weight training equipment.

4.0 Market Analysis Summary

Even in the midst of the economic downturn, the industry has maintained steady growth, with membership rates growing consistently and profits remaining solid. Demand for gyms and health and fitness clubs will continue to rise over the next five years, as the general public becomes more health conscious and the aging population places a greater value on staying fit. Additionally, the amount of leisure time and growth in household incomes will positively affect businesses, leading operators to expand into larger facilities.

 

4.1 Market Segmentation

The primary targeted market consists of three main groups. These categories are: 18 to 25 year old, 26 to 32 and 33 and older. To better understand the size and break down of the local population refer to total population break down chart in topic 6.0.  Refer to the following chart as a percentage view.

Table: Market Analysis

 

Market Analysis              
    2011 2012 2013 2014 2015  
Potential Customers Growth           CAGR
Ages 18-25 6% 387,459 410,707 435,349 461,470 489,158 6.00%
Ages 26-32 5% 625,123 656,379 689,198 723,658 759,841 5.00%
Above age 32 4% 825,650 858,676 893,023 928,744 965,894 4.00%
Total 4.77% 1,838,232 1,925,762 2,017,570 2,113,872 2,214,893 4.77%

 

Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

As indicated by the previous table and Illustration, we must focus on a few thousand well-chosen potential customers in the local community.

 

4.3 Service Business Analysis

The profile for fitness centers consists of the following geographic, demographic, and behavior factors:

Geographic’s

  • The immediate geographic target is the city of [YOUR CITY].
  • A 35 mile radius is in need of the services.
  • The total targeted population is 15,800 employees.

Demographic

  • 51%:49% male: female.
  • The individual income range is $38,000-$75,000.
  • 67% of the customers are single, 33% are married.
  • For the manufacturing customers, 43% have some undergraduate course work.
  • For the corporate customers, 83% have some undergraduate coursework, 16% have undertaken graduate coursework.

Behavior Factors

  • Recognize the need to have physical activity in their lives.
  • Have incorporated some sort of exercise program in their daily/ weekly routine for the last several years.
  • Are willing to utilize fringe benefits that are offered by their employer as part of their compensation package.

 

4.3.1 Competition and Buying Patterns

Exercising and “working out” has become a more mainstream activity in American’s lives over the last decade.  Five to ten years ago there were widespread reports about an impeding health crisis, obesity.  Americans, relative to their Western European counterparts have higher incidents of obesity.  To a large degree, this is correlated to American’s unhealthy diet of fast food, and generally poor food choices, especially fried foods.  The poor diet is not the only factor however.  Americans were fairly inactive, with only 19% of people age 20-40 exercising three times a week.  Luckily, that has changed over the last 10 years.  The percentage of active people has increased to 43% as of 2008.

 

5.0 Strategy and Implementation Summary

[YOUR COMPANY NAME]  has clearly defined the target market and has differentiated itself by offering a solid solution to fulfilling its customers’ needs. Reasonable sales targets have been established with an implementation plan designed to ensure the goals set forth below are achieved.

5.1 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Interior Views.

 

5.1.1 Strengths

  • Strong relationships with suppliers that offer credit arrangements, flexibility, and response to special product requirements.
  • Excellent and stable staff, offering personalized customer service.
  • Great retail space that offers flexibility with a positive and attractive, inviting atmosphere.
  • Strong merchandising and product presentation.
  • Good referral relationships.
  • High customer loyalty.

 

5.1.2 Weaknesses

  • Access to additional operating capital.
  • Cash flow continues to be unpredictable.
  • Owners are still climbing the “experience curve.”
  • Challenges of the seasonality of the business.

 

5.1.3 Opportunities

  • Growing market with a significant percentage of our target market still not knowing we exist.
  • Strategic alliances offering sources for referrals and joint marketing activities to extend our reach.
  • Changes in design trends can initiate home updating, and therefore, generate sales.
  • Increasing sales opportunities beyond our “100-mile” target area including several smaller communities that have produced a faithful following of customers.
  • Internet potential for selling products to other markets.

 

5.1.4 Threats

  1. The downturn in the economy has impacted gym sales.
  2. Expansion of national gyms into the local market
  3. Competition from a national gym; or a store with greater financing or product resources could enter the market.
  4. Continued price pressure due to competition or the weakening market reducing contribution margins.

 

5.2 Competitive Edge

The competitive edge of the [YOUR COMPANY NAME]  is our focus on the family. We offer our members childcare services that are second to none.  The focus on all aspects of wellness, not just hard core Training.  Of course they emphasize diet and nutrition as the safest and healthiest form of weight loss. Education on stress reduction, effects of sleep deprivation, and smoking cessation.

 

5.3 Marketing Strategy

An overview of the marketing plan includes:

  1. Analyzing the obesity population within a 50 mile radius
  2. Door Hangars of Mailers with our business name and description
  3. Ads launching new programs and services

 

5.4 Sales Strategy

Sales forecast is based on the advertisement mostly by word of mouth; occasionally they run radio ads during special times of the year.  Billboard ads, radio and television advertising are to follow when we receive the additional grant funds.

 

5.4.1 Sales Forecast

The following is the sales forecast for the next three years. These figures are based on the additional grant funds, which will allow for more employees as well as additional marketing to bring in new clients.

Table: Sales Forecast

Sales Forecast      
  2011 2012 2013
Sales      
Membership $97,655 $115,000 $125,000
Events $55,972 $63,000 $70,000
Other $104,957 $118,000 $128,000
Total Sales $258,584 $296,000 $323,000
       
Direct Cost of Sales 2011 2012 2013
Membership $0 $0 $0
Events $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

 

Chart: Sales Monthly

 

Chart: Sales by Year

 

5.5 Milestones

In order to achieve the growth and marketing goals that have been outlined in this business plan, the Company has the following deadlines to meet and ideas to implement. Some of these are outlined below:

 

  • Obtain Grant Funding to expand, grow and improve the business.
  • Secure additional space to facilitate our new products.
  • Construction/Leasehold Improvements in the Company’s location
  • Purchase computers, office equipment, office furniture and fixtures
  • Hire employees, the Company will look to hire minorities, veterans, disabled persons and the unemployed
  • Update our website and social media
  • Launch an advertising campaign
  • Working Capital to support operation until cash flow profitability

 

Table: Milestones

Milestones          
           
Milestone Start Date End Date Budget Manager Department
Building Lease Deposits 1/1/2011 1/7/2011 $6,000 Owner Operations
Leasehold Improvements 1/1/2011 2/5/2011 $20,000 Owner Operations
Purchase  Equipment 1/1/2011 2/5/2011 $10,000 Owner Department
Hire Employees 1/1/2011 12/31/2011 $75,000 Owner Department
Launch Advertising Campaign 1/1/2011 12/31/2011 $20,000 Owner Department
Website & Website Marketing 1/1/2011 3/31/2011 $10,000 Owner Department
Working Capital 1/1/2011 12/31/2011 $209,000 Owner Department
Totals     $350,000    

 

6.0 Management Summary

[YOUR NAME]  is the acting manager of the daily business operations.  She has no assistant manager; however she does have someone she leaves in total control when unavailable. [YOUR NAME]  has a long history of management in the health and wellness industry.

 

6.1 Personnel Plan

Currently 15 people who work at [YOUR COMPANY NAME]  as 1099 employees.  These 1099 employees work part-time as instructors for certain classes or trainers. The goal is to have full-time employees who can help make the operation of the business run smoothly.  With the additional grant funds Body of Stone would like to offer medical and dental benefits to those whom are full-time employees.  [YOUR COMPANY NAME]  would like to create an Obesity Program Coordinator position, CFO Position, Wellness Program Director, Kids Fit Program Director, Group Fitness Coordinator.

 

Table: Personnel

 

Personnel Plan      
  2011 2012 2013
Salaries $60,000 $75,000 $75,000
Account/Legal $3,600 $4,000 $4,000
Total People 2 4 4
       
Total Payroll $63,600 $79,000 $79,000

7.0 Financial Plan

The current financial plan for [YOUR COMPANY NAME]  is to obtain grant funding in the amount of $350,000. The grant will be used to add a fitness and gymnastics center, the purchase of a building to have room to offer a complete medically integrated facility that offers a physical therapy and a massage therapy center, a structured obesity program, to upgrade the website, and the hiring of employees as well as launching an advertising campaign.

The following sections of this plan will serve to describe the Company’s financial plan in more detail:

  • General Assumptions
  • Break-even Analysis
  • Profit and Loss
  • Cash Flow
  • Balance Sheet
  • Ratios

 

7.1 Important Assumptions

The table below presents the assumptions used in the financial calculations of this grant plan. [YOUR COMPANY NAME]  is a Sole Proprietorship and is taxed accordingly, estimated tax rate.

 

7.2 Break-even Analysis

For the Company’s break-even analysis for 2011, the monthly revenue break-even is projected to be $18,845. The Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk.

Table: Break-even Analysis

Break-even Analysis  
Monthly Revenue Break-even $18,845
   
Assumptions:  
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $18,845

Chart: Break-even Analysis

7.3 Projected Profit and Loss

As the Profit and Loss table shows, the company expects to continue its steady growth in profitability over the next three years of operations.

As seen in the profit and loss statement 2012 shows a significant drop in net profits, however this is caused by an increase in rent, 1099 employees, and salaries as we plan to hire more full-time employees.

The Pro Forma Profit and Loss statement was constructed based in large part on past performance over the 2010 period, the opening of a wholesale operation and investments in marketing and advertising. The sales for 2011, 2012 and 2013 are $258,584, $296,000 and $323,000, respectively. Gross margins for all three years are 100%. The Company will show a Net Loss for 2012 ($4,972) due to the internal expansion of the Company to launch the marketing, sales and operation efforts needed to take advantage of the market and growth in the future years. The Company will show a positive EBITDA of $46,850 in 2011, $21,128 in 2012 and $51,128 in 2013. The Operating expenses for this period were $226,134, $289,272 and $286,272, respectively. The Operating Expenses and Net Profit to Sales for the 2011, 2012 and 2013 period are affected by the internal expansion of the Company.

Table: Profit and Loss

Pro Forma Profit and Loss      
  2011 2012 2013
Sales $258,584 $296,000 $323,000
Direct Cost of Sales $0 $0 $0
Other Costs of Sales $0 $0 $0
Total Cost of Sales $0 $0 $0
       
Gross Margin $258,584 $296,000 $323,000
Gross Margin % 100.00% 100.00% 100.00%
       
       
Expenses      
Payroll $63,600 $79,000 $79,000
Marketing/Promotion $18,000 $15,000 $10,000
Depreciation $14,400 $14,400 $14,400
Rent $21,480 $50,000 $50,000
Utilities $8,160 $8,500 $8,500
Insurance $522 $522 $522
Payroll Taxes $9,540 $11,850 $11,850
1099 Employees $57,192 $75,000 $75,000
Entertainment $8,400 $10,000 $10,000
Other $24,840 $25,000 $27,000
       
Total Operating Expenses $226,134 $289,272 $286,272
       
Profit Before Interest and Taxes $32,450 $6,728 $36,728
EBITDA $46,850 $21,128 $51,128
  Interest Expense $11,700 $11,700 $11,700
  Taxes Incurred $3,112 $0 $3,754
       
Net Profit $17,638 ($4,972) $21,274
Net Profit/Sales 6.82% -1.68% 6.59%

 

 

Chart: Profit Monthly

 

Chart: Profit Yearly

 

Chart: Gross Margin Monthly

 

Chart: Gross Margin Yearly

7.4 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years. [YOUR COMPANY NAME]  has applied for a grant of $350,000. The Company forecast that it’ll receive $350,000 in the month of January 2011.

The cash flow in 2011 shows a repayment of some liabilities as well as the purchases of additional equipment. The following table displays the Company’s cash flow, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are also included in the appendix.

Table: Cash Flow

Pro Forma Cash Flow      
  2011 2012 2013
Cash Received      
       
Cash from Operations      
Cash Sales $258,584 $296,000 $323,000
Subtotal Cash from Operations $258,584 $296,000 $323,000
       
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 $350,000 $0 $0
Subtotal Cash Received $608,584 $296,000 $323,000
       
Expenditures 2011 2012 2013
       
Expenditures from Operations      
Cash Spending $63,600 $79,000 $79,000
Bill Payments $149,287 $204,170 $208,264
Subtotal Spent on Operations $212,887 $283,170 $287,264
       
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 $25,000 $0 $0
Purchase Long-term Assets $75,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $312,887 $283,170 $287,264
       
Net Cash Flow $295,697 $12,830 $35,736
Cash Balance $315,697 $328,526 $364,262

 

 

Chart: Cash

7.5 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the appendix. Body of Stone Fitness net worth is $291,637, $286,666 and $307,939 for 2011, 2012 and 2013, respectively. The Company’s Total Assets at the end of 2011, 2012 and 2013 will be $422,297, $420,726 and $442,062, respectively.

 

Table: Balance Sheet

Pro Forma Balance Sheet      
  2011 2012 2013
Assets      
       
Current Assets      
Cash $315,697 $328,526 $364,262
Other Current Assets $35,000 $35,000 $35,000
Total Current Assets $350,697 $363,526 $399,262
       
Long-term Assets      
Long-term Assets $103,000 $103,000 $103,000
Accumulated Depreciation $31,400 $45,800 $60,200
Total Long-term Assets $71,600 $57,200 $42,800
Total Assets $422,297 $420,726 $442,062
       

 

 

 

 

 

Liabilities and Capital 2011 2012 2013
       
Current Liabilities      
Accounts Payable $13,659 $17,061 $17,123
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,659 $17,061 $17,123
       
Long-term Liabilities $117,000 $117,000 $117,000
Total Liabilities $130,659 $134,061 $134,123
       
Paid-in Capital $350,000 $350,000 $350,000
Retained Earnings ($76,000) ($58,363) ($63,335)
Earnings $17,638 ($4,972) $21,274
Total Capital $291,638 $286,666 $307,939
Total Liabilities and Capital $422,297 $420,726 $442,062
       
Net Worth $291,637 $286,666 $307,939

 

7.6 Business Ratios

The table below presents the projected business ratios from the Fitness Industry as a reference with sales between $500,000 and $999,999.

 

Table: Ratios

Ratio Analysis        
  2011 2012 2013 Industry Profile
Sales Growth 19.71% 14.47% 9.12% 1.14%
         
Percent of Total Assets        
Other Current Assets 8.29% 8.32% 7.92% 29.74%
Total Current Assets 83.05% 86.40% 90.32% 35.63%
Long-term Assets 16.95% 13.60% 9.68% 64.37%
Total Assets 100.00% 100.00% 100.00% 100.00%
         
Current Liabilities 3.23% 4.06% 3.87% 15.31%
Long-term Liabilities 27.71% 27.81% 26.47% 45.72%
Total Liabilities 30.94% 31.86% 30.34% 61.03%
Net Worth 69.06% 68.14% 69.66% 38.97%
         
Percent of Sales        
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 81.53%
Selling, General & Administrative Expenses 93.18% 101.68% 93.41% 23.64%
Advertising Expenses 6.96% 5.07% 3.10% 1.91%
Profit Before Interest and Taxes 12.55% 2.27% 11.37% 12.72%
         

 

Main Ratios        
Current 25.67 21.31 23.32 1.60
Quick 25.67 21.31 23.32 1.45
Total Debt to Total Assets 30.94% 31.86% 30.34% 61.03%
Pre-tax Return on Net Worth 7.11% -1.73% 8.13% 42.03%
Pre-tax Return on Assets 4.91% -1.18% 5.66% 16.38%
         
Additional Ratios 2011 2012 2013  
Net Profit Margin 6.82% -1.68% 6.59% n.a
Return on Equity 6.05% -1.73% 6.91% n.a
         
Activity Ratios        
Accounts Payable Turnover 11.93 12.17 12.17 n.a
Payment Days 27 27 30 n.a
Total Asset Turnover 0.61 0.70 0.73 n.a
         
Debt Ratios        
Debt to Net Worth 0.45 0.47 0.44 n.a
Current Liab. to Liab. 0.10 0.13 0.13 n.a
         
Liquidity Ratios        
Net Working Capital $337,037 $346,466 $382,139 n.a
Interest Coverage 2.77 0.58 3.14 n.a
         
Additional Ratios        
Assets to Sales 1.63 1.42 1.37 n.a
Current Debt/Total Assets 3% 4% 4% n.a
Acid Test 25.67 21.31 23.32 n.a
Sales/Net Worth 0.89 1.03 1.05 n.a
Dividend Payout  0.00 0.00 0.00 n.a

 

 

Table: Sales Forecast

 

Sales Forecast                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales                          
Memberships   $6,500 $6,760 $7,030 $7,311 $7,603 $7,907 $8,223 $8,552 $8,894 $9,250 $9,620 $10,005
Events   $3,725 $3,874 $4,029 $4,190 $4,358 $4,532 $4,713 $4,902 $5,098 $5,302 $5,514 $5,735
Other   $7,825 $7,982 $8,142 $8,305 $8,471 $8,640 $8,813 $8,989 $9,169 $9,352 $9,539 $9,730
Total Sales   $18,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
                           
Direct Cost of Sales   Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Membership   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Events   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Table: Personnel

 

Personnel Plan                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Salaries   $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Account/Legal   $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Total People   2 2 2 2 2 2 2 2 2 2 2 2
                           
Total Payroll   $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300

Table: Profit and Loss

Pro Forma Profit and Loss                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales   $18,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
Direct Cost of Sales   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Costs of Sales   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
                           
Gross Margin   $18,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
Gross Margin %   100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
                           
                           
Expenses                          
Payroll   $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300
Marketing/Promotion   $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Depreciation   $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Rent   $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790
Utilities   $680 $680 $680 $680 $680 $680 $680 $680 $680 $680 $680 $680
Insurance   $522 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 15% $795 $795 $795 $795 $795 $795 $795 $795 $795 $795 $795 $795
1099 Employees 15% $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766 $4,766
Entertainment 15% $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700
Other   $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070 $2,070
                           
Total Operating Expenses   $19,323 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801 $18,801
                           
Profit Before Interest and Taxes   ($1,273) ($185) $400 $1,005 $1,631 $2,278 $2,948 $3,642 $4,360 $5,103 $5,872 $6,669
EBITDA   ($73) $1,015 $1,600 $2,205 $2,831 $3,478 $4,148 $4,842 $5,560 $6,303 $7,072 $7,869
  Interest Expense   $975 $975 $975 $975 $975 $975 $975 $975 $975 $975 $975 $975
  Taxes Incurred   ($337) ($174) ($86) $5 $98 $195 $296 $400 $508 $619 $735 $854
                           
Net Profit   ($1,911) ($986) ($489) $26 $558 $1,108 $1,677 $2,267 $2,877 $3,509 $4,162 $4,840
Net Profit/Sales   -10.59% -5.30% -2.55% 0.13% 2.73% 5.25% 7.71% 10.10% 12.42% 14.68% 16.87% 19.00%

Table: Cash Flow

Pro Forma Cash Flow                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash Received                          
Cash from Operations                          
Cash Sales   $18,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
Subtotal Cash from Operations   $18,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
Additional Cash Received                          
Sales Tax, VAT, HST/GST 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free)   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received   $350,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received   $368,050 $18,616 $19,201 $19,806 $20,432 $21,079 $21,749 $22,443 $23,161 $23,904 $24,673 $25,470
                           
Expenditures   Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Expenditures from Operations                          
Cash Spending   $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300
Bill Payments   $449 $13,449 $13,105 $13,193 $13,284 $13,378 $13,475 $13,575 $13,680 $13,787 $13,899 $14,015
Subtotal Spent on Operations   $5,749 $18,749 $18,405 $18,493 $18,584 $18,678 $18,775 $18,875 $18,980 $19,087 $19,199 $19,315
Additional Cash Spent                          
Sales Tax, VAT, HST/GST   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets   $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets   $75,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent   $105,749 $18,749 $18,405 $18,493 $18,584 $18,678 $18,775 $18,875 $18,980 $19,087 $19,199 $19,315
                           
Net Cash Flow   $262,301 ($133) $796 $1,313 $1,848 $2,401 $2,974 $3,568 $4,181 $4,817 $5,474 $6,155
Cash Balance   $282,301 $282,168 $282,965 $284,278 $286,126 $288,528 $291,502 $295,069 $299,251 $304,067 $309,541 $315,697

 

Table: Balance Sheet

Pro Forma Balance Sheet                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Assets Starting Balances                        
                           
Current Assets                          
Cash $20,000 $282,301 $282,168 $282,965 $284,278 $286,126 $288,528 $291,502 $295,069 $299,251 $304,067 $309,541 $315,697
Other Current Assets $10,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000
Total Current Assets $30,000 $317,301 $317,168 $317,965 $319,278 $321,126 $323,528 $326,502 $330,069 $334,251 $339,067 $344,541 $350,697
                           
Long-term Assets                          
Long-term Assets $28,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000 $103,000
Accumulated Depreciation $17,000 $18,200 $19,400 $20,600 $21,800 $23,000 $24,200 $25,400 $26,600 $27,800 $29,000 $30,200 $31,400
Total Long-term Assets $11,000 $84,800 $83,600 $82,400 $81,200 $80,000 $78,800 $77,600 $76,400 $75,200 $74,000 $72,800 $71,600
Total Assets $41,000 $402,101 $400,768 $400,365 $400,478 $401,126 $402,328 $404,102 $406,469 $409,451 $413,067 $417,341 $422,297
                           
Liabilities and Capital   Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
                           
Current Liabilities                          
Accounts Payable $0 $13,012 $12,665 $12,750 $12,838 $12,929 $13,022 $13,120 $13,220 $13,324 $13,432 $13,544 $13,659
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $13,012 $12,665 $12,750 $12,838 $12,929 $13,022 $13,120 $13,220 $13,324 $13,432 $13,544 $13,659
                           
Long-term Liabilities $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000 $117,000
Total Liabilities $117,000 $130,012 $129,665 $129,750 $129,838 $129,929 $130,022 $130,120 $130,220 $130,324 $130,432 $130,544 $130,659
                           
Paid-in Capital $0 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000
Retained Earnings ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000) ($76,000)
Earnings $0 ($1,911) ($2,897) ($3,386) ($3,360) ($2,802) ($1,695) ($18) $2,249 $5,126 $8,635 $12,798 $17,638
Total Capital ($76,000) $272,089 $271,103 $270,614 $270,640 $271,198 $272,305 $273,982 $276,249 $279,126 $282,635 $286,798 $291,638
Total Liabilities and Capital $41,000 $402,101 $400,768 $400,365 $400,478 $401,126 $402,328 $404,102 $406,469 $409,451 $413,067 $417,341 $422,297
                           
Net Worth ($76,000) $272,089 $271,103 $270,614 $270,640 $271,198 $272,305 $273,982 $276,249 $279,126 $282,635 $286,798 $291,637