African American Club Financials

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.

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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

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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

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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

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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

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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

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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

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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:

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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