Looking for a lingerie retail clothing store business plan? You're in the right place.
A lingerie shop ties up cash in thousands of band and cup sizes before the first customer walks in. A lender or a landlord will want to know how much stock you need, how many fittings you can do a day, and what happens when January sales come in light. A generic retail template won't answer any of that.
In this article we'll walk through a complete sample plan for a fitting-led lingerie shop in Royal Oak, Michigan, section by section, ending with the financials: the start-up budget, the first twelve months, stock turns, payroll and a 20% sales shortfall.
Here's what you'll take away:
- The executive summary: put the shop, the raise and the first three years on one page so a reader sees what you're asking for
- The competitor table: see how to position a specialist against department stores, chains and online sellers without naming rivals you can't source
- The stock and buying plan: work out how much opening inventory a deep size run needs, and how fast it should turn
- The start-up budget: find out how much cash sits in stock, fit-out and reserve before the doors open
- The first year, month by month: spot the slow months and the holiday spike before you hit them, and plan cash around both
- The staffing plan: match fitters to appointments so payroll follows sales
- The downside case: have an answer ready for "what if sales are 20% short?", with the steps the owner takes in response
If you're opening a lingerie or bra-fitting shop, read this before you write your own. The shop is fictional, so keep what fits your store and change the rest.
In this plan
Looking for a lingerie retail clothing store business plan template? The Toolkit builds yours with your own numbers.
The Store at a Glance
Anchor Hollow is a bra-fitting and intimate apparel shop that opens in downtown Royal Oak, Michigan, in January 2027, with stocking and training in the weeks before. It sells fitted bras, matching sets, sleepwear, swimwear and shapewear to women who want a correct size more than the lowest price. From Year 2 it adds post-surgery fittings, mastectomy bras and breast forms. Dana Whitfield owns 80% of the company and a family investor holds 20%.
The store raises $195,000: $85,000 of Dana's savings, $25,000 from the family investor and an $85,000 bank term loan. Of that, $76,000 buys opening stock, $54,000 builds out 1,350 square feet and buys fixtures, $23,000 covers legal work, licensing, launch marketing and pre-opening rent and training, and $42,000 stays in the bank as a reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $484,560 | $595,422 | $678,741 |
| Gross profit | $259,603 | $318,997 | $363,635 |
| Net income after opening costs | ($12,622) | $22,936 | $35,350 |
| Closing cash | $60,409 | $82,356 | $105,360 |
Year 1 loses money only because $23,000 of opening costs are expensed. Before those costs the store earns $10,378. It runs below break-even in January, February, March and August, and the holiday months carry the year. If revenue falls 20% short, the owner delays two hires and the post-surgery launch, trims marketing and her own pay, and stops distributions, and the store still ends every year with cash and a profit from Year 2.
The pitch is narrow. A customer books a private 45-minute fitting, leaves in the right band and cup, and returns for the next bra, the set that matches it and, in time, the swimsuit.
Anchor Hollow Up Close
Legal name: Anchor Hollow, LLC, a Michigan limited liability company. Owner: Dana Whitfield, 80%. A family investor holds 20%. Premises: 1,350 square feet of leased retail space in downtown Royal Oak, with six fitting rooms. Opening: January 2027, after a short pre-opening period for stocking and fitter training. Stage: pre-launch. The lease terms are drafted and the first vendor accounts are open.
Why the shop exists
A correct bra fit takes time and a range of sizes that many general apparel floors do not stock. Anchor Hollow is built around that gap: a one-to-one fitting in a private room, a deep run of bands and cups, and staff who know the stock.
Where it should be in two years
- About 1,500 new customers in Year 1, and repeat visits that lift bra sales from 2,600 to 3,000 in Year 2.
- A post-surgery line with 150 customers in Year 2, run by a lead fitter who starts in month 13 and completes manufacturer training.
- $595,422 of revenue in Year 2, with a profit after tax of $22,936.
- Year-end cash above $60,000 in every year while the bank loan is repaid.
What the shop sells
| Department | Typical price | Year 1 share of sales |
|---|---|---|
| Fitted bras | $86 average | 46% |
| Panties, matching sets, sleepwear and robes | $38 average item | 27% |
| Swimwear | $112 average | 11% |
| Shapewear, hosiery and loungewear | $44 average item | 13% |
| Strap and band adjustments | $14 | 3% |
| Post-surgery fittings, bras and forms | $150 average (from Year 2) | – |
Rules the shop has to follow
The shop needs a sales tax license, city registration and a sign permit, which the plan budgets at $1,200; Dana would confirm the current requirements with the state and the city. The shop also needs fitting-room privacy and clear hygiene rules: bras are exchangeable, while underwear and swimwear are final sale. Post-surgery products raise a separate question, because insurers set their own rules on what they cover and who may bill. The plan does not bill insurers. Dana would take advice from a payer and an attorney before changing that.
Royal Oak and the Lingerie Shopper
A walkable district with its own shoppers
Downtown Royal Oak is a dining and shopping district in Oakland County, north of Detroit. The plan relies on foot traffic from people already in the district, plus a wider draw from suburbs whose residents drive in for a fitting. Dana counts foot traffic at the chosen address at different hours before signing the lease. The sales target is $359 per square foot in Year 1 and about $500 by Year 3. A lender will want it tested against the landlord's tenant sales.
Who walks in
The core customer is a woman between 25 and 60 who has been wearing the wrong size. She may be shopping for a first fitted bra after pregnancy or a weight change, replacing bras that have lost shape, or buying for an event. She pays more for fit and often returns within six to twelve months. A second group, from Year 2, is women who need a prosthesis or a bra with pockets after surgery. They often arrive on a referral from a surgeon, nurse or support group and need privacy, time and a fitter with specific training.
Where else she could shop
| Alternative | What it offers | Why she goes there | Where Anchor Hollow differs |
|---|---|---|---|
| Department-store intimates floors | Many brands in one place | Convenience, sales events | Private fittings and a deeper size run |
| National lingerie chains | Heavy advertising and broad assortments | Familiar names, promotions | Fit-first service; sizes beyond the chain's core range |
| Online retailers | Wide choice and price comparison | Price, home delivery | A fitting that corrects the size before she orders |
| Independent boutiques | Curated fashion lingerie | Style, local feel | A larger size run and alterations |
| Medical supply stores | Post-surgery products | Help with insurance paperwork, in many cases | A boutique setting and fashion options |
The table describes kinds of competitors, not particular companies.
Where the shop is strong and exposed
| Helps | Hurts | |
|---|---|---|
| From inside | A trained owner who fits most customers herself; deep size run; low markdown rate | One location; Dana is the best fitter, so her absence slows sales; high payroll share for retail |
| From outside | Steady referrals from maternity, bridal and breast-care providers | Online price pressure; slow January; vendor price rises |
Winning and Keeping Fitting Customers
Marketing: $22,000 in Year 1 plus $9,000 of launch spend
The plan expects 1,500 new customers in Year 1, about $21 each in marketing. Most arrive through four routes.
- Local search. A Google Business Profile, a fitting-booking page and photos of the fitting rooms.
- Referral partners. Maternity and bridal shops, doulas, physical therapists and breast-care nurses send customers and receive a standing thank-you.
- Events. A fitting night for local women's groups, and a bridal-party morning each spring.
- Email and text. A reminder six months after a fitting. A bra loses its fit with wear, and that message is the main source of repeat sales.
How a sale happens
- The customer books a fitting online or walks in.
- A fitter measures her, brings six to eight styles and adjusts straps and bands in the room.
- Sizes not on the shelf are special-ordered, with a note when they arrive.
- At the till the fitter suggests the matching set and one more style, which is why the plan counts 1.35 sets and panties per bra.
- A reminder text goes out in week two to ask about fit, and again at six months.
Pricing
Fitted bras average $86 and every price is marked in store. Markdowns on seasonal swimwear and discontinued styles cost 2.5% of sales beyond the planned margin.
Running the Floor and the Stockroom
The store
The 1,350 square feet are split into a front sales floor, six private fitting rooms and a small stockroom. Rent is $40,500 in Year 1, or $30 a square foot including shared charges, plus $4,800 for utilities. Together that is 9.3% of Year 1 sales and 7.1% by Year 3.
How the stock works
Bras are bought by band and cup, so the shelf carries many more items than the sales number suggests. Opening stock costs $76,000. The point-of-sale system tracks stock by size, which lets the owner reorder the sizes that sell out and special-order the rest. Stock is about 20 weeks of cost of goods sold at the end of Year 1 and turns 2.6 times that year, which is slow for general retail and common for specialists that carry many sizes. Turns reach 3.4 in Year 3.
Buying calendar
Spring swimwear arrives in February and March, and the buy is trimmed to match the summer sales window. Holiday gift sets and sleepwear are ordered in August, and the cash for that buy is the reason for the $42,000 reserve. Dana attends one trade show a year.
Vendors and terms
The store works with six to eight lingerie and swimwear vendors. First orders are paid up front and carry minimums; reorders move to 30-day terms. No single vendor should account for more than a quarter of purchases. A secondary supplier of core sizes is lined up in case one vendor is out of stock.
Hours and staffing
The store opens Monday to Saturday from 10:00 to 18:00 and Sunday from 12:00 to 17:00. Dana works 45 hours a week, about 25 of them fitting. A part-time fitter works 24 hours and a weekend associate 16, with a seasonal associate in February, summer and the holidays who is trained to fit. The part-time fitter becomes the lead fitter in month 13.
Loss prevention and returns
Returns are by exchange for bras and final sale for underwear and swimwear. The plan sets shrinkage and damage at 1.0% of sales. Cameras cover the floor and the stockroom, never the fitting rooms.
Who Runs the Shop
Dana Whitfield, owner
Dana has eleven years in intimate apparel: six as a fitting specialist and buyer for a department-store chain, and five managing a specialty bra shop. She has fitted several thousand customers and bought for every season. Her $80,000 is the savings of those years, and she takes a $45,000 salary from the shop.
What the team lacks
Dana has not signed a retail lease on her own account and has never run a post-surgery line. The plan covers the first gap by having an attorney review the lease and the second by promoting the part-time fitter to lead fitter in month 13 and budgeting $3,500 for manufacturer training and certification.
If Dana is away
Dana is the shop's best fitter, so a long absence cuts sales. The part-time fitter, the lead fitter and the seasonal associate are trained to the same fitting method, and the plan does not budget key-person cover, which a lender may ask for.
Outside help
A retired buyer from a regional retailer reviews the buying plan each quarter. The shop uses a local accountant for monthly books, which is in the $3,600 of professional fees.
Ownership and the bank
Dana owns 80%, the family investor 20%. The bank loan carries a personal guarantee from Dana and quarterly financial reporting.
The Money Behind Anchor Hollow
The tables below come from one five-year model of the store. Year 1 is shown month by month because a lingerie shop's year is lumpy; later years are annual. The store figures come first so each line in the statements can be traced to a price, a unit count or a payroll decision.
Stock, build-out and funding
| Use of funds | Amount |
|---|---|
| Opening stock: bras in 32 to 44 bands and AA to H cups, with back-stock of core sizes | $46,000 |
| Opening stock: panties, matching sets, sleepwear and robes | $15,000 |
| Opening stock: spring swimwear | $8,000 |
| Opening stock: shapewear, hosiery and loungewear | $7,000 |
| Fit-out of 1,350 square feet, net of a landlord improvement allowance: flooring, lighting, six private fitting rooms, counter | $32,000 |
| Fixtures: bra walls, drawer units, mannequins, steamer | $14,000 |
| Point of sale with size-level inventory, tag printer, cameras, signage | $8,000 |
| City business registration, sign permit, sales tax license | $1,200 |
| Legal: LLC, lease review, vendor agreements | $3,800 |
| Pre-opening rent and fitter training | $9,000 |
| Launch: website, photography, opening event, local partnerships | $9,000 |
| Cash reserve for the first winter and the stock build for holiday | $42,000 |
| Total uses | $195,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitfield's savings | $85,000 |
| Family investor (20% stake) | $25,000 |
| Bank term loan | $85,000 |
| Total sources | $195,000 |
Dana Whitfield puts in $85,000 of her own savings and a family investor adds $25,000 for a 20% stake. A bank term loan of $85,000 at 10.25% runs seven years, with interest only for the first six months. Debt is 44% of the $195,000 raised, and the bank would expect a personal guarantee and a lien on fixtures. The rate is a planning figure. Opening stock takes $76,000, build-out and fixtures $54,000, and $23,000 pays for legal work, licensing, the launch and the weeks of rent and training before the doors open. The last $42,000 is the reserve, held for the slow January and for the holiday stock that must be bought and paid for before the sales arrive.
Store figures behind the forecast
- The store has 1,350 square feet in downtown Royal Oak at $30 a square foot a year, or $40,500 in Year 1, as a modified-gross figure covering base rent and shared charges, with six private fitting rooms. A broker would confirm the going rate before signing. Rent rises about 3% a year, and the fit-out is stated net of a landlord improvement allowance.
- Fitted bras are the anchor: 2,600 sold in Year 1 at an average of $86, or about 1,730 bra customers buying 1.5 each. Matching sets, panties, sleepwear and robes add 3,500 items at $38, swimwear 480 pieces at $112, shapewear and hosiery 1,400 items at $44, and about 900 strap and band adjustments are charged at $14. That is around 4,000 transactions in the year, roughly 13 a day over 310 trading days, at about $120 each.
- Prices rise 3% a year from Year 2. Unit volumes grow with repeat visits: bras reach 3,300 in Year 3 and 3,600 in Year 5.
- Gross margin is held at the Year 1 blend of 53.6% in every year. The Year 1 blend comes from line margins of 53% on bras, 55% on sets, 48% on swimwear, 50% on shapewear and 90% on adjustments. Post-surgery products carry about 44%, so the true margin in later years would run roughly half a point lower. Markdowns beyond that planned margin cost another 2.5% of sales, shrinkage and damage 1.0%, and card fees 2.7%, all charged as operating lines.
- The plan expects 1,500 first-time customers in Year 1, about 29 a week. Marketing is $22,000 plus $9,000 of launch spend, so about $21 for each new customer. The channels are local search, a fitting-booking page, partnerships with maternity, bridal and breast-care providers, and events with local women's groups.
- Fitting capacity covers the peak. A fitting takes about 45 minutes. December Year 1 sells about 409 bras to some 273 customers, which needs about 205 fitting hours. That month Dana (25 fitting hours a week), the part-time fitter (24) and the holiday associate (15) supply about 275. Across the year, 1,730 bra customers need roughly 1,300 hours against more than 2,500 available.
- Post-surgery fittings, bras and breast forms begin in month 13 with the lead fitter, who has completed manufacturer training. Year 2 books 150 customers at an average of $150, rising to 260 by Year 5. The plan books $3,500 of training, certification and sample forms in Year 2. The store does not bill insurers; customers receive itemized receipts to submit themselves, and Dana would confirm the rules with each payer and with counsel before adding any billing.
- Stock is carried at cost. Opening stock is $76,000, and the model holds $87,248 at the end of Year 1: about 20 weeks of cost of goods sold, or 2.6 turns. Turns rise to 3.4 in Year 3 and 3.9 in Year 5 as the size run settles. Lingerie turns slowly because a single style needs many band and cup sizes, and the plan special-orders sizes it does not stock.
- First orders with new vendors are paid up front. After that, vendors give 30 days, which leaves $18,490 owed at the end of Year 1. Customers pay at checkout, so receivables are about 2 days of card settlement.
- Payroll adds 27% to full-time wages for payroll taxes, health cover, workers' compensation and paid leave, and 15% for part-time staff. Pay raises of 3% a year are charged as a separate line from Year 2. The retail-pay benchmark is the Bureau of Labor Statistics median of $17.10 an hour for retail sales workers (May 2025); fitter rates sit close to it.
- Income tax is charged at the federal corporate rate of 21% plus Michigan's flat 6% (Tax Foundation). The store would likely elect S corporation status, which moves this tax to the owners' returns, so the corporate figure is cautious. Rates may change.
- Distributions of $10,000, $20,000 and $30,000 are paid in Years 3 to 5, after cash has passed $100,000.
Sales by department
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Fitted bras | $223,600 | $265,740 | $301,083 | $328,911 | $348,458 |
| Panties, matching sets, sleepwear and robes | $133,000 | $156,560 | $175,367 | $191,009 | $203,154 |
| Swimwear | $53,760 | $62,294 | $70,104 | $75,879 | $80,676 |
| Shapewear, hosiery and loungewear | $61,600 | $72,512 | $81,689 | $88,948 | $94,093 |
| Strap, band and hook-and-eye adjustments | $12,600 | $15,141 | $17,080 | $18,664 | $19,854 |
| Post-surgery fittings, bras and breast forms (from Year 2) | $0 | $23,175 | $33,418 | $39,338 | $43,895 |
| Total revenue | $484,560 | $595,422 | $678,741 | $742,749 | $790,130 |
| Growth on prior year | – | 23% | 14% | 9% | 6% |
Fitted bras and the sets, panties and sleepwear bought with them bring in 74% of Year 1 sales. Swimwear is 11% and sells in a short window. Post-surgery products do not exist in Year 1; the lead fitter who starts in month 13 makes the line possible, so Year 2 growth of 23% leans on that hire and on repeat customers.
Valentine's to holiday: the first twelve months
| Month | Fitted bras | Panties, matching sets, sleepwear and robes | Swimwear | Shapewear, hosiery and loungewear | Strap, band and hook-and-eye adjustments | Post-surgery fittings, bras and breast forms (from Year 2) | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|---|
| Jan 2027 | $8,428 | $3,876 | $1,008 | $2,464 | $476 | $0 | $16,252 | ($10,363) |
| Feb 2027 | $15,136 | $14,402 | $1,904 | $2,904 | $770 | $0 | $35,116 | ($257) |
| Mar 2027 | $14,620 | $6,536 | $6,384 | $3,960 | $826 | $0 | $32,326 | ($1,752) |
| Apr 2027 | $15,222 | $7,258 | $9,072 | $4,444 | $910 | $0 | $36,906 | $702 |
| May 2027 | $16,598 | $7,942 | $9,856 | $4,840 | $1,064 | $0 | $40,300 | $2,520 |
| Jun 2027 | $17,544 | $7,676 | $9,296 | $4,488 | $1,120 | $0 | $40,124 | $2,426 |
| Jul 2027 | $16,942 | $7,942 | $7,280 | $4,620 | $1,092 | $0 | $37,876 | $1,222 |
| Aug 2027 | $17,544 | $8,208 | $3,696 | $4,752 | $1,134 | $0 | $35,334 | ($140) |
| Sep 2027 | $19,522 | $9,310 | $1,344 | $6,380 | $1,246 | $0 | $37,802 | $1,182 |
| Oct 2027 | $20,812 | $11,666 | $672 | $7,084 | $1,246 | $0 | $41,480 | $3,153 |
| Nov 2027 | $26,058 | $19,418 | $672 | $7,084 | $1,316 | $0 | $54,548 | $10,154 |
| Dec 2027 | $35,174 | $28,766 | $2,576 | $8,580 | $1,400 | $0 | $76,496 | $21,912 |
December alone is 15.8% of Year 1 revenue, and November and December together are 27.0%. February is the second gift peak, with sets at $14,402 against $3,876 in January. Swimwear takes 52.5% of its sales between April and June. Operating profit is negative in January, February, March and August and positive in the other eight months, and the two holiday months earn more than the whole year. The model's lowest month-end cash is Apr, at about $25,000. It carries stock as a steady base and does not time the holiday buy; November and December cost of goods runs to roughly $61,000, bought on 30-day terms, which is why the reserve is $42,000 and why the true low may fall in the fall.
Floor staff and pay
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Owner, buyer and head fitter | $45,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Fitter (part time, about 24 hours a week, until month 12) | $22,000 | Month 1 | 0.5 | – | – | – | – |
| Sales associate (part time, weekends and evenings) | $14,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Holiday and swim-season associate (part time, February and May to July and November to December) | $18,000 | Month 2 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Lead fitter (full time from month 13, post-surgery certified; the part-time fitter moves into this role) | $38,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Second fitter (part time, about 20 hours a week) | $18,500 | Month 28 | – | – | 0.5 | 0.5 | 0.5 |
| Total payroll incl. on-costs | $108,900 | $131,860 | $147,816 | $153,135 | $153,135 |
Dana is on the floor from the first day, and she and the part-time fitter split most fittings. A weekend associate works 16 hours a week, and a seasonal associate trained to fit covers February, summer swim and the holidays. The part-time fitter becomes the full-time lead fitter in month 13 at $38,000, completes post-surgery training and launches that line. A second part-time fitter arrives in month 28 when Year 3 volume needs the hours. The seasonal associate is shown at an annual-equivalent rate and paid for six months. Dana's $45,000 salary is already in the costs, so profit here means what is left after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $484,560 | $595,422 | $678,741 | $742,749 | $790,130 |
| Cost of goods sold | ($224,957) | ($276,425) | ($315,106) | ($344,822) | ($366,818) |
| Gross profit | $259,603 | $318,997 | $363,635 | $397,927 | $423,312 |
| Payroll incl. on-costs | ($108,900) | ($131,860) | ($147,816) | ($153,135) | ($153,135) |
| Rent | ($40,500) | ($41,700) | ($43,000) | ($44,300) | ($45,600) |
| Utilities | ($4,800) | ($4,950) | ($5,100) | ($5,250) | ($5,400) |
| Marketing | ($22,000) | ($23,000) | ($24,000) | ($25,000) | ($26,000) |
| Insurance | ($4,400) | ($4,700) | ($5,000) | ($5,300) | ($5,600) |
| Professional fees | ($3,600) | ($3,800) | ($4,000) | ($4,200) | ($4,400) |
| Software subscriptions | ($3,900) | ($4,200) | ($4,500) | ($4,700) | ($4,900) |
| Card processing fees (2.7% of sales) | ($13,083) | ($16,076) | ($18,326) | ($20,054) | ($21,334) |
| Markdowns and clearance beyond planned margin (2.5% of sales) | ($12,114) | ($14,886) | ($16,969) | ($18,569) | ($19,753) |
| Shrinkage and damage (1.0% of sales) | ($4,846) | ($5,954) | ($6,787) | ($7,427) | ($7,901) |
| Bags, tissue, tags and store supplies | ($3,600) | ($3,900) | ($4,200) | ($4,400) | ($4,600) |
| Cleaning, alarm monitoring and repairs | ($3,000) | ($3,200) | ($3,300) | ($3,400) | ($3,500) |
| Trade-show and buying travel | ($3,200) | ($3,500) | ($3,700) | ($3,900) | ($4,000) |
| Surgical-fitting training, supplier certification and sample forms | $0 | ($3,500) | ($1,500) | ($1,500) | ($1,500) |
| Licenses, permits and filings | ($900) | ($1,000) | ($1,000) | ($1,100) | ($1,100) |
| Fixture refresh and equipment replacement | $0 | ($2,000) | ($3,000) | ($8,000) | ($4,000) |
| Annual pay raises (3% a year) | $0 | ($3,956) | ($9,002) | ($14,200) | ($19,220) |
| EBITDA | $30,760 | $46,815 | $62,435 | $73,492 | $91,369 |
| Depreciation | ($8,171) | ($8,171) | ($8,171) | ($8,171) | ($8,171) |
| Interest | ($8,613) | ($7,757) | ($6,660) | ($5,445) | ($4,099) |
| Income tax | ($3,597) | ($7,950) | ($12,253) | ($15,412) | ($20,360) |
| Net income before start-up costs | $10,378 | $22,936 | $35,350 | $44,464 | $58,738 |
| Opening costs expensed in Year 1 (legal, licensing, launch marketing, pre-opening rent and training) | ($23,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($12,622) | $22,936 | $35,350 | $44,464 | $58,738 |
Year 1 earns $10,378 after tax and interest, then absorbs $23,000 of opening costs, for a net loss of $12,622. Net income is $22,936 in Year 2, $35,350 in Year 3, $44,464 in Year 4 and $58,738 in Year 5. Payroll, pay raises included, runs at 22% to 23% of sales throughout, which is high for retail and reflects a fitting-led model with one-to-one service. Income tax in the model is charged on operating profit and is not reduced by the opening costs.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($75,863) | $32,157 | $44,310 | $53,241 | $67,358 |
| Fit-out and fixtures | ($54,000) | $0 | $0 | $0 | $0 |
| Funding received | $195,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($4,727) | ($10,210) | ($11,307) | ($12,522) | ($13,868) |
| Owner distributions | $0 | $0 | ($10,000) | ($20,000) | ($30,000) |
| Net change in cash | $60,409 | $21,947 | $23,003 | $20,719 | $23,490 |
| Closing cash | $60,409 | $82,356 | $105,360 | $126,079 | $149,569 |
Cash ends every year above $60,000. Year 1 operating cash is negative at $75,863 because $87,248 of stock must be bought and paid for, but the funding covers it. The loan balance falls to $32,366 by the end of Year 5, and distributions start in Year 3.
Balance sheet, stockroom included
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $60,409 | $82,356 | $105,360 | $126,079 | $149,569 |
| Accounts receivable | $2,655 | $3,263 | $3,719 | $4,070 | $4,329 |
| Inventory (at cost) | $87,248 | $89,821 | $91,755 | $93,241 | $94,341 |
| Fit-out and fixtures (net) | $45,829 | $37,657 | $29,486 | $21,314 | $13,143 |
| Total assets | $196,141 | $213,097 | $230,320 | $244,704 | $261,382 |
| Accounts payable (vendor terms) | $18,490 | $22,720 | $25,899 | $28,342 | $30,149 |
| Bank term loan | $80,273 | $70,063 | $58,756 | $46,234 | $32,366 |
| Paid-in capital | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 |
| Retained earnings | ($12,622) | $10,315 | $35,665 | $60,129 | $88,867 |
| Total liabilities and equity | $196,141 | $213,097 | $230,320 | $244,704 | $261,382 |
Break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 6.3% | 7.9% | 9.2% | 9.9% | 11.6% |
| Net margin (before start-up costs) | 2.1% | 3.9% | 5.2% | 6.0% | 7.4% |
| Payroll incl. pay raises as share of revenue | 22% | 23% | 23% | 23% | 22% |
| Revenue per full-time equivalent at year end | $193,824 | $198,474 | $193,926 | $212,214 | $225,751 |
| Average monthly revenue | $40,380 | $49,619 | $56,562 | $61,896 | $65,844 |
| Monthly revenue needed to cover operating costs | $35,595 | $42,337 | $46,850 | $50,464 | $51,632 |
| Debt service cover (EBITDA / interest + principal) | 2.3x | 2.6x | 3.5x | 4.1x | 5.1x |
The store covers its operating costs when monthly revenue passes the figure in the second-to-last row. Year 1 averages $40,380 a month against $35,595 needed, a cushion of about 13%, though January, February, March and August fall below the line. Debt service cover is 2.3x in Year 1 and rises to 5.1x. The Year 1 figure uses operating profit before the $23,000 of opening costs.
A slow-sales year: 20% less revenue
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $387,648 | $467,068 | $542,993 | $594,199 | $632,104 |
| Net income before start-up costs | ($5,756) | $14,982 | $15,776 | $18,885 | $27,493 |
| Net income after start-up costs | ($28,756) | $14,982 | $15,776 | $18,885 | $27,493 |
| Closing cash | $45,358 | $59,053 | $72,412 | $87,431 | $109,586 |
This case cuts every revenue line by 20% in every year. The response is a series of steps. Hires planned from month 13 start six months later, so the lead fitter arrives in month 19 and the second fitter in month 34, and the post-surgery line launches with the lead fitter, so its Year 2 sales are halved on top of the 20% cut. Marketing is cut 20%, part-time hours are cut 20%, Dana takes a 20% pay cut to $36,000, spring swimwear stock is trimmed by a quarter, fixture refresh is canceled and no distributions are paid. Card fees, markdowns and shrinkage fall with sales. Under those terms the store loses $28,756 in Year 1 after opening costs, is profitable in every later year, and holds at least $45,358 of cash. Year 1 equity ends at $81,244. The case does not test deeper markdowns, which are the biggest lever in this trade; a 3-point slip in gross margin would cost about $20,000 of profit in Year 3.
Sources
- Bureau of Labor Statistics, Retail sales workers, Occupational Outlook Handbook: median pay of $17.10 an hour for May 2025.
- Tax Foundation, Michigan state tax index page: a flat 6 percent corporate income tax.
- Rent, prices, fees and the loan rate are the plan's own figures. Confirm local rents and lending terms before using them in a real plan.
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