Professional Documents
Culture Documents
The following Financial plan was conducted for Big Hoss Barbershop and Lounge. The numbers and
information were based off of other competitors in the industry and projections that the owners believe to
be feasible.
Before operations can begin, Big Hoss Barbershop and Lounge must first have a location, employees,
equipment, and other materials necessary, ready to go. In order to make this happen, we decided that
two loans from Bank of America, one for $100,000, and the other for $200,000, along with the $200,000
we believe we could collect from owners, investors, family, and friends, would give us $500,000. This
would be more than sufficient for startup because as stated in the Sources and Uses of Funds statement
below, Total Startup expenses are $383,200, giving us a substantial amount of capital to work with.
Sources of Capital
Bank Loans
Bank 1 $ 100,000
Bank 2 $200,000
Total Bank Loans $ 300,000
Startup Expenses
Buildings/Real Estate
Purchase $ 250,000
Construction
Remodeling $15,000
Other $5,000
Total Buildings/Real Estate $ 270,000
Opening Inventory
Bar Materials $ 16,000
Hair Products $200
Barbershop Materials $200
Total Inventory $ 16,400
Summary Statement
Sources of Capital
Owners' and other investments $ 200,000
Bank loans $300,000
Other loans -
Total Source of Funds $ 500,000
Startup Expenses
Buildings/real estate $ 270,000
Leasehold improvements -
Capital equipment $70,000
Location/administration expenses $24,600
Opening inventory $16,400
Advertising/promotional expenses $2,200
Other expenses -
Contingency fund -
Working capital -
Total Startup Expenses $ 383,200
Important Assumptions
In order to project the first three years of operation for Big Hoss Barbershop and Lounge we had to make
the following assumptions:
Sales
Year 1:
Year 2:
Year 3:
28,512 Haircuts given
26,208 Drinks sold
4,896 Massage Chair uses
288 Movie/Show plays
6,048 Jukebox plays
Business Assumptions:
At least 5 Barbers are employed
Big Hoss Barbershop is open up to 6 days a week
These numbers are based off of local barber responses, which is further explained in the Market and
Industry Analysis section, and off of the assumption that Big Hoss Barbershop has up to 5 Barbers and
respective chairs.
Big Hoss Barbershop and Lounge plans to maintain a positively growing cash flow over the next three
years and therefore will be able to cover its expenses within that time period.
Balance Sheet
Year 0 Year 1 Year 2 Year 3
Assets
Liabilities and
Capital
Big Hoss
Barbershop Income Statement
3 Year Projection Year 1 Year 2 Year 3
Below-the-Line
Items
Income from
discontinued
operations
Effect of accounting
changes
Extraordinary items
Ratio Analysis
Ratio Analysis Year 0 Year 1 Year 2
Percent of Sales
Net Income 85092 141666 191393
Sales 445248 583776 704160
Growth Margin 0.2037516171 0.1361618155
Selling, General, and
administrative Expenses 69600 69600 69600
Commissions 176688 224496 265392
Advertising Expenses 2400 2400 2400
Interest Expense 17000 14900 10350
Profit Before Interest and
Taxes 196560 287280 366768
Main Ratios
Current 1.168 2.136
Quick 1.168 2.136
Total Debt to Total
Assets 0.6 0.5263157895 0.4494382022
Pre-tax Return on Net
Worth 0.9828 1.2768 1.497012245
Pre-tax Return on Assets 0.39312 0.6048 0.8241977528
Additional Ratios
Net Profit Margin 0.1911114705 0.2426718467 0.2718032833
Debt Ratios
Debt to Net Worth 1.5 1.111111111 0.8163265306
Liquidity Ratios
Net Working Capital 16800 56800 96800
Interest Coverage 11.56235294 19.28053691 35.43652174
Additional Ratios
Assets to Sales 1.122969671 0.8136682563 0.6319586458
Current Debt/Total
Assets 0.6 0.5263157895 0.4494382022
Sales/Net Worth 2.22624 2.59456 2.874122449
As you can see in the chart below, our projected Net Income and Sales Revenue have a strong positive
growth rate.