Convenience Store Business Plan Sample

8/11/2019 Convenience Store Business Plan Sample

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Convenience Store Business Plan

Executive Summary

Introduction

MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will

continue to exist into the future - the need for speed. MillenniumMart will be the first fully

automated, 24 hour convenience store that is more like an enormous dispensing machine than

the traditional store.

The company expects to capture market share by becoming the low cost leader in the

convenience store industry by significantly reducing one of the primary expenses, which is

labor. Through our completely automated shopping experience, customers will have the

chance to shop for everyday items at reduced prices, thus undercutting competition such as 7-

11, AmPm, Circle K, and other local convenience store chains. The possibilities for

expansion are excellent not only in the local area, but in neighboring communities as well.

The Company

The company is a joint venture start-up company between the principals, Mr. Bean and his

associates, and the management of Martin-Bower, one of the country's largest and most

successful food distributors. The company will be incorporated as a class C corporation in the

state of Delaware with all shares held by private investors.

Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to

acquire a further 11% shares based on growth and profitability after the first five years.

MillenniumMart is expected to open its first store in downtown Manhattan in March of Year

1.


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The company will be set up with a board of directors. Mr. James Bean, a former senior

manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted

the position of CFO.

The Products/Services

MillenniumMart will sell the same products as other convenience stores in the same

packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines,

soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items

such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel

additives and cleaning supplies, pet supplies, paper products, toothpaste, etc.

All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green

Giant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can

dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to

create personal accounts that can display preferred items, retain shopping lists and other

services. An automated, interactive "customer service rep" will be able to answer questions

and pass on comments to the company's management.

In addition, the company is looking into ways to sell restricted items such as beer, wine andcigarettes and to set up a separate Internet area for remote access to the Web and email for its

customers.

The Market

Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S.

retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once

again that the convenience store industry has become a powerful force in U.S. retailing.

Convenience stores serve the entire purchasing population of its geographical area but focuses

on customers who need to purchase items outside of normal working hours such as swing

shift employees and quick shoppers looking for snacks and related items. Therefore we have


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segmented our market into night shoppers, quick shoppers, and others. Growth rates for these

three segments match the population growth for the surrounding area.

Our main competitor is 7-11 which holds approximately 30% of the industry. Othercompetitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east

coast.

Financial Considerations

Our start-up requirements come to $453,000, which are largely single time fees associated

with opening the store. These costs are financed by both private investors and the investment

of Martin-Bower. It should be noted that we expect to be operating at a loss for the first six

months before advertising begins to take effect and draw in customers.

MillenniumMart will be receiving periodic influxes of cash in order to cover operating

expenses during the first two years as it strives toward sustainable profitability. Almost all of

this funding has been arranged through lending institutions and private investors already. We

do not anticipate any cash flow problems during the next three years.

1.1 Objectives


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These are the goals for the next three years for MillenniumMart:

Achieve profitability by July Year 1;

Earn approximately $200,000 in sales by Year 3;

Start paying dividends by Year 3;

Start up second store by Year 4.

1.2 Mission

MillenniumMart's primary objective is to create a new and revolutionary distribution outlet

that will significantly reduce prices for its customers and provide greater services with an

equal level of quality. The company seeks to be first to market with this daring new idea so as

to capture market share and create greater than average profits.

1.3 Keys to Success

In order to survive and expand, MillenniumMart must keep the following issues in mind:

We must attain a high level of visibility through the media, billboards, and other

advertising.

We must establish rigid procedures for cost control and incentives for maintaining tight

control.

We must expend a significant amount on R&D in order to constantly be able to offer better

and greater products and services.

Company Summary

Automated stores such as MillenniumMart are not new, they have existed in Asia, especially

in Japan for a number of years now and have been quite successful there. Mr. James Bean,

MillenniumMart's founder and the driving force behind the joint venture, has been intrigued


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with the idea of bringing this new type of store to the U.S. since it can significantly reduce

costs and the ability of an automated store to provide products and services is only limited to

the imagination of management.

The company is a joint venture start-up company between the principals, Mr. Bean and his

associates, and the management of Martin-Bower, one of the country's largest and most

successful food distributors. The company will be incorporated in the state of Delaware with

all shares held by private investors.

2.1 Company Ownership

We will be structured as a C-Corporation which operates as a standard corporation. This formwas chosen by the Board of Directors because of various tax advantages. Retained earnings

will not be distributed as dividends for at least five years, thus enabling the early retirement of

the debt. Additionally, the corporate structure offers limited personal liability.

The company is a joint venture start-up between the principals, Mr. Bean and his associates,

and the management of Martin-Bower, one of the country's largest and most successful food

distributors. The company will be incorporated in the state of Delaware with all shares held

by private investors.

Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to

acquire a further 11% shares based on growth and profitability after the first five years.

MillenniumMart is expected to open its first store in downtown Manhattan in March of 2003.

The company will be set up with a board of directors. Mr. James Bean, a former senior

manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted

the position of CFO.

2.2 Start-up Summary


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Our start-up expenses come to $453,000, which are largely single time fees associated with

opening the store. These costs are financed by both private investors and the investment of

Martin-Bower.

START-UP REQUIREMENTS

Start-up Expenses

Legal $2,400

Pre-sale advertising/marketing $8,000

Land location and finders fee $8,000

Consultants $4,000


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Insurance $1,780

Rent $12,000

Research and Development $10,000

Expensed Equipment $50,000

Initial store facilities $150,000

Other $3,000

TOTAL START-UP EXPENSES $249,180

Start-up Assets

Cash Required $113,820

Start-up Inventory $10,000

Other Current Assets $8,000

Long-term Assets $72,000

TOTAL ASSETS $203,820


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Total Requirements $453,000

START-UP FUNDING

Start-up Expenses to Fund $249,180

Start-up Assets to Fund $203,820

TOTAL FUNDING REQUIRED $453,000

Assets

Non-cash Assets from Start-up $90,000

Cash Requirements from Start-up $113,820

Additional Cash Raised $0

Cash Balance on Starting Date $113,820

TOTAL ASSETS $203,820

Liabilities and Capital

Liabilities


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Current Borrowing $15,000

Long-term Liabilities $100,000

Accounts Payable (Outstanding Bills) $8,000

Other Current Liabilities (interest-free) $10,000

TOTAL LIABILITIES $133,000

Capital

Planned Investment

Private Investors $150,000

Martin-Bower management $110,000

Other $60,000

Additional Investment Requirement $0

TOTAL PLANNED INVESTMENT $320,000

Loss at Start-up (Start-up Expenses) ($249,180)


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TOTAL CAPITAL $70,820

TOTAL CAPITAL AND LIABILITIES $203,820

Total Funding $453,000

Products

As the most progressive company in the industry, MillenniumMart plans to offer a greater

number of products and services in the future so as to create another dimension of

competitive advantage. So that our customers will feel secure, we will subscribe to the

security services offered by the shopping center of which we are a part. This will cut down on

graffiti and loitering and insure the safety of both employees and customers.

MillenniumMart will sell the same products as other convenience stores in the same

packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines,

soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items

such as canned soups, microwaveable meals, condiments, bread, auto products such as fueladditives and cleaning supplies, pet supplies, paper products, toothpaste, etc.

All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly GreenGiant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispensecash, stamps, Lotto and phone cards and other coupons and will have the ability to create personalaccounts that can display preferred items, retain shopping lists and other services. An automated,interactive "customer service rep" will be able to answer questions and pass on comments to thecompany's management.

Market Analysis Summary


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Our market is booming. Convenience store industry sales rose 8.6% for 2002. Overall U.S.

retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once

again that the convenience store industry has become a powerful force in U.S. retailing.



shift employees and quick shoppers looking for snacks and related items. Therefore we have

segmented our market into night shoppers, quick shoppers, and others. Growth rates for these

three segments match the population growth for the surrounding area.

Our main competitor is 7-11 which holds approximately 30% of the industry. Other

competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east

coast.

4.1 Market Segmentation

Our target market for our test store encompasses a five mile radius in which the approximate

population is 150,000 (based on census information).

The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic

(19%) with occupations classified as professional/technical, homemaker, or retired. The

majority of household incomes range from $20,000 - $30,000 (50.3%), yet there are also

affluent household incomes ranging from $50,000 - $100,000 (15.4%).

The median income in this area is $48,096, compared to the whole New York area which is

$34,248. The typical "head of household" age is 25 - 34 (22.4%) or age 34 - 44 (23.1%) with

a median age of 44.4 years old and an average age of 32 years old.

Target market segments



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shift employees and quick shoppers looking for snacks and related items.

MARKET ANALYSIS

YEAR1

YEAR2

YEAR3

YEAR4

YEAR5

Potential Customers Growth CAGR

Late night shoppers 3% 78,000 80,340 82,750 85,233 87,790 3.00%

Quick shoppers 2% 42,000 42,840 43,697 44,571 45,462 2.00%

Other 3% 30,000 30,840 31,704 32,592 33,505 2.80%


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Total 2.68% 150,000 154,020 158,151 162,396 166,757 2.68%

4.2 Industry AnalysisConvenience store industry sales rose 8.6% to $86.3 billion for 2002. Overall U.S. retail sales

grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the

convenience store industry has become a powerful force in U.S. retailing.

Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%).

The 2002 results confirm that a new, upward trend is emerging. This upward trend is based on

several factors, and occurred along with a slow rebound in the general economy.

Merchandise sales per customer increased 7.4% in 2000 suggesting that convenience stores

are placing higher priority in filling the customers' needs. Companies that align themselves

properly to fill those needs will be successful in the future.

4.2.1 Competition and Buying Patterns

7-11 holds approximately 30% of the industry market, and in 1999 their net income was $160million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery

establishments on the east coast.

Strategy and Implementation Summary

MillenniumMart's competitive edge will be the lower prices we will charge our customers and

the novel purchasing experience that will draw shoppers.

The most critical element of MillenniumMart's success will be its marketing and advertising.

In order to capture attention and sales MillenniumMart will use prominent signs at the store


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locations, billboards, media bites on local news, and radio advertisements to capture

customers.

Many of the initial customers will be drawn to the unique nature of the store and will thenhave the opportunity to realize the cost savings of MillenniumMart. We expect an average

27% increase in sales from year to year. This may seem very high, but considering the level

of initial sales and the growth possibilities, management actually considers this to be

conservative.

5.1 Competitive Edge

MillenniumMart's competitive edge will be the lower prices we will charge our customers andthe novel purchasing experience that will draw shoppers. In the convenience store industry,

low cost and availability are the two success criteria. We plan to create these advantages in a

new, high-tech environment that will retain customers.

5.2 Marketing Strategy

The most critical element of MillenniumMart's success will be its marketing and advertising.

Convenience stores serve the entire purchasing population of its geographical area but focuseson customers who need to purchase items outside of normal working hours such as swing

shift employees and quick shoppers looking for snacks and related items. In order to capture

attention and sales MillenniumMart will use prominent signs at the store locations, billboards,

media bites on local news, and radio advertisements to capture customers. Many of the initial

customers will be drawn to the unique nature of the store and will then have the opportunity

to realize the cost savings of MillenniumMart. Since automated shopping is still in its infancy,

the firm expects to invest a great deal of its available cash and revenues in marketing efforts.

5.3 Sales Strategy

Since our store will be a stand-alone, remote facility, there is little in the way being able to

directly influence how we close the sales other than to have an attractive storefront with our

low prices and easy-to-use system. We believe that this in itself is its own seller. One critical


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procedure to ensure top customer service and reliability will be establishing a method

for keeping enough inventory of all our products. We will be using industry data on inventory

for other convenience store chains to assist us.

5.3.1 Sales Forecast

Based on a 20% mark-up, our forecasted sales for years one, two, and three respectively are:

$2,480,106; $3,149,735; $4,000,163. This gives us an average 27% increase from year to

year. This may seem very high, but considering the level of initial sales and the growth

possibilities, management actually considers this to be conservative.

These sales figures are based on a conglomerate of commuter and walk-by traffic with anaverage $3.00 purchase amount conforming to industry averages. The target profit margin

was defined as an average net profit of all merchandise.


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SALES FORECAST

YEAR 1 YEAR 2 YEAR 3

Sales

Drinks $978,070 $1,242,149 $1,577,529

Snacks $873,277 $1,109,061 $1,408,508

Magazines/newspapers $209,586 $266,175 $338,042

General grocery items $279,449 $354,900 $450,723

Other $139,724 $177,450 $225,361


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TOTAL SALES $2,480,106 $3,149,735 $4,000,163

Direct Cost of Sales Year 1 Year 2 Year 3

Drinks $753,114 $956,455 $1,214,697

Snacks $672,423 $853,977 $1,084,551

Magazines/newspapers $161,382 $204,955 $260,292

General grocery items $215,175 $273,273 $347,056

Other $107,588 $136,636 $173,528

Subtotal Direct Cost of Sales $1,909,682 $2,425,296 $3,080,125

Management Summary

As stated earlier, MillenniumMart will be a joint venture between Mr. Wallace Bean and his

associates and the management of Martin-Bower, a large food distribution company. The

company officers will include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru

Takeda, who will be operations manager. Since the firm is a start-up, there will be little in theway of formal structure at first. The company also plans to hire three technicians who will

service the automated store and a office manager. Additional personnel will be added once

more stores are set up.


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Mr. Wallace Bean is a graduate of the University of Texas, Austin's school of business. He

has worked for more than twelve years in the food distribution and grocery store industry,

including positions as vice president of marketing for Fry's Food and Drug, director of special

projects for Giant Foods and more recently, senior vice president for Martin-Bower.

Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight

years experience working for various companies. Her last job was as a financial analyst for

Circle K corporation.

Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been

operational manager for Kiyama Inc. for the past six years which operates approximately six

hundred automated convenience stores throughout Japan. Mr. Takeda has moved to the

United States for the express purpose of bringing this new type of store to this country.

6.1 Personnel Plan

Initially the company will only have a small staff including upper management, an operations

technician and office manager. All other services, such as bookkeeping, will be outsourced.

PERSONNEL PLAN


Mr. Bean $42,000 $48,000 $52,000

Mrs. Tuck $42,000 $48,000 $52,000

Mr. Takeda $30,000 $40,000 $48,000


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Office manager $20,400 $22,000 $28,000

Technicians $33,000 $56,000 $58,000

TOTAL PEOPLE 7 7 7

Total Payroll $167,400 $214,000 $238,000

Financial Plan

The following tables illustrate our financial projections over the next three years. Please note

that we expect to be operating at a loss for the first six months before advertising begins to

take effect and draw in customers.

As retained earnings increase, a debt retirement fund will be established to encourage early

repayment, thus relieving interest expense. Also, a 30-day payment period for purchases will

be used to avoid incurring liabilities.

7.1 Important Assumptions

MillenniumMart is basing its assumptions on a stable growth market using average interest

rates over the past ten years.

GENERAL ASSUMPTIONS



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Plan Month 1 2 3

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 0 0 0

7.2 Break-even Analysis

The following table and chart show our Break-even Analysis. Although our break-even

point seems quite high, we are expecting to have higher than average fixed costs during the

period of this plan due to customer "creation costs," R&D costs, higher rent in a premier spot,

higher percentage of payroll costs to overall fixed costs with a small company, and the needto import and pay for the store facilities. We expect to have a more reasonable positive

retained earnings point around year 5.


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BREAK-EVEN ANALYSIS

Monthly Revenue Break-even $165,326

Assumptions:

Average Percent Variable Cost 77%

Estimated Monthly Fixed Cost $38,025

7.3 Projected Profit and Loss


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The following table explains our itemized costs and determines gross and net margin. Please

note that these predictions are weighted toward having higher costs in comparison to revenues

in case unexpected hidden costs arise. The charts give a visual representation of the data.


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PRO FORMA PROFIT AND LOSS


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Sales $2,480,106 $3,149,735 $4,000,163

Direct Cost of Sales $1,909,682 $2,425,296 $3,080,125

Other Costs of Goods $0 $0 $0

TOTAL COST OF SALES $1,909,682 $2,425,296 $3,080,125

Gross Margin $570,424 $724,439 $920,037

Gross Margin % 23.00% 23.00% 23.00%

Expenses

Payroll $167,400 $214,000 $238,000

Sales and Marketing and Other Expenses $60,000 $130,000 $130,000

Depreciation $7,200 $7,200 $7,200

Leased equipment $50,000 $60,000 $60,000


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Rent $84,000 $84,000 $84,000

Utilities $28,800 $30,000 $30,000

Accounting/bookeeping $6,500 $9,000 $9,000

Insurance $14,400 $14,400 $14,400

Payroll Taxes $0 $0 $0

Other $38,000 $45,000 $45,000

Total Operating Expenses $456,300 $593,600 $617,600

Profit Before Interest and Taxes $114,124 $130,839 $302,437

EBITDA $121,324 $138,039 $309,637

Interest Expense $16,250 $16,400 $14,650

Taxes Incurred $29,362 $34,332 $86,336

Net Profit $68,512 $80,107 $201,451


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Net Profit/Sales 2.76% 2.54% 5.04%

7.4 Projected Cash FlowMillenniumMart will be receiving periodic influxes of cash in order to cover operating

expenses during the first two years as it strives toward sustainable profitability. Almost all of

this funding has been arranged through lending institutions and private investors already. We

do not anticipate any cash flow problems during the next three years.

PRO FORMA CASH FLOW


Cash Received


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Cash from Operations

Cash Sales $2,480,106 $3,149,735 $4,000,163

SUBTOTAL CASH FROM OPERATIONS $2,480,106 $3,149,735 $4,000,163

Additional Cash Received

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

New Current Borrowing $5,000 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $50,000 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $54,000 $78,000 $0

SUBTOTAL CASH RECEIVED $2,589,106 $3,227,735 $4,000,163


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Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $167,400 $214,000 $238,000

Bill Payments $2,177,877 $3,134,865 $3,620,688

SUBTOTAL SPENT ON OPERATIONS $2,345,277 $3,348,865 $3,858,688

Additional Cash Spent

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

Principal Repayment of Current Borrowing $0 $7,000 $13,000

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $5,000 $10,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $30,000

Dividends $0 $0 $50,000


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SUBTOTAL CASH SPENT $2,345,277 $3,360,865 $3,961,688

Net Cash Flow $243,829 ($133,130) $38,475

Cash Balance $357,649 $224,519 $262,994

7.5 Projected Balance Sheet

The following table shows the Projected Balance Sheet for MillenniumMart.

PRO FORMA BALANCE SHEET


Assets

Current Assets

Cash $357,649 $224,519 $262,994

Inventory $371,402 $471,680 $599,034

Other Current Assets $8,000 $8,000 $8,000

TOTAL CURRENT ASSETS $737,050 $704,199 $870,027


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Long-term Assets

Long-term Assets $72,000 $72,000 $102,000

Accumulated Depreciation $7,200 $14,400 $21,600

TOTAL LONG-TERM ASSETS $64,800 $57,600 $80,400

TOTAL ASSETS $801,850 $761,799 $950,427

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $428,518 $242,359 $302,537

Current Borrowing $20,000 $13,000 $0

Other Current Liabilities $10,000 $10,000 $10,000

SUBTOTAL CURRENT LIABILITIES $458,518 $265,359 $312,537

Long-term Liabilities $150,000 $145,000 $135,000


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TOTAL LIABILITIES $608,518 $410,359 $447,537

Paid-in Capital $374,000 $452,000 $452,000

Retained Earnings ($249,180) ($180,668) ($150,561)

Earnings $68,512 $80,107 $201,451

TOTAL CAPITAL $193,332 $351,439 $502,891

TOTAL LIABILITIES AND CAPITAL $801,850 $761,799 $950,427

Net Worth $193,332 $351,439 $502,891

7.6 Business Ratios

We are using the industry standard business ratios for independent convenience store chains

as a comparison to our own. There are some significant differences between the two since we

have a completely different storefront than our competitors. First of all our accounts

receivable are very different as we expect to have higher sales using credit cards than other

stores, due to the convenience of using credit cards and cash cards at our facility. There is

generally a three day waiting period to receive funds from the credit card company. This is a

short period of time compared to a normal collection day period of 30 days, but it is still

something we need to factor for.


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In addition, we expect higher percentages in inventory as we will be operating only one store

initially and even many independent convenience store owners often have two or more

facilities. Our long-term assets are low since we are only renting our facilities.

RATIO ANALYSIS

YEAR 1 YEAR 2 YEAR 3INDUSTRY

PROFILE

Sales Growth 0.00% 27.00% 27.00% 2.27%

Percent of Total Assets

Inventory 46.32% 61.92% 63.03% 22.18%

Other Current Assets 1.00% 1.05% 0.84% 26.81%

Total Current Assets 91.92% 92.44% 91.54% 56.12%

Long-term Assets 8.08% 7.56% 8.46% 43.88%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

Current Liabilities 57.18% 34.83% 32.88% 26.39%


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Long-term Liabilities 18.71% 19.03% 14.20% 24.87%

Total Liabilities 75.89% 53.87% 47.09% 51.26%

NET WORTH 24.11% 46.13% 52.91% 48.74%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 23.00% 23.00% 23.00% 23.55%

Selling, General & AdministrativeExpenses

20.26% 20.10% 17.78% 16.21%

Advertising Expenses 0.00% 0.00% 0.00% 0.85%

Profit Before Interest and Taxes 4.60% 4.15% 7.56% 1.02%

Main Ratios

Current 1.61 2.65 2.78 1.68

Quick 0.80 0.88 0.87 0.71


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Total Debt to Total Assets 75.89% 53.87% 47.09% 4.63%

Pre-tax Return on Net Worth 50.63% 32.56% 57.23% 57.28%

Pre-tax Return on Assets 12.21% 15.02% 30.28% 10.83%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 2.76% 2.54% 5.04% n.a

Return on Equity 35.44% 22.79% 40.06% n.a

Activity Ratios

Inventory Turnover 10.91 5.75 5.75 n.a

Accounts Payable Turnover 6.06 12.17 12.17 n.a

Payment Days 27 42 27 n.a

Total Asset Turnover 3.09 4.13 4.21 n.a

Debt Ratios


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Debt to Net Worth 3.15 1.17 0.89 n.a

Current Liab. to Liab. 0.75 0.65 0.70 n.a

Liquidity Ratios

Net Working Capital $278,532 $438,839 $557,491 n.a

Interest Coverage 7.02 7.98 20.64 n.a

Additional Ratios

Assets to Sales 0.32 0.24 0.24 n.a

Current Debt/Total Assets 57% 35% 33% n.a

Acid Test 0.80 0.88 0.87 n.a

Sales/Net Worth 12.83 8.96 7.95 n.a

Dividend Payout 0.00 0.00 0.25 n.a

Appendix


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SALES FORECAST

MONTH

1

MONTH

2

MONTH

3

MONTH

4

MONTH

5

MONTH

6

MONTH

7

MONTH

8

MONTH

9

MONTH

10

MONTH

11

MONTH

12

Sales

Drinks 0% $28,000 $33,040 $38,987 $46,005 $54,286 $64,057 $75,588 $89,193 $105,248 $124,193 $146,547 $172,926

Snacks 0% $25,000 $29,500 $34,810 $41,076 $48,469 $57,194 $67,489 $79,637 $93,971 $110,886 $130,846 $154,398

Magazines/newspapers 0% $6,000 $7,080 $8,354 $9,858 $11,633 $13,727 $16,197 $19,113 $22,553 $26,613 $31,403 $37,056

General grocery items 0% $8,000 $9,440 $11,139 $13,144 $15,510 $18,302 $21,596 $25,484 $30,071 $35,484 $41,871 $49,407

Other 0% $4,000 $4,720 $5,570 $6,572 $7,755 $9,151 $10,798 $12,742 $15,035 $17,742 $20,935 $24,704

TOTAL SALES $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month

10

Month

11

Month

12

Drinks $21,560 $25,441 $30,020 $35,424 $41,800 $49,324 $58,202 $68,679 $81,041 $95,628 $112,841 $133,153

Snacks $19,250 $22,715 $26,804 $31,628 $37,321 $44,039 $51,966 $61,320 $72,358 $85,382 $100,751 $118,887

Magazines/newspapers $4,620 $5,452 $6,433 $7,591 $8,957 $10,569 $12,472 $14,717 $17,366 $20,492 $24,180 $28,533

General grocery items $6,160 $7,269 $8,577 $10,121 $11,943 $14,093 $16,629 $19,623 $23,155 $27,322 $32,240 $38,044

Other $3,080 $3,634 $4,289 $5,061 $5,971 $7,046 $8,315 $9,811 $11,577 $13,661 $16,120 $19,022

Subtotal Direct Cost ofSales

$54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638

PERSONNEL PLAN


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MONTH

1

MONTH

2

MONTH

3

MONTH

4

MONTH

5

MONTH

6

MONTH

7

MONTH

8

MONTH

9

MONTH

10

M

Mr. Bean 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Mrs. Tuck 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Mr. Takeda 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Office

manager0% $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700

Technicians 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $3,000 $3,000 $4,500 $4,500

TOTAL

PEOPLE5 5 5 5 5 5 6 6 7 7

Total

Payroll$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700

GENERAL ASSUMPTIONS

MONTH

1

MONTH

2

MONTH

3

MONTH

4

MONTH

5

MONTH

6

MONTH

7

MONTH

8

MONTH

9

MONTH

10

M

Plan

Month1 2 3 4 5 6 7 8 9 10

Current

Interest

Rate

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

Long-

term

Interest

Rate

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

Tax30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%


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Rate

Other 0 0 0 0 0 0 0 0 0 0

PRO FORMA PROFIT AND LOSS

MONTH

1

MONTH

2

MONTH

3

MONTH

4

MONTH

5

MONTH

6

MONTH

7

MONTH

8

MONTH

9

MONTH

10

MONTH

11

MONTH

12

Sales $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,49

Direct Cost of Sales $54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638

Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TOTAL COST OF

SALES$54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638

Gross Margin $16,330 $19,269 $22,738 $26,831 $31,660 $37,359 $44,084 $52,019 $61,382 $72,431 $85,469 $100,853

Gross Margin % 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00%

Expenses

Payroll $12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700

Sales and Marketing

and Other Expenses$5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Depreciation $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Leased equipment $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $6,000

Rent $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000


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Utilities $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400

Accounting/bookeeping $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $750 $750

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

Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $4,000 $5,000 $10,000

Total Operating

Expenses$35,400 $35,400 $35,400 $35,400 $35,400 $35,400 $36,900 $36,900 $39,400 $40,400 $41,650 $48,650

Profit Before Interestand Taxes

($19,070) ($16,131) ($12,662) ($8,569) ($3,740) $1,959 $7,184 $15,119 $21,982 $32,031 $43,819 $52,203

EBITDA ($18,470) ($15,531) ($12,062) ($7,969) ($3,140) $2,559 $7,784 $15,719 $22,582 $32,631 $44,419 $52,803

Interest Expense $958 $1,375 $1,375 $1,375 $1,375 $1,375 $1,375 $1,375 $1,417 $1,417 $1,417 $1,417

Taxes Incurred ($6,008) ($5,252) ($4,211) ($2,983) ($1,534) $175 $1,743 $4,123 $6,170 $9,184 $12,721 $15,236

Net Profit ($14,020) ($12,254) ($9,826) ($6,961) ($3,580) $409 $4,066 $9,621 $14,396 $21,430 $29,681 $35,550

Net Profit/Sales -19.75% -14.63% -9.94% -5.97% -2.60% 0.25% 2.12% 4.25% 5.39% 6.80% 7.99% 8.11%

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

Cash Received

Cash from

Operations


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Cash Sales $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491

SUBTOTAL

CASH FROM

OPERATIONS

$71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491

Additional Cash

Received

Sales Tax,

VAT, HST/GST

Received

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

New Current

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

New Other

Liabilities

(interest-free)

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

New Long-term

Liabilities$0 $50,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other

Current Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-

term Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment

Received$0 $0 $0 $0 $50,000 $0 $0 $0 $0 $0 $0 $4,000

SUBTOTAL

CASH

RECEIVED

$71,000 $133,780 $98,860 $116,655 $187,653 $162,431 $191,668 $226,169 $271,879 $314,917 $371,602 $442,491

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month

10

Month

11

Month

12

Expenditures

from Operations


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Cash Spending $12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700

Bill Payments $12,062 $120,914 $94,045 $108,734 $126,066 $146,518 $170,637 $198,680 $232,293 $272,239 $319,734 $375,955

SUBTOTALSPENT ON

OPERATIONS

$24,762 $133,614 $106,745 $121,434 $138,766 $159,218 $184,837 $212,880 $247,993 $287,939 $335,434 $391,655

Additional Cash

Spent

Sales Tax,

VAT, HST/GST

Paid Out

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

Principal

Repayment of

Current

Borrowing

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

Other Liabilities

Principal

Repayment

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

Long-term

Liabilities

Principal

Repayment

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

Purchase Other

Current Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-

term Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SUBTOTAL

CASH SPENT$24,762 $133,614 $106,745 $121,434 $138,766 $159,218 $184,837 $212,880 $247,993 $287,939 $335,434 $391,655

Net Cash Flow $46,238 $166 ($7,885) ($4,779) $48,887 $3,212 $6,831 $13,289 $23,886 $26,979 $36,168 $50,835


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Cash Balance $160,058 $160,225 $152,340 $147,561 $196,448 $199,661 $206,492 $219,780 $243,667 $270,645 $306,813 $357,649

PRO FORMA BALANCE SHEET

MONTH

1

MONTH

2

MONTH

3

MONTH

4

MONTH

5

MONTH

6

MONTH

7

MONTH

8

MONTH

9

MONTH

10

MONTH

11

MONTH

12

AssetsStarting

Balances

Current Assets

Cash $113,820 $160,058 $160,225 $152,340 $147,561 $196,448 $199,661 $206,492 $219,780 $243,667 $270,645 $306,813 $357,649

Inventory $10,000 $60,137 $70,962 $83,735 $98,807 $116,592 $137,579 $162,343 $191,565 $226,047 $266,735 $314,747 $371,402

Other Current

Assets$8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000

TOTAL

CURRENT

ASSETS

$131,820 $228,195 $239,186 $244,074 $254,368 $321,040 $345,239 $376,835 $419,345 $477,713 $545,380 $629,561 $737,050

Long-termAssets

Long-term

Assets$72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000

Accumulated

Depreciation$0 $600 $1,200 $1,800 $2,400 $3,000 $3,600 $4,200 $4,800 $5,400 $6,000 $6,600 $7,200

TOTAL

LONG-

TERM

ASSETS

$72,000 $71,400 $70,800 $70,200 $69,600 $69,000 $68,400 $67,800 $67,200 $66,600 $66,000 $65,400 $64,800

TOTAL

ASSETS$203,820 $299,595 $309,986 $314,274 $323,968 $390,040 $413,639 $444,635 $486,545 $544,313 $611,380 $694,961 $801,850

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


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Capital

Current

Liabilities

Accounts

Payable$8,000 $117,795 $90,440 $104,554 $121,209 $140,862 $164,052 $190,981 $223,271 $261,643 $307,280 $361,179 $428,518

Current

Borrowing$15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000 $20,000

Other Current

Liabilities$10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

SUBTOTAL

CURRENT

LIABILITIES

$33,000 $142,795 $115,440 $129,554 $146,209 $165,862 $189,052 $215,981 $248,271 $291,643 $337,280 $391,179 $458,518

Long-term

Liabilities$100,000 $100,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000

TOTAL

LIABILITIES$133,000 $242,795 $265,440 $279,554 $296,209 $315,862 $339,052 $365,981 $398,271 $441,643 $487,280 $541,179 $608,518

Paid-in Capital $320,000 $320,000 $320,000 $320,000 $320,000 $370,000 $370,000 $370,000 $370,000 $370,000 $370,000 $370,000 $374,000

RetainedEarnings

($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180)

Earnings $0 ($14,020) ($26,274) ($36,100) ($43,061) ($46,641) ($46,232) ($42,166) ($32,545) ($18,150) $3,280 $32,962 $68,512

TOTAL

CAPITAL$70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 $102,670 $124,100 $153,782 $193,332

TOTAL

LIABILITIES

AND

CAPITAL

$203,820 $299,595 $309,986 $314,274 $323,968 $390,040 $413,639 $444,635 $486,545 $544,313 $611,380 $694,961 $801,850

Net Worth $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 $102,670 $124,100 $153,782 $193,332


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Date post:	03-Jun-2018
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Convenience Store Business Plan Sample

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