Looking for a maternity clothing online business plan? You're in the right place.
An online clothing seller has to answer questions that a service business never faces. How much inventory do you buy before the first order? What does a new customer cost, and does the first order pay it back? Which months carry the year, and what happens to cash in the others? A blank template won't show what a sensible answer looks like.
In this article we'll walk through a full sample plan for an online seller of collegiate maternity wear in Cincinnati, Ohio, section by section. We'll cover the executive summary, the SWOT analysis and, most of all, the financials.
What you'll be able to do after reading:
- The executive summary: put a niche product on one page, so a reader sees who buys it and why within a minute
- The SWOT analysis: name a license risk or a seasonal peak plainly, without sounding unsure of the business
- The funding table: see how much of a raise goes to inventory, licenses and reserve, so you don't raise for the launch and run dry in the second year
- The first year, month by month: spot which months lose money before you reach them, and time your inventory buys around them
- The marketing budget: check what a new customer can cost against what their first order earns
- The five-year profit, cash flow and balance sheet: see how inventory, hiring and pay show up in the cash you hold
- The downside case: have an answer ready for "what if sales run 20% short?" along with the steps the founder takes
If you're planning an online clothing store, read this before you write your own. The business is fictional, so take what fits and change the rest.
In this plan
Looking for a maternity clothing online business plan template? The Toolkit builds yours with your own numbers.
ExpectingU.com at a Glance
ExpectingU.com is an online store in Cincinnati, Ohio that sells licensed collegiate maternity wear: team-color bump tees, hoodies and dresses, plus shower gift sets. It sells through its own website and an eBay store, and opens to the public on February 1, 2027. Founder Mary Lenton owns 75% of the company, and two alumna angel investors hold the rest.
Mary could not find a team tee that fit over a bump during her own pregnancy. Before opening she surveyed 520 expectant mothers about team-color maternity wear, and ad space on three expectant-parent sites is booked for launch.
The business raises $290,000: $110,000 of Mary's savings, $80,000 from the two investors and a $100,000 bank loan. Of that, $199,000 is held as a reserve, $26,000 buys opening inventory, $17,000 equipment, and $48,000 pays for license fees, legal work, the store build and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $286,000 | $525,000 | $772,000 |
| Net income after start-up costs | ($99,940) | ($27,456) | $34,401 |
| Closing cash | $110,672 | $41,502 | $31,195 |
Eight months of Year 1 lose money, and September to December turn a monthly profit as football season lifts sales. Year 3 is the first profitable year, and the margin that year is thin. If sales run 20% under plan and Mary delays one hire, drops another, cuts marketing and her own pay and pays no distributions, cash stays positive in all five years, though Year 3 closes with only about $9,000.
The store has one product idea: the shirt a pregnant woman wears to a game, in her school's colors, cut to fit. Friends and relatives buy the same pieces as gifts.
The Business and Its Licenses
Legal name: ExpectingU.com, LLC, an Ohio limited liability company. Owner: Mary Lenton, 75%; two alumna investors, 25% together. Base: 1,200 square feet of light-industrial space in the Cincinnati area, used as workshop, storeroom and packing bench. Funding closes: January 1, 2027. January goes on waitlist pre-orders and final set-up; the public store opens February 1.
Why the store exists
Sell maternity wear that shows a school allegiance, in sizes that suit a growing bump, shipped from a Cincinnati workshop.
What the first two years should deliver
- 12 licensed schools at launch, 20 by the end of 2028.
- A full-time fulfillment hire in month 19, ahead of the second football season.
- 5,100 own-site customers by the end of 2028, up from none.
- The bank loan repaid on schedule, ending in 2031.
Four ways it earns
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Maternity wear on the website | $38 tees to $78 dresses, $83 average order | 66% |
| eBay store | $45 average order, marketplace fees inside cost | 15% |
| Shower gift sets and baby items | $64 average set | 14% |
| Alumnae-club and group orders | $480 average order, from month 5 | 5% |
Selling school names
Collegiate marks belong to the schools. Many are licensed through a licensing agency or the school's own office, and each licensor sets its own application, approval, royalty and quality rules. Mary filed applications for the first 12 schools in the fall of 2026 and will not list a school's design without a signed license. The plan budgets $12,000 for application fees and advances against royalties, and uses a placeholder royalty inside direct costs. Terms, minimums and approval times are confirmed with each school; a school that refuses is dropped from the range.
Labels and shipping promises
Garments carry fiber content, country of origin and either the company name or an RN, as the FTC's textile labeling guidance describes. Shipping times shown at checkout are ones the workshop can meet. Under the FTC's mail, internet and telephone order rule, a customer is told if an order will ship late and offered the chance to cancel.
Expectant Mothers and the Fan Market
How many mothers there are
The National Center for Health Statistics counted 3,606,400 US births in 2025 on provisional data, a fall of about 1% from 2024. The store needs a few thousand customers a year, a very small slice of that, but a shrinking pool means growth must come from share and from gifts bought by relatives.
Where the product fits
Mass-market maternity retailers sell basics in plain colors. Fan-gear sites sell team shirts in regular sizes, which pull across a bump. Marketplaces list custom prints at low prices. In Mary's own search, team designs cut for pregnancy were hard to find, though some sellers may already offer them. The plan describes competitors as categories and quotes no competitor prices.
The alternatives a shopper has
| Alternative | What it offers | Why a shopper chooses it | How ExpectingU.com differs by design |
|---|---|---|---|
| Mass-market maternity chains | Wide range, stores and returns | Familiar, near, easy to try on | School designs they do not carry |
| Fan-gear retailers | Large catalog of team apparel | Official range, many teams | A cut and size guide made for pregnancy |
| Marketplace sellers | Unlicensed or custom prints | Lowest price | Licensed designs with a clear returns page |
| Local print shops | Custom one-offs | Quick, local | Maternity patterns and a consistent range |
The table shows how each is positioned, not which is better. Prices change often and are not quoted.
Strengths and weaknesses
| Strengths | Weaknesses |
|---|---|
| A need the founder met herself | Maternity pieces are worn for about nine months, so most customers buy once |
| Licensed designs in a maternity cut | Dependence on school approvals and royalty terms |
| Ad space booked before launch | Little brand recognition at launch |
| Opportunities | Threats |
|---|---|
| Gifts from friends and relatives | A school withdraws a license or raises its royalty |
| Alumnae clubs ordering for a shower or reunion | A large fan-gear seller adds a maternity cut |
| More schools each year | Falling births and dearer ads |
Who Buys a Team Bump Tee
The expectant fan
She is 24 to 38, has a school she cares about and is months from a wardrobe change. She buys online, checks the size guide, and wants one or two pieces for game days and photos.
The people who gift it
Friends, sisters and mothers-in-law, often looking for a shower present. They order gift sets, and some add a newborn piece. Gift sets are 14% of Year 1 revenue.
The group buyer
An alumnae club or a shower host needs six to thirty pieces in matching colors. Group orders average $480, start in month 5 and peak with the fall.
What every group asks for
A fit that works over a bump, a school name that looks official, a delivery date that holds, and an easy exchange if the size is wrong.
How Orders Arrive
From search to delivery
A shopper finds a design through search, an expectant-parent site or social media, picks a size from the guide, and pays by card or PayPal. The order is decorated, packed and shipped from Cincinnati within three business days, and a tracking email follows. A review request goes out a week after delivery.
The Year 1 order book
About 105,000 visits at a 2.2% conversion produce 2,300 own-site orders from 2,000 new customers. The eBay store adds about 933 orders, gift sets about 625 and group orders about 29.
| Source of new own-site customers | Customers | Share |
|---|---|---|
| Paid social | 700 | 35% |
| Search ads and organic search | 400 | 20% |
| Expectant-parent site ads | 340 | 17% |
| Influencers and referral codes | 320 | 16% |
| Alumnae clubs and campus partners | 240 | 12% |
Price and returns
Tees cost $38, hoodies $62 and dresses $78, and the average order holds 1.3 garments. Orders over $100 ship free; a $6 charge applies below that. The model allows for 12% of own-site orders coming back as exchanges or refunds. No sale events are planned in Year 1.
Repeat business
Most customers need one pregnancy wardrobe. Repeat orders come from second babies, gifts and new schools, set at 0.15 per earlier customer in Years 2 and 3. That is lower than a typical fashion retailer would expect, because the product is tied to one nine-month stage.
Reaching Expectant Fans
What marketing costs and what it buys
Year 1 marketing is $62,000: $14,000 of launch spend from start-up capital and $48,000 of running costs, 17% of revenue on the running part. Spread over 2,000 new own-site customers it comes to $31 each. A typical own-site order earns about $44 of gross profit after direct costs, so a first order repays the cost. The model holds the cost near $31 in every later year, because paid channels get dearer as the pool of expectant fans is worked. Marketing is the figure most likely to be wrong.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Launch: expectant-parent site ad space | $5,000 | Banners on three sites that committed space before opening |
| Launch: influencer kits | $4,000 | Free bump tees for 40 micro-creators |
| Launch: paid-social tests | $5,000 | Tests of five school designs before the first print run |
| Paid social | $17,000 | About 700 own-site customers |
| Expectant-parent sites and newsletters | $10,000 | About 340 customers |
| Search ads and content | $7,000 | About 400 customers |
| Campus and alumnae partnerships | $5,000 | About 240 customers and the first group orders |
| Influencer bump photos | $4,500 | Photos used across the site and ads |
| Email and text | $2,500 | Cart and delivery reminders |
| Referral and shower gift codes | $2,000 | Part of the 320 influencer and referral customers |
Milestones
- February 2027: store live with 12 schools.
- May 2027: first group order shipped.
- September 2027: football season, $26,600 from the site in the month.
- December 2027: 2,000 own-site customers for the year and 40 reviews on each of the five best-selling designs.
Packing, Printing and Inventory
The workshop
The 1,200 square feet hold two heat presses, a transfer printer, shelves of blank garments in nine sizes and a packing bench. Rent is $13,200 in Year 1. The workshop moves to 1,700 square feet in Year 4. Overflow printing in the fall goes to a Cincinnati-area decorator, priced inside direct costs.
How much inventory
Opening inventory is $26,000, mostly blank tees and hoodies in school colors. It rises to $54,504 at the end of Year 1 and $134,933 by Year 5. Designs for the largest schools are printed ahead of time. Smaller schools are printed to order, which holds inventory down. Designs that do not sell are cleared at a discount, and write-downs run from $2,500 in Year 1 to $9,500 in Year 5.
Capacity
October 2027 is the busiest month, with about 540 orders, 25 per working day. At roughly 10 minutes to decorate and 8 to pack, that is about 165 hours, and the part-timer and Mary's half-time on the bench supply about 195. That margin is why the fulfillment associate starts before the second fall. By Year 5 October brings about 1,770 orders and is the tightest point in the model; the third and fourth people and the overflow decorator cover it.
Software and data
A store platform with a returns portal, an email and text service, an inventory and order tool and accounting software, $7,200 in Year 1. Customer data sits with the platform vendors, and the privacy policy is drafted before launch.
Insurance and rules
Product liability, property and cyber cover, budgeted at $4,200 in Year 1. The business collects sales tax where required and confirms the rules by state, and the marketplace rules for eBay, with its accountant.
Mary Lenton and the Team
Mary Lenton, founder
Mary has ten years in channel marketing and high-level sales for a regional business-services company, where she led a team of four and ran a partner program. She holds a bachelor's degree in marketing. She invests $110,000 of savings and takes $54,000 a year.
Where the team is thin
Mary has not run printing or fulfillment before and has not negotiated a license. The plan covers this with a decorator on call, a lawyer for the license terms and a rule that no design goes live without a signed agreement.
If Mary is out
Orders can be paused with a banner and a longer shipping notice. The part-time hire can pack alone for a week, and the fulfillment associate hired in month 19 can run the workshop.
Investors and the bank
Two alumna investors hold 25% together. The bank loan carries a personal guarantee and a covenant to deliver quarterly accounts. One investor joins a monthly call and has no day-to-day role.
Financial Plan: Inventory, Football Season and Cash
A single five-year model sits behind the tables below: monthly for 2027, yearly afterward. Inventory comes up early because a seller of printed garments pays for it months before a fan buys it.
Paying for licenses, inventory and the first fall
| Use of funds | Amount |
|---|---|
| Opening inventory: blanks and the first fall print run | $26,000 |
| Collegiate license fees and advances against royalties | $12,000 |
| Heat presses, transfer printer, shelving, packing bench, laptops | $17,000 |
| Legal: entity, license agreements, store terms and privacy policy | $7,000 |
| Store build, size guide, photography and fit models | $15,000 |
| Launch: expectant-parent site ad space, influencer kits, first paid-social tests | $14,000 |
| Cash reserve for the first two football seasons and the inventory build | $199,000 |
| Total uses | $290,000 |
| Source of funds | Amount |
|---|---|
| Mary Lenton's savings | $110,000 |
| Two alumna angel investors (25% of the company) | $80,000 |
| Bank term loan | $100,000 |
| Total sources | $290,000 |
Mary puts in $110,000 of savings, 38% of the $290,000 raise. Two alumna angel investors contribute $80,000, 28%, for 25% of the company, which leaves Mary with 75%. A $100,000 bank term loan, 34% of the raise, runs five years at 10.5%, interest-only for six months, secured by a personal guarantee and a lien on equipment and inventory. The rate is an illustration for this example, not a quoted lending rate. The $199,000 reserve is 69% of the raise, and it is spent. Year 1 operations consume $153,395 of cash: the $51,940 operating loss, $48,000 of start-up costs, $54,504 of inventory and $2,351 of receivables, less $3,400 of depreciation that costs no cash. Year 2 draws cash down by a further $69,170, because the business loses $27,456, repays $19,330 of principal and keeps building inventory.
Operating figures behind the model
- Own-site orders: Year 1 brings 2,000 new customers, each placing 1.15 orders in the first year, so 2,300 orders at an average of $83 including shipping income. Year 2 has 3,100 new customers placing 3,565 orders, plus 300 repeat orders (0.15 for each earlier customer), at $85. Year 3 has 4,000 new customers placing 4,600 orders, plus 765 repeat orders, at $87. These steps land within 1% of the own-site line. Years 4 and 5 use 4,100 and 4,400 new customers at $89 and $91 and land within 2%.
- Prices: tees $38, hoodies $62, dresses $78, and an average of 1.3 garments an order. Orders over $100 ship free; a flat $6 fee on smaller orders is counted in the order value. Price rises of about 2.4% a year lift the average order.
- Traffic: the store converts about 2.2% of visits to orders, so Year 1 needs roughly 105,000 visits.
- Other channels: the eBay store averages $45 an order, about 933 orders in Year 1, and carries a 65% direct-cost rate that includes marketplace fees (the plan uses 13% plus promoted listings; eBay's fees change by category). Gift sets average $64, about 625 in Year 1. Group orders for alumnae clubs and shower hosts average $480, about 29 in Year 1, starting in month 5.
- Seasons: September to November bring $119,280 in Year 1, 42% of the year, because fall is football season. Spring due dates and showers carry the months before it. January holds only waitlist pre-orders, $1,900. Years 2 to 5 appear as annual totals.
- Direct costs are 49.8% of Year 1 revenue: 47% on the own site, 65% on eBay and 48% on gift sets and group orders. On a typical $83 own-site order that covers about 1.3 blank garments ($14), transfers ($3.50), a license royalty (about 10% of price, $8), postage net of shipping income ($5.50), packaging, card fees and a 12% return allowance, together about $39. Decoration labor is in payroll, not here. The royalty is a placeholder; each school sets its own rate and terms. No volume discount is credited in later years.
- Inventory at year end is the $26,000 opening buy plus 20% of that year's direct costs: $54,504, $78,324, $102,941, $119,286 and $134,933. Direct costs run through year-end inventory 2.6 times in Year 1 and 4.0 times in Year 5, an indicative figure because direct costs include fees and postage. Write-downs of $2,500 rising to $9,500 cover designs that sell below cost. Smaller schools are printed to order, which holds inventory down.
- Payroll adds 27% to wages for payroll taxes, health cover, workers' compensation and a retirement match (15% for part-time staff). Mary is paid $54,000, below her earlier salary, so the profit lines are what remains after she is paid. Wages shown are launch rates, and 3% pay raises are a separate line from Year 2.
- Rent is 1,200 square feet of light-industrial space in the Cincinnati area at about $11 a square foot a year, $13,200 in Year 1, rising about 3% a year, then 1,700 square feet from Year 4. These are planning figures, not quoted rents. Insurance covers product liability, property and cyber losses.
- Marketing is $48,000 of running spend plus $14,000 of launch spend in Year 1, which is $31 for each new own-site customer. Later years hold the cost near $31 as well (Year 2 $96,000, Year 3 $120,000, Year 4 $128,000, Year 5 $136,000), because paid channels get dearer as the pool of expectant fans is worked. A first order earns about $44 of gross profit, so the cost is repaid by the first order. It is the least secure figure in the model.
- Card sales settle in about three days, so receivables are small. Garment suppliers are paid on delivery, so the model carries no payables.
- Tax is charged at the 21% federal corporate rate with no state or city rate. Ohio taxes gross receipts above a threshold, not corporate income, and Cincinnati charges a municipal net-profit tax. Both would change the tax lines, so confirm them with a tax adviser. An LLC is usually taxed through its owners, which would also change them. Losses in Years 1 to 3 are carried forward, so tax starts in Year 4. The model does not apply the limit on how much of a carried loss can be used in a year.
- No distributions are paid in the five years. The loan is repaid on schedule and ends in Year 5, and cash stays with the business to fund inventory.
Revenue by sales channel
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Collegiate maternity wear (own site) | $190,000 | $330,000 | $470,000 | $550,000 | $640,000 |
| eBay store | $42,000 | $55,000 | $62,000 | $66,000 | $68,000 |
| Shower gift sets and baby items | $40,000 | $90,000 | $150,000 | $200,000 | $240,000 |
| Alumnae-club and group orders | $14,000 | $50,000 | $90,000 | $120,000 | $145,000 |
| Total revenue | $286,000 | $525,000 | $772,000 | $936,000 | $1,093,000 |
| Growth on prior year | – | 84% | 47% | 21% | 17% |
The own site supplies 66% of Year 1 revenue and 59% of Year 5. The eBay store is a way to find first buyers and shrinks from 15% to 6% as the site matures. Gift sets and group orders grow from 19% of the year to 35%, because they are bought by people other than the expectant mother and repeat each season. Revenue grows 84% in Year 2 on a base with eleven months of selling, then slows to 17% by Year 5. The Year 2 step depends on 3,100 new customers at the same acquisition cost, which makes it the first number to miss.
Month by month through 2027
| Month | Collegiate maternity wear (own site) | eBay store | Shower gift sets and baby items | Alumnae-club and group orders | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $1,900 | $0 | $0 | $0 | $1,900 | ($14,190) |
| Feb 2027 | $7,600 | $1,260 | $1,200 | $0 | $10,060 | ($10,096) |
| Mar 2027 | $9,500 | $2,100 | $2,400 | $0 | $14,000 | ($8,119) |
| Apr 2027 | $11,400 | $2,520 | $3,600 | $0 | $17,520 | ($6,353) |
| May 2027 | $11,400 | $2,940 | $4,000 | $560 | $18,900 | ($5,661) |
| Jun 2027 | $11,400 | $2,940 | $4,000 | $1,120 | $19,460 | ($5,380) |
| Jul 2027 | $13,300 | $3,360 | $2,800 | $1,400 | $20,860 | ($4,678) |
| Aug 2027 | $19,000 | $4,200 | $2,400 | $1,680 | $27,280 | ($1,457) |
| Sep 2027 | $26,600 | $5,460 | $3,200 | $2,800 | $38,060 | $3,951 |
| Oct 2027 | $28,500 | $5,880 | $4,000 | $2,800 | $41,180 | $5,516 |
| Nov 2027 | $26,600 | $5,880 | $5,600 | $1,960 | $40,040 | $4,944 |
| Dec 2027 | $22,800 | $5,460 | $6,800 | $1,680 | $36,740 | $3,289 |
January is the waitlist only. Sales reach $18,900 in May on spring due dates and baby showers, ease in July, and jump from August as football starts: $27,280 in August, then $38,060, $41,180 and $40,040 in September to November. EBITDA is negative in eight months and positive from September to December ($3,951, $5,516, $4,944 and $3,289). The lowest month-end balance in this series is Aug, at about $130,000, after allowing for card settlement. The monthly series leaves out inventory buys and receivables, so the year-end close of $110,672 in the cash table is the better guide. Monthly cash for Years 2 and 3 is not modeled.
The payroll, hire by hire
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and managing director (Mary Lenton) | $54,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Packing and customer care (part time, 25 hours a week) | $26,000 | Month 5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Fulfillment and customer care associate | $38,000 | Month 19 | – | 1 | 1 | 1 | 1 |
| Production and packing associate | $36,000 | Month 43 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $88,513 | $122,610 | $146,740 | $169,600 | $192,460 |
Mary runs the business alone from January to April. A part-time packing and customer care hire joins in month 5, ahead of the first group orders. A full-time fulfillment associate follows in month 19, before the second football season, and a production and packing associate in month 43, with the move to 1,700 square feet. Mary costs $68,580 of Year 1's $88,513 payroll. In October 2027 about 540 orders need roughly 165 hours of decorating and packing, against about 195 hours a month from the part-timer and Mary's half-time on the bench. By Year 5 October brings roughly 1,770 orders, the tightest point in the model, and an overflow decorator in the Cincinnati area takes the excess; that cost sits inside direct costs. Payroll rises only by the 3% raises in Year 5.
Profit and loss by year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $286,000 | $525,000 | $772,000 | $936,000 | $1,093,000 |
| Direct costs (garments, transfers, royalties, net postage, card and marketplace fees, returns) | ($142,520) | ($261,619) | ($384,704) | ($466,429) | ($544,666) |
| Gross profit | $143,480 | $263,381 | $387,296 | $469,571 | $548,334 |
| Payroll incl. on-costs | ($88,513) | ($122,610) | ($146,740) | ($169,600) | ($192,460) |
| Rent | ($13,200) | ($13,600) | ($14,000) | ($20,400) | ($21,000) |
| Utilities | ($2,400) | ($2,500) | ($2,600) | ($2,700) | ($2,800) |
| Marketing | ($48,000) | ($96,000) | ($120,000) | ($128,000) | ($136,000) |
| Insurance | ($4,200) | ($4,800) | ($5,400) | ($6,000) | ($6,400) |
| Professional fees | ($4,000) | ($4,500) | ($5,000) | ($5,000) | ($5,500) |
| Software subscriptions | ($7,200) | ($9,600) | ($12,000) | ($13,500) | ($15,000) |
| License royalty minimums and annual renewals | ($3,000) | ($4,000) | ($5,000) | ($5,500) | ($6,000) |
| Photography, fit models and content | ($5,000) | ($6,500) | ($8,000) | ($9,000) | ($10,000) |
| Write-downs on unsold inventory and clearance losses | ($2,500) | ($4,500) | ($6,500) | ($8,000) | ($9,500) |
| Chargebacks, fraud losses and bad debt | ($900) | ($1,500) | ($2,100) | ($2,600) | ($3,000) |
| Supplies, bank charges and travel to campus events | ($2,800) | ($3,500) | ($4,200) | ($4,800) | ($5,200) |
| Equipment replacement and new-hire kit | $0 | ($1,500) | ($2,500) | ($5,000) | ($2,500) |
| Annual pay raises (3% a year) | $0 | ($3,678) | ($8,936) | ($15,726) | ($24,155) |
| EBITDA | ($38,233) | ($15,407) | $44,320 | $73,745 | $108,819 |
| Depreciation | ($3,400) | ($3,400) | ($3,400) | ($3,400) | ($3,400) |
| Interest | ($10,307) | ($8,649) | ($6,519) | ($4,154) | ($1,528) |
| Income tax | $0 | $0 | $0 | ($4,451) | ($21,817) |
| Net income before start-up costs | ($51,940) | ($27,456) | $34,401 | $61,740 | $82,074 |
| Start-up costs expensed at opening (legal, license fees, store build, launch marketing) | ($48,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($99,940) | ($27,456) | $34,401 | $61,740 | $82,074 |
Year 1 loses $51,940 before start-up costs and $99,940 after them. Year 2 loses another $27,456 because marketing doubles to $96,000 and the associate is hired. Year 3 is the first profitable year, with net income of $34,401 and an EBITDA margin of 5.7%. The margin reaches 7.9% in Year 4 and 10.0% in Year 5, as marketing falls from 18.3% of revenue in Year 2 to 12.4% and payroll settles at 20%. Tax is zero until Year 4 ($4,451) because early losses carry forward. The margin is thin in Year 3 and depends on direct costs holding at 49.8%; a rise of two points would remove about $15,000 of profit.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($153,395) | ($49,840) | $11,153 | $47,447 | $68,536 |
| Presses, printer and packing bench | ($17,000) | $0 | $0 | $0 | $0 |
| Funding received | $290,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($8,933) | ($19,330) | ($21,460) | ($23,825) | ($26,451) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $110,672 | ($69,170) | ($10,307) | $23,622 | $42,085 |
| Closing cash | $110,672 | $41,502 | $31,195 | $54,816 | $96,902 |
Closing cash is $110,672, $41,502, $31,195, $54,816 and $96,902 across the five years. Year 3 is the lowest year end: profit of $34,401 is outrun by $24,617 of inventory growth, $21,460 of loan principal and $2,030 of receivables. The loan falls from $100,000 to $91,067 in Year 1 and is gone by Year 5.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $110,672 | $41,502 | $31,195 | $54,816 | $96,902 |
| Accounts receivable | $2,351 | $4,315 | $6,345 | $7,693 | $8,984 |
| Inventory (blanks and decorated garments) | $54,504 | $78,324 | $102,941 | $119,286 | $134,933 |
| Presses, printer and packing bench (net) | $13,600 | $10,200 | $6,800 | $3,400 | $0 |
| Total assets | $181,127 | $134,341 | $147,281 | $185,195 | $240,818 |
| Bank loan | $91,067 | $71,737 | $50,276 | $26,451 | $0 |
| Paid-in capital | $190,000 | $190,000 | $190,000 | $190,000 | $190,000 |
| Retained earnings | ($99,940) | ($127,396) | ($92,995) | ($31,256) | $50,818 |
| Total liabilities and equity | $181,127 | $134,341 | $147,281 | $185,195 | $240,818 |
Break-even, margins and inventory turns
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -13.4% | -2.9% | 5.7% | 7.9% | 10.0% |
| Net margin (before start-up costs) | -18.2% | -5.2% | 4.5% | 6.6% | 7.5% |
| Payroll incl. pay raises as share of revenue | 31% | 24% | 20% | 20% | 20% |
| Revenue per full-time equivalent at year end | $190,667 | $210,000 | $308,800 | $267,429 | $312,286 |
| Average monthly revenue | $23,833 | $43,750 | $64,333 | $78,000 | $91,083 |
| Monthly revenue needed to cover operating costs | $30,184 | $46,309 | $56,971 | $65,750 | $73,007 |
| Debt service cover (EBITDA / interest + principal) | -2.0x | -0.6x | 1.6x | 2.6x | 3.9x |
The last two rows of the ratio table set average monthly revenue against the figure needed to cover operating costs. Year 1 averages $23,833 a month against $30,184 needed, 21% short. Year 2 averages $43,750 against $46,309. Year 3 clears the line by $7,362 a month. Debt service cover is negative in Years 1 and 2 and 1.6 times in Year 3, so a lender would need to waive the cover test for two years and rely on the reserve and the guarantee. Inventory turns on direct costs are 2.6, 3.3, 3.7, 3.9 and 4.0 times.
If sales land 20% under plan
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $228,800 | $420,000 | $617,600 | $748,800 | $874,400 |
| Net income before start-up costs | ($57,320) | ($21,951) | ($4,508) | $43,824 | $83,019 |
| Net income after start-up costs | ($105,320) | ($21,951) | ($4,508) | $43,824 | $83,019 |
| Closing cash | $111,463 | $52,954 | $9,069 | $18,313 | $64,730 |
This case cuts every revenue line by 20% in every year. The response: the fulfillment associate starts six months later, the production associate is dropped, marketing is cut by 20%, Mary takes a 20% pay cut, the workshop stays at 1,200 square feet and no distributions are paid. On those terms cash at each year end never falls below $9,069, in Year 3, and the business turns profitable in Year 4 ($43,824), a year later than the base case. Equity ends Year 1 at $84,680. Year 3 closes with cash of about $9,000, which a bank would regard as no cushion; the owners would put in more money or ask for an interest-only extension before then. Smaller fall print runs release some cash, and the weaker months are the ones that follow a poor football season.
Sources
- Centers for Disease Control and Prevention, National Center for Health Statistics, Births: Provisional Data for 2025, Vital Statistics Rapid Release No. 43, and the April 9, 2026 press release: 3,606,400 births, down 1% from 2024.
- Federal Trade Commission, Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts.
- Federal Trade Commission, Business guide to the Mail, Internet, or Telephone Order Merchandise Rule.
- Collegiate license terms and royalty rates, eBay fee rates, Ohio and Cincinnati business taxes and sales-tax rules by state: not sourced. Confirm each before relying on it.
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