Startup Financial Planning Model for Susie’s Chocolate Business

Overview

Susie is determined to start her own chocolate business. She has some experience in the industry and is now signed up for a “Professional Chocolatier Program” running from Sep 2025 to Dec 2025. She will open and operate The Chocolate Shop (CS) in Kitchener/Waterloo as a sole proprietorship specialty chocolate shop that manufactures and retails delicious chocolate morsels. She is planning on a soft opening in January 2026. She lives in a small apartment so plans to rent a unit with a commercial kitchen. She will of course produce her chocolate delights using only Fair Trade chocolate. 

She is looking to you to complete an Excel financial model based on her estimates / assumptions that will help her summarize her start-up financial projections. You will create a set of “input sheets” that record all the figures, complete all of the calculations and feed the results into your three (3), forecasted financial statements, [Cash Flow Forecast (CFF), a Forecasted Income Statement (FIS) and a Forecasted Balance Sheet (FBS)], for one year. All in one Excel workbook. Remember from your accounting course that everything on the statements will be double-entry!!

Your Task – Create a Financial Model 

You are producing a customer focused, professional looking, Excel based, financial model for one year to be used for business planning. It is not just typing the data into a financial statement template—the input sheets provide space to collect the data, make any required calculations, state any assumptions or sources, and then feed into the three financial statements that contain no hardcoding. It should be formatted to be printed on 8”x11” paper, in the event you wanted to include portions in a report. Formatting will include clear indications as to where Susie can enter/change data to help her write her business plan. It will consist of the following twelve (12) tabs:

• Cover Sheet will include introductory information, plus:
  • Table of Contents - explanation of what is on each tab
  • Legend - what the different colours/formatting mean
  • Statement of Proof of Work, as a student this is included
• Cash Flow Forecast (CFF)
• Forecasted Income Statement (IS)
• Forecasted Balance Sheet (BS)
• Start-Up Cost Summary - Startup items should be divided into Expenses, Capital Expenditures, Inventory and Inflows of Monies.
• Sales Projections / Inventory - Sales for each channel by month and customer payment method. Raw material inventory by month. Cost of Good Sold factor for materials.
• Assets & Depreciation – using simple, straight-line depreciation method
• Human Resources (HR) Expenses -
• Financing - (loan details and horizontal calculated table showing principal and interest payments each month, line of credit rate and limit, and amount of desired monthly contingency)
• Other Expenses – marketing, location, delivery etc.
• NAICS benchmarking summary report based on % of Sales
• NAICS benchmarking summary report based on $ of sales

Start-Up Cost Assumptions / Estimates 

During her start-up, Susie estimates she will pay out the following for start-up costs: 

• Cooling racks and other manufacturing items will cost $16,500. These are depreciable items.
• Computer equipment (hardware and POS) will be $8,250.
• Computer software (will be expensed, not depreciated) at $1150.
• Internet Service Provider (ISP) one-time modem installation charge of $185.
• Internet domain for $115. It is needed for a basic web presence. 
• All one-time utility installation/setup charges will total $450.
• $345 to register her sole proprietorship business.
• Membership during start-up to join the Chamber of Commerce will be $300.
• Susie will pay her annual fee of $375 in March 2026.
• Opening inventory, to cover her first month’s sales (Jan) plus extra items (call it safety stock) for $4250 in inventory to provide a nice selection of ingredients.
• Her share of the leasehold improvements done during start-up will be $11,250 (see Lease and Location section for more details). This is a depreciable capital item.
• Rent is waived during start-up. The landlord gave her two months of free rent to allow for leasehold improvements. She pays her monthly rent starting January 2026—no first and last will be required.
• Professional Fees: Lawyer fees for examining her lease agreement and making suggestions will be $1375. The accountant/bookkeeper advice to help set up books will be $750.
• Utilities for the start-up period will be $455.
• Some initial marketing and advertising and logo design will cost her $1425 (expense)
• Trade Booth equipment (tables, canopy, signage etc.) is estimated at $920 and will be expensed.
• Her outdoor signage and sign permit will cost $1,855.
• Training will be $3,225 (Chocolatier courses, food handling for her and her sister, etc.)
• Miscellaneous Startup - $1950

Sales / Revenue Assumptions 

Susie envisions her business to be a small manufacturing site for chocolate treats from a commercial grade kitchen. She has set $295,000 as her ambitious sales goal for year 1. She plans to distribute through the following channels:

• Factory Storefront (24% of sales) – mostly pickup from a small counter (75?bit / 25% credit cards)
• Tradeshows / Popup Markets (35% of sales) – (95% credit cards & 5?sh)
• Larger Pre-Orders (B2B / Weddings) (41% of sales) – corporate sales to other stores or businesses as gifts and Weddings as favours for guests. This channel is 45% credit cards & 55% of sales are net 30 days paid by cheque or EFT with no additional costs) 

She is going to give trade credit to some of her bigger clients with net 30 days terms so that revenue will be received in the month after the initial sales. At this point, she is not expecting problems in collecting these funds but will need to send out electronic statements each month.  Also note that she receives the credit card monies back in the same month as the sales, but with a 2.95?e.  Susie’s initial research is that fine chocolate sells for up to $45 a pound and lower quality for $12 - $15 a pound. She is going to use $25/pound as her average price for chocolate. Again, Susie estimates her first-year sales, from all channels, will total $295,000. Figure 1 shows the estimated seasonality breakdown by sales channel for each month. She has also included Jan 2027 (month 13) seasonality since it is needed to calculate inventory purchases.

Susie expects her second-year total sales will increase by about 18% as people get to know about her fine products. She will assume the sales mix will also remain the same in the second year. (Note: You need the Jan. 2027 sales amount estimate to calculate purchases in Dec. 2026)

Cost of Sales for Materials 

She has located some wonderful suppliers who have a full range of needed ingredients and packaging. Turnaround is quick. She will place the order, receive it, and pay for it (COD) one month in advance of her sales. She calculates that her average Cost of Goods for materials only is 33.75%. Her accountant told her the inventory shrinkage and sampling costs are already included in her Cost of Goods Sold figure. She is assuming that all of the employee costs will be added to the Cost of Goods Sold. (stated separately) 

Susie feels she needs some safety stock and will purchase $4,250 in inventory during start-up. She will purchase an additional $3,750 of inventory in August 2026 in preparation for the busy season.

Depreciation 

In Figure #2, Suzie outlined the information to calculate her depreciation. On the Balance Sheet she wants to always show the original value of the items and then separately the accumulated depreciation to show the Net Capital Asset Value. You advise her to keep it simple and use the straight line depreciation method. 

Susie’s accountant advises that depreciation should start in the year she starts the business operations NOT in the startup period. 

Memberships & Professional Fees

As stated, Susie is going to register with the local Greater K-W Chamber of Commerce during her startup. Her next cost will be the $375 per year for membership payable in March 2026.

Plus, she plans to renew her membership in the Fine Chocolate Industry Association (FCIA) for $555 in July 2026. She hopes the learning opportunities and networking will be well worth the cost. 

Her other ongoing professional fees (lawyer & accountant) are estimated at $7475 per year. She decides you should split them evenly over the first 10 months of the years. 

You tell her you will add the membership fees (Chamber and FCIA) and professional fees together for easy comparison to the Industry Canada (NAICS) reports.

Salaries for Employees

Susie will work in the production of the business for about 10 days per month. She is also the main sales and delivery person and also does the purchasing and accounting. She estimates it will be 50+ hours per week. 

She is now single (again) with no dependents but at 32 years of age, has the drive to start her own business. 

She does not have any government benefit costs during the year and has no health and dental benefits plans. She cannot expense a salary as it’s a sole proprietorship but will take out $4600 a month starting in February 2026. Any monies she takes out is a draw against the equity of the business and will appear on the Balance Sheet in the Equity section (and goes in CFF of course). 

She will pay her one “full-time” (FT) employee, her sister, $21.25 per hour starting in January 2026 and her salary will be based on 40 hours per week. We assume she will work 4 weeks per month. All of her salary will be included in the Cost of Goods Sold. She is salaried so the hours or pay does not fluctuate. In addition, the payroll expenses and minimal benefits she pays to her add up to an additional 22% of her salary per month.

She plans to hire part-time (PT) workers and pay them $17.50 per hour which is above the local living wage. They will work as needed and Figure 4 shows her projections for hours. Their payroll expenses are an additional 18% of their wages. 

All employee labour costs (wages + benefits) are to be included with Cost of Goods Sold. On the FIS, ensure the inventory/materials and HR are shown separately. 

Marketing Expenses 

She has decided to use various methods of marketing. She is hoping to increase the business (B2B) sales by setting up her display at the Chamber’s meetings etc. throughout the year. She wants to pitch Employee Appreciation and new client gifts! The cost will be $150 per setup. She will set up her display in March, April, September, November, and December.

She plans to attend local tradeshows and markets and she is estimating each one costs $225-$350. That is the rental fee and any other incidentals to attend. Figure #3 shows the Chamber and other tradeshow costs. 

Providing samples will help sell her product and she thinks that will be included in her Cost of Goods and will not be an additional marketing expense. Packaging will also be included in the Cost of Goods too!

Lease and Location Expenses

Susie has secured this location with a 5-year lease. When she moved in, she made a deal with the landlord to make the leasehold improvements. Her share to get the premises ready will be $11,250 in leasehold improvements all of which will be completed before her starting date. Depreciation will start with her projected opening date. Her rent is $21.75/square foot for her 425 sq ft of space . In addition, she pays an additional $2.50/square foot for the CAM. The CAM covers a common washroom, use of two labelled parking spots, and all interior and exterior maintenance. Her other monthly location costs are minor maintenance and cleaning costs of $325/month and Content Insurance for $110

Delivery Expenses

Instead of paying herself mileage, Susie is bringing her own van into the business during the start-up. She plans to deliver locally. She figures that way she can deduct vehicle expenses. It is an older white cargo van with a FMV of $18,250. Her accountant said to show it coming the beginning of January 2026. It’s an older van that has a projected useful life of four (4) years and no salvage value.

She is going to put all other vehicle maintenance and van operating costs in a Delivery expense account. She figures that will amount to $425 per month plus extra delivery fees of $250 in Sept, Oct., Nov. and Dec. as they are her busy months. She will keep the “extra” delivery fees on a separate line on the input sheets to ensure she can easily adjust as needed.

Other Monthly Expenses

Other monthly cash expenses for 2026 are estimated to be:

Bank charges $ 75

Utilities $ 630

Telephone/internet $ 225

Other/Miscellaneous $2,875

Financing Arrangements

Susie has a good working relationship with her local bank. She already has a secured personal Line of Credit against her house with a $125,000 limit on it. She pays 5.75% interest on it anytime she uses it. For this forecasting, she assumes she pays back the FULL principal in the next month and again borrows anything she needs (as opposed to keeping a running total). The monthly interest incurred is also paid in that following month. She realizes this is slightly overestimating the interest as she may have only borrowed it for 5 or 6 days but finds it is the best way to estimate the cost of borrowing. 

She insists you build in a contingency (or “cushion”) amount of $2,250 cash on hand at the end of each month on her CFF reconciliation. If her cash on hand plus the contingency falls below this $2,250, she will borrow against the line of credit. Susie has $84,000 saved to invest in the business. She puts it in during the start-up period. Her parents will give her a loan of $50,000. They are charging her 2.95% per year and she has agreed to pay them back over 18 months with equal monthly payments consisting of principal and interest (PMT). Susie will receive the money in January 2026 and will make her first payment the following month in February. 

To make any comparisons easier later on, you tell her you will group financial costs together one after the other on the CFF and total them on the FIS (that will include: bank charges, interest on the loan and any interest incurred on the line of credit, and all credit card charges) and call them Financial Costs and put them in the Operating Expenses on the FIS rather than after the Net Income line. (Note: this is the way the Industry Financial Data does it)

Benchmarking Against Industry Financial Performance Data

You have also recommended that on her FIS, you setup a calculated “Expenses as a % of Sales” column. She can use this to quickly benchmark to industry data using the NAICS reports you created in class in Week #2.

Other Notes

• Sales taxes and input tax credits (ITCs for HST) are important factors in retail sales. However, for these projections, Susie has taken her accountant’s advice and has excluded these from her estimated sales and expenses. She will not build in tax remittance estimates.
• Government benefit expenses (CPP, etc.-the 18% and 22%) for her employees, will show in the month incurred not the month in which they are remitted.

Case Requirements

Suzie realizes these numbers are all guesses but it’s a start. She now wants to have you set up a set of Excel financial statements to allow her to do more analysis and planning. She is looking to you to create a Workbook consisting of the 12 Worksheets. 

She does not know Excel like you do so she has asked that you build the model so she can easily see where she can change input data and print it out for review. Each tab must be formatted to fit on 8 x 11” paper but can be either landscape or portrait orientation. She would prefer they don’t flow onto a second page but they must be easily readable!! The tabs must all look professional. For example, monthly columns should have equal width; everything should be readable when printed in B&W; and, of course, spell checked. You will be submitting the assignment in 2 parts and the two pieces are worth a total of 30% of your term mark. There is a bonus for successful completion of the 2^nd submission that balances after ad hoc changes are made. Susie is expecting a professional model designed for a small business client. This means: 

• You must lay out all factors/data/input in the Input Sheets so they are entered ONCE and a user can easily see where to change the data! If using on other input sheets, link back. Don’t be afraid to add Notes or comments for assumptions or sources of numbers. This will be VERY important when you create your Business Plan next term. 
• Avoid all Hard-Coding (i.e. typing in a number) on the statements and calculated spots on the input sheets. Hard Coding means you can see a number. The “5%” is hardcoded in the example formula =5%*$A1$G45 - Always check sheet with Ctrl+~). (ctrl+tilde)
• Spell Check (F7) is essential. Including on the Tabs.
• Format must include:
  • File opens on the first tab with the cursor in A1 and all tabs open in Normal View o All sheets saved with cursor in A1
  • The sheets MUST be readable and print out with thought on placement and size.
  • Start everything at left side so easy to scan through.
  • Columns in charts should be of equal width.
  • All workbook tabs are labelled and colour coded to group them.
  • Footers all show: your name, Tab Name and Page #. Could be Page # of # Pages. All but name has to be “programmed in” with field codes not just typed. (Hint: hold down the Ctrl key and choose all the tabs. Then enter the footer fields once and they’ll appear on all chosen tabs) 
• Formatted to print out on multiple pages as she envisions first making changes in pencil. Avoid breaking charts over multiple pages. If you do need a page break, remember to repeat headings and column labels as appropriate.
• Feel free to add Notes sections on any sheets to help Susie understand.

Susie is looking forward to sitting down with you with the completed model to discuss what she needs to do to improve her start-up business plan projections. 

Overall Notes and Hints

• All components of this project must be completed in Excel and must be your own, from scratch, and not copied from someone else, from previous years or from samples displayed. Any sign of copying work will mean a mark of 0/100 marks for all involved and may receive further disciplinary action. It is encouraged that you discuss ideas, ask questions, clarify points, but the work must be your own. Please insert the “Statement of Proof of Work on your Cover Page” and include your name.

Statement of Proof of Work 

“I have read and understand the rules regarding plagiarism/copying/cheating. I may have discussed this with others but at NO time did I allow my work to be copied nor did I copy from another student (past or present). I understand I may receive a zero on this assignment (one or both parts) and receive disciplinary action for turning in work that is not solely my own.” ~ Name of Student

• The assignment must be completed within one workbook with individual worksheet tab names helping the reader navigate the relevant sheets. Please put in the same order as the Figure #5 List of Worksheets.
• Colouring tabs to group them will be helpful. (e.g. two NAICS should be one colour and Financial Statements another colour). Keeping tab names short will also aid navigation. Use the shortened Tab Name then spell it out in the Contents List on the Cover Page.
• The sheets must be easily readable online and when printed. Think through how they would look if printed in B&W or colour. Should they be landscape or portrait orientation?
• Ensure the different types of cells, as listed on the Legend, are distinguishable. If you don’t colour the ones to type into, how will anyone know which ones can be changed?
• Think about choices…too dark makes it unreadable and red has a negative connotation in financial statements.
• Footers-- Put your name (Created by: your name) on the left. In addition, insert the Tab Name and “Page #” or “Page # of #” in the footer of each page. These must use “field codes” NOT typed in manually. Excel Tip: group all the tabs (Ctrl + click on each one) and insert this information once. 
• Use “File/Print Workbook” to view the contents and see how each are laid out. Did you remember the footer information? Are page breaks correct? Are they readable? Is it 12 pages long?
• If large sheets, freeze the titles for easy scrolling and reading online.
• The biggest challenge is to make this useful for forecasting. There should be NO hardcoded numbers in the three financial sheets or in any of the calculated schedules or cells. And, it should be clear to the reader as to where you can change numbers.
• Put information in once and then link to everywhere else it is needed/used. Some common areas to watch and ensure they are in only one place, are CofGS, Sales, and seasonality rates. Ctrl +~ will allow you to view your financial statements to ensure this is done correctly.
• Use Copy and Paste or linking or the Auto-fill handle (month names for instance) wherever possible to avoid spelling mistakes or missing information. For instance, link the CFF Names of expenses and CFF Totals to the FIS.
• The CFF format will be different from the format in the text. Ours is optimized to be a robust Excel model not a fill-in the blanks type. Follow this order:
  • Inflows – Mostly sales from each of the channels but you’d also put things like receipt of a loan, or interest you receive, or if you sold any excess equipment, etc.
  • Outflows – group the Operating Expenses into Operating and Non-Operating Outflows.

Non-Operating Outflows include capital purchases (none in this case), financing outflows (LofC & loan—both interest and principal payments on separate lines), merchandise purchases and owner’s drawings since these don’t go on the Income Statement. o Reconciliation Area (Beginning Cash on Hand + Inflows Total – Outflows Total = Total Cash Before Borrowing. Then, insert a memo field to link in the contingency amount so its visible. Then, calculate the total to borrow with an IF statement and then ending cash on hand.

• Proof carefully. There should be no unknown abbreviations, typing errors, or spelling errors. Ensure you spell check your work. (F7) (Hints: principal on a loan is NOT principle. Both the word “maintenance” and the spelling of names of months are often incorrect. And so is the spelling of the tab names).
• Capitalization of words and phrases and the formatting of dollar signs, commas in numbers and percentage signs should be done consistently and with the Canadian English format.
• Do not show cents on the Financial Statements if the amount is over $10.
• On Input sheets, decimals may be shown but consider how much busier it looks if $.00 is showing. Ensure decimal usage is consistent on each sheet. 
• NO MACROS – Unfortunately macros are a security risk and assignments containing them will not be accepted. So please don't include macros and don't save in the .xlsm format.
• Save often and save various versions. If you use OneDrive, Excel has an AutoSave feature. Save to the cloud! Every year we have students lose a week plus of work.

Assessment Summary and Mentor-Guided Approach

Brief Summary of Assessment Requirements

This assessment requires the creation of a one-year Excel-based financial model for The Chocolate Shop (CS), a small start-up chocolate manufacturing and retail business. Students must build a professional, fully linked, assumption-driven financial workbook consisting of 12 worksheets, formatted for printing and business use. The model must include:

• A Cover Sheet, Table of Contents, Legend, and Statement of Proof of Work

• Three fully linked financial statements with no hardcoding:

  • Cash Flow Forecast (CFF)

  • Forecasted Income Statement (FIS)

  • Forecasted Balance Sheet (FBS)

• Nine input and calculation sheets:

  • Start-Up Cost Summary

  • Sales Projections / Inventory

  • Assets & Depreciation

  • Human Resources Expenses

  • Financing

  • Other Expenses

  • NAICS Benchmarking (% Sales & $ Sales)

  • Start-Up Assumptions

Students must apply double-entry accounting, follow formatting rules (print layout, headers/footers, colour-coded tabs, equal column widths), and ensure zero hardcoded numbers in statements. All calculations must be linked to inputs, enabling Susie (the client) to adjust assumptions easily.

Key modelling tasks include:

• Structuring revenue by monthly seasonality and sales channels

• Calculating Cost of Goods Sold

• Developing depreciation schedules

• Building HR cost tables (FT, PT, benefits)

• Designing financing schedules (LOC borrowing, family loan amortization)

• Including contingency cash, reconciliation logic, and Industry NAICS benchmarking

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