Business Plan Sample: Income Statement

Income Statement

We expect to make a small after-tax profit of $34,901 in the first year (see Appendix 2 and Table 4 below). This is before the owner's drawings. Any owner's drawings will be contingent on performance being better than that expected in the Plan.

Table 4. Profits in Years One to Three

Balance Sheet

The Balance Sheet at the end of Year One (see Appendix 2) shows a healthy surplus of current assets over current liabilities. We have shown a conservative funding position, which does not include any of the additional capital that we hope to secure.

Performance Ratios

We plan to move our gross profit up from 11 percent in Year One to 13 percent in Year Three. These figures look quite low, but it should be remembered that our gross profit is really the sales commission we earn, not the full price of an adventure vacation. Our net income before taxes is a more accurate measure of performance. This we expect to move from 2 percent at the outset up to 8 percent by Year Three. Commission generated and profit per employee will be among the highest in the industry.

Table 5. Commission Generated and Profit per Employee

Break-Even

To break even we will need to sell between 2 and 3 vacations per day. This compares with our present sales of 1.3 vacations per day, based on our part-time effort out of the clothing shop. We feel confident that the break-even point can be attained within a reasonable period of time.

Funds Required and Timing

We plan to make two major investments: one in Web site and database development and one in shop premises development.

          Web site and database development - this will cost $41,325. The database system is one of our key differentiators. It will allow us to offer superior service and ensure a high level of repeat business and referrals.

          The Web site is vital if we are to reach this wide and disparate global market. The group of potential clients we have chosen as our target market--affluent, professional 25- to 35-year olds--are prime users of the Internet. Even those people in our locality will expect to be able to research our offers on the Internet before coming to the shop. (See Appendix 1, Internet Growth and the Sale of Travel Services )

          Shop premises development - this will cost us $29,225. We have to look professional and have an efficient work environment. If our staff do not have the right tools, we can hardly expect them to deliver superior performance. If clients see “amateurâ€� premises, they will not be inspired to spend thousands of dollars and entrust their adventure vacation plans to us.

Both these investments need to be made at the outset to ensure that the business creates the right impression from the start. We get only one chance to make a first impression.

We have decided to lease our telephone and computer systems, since this is a rapidly changing area and we need to have access to the very latest technology. Financing packages from equipment suppliers are currently very attractive.

Funding Options

The owner plans to invest $41,750 of her own money (the proceeds of the sale of her share of the clothing shop business). The cash flow projections show that the business will require $83,500 of working capital during the early months of the first year's operations. In the event that additional funds prove necessary, we have identified two options for raising further funds:

Option 1: The sale of equity, perhaps to the original shop partners, could raise between $41,750 and $167,000. This would provide some capital to allow for growth. Any shortfall could be funded either by a line of credit or a bank loan.

Option 2: Approach our bank with a view to raising a medium-term loan of $41,750 and a line of credit of $58,450. Heather Mitchell could, with family help, provide any lender with security for part, if not all, of this facility.