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U&Me Dance

Dance Studio
Business Plan
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Financial Plan
We plan to use our own start-up cash to nance the business. The Majestic is a turn key building for this type of
business, requiring very limited contract work for us to bring in. A kitchen space and oce window are to be
negotiated with the building owner. Our start-up requirements are business assets, teaching supplies, and
advertising.
We want to nance growth mainly through cash ow.

8.1 Important Assumptions

The nancial plan depends on important assumptions, most of which are shown in the following table as annual assumptions.
The monthly assumptions are included in the appendix. From the beginning, we recognize that collectionof payments for dance
lesson packages is critical, however, not a factor we can inuence easily. Interest rates, tax rates, and personnel burden are
based on conservative assumptions.
Three of the more important underlying assumptions are:
1.

We assume that people in Whatcom County and more importantly, Bellingham, will be interested in learning to
dance and will give us a try.

2.

We assume that the area will continue to grow, as in the past, and at the projected rate of 5% per year.

3.

We assume that the Majestic will continue to be rented for events as in the past.

GENERAL ASSUMPTIONS

Plan Month

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YEAR 1

YEAR 2

YEAR 3

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Plan Month

Current 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

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8.2 Break-even Analysis

We will needan average ofthirty new students each month taking the introductory classes. Of these thirty students, we are
anticipating that 25% will stay to take additional classes (i.e. Social Foundation, Bronze, etc.). We realize that we may have a slow
start, until the word gets out about our business, and therefore, will take a few months to "ramp up" tothirty new students.

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BREAK-EVEN ANALYSIS
Monthly Revenue Break-even

$22,393

Assumptions:
Average Percent Variable Cost

10%

Estimated Monthly Fixed Cost

$20,150

8.3 Projected Prot and Loss

Our projected prot and loss is shown on the following table, with sales increasing at a rate of 15% year over year.If we are
able to meet our sales forecast, we will begin makinga prot almost immediately. Traditionally in the dance business the slower
months are in the mid-summer. However, the facility rental is higher in the Summer and should, therefore, supplement the
slower teaching months.
The detailed monthly projections are included in the appendix.

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PRO FORMA PROFIT AND LOSS

Sales
Direct Cost of Sales
Other Production Expenses
TOTAL COST OF SALES
Gross Margin
Gross Margin %

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YEAR 1

YEAR 2

YEAR 3

$301,990

$347,289

$399,382

$30,244

$34,780

$39,997

$0

$0

$0

$30,244

$34,780

$39,997

$271,746

$312,509

$359,385

89.99%

89.99%

89.99%

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Expenses
Payroll

$98,150

$112,000

$124,000

Sales and Marketing and Other Expenses

$45,100

$45,800

$52,500

Depreciation

$3,540

$3,540

$3,540

Utilities

$9,000

$10,000

$11,000

Telephone

$2,400

$2,400

$2,400

Insurance

$1,800

$1,800

$1,800

$72,000

$72,000

$74,712

$9,815

$11,200

$12,400

$0

$0

$0

$241,805

$258,740

$282,352

Prot Before Interest and Taxes

$29,941

$53,769

$77,033

EBITDA

$33,481

$57,309

$80,573

Interest Expense

($550)

($1,700)

($2,900)

Taxes Incurred

$9,147

$16,641

$23,980

$21,344

$38,828

$55,953

7.07%

11.18%

14.01%

Rent
Payroll Taxes
Other
Total Operating Expenses

Net Prot
Net Prot/Sales

8.4 Projected Cash Flow

Cash ow projections are critical to our success.The annual cash ow gures are included here and the more important
detailed monthly numbers are included in the appendix. The business will generate more than enough cash ow to cover all of
its expenses. The monthly cash ow is shown in the following chart, with one bar representing the cash ow per month, and the
other the monthly cash balance.

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PRO FORMA CASH FLOW

YEAR 1

YEAR 2

YEAR 3

Cash Received

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Cash from Operations
Cash Sales

$301,990

$347,289

$399,382

SUBTOTAL CASH FROM OPERATIONS

$301,990

$347,289

$399,382

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

$301,990

$347,289

$399,382

Year 1

Year 2

Year 3

$98,150

$112,000

$124,000

Bill Payments

$163,661

$192,360

$214,001

SUBTOTAL SPENT ON OPERATIONS

$261,811

$304,360

$338,001

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$11,000

$12,000

$12,000

Purchase Other Current Assets

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

Dividends

$0

$0

$0

$272,811

$316,360

$350,001

Net Cash Flow

$29,179

$30,929

$49,381

Cash Balance

$39,929

$70,858

$120,239

Additional Cash Received

SUBTOTAL CASH RECEIVED

Expenditures
Expenditures from Operations
Cash Spending

Additional Cash Spent

Long-term Liabilities Principal Repayment

SUBTOTAL CASH SPENT

8.5 Projected Balance Sheet

The balance sheet in the following table shows managed but sucient growth of net worth, and a suciently healthy nancial
position. The monthly estimates are included in the appendix.

PRO FORMA BALANCE SHEET

YEAR 1

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YEAR 2

YEAR 3

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Assets
Current Assets
Cash

$39,929

$70,858

$120,239

Other Current Assets

$12,000

$12,000

$12,000

TOTAL CURRENT ASSETS

$51,929

$82,858

$132,239

$17,700

$17,700

$17,700

$3,540

$7,080

$10,620

TOTAL LONG-TERM ASSETS

$14,160

$10,620

$7,080

TOTAL ASSETS

$66,089

$93,478

$139,319

Year 1

Year 2

Year 3

$15,296

$15,856

$17,744

Current Borrowing

$0

$0

$0

Other Current Liabilities

$0

$0

$0

$15,296

$15,856

$17,744

($11,000)

($23,000)

($35,000)

$4,296

($7,144)

($17,256)

Paid-in Capital

$50,000

$50,000

$50,000

Retained Earnings

($9,550)

$11,794

$50,622

Earnings

$21,344

$38,828

$55,953

TOTAL CAPITAL

$61,794

$100,622

$156,575

TOTAL LIABILITIES AND CAPITAL

$66,089

$93,478

$139,319

Net Worth

$61,794

$100,622

$156,575

Long-term Assets
Long-term Assets
Accumulated Depreciation

Liabilities and Capital

Current Liabilities
Accounts Payable

SUBTOTAL CURRENT LIABILITIES

Long-term Liabilities
TOTAL LIABILITIES

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business plan

8.6 Business Ratios

The following table outlines some of the more important ratios from theFine Art Schoolsindustry. The nal column, Industry
Prole, details specic ratios based on the industry as it is classied by the Standard Industry Classication (SIC) code, 7911.

RATIO ANALYSIS

Sales Growth

YEAR 1

YEAR 2

YEAR 3

INDUSTRY PROFILE

0.00%

15.00%

15.00%

16.60%

18.16%

12.84%

8.61%

33.90%

Percent of Total Assets

Other Current Assets

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Other Current Assets

18.16%

12.84%

8.61%

33.90%

Total Current Assets

78.57%

88.64%

94.92%

43.80%

Long-term Assets

21.43%

11.36%

5.08%

56.20%

100.00%

100.00%

100.00%

100.00%

23.14%

16.96%

12.74%

36.40%

-16.64%

-24.60%

-25.12%

22.60%

6.50%

-7.64%

-12.39%

59.00%

93.50%

107.64%

112.39%

41.00%

100.00%

100.00%

100.00%

100.00%

Gross Margin

89.99%

89.99%

89.99%

0.00%

Selling, General & Administrative Expenses

82.92%

78.80%

75.98%

70.60%

Advertising Expenses

7.95%

6.91%

7.51%

3.60%

Prot Before Interest and Taxes

9.91%

15.48%

19.29%

3.90%

Current

3.40

5.23

7.45

1.40

Quick

3.40

5.23

7.45

1.01

6.50%

-7.64%

-12.39%

59.00%

Pre-tax Return on Net Worth

49.34%

55.13%

51.05%

3.70%

Pre-tax Return on Assets

46.14%

59.34%

57.37%

8.90%

Additional Ratios

Year 1

Year 2

Year 3

Net Prot Margin

7.07%

11.18%

14.01%

n.a

Return on Equity

34.54%

38.59%

35.74%

n.a

11.70

12.17

12.17

n.a

27

29

28

n.a

4.57

3.72

2.87

n.a

Debt to Net Worth

0.07

-0.07

-0.11

n.a

Current Liab. to Liab.

3.56

0.00

0.00

n.a

$36,634

$67,002

$114,495

n.a

0.00

0.00

0.00

n.a

0.22

0.27

0.35

n.a

TOTAL ASSETS
Current Liabilities
Long-term Liabilities
Total Liabilities
NET WORTH
Percent of Sales
Sales

Main Ratios

Total Debt to Total Assets

Activity Ratios
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios

Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales

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Current Debt/Total Assets

23%

17%

13%

n.a

Acid Test

3.40

5.23

7.45

n.a

Sales/Net Worth

4.89

3.45

2.55

n.a

Dividend Payout

0.00

0.00

0.00

n.a

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Important Assumptions (nancial_plan_fc.php#8.1_Important_Assumptions)

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Projected Prot and Loss (nancial_plan_fc.php#8.3_Projected_Prot_and_Loss)

Projected Cash Flow (nancial_plan_fc.php#8.4_Projected_Cash_Flow)
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