Business Plan Sample: Financial Forecast

Financial Forecast

Northwind Traders started as a clothing store and has expanded into the travel agency business, with its focus on adventure travel in Europe. Last year, Northwind Traders clothing store made $200,400 profit on sales of $1,419,500 and employed seven people.

Northwind Traders expects that by concentrating full-time on selling adventure vacations, clients will increase from the present level of 200 (achieved over a six-month period with only a part-time effort), to at least 660 in the first year, 1400 in the second, and 2100 in the third. To help achieve this growth, Ms. Mitchell has identified three other tour operators she wishes to represent and has begun negotiations with them.

Selling between two and three vacations a day will allow the business to make a modest profit in Year One. By Year Two posttax profits should be $304,000 and will increase to nearly $496,000 by Year Three.

Financing Requirements

Ms. Mitchell plans to sell her shares in the clothing shop and invest the proceeds in the new travel business, Northwind Traders. In addition, she will be investing $41,750 of her own money in the business and seeking $83,500 from outside sources. Return on shareholders capital by Year Three is projected to be close to 100 percent. The purpose of the business plan is to communicate this highly profitable opportunity to Ms. Mitchell's partners in the clothing shop and to outside investors, and to attract interest in the venture.

Alternatively, Ms. Mitchell is considering loan finance made up of a $41,750 two-year loan and a credit line of $58,450. In total, about $125,250 will be needed to fund the business during the initial months.