1. FINANCIAL PLAN
This includes figuring out the route of action to reap the desired effects. It ensures financial
operations, improves motivation, and helps manage through decreasing uncertainties.
1.1. ASSUMPTIONS
i. Salaries will remain steady for the first three years of operations however will appreciate
yearly via 50% from the fourth year of activity
ii. . Electricity and other operational bills will vary according to work and services being
done, that is, consumption.
iii. Service sales will appreciate with 50%
Important Assumptions
After close examination of the local market for social clubs, we evaluated a wider surrounding
region. From this analysis, the following table provides projected annual sales during the first
three years of operations.
Large Clubs Medium Clubs Start-ups
Year 1 Average Sales $157,500 $130,061 $100,000
Year 2 Average Sales $168,354 $123,570 $112,500
Year 3 Average Sales $185,882 $145,885 $100,000
The African American Club will be classified in the 'Medium Clubs' category for purposes of
this table.
African American Club Financials 2
1.2. AFRICAN AMERICAN CLUB MONTHLY BREAK-EVEN ANALYSIS
The monthly break-even point is shown above.
BREAK-EVEN ANALYSIS
Monthly Revenue Break-even $3500
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $1575
1.3. PROJECTED PROFIT AND LOSS
Sales are predicted to increase each month with first-year annual service sales. Gross margin,
likewise, is expected to increase correspondingly. The profit and loss numbers are estimates for
the first year. We anticipate the generation of revenue starting the first few months of operation.
African American Club Financials 3
African American Club Financials 4
PRO FORMA PROFIT AND LOSS
YEAR 1 YEAR 2 YEAR 3
Sales $56,250 $91,875 $169,290
Direct Cost of Sales $25,800 $28,140 $28,984
Other Costs of Sales $0 $0 $0
TOTAL COST OF SALES $25,800 $28,140 $28,984
Gross Margin $30,450 $63,735 $140,306
Gross Margin % 54.13% 69.37% 82.88%
Expenses
Payroll $2,500 $26,500 $40,000
African American Club Financials 5
Sales and Marketing and Related
Expenses
$9,050 $2,000 $2,000
Depreciation $0 $0 $0
Rent $0 $0 $0
Utilities $360 $400 $450
Insurance $4,180 $4,300 $4,500
Payroll Taxes $0 $0 $0
Club website and upgrade $726 $800 $900
Credit Card Merchant Fees $1,688 $2,756 $5,079
E-Marketing platform maintenance $0 $0 $0
Marketing $1,323 $1,418 $2,579
Venue maintenance(May vary) $960 $1,000 $1,100
Office Expenses $1,900 $2,100 $2,500
Total Operating Expenses $22,687 $41,274 $59,108
Profit Before Interest and Taxes $7,763 $22,461 $81,198
EBITDA $7,763 $22,461 $81,198
African American Club Financials 6
Interest Expense $750 $750 $750
Taxes Incurred $2,104 $6,513 $24,134
Net Profit $4,909 $15,197 $56,313
Net Profit/Sales 8.73% 16.54% 33.26%
PROJECTED CASH FLOW
The following table and chart highlight the projected cash flow for the first year.
PRO FORMA CASH FLOW
African American Club Financials 7
YEAR 1 YEAR 2 YEAR 3
Cash Received(Membership) $10000 $10000 $10000
Cash from Operations
Cash Sales $56,250 $91,875 $169,290
SUBTOTAL CASH FROM OPERATIONS $66,250 $101,875 $179,290
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 $66,250 $101,875 $179,290
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $2,500 $26,500 $40,000
Bill Payments $43,834 $51,176 $71,103
SUBTOTAL SPENT ON OPERATIONS $46,334 $77,676 $111,103
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
African American Club Financials 8
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $46,334 $77,676 $111,103
Net Cash Flow $9,916 $14,199 $58,187
Cash Balance $21,800 $35,999 $94,186
PROJECTED BALANCE SHEET
The balance sheet shows healthy growth of net worth and a strong financial position.
PRO FORMA BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets
Cash $21,800 $35,999 $94,186
Other Current Assets $0 $0 $0
TOTAL CURRENT ASSETS $21,800 $35,999 $94,186
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
TOTAL LONG-TERM ASSETS $0 $0 $0
African American Club Financials 9
TOTAL ASSETS $21,800 $35,999 $94,186
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $5,122 $4,124 $5,998
Current Borrowing $15,000 $15,000 $15,000
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $20,122 $19,124 $20,998
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $20,122 $19,124 $20,998
Paid-in Capital $10,000 $10,000 $10,000
Retained Earnings $13,232 $8,323 $6,875
Earnings $4,909 $15,197 $56,313
TOTAL CAPITAL $1,677 $16,875 $73,188
TOTAL LIABILITIES AND CAPITAL $21,800 $35,999 $94,186
Net Worth $1,677 $16,875 $73,188
Until a building has been located and our calculations completed it is difficult to pinpoint exact
funding needs. According to NBIA, the average start-up of a business incubator is between
$72,320 to 207,500. The breakdown is as follows:
African American Club Financials 10
Low Estimate High Estimate
Leasehold Improvements $0 $25,000
Telephone System $700 $30,500
Furnishings $29,900 $47,000
Office Equipment $1,650 $18,750
Organizational Costs/Other $3,600 $7,750
Additional Funds $20,000 $50,000
Initial Marketing $3,500 $5,000
Prepaid Rent/Utility Deposit $9,000 $17,500
Travel and Lodging $1,500 $2,500
Supplies $2,500 $3,500
Total Investment $72,350 $207,500
1.4. DESIRED FINANCING
Item Amount
Pre – operational cost $207,500.00
Approximate projected capital $150,000.00
TOTAL $357,500.00