Monday 20 May 2013

BUSINESS PLAN MERDEKA TACKLE & TRIP SHOP


Executive Summary

Located off Federal Highway, next to the new  PJ Plaza, Merdeka Tackle and Trip Shop will offer a convenient one-stop resource for all fishing products to travelers heading into the Merdeka National Parks System . Federal Highway is the gateway to over 130 public fishing locations and the PJ Plaza is the last commercial shopping and dining area before entering the Merdeka National Parks System. Merdeka Tackle and Trip Shop will capitalize on its location to pull in customers. It will offer a wide selection of fishing products as well as information on fishing conditions.

Fahmi Ahmad, owner of Merdeka Tackle and Trip Shop, has been an avid fisherman in the area for the past 10 years. He knows all the area's best fishing locations and has managed two fishing tackle and bait shops in the past seven years.

 




 


1.1 Objectives

  • To become a familiar and essential shopping destination for travelers heading out for a day of fishing.
  • Build a customer base that will grow each year.
  • Offer exceptional service and products to both the experienced and novice fishing enthusiast.
  • Offer the best fishing trip around the world .

1.2 Keys to Success

The keys to success for Merdeka Tackle and Trip Shop are the following:

  • Location: Merdeka Tackle and Trip Shop is located off Federal Highway , next to the new PJPlaza. Federal Highway  is the gateway to over 130 public fishing locations in the Merdeka National Park System. PJ Plaza is the last commercial shopping and dining location before entering the Merdeka National Park System. Many travelers routinely stop in the plaza at the beginning and end of their day in the park system.

 

  • Service: Fahmi Ahmad, owner of Merdeka Tackle and Trip Shop, knows that customers are not in his shop to browse. They need the right product or the best information on where to fish. Merdeka Tackle and Trip Shop will offer exceptional service and get the customers on their way so they can enjoy a day of fishing.

1.3 Mission

The mission of Merdeka Tackle and Trip Shop is to be the best, most visible, fishing product and information resource in the Merdeka National Parks area. We want travelers to plan stopping at our store as a important step in their day of fishing.


Company Summary


Merdeka Tackle and Trip Shop  will offer a convenient one-stop resource for all fishing products to travelers heading into the Merdeka National Parks System. The shop will be open April to November.

2.1 Company Ownership


Merdeka Tackle and Trip Shop is a sole proprietorship owned by Fahmi Ahmad.

2.2 Start-up Summary


Estimated start-up costs and expenses are set forth below. The start-up costs are to be financed by Fahmi Ahmad’s  personal investment.

 

 
Start-up Funding
Start-up Expenses to Fund
RM 12,300
Start-up Assets to Fund
RM 12,700
Total Funding Required
RM 25,000
Assets
Non-cash Assets from Start-up
RM 0
Cash Requirements from Start-up
RM 12,700
Additional Cash Raised
RM 0
Cash Balance on Starting Date
RM 12,700
Total Assets
RM 12,700
Liabilities and Capital
Liabilities
Current Borrowing
RM 0
Long-term Liabilities
RM 0
Accounts Payable (Outstanding Bills)
RM 0
Other Current Liabilities (interest-free)
RM 0
Total Liabilities
RM 0
Capital
Planned Investment
Fahmi Ahmad
RM 25,000
Other
RM 0
Additional Investment Requirement
RM 0
Total Planned Investment
RM 25,000
Loss at Start-up (Start-up Expenses)
(RM 12,300)
Total Capital
RM 12,700
Total Capital and Liabilities
RM 12,700
Total Funding
RM 25,000

 

 

Start-up
Requirements
Start-up Expenses
Legal
RM 500
Insurance
RM 0
Rent
RM 800
Inventory
RM 7,000
Display Equipment
RM 2,000
Store Sign
RM 2,000
Other
RM 0
Total Start-up Expenses
RM 12,300
Start-up Assets
Cash Required
RM 12,700
Start-up Inventory
RM 0
Other Current Assets
RM 0
Long-term Assets
RM 0
Total Assets
RM 12,700
Total Requirements
RM 25,000




Products

Store products include:

  • Fly rods and reels.
  • Lines-leaders-tippets.
  • Fishing gadgets-net/retractors.
  • Fishing footgear.
  • Raingear.
  • Maps.
  • Flies and fly tying materials.
  • Gear bags.
  • Tubes.
  • Fishing Trip with more 1000 fishing location around the world.
  • Misc: drinks, snacks, souvenirs, etc.


Market Analysis Summary


The Merdeka Tackle and Trip Shop is dotted with a number of small fishing tackle and bait shops on small roads around the park system. Most of them only serve a few fishing areas and have irregular operating hours. Federal Highway  is the only main traffic artery into the park system and yet there are currently no other tackle and bait shop located on Federal Highway. This is because the closest commercial center to the park system, PJ Plaza, is eight miles from the park's entrance. Over 90% of the park visitors use Federal Highway  to access the park system. Last year, the park system welcomed 100,000 fishing enthusiasts.

These enthusiasts were typically male between the ages of 20-45 years old. A fishing party of three to five is the norm for the area. Approximately 70% of these fishing enthusiasts visit the park system several times a year and develop strong customer relationships with the area's businesses.

The Merdeka Tackle and Trip Shop will create a base of loyal customers with quality service and fishing information that customers will come to depend.

Strategy and Implementation Summary

Federal Highway is a four-lane highway running north to the park system and south to the town of Petaling Jaya. The Merdeka Tackle and Trip Shop is located just off the northbound lanes and is next to the PJ Plaza. The shop will erect a large sign to grab customer attention to its location.

Once in the store, Fahmi Ahmad will provide the exceptional service that will build a loyal customer base.

5.1 Competitive Edge

Merdeka Tackle and Trip Shop ‘s competitive edge is two-fold:

·         Location: Merdeka Tackle and Trip Shop  is located off Federal Highway, next to the new PJ Plaza. Federal Highway is the gateway to over 130 public fishing locations in the Merdeka National Park System. Many travelers routinely stop in the plaza at the beginning and the end of their day in the park system.

 

·         Service: Fahmi Ahmad has the experience to provide exceptional service.

5.2 Sales Strategy

The key to customer satisfaction is a customer-friendly store that is easy to navigate and has knowledgeable people to help customers find what they want quickly.

5.2.1 Sales Forecast

The following is the sales forecast for three years. The monthly estimates for the first year are included in the appendices.

 




Sales Forecast
Year 1
Year 2
Year 3
Sales
Fishing Products
RM 48,400
RM 60,000
RM 70,000
Misc
RM 7,600
RM 8,000
RM 9,000
Total Sales
RM 56,000
RM 68,000
RM 79,000
Direct Cost of Sales
Year 1
Year 2
Year 3
Fishing Products
RM 7,000
RM 9,000
RM 10,000
Misc
RM 1,500
RM 1,750
RM 2,000
Subtotal Direct Cost of Sales
RM 8,500
RM 10,750
RM 12,000

 

Personnel Plan
Year 1
Year 2
Year 3
Fahmi Ahmad
RM 24,000
RM 28,000
RM 35,000
Other
RM 0
RM 0
RM 0
Total People
1
1
1
Total Payroll
RM 24,000
RM 28,000
RM 35,000




Financial Plan


The following sections will outline the important financial assumptions, break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Break-even Analysis


The break-even analysis indicates what is needed in monthly revenue to break even.

 



7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss. The appendices include first year monthly P & L estimates.

 












Pro Forma Profit and Loss
Year 1
Year 2
Year 3
Sales
RM 56,000
RM 68,000
RM 79,000
Direct Cost of Sales
RM 8,500
RM 10,750
RM 12,000
Other Production Expenses
RM 0
RM 0
RM 0
Total Cost of Sales
RM 8,500
RM 10,750
RM 12,000
Gross Margin
RM 47,500
RM 57,250
RM 67,000
Gross Margin %
84.82%
84.19%
84.81%
Expenses
Payroll
RM 24,000
RM 28,000
RM 35,000
Sales and Marketing and Other Expenses
RM 8,000
RM 10,000
RM 11,000
Depreciation
RM 0
RM 0
RM 0
Leased Equipment
RM 0
RM 0
RM 0
Utilities
RM 1,470
RM 1,800
RM 1,800
Insurance
RM 0
RM 0
RM 0
Rent
RM 9,700
RM 9,700
RM 9,700
Payroll Taxes
RM 3,600
RM 4,200
RM 5,250
Other
RM 0
RM 0
RM 0
Total Operating Expenses
RM 46,770
RM 53,700
RM 62,750
Profit Before Interest and Taxes
RM 730
RM 3,550
RM 4,250
EBITDA
RM 730
RM 3,550
RM 4,250
Interest Expense
RM 0
RM 0
RM 0
Taxes Incurred
RM 219
RM 1,065
RM 1,275
Net Profit
RM 511
RM 2,485
RM 2,975
Net Profit/Sales
0.91%
3.65%
3.77%

7.3 Projected Cash Flow


The following is the projected cash flow for three years. First year monthlies are in the appendix.

 



 

 

 

Pro Forma Cash Flow
Year 1
Year 2
Year 3
Cash Received
Cash from Operations
Cash Sales
RM 56,000
RM 68,000
RM 79,000
Subtotal Cash from Operations
RM 56,000
RM 68,000
RM 79,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received
RM 0
RM 0
RM 0
New Current Borrowing
RM 0
RM 0
RM 0
New Other Liabilities (interest-free)
RM 0
RM 0
RM 0
New Long-term Liabilities
RM 0
RM 0
RM 0
Sales of Other Current Assets
RM 0
RM 0
RM 0
Sales of Long-term Assets
RM 0
RM 0
RM 0
New Investment Received
RM 0
RM 0
RM 0
Subtotal Cash Received
RM 56,000
RM 68,000
RM 79,000
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations
Cash Spending
RM 24,000
RM 28,000
RM 35,000
Bill Payments
RM 32,132
RM 35,243
RM 40,920
Subtotal Spent on Operations
RM 56,132
RM 63,243
RM 75,920
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
RM 0
RM 0
RM 0
Principal Repayment of Current Borrowing
RM 0
RM 0
RM 0
Other Liabilities Principal Repayment
RM 0
RM 0
RM 0
Long-term Liabilities Principal Repayment
RM 0
RM 0
RM 0
Purchase Other Current Assets
RM 0
RM 0
RM 0
Purchase Long-term Assets
RM 0
RM 0
RM 0
Dividends
RM 0
RM 0
RM 0
Subtotal Cash Spent
RM 56,132
RM 63,243
RM 75,920
Net Cash Flow
(RM 132)
RM 4,757
RM 3,080
Cash Balance
RM 12,568
RM 17,325
RM 20,405

7.4 Projected Balance Sheet


The following is the projected balance sheet for three years. The first year monthly projections can be seen in the appendix.

Pro Forma Balance Sheet
Year 1
Year 2
Year 3
Assets
Current Assets
Cash
RM 12,568
RM 17,325
RM 20,405
Inventory
RM 1,170
RM 1,480
RM 1,652
Other Current Assets
RM 0
RM 0
RM 0
Total Current Assets
RM 13,738
RM 18,805
RM 22,057
Long-term Assets
Long-term Assets
RM 0
RM 0
RM 0
Accumulated Depreciation
RM 0
RM 0
RM 0
Total Long-term Assets
RM 0
RM 0
RM 0
Total Assets
RM 13,738
RM 18,805
RM 22,057
Liabilities and Capital
Year 1
Year 2
Year 3
Current Liabilities
Accounts Payable
RM 527
RM 3,109
RM 3,386
Current Borrowing
RM 0
RM 0
RM 0
Other Current Liabilities
RM 0
RM 0
RM 0
Subtotal Current Liabilities
RM 527
RM 3,109
RM 3,386
Long-term Liabilities
RM 0
RM 0
RM 0
Total Liabilities
RM 527
RM 3,109
RM 3,386
Paid-in Capital
RM 25,000
RM 25,000
RM 25,000
Retained Earnings
(RM 12,300)
(RM 11,789)
(RM 9,304)
Earnings
RM 511
RM 2,485
RM 2,975
Total Capital
RM 13,211
RM 15,696
RM 18,671
Total Liabilities and Capital
RM 13,738
RM 18,805
RM 22,057
Net Worth
RM 13,211
RM 15,696
RM 18,671

 


7.5 Business Ratios


Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5091, Sporting & Recreational Goods, are shown for comparison.

Ratio Analysis
Year 1
Year 2
Year 3
Industry Profile
Sales Growth
0.00%
21.43%
16.18%
11.50%
Percent of Total Assets
Inventory
8.52%
7.87%
7.49%
28.00%
Other Current Assets
0.00%
0.00%
0.00%
29.00%
Total Current Assets
100.00%
100.00%
100.00%
88.70%
Long-term Assets
0.00%
0.00%
0.00%
11.30%
Total Assets
100.00%
100.00%
100.00%
100.00%
Current Liabilities
3.83%
16.53%
15.35%
38.00%
Long-term Liabilities
0.00%
0.00%
0.00%
9.00%
Total Liabilities
3.83%
16.53%
15.35%
47.00%
Net Worth
96.17%
83.47%
84.65%
53.00%
Percent of Sales
Sales
100.00%
100.00%
100.00%
100.00%
Gross Margin
84.82%
84.19%
84.81%
23.00%
Selling, General & Administrative Expenses
83.91%
80.54%
81.04%
14.80%
Advertising Expenses
14.29%
14.71%
13.92%
0.70%
Profit Before Interest and Taxes
1.30%
5.22%
5.38%
2.00%
Main Ratios
Current
26.08
6.05
6.51
2.19
Quick
23.86
5.57
6.03
1.22
Total Debt to Total Assets
3.83%
16.53%
15.35%
47.00%
Pre-tax Return on Net Worth
5.53%
22.62%
22.76%
5.30%
Pre-tax Return on Assets
5.31%
18.88%
19.27%
10.10%
Additional Ratios
Year 1
Year 2
Year 3
Net Profit Margin
0.91%
3.65%
3.77%
n.a
Return on Equity
3.87%
15.83%
15.93%
n.a
Activity Ratios
Inventory Turnover
9.23
8.11
7.66
n.a
Accounts Payable Turnover
61.99
12.17
12.17
n.a
Payment Days
27
18
29
n.a
Total Asset Turnover
4.08
3.62
3.58
n.a
Debt Ratios
Debt to Net Worth
0.04
0.20
0.18
n.a
Current Liab. to Liab.
1.00
1.00
1.00
n.a
Liquidity Ratios
Net Working Capital
$13,211
$15,696
$18,671
n.a
Interest Coverage
0.00
0.00
0.00
n.a
Additional Ratios
Assets to Sales
0.25
0.28
0.28
n.a
Current Debt/Total Assets
4%
17%
15%
n.a
Acid Test
23.86
5.57
6.03
n.a
Sales/Net Worth
4.24
4.33
4.23
n.a
Dividend Payout
0.00
0.00
0.00
n.a