Starting a dry cleaning business can be costly and having a financial model that lets you have some reference to where you want to be can be greatly helpful and reduce some of the unknowns and fears. The idea of a financial model has many folds. It lets you know what kind of startup costs you are going to need to come up with after any debt / investor financing as well as what kind of revenues are required in order to reach a certain break even point and start earning profits.
This financial model is designed to forecast the annual profit and loss and cash flow of a dry cleaning business. The main inputs are fairly high level and make for a quick analysis, but detailed enough to be useful. The user inputs:
- Startup cost items
- On-going cost items (count / annual cost per item / total annual cost)
- Percentage growth of fixed costs per year
- Start year of operations
- Number of operating years
- Exit multiple (per annualized EBITDA at exit year)
And for revenue assumptions:
- Items per Day
- Avg Ticket Price per Item
- Working Days/Year
- Estimated Annual Revenue
- Annual Rev. Growth / Year
- Number of Years with Growth
Based on all entered assumptions, the result is organized into an annual profit / loss statement and cash flow. The return summary will display the total project IRR, equity multiple, and annualized equity multiple as well as total Return on Investment (ROI) and annualized ROI.
This is a simple tool, but well organized and easy for anyone to understand / use.
