Posted: March 24th, 2023

Healthy Bee Restaurant: Financial Planning and Forecasting

Overview

Financial planning and projection are one of the most essential parts of the business plan. The plan and forecast will assist Healthy Bee Restaurant to evaluate its performance over the next three years. The business can appraise performance and identify the development path in uncertain business operations through the path. Several elements of financial planning and projection, including risk analysis, break-even analysis, and Pro-forma financial statements, are imperative in financial planning and forecasting.

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Important Assumptions

The financial plan is based on several assumptions. The business environment and unforeseen factors make the operations uncertain; hence, the projections are not guaranteed. The first assumption is that the business will experience growth in a number of aspects, including the growth in sales and total assets. In fact, it is assumed that the operating environment will grow as the number of people in need of fast food is increasing.

Risk Analysis

Healthy Bee Restaurant does not operate in a vacuum. Some factors make it a risky business undertaking. Despite the high demand for fast food, health concerns are highly debated among members of the public. The health issues attract the government to impose rules, regulations, and laws that can make it hard for the business to operate. In addition, the fact that foodstuffs are perishable in nature implies that Healthy Bee Restaurant is likely to suffer loss if the goods expire.

Break-Even Analysis

Breakeven analysis assists in the identification of the point in time when the business will start reporting profits after conception. At the breakeven point, profit is usually equal to zero, and a healthy company should have an upward profit growth from that point (Graham and Smart 464). A business that takes long before the realization of the breakeven point is not viable and cannot guarantee success. Based on the projected income statement, it is clear that Healthy Bee Restaurant will expense a breakeven during the second year.

Profit and Loss Statement

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Healthy Bee Restaurant

Projected Income Statement for the End of Year 1, Year 2, Year 3

Pro Forma income statement:  1st 2 nd yrs 3nd
sales                431,467.00                           742,560.00            905,245.00
cost of goods sold                258,880.20                           371,280.00            334,940.65
gross profit                172,586.80                           371,280.00            570,304.35
advertisement                  20,000.00                             20,000.00                5,000.00
salaries                195,408.00                           214,948.80            236,443.68
Insurance                    7,500.00                               7,500.00                7,500.00
Equipment maintenance                    3,000.00                               3,000.00                3,000.00
utilities                  12,000.00                             13,500.00              16,700.00
supply                    6,000.00                               7,052.00                9,240.00
depreciation                    1,000.00                               1,000.00                1,000.00
total expenses                244,908.00                           267,000.80            278,883.68
operating profit                 (72,321.20)                           104,279.20            296,420.67
Interest income (8%)                                   8,342.34              23,713.65
Earnings before taxes                 (52,321.20)                           112,621.54            320,134.32
Tax (25%)                               –                               28,155.38              80,033.58
net income                 (52,321.20)                             84,466.15            240,100.74

 

The business is expected to start from a higher note, as far as sales revenue is concerned, since the number of customers who demand fast food is high. However, the total expenses are high during the first year, which is a common phenomenon in many new businesses. The revenue amount will grow significantly across the three years, and the business will report net profit during the first years.

Balance Sheet Forecast

A balance sheet shows the financial position of an organization at a given time.

Healthy Bee Restaurant

Projected Balance Sheet as at the end Year 1, Year 2, Year 3

Pro forma balance sheet Year 1 Year 2 Year 3
Current assets      
Cash and cash equivalent                2,000.00                          2,100.00                                            2,205.00
Inventory                4,000.00                          4,200.00                                            4,410.00
Prepaid expenses                2,000.00                          2,100.00                                            2,205.00
Total current assets                8,000.00                          8,400.00                                            8,820.00
Fixed assets      
Furniture and fittings              15,000.00                        15,750.00                                         16,537.50
equipment                4,000.00                          4,200.00                                            4,410.00
Computers                5,000.00                          5,250.00                                            5,512.50
Total fixed assets              24,000.00                        25,200.00                                         26,460.00
Total Assets               32,000.00                        33,600.00                                         35,280.00
Current liabilities      
Accounts payable                    500.00                          1,000.00                                            1,250.00
Accrued expenses                2,000.00                          7,600.00                                         14,030.00
Long term debt              19,500.00                        15,000.00                                         10,000.00
Total liabilities              22,000.00                        23,600.00                                         25,280.00
owners equity              10,000.00                        10,000.00                                         10,000.00
Total liabilities  and equity              32,000.00                        33,600.00                                         35,280.00

 

Assets are immensely essential when it comes to business operations. Growth in assets indicates that a business is on an upward and appealing growth direction, as well as improved liquidity and leverage status (Dlabay and Burrow 66). Healthy Bee Restaurant expects its total assets to grow at 5 % per annum.

Cash Flow Statement

The cash flow statement shows the cash flows from operations, investment, and financing activities (Fight 165). Healthy Bee Restaurant projects that the net cash flow balances for the first years will be negative due to huge usage in the startup capitals, but it is projected to improve to a positive level in years 2 and 3.

Healthy Bee Restaurant

Cash Flow Statement for Year 1, Year 2, Year 3

Cash flow statement Year 1 Year 2 Year 3
Net reported profits            (52,321.20)                        84,466.15                                       240,100.74
Changes in current  assets                8,000.00                              400.00                                               420.00
net cash flow from operations            (60,321.20)                        84,066.15                                       239,680.74
Investment cash flow      
changes in fixed assets              24,000.00               (49,200.00)                                       (51,660.00)
Add depreciation charged                1,000.00                          1,000.00                                            1,000.00
Net cash flow from investing activities            (85,110.00)                      (48,200.00)                                       (50,660.00)
Cash from financing  activities      
changes in liabilities              22,000.00                          1,600.00                                            1,680.00
Interest INCOME                             –                            8,342.34                                         23,713.65
               22,000.00                          9,942.34                                         25,393.65
total net cash flow         (123,431.20)                        45,808.49                                       214,414.40

 

 

Works Cited

Dlabay, Les and Jim Burrow. Business Finance. Mason, Ohio: South Western, 2007. Print.

Graham, John and Scott Smart. Introduction to Corporate Finance. Mason, Ohio: South-Western Cengage Learning, 2012. Print.

Fight, Andrew. Cash Flow Forecasting. Oxford: Elsevier Butterworth-Heinemann, 2006. Print.

 

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