retail tp a22

8/7/2019 Retail Tp A22

http://slidepdf.com/reader/full/retail-tp-a22 1/22

RETAIL MANAGEMENT (MGT- 533)

Term paper

Topic: Business plan

opening a retail store

On

womens shoe store

SUBMITTED BY: SUBMITTED TO:

Name: Satnam singh Mr. Pedro Tiago Nougueria Pinto

Class: BBA Dept: LSM

Section: S1804

Reg. no.: 10809169

Roll no.: 22



Women's Shoe Store Business Plan Description about a retail store

Kwality store is a women-only shoe store in rampur. Badly needs an upscale shoe store for womenbecause the current stores have an inadequate selection. Currently, women that need a special pair of shoes often must travel up to extent places to find the right shoes.

Kwality store will have an unmatched, extensive selection of different shoes. Generally, the size of kwality

store selection is cost prohibitive due to all the different sizes that must be stocked per style. Kwality

stores has a unique business model that allows them to have an extensive selection at the cost of only

stocking one size per style. This is accomplished through a special relationship with the wholesaler so

kwality store can receive a customer's needed size within two days. Rush overnight shipping is available

at additional cost.

Kwality store will leverage Holly Heels' extensive knowledge of the women's retail shoe industry to

quickly gain market share. Profitability will be reached by month ten and $284,000 will be generated in

revenue in year three.

Keys to Success

The key to success is to meet the demand for an upscale women's shoe store with a wide selection and

focused customer attention.

Goals & Objectives

The objectives for the first three years of operation include:

1. To create a product-based retail store whose primary goal is to exceed customer's expectations.

2. To increase the number of clients served by 20% per year by serving an unmet need with

outstanding selection and customer service.

3. To develop a start-up business, surviving off of its own cash flow.



Type of retail store : Women's Shoe Store

Mission

Kwality stores mission is to provide rampur with an upscale selection of women's shoes and outstandingcustomer service. We exist to attract and maintain customers. When we adhere to this maxim, everythingelse will fall into place. Our services will exceed the expectations of our customers.

Company Summary

Kwality stores is an upscale women's shoe store located in rampur., an un-serviced niche. Customerslooking for these shoes must travel up to hilly places. Kwality stores will be able to offer a wide selectionbecause they will typically only have one size available per style. This one size is used as ademonstrative model. All other sizes are available within two days.

Start-up Summary

Kwality stores will incur the following start-up costs:

y Computer system with CD-RW, printer, Microsoft Office, QuickBooks Pro, and POS software.

y POS terminal/cash register.

y Back office desk and chair.

y Front of store counter.

y Shelving racks.

y Display racks.

y Chairs, mirrors.

y Assorted halogen track lighting.

Please note that the following items which are considered assets to be used for more than a year willlabeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciationmethod.

Start-up Funding

Start-up Expenses to Fund $600

Start-up Assets to Fund $29,400

Total Funding Required $30,000

Assets

Non-cash Assets from Start-up $14,368

Cash Requirements from Start-up $20,032

Additional Cash Raised $0

Cash Balance on Starting Date $20,032

Total Assets $34,400

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $0



Capital

Planned Investment

Holly $30,000

Other $0

Additional Investment Requirement $0

Total Planned Investment $30,000

Loss at Start-up (Start-up Expenses) ($600)

Total Capital $29,400

Total Capital and Liabilities $29,400

Total Funding $30,000

Start-up

Requirements

Start-up Expenses

Legal $500

Stationery etc. $100

Other $0

Total Start-up Expenses $600

Start-up Assets

Cash Required $20,032

Other Current Assets $0

Long-term Assets $9,368

Total Assets $29,400

Total Requirements $30,000

Products

Kwality stores will sell upscale women's shoes. The general categories of shoes that will be sold are:

y Sandalsy Stylish work shoes

y Loafers

y Dress shoes

y Canvas athletic/stylish shoes

Kwality stores will strive to have one of the largest selection of shoes in Oregon, barring the larger stores

in rampur. Kwality stores will accomplish this by having one size per style in stock as a demonstration

model. Kwality stores will then order the style in the needed size and it will arrive within two days (rush

one day service is available). This will be accomplished through a special relationship with the wholesaler

who is able to send out the right size in the right style on demand. Often a wholesaler will be unwilling to

ship out individual shoes, but kwality stores was able to secure an exclusive arrangement with a itswholesaler to meet this need.

Market Analysis Summary

Kwality stores will be targeting two distinct groups of fashion-concious female shoppers--professional

workers and housewives. While both groups are interested in dress shoes, the professionals will also be

looking for fashionable shoes they are able to wear with their business attire. The housewives might be

looking for fasionable but more casual shoes.



Market Segmentation

Kwality stores is targeting two different population segments within the broad category of the fashion-

conscious female with disposable income.

y Professionals: these are full-time working professional women. They typically earn more than

$45,000. They will purchase shoes for the workplace, as well as for leisure time.y Housewives: The household income of this group is $60k-$120k, generally toward the higher end

of this range.

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Professionals 9% 12,457 13,578 14,800 16,132 17,584 9.00%

Housewives 8% 14,544 15,708 16,965 18,322 19,788 8.00%

Other 0% 0 0 0 0 0 0.00%Total 8.47% 27,001 29,286 31,765 34,454 37,372 8.47%

Target Market Segment Strategy

These markets will be targeted through an attractive, eye-catching storefront in a popular mall. Most

women within the target market shop at malls. Malls allow them to visit many different stores within the

same vicinity. By just having a visible storefront in a well traveled mall, kwality stores will receive walk-

through customers.

While the leased space in a mall is expensive, one of the benefits that you pay for is the mall association

which spends money on marketing the mall and the stores within the mall.

Industry Analysis

Women's shoe retail industry is made up of several different types of companies:

y Shoe-only stores: As the name implies, these stores only sell shoes. Generally the shoe-only

stores will either sell athletic shoes for men and women, or dress shoes for only one sex.

y Large department stores: these types of stores sell everything, including shoes.



y Small women's retail stores: these types of stores cater to women by only selling women's

clothing and shoes.Competition and Buying Patterns

Kwality stores has three direct competitors in rampur:

y (name omitted). This is a women's only clothing and shoe store. They have a nice selection of clothing but a poor selection of shoes. The shoe styles are not cutting edge. The price point for the

shoes is $30-$120.

y (name omitted). This is a large, complete, department store. The store however, suffers from

cluttered displays and a general sense of disorganization. Shoes here are $30-$120.

y (name omitted). This is a national franchise that only sells shoes, for both men and women. This

company will sell knock-offs, shoes just like name brands, but with their name on it. While this store

has a huge selection, the quality of the shoes leaves a lot to be desired. This is somewhat

understandable as the shoes typically sell for $13-$50. While the shoes are often good copies of

famous brands, the execution is sometimes off. Many of the shoes are made out of pleather and

look like they were dipped in wax, giving them a tacky appearance.

An indirect competitor is a shoe smith that will dye shoes. The shoes are typically dyed to match a

specific dress. Not all colors can be dyed, and dying in general is not the ideal situation. Dying shoes

creates a new shoe color that is acceptable only 20% of the time.

The two major competitors in hilly places are:

y Nordstroms: mid- to high-end department store known for their outstanding customer service. The

shoe price point is $60-$300.

y Saks: this department store caters to the high class, older crowd. Shoes range from $75-$400.

The buying habits for fashion-conscious women consist of typically buying at least one pair of shoes per

month. Women generally purchase a pair of shoes to go with a specific dress. Once the woman

purchases the dress she will then begin the sometimes long search for the perfect pair of shoes.

Strategy and Implementation Summary

Kwality stores will leverage their competitive edge of extensive selection to drive sales. This is indeed a

competitive edge because it is typically cost prohibitive for a store to have as much of a selection that

kwality stores will offer. Because of a unique business model, Passion Soles is able to leverage their

financial resources and offer an unmatched selection. This is done by carrying a large selection of styles

by only stocking one size per style. Once the customer has chosen the style, kwality stores will have the

customer's shoes in one to two days.Sales Strategy

Kwality stores sales strategy will be based on display and visibility. A highly visible store with attractive

product displays located in the mall will get a high percentage of foot traffic. This is especially the case for

a women's shoe store. Women love to shop for shoes. Some women even use shoe shopping as a form

of therapy, similar to eating chocolate. These activities can make them feel better.



The sales strategy will simply be, have the most complete selection of shoes. Assuming the prices are

reasonable, having an extensive selection will drive sales because we believe our target markets of

fashion-conscious females are always looking for the perfect pair of shoes to coordinate with their fashion

style.

Sales Forecast

The first month will be used to set up the store front. The first employee will be hired and display inventory

will be purchased. There will be no sales activity during the first month. The second month will begin to

see sales activity, and it is forecasted that around month four sales will really begin to pick up. The reason

for this is that word will get out about kwality stores and more and more people will be coming in to check

out the extensive selection. A third employee will be hired in December for the holiday season.

Sales Forecast

Year 1 Year 2 Year 3

SalesProfessionals $84,402 $118,745 $135,454

Housewives $54,861 $89,184 $102,095

Total Sales $139,263 $207,929 $237,549

Direct Cost of Sales Year 1 Year 2 Year 3

Professionals $33,761 $47,498 $54,182

Housewives $21,945 $35,674 $40,838

Subtotal Direct Cost of Sales $55,705 $83,172 $95,020

Milestones

Kwality stores will have several milestones early on:

y Business plan completion. This will be done as a road map for the organization. This will be an

indispensable tool for the ongoing performance and improvement of the company.

y Set up the store front.

y Revenues exceeding $75,000.

y Profitability.

Milestones

Milestone Start Date End Date Budget Manager Department



Business plancompletion

1/1/2001 2/1/2001 $0 ABC Marketing

Set up the store front 1/1/2001 2/1/2001 $0 ABC Department

Revenues exceeding$75,000

1/1/2001 9/31/2001 $0 ABC Department

Profitability 1/1/2001 10/31/2001 $0 ABC Department

Totals $0Competitive Edge

Kwality stores competitive edge is an unmatched selection in rampur. This selection will be achieved in

two ways. The first way is a very specific effort to carry as many styles of shoes as possible. Kwality

stores recognizes that rampur currently does not have a single store that offers a wide selection of decent

quality shoes for the fashion conscious female consumer. The competitive edge is the recognition of this

unserved niche and the serving of this demand.

Kwality stores will be able to offer a large selection through a unique inventory model that stocks only one

size per style. The advantage is that for the same amount of money that kwality stores invests in

overhead, they can offer far more styles.

This model is effective because women are willing to order a pair of shoes sight seen but not fitted.

Kwality stores offers two day delivery with an additional expense rush overnight option.

Personnel Plan

they will be working full time at kwality stores. They will be in charge of all administrative details, hiring,

inventory management, etc. Beginning with month two, Holly will hire a full-time sales clerk to help them

at the store. By December, she will hire an additional full-time employee in time for the holiday season.

Personnel Plan


Holly $36,000 $40,000 $42,000

Full-time employee $17,600 $19,200 $19,200Full-time employee $1,600 $19,200 $19,200

Total People 3 3 3

Total Payroll $55,200 $78,400 $80,400

OPERAT

ION

AL

PALN

Start-Up Expenses

How much does it cost to start a shoe retail store? There are no hard and fast rules in setting the pricetag of a shoe store business. Your start-ups costs will be influenced by a number of factors, including:

y Size and design of the storey Location



y Target markety Inventory selectiony Level of marketing

Given the factors above, the price tag can be anywhere from $20,000 to as much as several hundredthousand dollars!

Using the common start-up expenses of a retail shoe store listed below, create a worksheet with your projected costing for each item to get a clear idea of your start-up expenses:

Store Construction and Design

y Store construction/remodeling (flooring, painting, carpentry, etc.)y Interior design and decorating costsy Fixtures and Leasehold Improvements (fire alarms, restroom upgrade, heating, air conditioning,

etc.)y Installation costs (lighting, etc)y Displays, showcases, shelves/racks, sales counters and sales registersy

Back-office furniture, shelving and fixtures

Occupancy Costs

y Lease payments/Renty Utilities and other deposits (telephone, water, electricity/gas, cleaning)y Insurance (fire, theft, etc.)

Fees and Permits

y Legal feesy Licenses and permitsy Professional feesy Merchant account fees (for accepting and processing credit cards)

Promotion Expenses

y Store signagey Advertising and promotion for launch

y Visuals

Operating Expenses

y Opening Inventoryy Bags and boxes with store logoy Gift wrapping supplies (if gift wrapping is offered)

y Cash (reserves and on hand)

Administrative Costs

y Office Suppliesy Sales receiptsy Cleaning supplies (window cleaning, trash cans, mop)



y Miscellaneous

Employee Costs

y Salaries and wagesy Payroll-added costs

Equipment

y Computers, copy machiney Point of sales systems (Credit card and check processing machines, bar code reader, cash

drawer, cash register, POS software, etc.)y Fax machiney Security cameras and equipment including fire extinguishersy Sales floor equipment (baskets, bags, shopping carts, customer seating areas, specialty lighting)y Mirrorsy Other signs (Exit, restroom and store hours signs)y Other equipment (drink fountains)

Miscellaneous

y Unplanned expensesy Miscellaneous fees

Gross Profit Margin

It is important that you have a good idea of the expected gross margin of your retail store. Gross marginis the difference between net sales and cost of goods sold; it is what is left over after deducting cost of sales from sales and converting that to a percent. For example, if the sales of your shoe store are$150,000 and your cost of sales are $78,000 then your gross margin is $72,000 and that converts to 48percent (100*(72,000/150,000)).

According to the Annual Retail Trade Survey of the Bureau of Census, the annual gross margin as apercentage of sales for shoe retail industry is 42.6% in 2002. This is relatively high compared to food andbeverage stores with 28.5 gross margin, gasoline stations at 19.3 and electronics/appliance stores at27.8.

Total Fixed Expenses

As you operate your store, you will be incurring fixed or ongoing expenses. Below are estimated fixedexpenses that your store may incur (estimates can be below or above your actual costs):

Monthly Estimate Annual Estimate

Rent (2,000 square feet at $3,000/month) $3,000 $36,000Utilities (light, heat, air conditioning, phone) 500 6,000

Wages (2 clerks at $8/hour for 20 hours a week) 1,280 15,360

Payroll tax (estimate at 10%) 128 1,536

Fees and accounting (licenses, permits, accounting) 175 2,100

Insurance (liability and loss due to fire, etc.) 600 7,200

Loan Payment (assume that $50,000 was borrowed at 10%interest per year)

1,062 12,744

Advertising 500 6,000



Miscellaneous Expenses (office supplies, janitorial or cleaningservices, etc.)

200 2,400

Sub-Total $7,445 $89,340

Owner¶s salary/compensation $3,500 42,000

Total Fixed Expenses $10,945 $131,340

Gross Margin 42.6%

Sales Required (Total Fixed Expenses / Gross Margin) $25,692.49 $308,309.85

Given the above projections, you will need to sell the following number:

y Sales of $856.42 per day if open 7 days a weeky At an average price of $59.95 per pair of shoes, that means around 14 to 15 pairs of shoes sold

per day

Choosing Your Merchandise

The type and quality of your merchandise will shape the image of your retail store. Customers will comeand patronize your store due to the quality of your inventory (among other reasons such as customer service). Your inventory can also spell the success or failure of your business: choose too much of a shoestyle that no one wants to buy, you may be staring at the death of your business.

Below are some suggestions on how to best choose your inventory for your shoe business:

y Check your sources and ask how their shoes are manufactured.Stay away from those thatmanufacture their brands from sweatshops and other politically hot buttons. Carefully review thecompanies that you are dealing with, including consumer complaints and lawsuits (use the Webto research).

y Product segmentation. Given your original vision for your retail store, think the types of shoesyou want to offer. You may want your store to focus on women shoes, categorized as follows:

casual, boots, sling backs and mules, outdoor and athletic, wedding, pumps and career shoes,etc. Now devise a percentage to allocate each category. For example, you may want to dedicate10% of your inventory to casual shoes; 10% for outdoors; 5% for weddings, etc. You can also usethis approach when thinking of brands you want included in your store.

Note that factors such as trends, weather and customer preferences need to be taken into considerationwhen determining the percentages for each product category or brand. For example, boots may occupy avery small percentage of your inventory for the summer, but orders for this type of shoes will increase for the fall and winter seasons.

y Put a tracking system in place. It is critical to know which merchandises are moving from whatcategories/brands, and which are not. There are a number of inventory management softwaresystems currently available, although its price may be too high for start-up shoe stores without

deep capitalization. Instead, develop a system that could allow you to track the movement of merchandises. You can assign stock numbers that will include the following information: stockaging code (whether a number or letter) to help you know when the stock came into the store,retail price, item information (supplier, style, size, color), stock keeping unit (S.K.U. number) andother information you may deem important.

Key Success Factors



The success of your shoe retail store will depend on a number of factors, foremost of which are asfollows:

y Clear image. You must create a particular image ± and stick with it ± in the minds of your customers. Are you a discount shoe store where branded shoes can be purchased at a discount?Do you offer the lowest prices in town? Do you have the widest selection? A clear market position

conveys a clear and consistent company image.

y Ability to control stock on hand. You need to put adequate stock control in place to reduceinventory costs and increase stock turns. Loss prevention is critical in any retail establishment, astheft and shrinkage represent lost dollars for the retailer. Have systematized procedures for doingphysical counts of your inventory, as well as clear policies on employee theft.

y Strong financial management. The ability to manage finances and control debt is critical for anytype of business.

y Selection of products based on market demand. You need to have a keen sense of predictingthe market and knowing what customers want. Your success depends on offering items that themarket wants.

y Attractive product presentation.Success in retailing entails knowing how to maximize everysquare inch of the store and warehouse (if any). With good rental space getting more expensive,you need to carefully plan your space through effective use of floor patterns, location of merchandise, amounts of merchandise and use of appropriate displays. Store layout and productdisplay induce product purchase and reinforce company image.

y Well-trained and experienced work force. The quality of the sales force is important in thesuccess of a retail store. Your sales employees are the face of your business, and you need toensure that they provide quality customer service. One of the leading shoe retail chains, The

Athlete¶s Foot Group, even train their staffs to measure the foot's length, arch, and width of thecustomer to find the right shoe brand and style.

Financial Plan

The following sections will outline important financial information.

Important Assumptions

The following table details important financial assumptions.

General Assumptions


Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

Break-even Analysis

The Break-even Analysis indicates that approximately $13,000 is needed in monthly revenue to reach the

break-even point.



Break-even Analysis

Monthly Revenue Break-even $12,369

Assumptions:Average Percent Variable Cost 40%

Estimated Monthly Fixed Cost $7,421

Projected Profit and Loss

The following table will indicate projected profit and loss. We estimate purchase of new shoe display

inventory, primarily for the seasonal changes in styles. Because these are displays, we are tracking them

as expenses. It is estimated that new styles (especially around the change in seasons) will require regular

purchase of shoe displays as part of the normal course of business.

Pro Forma Profit and Loss


Sales $139,263 $207,929 $237,549

Direct Cost of Sales $55,705 $83,172 $95,020

Other Production Expenses $0 $0 $0

Total Cost of Sales $55,705 $83,172 $95,020



Gross Margin $83,558 $124,757 $142,529

Gross Margin % 60.00% 60.00% 60.00%

Expenses

Payroll $55,200 $78,400 $80,400

Sales and Marketing and Other Expenses

$1,200 $1,200 $1,200

Depreciation $1,056 $1,056 $1,056

Shoe Display Inventory $7,000 $5,000 $5,000

Utilities $1,200 $1,200 $1,200

Insurance $1,800 $1,800 $1,800

Rent $21,600 $21,600 $21,600

Payroll Taxes $0 $0 $0

Other $0 $0 $0

Total Operating Expenses $89,056 $110,256 $112,256

Profit Before Interest and Taxes ($5,498) $14,501 $30,273

EBITDA ($4,442) $15,557 $31,329

Interest Expense $255 $224 $37

Taxes Incurred $0 $4,283 $9,071 Net Profit ($5,753) $9,994 $21,165

Net Profit/Sales -4.13% 4.81% 8.91%

Projected Cash Flow

The following chart and table will indicate projected cash flow. We anticipate borrowing $5,000 in June to

cover shoe display inventory purchases and other expenses.

Pro Forma Cash FlowYear 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales $139,263 $207,929 $237,549

Subtotal Cash from Operations $139,263 $207,929 $237,549

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0



New Current Borrowing $5,000 $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 $144,263 $207,929 $237,549

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $55,200 $78,400 $80,400

Bill Payments $78,704 $118,797 $133,576

Subtotal Spent on Operations $133,904 $197,197 $213,976

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $1,260 $3,000 $740

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $135,164 $200,197 $214,716

Net Cash Flow $9,099 $7,732 $22,833

Cash Balance $29,131 $36,863 $59,697

Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet


Assets

Current Assets

Cash $29,131 $36,863 $59,697

Other Current Assets $0 $0 $0

Total Current Assets $29,131 $36,863 $59,697

Long-term Assets

Long-term Assets $9,368 $9,368 $9,368

Accumulated Depreciation $1,056 $2,112 $3,168

Total Long-term Assets $8,312 $7,256 $6,200

Total Assets $37,443 $44,119 $65,897

Liabilities and Capital Year 1 Year 2 Year 3

Current LiabilitiesAccounts Payable $10,056 $9,738 $11,090

Current Borrowing $3,740 $740 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $13,796 $10,478 $11,090

Long-term Liabilities $0 $0 $0

Total Liabilities $13,796 $10,478 $11,090

Paid-in Capital $30,000 $30,000 $30,000



Retained Earnings ($600) ($6,353) $3,641

Earnings ($5,753) $9,994 $21,165

Total Capital $23,647 $33,641 $54,807

Total Liabilities and Capital $37,443 $44,119 $65,897

Net Worth $23,647 $33,641 $54,807

Business Ratios

The following table compares our ratios to Standard Industry Code #3144 (Women's footwear, except

athletic).

Ratio Analysis

Year 1 Year 2 Year 3Industry

Profile

Sales Growth 0.00% 49.31% 14.25% 10.45%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 33.22%

Total Current Assets 77.80% 83.55% 90.59% 85.17%

Long-term Assets 22.20% 16.45% 9.41% 14.83%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 36.85% 23.75% 16.83% 26.82%

Long-term Liabilities 0.00% 0.00% 0.00% 25.97%

Total Liabilities 36.85% 23.75% 16.83% 52.79%

Net Worth 63.15% 76.25% 83.17% 47.21%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 60.00% 60.00% 60.00% 22.01%

Selling, General & AdministrativeExpenses

74.12% 49.27% 48.20% 10.93%

Advertising Expenses 0.43% 0.23% 0.21% 1.05%

Profit Before Interest and Taxes -3.95% 6.97% 12.74% 2.49%

Main Ratios

Current 2.11 3.52 5.38 2.58

Quick 2.11 3.52 5.38 1.37

Total Debt to Total Assets 36.85% 23.75% 16.83% 57.34%

Pre-tax Return on Net Worth -24.33% 42.44% 55.17% 6.10%

Pre-tax Return on Assets -15.36% 32.36% 45.88% 14.29%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -4.13% 4.81% 8.91% n.a

Return on Equity -24.33% 29.71% 38.62% n.a

Activity Ratios

Accounts Payable Turnover 8.83 12.17 12.17 n.aPayment Days 27 30 28 n.a

Total Asset Turnover 3.72 4.71 3.60 n.a

Debt Ratios

Debt to Net Worth 0.58 0.31 0.20 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital $15,335 $26,385 $48,607 n.a



Interest Coverage -21.57 64.74 818.20 n.a

Additional Ratios

Assets to Sales 0.27 0.21 0.28 n.a

Current Debt/Total Assets 37% 24% 17% n.a

Acid Test 2.11 3.52 5.38 n.a

Sales/Net Worth 5.89 6.18 4.33 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Sales Forecast

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Sales

Professionals 0% $0 $3,245 $4,114 $5,678 $6,545 $6,985 $7,454 $7,945 $8,569 $9,956$11,45

4

$12,457

Housewives 0% $0 $2,109 $2,674 $3,691 $4,254 $4,540 $4,845 $5,164 $5,570 $6,471 $7,445 $8,097

Total Sales $0 $5,354 $6,788 $9,369$10,79

9$11,52

5$12,29

9$13,10

9$14,13

9$16,42

7$18,89

9$20,554

Direct Cost of Sales

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Professionals $0 $1,298 $1,646 $2,271 $2,618 $2,794 $2,982 $3,178 $3,428 $3,982 $4,582 $4,983

Housewives $0 $844 $1,070 $1,476 $1,702 $1,816 $1,938 $2,066 $2,228 $2,589 $2,978 $3,239

SubtotalDirect Cost of Sales

$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222

Personnel Plan

Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month 8 Month9 Month10 Month11 Month12

Holly 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000$3,00

0$3,000 $3,000 $3,000 $3,000

Full-timeemployee

0% $0 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600$1,60

0$1,600 $1,600 $1,600 $1,600

Full-timeemployee

0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,600

Total People 1 2 2 2 2 2 2 2 2 2 2 3

Total Payroll $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600$4,60

0$4,600 $4,600 $4,600 $6,200

General Assumptions

Month 1Month

2 Month 3Month

4Month

5Month

6Month

7Month

8Month

9Month

10Month

11Month

12

PlanMonth

1 2 3 4 5 6 7 8 9 10 11 12

CurrentInterestRate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%10.00

%10.00

%10.00% 10.00%

10.00%

Long-termInterest

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%10.00

%10.00

%10.00% 10.00%

10.00%



Rate

Tax Rate 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

Month 1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11

Month

12

Sales $0 $5,354 $6,788 $9,369$10,79

9$11,52

5$12,29

9$13,10

9$14,13

9$16,427 $18,899

$20,554

Direct Costof Sales

$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222

Other ProductionExpenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Costof Sales

$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222

GrossMargin

$0 $3,213 $4,073 $5,621 $6,480 $6,915 $7,379 $7,866 $8,483 $9,856 $11,339$12,33

2

GrossMargin % 0.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%

Expenses

Payroll $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $6,200

Sales andMarketingand Other Expenses

$100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100

Depreciation

$88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88

ShoeDisplayInventory

$5,000 $0 $0 $0 $2,000 $0 $0 $0 $0 $0 $0 $0

Utilities $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100

Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Rent $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800

PayrollTaxes

15%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalOperatingExpenses

$10,238 $6,838 $6,838 $6,838 $8,838 $6,838 $6,838 $6,838 $6,838 $6,838 $6,838 $8,438

ProfitBeforeInterest

and Taxes

($10,238)

($3,625)

($2,765)

($1,217)

($2,358)

$77 $541 $1,028 $1,645 $3,018 $4,501 $3,894

EBITDA($10,15

0)($3,537

)($2,677

)($1,129

)($2,270

)$165 $629 $1,116 $1,733 $3,106 $4,589 $3,982

InterestExpense

$0 $0 $0 $0 $0 $42 $40 $38 $36 $35 $33 $31

TaxesIncurred

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit($10,23

8)($3,625

)($2,765

)($1,217

)($2,358

)$35 $502 $989 $1,609 $2,984 $4,469 $3,863



NetProfit/Sales

0.00%-

67.71%-

40.74%-

12.99%-

21.84%0.31% 4.08% 7.55%

11.38%

18.16% 23.64%18.80

%

Pro Forma Cash Flow

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Cash ReceivedCash fromOperations

Cash Sales $0 $5,354 $6,788$9,36

9$10,79

9$11,52

5$12,29

9$13,10

9$14,13

9$16,42

7$18,89

9$20,55

4

Subtotal CashfromOperations

$0 $5,354 $6,788$9,36

9$10,79

9$11,52

5$12,29

9$13,10

9$14,13

9$16,42

7$18,89

9$20,55

4

AdditionalCash Received

Sales Tax,VAT,

HST/GSTReceived

0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New CurrentBorrowing

$0 $0 $0 $0 $0 $5,000 $0 $0 $0 $0 $0 $0

New Other Liabilities(interest-free)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-

term Assets$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

Subtotal CashReceived

$0 $5,354 $6,788$9,36

9$10,79

9$16,52

5$12,29

9$13,10

9$14,13

9$16,42

7$18,89

9$20,55

4

ExpendituresMonth

1Month

2Month

3Month

4Month

5Month

6Month

7Month

8Month

9Month

10Month

11Month

12

ExpendituresfromOperations

Cash

Spending

$3,000 $4,600 $4,600$4,60

0

$4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $6,200

Bill Payments $238 $7,055 $4,311$4,90

0$5,983 $8,414 $6,812 $7,120 $7,446 $7,872 $8,789 $9,765

Subtotal Spenton Operations

$3,238$11,65

5$8,911

$9,500

$10,583

$13,014

$11,412

$11,720

$12,046

$12,472

$13,389

$15,965

AdditionalCash Spent

Sales Tax,VAT,

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0



HST/GSTPaid Out

PrincipalRepayment of CurrentBorrowing

$0 $0 $0 $0 $0 $0 $210 $210 $210 $210 $210 $210

Other LiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-termLiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseOther CurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseLong-term

Assets

$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

Subtotal CashSpent

$3,238$11,65

5$8,911

$9,500

$10,583

$13,014

$11,622

$11,930

$12,256

$12,682

$13,599

$16,175

Net Cash Flow($3,238

)($6,300

)($2,123

)($131) $216 $3,511 $677 $1,179 $1,883 $3,745 $5,301 $4,379

Cash Balance$16,79

4$10,49

3$8,370

$8,240

$8,456$11,96

7$12,64

4$13,82

3$15,70

6$19,45

1$24,75

2$29,13

1

Pro Forma Balance Sheet

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

AssetsStartingBalances

CurrentAssets

Cash$20,03

2$16,79

4$10,49

3$8,370 $8,240 $8,456

$11,967

$12,644

$13,823

$15,706

$19,451

$24,752

$29,131

Other CurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total

CurrentAssets

$20,032

$16,794

$10,493 $8,370 $8,240 $8,456

$11,967

$12,644

$13,823

$15,706

$19,451

$24,752

$29,131

Long-termAssets

Long-termAssets

$9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368

Accumulated

$0 $88 $176 $264 $352 $440 $528 $616 $704 $792 $880 $968 $1,056



Depreciation

TotalLong-termAssets

$9,368 $9,280 $9,192 $9,104 $9,016 $8,928 $8,840 $8,752 $8,664 $8,576 $8,488 $8,400 $8,312

Total

Assets

$29,40

0

$26,07

4

$19,68

5

$17,47

4

$17,25

6

$17,38

4

$20,80

7

$21,39

6

$22,48

7

$24,28

2

$27,93

9

$33,15

2

$37,44

3

LiabilitiesandCapital

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

CurrentLiabilities

AccountsPayable

$0 $6,912 $4,149 $4,703 $5,701 $8,187 $6,575 $6,873 $7,184 $7,581 $8,464 $9,418$10,05

6

CurrentBorrowing

$0 $0 $0 $0 $0 $0 $5,000 $4,790 $4,580 $4,370 $4,160 $3,950 $3,740

Other CurrentLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCurrentLiabilities

$0 $6,912 $4,149 $4,703 $5,701 $8,187$11,57

5$11,66

3$11,76

4$11,95

1$12,62

4$13,36

8$13,79

6

Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalLiabilities

$0 $6,912 $4,149 $4,703 $5,701 $8,187$11,57

5$11,66

3$11,76

4$11,95

1$12,62

4$13,36

8$13,79

6

Paid-in

Capital

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0

$30,00

0RetainedEarnings

($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600)

Earnings $0($10,23

8)($13,86

3)($16,62

9)($17,84

5)($20,20

4)($20,16

8)($19,66

7)($18,67

7)($17,06

9)($14,08

5)($9,61

6)($5,75

3)

TotalCapital

$29,400

$19,162

$15,537

$12,771

$11,555

$9,196 $9,232 $9,733$10,72

3$12,33

1$15,31

5$19,78

4$23,64

7

TotalLiabilitiesandCapital

$29,400

$26,074

$19,685

$17,474

$17,256

$17,384

$20,807

$21,396

$22,487

$24,282

$27,939

$33,152

$37,443

Net Worth$29,40

0$19,16

2$15,53

7$12,77

1$11,55

5 $9,196 $9,232 $9,733$10,72

3$12,33

1$15,31

5$19,78

4$23,64

7

retail tp a22

Documents