9. FINANCIAL PLAN
9.1 Start-up capital
Analysis of Start-up Costs
| Legal & Accounting fees: | R 12 000.00 |
| Furniture & fittings: | R 50 000.00 |
| Office equipment: | R 75 000.00 |
| Vehicle testing equipment: | R 25 000.00 |
| Camera equipment: | R 7 000.00 |
| Stationery: | R 3 000.00 |
| Advertising & marketing: | R155 000.00 |
| Deposit for initial print run: | R150 000.00 |
| Other: | R 25 000.00 |
| Total start-up cost: | R502 000.00 |
9.2 Fixed business costs
Analysis of Monthly Expenses
| Rent: | R 25 000.00 |
| Utilities: | R 10 000.00 |
| Wages & salaries: | R192 000.00 |
| Payroll expenses (taxes, etc): | R 3 500.00 |
| Printing: | R280 000.00 |
| Insurance: | R 4 000.00 |
| Bank charges: | R 1 000.00 |
| Bank loans: | R 20 000.00 |
| Repairs & Maintenance: | R 3 000.00 |
| Vehicle Expenses: | R 3 000.00 |
| Travel /Delivery/Fuel: | R 2 500.00 |
| Telephone: | R 5 500.00 |
| Supplies (office & operating ie. cleaning) | R 4 500.00 |
| Website & IT backup | R 11 000.00 |
| Miscellaneous: | R 15.000.00 |
| * Total average fixed business costs: | R580 000.00 |
* Printing cost will vary according to circulation. Figure indicated here is a predicted monthly average
9.3 Break-even analysis
In year one, a break-even scenario would be adequate. To break even, Wheels Alive! needs 9 039 copy sales, which equates to revenue of R117 507 (bearing in mind that 50% of the cover price goes to the retailer and distributor). Plus advertising sales of 18.5 pages (@R25 000 for a full page and R12 500 for a half page. These figures are regarded as achievable in year one, with incremental improvements to be expected in year two and year three
9.4 Important assumptions
| Year 1 | Year 2 | Year 3 | |
| Current interest rate | 8.5% | 9.0% | 9.5% |
| Tax rate | 28% | 28% | 28% |
| Electricity tariffs | — | +8% | +5% |
| Printing cost | R28/unit | unchanged | +8% |
| Cover price | R26.50 | +5% | +8% |
| Distributor’s commission | 25% of cover price | unchanged | unchanged |
| Retailer’s commission | 25% of cover price | unchanged | unchanged |
| Advertising page rate | R25 000 per page | +8% | +8% |
| Advertising revenue | — | +20% | +25% |
| Circulation | — | +30% | +50% |
9.5 Projected profit & loss (first 12 months of operation)
| Annual Gross Revenue: | R6 867 000.00 |
| Less Printing & Overheads: | R6 960 000.00 |
| Net loss (12 months): | R 93 000.00 |
9.6 Projected cash flow
* See Section 13 (Appendices) for full Projected Cash Flow statement
9.7 Projected balance sheet
* See Section 13 (Appendices) for full Projected Balance Sheet statement
9.8 Business loan / Start-up Capital
A bank loan of R900 000 is being sought to cover projected start-up costs (see 9.1) and running costs during year one and year two. This has been granted at an interest rate of 10% (fixed for two years) over 84 months.
In addition, Johan Blignaut is investing R500 000 of his own capital, and Bernard Plaatjies is investing R200 000.
9.9 Loan Repayment Schedule
* See Section 13 (Appendices) for full Loan Repayment schedule
10.0 Personal financial statement of owner
* See Section 13 (Appendices) for full Personal Financial Statement of owner
