Financial and Managerial Accounting

MBA 612 Fall 2010

By:

Marios ------------- U------------Sampson Christos U074N0925

Business Plan of Spanish Delight

Lecturer: Dr Tsaklanganos, Angelos

Table of Contents
1. Executive Summary 2. Company Description . 3. Description of Product and Service .. 4. Market Analysis ... 5. Marketing Strategy .. 6. Operating Plan . 7. Management Team . 8. Funds Required and Expected Uses 9. Financial Statements ... 1 4 5 9 13 17 22 25 27

1. Executive Summary
The business plan for Spanish Delight restaurant studies the opportunity taken from purchasing goodwill and assets from Atzeka restaurant which will seize operations. The current owner is interested in selling the operations, as the restaurant is not doing the volume he thought it would. The restaurant is located in Ledra street offering great potential for attracting customers. The area is surrounded by cafes, bars, pubs and clubs and its one of the hot spots of Nicosia. Spanish Delight management team believes that the market can be segmented into four distinct groups. The first group is the tourists, especially from Europe, the second group that will be targeted is middle aged Cypriot couples who are looking for a cuisine that will satisfy them and give a diverse experience in there night life. The third group will be vegetarian people, since nowadays it is kind of a trend to be vegetarian and last people who are single, open minded and willing to try something new, tasty, low fat and interesting.

Mission - Vision
Spanish Delight mission is to be a full service, family Spanish restaurant offering high quality affordable Spanish cuisine inspired by authentic family recipes. Our goal is to provide our customers with an entire dining experience that exceeds their expectations on every visit. Our restaurant is clean and the quality is always high. We value the people who work for us. Quality employees make quality food, keep the restaurant cleaner, give better service, and stay employed longer because they like working at Spanish Delight. We have found that friendly managers hire friendly crew people and friendly crew people attract customers. 1

We have a strong management team with a great experience in the field of restaurants and generally in the small business industry of Cyprus. The optimal goal of the management team and the motto of the restaurant will be: People entering the restaurant, having the sense that they went on a quick trip to Spain, eat there, have fun and went home to come again.

Values
Quality quality food and service Cleanliness a priority to preserve quality; both in the kitchen and the dining area Taste an unforgettable Spanish flavor Experience something to remember

Keys to Success
Unique, Innovative & Contemporary: The creation of a unique and innovative fine dining atmosphere will differentiate us from the competition. The restaurant will stand out from the other restaurants in the area because of the unique design and decor. We will offer a fine dining experience in an electric atmosphere. Product quality: great and healthy food, great service and atmosphere. Menu: The menu will appeal to a wide and varied clientele. Our eclectic menu features regional specialties and family recipes from Spain highlighting the beauty of the Spanish culture. Employee Retention Focus: Employee retention and development programs will be a primary focus and success platform for this

business. Through these programs, we will be able to draw seasoned and elite professionals and build a committed work force. Cost Control Focus: We will control costs at all times, without exception. Cost Control will be an integrated function of the restaurant from the onset. Cost control is about managing the numbers interpreting and comparing the numbers that impact the bottom line. 80% of the success of a restaurant is determined before it opens. Due to intense competition, restaurateurs must look for ways to differentiate their business to achieve and maintain a competitive advantage. Cyprus requires a place that will fit into the 'new way of living' of modern people, one that is contemporary entertaining and healthy at the same time. Spanish Delight will fill that niche.

2. Company Description
Spanish Delight focuses on providing Spanish base Ethnic food. Our restaurant is single unit, small sized restaurant. The restaurant will be located in Lidra avenue and it will service all types of dinning: lunch, dinners. Our goal is to take advantage of the street traffic during the week and especially on weekends. Service will be available during the following hours: Lunch: Monday to Saturday, 12 a.m. 3 p.m. Dinner: Monday to Saturday, 6:30 p.m. 1 a.m. Fridays and Saturdays: 7:30 p.m. 1:30 a.m. The financial success is one of the most important aspects for us. In order to achieve success, we need to provide high quality food and service, extremely clean with interesting twists. This is a huge opportunity for us because our restaurant will be the only one in the area and it will serve food extremely different from the other regular restaurants thats why is going to be unique in its kind. Our short-term goals are to keep the customer satisfied in order to build a good name. A satisfied customer will promote the restaurant to family and friends thus increasing the volume of the operations. Our long-term goals include of course the profit but also establishing Spanish Delight as the best choice for Spanish food in town. People nowadays tend to visit new and totally different types of cuisine and restaurants. So we believe that more and more people will visit our restaurant and the restaurant will be a success. The restaurant will start out as a simple limited partnership, owned by its founders.

3. Description of Product and Service

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The menu will be written in plain language so everyone can understand and make his/her selection. In addition the menu will change on a daily basis so our customers can try something new every day and have a variety of choices. As we mention earlier our restaurant will offer Spanish and a selection of international dishes. Our food will be of the finest quality and prepared with exotic flare in combination with Spanish and other regional flavors. The center of our attention is the customer so we need to offer high quality food and services and create long term relationships and loyal customers. Portions will be modestly sized, garnished with stunning presentations. We will keep a small constant menu and the rest of the menu will be based on the chefs recommendation. This will help us to reduce waste and plan ingredients and purchasing.

Spanish Ingredients and Recipes

Our chef will have great autonomy in designing and producing menu offerings from many different world cultures. We will procure all the traditional, authentic ingredients necessary to hold true to these varied and interesting cultural recipes.

Intellectual Property - Trademark

Our trademark is a combination of words and images intending to demonstrate to the customer two different aspects. The first aspect regarding the name shows the geographical location that our food will be origin as well as what the customer will be waiting, from the food delivered to them. The above mentioned can be seen from the two words seen in our logo which are SPANISH and DELIGHT. The second aspect that has to do with the image, the aim was to show to the customer the long history, the pleasure and the enjoyment of having a meal at a Spanish traditional restaurant. Our intention is to register the trademark under the World Intellectual Organization as well as in Europe. More specifically we will register it under WIPO as well as in OHIM in order to protect it in the 27 European Countries as well as in the Middle East countries. The cost for protecting a trademark under one class / service is quite low and affordable for all business (small or medium sized) and since we intend to expand our business in 5

the near future, our trademark will be the distinctive indicator of our business organization.

Menu:
Side dishes: Sopa del da
(Organic greens, tomato, olives, garlic croutons, red wine vinaigrette)

Vegetable Soup
Los tres amigos (Grilled trio of sausages served with grilled flatbread) Boquerones (Slow oven roasted tomatoes topped with goat cheese, basil)

Patatas alioli
Patatas bravas

Ensalada Tasca
Bistec de ternera Menestra de verduras Salmn a la planch Paella Valenciana Ossobucco de ternera Paella de mariscos

Platos principales:

Combo Plates: Salmon Plate Snapper Plate Chicken Plate Beef Plate Shish Kabob Plate Tofu Plate Hummus Plate Mediterranean Plate Garden Plate 7

International Wraps:

Egyptian Wrap Lebanese Wrap Chicken Shish Kebab Wrap Chicken Teriyaki Wrap Tofu Wrap Shitake Mushroom Wrap Mushroom Melt Wrap Veggie Melt Wrap Jerusalem Wrap Baba Ganoush Create Your Own Wrap

Special Drinks & Coffees: Alcoholic drinks Non- alcoholic dinks Coffee Sangria

Appetizers: Bread Basket served with Olive oil, Black Pepper, and Goat Cheese dip Blue Crab Fritters with Mango-Tamarind sauce Crab Cake medallions with Shrimp & Lobster

Entrees: Tequila Scallops with Spanish sherry reduction 8

Thai Red Chili rubbed shrimp Voodoo Prince Curry Chicken and Bock Chow with sticky rise in Banana Herb Roasted Chicken or CooChee (House) spices

Desserts: Chocolate Chunk Bread Pudding with Bourbon Cherry sauce Chocolate Explosion Milk, Dark and White chocolate Fruit Plate

4. Market Analysis Potential customers

Middle Aged Cypriot Couples: The restaurant will have an intimate, romantic, atmosphere. Spanish Delight will be the best location in town for middle aged couples from Cyprus who are looking for a cuisine that will satisfy them and give them a different experience in there night life. Vacationers: Cyprus attracts many tourists during the summer months of May through October. Spanish Delight will be a destination dining locale, with its attractive atmosphere, international menu, and lounge. Also, tourists are more familiar with European cuisines and care more about their health. VegetarianPeople: Our menu will always have a line of extremely delicious vegetarian foods that will deal with the market segment of vegetarian people. Individuals: For People who are single, open minded and willing to try something new, tasty, low fat, interesting. Spanish Delight can offer them the ultimate dining experience and have a wonderful time 9

Market Analysis Potential Customers Middle Aged Cypriot Couples Tourists Individuals Vegetarian People Market Percentage 30

30 25 15

Competitors
Our major competitors in the food industry are quite many. Although we are the only one Spanish restaurant situated in Ledras street there are many restaurants newly opened in the area. Consequently there is lower gross profit for the company. If we compare our Spanish restaurant competitors, we can identify that our weaknesses are strengths for some of the competitors restaurants. For example, we are situated in an area that cars are not allowed to cross over, so this means that its more difficult for customers reaching the store. On the other hand our price as well as our food quality compared to other Spanish restaurants is at a superior position. We also have to mention 10

that lack of delivery services and lack of kids meal menu are a major disadvantage for the expansion and attraction of new customers to the business in contrast to our competitors. A new competitor in your home market

What makes as special

What will make as special will be the creation of an environment that will impress and satisfy the customer. We also aim to provide a combination of interesting and excellent services. Our goal is to create strong identity in our community with a grand opening. In order to achieve our goals we focus on the marketing to increase customer awareness in Nicosia and in the surrounding areas. There is a variety of tactics and programs that will help us achieve our goal of explaining who we are and what we do and that word-of-mouth will be our main marketing force. All menu items are moderately priced for the area. While we are not striving to be the lowest-priced restaurant, we are aiming to offer exceptional food at reasonable prices for the average restaurant diner.

Marketing research and their findings

In order find more information about our target market, we conducted a marketing research using various techniques like focus groups, pilot studies, surveys, secondary data, case studies etc. Our market research helped us to identify the following: We aimed to determine who our customer is, what are the customer needs, wants, expectations, beliefs etc. Also we were able to determine the proportion of the target market nearly 95% of our surveyed focus group endorsed having a choice of different size portions. Spanish Delight Restaurant concept is built to offer different-sized portions. Our customers want the option to choose what satisfies their appetite. Also we were able to determine the menu variety. After studying other marketing researches, we found that Spanish restaurants are increasing in Nicosia because Cypriots are more willing to try new thinks and especially international taste. 11

Also we were able to determine the proper dining experience. We must provide customer satisfaction with food and service being highly important, but our findings indicate that the decoration, lighting, and other options to improve the dining experience are also factors in customer decisions. Spanish Delight Restaurant takes all these factors in consideration for the design of this restaurant.

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Marketing Research - SWOT Analysis 5. Marketing Strategy Strengths

Spanish food in an area in Nicosia that no other exotic restaurant exists. The restaurant has good location The food quality and prices are very good. Friendly and experienced food service team. Good ventilation and airconditioning system. Flexible working hours for employees. New innovative service. Good Marketing and promotional tools to attract customers

Weaknesses
Size of the business (Square meters and only one store) The restaurant has no market presence or reputation There are no big newspapers or TV advertisements There are no kids playing area in the restaurants There is no kid's meal There is no home delivery service

Opportunities
Food habits are changing Standard of living has good location To open branches in new cities in Cyprus and Europe. To build children playing area in the restaurants. Establishing home delivery service Hiring and training new employees Making new food dishes TV commercials Developing market Tourism Advancement of technology Increase of population European Union

Threats
A new competitor in your home market Risk of rejection for Spanish food Shift in consumer taste away from the service. Renovation vs. new construction and the cost of renovation because of the age of buildings No incentives for rehabilitation of existing housing stock there are some historic preservation incentives for commercial buildings Parking continues to be an issue and we need to consider the type of development and how that will impact the need for parking

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Spanish Delight Restaurant marketing strategy will be to promote our exciting food, superior service, and thrilling concepts to draw in the local repeat customers and the yearly fixed tourists. Marketing initiatives will concentrate on the following: Customer Service: Based on our experience in the restaurant industry, customer service has always been the major draw for the dining clientele. Food and atmosphere is far out-shadowed by superior customer service that turns a new customer into a repeat customer. As managers we must demand the wait-staff to provide the very best in quality services to the customer, ensuring that they are content and satisfied with their dining experience. Wait-staff will be thoroughly trained. Location/Building: The most important Marketing tool that we have is the exterior of our building, and our new sign. We budgeted a great deal into the renovations and decor to generate the aesthetic appeal of Spanish Delight Restaurant. Advertising and Promotion: Our Advertising Plan and media schedule call for targeting customers directly through local publications aimed at, respectively, tourists, Cypriot couples, and individuals and vegetarian people. Also based on our experience we know that the key to success at this time of initial opening is extensive media promotion for the achievement of our goals. A healthy budget is allocated for the first year. A primary part of the budget is allocated to create the media and customer buzz for the month prior to opening and the next three months after the grand opening. Promotional Campaign: The best way to reach our potential customers is to develop an intense advertising campaign promoting our concept 14

of "Spanish restaurant, pleasant experience." In addition to standard advertising practices, we will gain considerable recognition through newspapers, newsletters and public announcements. Consumers will be encouraged to visit our website to be greeted with a flash media intro that highlights the restaurant, past happenings and upcoming attractions.

Advertising and promotional strategy

Publicity Strategy
Establish an effective and efficient communication between the management team and the top level personnel so we can achieve our goals by providing high quality food with excellent services. Create a monthly package updates for the most effective media. Create long term relationship with the editorial stuff of many Medias like newspapers, magazines, TV, radio etc. Create a complete history about the restaurant and menu so we can inform potential customers about how and when this kind of restaurant was created and what the growth has been since the beginning. During the first six to twelve months of our operations, invite with personal invitations the most influential reporters, editors, critics from local news papers and magazines or local and international celebrities. People have become more sensitive in community problems. Therefore, we should take advantage this sensitivity and participate in particular community service such as recycling, pollution and charity. These sensitivities will create good relationship with the community and gain their trust and support, and at the same time give something back to the community.

Marketing programs

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There are three marketing programs that we can use to achieve our goals. Those are: one on one personal conversation in the restaurant, public relation and media marketing. The cheapest and more effective in my opinion marketing is the personal conversation with our customers. Therefore both the management and head chiefs will chat with the customers and make sure that they receive high quality food with excellent services. This will create good relationship and loyalty with our customers. Another marketing program that is applicable is the public relations. In this situation we can use the critic choice to design our decoration, services, and menu. Also, we can use the brochures to advertise in multiple places like hotels, shops, online etc. Our goal is to attract and retain loyal customers We should try to create good business relationships with companies in both the private and public sector. In this way we can attract more customers. Finally, the media marketing is also available. We can use the news paper, TV, radio, official web side to advertise our menu and excellent services, but also to provide directions for our restaurant location.

Sales Strategy
Our strategy is simple: To create an environment that will impress and satisfy the customer. Our marketing strategies are designed to get critics and initial customers into our doors. Our sales strategies must take the next step and create loyalty and long term relationships. By creating long term relationships with our customers we get more customers because if customers are satisfied and happy with our services and prices they will tell about the dining experience to friends and relatives. Spanish Delight sales strategy requires consistently high quality food, service, speed, and atmosphere. This can be accomplished by: 16

Hiring employees who genuinely enjoy their jobs and appreciate Continues improvements of quality, is every employee and The head chief should have personal conversations with the

our restaurants unique offerings. manager job customers so we can obtain a feedback about our food variety and services. Evaluating food choices for popularity, and keeping favorites on the menu as we rotate seasonal foods and specials Also we were able to determine the most reasonable price. Our customers and consumers in more general have become more demanding for the value of the dining euro. Our menu is priced at a mid-tier level, with no entrance over 20. In addition we have an extended menu and Appetizer selection priced between 5.00 10.00, allowing budget dining in a full-service restaurant.

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6. Operating Plan

Location - Building
There are a lot of factors that we have to think about the location of the restaurant. We have to choose the town that it will be situated, will it be a tourist place or a village. As for the building we can buy a new or used building or even rent. We can also buy the land and built our own building according to our needs.

Location
We decided that the best place for our restaurant is Nicosia and more specifically Lidra street. The reason that we decided to go there is because Nicosia is both tourist place depending on the territory - and the fact that many Cypriots visit at night. We expect that tourist will visit our restaurant because it will be a new experience even for them. Another reason we have chosen Lidra street is because we wanted to take advantage of the stores and night clubs around that attract customers and immediately have an advertisement without spending any money. Also the environment is kind of exotic since there is a feeling of unique and old architecture in the surrounding buildings. Furthermore there are not any other restaurants of exotic food there.

Renting
We decided that we are going to rent a building because we cannot afford to buy one at the initial stages of our opening and we prefer to spend that money to the decoration of the building. Even if we could afford one it wouldnt be wise, because the economic crisis around the globe has made small business more conservative about money spending, since the business may not attract the customers it expected.

Building
For our needs we found a building in a really good condition and enough place for our needs. The size of the building is 250 m2 that includes the place for the tables for the 18

kitchen and the place for storage. There is also a small garden that is important for as because we need to decorate it in a Spanish style. Something else that was important for our decision is that the place was an Italian restaurant before. This is very important for as since it will save as time from bureaucratic procedures for getting a license for the restaurant.

Facilities - Equipment
Another advantage for this building is that the electricity installations are ready and in a good condition and for our needs. We found a company MachinePro Ltd which is specialized in repairing restaurant equipment, something that we definitely need, and also provides 24 hours service. We intend to give lots of emphasis in the good quality of our equipment in order to keep our customers satisfied. If for example we have some machines that will continuously have problems then the food will be late delivered to customers. As a consequence we will have dissatisfied customers, which is something that we really want to avoid since this will ruin the image of our restaurant.

The Inside
It is very important to do a briefly and concise description of the Spanish Delight restaurant for the customers who will choose to visit this extraordinary place. When someone enters into the restaurant they will experience a place arranged as below. They will see a large hall for dining which it divided into two rooms. The first room is the center of the restaurant which is a non smoking area where the piano is located. On the walls of this room, paintings will be placed showing places and scenes from different countries so as for the customers to view and enjoy different cultures. The second room will be the family section. On this room wall paintings will appear showing different monuments of different countries which will give an essence of feelings that they have visited a different country while they enjoy their meals. This in turn creates an excellent atmosphere and beauty of place for someone who chooses to visit our restaurant.

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The rooms are scented with aroma of jasmine with dim lightning and tables covered in white silky clothe, creating a romantic and at the same time an exotic atmosphere. The whole restaurant is decorated with an unusual decoration of each culture something which someone has never seen before and creates a sense of pleasure, visually mood in a charming high energy ambience. Our aim is to have satisfied customers giving them an unforgettable experience of our restaurant. The reception of the restaurant has photos placed on the walls from important cities and places and also famous personnel from different countries and culture. This spot is where we welcome our customers which give out warmth so as to make them comfortable to ask for any information they require. It is also where customers are attended to their tables with the help of the waiter who will serve them for the night. The reception office cost 520 from Bo Concept the green carpet on the floor cost 400 from Cyfloor and the wooden walls of the restaurants cost us 780 which was bought from Parke Kofteros.

The outside
The garden is an essential part in the whole operations of the business mainly because of the climate temperature that exist in Cyprus. What we intend, is to create a coffee place in the garden in the summer period. This is the main reason that we have invested a lot of money on its design and decoration. The floor in the garden will have tiles with earthly colors bought from Sophocle Kyprianou. They cost 18.00 per square meter and we paid for 75m the amount of 1350. On the rest of the garden we intend to plant orthoclado tree which is a cypress tree that is very beautiful and a new trend for gardens, epoxiaka which are small plants that are planted on specific periods of the year and palm tress that will make the place look more exotic. Garden is also very important for the outside looking of our restaurant. They are estimated to cost 850 in a time period of 3 weeks.

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Kitchen
The kitchen is located at the back of the restaurant. The kitchen is also composed by three stations dictated by the restaurants menu. There is a working station that is used for chicken, another for fish and finally for salads and cold plates. Working stations help keep the restaurants kitchens running smoothly. In the kitchen we will have the refrigerator where we will have all the ingredients that we will use for the meals. It will be located in the center of stations, so it can be reached easily by the cooks, so they dont have a waste time. Next to it, there will be the sink for washing the ingredients and underneath of it the 2 dish washers for plates and other equipment. Above of each station there will be shelves with all the flavorings that the cook will need to use for the dishes. Behind the stations, there will be 3 big ovens that they will use for cooking, without getting in way of the other cooks. In the side of each station, there is a bench, where the cooks place the finished plates, so the waiters can pick them up easily and take them to the customers quickly. The existing machinery includes a stainless steel food prepare table, an electric conveyor toaster, a professional microwave oven, a professional oven and grill, a professional cheese grater, an electric slicer, two toaster ovens, a vacuum pack machine, a professional washing machine and a refrigerator, an ice machine, a stainless steel potato cutter, an electric food warmer and a twin basket fryer, and an espresso, hot chocolate and coffee machine. Although we have the existing machinery, we had to buy some new ones that we will be needed. We bought the new machinery and kitchen equipment from Miele. It cost us about 67.340.

Suppliers
As a Spanish restaurant we dont have to import anything from another country. All the goods can be found here in Cyprus from our local suppliers. We have chosen to take our inventory from 2 different suppliers for the reason that we dont want to run out of stocks 21

at any time. This will also give as the advantage of bargaining our prices between the two suppliers. Now as for vegetables, our chef will be in charge selecting every morning fresh fruits and vegetables from Laiki Agora of Saint Antonios which is situated in a distance of 3 kilometers from our restaurant.

Delivering
The delivery of our inventory- goods might cause as a problem, since there isnt a parking place. Parking place is a general problem for this area. There isnt any parking place in the front entrance of the shop and the only parking place is on the back side. Only on specific times (Between 07:00 - 10:00) the suppliers can deliver there goods at the restaurant.

7. Management Team
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Ownership
The two owners Marios and Christos will bring a large experience in their new limited partnership. The essential reason for starting a limited partnership instead of a company is that the partners will have the right to manage the business directly. We wouldnt like at the first stages of the business other people to manage it, since we believe that we have the experience and knowledge to do it.

Responsibilities of Management
Marios has great experience in business development and in managing personnel and we are quite confident of his ability to develop the restaurant and find the best staff possible. Marios will be responsible for all financial issues as he has an enormous experience in accounting and finance. Moreover our chef, Christos has already published a cookbook that will add prestige to the restaurant immediately. He also has a degree in Business Administration with concentration in Marketing and thus will be the marketing manager of the restaurant as well. Day to day operational management will be conducted by Marios and Christos, as in charge of management. They will also be advised and supported by their Advisory Board (Attorney, financial controller).

Advisory Board
- Lellos P. Demetriades Law Office LLC will be in charge for the registration of the business and trademark. Achilleas Demetriades is our corporate attorney. - Pricewaterhouse coopers will be in charge of our financial, tax and advisory service. - Komodromos Markos will be our Media and Public Relation Consultant. - Androulla Aristidou of Aristidou Hospitality services will be our Restaurant Consultant

Biographies - Qualification

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Marios has great experience in managing personnel and he will be responsible for the recruiting. His experience and background knowledge in the field of restaurants will certainly be a great advantage for the business. He has 10 years of business management and accounting. His responsibilities will be day to day cash flow planning and staff management as well as training of personnel. Christos has been working as a chef for the past 10years in an identical type of restaurant. He was disappointed by the behavior of the previous owner and decided to join our team. He is a well known chef since he was cooking for a morning show on TV. Besides that, he has already published a book on health and cooking and has great knowledge on the operation and marketing of a restaurant as well as a degree in Marketing. Christos responsibilities will be in inventory negotiations, marketing, menu and operation management and of course he will be the chef of the restaurant.

Organizational Plan Personnel Plan

Organizational Plan
Head Manager

Accountant

General Manager

Supervis or

Chef

Cooks

Waiters

Personnel Plan
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The staff will include 7 full-time employees and 3 part-time employees, who will work a total of 850 hours per week and generate an average monthly gross payroll of 197.000 for the first year in business. As the personnel plan shows below, we expect to invest in a good team that will be fairly paid. We think the planned staff is in good proportion to the size of the restaurant and projected revenues.

Personnel Plan
Managers Chef Cleaning Waiters Other Total People Total Payroll 2011 50,000 45,000 30,000 72,000 24,000 10 197,000 2012 60,000 50,000 35,000 108,000 34,000 12 287,000 2013 70,000 65,000 50,000 108,000 49,000 14 342,000

8. Funds Required and Expected Uses

Start-up Expenses, Assets and Liabilities 25

We were able to lease the place at 2,500 per month. Our restaurant will be ready to use in three months period. We believe that our restaurant will start making profit in 12 months period. The place is already set up as a restaurant, but unfortunately the equipment is outdated so we need to buy new ones, so we plan to come up with a total of 100,000 in capital, thus a 130,000 guaranteed 13-year bank loan to set up the business.

Start-up Expenses, Assets and Liabilities Start-up Requirements

Start-up Expenses Legal Stationery etc. Other Total Start-up Expenses Start-up Assets Needed Cash Balance on Starting Date Other Current Assets Total Current Assets Long-term Assets Total Assets Total Requirements Funding Investment Investor 1 Investor 2 Total Investment Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities 26

1,500 1,100 1,300 3,900

80,000 50,000 130,000 80,000 210,000 210,000

60,000 40,000 100,000

1,000 0 0

Current Liabilities Long-term Liabilities(bank loan) Total Liabilities

1,000 130,000 131,000

S upD ram tart iag

250000 200000 150000 100000 50000 0 Assets Loans Expences Investm ent Assets Loans Expences Investment

9. Financial Statements
Assumptions underline financial projections

Sales Forecast
Unit Sales 2011 27 2012 2013

Meals Drinks Other Total Unit Sales Unit Prices Meals Drinks Other Sales Meals Drinks Other Total Sales Direct Unit Costs Meals Drinks Other Direct Cost of Sales Meals Drinks Other Subtotal Direct Cost of Sales

22,822 11,415 240 34,477 2011 15.00 2.00 10.00

35,000 17,500 500 53,000 2012 15.00 2.00 10.00

45,000 22,500 1,000 68,500 2013 15.00 2.00 10.00

342,330 22,830 2,400 367,560 2011 2.00 0.50 1.00 2011 45,644 5,708 240 51,592

525,000 35,000 5,000 565,000 2012 2.00 0.50 1.00 2012 70,000 8,750 500 79,250

675,000 45,000 10,000 730,000 2013 2.00 0.50 1.00 2013 90,000 11,250 1,000 102,250

Pro Forma Balance Sheet Balance sheet account for the years 2011 2012 - 2013 2011
Capital Assets Fixed Assets
28

2012

2013

Furniture and fittings Kitchen Ware Electrical Equipment Tablecloths etc

37135 1235 25905 3065 67340

38195 1830 24100 2759 66884

32918 1728 21690 2584 58920

Current Assets
Stock Debtors Cash

2225
748 383,355 386,328 59617 2350 61,967 324,361

11350
1700 561,960 575,010 82029 3500 78,529 496,481

17525 1300 773,671 792,496 98300 ----98,300 694,196

Current Liabilities Creditors Wages due Net Current Assets Total Assets - Current Liabilities Capital Add Net Profit/Loss Less Drawings Long Term Liabilities

391,701
306,259 (15138)
580 100000

563,365
442,539
40582 244 80000

753,116
628,423
78931 762 45000

391,701

563,365

753,116

Fixed Assets Depreciation

Our fixed assets are depreciated in a Straight Line Method at a 10% rate each year Furniture and fittings Opening B/ce 2011 37135 Depreciation Depreciation % 10% 3713 29 New Assets 4774 Closing B/ce 38195

2012 2013

38195 36575

10% 10%

3819 3657

2200 -----

36575 32918

Electrical Equipment Opening B/ce 2011 2012 2013 Kitchen Ware Opening B/ce 2011 2012 2013 Tablecloths etc. Opening B/ce 2011 2012 2013 3065 2759 2483 Depreciation Depreciation % 10% 306 10% 276 10% 249 New Assets ------350 Closing B/ce 2759 2483 2584 1235 1830 1920 Depreciation Depreciation % 10% 123 10% 183 10% 192 New Assets 718 273 ---Closing B/ce 1830 1920 1728 23315 25905 24100 Depreciation Depreciation % 10% 2331 10% 2590 10% 2410 New Assets 4921 785 ----Closing B/ce 25905 24100 21690

Pro Forma Trading and Profit & Loss a/c 2011

Sales Less Cost of sales Opening stock Add purchases 367,560 ---120669.50 30

2012
565,000

2013
730,000 11350 239,750

2225
185,500

Less Purchases Returns Less closing stock Gross Profit Add other income Income from investment Less Expenses Interest payable Insurance Repairs Light and Heat Salaries Advertising Rent Other Expenses Depreciation Furniture and fittings Electrical Equipment Kitchen Ware Tablecloth etc. NET Loss/Profit

669.50

5.500

2225
117775 249785 ---5000 850 100000 3600 197,000 10000 30000 2000 3713 2331 123 306 264.923 (15138)

11350
180000 385000 ---4000 850 3000 4000 287,000 7000 30000 1700 3819 2590 183 276 344.418 40582

9.750 17525 230000 500000 ---2250 850 1000 4300 342,000 4000 30000 900 32918 2410 192 249 421069 78931

Pro Forma Cash Flow

The cash flow projection shows that starting cost and provisions for ongoing expenses are adequate to meet our needs until the business itself generates its own cash flow sufficient to support operations.

2011
Cash from Operating activities: Cash Sales Increase in Debtors Decrease in Creditors Subtotal Cash from Operations

2012

2013

367,560 (748) (9617) 357,195 31

565,000 (952) 2412 566,460

730,000 400 (3729) 726,671

Cash flows from investing activities Patent purchased Plant and machinery purchased Bank interest paid Subtotal Cash Received Cash flows from financing activities Loan received Cash Balance

(1,500) (67340) (5000) 283,355

0 0 4500 561,960

0 0 4000 733,671

100,000 383,355 561,960

40,000 773,671

Ratio Analysis 2011

Gross Profit Ratio Gross Profit x 100 = Sales 249785x100=67.95% 367,560 385000x100=68.14% 565,000 500000x100=68.49% 730,000

2012

2013

Net Profit Ratio Net Profit x 100 = Sales -15138x100=4.11% 367,560 40582x100=7.18% 565,000 78931x100=10.8% 730,000

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Stock Turnover Cost of Sales = Average stock Current Ratio Current Assets = Current Liabilities Acid test ratio Current Stock = Current Liabilities Assets cl.

117775 = 105.86 1112.50

180000 = 26.51 6787.50

230000 = 15.93 14437.50

386,328 = 6.23 times 61,967

575,010 = 7.32 times 78,529

792,496 = 8.06 times 98,300

386,328-2225 = 6.19 575,010-11350=7.17 792,496-17525=7.88 98,300 61,967 78,529

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