Business Expansion

Business Expansion

James Miller

Strayer University

BUS 402

Professor Arend Clayborn

Business Expansion

Financial Plan

In Smyrna Sporting Goods’ financial plan, one of the first questions to ask is, what profits can the business expect to earn? According to Federal Firearms Licenses, (n.d.) Smyrna Sporting Goods in Smyrna, DE is a private company categorized under Specialty Sport Supplies. Established in 1954 and incorporated in Delaware. Current estimates show this company has annual revenue of over $600,000 and employs a staff of approximately four. The sales target for Smyrna is 600,000 dollars and as the owner, I would expect at least 71,000-dollar salary for running the business. The sales level to achieve this would be 12.0 percent. This figure is calculated by dividing net profit by net sales. The sales level required to produce a net profit of 71,000 dollars is 591,666.67.

Using statistics recommended by the U.S. Department of commerce (2004), cost of goods sold, is roughly around 58 percent for a sporting goods store. The monetary amount for cost of goods sold is 343,166.67. The Sporting goods store complete projected income statement is shown as follows:

Projected Income statement

Net Sales | 100% | 591,666.67 |

Cost of Goods Sold | 58% | 343,166.67 |

Gross Profit Margin | 25% | 150,000 |

Operating Expense | 13% | 79,000 |

Net Income | 62% | 71,000 |

As you can see by the projected income statement above, the store should support the salary I am looking for. The next step in projected income statement is to determine daily sales achievements. Assuming the shop will be open 6 days per week for 52 weeks (312 days), Smyrna must average 1,896.37 per day in sales. This amount is achievable, and with the sale of one firearm, ranging in price from 300.00 dollars to 5,000 dollars, Smyrna should expect to meet sales figures.

Assets and Liabilities are equally important in the financial plan of business. Not only should a business show...