Naledi Threads Business Plan — Break-Even
The revenue and basket volume needed to cover the cost base, and when the boutique crosses its own break-even.
Break-Even
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. The Business
- 3. Market Analysis
- 4. Location Strategy
- 5. Products and Merchandise Strategy
- 6. SWOT and Competitive Position
- 7. Marketing and Sales
- 8. Operations
- 9. People, Compliance and Controls
- 10. Implementation Plan
- 11. Financial Plan
- 12. Break-Even
- 13. Working Capital and Debt Service
- 14. Returns
- 15. Sensitivity and Scenarios
- 16. Risk Management
- 17. Trigger Points and Management Response
- 18. Key Performance Indicators
- 19. Key Assumptions
- 20. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Pre-Opening Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
|
Measure |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Achieved gross margin |
48.5% |
50.0% |
51.2% |
51.8% |
52.2% |
|
Less: commission and card fees |
(2.93%) |
(2.93%) |
(2.93%) |
(2.93%) |
(2.93%) |
|
Contribution margin |
45.57% |
47.07% |
48.27% |
48.87% |
49.27% |
|
Fixed cost base |
833 652 |
907 556 |
1 077 680 |
1 162 429 |
1 247 983 |
|
Break-even revenue on the cost base |
1 829 388 |
1 928 099 |
2 232 608 |
2 378 615 |
2 532 947 |
|
As a share of planned revenue |
100.9% |
84.4% |
88.1% |
87.3% |
87.3% |
|
Debt service |
95 200 |
130 999 |
130 999 |
130 999 |
130 999 |
|
Break-even including debt service |
2 038 297 |
2 206 405 |
2 503 996 |
2 646 671 |
2 798 827 |
|
As a share of planned revenue |
112.4% |
96.6% |
98.8% |
97.1% |
96.4% |
|
Margin of safety |
-12.4% |
3.4% |
1.2% |
2.9% |
3.6% |
|
Break-even transactions per trading day |
12.9 |
13.5 |
14.7 |
14.9 |
15.2 |
Expressed in transactions, the store must complete 12.9 sales a day in Year 1 to cover its costs and its debt service, against a planned 11.5. By Year 5 it must complete 15.2 a day against a planned 15.7. The difference between surviving and not is roughly one and a half transactions a day in Year 1 and half a transaction a day at maturity — which is simultaneously the most encouraging and the most alarming way to state the position.