bridal shop
TRANSCRIPT
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FANTASY BRIDAL BOUTIQUES
Executive Summary
Moms, Maids, and More is a wedding attire shop like no other. While most retail bridal shopsfocus on selling wedding gowns, our focus is everything else. We will cater to the mothers of thebride and groom, bridesmaids. In addition, we will provide an array of accessories for all thefemale members of the bridal party.
Moms, Maids, and More is registered as a single-member, incorporated in Bhubaneswar state,and the sole owner is Florence Sahoo. The purpose this business plan is to secure start-upfinancing. We project that the company will reach the break-even point in its fourth month of
operations.
The projections outlined within this business plan indicate sufficient funds for repayment of therequested loan.
1.1 Objectives
Moms, Maids, and More has the following objectives:
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
year 1 year 2 year 3
sales
gross profit
net profit
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1. To be the primary one-stop-shop for the female members of a bridal party once the bridehas purchased her gown (i.e. mother of the bride, mother of the groom, bridesmaids,relatives, footwear, and accessories).
2. To have vigorous sales in the first twelve months of operations.3. In Year 3, to have sales more than double first year level and net income of at least 10%
of sales.
1.2 Mission
Moms, Maids, and More is a boutique that provides attire and accessories for female bridalattendants. We believe in providing superior customer service and creating a shoppingexperience that is relaxed and pleasurable. We also believe in providing a working environmentfor our employees that is professional and fun, and that empowers our employees to betrustworthy and valuable resources to our customers.
1.3 Keys to Success
To be successful in this business, Moms, Maids, and More must:
1. Generate and preserve a reputation of being the one-stop-shop for bridalpurchases beyond the wedding gown.
2. Establish a strong referral network among others in the bridal industry.3. Provide better customer service.4. Maintain a fresh mix of inventory.Company Summary
Moms, Maids, and More is a new retail boutique that will be a unique supplement to theexisting bridal shops in the best area. While most bridal shops focus on providing thebride with her wedding dress, the focus of Moms, Maids, and More is everything besidesthe wedding dress. Our core products include mother-of-the-bride and mother-of-the-groom attire, bridesmaids' attire, bridal footwear, and bridal accessories, such asheadpieces, and jewelry. Our goal is to be the one-stop-shop for items beyond thewedding dress, and to provide a fulfilling shopping experience for our customers.
2.1 Company Ownership
Moms, Maids, and More is a privately held company. It is registered in Bhubaneswar as asingle-member with Florence Sahoo as the owner.
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2.2 Start-up Summary
Total start-up cost estimates are shown in the following table and charts. The mostsignificant components of the start up costs are inventory (30%), cash-on-hand (23%),and expensed equipment and leasehold improvements (19%).
The start-up costs will be financed through a combination of owner investment and long-term loans.
START-UP REQUIREMENTS
Start-up Expenses
Legal 48000
Stationery 38400
Other Supplies 55200
Consultants 72000
Insurance 48000
Rent 422400
Leasehold Improvements(Expensed)
480,000
Expensed Equipment 384000
Other 192000
Total Start-up Expenses 1740000
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
expenses assets investment loans
AxisT
itle
Axis Title
Chart Title
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Start-up Assets
Cash Required 1051200
Start-up Inventory 1360800
Other Current Assets 48000
Long-term Assets 40800
Total Assets 2868000
Total Requirements 4608000
Start-up Funding
Start-up Expenses to Fund 1740000
Start-up Assets to Fund 2868000
Total Funding Required 4608000
Assets
Non-cash Assets from Start-up
1816800
Cash Requirements fromStart-up
1051200
Additional Cash Raised 0
Cash Balance on StartingDate
1051200
Total Assets 2868000
Liabilities and Capital
Liabilities
Current Borrowing 0
Long-term Liabilities 3120000
Accounts Payable(Outstanding Bills)
48000
Other Current Liabilities(interest-free)
0
Total Liabilities 3168000
CapitalPlanned Investment
Florence Sahoo 1440000
Other 0
Additional InvestmentRequirement
0
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Total Planned Investment 1440000
Loss at Start-up (Start-upExpenses)
(1740000)
Total Capital (300000)
Total Capital and Liabilities 2868000Total Funding 4608000
Products
Moms, Maids, and More will carry mother-of-the-bride, mother-of-the-groom, bridesmaid. Inaddition, we will carry bridal footwear and bridal accessories such as and jewelry. We will aimto provide products in a wide variety of styles and price-ranges that are of good quality and fromreputable designers.
The dresses will be sold primarily on a made-to-order basis. We will keep a sample dress of eachstyle in the store for customers to try on, and once they decide on a style, we will then order it intheir size and in the color of their choosing. If, however, a customer is pleased with the floorsample, they will have the option to purchase that item.
When a dress is being made-to-order, a fifty percent, non-refundable deposit will berequired. Once the dress arrives, the deposit will be applied toward the balance. Full paymentwill be due before the customer can take the dress from the store. Shoes and jewelry willprimarily be sold off the floor.
Most designers set "minimums," which means that they require the purchase of a certain number
of sample dresses in any given season. Some designers require that all samples be purchased atonce, while other designers allow the purchase of samples to be staggered throughout theseason. The buying pattern for Moms, Maids, and More will be a function of designerrequirements as well as customer demand for new products.
Market Analysis Summary
What is unique about Moms, Maids, and More is that it places a spotlight on the weddingpurchases that are typically overshadowed by the purchase of the wedding dress. Wedding dress,on average, comprise about 6.1% of the total wedding expenditures, while the mothers' attire,attendants' attire, and accessories collectively make up another 7.8% of the total weddingexpenditures. Moms, Maids, and More is focusing on the 7.8% that is usually an afterthought formost bridal shops.
Moms, Maids, and More is a store like no other. It creates a shopping environment in whichmothers, bridesmaids, and flower girls, as well as the bride, are catered to.
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4.1 Market Segmentation
There are three major market segments that will be served by Moms, Maids, and More: mother-
of-the-bride/mother-of-the-groom; attendants, which includes bridesmaids and brides. It isimportant to keep in mind that most customers who are shopping for bridal attire are in it for theexperience just as much as the are in it to walk away with a purchase. That means that catering totheir desire for "fun" and "pampering" will be just as critical as providing them with desirablemerchandise.
For almost every bride in King County, there will be at least two mothers who will need to beoutfitted for the big day. For many mothers, especially the mother-of-the-bride, the weddingof her child is second only in significance to her own wedding. As a result, the style of the gowntends to take precedence over price. These customers will want a unique shopping experiencethat will acknowledge their significance in the upcoming wedding.
The most common number of bridesmaids, including the maid-of-honor, is four. Becausebridesmaids are typically expected to pay for their own attire, they tend to be fairly cost-conscious. If they believe that they will be able to use the dress more than once, then pricebecomes less of an issue. The bride usually has the final say in which dress will be chosen, whichcreates an interesting dynamic. On the one hand, the bride's tastes need to be accommodated, andon the other hand, the bridesmaids need to feel comfortable with the amount they are spending.Bridesmaid parties often shop as a group so that they can decide on a dress together. For groupsof three or more, appointments will be recommended to ensure that proper attention and dressingroom space is provided.
The bridesmaids' attire, the bride usually makes the decision about the style of the dress, but theparent of the flower girl usually pays for it.
In addition to helping outfit the bridal party, Moms, Maids, and More will aim to accommodatebrides who are still in need of the other critical pieces to go with her gown, such as shoes andjewelry. While some brides purchase the "other items" at the time that they purchase their dress,most brides choose to shop around for the accessories.
4.2 Target Market Segment Strategy
The focus of Moms, Maids, and More is "everything but the wedding dress." There are nearly 20
bridal shops in this area that focus primarily on selling wedding dress. However, for every bride,there are, on average, at least five other females who need to be outfitted, and the bride herselfwill also require additional accessories.
Because most bridal shops focus on selling wedding dress, there is minimal effort dedicated tothe other necessary items. Moms, Maids, and More gives the "other items" their ownsignificance. Without the bridal gown as a distraction, the "other items" will no longer be an
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afterthought. Mothers and bridal attendants can have their own unique shopping experience, andbrides can have a fresh environment in which to shop for their accessories.
4.3 Industry Analysis
There are thousands of bridal shops nation-wide. Most of them are locally-owned, single-unitoperations, however, there are increasing numbers of chains entering the marketplace. Theprimary focus of all bridal shops is the wedding dresses. Some shops will also carry a limitedselection of mothers' dresses, attendants' attire, and accessories, but their main goal is to sellwedding dresses. As a result, the market currently lacks a place to find a good selection of theother necessary items.
4.3.1 Competition and Buying Patterns
There are currently about 20 bridal shops in this region. However, the primary focus of all ofthose shops is wedding dresses, so they have a very limited selection of mothers' attire,
attendants' attire, bridal footwear, and other bridal accessories.
Establishing a reputation for having a good selection and providing superior customer servicewill be key. Statistics show that brides will visit, on average, a total of six stores beforepurchasing their wedding gown. The "shop around before you buy" mentality may apply to theother members of the bridal party, as well, so it will be critical to provide a unique selection ofitems in a memorable environment. It will also be important to have a wide selection of items, sothat the customers feel fulfilled with what they've seen at our store and won't feel the need toshop around.
As previously mentioned, bridesmaids tend to be more cost-conscious, so competitive pricing
will be key for that segment. We will offer a wide variety of styles at different price points -again, working to assure the members of the bridal party that they are being presented with acomprehensive selection, thus reducing the need to shop around.
Strategy and Implementation Summary
Moms, Maids, and More has the distinct advantage of being the only store of its kind in itsmarket.
our wide-range of clothing styles, designers, and accessories the attention we pay to all the female members of the wedding party our wonderful location in a destination shopping area
Our marketing strategy begins with standard print and online listings in wedding media, andcontinues through networks of wedding consultants. Our location, next to complementary shopsand an upscale mall, will generate additional foot traffic.
Our sales strategy is designed to "close the deal" - from the moment a potential customer walksin the door, she will know that her place in the wedding, and her needs, are important to us. We
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will create an atmosphere that makes shopping for the "other items" as significant as theexperience of shopping for the wedding dress. In other stores, mothers, bridesmaids, and otherwedding party members are often an afterthought. At Moms, Maids, and More, they will begiven as much prominence and attention as the bride receives when dress shopping.
5.1 Competitive Edge
The predominant competitive edge of Moms, Maids, and More is that it is the only store of itskind in Bhubaneswar. Most bridal shops focus on the wedding dress itself and focus in a fewother product-lines, such as mothers' attire or bridesmaids' attire. When shops focus primarily onthe bride's dresses, there tends to be a lack of selection and lack of attention devoted to the otherproduct lines. At a traditional bridal shop, the bride is the primary focus, and everything else issecondary.
Moms, Maids, and More offers an entirely different shopping experience. At our shop, the focusis everything besides the wedding dress. This means that our customers will be offered a wide
selection of their desired attire, and their needs will be our primary focus. We will have the mostcomprehensive selection of mothers' attire, attendants' attire, and bridal accessories.
Another competitive advantage is our location. We are located in the heart of the city whichis geographically convenient to customers. In addition, our shop is located on the corner of amain intersection with great street visibility and free parking. We are located in a complex thatincludes jewelry stores all of which are complementary businesses.
5.2 Marketing Strategy
Moms, Maids, and More will use the following mediums for its marketing efforts:
1. Local Wedding Publications - This includes magazines that are used to promotewedding shows and local wedding resource books.
2. Bridal Consultants - By building relationships with local bridal consultants, we willhave a direct referral source.
3. TheKnot.com - This is a web site specifically geared toward people who are preparingfor a wedding. Visitors to this site can do state-specific searches for shops and services intheir area. By listing ourselves on this site, we will be specifically targeting our market.
4. Web Links - Most designers offer a "store locator" on their web pages. Therefore, whenavailable, we will be listed on the web sites of the designers whose lines we carry, with alink to our web site.
5. Yellow Pages - We will be listed under the "bridal" section of the yellow pages, so thiswill serve as a standard resource for customers to find us.5.3 Sales Strategy
1. Customers need to be acknowledged and attended to right away. Everyone who walksthrough the door is preparing for a big event. They are probably not in our shop to browseor make a casual purchase, so they need to be taken seriously immediately.
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2. Our expertise will help customers stay focused. The process of choosing bridal attire canbe overwhelming, because it is such a significant purchase, and because there are somany variables (e.g. colors, event setting, coordinating with the other participants, etc.).
Therefore, it will be critical to navigate the customer through the process efficiently. Bycontrolling the process, the outcome (the sale) is more attainable.
3. In addition to selling goods, we are selling a shopping experience. Because each womanmakes wedding purchases only a few times in her life, the process of shopping for bridalattire is quite memorable, and is often a bonding experience for moms, girl friends, andthe bride. If the experience is a positive one, word of mouth will grow exponentially.
4. Sales goals will be set for our employees, and achievement of those goals will berewarded monetarily.
5.3.1 Sales Forecast
The following illustrates the forecasted sales for Moms, Maids, and More.
One percent is a sensible estimate for the first year of operations. There are currently about 20shops in our city that carry some or all of the items offered at Moms, Maids, andMore. Assuming that the customer base was divided evenly among these shops, each shop would
have about a two-and-a-half percent market share. However, because this will be the first year ofoperations for Moms, Maids, and More, that "even share" of the market is not expected rightaway. It is expected that by year two, the market share will increase to two percent, and by yearthree, the market share will exceed three percent. This will happen as Moms, Maids, and Morebecomes known as the place to shop for mothers' attire, attendants' attire, and other bridalaccessories.
To break the sales forecast down even further, the goal of of sales in year one is equivalent toselling to 160 wedding parties during the year, or to three wedding parties per week.
The table is constructed in such a way that it counts a sale when cash is received. When dresses
are ordered, a minimum 50% deposit is required. When a customer receives the item theyordered, the remaining 50% is due. For projection purposes, it is assumed that the dresses willarrive two to three months after they are ordered. So, for example, if a customer orders a Rs.9600dress in January, Rs. 4800 goes into January's sales, and Rs. 4800 goes into April's sales. Forshoes and accessories, we are assuming that the items will be in stock, therefore, thoseprojections reflect the gross amount of the sale on the day of purchase.
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Costs of sales assumes that for clothing, the wholesale cost will average about 46.5% of the retailprice, and for accessories, the wholesale cost will average about 30% of the retail price. For theclothing items, there is a two-month lag in cost of sales because the inventory takes two to threemonths to arrive from the day it is ordered, and the store does not pay for custom-ordered itemsuntil they are shipped.
SALES FORECAST
Year 1 Year 2 Year 3
Sales
Mothers' Attire 5304000 9282000 16243488
Bridesmaids' Attire 4866624 7056624 10232064
Flower Girl Dresses 415200 539760 701712
Shoes 782400 1056240 1425936
Other Accessories 765600 995280 1293888
Total Sales 12133824 18929904 29897040
Direct Cost of SalesYear 1 Year 2 Year 3
Clothing 4756608 7610544 12176832
Shoes and Other Accessories 503280 654288 850560
Subtotal Direct Cost of Sales 5259888 8264784 13027392
5.4 Milestones
The accompanying table lists the critical milestones for Moms, Maids, and More from now untilthe store is ready to open for business. Florence Sahoo will be in charge of each of thecompletion of each of these items.
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MILESTONES
Milestone Start Date End Date Budget Manager Department
Business Plan 6/30/2003 9/30/2003 0Florence
SahooAdministrative
Licensing and Permits 7/1/2003 8/31/2003 0Florence
SahooAdministrative
Site Selection and LeaseNegotiations
7/7/2003 10/15/2003 0Florence
SahooAdministrative
Secure Start-UpFinancing
7/28/2003 10/15/2003 0Florence
SahooAdministrative
Secure Line of Credit 7/28/2003 10/15/2003 0Florence
SahooAdministrative
Buying Show 9/10/2003 9/13/2003 0Florence
SahooAdministrative
Web Site Construction 10/8/2003 11/15/2003 0Florence
SahooAdministrative
Accounting Plan 11/15/2003 1/15/2004 0Florence
SahooAdministrative
Leasehold Improvements 1/2/2004 2/28/2004 0Florence
SahooAdministrative
Personnel Plan 1/15/2004 2/15/2004 0 Florence Administrative
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Sahoo
Totals 0
Web Plan Summary
The Moms, Maids, and More website will be an expanded business card for the store. Visitorswill be able to receive information about the designers we carry as well as basic storeinformation, such as location and store hours.
The site will also be a resource for bridesmaids who are unable to physically come in to ordertheir attire. Through a secure log in, they will be able to provide the necessary information toplace their order. This is an added convenience that most bridal shops do not offer.
6.1 Website Marketing Strategy
The website will be an additional resource for customers who want to learn more about ourstore. Visitors to our site will fall into two primary categories:
1. People who have not yet been to the shop and want to learn more about it.2. Bridesmaids who are ready to order their attire.
Category 1 visitors will be coming to the site to learn more about the store and what we have tooffer. Highlights for these visitors will be the store description, links to our designers' sites, amap to the store, contact information, and store hours.
Category 2 visitors will be bridesmaids who are unable to come into the store to be measured
and/or pay their deposit. It is quite common for bridesmaids to be out-of-town and unable tophysically come in to complete their purchase. While our customers will be able to completesales by phone and fax, they will appreciate the added convenience of being able to completetheir purchases online. Once the bridesmaid gown has been selected for a bridal party, a securelogin will be created for each of the bridesmaids so that they can complete the necessary orderinformation on line.
6.2 Development Requirements
Initially, the Moms, Maids, and More website will be developed with few technical resources. Asimple hosting provider will host the site and provide the technical back end. We will work with
a contracted web page designer to develop a simple, yet classy, site.
The most technically complex portion of the site will be the bridesmaid ordering portion. Forthis, a secure site must be created so that credit card information can be transmitted safely. Inaddition, it will need to be designed in such a way that store employees will be able to set up thenecessary profiles for bridesmaids to log in
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Management Summary
Moms, Maids, and More will be managed by the owner, Florence Sahoo (complete resume isenclosed). Florence is a CPA who spent four years in public accounting. Her efforts wereprimarily focused on auditing the financial statements of closely-held businesses in the greater
Seattle area. Through this work, she developed an understanding of various business cycles,internal controls, cash flow, inventory management, ratio analysis, variance analysis, smallbusiness dynamics, and basic tax principles. While working in publicaccounting, Florence supervised numerous projects and teams of various sizes. She frequentlyrepresented the firm at public speaking engagements, and she established a recruiting programfor the firm.
For the past two years, Florence has performed extensive research on the bridal industry. Hermentors include a bridal boutique owner; a wedding consultant who has been planning weddingsfor nearly 20 years; and a coordinator of a local wedding show. In addition to performingextensive research on the bridal industry, Florence also worked in a local bridal shop to learn the
day-to-day operations. While working as a salesperson at the bridal shop, Florence was one ofthe top sellers, often out-performing sales associates who had been there longer and workedmore hours than her.
Florence Sahoo enthusiasm, perceptiveness, and organization skills will be the keys toorchestrating the efforts of the sales team and making Moms, Maids, and More a successfulbusiness.
SUMMARY OF QUALIFICATIONS
Certified Public Accountant (CPA), licensed Lifetime of experience with small businesses Excellent organizational and communication skills
7.1 Personnel Plan
Moms, Maids, and More will have a sales force that includes the owner and three part-timeemployees. The store will have two sales associates in the store on weekdays, and threeassociates in the store on weekends. Sales associates will be paid an hourly wage of [Proprietaryand Confidential Information removed]. In years two and three, the sales associates' hours willincrease to accommodate the planned increase in sales; thus, the wages in years two and threeincrease significantly.
The owner, Florence Sahoo, will not be paid a salary, but will take distributions from thecompany profits while maintaining a positive cash balance. The financials in this plan do not yetinclude the owner's draw.
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PERSONNEL PLAN
Year 1 Year 2 Year 3
Florence
SahooOwner
0 0 0
Part TimeSalesAssociate1
806400 864000 888000
Part TimeSalesAssociate2
334080 720000 864000
Part TimeSalesAssociate3
334080 384000 408000
TotalPeople
4 4 4
TotalPayroll
1474560 1968000 2160000
Financial Plan
Moms, Maids, and More expects to be profitable by the end of its second year of operations. Toget the business up and running, we will need to obtain financing. The initial market share willbe modest; however, significant growth in market share is expected due to the unique niche thatthe shop is targeting. The market share is expected to grow at a more modest rate after year three.
8.1 Important Assumptions
The following assumptions are key to understanding the profit and loss projections.
We do not sell anything on credit - all items must be paid in full before they are takenfrom the store.
We are estimating that 80% of the purchases will be made with credit cards. The creditcard fees are calculated as 80% of the sales, times 1.8 percent (the fee rate).
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Cost of sales for the clothing items has a two month delay. This is because most clothingitems will be custom ordered and, as a result, Moms, Maids, and More will not have topay for them until they arrive about two months after they are ordered.
GENERAL ASSUMPTIONS
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 6.25% 6.25% 6.25%
Long-term Interest Rate 6.25% 6.25% 6.25%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
8.2 Break-even Analysis
For the break-even analysis, the following assumptions were used:
1. Fixed costs per month are estimated as total first year operating expenses divided by 12.2. For each item sold, there is a variable price equal to about 43% of the retail price of the
item.
BREAK-EVEN
ANALYSIS
Monthly RevenueBreak-even
1029360
Assumptions:
Average PercentVariable Cost
43%
Estimated MonthlyFixed Cost
583152
8.3 Projected Profit and Loss
We expect losses in the first year, because it will take time for the store to build momentum andgenerate traffic. However, once sales increase, the results are positive because many of the otherexpenses will remain fixed. In fact, we expect that sample inventory costs will actually go downin years to come. Some designers will provide sample inventory at deep discounts and/or provide
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the samples free of charge once good credit terms are established. As a result, the annualexpenditures for sample inventory should decrease.
PRO FORMA PROFIT AND LOSS
Year 1 Year 2 Year 3
Sales 12133824 18929904 29897040
Direct Cost of Sales 5259888 8264784 13027392
Credit Card Fees 174720 151440 239184
Total Cost of Sales 5434608 8416224 13266576
Gross Margin 6699216 10513632 16630464
Gross Margin % 55.21% 55.54% 55.63%
Expenses
Payroll 1474560 1968000 2160000
Sales and Marketing andOther Expenses
571200 576000 576000
Depreciation 103680 103680 103680
Rent including triple nets 2534400 2628000 3211200
Utilities 432000 456000 480000
Insurance 201600 220800 244800
Payroll Taxes 221184 295200 324000
Supplies 172800 192000 206400
Repairs and Maintenance 115200 124800 134400
Professional Fees 14400 168000 192000
Taxes and Licenses 52800 52800 52800
New Sample Inventory 960000 720000 672000
Total Operating Expenses 6997824 7505280 8357280
Profit Before Interest andTaxes
(298608) 3008352 8273184
EBITDA (194928) 3112032 8376864
Interest Expense 173856 136464 97440Taxes Incurred 0 861600 2452704
Net Profit (472416) 2010336 5723040
Net Profit/Sales -3.89% 10.62% 19.14%
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8.4 Projected Cash Flow
The cash flow of Moms, Maids, and More is somewhat unique. For items that are sold off thefloor, the cash flow and revenue recognition is traditional, in that full payment is received at thetime of the sale, and the customer takes possession of the item at that time. This is how most of
the shoe sales will take place, as well as some of the other accessory purchases.
However, most of the other items in the store have a different flow. Let's use a dress as anexample. The customer will try on a sample in the store, and when she decides to purchase theitem, she will most likely have to order it in the size and color of her choosing. For this processto begin, the customer must provide a deposit of at least 50% of the total price of the item (note:while some customers may choose to pay the full amount at the time the order is placed, theseillustrations assume that everyone will choose the 50% option). The remaining balance willbe due within thirty days of when the item arrives in our store.
This timing issue has also been taken into consideration for the costs of goods sold. The store
will be billed for items when the items are shipped, thus cash outflow for the cost of the item willclosely match the cash inflow of the customer paying the balance on the item.
PRO FORMA CASH FLOW
Year 1 Year 2 Year 3
Cash Received
Cash from OperationsCash Sales 12133824 18929904 29897040
Subtotal Cash fromOperations 12133824 18929904
29897040
Additional Cash Received
Sales Tax, VAT, HST/GSTReceived
0 0 0
New Current Borrowing 0 0 0
New Other Liabilities(interest-free)
0 0 0
New Long-term Liabilities 0 0 0Sales of Other Current Assets 0 0 0
Sales of Long-term Assets 0 0 0
New Investment Received 0 0 0
Subtotal Cash Received 12133824 18929904 29897040
Expenditures Year 1 Year 2 Year 3
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Expenditures fromOperations
Cash Spending 1474560 1968000 1260000
Bill Payments 9334896 14511072 21619728
Subtotal Spent on Operations 10809456 16479072 23779728
Additional Cash Spent
Sales Tax, VAT, HST/GSTPaid Out
0 0 0
Principal Repayment ofCurrent Borrowing
0 0 0
Other Liabilities PrincipalRepayment
0 0 0
Long-term LiabilitiesPrincipal Repayment
624960 624000 624000
Purchase Other CurrentAssets 0 0 0
Purchase Long-term Assets 0 0 0
Dividends 0 0 0
Subtotal Cash Spent 11434416 17103072 24403728
Net Cash Flow 699408 1826784 5493312
Cash Balance 1750608 3577392 9070704
8.5 Projected Balance Sheet
Moms, Maids, and More maintains a strong current ratio throughout. While the net worth of thebusiness is negative in year one, it makes steady gains and becomes positive in year two. By theend of year three, retained earnings is also close to being positive.
PRO FORMA BALANCE SHEET
Year 1 Year 2 Year 3
AssetsCurrent Assets
Cash 1750608 3577392 9070704
Inventory 330144 518784 817728
Other Current Assets 48000 48000 48000
Total Current Assets 2128752 4144176 9936432
Long-term Assets
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Long-term Assets 408000 408000 408000
Accumulated Depreciation 10080 207360 311040
Total Long-term Assets 304320 200640 96960
Total Assets 2433072 4344816 10033392
Liabilities and Capital Year 1 Year 2 Year 3Current Liabilities
Accounts Payable 710496 1235856 1825440
Current Borrowing 0 0 0
Other Current Liabilities 0 0 0
Subtotal Current Liabilities 710496 1235856 1825440
Long-term Liabilities 2495040 1871040 1247040
Total Liabilities 3205536 3106896 3072480
Paid-in Capital 1440000 1440000 1440000
Retained Earnings (1740000) (2212416) (202080)Earnings (472416) 2010336 923040
Total Capital (772416) 1237920 6960960
Total Liabilities and Capital 2433072 4344816 10033392
Net Worth (772416) 1237920 6960960
8.6 Business Ratios
The following table breaks down some of the key financial ratios. Where available, industryaverages for Bridal Shops - SIC code 5621.0102, are shown for comparison.
RATIO ANALYSIS
Year 1 Year 2 Year 3Industry
Profile
Sales Growth 0.00% 56.01% 57.94% -0.02%
Percent of Total Assets
Inventory 13.57% 11.94% 8.15% 50.91%
Other Current Assets 1.97% 1.10% 0.48% 24.44%
Total Current Assets 87.49% 95.38% 99.03% 85.49%
Long-term Assets 12.51% 4.62% 0.97% 14.51%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 29.20% 28.44% 18.19% 29.49%
Long-term Liabilities 102.55% 43.06% 12.43% 11.18%
Total Liabilities 131.75% 71.51% 30.62% 40.67%
Net Worth -31.75% 28.49% 69.38% 59.33%
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Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.21% 55.54% 55.63% 40.07%
Selling, General &Administrative Expenses
59.10% 44.92% 36.48% 21.95%
Advertising Expenses 0.00% 0.00% 0.00% 2.92%
Profit Before Interest andTaxes
-2.46% 15.89% 27.67% 2.90%
Main Ratios
Current 3.00 3.35 5.44 2.64
Quick 2.53 2.93 5.00 0.74
Total Debt to Total Assets 131.75% 71.51% 30.62% 5.31%
Pre-tax Return on Net Worth 61.16% 232.00% 117.45% 47.92%
Pre-tax Return on Assets -19.42% 66.10% 81.49% 10.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -3.89% 10.62% 19.14% n.a
Return on Equity 0.00% 162.40% 82.22% n.a
Activity Ratios
Inventory Turnover 6.78 19.47 19.49 n.a
Accounts Payable Turnover 14.07 12.17 12.17 n.a
Payment Days 27 24 25 n.a
Total Asset Turnover 4.99 4.36 2.98 n.a
Debt Ratios
Debt to Net Worth 0.00 2.51 0.44 n.a
Current Liab. to Liab. 0.22 0.40 0.59 n.a
Liquidity Ratios
Net Working Capital 1418304 2908320 8111040 n.a
Interest Coverage -1.72 22.05 84.91 n.a
Additional Ratios
Assets to Sales 0.20 0.23 0.34 n.a
Current Debt/Total Assets 29% 28% 18% n.a
Acid Test 2.53 2.93 5.00 n.a
Sales/Net Worth 0.00 15.29 4.29 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Appendix
SALES FORECAST
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month11
Month12
sales
Mothers' Attire
0%
108000
216000
360000
540000
648000
696000
720000
600000
480000
408000
288000
240000
Bridesmaids'
Attire
0%
102816
154224
274176
514080
496944
548352
685440
548352
445536
445536
342720
308448
RelativeDresses
0%
9600
14400
16800
38400
43200
43200
50400
48000
45600
40800
33600
31200
Shoes0%
1200
19200
48000
72000
91200
96000
108000
100800
72000
72000
48000
43200
OtherAccessories
0%
20400
24000
48000
78000
81600
100800
100800
86400
74400
62400
48000
40800
Total
Sales
252
816
427
824
746
976
1242
480
1360
944
1484
352
1484
352
1383
552
1117
536
1028
736
760
320
663
648
DirectCost ofSales
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month11
Month12
Clothing
0 0202848
361824
361824
800976
749616
587904
536544
328464
303072
277104
ShoesandOtherAccessories
194
40
259
20
576
00
7056
0
7776
0
6336
0
5472
0
3456
0
2736
0
2592
0
230
40
230
40
SubtotalDirectCost ofSales
19440
25920
260448
432384
686064
864336
804336
622464
563904
354384
326112
300144
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Rate
TaxRate
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
PRO FORMA PROFIT AND LOSS
Month1
Month 2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Sales252816
427824
746976
1242480
1360944
1484352
1664640
1383552
1117536
1028736
760320
663648
DirectCost ofSales
194402592
0
26044
8
43238
4
68606
4
86433
6
80433
6
62246
4
56390
4
35438
4
32611
2
30014
4
CreditCardFees
3648 6144 10752 17904 19584 21360 23952 19920 16080 14832 10944 9552
TotalCostt ofSales
2308832064
271200
450288
705648
885696
828288
642384
579984
369168
337056
309696
GrossMgargin
229728
395760
475776
792192
655296
598656
836352
741168
537552
659568
423264
353952
GrossMargin%
90.87
%
92.50
%
63.69
%
63.76
%
48.15
%
40.33
%
50.24
%
53.57
%
48.10
%
64.11
%
55.67
%
53.33
%
Expenses
Payroll122880
122880
122880
122880
122880
122880
122880
122880
122880
122880
122880
122880
SalessandMarketing andOtherExpenses
7200024000
24000 96000 33600 33600 33600 33600 33600 $2,500 33600 33600
Depreciation 8640 8640 8640 8640 8640 8640 8640 8640 8640 8640 8640 8640
Rentincludingtriple nets
211200
211200
211200
211200
211200
211200
211200
211200
211200
211200
211200
211200
Utilities 3600036000
36000 36000 36000 36000 36000 36000 36000 36000 36000 36000
Insurance 16800 1680 16800 16800 16800 16800 16800 16800 16800 16800 16800 16800
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0
PayrollTaxes
15%
1843218432
18432 18432 18432 18432 18432 18432 18432 18432 18432 18432
Supplies 1440014400
14400 14400 14400 14400 14400 14400 14400 14400 14400 14400
RepairsandMaintenance
9600 9600 9600 9600 9600 9600 9600 9600 9600 9600 9600 9600
Professional Fees
4800 4800 4800 24000 48000 24000 4800 4800 4800 4800 4800 4800
TaxesandLicenses
15%
0 0 0 0 0 0 0 4800 0 48000 0 0
NewSample
Inventory
0 0 96000 96000 96000 96000 96000 48000 48000192000
96000 96000
TotalOperatingExpenses
514752
466752
581952
653952
615552
591552
572352
529152
524352
802752
572352
572352
ProfitBeforeInterestandTaxes
(285024)
(70992)
(106176)
138240
39744 7104264000
212016
13200(143184)
(149088)
(218400)
EBITDA(276384)
(62352)
(97536)
146880
48384 15744272640
220656
21840(134544)
(140448)
(209760)
InterestExpense
15984 15696
15456 15168 14880 14640 14352 14064 13824 13536 13248 13008
TaxesIncurred
0 0 0 0 0 0 0 0 0 0 0 0
Net Profit(301008)
(86736)
(121632)
123072
24816(24768)
249648
197952
(624)(156720)
(162336)
(231408)
NetProfit/Sales
-119.06%
-20.27%
-16.28%
9.91% 1.82%-0.51%
15.00%
14.31%
-0.06%
-15.23%
-21.35%
-34.87%
PRO FORMA CASH FLOW
Month 1
Month2
Month 3Mont
h 4Mont
h 5Mont
h 6Mont
h 7Mont
h 8Mont
h 9Month 10
Month11
Month12
CashReceived
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CashfromOperations
CashSales
252816
427824
7469761242480
1360944
1484352
224640
1383552
1117536
1028736
760320
663648
SubtotalCashfromOperations
252816
427824
7469761242480
1360944
1484352
1664640
138552
1117536
1028736
760320
663648
Additional CashReceived
SalesTax,VAT,
HST/GSTReceived
0.00
% 0 0 0 0 0 0 0 0 0 0 0 0
NewCurrentBorrowing
0 0 0 0 0 0 0 0 0 0 0 0
NewOtherLiabilities
(interest-free)
0 0 0 0 0 0 0 0 0 0 0 0
NewLong-termLiabilities
0 0 0 0 0 0 0 0 0 0 0 0
Sales ofOtherCurrentAssets
0 0 0 0 0 0 0 0 0 0 0 0
Sales ofLong-termAssets
0 0 0 0 0 0 0 0 0 0 0 0
NewInvestmentReceived
0 0 0 0 0 0 0 0 0 0 0 0
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SubtotalCashReceived
252816
427824
7469761242480
1360944
1484352
1664640
1383552
1117536
1028736
760320
663648
Expenditures
Month 1
Month2
Month 3Mont
h 4Mont
h 5Mont
h 6Mont
h 7Mont
h 8Mont
h 9Month 10
Month11
Month12
ExpendituresfromOperations
CashSpending
122880
122880
122880122880
122880
122880
122880
122880
122880
122880
122880
122880
BillPayments
61440401328
$7,523361104
479232
581520
1344000
1545120
120576
856272
918960
821328
759216
SubtotalSpent onOperations
184320
524208
483984 602112
704400
1466880
1668000
1328256
979152
1041840
944208
882096
Additional CashSpent
SalesTax,VAT,HST/GST Paid
Out
0 0 0 0 0 0 0 0 0 0 0 0
PrincipalRepayment ofCurrentBorrowing
0 0 0 0 0 0 0 0 0 0 0 0
OtherLiabilitiesPrincipalRepayment
0 0 0 0 0 0 0 0 0 0 0 0
Long-termLiabilitiesPrincipalRepayment
52080 52080 52080 52080 52080 52080 52080 52080 52080 52080 52080 52080
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PurchaseOtherCurrentAssets
0 0 0 0 0 0 0 0 0 0 0 0
PurchaseLong-termAssets
0 0 0 0 0 0 0 0 0 0 0 0
Dividends
0 0 0 0 0 0 0 0 0 0 0 0
SubtotalCashSpent
236400
576288
536064654192
756480
1518960
1720080
1380336
1031232
1093920
996288
934176
Net CashFlow
16416(148464)
210912588288
604464
(34608)
(55440)
3216 86304(65184)
(235968)
(270528)
Cash
Balance
10676
16
91915
2
113011217183
52
23228
16
22882
08
22327
68
22359
84
23222
88
22571
04
20211
36
17506
08
PRO FORMA BALANCE SHEET
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Assets
Startin
g Balances
CurrentAssets
Cash 1051200
1067616
919152
1130112
1718352
2322816
2288208
2232768
2235984
2322288
2257104
2021136
1750608
Inventory
1360800
1341360
1315440
1054992
622608
754656
950736
884784
684672
620304
389808
358704
330144
OtherCurrentAssets
48000 48000 48000 48000 48000 48000 48000 48000 48000 48000 48000 48000 48000
TotalCurrentAssets
2460000
2456976
2282592
2233056
2388960
3125472
3286944
3165552
2968656
2990592
2694912
2427840
2128752
Long-termAssets
408000
408000
408000
408000
408000
408000
408000
408000
408000
408000
408000
408000
408000
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AccumulatedDepreciation
0 8640 17280 25920 34560 43200 51840 60480 69120 77760 86400 95040103680
TotalLong-termAssets
408000
399360
390720
382080
373440
364800
356160
347520
338880
330240
321600
312960
304320
TotalAssets
2868000
2856336
2673312
2615136
2762400
3490272
3643104
3513072
3307536
3320832
3016512
2740800
2433072
Liabilities andCapital
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
CurrentLiabilities
AccountsPayable
48000 389424
345216
460752
536976
1292112
1504512
1176912
825504
891504
795984
734688
710496
CurrentBorrowing
0 0 0 0 0 0 0 0 0 0 0 0 0
OtherCurrentLiabilities
0 0 0 0 0 0 0 0 0 0 0 0 0
SubtotalCurrent
Liabilities
48000
38942
4
34521
6
46075
2
53697
6
12921
12
15045
12
11769
12
82550
4
89150
4
79598
4
73468
8
71049
6
Long-termLiabilities
3120000
3067920
3015840
2963760
2911680
2859600
2807520
2755440
2703360
2651280
2599200
2547120
2495040
TotalLiabilities
3168000
3457344
3361056
3424512
344832
4151712
4312032
393252
3528864
3542784
3395184
3281808
3205536
Paid-inCapital
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
1440000
RetainedEarnings
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
(1740000)
Earnings
0(301008)
(387696)
(509328)
(38656)
(361440)
(368928)
(119328)
78672 78048(78720)
(241056)
(472416)
TotalCapital
(300000)
(601008)
(687696)
(809328)
(686256)
(661440)
(668928)
(419328)
(221328)
(221952)
(378720)
(541056)
(772416)
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TotalLiabilities andCapital
2868000
2856336
2673312
2615136
2762400
3490272
3643104
3513072
3307536
3320832
3016512
2740800
2433072
NetWorth
(300000)
(601008)
(687696)
(809328)
(686256)
(661440)
(668928)
(419328)
(221328)
(221952)
(378720)
(541056)
(772416)