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This is a business plan. It does not imply an offering of securities.
Table of Contents
1.0 Executive Summary ..............................................................................................................1
Chart: Highlights ........................................................................................................1
1.1 Objectives ....................................................................................................................1
1.2 Mission .........................................................................................................................2
1.3 Keys to Success ...........................................................................................................2
2.0 Company Summary ..............................................................................................................3
2.1 Company Ownership ....................................................................................................3
2.2 Start-up Summary ........................................................................................................3
Table: Start-up ...........................................................................................................4
Table: Start-up Funding .............................................................................................5
Chart: Start-up ...........................................................................................................6
2.3 Company Locations and Facilities................................................................................6
3.0 Products ...............................................................................................................................6
3.1 Product Description ......................................................................................................7
3.2 Competitive Comparison ..............................................................................................7
3.3 Sales Literature ............................................................................................................8
3.4 Sourcing .......................................................................................................................8
3.5 Technology...................................................................................................................8
3.6 Future Products ............................................................................................................8
4.0 Market Analysis Summary ....................................................................................................8
4.1 Market Segmentation ...................................................................................................9
Table: Market Analysis ............................................................................................10
Chart: Market Analysis (Pie) ....................................................................................10
4.2 Target Market Segment Strategy ...............................................................................10
4.2.1 Market Needs .................................................................................................10
4.2.2 Market Trends.................................................................................................11
4.2.3 Market Growth ................................................................................................11
4.3 Industry Analysis ........................................................................................................11
4.3.1 Competition and Buying Patterns ...................................................................12
4.3.2 Main Competitors............................................................................................12
4.3.3 Industry Participants .......................................................................................13
5.0 Strategy and Implementation Summary .............................................................................13
5.1 Competitive Edge .......................................................................................................14
5.2 Value Proposition .......................................................................................................14
5.3 Sales Strategy ............................................................................................................14
5.3.1 Sales Forecast ................................................................................................15
Chart: Sales Monthly .......................................................................................15
Table: Sales Forecast .....................................................................................16
5.4 Milestones ..................................................................................................................16
Table: Milestones.....................................................................................................16
5.5 Marketing Strategy .....................................................................................................16
5.5.1 Sales Programs ..............................................................................................17
5.5.2 Positioning Statement .....................................................................................17
5.5.3 Pricing Strategy ..............................................................................................17
5.5.4 Promotion Strategy .........................................................................................17
5.5.5 Marketing Programs .......................................................................................18
5.6 Strategic Alliances ......................................................................................................18
Page 1
Table of Contents
6.0 Management Summary ......................................................................................................18
6.1 Organizational Structure.............................................................................................18
6.2 Personnel Plan ...........................................................................................................19
Table: Personnel......................................................................................................19
6.3 Management Team ....................................................................................................19
6.4 Management Team Gaps ..........................................................................................20
7.0 Financial Plan .....................................................................................................................21
7.1 Important Assumptions ..............................................................................................21
Table: General Assumptions ...................................................................................21
7.2 Projected Cash Flow ..................................................................................................22
Table: Cash Flow .....................................................................................................22
Chart: Cash..............................................................................................................23
7.3 Key Financial Indicators .............................................................................................24
Chart: Benchmarks ..................................................................................................24
7.4 Break-even Analysis...................................................................................................25
Chart: Break-even Analysis .....................................................................................25
Table: Break-even Analysis .....................................................................................25
7.5 Projected Profit and Loss ...........................................................................................26
Chart: Profit Monthly ................................................................................................26
Table: Profit and Loss ..............................................................................................27
7.6 Projected Balance Sheet ............................................................................................28
Table: Balance Sheet ..............................................................................................28
7.7 Business Ratios .........................................................................................................29
Table: Ratios............................................................................................................29
Table: Sales Forecast .................................................................................................................1
Table: Personnel ........................................................................................................................2
Table: General Assumptions ......................................................................................................3
Table: Profit and Loss.................................................................................................................4
Table: Cash Flow ........................................................................................................................5
Table: Balance Sheet .................................................................................................................6
Page 2
The Watertower
1.0 Executive Summary
The Watertower is a full-service restaurant/cafe located in the Sweet Auburn District of Atlanta.
The restaurant features a full menu of moderately priced "comfort" food influenced by African
and French cooking traditions, but based upon time honored recipes from around the world. The
cafe section of The Watertower features a coffeehouse with a dessert bar, magazines, and space
for live performers.
The Watertower will be owned and operated by The Watertower LLC, a Georgia limited liability
corporation managed by David N. Patton IV, a resident of the Empowerment Zone. The members
of the LLC are David N. Patton IV (80%) and the Historic District Development Corporation (20%).
This business plan offers financial institutions an opportunity to review our vision and strategic
focus. It also provides a step-by-step plan for the business start-up, establishing favorable sales
numbers, gross margin, and profitability.
This plan includes chapters on the company, products and services, market focus, action plans and
forecasts, management team, and financial plan.
1.1 Objectives
1.
2.
3.
Sales approaching and surpassing $1.9 million by the end of the first year.
Targeting and maintaining a net profit of at least 14% by the second year.
To cultivate monthly sales to reach $167,000 by the end of the fourth month of operation,
and $220,000 monthly by the end of the first year of operation.
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The Watertower
1.2 Mission
The Watertower concept is built upon the success stories of Atlanta's many casual dining and
coffeehouse venues. Located in the Sweet Auburn District of Atlanta adjacent to the Studioplex
on Auburn residential loft development, The Watertower will provide accessible and affordable
high quality food, coffee-based products, and entertainment to the thousands of residents and
hotel visitors located within a five-mile radius. In time, The Watertower will establish itself as a
"destination" of choice to the many residents of the greater Atlanta metropolitan area, as well as
numerous out-of-town visitors.
The establishment will provide a "complete, high-quality" evening experience for those searching
for something that is rapidly becoming popular among Atlanta diners. Not only will patrons be
able to dine on "comfort" food based upon time honored recipes from the world over, they will do
so in a facility containing ample patio space for a favorite pastime of Atlanta's residents: alfresco
dining. Patrons will also have the option of enjoying coffee, desserts, and live entertainment in
The Watertower's coffeehouse or, a relaxed game of bocci in the gardens located adjacent to the
patio space.
The cafe's aim is simple. It will provide a completely sophisticated, sensual, yet casual dining and/
or coffeehouse experience for the many Atlantans and visitors who frequent the city's casual dining
spots and entertainment venues. It will be an affordable venture for patrons, one that will
encourage them to return on many occasions. The menu will feature hearty fare of the type that
is frequently out of the reach of the typical young professional...out of reach because time
frequently prevents her/him from cooking hearty meals like those featured on our menu.
Finally, and quite significantly, The Watertower will provide a much needed neighborhood-based
retail food operation that is currently unavailable to the southern end of Atlanta's Old Fourth
Ward neighborhood. Not only is it projected that the business will generate 21 new jobs, the
partnership responsible for creating The Watertower will generate additional revenue specifically
dedicated to assisting the Historic District Development Corporation in its efforts to bring affordable
housing, new jobs, and commercial activity to the Old Fourth Ward.
3.
4.
Product quality: Food, coffee-based beverages, and entertainment are our products.
They must be of the high quality and value.
Service: Our patrons are paying to have a good time. Their experience will suffer if service
is not of the highest caliber. Each member of the staff will be courteous, efficient, and
attentive.
Marketing: We will need to target our audience early and often. While the business is
located in a central and accessible location, many people will have to be re-introduced to
the neighborhood surrounding the Martin Luther King National Historic Site and Auburn
Avenue.
Management: We will need to have a firm grasp on food, beverage, and labor costs. The
dining/entertainment/coffeehouse experience must be delivered in a fashion that will not
only inspire repeat business, but encourage word-of-mouth recommendations to others.
Proper inventory, employee management, and quality control is key.
Page 2
The Watertower
2.0 Company Summary
The Watertower is a bistro and coffeehouse facility located in a renovated house immediately
adjacent to the Studioplex on Auburn residential loft development. The Watertower derives its
name from an historic 200+ foot tall watertower located on the grounds of the restaurant, and
immediately across the street from the main entrance of the Studioplex facility. Architecturally, this
watertower will serve as a beacon/locator for our facility as it towers over the southern end of
the Old Fourth Ward neighborhood and the eastern end of the Sweet Auburn residential and
business district.
The facility is bordered by Auburn Avenue to the south and Irwin Street to the north. Residential
live/work townhouses are planned for construction across the street from, and adjacent to, The
Watertower on Irwin Street.
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The Watertower
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Debt Service
Licenses/Tax/Deposits
Expensed Equipment
Employee/Payroll
Accounting
Soft Opening Expense
Grand Opening Advertising
Misc. Expenses
Total Start-up Expenses
$2,000
$500
$500
$1,500
$1,745
$5,000
$12,000
$36,600
$26,834
$1,000
$4,000
$3,000
$2,000
$96,679
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$100,000
$61,157
$0
$595,040
$756,197
Total Requirements
$852,876
Page 4
The Watertower
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
$96,679
$756,197
$852,876
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
$656,197
$100,000
$0
$100,000
$756,197
$29,850
$695,399
$29,627
$0
$754,876
Capital
Planned Investment
Investor 1(Home Equity/Pre-develop. Invest)
Investor 2(Pre-development Investment)
Other
Additional Investment Requirement
Total Planned Investment
$64,000
$34,000
$0
$0
$98,000
($96,679)
$1,321
$756,197
Total Funding
$852,876
Page 5
The Watertower
3.0 Products
The Watertower is a cafe/restaurant/coffeehouse venue that sells moderately-priced food to an
upscale casual dining market. The venue features brewed coffee and espresso-based beverages,
Page 6
The Watertower
granita ices, fruit smoothies and juices, and other beverages typically associated with a coffee
shop. A dessert bar will serve a range of freshly prepared desserts, as well as baked goods
associated with breakfast.
Luncheon offerings contain both carry-out and dine-in menu selections, while evening hours will
accommodate full-service dining and Spanish tapas (appetizer) service, a full-service bar and light,
weekend, live entertainment.
Reflecting a target niche market, a limited selection of out-of-town newspapers, as well as art,
architecture, cinema, design and lifestyle magazines will be sold. Additionally, the venue will
feature art and products made by Studioplex artists, providing a cross-selling opportunity.
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The Watertower
Relative to the location of these establishments, The Watertower is centrally geographically
located. It's location will easily allow for patrons from these other establishments to finish an
evening with dessert, coffee, drinks, and/or dancing.
3.4 Sourcing
The Watertower will buy from a select group of Atlanta restaurant suppliers and liquor
distributors. Direct sales relationships will also be established with fresh produce, meat, and
seafood distributors based at the Sweet Auburn Curb Market. Negotiations are also underway to
establish direct relationships with seafood suppliers on the Florida Gulf coast.
The cafe will receive substantial discounts from artists and artisans participating in the
manufacture of signature pieces of dinnerware, furniture, lighting, and sculpture to be featured
at The Watertower. As part of a marketing agreement with Studioplex merchants, the business will
prominently feature their products in exchange for these discounted fixtures and equipment.
3.5 Technology
The Watertower logo is protected by federal trademark laws. All of our menu creations will not
necessarily have the same protections, however, when possible, popular "trade-names" will be
protected. The business of The Watertower is not dependent upon process technology or
patentable inventions.
The Watertower
for food away from home rose by almost 20%, coinciding with the number of women entering
the work force. With two income earners per household, neither person may have time to fix
meals. Since the 1950s, commercial food service sales have continued to rise as more and more
people find that eating away from home suits their lifestyles.
Specialty coffee is a $5+ billion per year industry in the United States, and has grown at a rate in
excess of 20% per year in the last decade. That sustained growth is expected into this decade
according the the Specialty Coffee Association of America.
Atlanta in the mid-1990s had only a handful of specialty coffee retailers: San Francisco Roasters,
Cafe Diem, Cafe Intermezzo, Aurora Coffee, J. Martinez, and others. Now, coffee roasters, shops,
and suppliers take more than two full pages in the Yellow Pages. Starbucks announced last year
that it expects to open 600 additional stores in 2000.
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The Watertower
Table: Market Analysis
Market Analysis
Potential Customers
Atlanta Area Residents
Hotel/Convention/Visitors
Downtown Workers
Total
Growth
10%
15%
20%
12.87%
Year 1
Year 2
Year 3
Year 4
Year 5
91,568
32,100
23,350
147,018
100,725
36,915
28,020
165,660
110,798
42,452
33,624
186,874
121,878
48,820
40,349
211,047
134,066
56,143
48,419
238,628
CAGR
10.00%
15.00%
20.00%
12.87%
The Watertower
coffeehouse and/or evening entertainment scene.
Our customers are well educated and interested in partaking of new experiences. Keeping the
menu and the entertainment offerings "fresh" will remain a constant challenge to the business.
Segments of the target market tend to dine out, visit coffee shops, and seek evening
entertainment frequently. They tend to choose comfortable, affordable venues, and repeat
appearances at places that offer familiar scenery with new twists.
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The Watertower
4.3.1 Competition and Buying Patterns
The general nature of the competition is typically a 70 to 150 seat restaurant with outdoor seating.
The menu prices for entree's range from $7.00 to over $25.00. All of the surrounding
establishments serve, at a minimum, beer and wine. Most serve liquor-spirits as well.
Some of these venues have added live entertainment to their offerings, however, most are
prevented by their facilities from expanding into this area of service. Most of the live
entertainment/dancing venues are located in Midtown and Buckhead to the north with a few
more venues located west in Downtown Atlanta, and to the east in Little Five Points.
While historically Buckhead has remained a center for restaurants and entertainment venues,
Virginia Highland, Little Five Points, and Midtown have grown tremendously in their appeal to
diners and partygoers. With the tremendous rise in intown property values, a residential building
boom, and a decrease in crime statistics, venues closer to downtown have seen a remarkable rise
in business.
A busy population of urban professionals, intent upon working hard and playing hard, has fewer
and fewer opportunities to cook at home. These people eat out often and do so with friends.
Because this population tends to eat out far more than the typical population, they look for
value. While they might not regularly frequent a restaurant featuring entree prices of $17.00 and
higher, they will repeat appearances at restaurants featuring entrees ranging between $7.00 and
$16.00.
Many of these patrons also seek entertainment venues on the weekends that are close to their
dining venues and homes. Historically, live jazz and Latin music venues in northeast Atlanta have
been unavailable to patrons. The market currently suggests that such a venue on Auburn Avenue
is not only desired by the populations frequenting restaurants and clubs in northeast Atlanta, it is
suggested that it is needed. As Buckhead traffic and appeal has grown beyond the capacity of the
neighborhood, patrons are now looking for "easier" places to go out, eat, and have fun.The parking
and traffic woes of Buckhead have grown to notorious proportions. Midtowners and residents in
adjacent neighborhoods would much rather patronize venues closer to downtown. The
Watertower offers them an attractive dining/entertainment/coffeehouse option.
The Watertower
rather hidden location. It has become identified nationally as a residence of Atlanta's growing
African-American music scene.
Kaya: A bistro and large scale nightclub located on Peachtree Street in Midtown, Kaya boasts an
impressive array of entertainment, from Latin music, to hip-hop, disco, and live bands. The
restaurant is located on the Peachtree Street side of the club. In the evening, the restaurant
generally features a dj or a live band, while the large club portion in the rear of the establishment
features a large dance floor and a dj.
It is very popular and regularly features large crowds. Kaya maintains limited parking
immediately adjacent to the club.
Cosmopolitan: Cosmopolitan is located in a converted house in Midtown. It is a very small
venue featuring a casual-upscale dining menu. The club is converted to a cocktail bar/nightclub in
the evening with a small dance floor. It has no designated parking.
Newly arrived to the Atlanta scene, the club features long lines in the evenings. Quite often the
club is not able to accommodate the numbers of people interested in visiting the establishment.
The Somber Reptile: Located in downtown Atlanta on Marietta Street, the club features live
rock bands and a cajun oriented menu. The clientele is growing steadily as the club's reputation
grows. It offers an alternative to the traditional Atlanta nightlife scene.
The Somber Reptile is part of the growing renovation trend taking place in the warehouse district
along Marietta Street just west of Downtown Atlanta. While it naturally draws from the nearby
residents, it competes directly with the rock music venues located in Little Five Points on the east
side of the Atlanta.
Cafe/Apres Diem: Cafe Diem, the first coffeehouse/restaurant to be located south of Ponce De
Leon Avenue on the northeast side of Atlanta, has enjoyed extraordinary success. Formerly located
on Highland Avenue, the business recently (and reluctantly) located to a strip mall in midtown after
a lengthy dispute with its former landlord. It's departure from the immediate area provides an
extraordinary opportunity for The Watertower to capitalize on an even greater unmet need for a
casual restaurant/coffeehouse experience.
Highland Bagel/Caribou Coffee: Located on North Highland Avenue, this is a traditional
corporate coffeehouse which provides morning coffee and sandwich service. The owners are
currently expanding to provide evening service.
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The Watertower
1.
2.
3.
The atypical Atlanta intown resident. This urban professional works long hours and has
relatively little time to cook at home. She/he has an active social life and spends a
substantial amount of disposable income maintaining it.
The many downtown businesses which regularly use restaurant dining as an function of
conducting business.
The tourist and convention populations centered in downtown venues.
3.
4.
The facility's location puts it into close proximity to substantial populations of affluent
Atlantans.
The owner, a 16-year-resident of Atlanta, was educated in and works professionally in
northeast Atlanta. His early work experience included a substantial period working within
a casual/upscale restaurant in the mid-to-late 1980s in Virginia Highland. As the Dean of
Students at Emory University School of Law, he has conferred over 1,300 law degrees
during his tenure, most of them have remained in the Atlanta area. His position at Emory
also required him to manage significant catering budgets. The owner, through his
business, academic, and community activities, maintains a substantial Atlanta-based
network of professionals.
The facility's construction will easily allow for flexible dining/coffeehouse/entertainment
options making it attractive to numerous populations.
The facility's location in an Empowerment Zone and local Enterprise Zone provides
significant tax advantages.
The Watertower
firms) for regular business lunch and dinner entertaining.
Page 15
The Watertower
Table: Sales Forecast
Sales Forecast
Year 1
Year 2
Year 3
Sales
Restaurant
Coffeehouse
Total Sales
$1,926,217
$260,384
$2,186,601
$2,078,138
$273,403
$2,351,541
$2,285,951
$287,073
$2,573,024
Year 1
$1,270,196
$78,112
$1,348,308
Year 2
$1,277,010
$0
$1,277,010
Year 3
$1,340,860
$0
$1,340,860
5.4 Milestones
The accompanying table lists important program milestones, with dates and managers in charge,
and budgets for each. The milestone schedule indicates our emphasis on planning for
implementation.
What the table doesn't show is the commitment behind it. Our business plan software includes
complete provisions for plan-vs.-actual analysis, and we will be holding monthly follow-up meetings
to discuss the variance and course corrections.
Table: Milestones
Milestones
Milestone
Leasehold Buildout
Equipment Installation
Marketing Plan
Fixture/table Construction
Begin Construction Process
Design Management
Legal Research
Interior Design
Entertainment Research
Purchasing Research
Totals
Start Date
11/1/2000
1/1/2001
1/1/2001
12/1/2000
10/1/2000
5/1/2000
1/1/2000
10/1/2000
2/1/2000
1/1/2000
End Date
2/1/2001
2/1/2001
5/1/2001
5/1/2001
3/1/2001
12/1/2000
4/1/2000
7/1/2000
12/31/2000
10/1/2000
Budget
$30,000
$75,000
$4,500
$3,500
$0
$0
$1,000
$0
$0
$0
$114,000
Manager
David Patton
David Patton
Cindy Abel
David Patton
M.Syphoe
R.Rauh
Patton/Moser
K.Brown
David Patton
David Patton
Department
Owner
Owner
Marketing
DNP/PTC
HDDC
R.Architects
Legal
C.Concepts
Owner
Owner
The Watertower
city to look forward to experiencing The Watertower.
2.
3.
Special Event Sales: Develop opportunities to sell to companies for private parties and
special events. The specific responsibility is with the owner with assistance from the
manager on staff and Real World Communications.
Music Related Special Events: Develop relationships with artists and promoters in the area
to feature artists rising in popularity, either through CD release parties or live
performances.
Artist/Studioplex Special Events: Develop opportunities to host or cater artist openings.
2.
3.
Our participation in the Chocolate Soul and Funk Jazz Kafe' special promotions and the
Sweet Auburn and Inman Park festivals is important because these are events that bring
our target market together.
Our participation in local radio and specifically targeted PBS shows on the local stations.
Public relations programs focusing on related opportunities, guest appearances on local
Page 17
The Watertower
4.
radio, etc.
Advertising placed carefully, in mostly-alternative channels like Creative Loafing,
Southern Voice, university newspapers, etc.
Page 18
The Watertower
A sous-chef/line cook (to be hired) will perform secondary management functions in the kitchen
as well as provide assistance to the chef in main kitchen/cooking functions.
Part-time personnel will be hired to handle bartending, serving, and dishwashing functions.
The marketing, and accounting function will be handled by independent contractors/consultants.
Salary
Owner/General Manager
$39,900
Chef
$30,000
Manager
$28,000
Sous-chef/Line Cook
$23,000
$14,560 + Tips
Barristas/Bartenders
$7/Hour
Servers
$3/Hour + Tips
Dishwashers/Bussers
$6/Hour
Table: Personnel
Personnel Plan
Owner/Manager
Employees
Total People
Year 1
$39,996
$282,012
21
Year 2
$39,996
$282,012
21
Year 3
$39,996
$282,012
21
Total Payroll
$322,008
$322,008
$322,008
The Watertower
Special Advocates. Prior to his position at Emory, Mr. Patton worked as an attorney for a
Cincinnati, Ohio-based law where he specialized in litigation and small business development. Mr.
Patton received his law degree from the University of Georgia in 1991 and his undergraduate
degree from Emory University in 1988. Mr. Patton put himself through college working in a casual
dining establishment in the Virginia Highland neighborhood in the late 1980s.
The following potential managers are under consideration for employment
Nicolas Godebert - Chef: Mr. Godebert is currently the Executive Chef of the Chanteclair
Restaurant, St. Martin, F.W.I. He has been in this position since 1997. Prior to this appointment, he
was the sous-chef at Dessirier Restaurant, Paris, France and the sous-chef for the Raphael Hotel
Restaurant, Paris, France. He received his apprenticeship and cooking school certificate from the
Sous l'Olivier Restaurant and the Ecole de Paris des Metiers de la Table in 1993, respectively.
Cristina Brito - Manager: Ms. Brito, currently a food and beverage supervisor for the Westin
Atlanta North hotel, received her start in the hotel and restaurant business in Recife-PE/ Brazil. At
the Mar Hotel, she was responsible for the sales and marketing of a five-star establishment. She
maintained extensive contact with corporate clients, thus requiring her to speak English, French,
Italian, and Portuguese fluently. Ms. Brito has extensive experience in Atlanta's catering industry
dating from 1988, as well as experience as a chef.
Page 20
The Watertower
7.0 Financial Plan
We want to finance growth mainly through cash flow. We recognize that this means we will have to
grow more slowly than we might like.
The most important indicator in our case is inventory turnover. We have to make sure that food
inventory turnover stays at approximately four turns per month, or we risk loss through spoilage.
We do not want to let our average collection days get above 45 under any circumstances. This
could cause a serious problem with cash flow, because our working capital situation is tight. Most
credit sales will be via credit and debit cards. We do have plans to initiate direct billing for law firms
and other businesses conducting regular visits.
We must target a net profit of 14% at the least, and hold marketing costs to no more than one to
three percent of gross sales.
1.
2.
3.
Year 1
1
12.25%
6.75%
25.42%
0
Year 2
2
12.25%
6.75%
25.00%
0
Year 3
3
12.25%
6.75%
25.42%
0
Page 21
The Watertower
7.2 Projected Cash Flow
We expect to manage cash flow over the next three years with minimal new investment required
over the first two years. It is our expectation that revenue beyond projected sales will be invested
in retiring long-term debt early.
Year 2
Year 3
$2,186,601
$2,186,601
$2,351,541
$2,351,541
$2,573,024
$2,573,024
$0
$0
$0
$0
$0
$0
$0
$2,186,601
$0
$0
$0
$0
$0
$0
$0
$2,351,541
$0
$29,559
$0
$0
$0
$0
$0
$2,602,583
Year 1
Year 2
Year 3
$322,008
$1,633,772
$1,955,780
$322,008
$1,666,553
$1,988,561
$322,008
$1,783,297
$2,105,305
$0
$23,160
$0
$27,430
$0
$0
$0
$2,006,370
$0
$26,435
$0
$29,329
$0
$0
$0
$2,044,325
$0
$0
$0
$31,339
$0
$0
$0
$2,136,644
$180,231
$280,231
$307,216
$587,446
$465,939
$1,053,385
Cash Received
Expenditures
Page 22
The Watertower
Page 23
The Watertower
7.3 Key Financial Indicators
The most important indicators in our case are are daily seating "counts" and weekly sales
numbers. We must also make sure that we are turning our inventory rapidly so as to avoid food
spoilage.
We must target net profit/sales figures toward the 14% level with gross margins never dipping
below 38%. Marketing costs should never exceed three percent of sales.
Page 24
The Watertower
7.4 Break-even Analysis
The Break-even Analysis shows that The Watertower has a good balance of fixed costs and
sufficient sales strength to remain healthy. Our break-even point is $106,101 on sales averaging
$12.54 per patron. This break-even position is achieved on a monthly fixed cost of $57,873 and
and per unit/patron variable cost of $5.70.
$122,179
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
62%
$46,841
Page 25
The Watertower
7.5 Projected Profit and Loss
We expect income to approach $2.1 million for calendar year 2002. It should increase to $2.57
million by the end of the years covered in this plan.
Page 26
The Watertower
Table: Profit and Loss
Pro Forma Profit and Loss
Year 1
$2,186,601
$1,348,308
$0
$1,348,308
Year 2
$2,351,541
$1,277,010
$0
$1,277,010
Year 3
$2,573,024
$1,340,860
$0
$1,340,860
Gross Margin
Gross Margin %
$838,293
38.34%
$1,074,531
45.69%
$1,232,164
47.89%
Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equip/Van/Dispensing Systems
Utilities
Insurance
Other Taxes
Payroll Taxes
Other
$322,008
$80,800
$6,900
$12,600
$24,000
$20,940
$24,000
$70,842
$0
$322,008
$80,800
$6,900
$12,600
$24,000
$22,000
$24,000
$70,842
$0
$322,008
$80,800
$6,900
$12,600
$24,000
$23,000
$24,000
$70,842
$0
$562,090
$563,150
$564,150
$276,203
$283,103
$48,095
$55,675
$511,381
$518,281
$43,298
$117,021
$668,014
$674,914
$41,442
$159,254
Net Profit
Net Profit/Sales
$172,433
7.89%
$351,062
14.93%
$467,318
18.16%
Sales
Direct Cost of Sales
Other
Total Cost of Sales
Page 27
The Watertower
7.6 Projected Balance Sheet
As shown in the Balance Sheet, we expect a healthy growth in net worth from approximately
$172,000 at the end of 2002 to almost $1 million by the end of the plan period.
Year 2
Year 3
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
$280,231
$129,671
$0
$409,902
$587,446
$110,869
$0
$698,316
$1,053,385
$129,058
$0
$1,182,443
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$595,040
$6,900
$588,140
$998,042
$595,040
$13,800
$581,240
$1,279,556
$595,040
$20,700
$574,340
$1,756,783
Year 1
Year 2
Year 3
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$149,628
$6,690
$0
$156,318
$135,844
($19,745)
$0
$116,099
$147,533
$9,814
$0
$157,347
Long-term Liabilities
Total Liabilities
$667,969
$824,287
$638,640
$754,739
$607,301
$764,648
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
$98,000
($96,679)
$172,433
$173,754
$998,042
$98,000
$75,754
$351,062
$524,817
$1,279,556
$98,000
$426,817
$467,318
$992,135
$1,756,783
Net Worth
$173,754
$524,817
$992,135
Assets
Page 28
The Watertower
7.7 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 5812, Eating Places, are shown for comparison. The
ratios show a plan for balanced, healthy growth.
Table: Ratios
Ratio Analysis
Year 1
n.a.
Year 2
7.54%
Year 3
9.42%
Industry Profile
7.60%
12.99%
0.00%
41.07%
58.93%
100.00%
8.66%
0.00%
54.57%
45.43%
100.00%
7.35%
0.00%
67.31%
32.69%
100.00%
3.60%
35.60%
43.70%
56.30%
100.00%
15.66%
66.93%
82.59%
17.41%
9.07%
49.91%
58.98%
41.02%
8.96%
34.57%
43.53%
56.47%
32.70%
28.50%
61.20%
38.80%
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
100.00%
38.34%
30.51%
0.73%
12.63%
100.00%
45.69%
30.77%
0.68%
21.75%
100.00%
47.89%
29.62%
0.62%
25.96%
100.00%
60.50%
39.80%
3.20%
0.70%
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
2.62
1.79
82.59%
131.28%
22.86%
6.01
5.06
58.98%
89.19%
36.58%
7.51
6.69
43.53%
63.15%
35.67%
0.98
0.65
61.20%
1.70%
4.30%
Year 1
7.89%
99.24%
Year 2
14.93%
66.89%
Year 3
18.16%
47.10%
n.a
n.a
10.91
11.72
28
2.19
10.62
12.17
32
1.84
11.18
12.17
29
1.46
n.a
n.a
n.a
n.a
4.74
0.19
1.44
0.15
0.77
0.21
n.a
n.a
$253,583
5.74
$582,217
11.81
$1,025,096
16.12
n.a
n.a
0.46
16%
1.79
12.58
0.00
0.54
9%
5.06
4.48
0.00
0.68
9%
6.69
2.59
0.00
n.a
n.a
n.a
n.a
n.a
Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Page 29
Appendix
Table: Sales Forecast
Sales Forecast
Sales
Restaurant
Coffeehouse
Total Sales
Direct Cost of Sales
Restaurant
Coffeehouse
Subtotal Direct Cost of Sales
0%
0%
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$116,330
$14,525
$130,855
$126,271
$14,525
$140,796
$132,163
$16,800
$148,963
$150,898
$16,800
$167,698
$142,787
$19,800
$162,587
$153,458
$19,800
$173,258
$164,320
$22,770
$187,090
$190,700
$22,770
$213,470
$184,871
$26,185
$211,056
$184,871
$26,185
$211,056
$189,120
$30,112
$219,232
$190,428
$30,112
$220,540
Month 1
$101,350
$4,357
$105,707
Month 2
$102,363
$4,357
$106,720
Month 3
$103,386
$5,040
$108,426
Month 4
$105,419
$5,040
$110,459
Month 5
$104,420
$5,940
$110,360
Month 6
$105,850
$5,940
$111,790
Month 7
$106,908
$6,831
$113,739
Month 8
$108,850
$6,831
$115,681
Month 9
$107,350
$7,855
$115,205
Month 10
$107,350
$7,855
$115,205
Month 11
$108,100
$9,033
$117,133
Month 12
$108,850
$9,033
$117,883
Page 1
Appendix
Table: Personnel
Personnel Plan
Owner/Manager
Employees
Total People
Total Payroll
0%
0%
Month 1
$3,333
$23,501
21
Month 2
$3,333
$23,501
21
Month 3
$3,333
$23,501
21
Month 4
$3,333
$23,501
21
Month 5
$3,333
$23,501
21
Month 6
$3,333
$23,501
21
Month 7
$3,333
$23,501
21
Month 8
$3,333
$23,501
21
Month 9
$3,333
$23,501
21
Month 10
$3,333
$23,501
21
Month 11
$3,333
$23,501
21
Month 12
$3,333
$23,501
21
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
$26,834
Page 2
Appendix
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
Month 1
1
12.25%
6.75%
30.00%
0
Month 2
2
12.25%
6.75%
25.00%
0
Month 3
3
12.25%
6.75%
25.00%
0
Month 4
4
12.25%
6.75%
25.00%
0
Month 5
5
12.25%
6.75%
25.00%
0
Month 6
6
12.25%
6.75%
25.00%
0
Month 7
7
12.25%
6.75%
25.00%
0
Month 8
8
12.25%
6.75%
25.00%
0
Month 9
9
12.25%
6.75%
25.00%
0
Month 10
10
12.25%
6.75%
25.00%
0
Month 11
11
12.25%
6.75%
25.00%
0
Month 12
12
12.25%
6.75%
25.00%
0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$130,855
$105,707
$0
$105,707
Month 2
$140,796
$106,720
$0
$106,720
Month 3
$148,963
$108,426
$0
$108,426
Month 4
$167,698
$110,459
$0
$110,459
Month 5
$162,587
$110,360
$0
$110,360
Month 6
$173,258
$111,790
$0
$111,790
Month 7
$187,090
$113,739
$0
$113,739
Month 8
$213,470
$115,681
$0
$115,681
Month 9
$211,056
$115,205
$0
$115,205
Month 10
$211,056
$115,205
$0
$115,205
Month 11
$219,232
$117,133
$0
$117,133
Month 12
$220,540
$117,883
$0
$117,883
$25,148
19.22%
$34,076
24.20%
$40,537
27.21%
$57,239
34.13%
$52,227
32.12%
$61,468
35.48%
$73,351
39.21%
$97,789
45.81%
$95,851
45.41%
$95,851
45.41%
$102,099
46.57%
$102,657
46.55%
$26,834
$7,900
$26,834
$6,500
$26,834
$7,900
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$26,834
$6,500
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$575
$1,050
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$2,000
$1,745
$2,000
$5,903
$0
$48,007
$46,607
$48,007
$46,607
$46,607
$46,607
$46,607
$46,607
$46,607
$46,607
$46,607
$46,607
($22,859)
($22,284)
$4,185
($8,113)
($12,531)
($11,956)
$4,154
($4,171)
($7,470)
($6,895)
$4,122
($2,898)
$10,632
$11,207
$4,090
$1,635
$5,620
$6,195
$4,058
$390
$14,861
$15,436
$4,026
$2,709
$26,744
$27,319
$3,993
$5,688
$51,182
$51,757
$3,960
$11,805
$49,244
$49,819
$3,927
$11,329
$49,244
$49,819
$3,893
$11,338
$55,492
$56,067
$3,860
$12,908
$56,050
$56,625
$3,826
$13,056
Net Profit
Net Profit/Sales
($18,931)
-14.47%
($12,514)
-8.89%
($8,695)
-5.84%
$4,906
2.93%
$1,171
0.72%
$8,126
4.69%
$17,063
9.12%
$35,416
16.59%
$33,987
16.10%
$34,013
16.12%
$38,724
17.66%
$39,168
17.76%
Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Leased Equip/Van/Dispensing
Systems
Utilities
Insurance
Other Taxes
Payroll Taxes
Other
Total Operating Expenses
22%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$130,855
$130,855
$140,796
$140,796
$148,963
$148,963
$167,698
$167,698
$162,587
$162,587
$173,258
$173,258
$187,090
$187,090
$213,470
$213,470
$211,056
$211,056
$211,056
$211,056
$219,232
$219,232
$220,540
$220,540
$0
$0
$0
$0
$0
$0
$0
$130,855
$0
$0
$0
$0
$0
$0
$0
$140,796
$0
$0
$0
$0
$0
$0
$0
$148,963
$0
$0
$0
$0
$0
$0
$0
$167,698
$0
$0
$0
$0
$0
$0
$0
$162,587
$0
$0
$0
$0
$0
$0
$0
$173,258
$0
$0
$0
$0
$0
$0
$0
$187,090
$0
$0
$0
$0
$0
$0
$0
$213,470
$0
$0
$0
$0
$0
$0
$0
$211,056
$0
$0
$0
$0
$0
$0
$0
$211,056
$0
$0
$0
$0
$0
$0
$0
$219,232
$0
$0
$0
$0
$0
$0
$0
$220,540
Expenditures
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$26,834
$35,544
$62,378
$26,834
$175,815
$202,649
$26,834
$127,186
$154,020
$26,834
$132,308
$159,142
$26,834
$137,495
$164,329
$26,834
$134,078
$160,912
$26,834
$139,478
$166,312
$26,834
$145,029
$171,863
$26,834
$152,660
$179,494
$26,834
$149,153
$175,987
$26,834
$149,821
$176,655
$26,834
$155,206
$182,040
$0
$1,824
$0
$2,221
$0
$0
$0
$66,423
$0
$1,843
$0
$2,223
$0
$0
$0
$206,715
$0
$1,861
$0
$2,243
$0
$0
$0
$158,124
$0
$1,880
$0
$2,257
$0
$0
$0
$163,279
$0
$1,900
$0
$2,268
$0
$0
$0
$168,497
$0
$1,919
$0
$2,281
$0
$0
$0
$165,112
$0
$1,939
$0
$2,292
$0
$0
$0
$170,543
$0
$1,958
$0
$2,305
$0
$0
$0
$176,126
$0
$1,978
$0
$2,317
$0
$0
$0
$183,789
$0
$1,999
$0
$2,328
$0
$0
$0
$180,314
$0
$2,019
$0
$2,341
$0
$0
$0
$181,015
$0
$2,040
$0
$2,354
$0
$0
$0
$186,434
$64,432
$164,432
($65,919)
$98,513
($9,161)
$89,352
$4,419
$93,771
($5,910)
$87,861
$8,146
$96,007
$16,547
$112,553
$37,344
$149,897
$27,267
$177,164
$30,742
$207,907
$38,217
$246,124
$34,106
$280,231
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
0.00%
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Starting Balances
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
$100,000
$61,157
$0
$161,157
$164,432
$116,278
$0
$280,710
$98,513
$117,392
$0
$215,905
$89,352
$119,269
$0
$208,621
$93,771
$121,505
$0
$215,276
$87,861
$121,396
$0
$209,257
$96,007
$122,969
$0
$218,976
$112,553
$125,113
$0
$237,666
$149,897
$127,249
$0
$277,146
$177,164
$126,726
$0
$303,890
$207,907
$126,726
$0
$334,632
$246,124
$128,846
$0
$374,970
$280,231
$129,671
$0
$409,902
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$595,040
$0
$595,040
$756,197
$595,040
$575
$594,465
$875,175
$595,040
$1,150
$593,890
$809,795
$595,040
$1,725
$593,315
$801,936
$595,040
$2,300
$592,740
$808,016
$595,040
$2,875
$592,165
$801,422
$595,040
$3,450
$591,590
$810,566
$595,040
$4,025
$591,015
$828,681
$595,040
$4,600
$590,440
$867,586
$595,040
$5,175
$589,865
$893,755
$595,040
$5,750
$589,290
$923,922
$595,040
$6,325
$588,715
$963,685
$595,040
$6,900
$588,140
$998,042
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$29,627
$29,850
$0
$59,477
$171,581
$28,026
$0
$199,607
$122,781
$26,183
$0
$148,964
$127,721
$24,322
$0
$152,043
$133,032
$22,442
$0
$155,474
$129,435
$20,542
$0
$149,977
$134,653
$18,623
$0
$153,276
$139,937
$16,684
$0
$156,621
$147,688
$14,726
$0
$162,414
$144,165
$12,748
$0
$156,913
$144,647
$10,749
$0
$155,396
$150,046
$8,730
$0
$158,776
$149,628
$6,690
$0
$156,318
Long-term Liabilities
Total Liabilities
$695,399
$754,876
$693,178
$892,785
$690,955
$839,919
$688,712
$840,755
$686,455
$841,929
$684,187
$834,164
$681,906
$835,182
$679,614
$836,235
$677,309
$839,723
$674,992
$831,905
$672,664
$828,060
$670,323
$829,099
$667,969
$824,287
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
$98,000
($96,679)
$0
$1,321
$756,197
$98,000
($96,679)
($18,931)
($17,610)
$875,175
$98,000
($96,679)
($31,445)
($30,124)
$809,795
$98,000
($96,679)
($40,140)
($38,819)
$801,936
$98,000
($96,679)
($35,234)
($33,913)
$808,016
$98,000
($96,679)
($34,063)
($32,742)
$801,422
$98,000
($96,679)
($25,937)
($24,616)
$810,566
$98,000
($96,679)
($8,874)
($7,553)
$828,681
$98,000
($96,679)
$26,542
$27,863
$867,586
$98,000
($96,679)
$60,529
$61,850
$893,755
$98,000
($96,679)
$94,542
$95,863
$923,922
$98,000
($96,679)
$133,266
$134,587
$963,685
$98,000
($96,679)
$172,433
$173,754
$998,042
$1,321
($17,610)
($30,124)
($38,819)
($33,913)
($32,742)
($24,616)
($7,553)
$27,863
$61,850
$95,863
$134,587
$173,754
Net Worth
Page 6