Important Assumptions. The national economy is projected to continue its course of steady growth. The local economy remains strong with a low level of unemployment and a strong real estate market. The target market consists primarily of people who have established incomes and are in their peak income years. Temporary economic fluctuations will have little effect on their buying patterns and hobbies. The target market is generally regarded as middle class to upper middle class people and are sufficiently affluent that they can pursue hobbies such as quilting without considering the costs.
Important Assumptions. The following table shows the General Assumptions for COMPANY NAME. The average percent variable cost is 4%. The estimated monthly fixed cost is $30,140.
Important Assumptions. The following assumptions in short-term and long-term borrowing rates and income tax rates were made in order to formulate this Business Plan: • Short term borrowing interest rates will remain at a consistent level throughout Year 1, followed by an increase of 0.50% in Year 2, and an additional increase of 0.50% in Year 3. • Long term borrowing interest rates will continuously maintain a 1.00% margin over short term borrowing interest rates throughout the three-year period. • Federal income tax rates are assumed to be 0.00% on profits since it is in the process of acquiring Internal Revenue Service status as a 501(c)(3) non-profit organization. Table: General Assumptions Plan Month 1 2 3 Current Interest Rate 4.50% 5.00% 5.50% Long-term Interest Rate 5.50% 6.00% 6.50% Tax Rate 0.00% 0.00% 0.00% 6.2 Projected Surplus or Deficit The following Projected Surplus and Deficit Table and charts illustrate funds received, operating expenses, and projected funding surplus or deficit over the next three years. It illustrates the effects of increased expenses such as asset acquisition, personnel, and marketing as the Foundation expands. It also illustrates the delayed funding growth that occurs months after the capital expenditures of start-up and expansion. A monthly projection for the first twelve months of funding, direct cost of funding, operating expenses, and surpluses or deficits, is found in the appendix. The following assumptions were made when preparing the Projected Surplus and Deficit Table: • Assumptions made previously in this Business Plan for start-up expenses and asset acquisition, start-up and continued funding, direct cost of funding, personnel and borrowing rates remain unchanged and as previously identified in this Business Plan. • The inflationary increase for Utilities, Insurance, and Employee Benefits are assumed to be 20.0% annually. • The inflationary increase for Property Tax is assumed to be 30.0% annually. • The inflationary increase for Marketing and Advertising is assumed to be 5.0% annually. • The inflationary increase for Sub-Contracted Labor is assumed to be 4.0% annually. • The inflationary increase for all other expenses not listed above is assumed to be 3.0% annually. • Depreciation is calculated on long-term assets such as vehicles, computers, office furniture, and equipment using a straight-line depreciation method and a five-year expected asset life. • Depreciation is calculated on long-term assets such as buildings, renovations...
Important Assumptions. Due to the current economic uncertainties, our assumptions are conservative. In judging and estimating, we have chosen the alternatives that are least likely to overstate assets and income. The key underlying assumptions are: • we assume a slow economic recovery process over the next five years, but no major depression • we assume access to capital and financing sufficient to maintain our financial plan as shown in the tables • we assume continued popularity of pizza services in our target market Other important assumptions are included in the next table. General Assumptions FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Plan Month 1 2 3 4 5 Current Interest Rate 9.00% 9.00% 9.00% 9.00% 9.00% Long-term Interest Rate 12.00% 12.00% 12.00% 12.00% 12.00% Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% Payment Delays 30 30 30 30 30 Sales on Credtit 15.00% 15.00% 15.00% 15.00% 15.00% Collection Period (days) 40 40 40 40 40 Inventory on Hand (days) 21 21 21 21 21 Inflation Rate 5.00% 5.00% 5.00% 5.00% 5.00% Max Op. Capacity (pizzas/day) 400 400 400 400 400
7.1 Risks
a) External Risks (These risks come from outside the company and are more difficult to prevent and control.)
Important Assumptions. The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, the company recognizes that collection of payments for dance lesson packages is critical, however, not a factor [YOUR COMPANY NAME] can influence easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Three of the more important underlying assumptions are:
1. The company assumes that people in Cumberland County and more importantly, Vineland, will be interested in learning to dance and will give it a try.
2. The company assumes that the area will continue to grow, as in the past, and at a projected rate of 5% per year.
3. The company assumes that the facility will continue to be rented for events as in the past.
Important Assumptions. The table below presents the assumptions used in the financial calculations of this business plan. [YOUR COMPANY NAME] is a Sole Proprietorship owned by [YOUR NAME] and is taxed accordingly, estimated at a 25% tax rate. The average Gross Profit % is estimated to be 40.57% in 2010, 38.37% in 2011 and 40.84% in 2012 based on historical data and additions. Depreciation expense is based on the scheduled additions in the Milestones Table. Insurance, utilities and all other expenses assume a 5% increase due to inflation & other cost variables during 2011 and 2012.
Important Assumptions. Due to the current economic uncertainties, our assumptions are conservative. In judging and estimating, we have chosen the alternatives that are least likely to overstate assets and income. The key underlying assumptions are: • we assume a slow economic recovery process over the next five years, but no major depression • we assume access to capital and financing sufficient to maintain our financial plan as shown in the tables • we assume continued popularity of pizza services in our target market Other important assumptions are included in the next table. Table: General Assumptions General Assumptions FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Plan Month 1 2 3 4 5 Current Interest Rate 9.00% 9.00% 9.00% 9.00% 9.00% Long-term Interest Rate 12.00% 12.00% 12.00% 12.00% 12.00% Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% Payment Delays 30 30 30 30 30 Sales on Credtit 15.00% 15.00% 15.00% 15.00% 15.00% Collection Period (days) 40 40 40 40 40 Inventory on Hand (days) 21 21 21 21 21 Inflation Rate 5.00% 5.00% 5.00% 5.00% 5.00% Max Op. Capacity (pizzas/day) 400 400 400 400 400 7.7.1 RISKS Company management is responsible for constantly evaluating risks and taking corrective actions to provide adequate prevention, control and risk reserves. We have identified several risks that are associated with our business project. There are many possible classifications of risks, but for the purposes of this plan, we have chosen to group them as follows:
a) External Risks (These risks come from outside the company and are more difficult to prevent and control.)
Important Assumptions. For the business to realize its objectives and ambitions, some assumptions will need to be made to make this analysis realistic and accurate. This takes into account that the industry is now set to grow given the increasing demand for low cost and convenient phone repair services across the UK from both the corporate and private users. These assumptions demonstrate how objective we want to be in our projections. We assume;
1. The projected commission from phone repair companies will remain stable with minimal variation.
2. That our emphasis on customer service will be in line with what the market demands for the right price
3. That given the low level of phone repair service comparison sites companies in the UK, ours will be a stand out enterprise, preferred to most. These are considered to be conservative in case our predictions are erroneous.
Important Assumptions. The important assumptions are shown in the profit and loss table that follows the break-even analysis. If margins and fixed expenses remain consistent with the projections, the break-even point for the company will be that shown in the analysis below. Also, projections for net profit and earning will be on target.
Important Assumptions. We will be able to attract experienced affiliates with a 25% flat payout commission structure. We will attain 100 customers in year 1, 200 in year 2, and 250 in year 3. The large increase in year two growth is due to the enhanced marketing and sales tactics that will be available through our data collection, an optimal price structure attained from testing, and increased visibility and operational efficiency of our company with the move to the new office space in midtown, NYC. 90% customer retention expected after each year. Growth of average revenue per customer will be 10% in year 2 and 15% in year 3. This assumption is based on growth of our brand image and improved sales tactics, which will allow us to command higher rates, increase sales per client ratio, and post sale advertising revenue. Based on past sales history, we anticipate 70% of clients to pay in full. The other 30% will receive financing with a 5% interest rate. Those who purchase the consulting package or above and pass the test to receive free financing are excluded from the above).
