Big Hoss Barbershop Financial Plan.docx



Big Hoss Barbershop and Lounge Financial PlanThe following Financial plan was conducted for Big Hoss Barbershop and Lounge. The numbers and information were based off of other competitors in the industry and projections that the owners believe to be feasible. Sources and Uses of FundsBefore operations can begin, Big Hoss Barbershop and Lounge must first have a location, employees, equipment, and other materials necessary, ready to go. In order to make this happen, we decided that two loans from Bank of America, one for $100,000, and the other for $200,000, along with the $200,000 we believe we could collect from owners, investors, family, and friends, would give us $500,000. This would be more than sufficient for startup because as stated in the Sources and Uses of Funds statement below, Total Startup expenses are $383,200, giving us a substantial amount of capital to work with. Sources of Capital Owners' Investment (name and percent ownership)Sam Henig (40%)$ 80,000Ryan Holland (35%)$70,000Toan Huynh (25%)$50,000Other investor-Total Investment$ 200,000Bank LoansBank 1$ 100,000Bank 2$200,000Total Bank Loans$ 300,000Startup ExpensesBuildings/Real EstatePurchase$ 250,000ConstructionRemodeling$15,000Other$5,000Total Buildings/Real Estate$ 270,000 Capital Equipment ListFurniture$ 50,000Equipment$15,000Fixtures$5,000Other-Total Capital Equipment$ 70,000 Location and Admin ExpensesUtility deposits-Business License$200Owners License$250Barber License$150Liquor License$20,000Legal and accounting fees-Prepaid insurance$4,000Pre-opening salaries-Other-Total Location and Admin Expenses$ 24,600 Opening InventoryBar Materials$ 16,000Hair Products$200Barbershop Materials$200Total Inventory$ 16,400 Advertising and Promotional ExpensesAdvertising$ 1,200Signage$1,000Other/additional categories-Total Advertising/Promotional Expenses$ 2,200 Summary StatementSources of CapitalOwners' and other investments$ 200,000Bank loans$300,000Other loans-Total Source of Funds$ 500,000 Startup ExpensesBuildings/real estate$ 270,000Leasehold improvements-Capital equipment$70,000Location/administration expenses$24,600Opening inventory$16,400Advertising/promotional expenses$2,200Other expenses-Contingency fund-Working capital-Total Startup Expenses$ 383,200 Important AssumptionsIn order to project the first three years of operation for Big Hoss Barbershop and Lounge we had to make the following assumptions:SalesYear 1:19,584 Haircuts given13,536 Drinks sold2,016 Massage Chair uses864 Movie/Show plays4,320 Jukebox playsYear 2:24,768 Haircuts given19,584 Drinks sold3,744 Massage Chair uses576 Movie/Show plays5,472 Jukebox playsYear 3:28,512 Haircuts given26,208 Drinks sold4,896 Massage Chair uses288 Movie/Show plays6,048 Jukebox playsBusiness Assumptions:At least 5 Barbers are employedBig Hoss Barbershop is open up to 6 days a weekThese numbers are based off of local barber responses, which is further explained in the Market and Industry Analysis section, and off of the assumption that Big Hoss Barbershop has up to 5 Barbers and respective chairs. Projected Cash FlowBig Hoss Barbershop and Lounge plans to maintain a positively growing cash flow over the next three years and therefore will be able to cover its expenses within that time period. Projected Balance SheetBalance SheetYear 0Year 1Year 2Year 3AssetsCash$116,800$96,800$81,800$86,800Inventory$10,000$15,000$20,000Total Current Assets$116,800$106,800$96,800$106,800Long-term Assets$383,200$383,200$368,200$348,200Accumulated Depreciation($15,000)($20,000)($45,000)Total Long-term Assets$383,200$368,200$348,200$303,200Total Assets$500,000$475,000$445,000$410,000Liabilities and CapitalCurrent Liabilities$100,000$50,000--Other Current LiabilitiesLong-Term Liabilities$200,000$200,000$200,000$170,000Total Liabilities$300,000$250,000$200,000$170,000Paid-in Capital$200,000$200,000$200,000$200,000Retained Earnings-$25,000$45,000$40,000Total Capital$200,000$225,000$245,000$240,000Total Liabilities and Capital$500,000$475,000$445,000$410,000Net Worth$200,000$225,000$245,000$240,000 Projected Income StatementBig Hoss BarbershopIncome Statement3 Year ProjectionYear 1Year 2Year 3RevenueYear 1Year 2Year 3Sales revenue$445,248$583,776$704,160Total RevenuesExpensesAdvertising$2,400$2,400$2,400Commissions$176,688$224,496$265,392Cost of goods sold$20,000$30,000$40,000DepreciationEmployee benefitsFurniture and equipmentInsurance$4,000$4,000$4,000Interest expense$17,000$14,900$10,350Maintenance and repairs$5,000$7,000$10,000Office supplies$200$200$200Salaries and wages$69,600$69,600$69,600Utilities$28,800$28,800$28,800Web hosting and domainsOtherTotal Expenses$323,688$381,396$430,742Earning before TaxNet Income Before Taxes$121,560$202,380$273,418Income tax expense$36,468$60,714$82,025Payroll taxesIncome from Continuing OperationsBelow-the-Line ItemsIncome from discontinued operationsEffect of accounting changesExtraordinary itemsNet Income$85,092$141,666$191,393 Ratio AnalysisRatio AnalysisYear 0Year 1Year 2Total Current Assets$116800$106800$96800Long-term assets$383200$368200$348200Total Assets$500000$475000$445000Current Liabilities$100000$50000$0Long-term liabilities$200000$200000$200000Total Liabilities$300000$250000$200000Net Worth$200000$225000$245000Percent of SalesNet Income85092141666191393Sales445248583776704160Growth Margin0.20375161710.1361618155Selling, General, and administrative Expenses696006960069600Commissions176688224496265392Advertising Expenses240024002400Interest Expense170001490010350Profit Before Interest and Taxes196560287280366768Main RatiosCurrent1.1682.136Quick1.1682.136Total Debt to Total Assets0.60.52631578950.4494382022Pre-tax Return on Net Worth0.98281.27681.497012245Pre-tax Return on Assets0.393120.60480.8241977528Additional RatiosNet Profit Margin0.19111147050.24267184670.2718032833Debt RatiosDebt to Net Worth1.51.1111111110.8163265306Liquidity RatiosNet Working Capital168005680096800Interest Coverage11.5623529419.2805369135.43652174Additional RatiosAssets to Sales1.1229696710.81366825630.6319586458Current Debt/Total Assets0.60.52631578950.4494382022Sales/Net Worth2.226242.594562.874122449As you can see in the chart below, our projected Net Income and Sales Revenue have a strong positive growth rate. ................
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