Retail Tp A22
-
Upload
perminder-singh-khalsa -
Category
Documents
-
view
226 -
download
0
Transcript of Retail Tp A22
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 1/22
RETAIL MANAGEMENT (MGT- 533)
Term paper
Topic: Business plan
opening a retail store
On
womens shoe store
SUBMITTED BY: SUBMITTED TO:
Name: Satnam singh Mr. Pedro Tiago Nougueria Pinto
Class: BBA Dept: LSM
Section: S1804
Reg. no.: 10809169
Roll no.: 22
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 2/22
Women's Shoe Store Business Plan Description about a retail store
Kwality store is a women-only shoe store in rampur. Badly needs an upscale shoe store for womenbecause the current stores have an inadequate selection. Currently, women that need a special pair of shoes often must travel up to extent places to find the right shoes.
Kwality store will have an unmatched, extensive selection of different shoes. Generally, the size of kwality
store selection is cost prohibitive due to all the different sizes that must be stocked per style. Kwality
stores has a unique business model that allows them to have an extensive selection at the cost of only
stocking one size per style. This is accomplished through a special relationship with the wholesaler so
kwality store can receive a customer's needed size within two days. Rush overnight shipping is available
at additional cost.
Kwality store will leverage Holly Heels' extensive knowledge of the women's retail shoe industry to
quickly gain market share. Profitability will be reached by month ten and $284,000 will be generated in
revenue in year three.
Keys to Success
The key to success is to meet the demand for an upscale women's shoe store with a wide selection and
focused customer attention.
Goals & Objectives
The objectives for the first three years of operation include:
1. To create a product-based retail store whose primary goal is to exceed customer's expectations.
2. To increase the number of clients served by 20% per year by serving an unmet need with
outstanding selection and customer service.
3. To develop a start-up business, surviving off of its own cash flow.
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 3/22
Type of retail store : Women's Shoe Store
Mission
Kwality stores mission is to provide rampur with an upscale selection of women's shoes and outstandingcustomer service. We exist to attract and maintain customers. When we adhere to this maxim, everythingelse will fall into place. Our services will exceed the expectations of our customers.
Company Summary
Kwality stores is an upscale women's shoe store located in rampur., an un-serviced niche. Customerslooking for these shoes must travel up to hilly places. Kwality stores will be able to offer a wide selectionbecause they will typically only have one size available per style. This one size is used as ademonstrative model. All other sizes are available within two days.
Start-up Summary
Kwality stores will incur the following start-up costs:
y Computer system with CD-RW, printer, Microsoft Office, QuickBooks Pro, and POS software.
y POS terminal/cash register.
y Back office desk and chair.
y Front of store counter.
y Shelving racks.
y Display racks.
y Chairs, mirrors.
y Assorted halogen track lighting.
Please note that the following items which are considered assets to be used for more than a year willlabeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciationmethod.
Start-up Funding
Start-up Expenses to Fund $600
Start-up Assets to Fund $29,400
Total Funding Required $30,000
Assets
Non-cash Assets from Start-up $14,368
Cash Requirements from Start-up $20,032
Additional Cash Raised $0
Cash Balance on Starting Date $20,032
Total Assets $34,400
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 4/22
Capital
Planned Investment
Holly $30,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $30,000
Loss at Start-up (Start-up Expenses) ($600)
Total Capital $29,400
Total Capital and Liabilities $29,400
Total Funding $30,000
Start-up
Requirements
Start-up Expenses
Legal $500
Stationery etc. $100
Other $0
Total Start-up Expenses $600
Start-up Assets
Cash Required $20,032
Other Current Assets $0
Long-term Assets $9,368
Total Assets $29,400
Total Requirements $30,000
Products
Kwality stores will sell upscale women's shoes. The general categories of shoes that will be sold are:
y Sandalsy Stylish work shoes
y Loafers
y Dress shoes
y Canvas athletic/stylish shoes
Kwality stores will strive to have one of the largest selection of shoes in Oregon, barring the larger stores
in rampur. Kwality stores will accomplish this by having one size per style in stock as a demonstration
model. Kwality stores will then order the style in the needed size and it will arrive within two days (rush
one day service is available). This will be accomplished through a special relationship with the wholesaler
who is able to send out the right size in the right style on demand. Often a wholesaler will be unwilling to
ship out individual shoes, but kwality stores was able to secure an exclusive arrangement with a itswholesaler to meet this need.
Market Analysis Summary
Kwality stores will be targeting two distinct groups of fashion-concious female shoppers--professional
workers and housewives. While both groups are interested in dress shoes, the professionals will also be
looking for fashionable shoes they are able to wear with their business attire. The housewives might be
looking for fasionable but more casual shoes.
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 5/22
Market Segmentation
Kwality stores is targeting two different population segments within the broad category of the fashion-
conscious female with disposable income.
y Professionals: these are full-time working professional women. They typically earn more than
$45,000. They will purchase shoes for the workplace, as well as for leisure time.y Housewives: The household income of this group is $60k-$120k, generally toward the higher end
of this range.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Professionals 9% 12,457 13,578 14,800 16,132 17,584 9.00%
Housewives 8% 14,544 15,708 16,965 18,322 19,788 8.00%
Other 0% 0 0 0 0 0 0.00%Total 8.47% 27,001 29,286 31,765 34,454 37,372 8.47%
Target Market Segment Strategy
These markets will be targeted through an attractive, eye-catching storefront in a popular mall. Most
women within the target market shop at malls. Malls allow them to visit many different stores within the
same vicinity. By just having a visible storefront in a well traveled mall, kwality stores will receive walk-
through customers.
While the leased space in a mall is expensive, one of the benefits that you pay for is the mall association
which spends money on marketing the mall and the stores within the mall.
Industry Analysis
Women's shoe retail industry is made up of several different types of companies:
y Shoe-only stores: As the name implies, these stores only sell shoes. Generally the shoe-only
stores will either sell athletic shoes for men and women, or dress shoes for only one sex.
y Large department stores: these types of stores sell everything, including shoes.
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 6/22
y Small women's retail stores: these types of stores cater to women by only selling women's
clothing and shoes.Competition and Buying Patterns
Kwality stores has three direct competitors in rampur:
y (name omitted). This is a women's only clothing and shoe store. They have a nice selection of clothing but a poor selection of shoes. The shoe styles are not cutting edge. The price point for the
shoes is $30-$120.
y (name omitted). This is a large, complete, department store. The store however, suffers from
cluttered displays and a general sense of disorganization. Shoes here are $30-$120.
y (name omitted). This is a national franchise that only sells shoes, for both men and women. This
company will sell knock-offs, shoes just like name brands, but with their name on it. While this store
has a huge selection, the quality of the shoes leaves a lot to be desired. This is somewhat
understandable as the shoes typically sell for $13-$50. While the shoes are often good copies of
famous brands, the execution is sometimes off. Many of the shoes are made out of pleather and
look like they were dipped in wax, giving them a tacky appearance.
An indirect competitor is a shoe smith that will dye shoes. The shoes are typically dyed to match a
specific dress. Not all colors can be dyed, and dying in general is not the ideal situation. Dying shoes
creates a new shoe color that is acceptable only 20% of the time.
The two major competitors in hilly places are:
y Nordstroms: mid- to high-end department store known for their outstanding customer service. The
shoe price point is $60-$300.
y Saks: this department store caters to the high class, older crowd. Shoes range from $75-$400.
The buying habits for fashion-conscious women consist of typically buying at least one pair of shoes per
month. Women generally purchase a pair of shoes to go with a specific dress. Once the woman
purchases the dress she will then begin the sometimes long search for the perfect pair of shoes.
Strategy and Implementation Summary
Kwality stores will leverage their competitive edge of extensive selection to drive sales. This is indeed a
competitive edge because it is typically cost prohibitive for a store to have as much of a selection that
kwality stores will offer. Because of a unique business model, Passion Soles is able to leverage their
financial resources and offer an unmatched selection. This is done by carrying a large selection of styles
by only stocking one size per style. Once the customer has chosen the style, kwality stores will have the
customer's shoes in one to two days.Sales Strategy
Kwality stores sales strategy will be based on display and visibility. A highly visible store with attractive
product displays located in the mall will get a high percentage of foot traffic. This is especially the case for
a women's shoe store. Women love to shop for shoes. Some women even use shoe shopping as a form
of therapy, similar to eating chocolate. These activities can make them feel better.
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 7/22
The sales strategy will simply be, have the most complete selection of shoes. Assuming the prices are
reasonable, having an extensive selection will drive sales because we believe our target markets of
fashion-conscious females are always looking for the perfect pair of shoes to coordinate with their fashion
style.
Sales Forecast
The first month will be used to set up the store front. The first employee will be hired and display inventory
will be purchased. There will be no sales activity during the first month. The second month will begin to
see sales activity, and it is forecasted that around month four sales will really begin to pick up. The reason
for this is that word will get out about kwality stores and more and more people will be coming in to check
out the extensive selection. A third employee will be hired in December for the holiday season.
Sales Forecast
Year 1 Year 2 Year 3
SalesProfessionals $84,402 $118,745 $135,454
Housewives $54,861 $89,184 $102,095
Total Sales $139,263 $207,929 $237,549
Direct Cost of Sales Year 1 Year 2 Year 3
Professionals $33,761 $47,498 $54,182
Housewives $21,945 $35,674 $40,838
Subtotal Direct Cost of Sales $55,705 $83,172 $95,020
Milestones
Kwality stores will have several milestones early on:
y Business plan completion. This will be done as a road map for the organization. This will be an
indispensable tool for the ongoing performance and improvement of the company.
y Set up the store front.
y Revenues exceeding $75,000.
y Profitability.
Milestones
Milestone Start Date End Date Budget Manager Department
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 8/22
Business plancompletion
1/1/2001 2/1/2001 $0 ABC Marketing
Set up the store front 1/1/2001 2/1/2001 $0 ABC Department
Revenues exceeding$75,000
1/1/2001 9/31/2001 $0 ABC Department
Profitability 1/1/2001 10/31/2001 $0 ABC Department
Totals $0Competitive Edge
Kwality stores competitive edge is an unmatched selection in rampur. This selection will be achieved in
two ways. The first way is a very specific effort to carry as many styles of shoes as possible. Kwality
stores recognizes that rampur currently does not have a single store that offers a wide selection of decent
quality shoes for the fashion conscious female consumer. The competitive edge is the recognition of this
unserved niche and the serving of this demand.
Kwality stores will be able to offer a large selection through a unique inventory model that stocks only one
size per style. The advantage is that for the same amount of money that kwality stores invests in
overhead, they can offer far more styles.
This model is effective because women are willing to order a pair of shoes sight seen but not fitted.
Kwality stores offers two day delivery with an additional expense rush overnight option.
Personnel Plan
they will be working full time at kwality stores. They will be in charge of all administrative details, hiring,
inventory management, etc. Beginning with month two, Holly will hire a full-time sales clerk to help them
at the store. By December, she will hire an additional full-time employee in time for the holiday season.
Personnel Plan
Year 1 Year 2 Year 3
Holly $36,000 $40,000 $42,000
Full-time employee $17,600 $19,200 $19,200Full-time employee $1,600 $19,200 $19,200
Total People 3 3 3
Total Payroll $55,200 $78,400 $80,400
OPERAT
ION
AL
PALN
Start-Up Expenses
How much does it cost to start a shoe retail store? There are no hard and fast rules in setting the pricetag of a shoe store business. Your start-ups costs will be influenced by a number of factors, including:
y Size and design of the storey Location
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 9/22
y Target markety Inventory selectiony Level of marketing
Given the factors above, the price tag can be anywhere from $20,000 to as much as several hundredthousand dollars!
Using the common start-up expenses of a retail shoe store listed below, create a worksheet with your projected costing for each item to get a clear idea of your start-up expenses:
Store Construction and Design
y Store construction/remodeling (flooring, painting, carpentry, etc.)y Interior design and decorating costsy Fixtures and Leasehold Improvements (fire alarms, restroom upgrade, heating, air conditioning,
etc.)y Installation costs (lighting, etc)y Displays, showcases, shelves/racks, sales counters and sales registersy
Back-office furniture, shelving and fixtures
Occupancy Costs
y Lease payments/Renty Utilities and other deposits (telephone, water, electricity/gas, cleaning)y Insurance (fire, theft, etc.)
Fees and Permits
y Legal feesy Licenses and permitsy Professional feesy Merchant account fees (for accepting and processing credit cards)
Promotion Expenses
y Store signagey Advertising and promotion for launch
y Visuals
Operating Expenses
y Opening Inventoryy Bags and boxes with store logoy Gift wrapping supplies (if gift wrapping is offered)
y Cash (reserves and on hand)
Administrative Costs
y Office Suppliesy Sales receiptsy Cleaning supplies (window cleaning, trash cans, mop)
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 10/22
y Miscellaneous
Employee Costs
y Salaries and wagesy Payroll-added costs
Equipment
y Computers, copy machiney Point of sales systems (Credit card and check processing machines, bar code reader, cash
drawer, cash register, POS software, etc.)y Fax machiney Security cameras and equipment including fire extinguishersy Sales floor equipment (baskets, bags, shopping carts, customer seating areas, specialty lighting)y Mirrorsy Other signs (Exit, restroom and store hours signs)y Other equipment (drink fountains)
Miscellaneous
y Unplanned expensesy Miscellaneous fees
Gross Profit Margin
It is important that you have a good idea of the expected gross margin of your retail store. Gross marginis the difference between net sales and cost of goods sold; it is what is left over after deducting cost of sales from sales and converting that to a percent. For example, if the sales of your shoe store are$150,000 and your cost of sales are $78,000 then your gross margin is $72,000 and that converts to 48percent (100*(72,000/150,000)).
According to the Annual Retail Trade Survey of the Bureau of Census, the annual gross margin as apercentage of sales for shoe retail industry is 42.6% in 2002. This is relatively high compared to food andbeverage stores with 28.5 gross margin, gasoline stations at 19.3 and electronics/appliance stores at27.8.
Total Fixed Expenses
As you operate your store, you will be incurring fixed or ongoing expenses. Below are estimated fixedexpenses that your store may incur (estimates can be below or above your actual costs):
Monthly Estimate Annual Estimate
Rent (2,000 square feet at $3,000/month) $3,000 $36,000Utilities (light, heat, air conditioning, phone) 500 6,000
Wages (2 clerks at $8/hour for 20 hours a week) 1,280 15,360
Payroll tax (estimate at 10%) 128 1,536
Fees and accounting (licenses, permits, accounting) 175 2,100
Insurance (liability and loss due to fire, etc.) 600 7,200
Loan Payment (assume that $50,000 was borrowed at 10%interest per year)
1,062 12,744
Advertising 500 6,000
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 11/22
Miscellaneous Expenses (office supplies, janitorial or cleaningservices, etc.)
200 2,400
Sub-Total $7,445 $89,340
Owner¶s salary/compensation $3,500 42,000
Total Fixed Expenses $10,945 $131,340
Gross Margin 42.6%
Sales Required (Total Fixed Expenses / Gross Margin) $25,692.49 $308,309.85
Given the above projections, you will need to sell the following number:
y Sales of $856.42 per day if open 7 days a weeky At an average price of $59.95 per pair of shoes, that means around 14 to 15 pairs of shoes sold
per day
Choosing Your Merchandise
The type and quality of your merchandise will shape the image of your retail store. Customers will comeand patronize your store due to the quality of your inventory (among other reasons such as customer service). Your inventory can also spell the success or failure of your business: choose too much of a shoestyle that no one wants to buy, you may be staring at the death of your business.
Below are some suggestions on how to best choose your inventory for your shoe business:
y Check your sources and ask how their shoes are manufactured.Stay away from those thatmanufacture their brands from sweatshops and other politically hot buttons. Carefully review thecompanies that you are dealing with, including consumer complaints and lawsuits (use the Webto research).
y Product segmentation. Given your original vision for your retail store, think the types of shoesyou want to offer. You may want your store to focus on women shoes, categorized as follows:
casual, boots, sling backs and mules, outdoor and athletic, wedding, pumps and career shoes,etc. Now devise a percentage to allocate each category. For example, you may want to dedicate10% of your inventory to casual shoes; 10% for outdoors; 5% for weddings, etc. You can also usethis approach when thinking of brands you want included in your store.
Note that factors such as trends, weather and customer preferences need to be taken into considerationwhen determining the percentages for each product category or brand. For example, boots may occupy avery small percentage of your inventory for the summer, but orders for this type of shoes will increase for the fall and winter seasons.
y Put a tracking system in place. It is critical to know which merchandises are moving from whatcategories/brands, and which are not. There are a number of inventory management softwaresystems currently available, although its price may be too high for start-up shoe stores without
deep capitalization. Instead, develop a system that could allow you to track the movement of merchandises. You can assign stock numbers that will include the following information: stockaging code (whether a number or letter) to help you know when the stock came into the store,retail price, item information (supplier, style, size, color), stock keeping unit (S.K.U. number) andother information you may deem important.
Key Success Factors
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 12/22
The success of your shoe retail store will depend on a number of factors, foremost of which are asfollows:
y Clear image. You must create a particular image ± and stick with it ± in the minds of your customers. Are you a discount shoe store where branded shoes can be purchased at a discount?Do you offer the lowest prices in town? Do you have the widest selection? A clear market position
conveys a clear and consistent company image.
y Ability to control stock on hand. You need to put adequate stock control in place to reduceinventory costs and increase stock turns. Loss prevention is critical in any retail establishment, astheft and shrinkage represent lost dollars for the retailer. Have systematized procedures for doingphysical counts of your inventory, as well as clear policies on employee theft.
y Strong financial management. The ability to manage finances and control debt is critical for anytype of business.
y Selection of products based on market demand. You need to have a keen sense of predictingthe market and knowing what customers want. Your success depends on offering items that themarket wants.
y Attractive product presentation.Success in retailing entails knowing how to maximize everysquare inch of the store and warehouse (if any). With good rental space getting more expensive,you need to carefully plan your space through effective use of floor patterns, location of merchandise, amounts of merchandise and use of appropriate displays. Store layout and productdisplay induce product purchase and reinforce company image.
y Well-trained and experienced work force. The quality of the sales force is important in thesuccess of a retail store. Your sales employees are the face of your business, and you need toensure that they provide quality customer service. One of the leading shoe retail chains, The
Athlete¶s Foot Group, even train their staffs to measure the foot's length, arch, and width of thecustomer to find the right shoe brand and style.
Financial Plan
The following sections will outline important financial information.
Important Assumptions
The following table details important financial assumptions.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3Current 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
Break-even Analysis
The Break-even Analysis indicates that approximately $13,000 is needed in monthly revenue to reach the
break-even point.
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 13/22
Break-even Analysis
Monthly Revenue Break-even $12,369
Assumptions:Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $7,421
Projected Profit and Loss
The following table will indicate projected profit and loss. We estimate purchase of new shoe display
inventory, primarily for the seasonal changes in styles. Because these are displays, we are tracking them
as expenses. It is estimated that new styles (especially around the change in seasons) will require regular
purchase of shoe displays as part of the normal course of business.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $139,263 $207,929 $237,549
Direct Cost of Sales $55,705 $83,172 $95,020
Other Production Expenses $0 $0 $0
Total Cost of Sales $55,705 $83,172 $95,020
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 14/22
Gross Margin $83,558 $124,757 $142,529
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $55,200 $78,400 $80,400
Sales and Marketing and Other Expenses
$1,200 $1,200 $1,200
Depreciation $1,056 $1,056 $1,056
Shoe Display Inventory $7,000 $5,000 $5,000
Utilities $1,200 $1,200 $1,200
Insurance $1,800 $1,800 $1,800
Rent $21,600 $21,600 $21,600
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $89,056 $110,256 $112,256
Profit Before Interest and Taxes ($5,498) $14,501 $30,273
EBITDA ($4,442) $15,557 $31,329
Interest Expense $255 $224 $37
Taxes Incurred $0 $4,283 $9,071 Net Profit ($5,753) $9,994 $21,165
Net Profit/Sales -4.13% 4.81% 8.91%
Projected Cash Flow
The following chart and table will indicate projected cash flow. We anticipate borrowing $5,000 in June to
cover shoe display inventory purchases and other expenses.
Pro Forma Cash FlowYear 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $139,263 $207,929 $237,549
Subtotal Cash from Operations $139,263 $207,929 $237,549
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 15/22
New Current Borrowing $5,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $144,263 $207,929 $237,549
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $55,200 $78,400 $80,400
Bill Payments $78,704 $118,797 $133,576
Subtotal Spent on Operations $133,904 $197,197 $213,976
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,260 $3,000 $740
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $135,164 $200,197 $214,716
Net Cash Flow $9,099 $7,732 $22,833
Cash Balance $29,131 $36,863 $59,697
Projected Balance Sheet
The following table will indicate the projected balance sheet.
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $29,131 $36,863 $59,697
Other Current Assets $0 $0 $0
Total Current Assets $29,131 $36,863 $59,697
Long-term Assets
Long-term Assets $9,368 $9,368 $9,368
Accumulated Depreciation $1,056 $2,112 $3,168
Total Long-term Assets $8,312 $7,256 $6,200
Total Assets $37,443 $44,119 $65,897
Liabilities and Capital Year 1 Year 2 Year 3
Current LiabilitiesAccounts Payable $10,056 $9,738 $11,090
Current Borrowing $3,740 $740 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,796 $10,478 $11,090
Long-term Liabilities $0 $0 $0
Total Liabilities $13,796 $10,478 $11,090
Paid-in Capital $30,000 $30,000 $30,000
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 16/22
Retained Earnings ($600) ($6,353) $3,641
Earnings ($5,753) $9,994 $21,165
Total Capital $23,647 $33,641 $54,807
Total Liabilities and Capital $37,443 $44,119 $65,897
Net Worth $23,647 $33,641 $54,807
Business Ratios
The following table compares our ratios to Standard Industry Code #3144 (Women's footwear, except
athletic).
Ratio Analysis
Year 1 Year 2 Year 3Industry
Profile
Sales Growth 0.00% 49.31% 14.25% 10.45%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 33.22%
Total Current Assets 77.80% 83.55% 90.59% 85.17%
Long-term Assets 22.20% 16.45% 9.41% 14.83%Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 36.85% 23.75% 16.83% 26.82%
Long-term Liabilities 0.00% 0.00% 0.00% 25.97%
Total Liabilities 36.85% 23.75% 16.83% 52.79%
Net Worth 63.15% 76.25% 83.17% 47.21%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 22.01%
Selling, General & AdministrativeExpenses
74.12% 49.27% 48.20% 10.93%
Advertising Expenses 0.43% 0.23% 0.21% 1.05%
Profit Before Interest and Taxes -3.95% 6.97% 12.74% 2.49%
Main Ratios
Current 2.11 3.52 5.38 2.58
Quick 2.11 3.52 5.38 1.37
Total Debt to Total Assets 36.85% 23.75% 16.83% 57.34%
Pre-tax Return on Net Worth -24.33% 42.44% 55.17% 6.10%
Pre-tax Return on Assets -15.36% 32.36% 45.88% 14.29%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.13% 4.81% 8.91% n.a
Return on Equity -24.33% 29.71% 38.62% n.a
Activity Ratios
Accounts Payable Turnover 8.83 12.17 12.17 n.aPayment Days 27 30 28 n.a
Total Asset Turnover 3.72 4.71 3.60 n.a
Debt Ratios
Debt to Net Worth 0.58 0.31 0.20 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $15,335 $26,385 $48,607 n.a
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 17/22
Interest Coverage -21.57 64.74 818.20 n.a
Additional Ratios
Assets to Sales 0.27 0.21 0.28 n.a
Current Debt/Total Assets 37% 24% 17% n.a
Acid Test 2.11 3.52 5.38 n.a
Sales/Net Worth 5.89 6.18 4.33 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Appendix
Sales Forecast
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Sales
Professionals 0% $0 $3,245 $4,114 $5,678 $6,545 $6,985 $7,454 $7,945 $8,569 $9,956$11,45
4
$12,457
Housewives 0% $0 $2,109 $2,674 $3,691 $4,254 $4,540 $4,845 $5,164 $5,570 $6,471 $7,445 $8,097
Total Sales $0 $5,354 $6,788 $9,369$10,79
9$11,52
5$12,29
9$13,10
9$14,13
9$16,42
7$18,89
9$20,554
Direct Cost of Sales
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Professionals $0 $1,298 $1,646 $2,271 $2,618 $2,794 $2,982 $3,178 $3,428 $3,982 $4,582 $4,983
Housewives $0 $844 $1,070 $1,476 $1,702 $1,816 $1,938 $2,066 $2,228 $2,589 $2,978 $3,239
SubtotalDirect Cost of Sales
$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222
Personnel Plan
Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month 8 Month9 Month10 Month11 Month12
Holly 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000$3,00
0$3,000 $3,000 $3,000 $3,000
Full-timeemployee
0% $0 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600$1,60
0$1,600 $1,600 $1,600 $1,600
Full-timeemployee
0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,600
Total People 1 2 2 2 2 2 2 2 2 2 2 3
Total Payroll $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600$4,60
0$4,600 $4,600 $4,600 $6,200
General Assumptions
Month 1Month
2 Month 3Month
4Month
5Month
6Month
7Month
8Month
9Month
10Month
11Month
12
PlanMonth
1 2 3 4 5 6 7 8 9 10 11 12
CurrentInterestRate
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%10.00
%10.00
%10.00% 10.00%
10.00%
Long-termInterest
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%10.00
%10.00
%10.00% 10.00%
10.00%
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 18/22
Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%30.00
%30.00
%30.00% 30.00%
30.00%
Other 0 0 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 $0 $5,354 $6,788 $9,369$10,79
9$11,52
5$12,29
9$13,10
9$14,13
9$16,427 $18,899
$20,554
Direct Costof Sales
$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222
Other ProductionExpenses
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Costof Sales
$0 $2,142 $2,715 $3,747 $4,320 $4,610 $4,920 $5,244 $5,656 $6,571 $7,560 $8,222
GrossMargin
$0 $3,213 $4,073 $5,621 $6,480 $6,915 $7,379 $7,866 $8,483 $9,856 $11,339$12,33
2
GrossMargin % 0.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%
Expenses
Payroll $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $6,200
Sales andMarketingand Other Expenses
$100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Depreciation
$88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88
ShoeDisplayInventory
$5,000 $0 $0 $0 $2,000 $0 $0 $0 $0 $0 $0 $0
Utilities $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Rent $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
PayrollTaxes
15%
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TotalOperatingExpenses
$10,238 $6,838 $6,838 $6,838 $8,838 $6,838 $6,838 $6,838 $6,838 $6,838 $6,838 $8,438
ProfitBeforeInterest
and Taxes
($10,238)
($3,625)
($2,765)
($1,217)
($2,358)
$77 $541 $1,028 $1,645 $3,018 $4,501 $3,894
EBITDA($10,15
0)($3,537
)($2,677
)($1,129
)($2,270
)$165 $629 $1,116 $1,733 $3,106 $4,589 $3,982
InterestExpense
$0 $0 $0 $0 $0 $42 $40 $38 $36 $35 $33 $31
TaxesIncurred
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit($10,23
8)($3,625
)($2,765
)($1,217
)($2,358
)$35 $502 $989 $1,609 $2,984 $4,469 $3,863
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 19/22
NetProfit/Sales
0.00%-
67.71%-
40.74%-
12.99%-
21.84%0.31% 4.08% 7.55%
11.38%
18.16% 23.64%18.80
%
Pro Forma Cash Flow
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Cash ReceivedCash fromOperations
Cash Sales $0 $5,354 $6,788$9,36
9$10,79
9$11,52
5$12,29
9$13,10
9$14,13
9$16,42
7$18,89
9$20,55
4
Subtotal CashfromOperations
$0 $5,354 $6,788$9,36
9$10,79
9$11,52
5$12,29
9$13,10
9$14,13
9$16,42
7$18,89
9$20,55
4
AdditionalCash Received
Sales Tax,VAT,
HST/GSTReceived
0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New CurrentBorrowing
$0 $0 $0 $0 $0 $5,000 $0 $0 $0 $0 $0 $0
New Other Liabilities(interest-free)
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-termLiabilities
$0 $0 $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
NewInvestmentReceived
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal CashReceived
$0 $5,354 $6,788$9,36
9$10,79
9$16,52
5$12,29
9$13,10
9$14,13
9$16,42
7$18,89
9$20,55
4
ExpendituresMonth
1Month
2Month
3Month
4Month
5Month
6Month
7Month
8Month
9Month
10Month
11Month
12
ExpendituresfromOperations
Cash
Spending
$3,000 $4,600 $4,600$4,60
0
$4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $6,200
Bill Payments $238 $7,055 $4,311$4,90
0$5,983 $8,414 $6,812 $7,120 $7,446 $7,872 $8,789 $9,765
Subtotal Spenton Operations
$3,238$11,65
5$8,911
$9,500
$10,583
$13,014
$11,412
$11,720
$12,046
$12,472
$13,389
$15,965
AdditionalCash Spent
Sales Tax,VAT,
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 20/22
HST/GSTPaid Out
PrincipalRepayment of CurrentBorrowing
$0 $0 $0 $0 $0 $0 $210 $210 $210 $210 $210 $210
Other LiabilitiesPrincipalRepayment
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-termLiabilitiesPrincipalRepayment
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
PurchaseOther CurrentAssets
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
PurchaseLong-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 CashSpent
$3,238$11,65
5$8,911
$9,500
$10,583
$13,014
$11,622
$11,930
$12,256
$12,682
$13,599
$16,175
Net Cash Flow($3,238
)($6,300
)($2,123
)($131) $216 $3,511 $677 $1,179 $1,883 $3,745 $5,301 $4,379
Cash Balance$16,79
4$10,49
3$8,370
$8,240
$8,456$11,96
7$12,64
4$13,82
3$15,70
6$19,45
1$24,75
2$29,13
1
Pro Forma Balance Sheet
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
AssetsStartingBalances
CurrentAssets
Cash$20,03
2$16,79
4$10,49
3$8,370 $8,240 $8,456
$11,967
$12,644
$13,823
$15,706
$19,451
$24,752
$29,131
Other CurrentAssets
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total
CurrentAssets
$20,032
$16,794
$10,493 $8,370 $8,240 $8,456
$11,967
$12,644
$13,823
$15,706
$19,451
$24,752
$29,131
Long-termAssets
Long-termAssets
$9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368 $9,368
Accumulated
$0 $88 $176 $264 $352 $440 $528 $616 $704 $792 $880 $968 $1,056
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 21/22
Depreciation
TotalLong-termAssets
$9,368 $9,280 $9,192 $9,104 $9,016 $8,928 $8,840 $8,752 $8,664 $8,576 $8,488 $8,400 $8,312
Total
Assets
$29,40
0
$26,07
4
$19,68
5
$17,47
4
$17,25
6
$17,38
4
$20,80
7
$21,39
6
$22,48
7
$24,28
2
$27,93
9
$33,15
2
$37,44
3
LiabilitiesandCapital
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
CurrentLiabilities
AccountsPayable
$0 $6,912 $4,149 $4,703 $5,701 $8,187 $6,575 $6,873 $7,184 $7,581 $8,464 $9,418$10,05
6
CurrentBorrowing
$0 $0 $0 $0 $0 $0 $5,000 $4,790 $4,580 $4,370 $4,160 $3,950 $3,740
Other CurrentLiabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
SubtotalCurrentLiabilities
$0 $6,912 $4,149 $4,703 $5,701 $8,187$11,57
5$11,66
3$11,76
4$11,95
1$12,62
4$13,36
8$13,79
6
Long-termLiabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TotalLiabilities
$0 $6,912 $4,149 $4,703 $5,701 $8,187$11,57
5$11,66
3$11,76
4$11,95
1$12,62
4$13,36
8$13,79
6
Paid-in
Capital
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0
$30,00
0RetainedEarnings
($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600) ($600)
Earnings $0($10,23
8)($13,86
3)($16,62
9)($17,84
5)($20,20
4)($20,16
8)($19,66
7)($18,67
7)($17,06
9)($14,08
5)($9,61
6)($5,75
3)
TotalCapital
$29,400
$19,162
$15,537
$12,771
$11,555
$9,196 $9,232 $9,733$10,72
3$12,33
1$15,31
5$19,78
4$23,64
7
TotalLiabilitiesandCapital
$29,400
$26,074
$19,685
$17,474
$17,256
$17,384
$20,807
$21,396
$22,487
$24,282
$27,939
$33,152
$37,443
Net Worth$29,40
0$19,16
2$15,53
7$12,77
1$11,55
5 $9,196 $9,232 $9,733$10,72
3$12,33
1$15,31
5$19,78
4$23,64
7
8/7/2019 Retail Tp A22
http://slidepdf.com/reader/full/retail-tp-a22 22/22