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forumworkshop

Continued from last issue...

INTERPRETING THE NUMBERS

The budget included in your business plan

should incorporate a 5-year projection of costs

and sales, and the store's profitability. You may

start to profit the first month, as soon as the revenue

generated by sales exceeds your monthly

cost of operations. More likely it will take

longer than that to build your business to the

break-even point when revenue from sales covers

expenses. Until that happens, you're operating

in the red. When you've got money left

over, and your monthly expenses are met,

you're in the black, and the business is profitable.

When those profits are enough to allow

you to satisfy any debts incurred by you to set

up the business, you'll begin to realize the full

profit potential of your store.

The trends will vary from month to month, especially

during this first year. Rare if the retail

category with steady sales throughout the year.

Some specialty dealers do as much as 80% of

business in the 4th quarter. Sales then literally

carry them through the lean months of the rest

of the year. That's why it's so important to get

your business up and running at least 2 months

before your peak selling period. Be there at the

beginning and you take some pressure off. You

want your accountant to prepare annual projections

for sales, expenses, and profits, as well

as monthly breakdowns for the first 5 years of

operations. You won't have a real sense of your

business until you can review it on an annual basis, and can make year-to-year comparisons.

Think of the only variable in your budget for

the first year as the amount budgeted in for

your salary. You can certainly live on more and,

if need be, will learn to live on less. Everything

else represents a necessary investment in giving

the store its appropriate start.

FINANCIAL PROJECTION CHARTS

The following financial projections are

for the same hypothetical clothing store

we used for the start-up cost charts.

Sweet Impressions Clothing Boutique, Inc.

SUMMARY OF SIGNIFICANT

PROJECTION ASSUMPTIONS

Note A - Nature of Projections

These financial projections are based on projected

sales levels and present, to the best of

management's knowledge and belief, the Company's

expected results of operations for the

projection period. The presentations are for the

purpose of establishing a proposed corporation

that would own and manage a clothing store,

and should not be considered to be a presentation

of expected future results. Accordingly,

these projections may not be useful for other

purposes. The assumptions disclosed herein

are those that management believes are significant

to the projections.

continued...

FORUM WORKSHOP

Operating Your

RETAIL STORE´┐Ż

R E T A I L

S T O R E

Operating

Your

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