Health Spa

resort hotelce aims to be the premier wellness spa/salon in the capital of North Carolina, NC ara. Through a droll combination of offered operate and products, they leave al unity quickly gain securities industry share. SoulSpace get out provide customers with a relaxing, rejuvenating atmosp here where e rattling of their mind and eubstance needs can be met. The problem go out be set up as a p prowessnership with Steve Long, Debby Long, and Linda Hill-Chinn owning equal portions of the operation. Products and receiptss SoulSpace offers a massive renewing of mind and body heal services and products.The salon aspect of the headache ordain provide both males and females with each type of hair styling services. The spa business is devoted to providing holistic methods of massage, body work, and heartiness work. This is all d mavin in a relaxing, serene setting. Location SoulSpace has chosen Raleigh, NC as their city for the business venture. Raleigh has consistently ove r the work a couple of(prenominal) years been voted the best place to work and hold water in the USA, frequently making the top five and ten lists of Forbes, Money, and Inc. magazines.Raleigh has one of the virtually better populations that loosely correlates to earning potential, or at least indicates a higher total household income. Additionally, the downtownarea has undergone a recent renovation that has attracted a sens of new businesses as well as become a hot urban area. Competitive Edge SoulSpaces competitive edge is their curious combination of services, fix, and customer-centric focus. both the extraordinary services and location has been detailed antecedently. SoulSpace has set out since its inception to provide quality, imagine adapted services.SoulSpace has an innovative training program that is extensive in its depth, decent training employees to provide an unprecedented aim of customer service. any customers pass on leave SoulSpace with a feeling that thei r needs were met well beyond any expectations that they previously had and far better than any competitor. This customer-centric business model is non just rhetoric, there are financial incentives in place for employees to offer unprecedented levels of service. This testament ensure a high rate of return customers, allowing SoulSpace to meet their ambitious goal of 90%. pecuniarysSoulSpace has forecasted substantial gross sales taxs by year two. Also by year two the business ordain reach profitability and confound achieveda healthy profit forwards taxes. When SoulSpace begins their fundraising sudors they will con viewr options such as LLC status to replace the partnership business formation that they have currently adopted. SoulSpace is an exciting business that provides a combination of sought aft(prenominal) services that are not currently offered by a direct competitor. SoulSpace will provide a relaxing, serene setting for a variety of mind and body rejuvenation servi ces for the booming Raleigh population. . 1 Objectives The objectives for SoulSpace are outlined below 1. Substantial salesrevenue by closing of second year. 2. Profit before tax by end of second year. 3. Have clientele return rate of90% by end of first year. 4. Become established corporation destination by end offirst year. 1. 2 Mission SoulSpace will provide a comforting, yet stimulating, atmosphere in which customers will be able to relax both their body and mind, reconnecting their daily lives to their true purpose through a wide range of holistic methods including massage, body works, energy works, and hair styling.SoulSpace will establish itself as a dependable destination to which they can always come to escape the tunees of life, and rejuvenate their energies, their souls, and their lives. 1. 3 Keys to Success 1. Quality and skilled employees well-known(prenominal) with energy work and oriented to a soothing spiritual disposition. 2. Establish trust within the community that each customers needs will be interpreted care of during e really visit. 3. Easily accessible location. 4. Effective advertising. Company Summary SoulSpace Holistic Spa and beauty shop is a new destination whirl customers the unique combination of hair styling, massage,body and energy work, and raining, all in one beautifully serene setting. Soulspace will offer all ranges of hair styling, curative massage, manicure, facial, sauna, Reiki, therapeutic touch, and specific complimentary product offerings. The goal and promise of SoulSpace can be summed up in our name and sloganSoulSpace Holistic Spa and Salon reinstate Your Life 2. 1 Company Ownership SoulSpace, at this time, is a privately held partnership, owned by Steve and Debby Long and Linda Hill-Chinn. In the course of fund raising, we will look for the feasibility of both a partnership, and a limited liability partnership. . 2 Start-up Summary In the spare-time activitytable, the start-up funds has been marked for the estimated amount needed to finish up operational expenses for the first two months. Start-up Funding Start-up Expenses to Fund $94,000 Start-up Assets to Fund $66,000 entirety Funding Required $160,000 Assets Non-cash Assets from Start-up $6,000 notes Requirements from Start-up $60,000 Additional cash Raised $0 Cash Balance on Starting take care $60,000 totality Assets $66,000 Liabilities and Capital Liabilities on-going Borrowing $0 long Liabilities $0Accounts Payable (Outstanding write ups) $0 early(a) stream Liabilities (interest-free) $0 entireness Liabilities $0 Capital think Investment Investor 1 $66,000 Investor 2 $47,000 Investor 3 $47,000 Additional Investment Requirement $0 Total visualizened Investment $160,000 firing at Start-up (Start-up Expenses) ($94,000) Total Capital $66,000 Total Capital and Liabilities $66,000 Total Funding $160,000 Start-up Requirements Start-up Expenses Legal $4,000 Stationery etc. $2,000 Brochures $3,000 Construction/Design $30,000 insurance $3,000 Rent $20,000 Research and Development $0 Expensed Equipment $15,000 other $17,000 Total Start-up Expenses $94,000 Start-up Assets Cash Required $60,000 Start-up Inventory $6,000 Other flow rate Assets $0 Long-term Assets $0 Total Assets $66,000 Total Requirements $160,000 2. 3 Company Locations and Facilities Target positions for SoulSpace accept downtown Raleigh in the Warehouse District and Art Districts, West Raleigh near merriment Sports Arena, and arural area off route 40/440 between Raleigh and Cary.SoulSpace will need at least 4,000 square feet (sq. ft. )of space. Initial estimates pose leasing between $12/sq. ft. to $28/sq. ft. (inclusive of tax and accommodations). Contact has been made with Mary Hobbson of Grub & Ellis Real Estate for 4,200 sq. ft. at 510 Glenwood Avenue downtown Raleigh. This site is within the home run priority area in part of the Warehouse District in what is now referred to as Glenwood South. The lease is $28/sq. ft. , making estimated catch up withments at $9,800/month, the most expensive of all target sites.We too have met with Peter Pace of York Properties when shown the space available at 200 West Street in Raleighs Warehouse district. This space is in priority target range, and will be two blocks from the Raleigh Commuter Rail Hub due to open in the side by side(p) five to eight years. The location is spacious at 10,000 sq. ft. , with first floor (5,000 sq. ft. ) leasing at $12. 50/sq. ft. and the basement floor (5,000 sq. ft. ) leasing at $8/sq. ft. , which averages out to $10. 25/sq. ft. for the entire 10,000 sq. ft. location.This makes this space cheaper than the other locations, and has twice the space. We have in any case met with David Stowe of Anthony Allenton Real Estate when shown space at the Royal Bakery on Hillsborough Street crossways from Meredith College. This location is within priority target, and has 6,000 sq. ft. at $20. 60/sq. ft. This site is extremely attractive for it offers many accommodations such as plumbing, electrical, and hvac, that will save us hugely on construction costs, thusly counterbalancing the expense of rent, which is only $300, over our high-ended estimated budget.Also, this space is primely located on Hillsborough, 1/4 mile from the Beltine, and two miles from Highway 40. It is also the site of a future Commuter Rail Station. They have also built a large parking decking which will be free to all patrons. Products and Services SoulSpace will provide customers with individualised beautifying and relaxational services and complimenting products, as well as training in specific forms of energy work, accessible materials on a wide range of health-related topics, and the option to purchase artwork displayed in SoulSpace.Explanations and/or consultations will be provided on all services and products if needed. 3. 1 Product and Service Description 1. Men and Women Hair StylingMens($30 average)and w omens($40 average)color ($75), perm ($80), and combos ($80-$120). Selected hair care products (shampoos, conditioners, cleansers, brushes, mirrors) will be sold as well. 2. automobile trunk WorksMassage ($60), other massage/body works ($65 average), facials ($60 average), manicures ($45), pedicures ($50-$65), waxing ($20 average), aromatherapy ($40), and combos ($60-$200 depending).Specific complementing products will be sold as well. 3. Energy WorksReiki (1/2 hour $35, 1 hour $60), energy revitalization (1 hour $60), and therapeutic touch (1 hour $60). Customers will complicate masses wishing to strengthen their physical body, mind, and spirit through the cleaning and revitalizing of their energetic system (i. e. , aura, human energy line of merchandise). The Reiki offered will be traditional Usui Shiki Ryoho, the paramount form of Reiki practiced worldwide, which originated in Japan from its rediscoverer Dr. Mikao Usui. Reiki is a hands-on stepping method of balancing the ener gy field.Energy revitalization and therapeutic touch are energy field cleansing and revitalizing techniques working with the outer levels of the energy field along with Reiki. 4. Artwork Most of the artwork in SoulSpace will beby local anesthetic artists, for sale to the customers. SoulSpace will earn a 15% burster on each piece sold. This adds an extra element of community integration to SoulSpace with an added emphasis of the art existence from beginning artists, and that the art be spiritual and/or modern in form. 3. 2 Competitive Comparison There are many salons in the greater Raleigh area but no direct competitors.There are many places offering massage, but there are only ten twenty-four hour period spas, of which only four are a spa/salon. There is one place offering energy work, in Clayton (30 minutes southeast from downtown Raleigh). All energy work practitioners are private, of which there are only ten working full-time, with most of them concentrating on other alternat ive modalities, and an estimated ten (twenty at the very most) part-time energy practitioners. Not including Chapel Hill and Durham, the above service an estimated population of at least 800,000, with that figure growing by an estimated 6,000 persons daily. . 3 sales Literature Services brochure, logo/slogan with advertising to be take ond, and a planned website. 3. 4 Fulfillment SoulSpace services cover themselves as a cancel way to rejuvenate ones life. 3. 5 Technology SoulSpace will sell complementing products of the highest quality that have not been created through the testing of animals, and are of the latest scientific crafty for effecting the desired results for body beautification and energetic balancing maintenance. 3. 6 Future Products and Services SoulSpace will add healing touch when Steve Long earns his certification.SoulSpace will always keep on involved with the best spa relaxational techniques offered, and will implement them if deemed appropriate and feasible f or SoulSpace clientele. Market summary Summary There are no exact competitors, and few related competitors in the greater Raleigh area. There are no related competitors in the downtown Raleigh area. The space at 510 Glenwood was recommended to us by the managing realtors because they had targeted that space for a spa type tenant. By nature of the service SoulSpace will provide, success will be pronto achieved. 4. 1 Market SegmentationOur target market will be divided by salon customers and spa customers. Salon customers will be from every age and gender however, since the salon and spa will be in direct association with each other, we expect that the spa market segment will greatly affect the salon market segment. Thusly, our target market segment will be male and female professionals and retirees, from the age of 25, with unmarried and household incomes greater than $25,000. Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers appendage CAGR +$25K 5 mi. Radius Raleigh 2% 50,500 51,510 52,540 53,591 54,663 2. 0% +$25K 5 mi. Radius West Raleigh 2% 53,000 54,060 55,141 56,244 57,369 2. 00% Total 2. 00% 103,500 105,570 107,681 109,835 112,032 2. 00% 4. 2 Target Market Segment Strategy The members of these market segments have luxury coin on hand, and lead professional livesfilled with stress at a consistent level. All persons usually need hair styling regardless of income level, and make the effort to find the money available to style their look. 4. 2. 1 Market Needs People love to pamper themselves, especially people who have achieved a modicum level of professional success.Raleigh has becomea bastion for the happy, having consistently been named as one of the best cities in America to live and to do business in since the middle(prenominal) 1990s. This has created a community of wealth, mobility, and growth. Raleigh has successfully utilize a refurbishing plan of old downtown, which now makes Glenwood South, the Warehouse Distri ct, and Hillsborough Street one of the most popular destinations in the whole city. 4. 2. 2 Market Trends With the restitution of Raleighs Warehouse District, including Glenwood South, and its continual development of downtown Raleigh, this area will nly become more popular. 4. 2. 3 Market Growth WhenForbes, Inc. ,andMoney, Inc. listed Raleigh as the best place to live and do business, and subsequently listed Raleigh in the top five and top ten in the followers years, a population boom ensued in the late 1990s. The North Carolina census released in October 2000 reportsthat an average of 6,000 persons per day were relocating to the greater Raleigh area. According to this census, the Triangle has one of the highest concentrations of Ph. D. s per square mile in the world. The average income per household is $40,000-$60,000and climbing.According to theRaleigh News & Observerreports of Raleigh City Counsel meetings concerning growth, the continuing refurbishment of downtown Raleigh is a top priority, along with a complete overhaul of the mass transit system. New buses and taxis are funded and are to be implemented during the next two years. A Commuter Rail System run by the Triangle Transit Authority is supposed to be finalized May 1, 2001, and immaculate by 2007-2008, with rail stations throughout downtown, running up Hillsborough Street going to RDU Airport then connecting to Chapel Hill and Durham later phases include branch rails to North Raleigh.The refurbishment plan observes, and downtown is now populated with more destinations than ever, with the plan growing even more businesses. The future looks very promising for a thriving downtown with a continual presence of customers. 4. 3 Service Business Analysis We are part of the retail health and beauty industry which has four study types 1. Salons Stores with only hair styling services and products. 2. Day Spas Stores specializing in body health maintenance through a variety of services and products. 3. Day Spa & Salon Stores combining the services of the two aforementioned. 4. Health & Beauty Products Stores selling only merchandise products covering the wide range of products available but not inclusive of those sold by salons and spas. 4. 3. 1 main Competitors The main competitors are Salon 21 with a location in downtown Raleigh, Von Kekel with locations in tocopherol Cary and North Raleigh, Soigne with a location in mid North Raleigh, Emerald City with a location in northwestward Raleigh, Image with a location in far North Raleigh, Millennium 2000 with a location n North Raleigh, Devine with a location in mid North Raleigh, and Warren Scott with a location in far North Raleigh. Also, by nature of their popularity we must also include these spas as main competition Skin Sense with locations in downtown Cary and far North Raleigh, and Iatria in far North Raleigh. Strengths of the above are services offered location proximity to major housing developments, and name recog nition. The weaknesses of these competitors are cosmopolitan lack of promotion, concentration mainly in North Raleigh.With our target location being downtown Raleigh, we will be servicing East, South, West, and Old Raleigh, as well as downtown commuters. There are no salon-spas in West Raleigh, the closest being Von Kekel in East Cary, and the spa only Skin Sense also in Cary. The only downtown competitor, Salon 21, is very small, not very well known, and concenters most of their business on the salon end. Our market advantage is wide open, and will give us the opportunity to service a large population base that is not currently being well served.When you include our service of energy works, we become the sole provider of all three services of hair works, body works, and energy worksnot only in downtown Raleigh, but for the entire greater Raleigh area. 4. 3. 2 Business Participants Industry participants are those whose services include salon and spa offerings. Salon services conce rn hair styling, while spa services concern body relaxing and rejuvenating offerings such as massage, and elateand face works. 4. 3. 3 Competition and Buying PatternsCustomers choose spa and salon services based on proximity to their daily travels from home and work, reputation for quality, and superb pricing. With our combined services, we expect to compete mainly against other combination spa-salons. Strategy and Implementation Summary 1. strain quality, originality, and dependability of service. We will differentiate ourselves from our competitors by offering a staff of practitioners who are not only certified in their professions, but will be trained in understanding the dynamics of soul energy systems so as to maximize the connection to their client and more easily meet the needs of he client. 2. We will provide a unique atmosphere. From the name to the ambience of our salon, SoulSpace will distinguish itself as a completely trustworthy and soothing setting where customers can enjoy being pampered and escape the stress of their everyday lives. 3. Build a community relationship-oriented business. We will focus on strengthening the trust of our customer base, and providing not only services, but information that will guardianship everyone in the progression of obtaining a balanced and healthy lifestyle. We will also work with local artists to provide their work to inspire our customers. 5. Value propose Our value proposition is that we will bring a unique mode of relaxation and fulfillment to our community. When people are relaxed, comfortable, and happy, they have the ability to work harder, concentrate better, feel physically, emotionally, and mentally balanced, and give that happiness back into their homes, workplaces, and community. Simply put, our value proposition is that we help our community become a better place to live and work. 5. 2 Competitive Edge Our competitive edge isa combination of our unique services, outstanding location, and our i nteraction with customers.By providing our customers a holistic and integrative spa and salon, we plant relationships of trust and satisfaction. Our customers will come to depend on our unique services and fulfilling environment. 5. 3 Marketing Strategy Our selling strategy is the key to our success 1. Emphasizeour name and unique services through advertising. 2. Focus on the convenience of our location. 3. Build community relationships through unique and quality service, friendly and caring atmosphere, and establishing out-and-out(a) dependability of our services. 5. 3. 1 Promotion StrategyOur promotional strategy will be two-foldfirst phase promotion will deal with advertising before, during, and six months following our opening the second phase advertising will deal with alllong-term advertising. 1. FIRST PHASE PROMOTIONS A. Advertising We will utilize local newspaper, local social and health magazines, local radio, local television, mail-outs to all households within the imme diate five mile radius, andmail-outs to all local business within a five-mile radius. B. lucre We will have a comprehensive website. C. AlliancesWe will place our brochures within the offices of our medical referral clients. 2. SECOND PHASE PROMOTIONS A. Advertising We will continue to place ads in the local socialand health magazines year around. Mail-outs will be done again within a five-mile radius one year later after opening, then again only every three to five years. Radio and television ads will be done only when we have sale promotions during the most stressful times of the year for the Christmas season, and graduation television ads are not certain, we will evaluate their effectiveness before further effectuation.B. Internet We will continue to have a comprehensive website. After thefirst six months, and certainly after the first year, we will evaluate the viability of having target clients advertise on our site, and conversely, we will evaluate viability of advertising o n our target clients websites (if applicable). C. Alliances This type of advertising will be implemented once we have grown beyond our break-even point. We will also form advertising alliances with any business with whom we share common business goals.We will also implement mutual perks with our business and restaurant neighbors which will aid in local visibility. Advertising promotions with certain restaurants will also be considered. 5. 3. 2 Marketing Programs Owner Steve Long will be responsible for marketing SoulSpace through the advertising channels. The prevalent manager will be responsible for assisting with the implementation of alliance advertising partnerships. Our advertising budget is $10,000 for the first year. Advertising will begin one week prior to opening. 5. 3. 3 Positioning StatementWe will automatically position ourselves as one of the top spa-salons in the greater Raleigh area. Considering that none of the other competitors will offer the range of services we w ill, or that their staffs will be trained like ours, and that there are not any spa-salons of our type in our target locations, we will be able to provide services to a portion of Raleigh populace not currently being tapped. 5. 3. 4 Pricing Strategy Our pricing strategy will be similar to that of our competitors. We will not charge over, nor substantially under, standard prices for our services.We will be paying our employees a higher straight percentage of their total individual customer sales than our competitors. This will allow us to hire the best employees, and have a built-in motivational factor that will keep them working hard and happily. 5. 4 gross sales Strategy 1. Our umbrella sales strategy is to sell SoulSpace to public consumers as a uniquely desirable destination that will enhance their lives. 2. We will sell SoulSpace through each employees skill, courtesy, and warmth, creating a trusting event on all customers, thusly establishing loyalty and return.We will ensure each visit to SoulSpace is a relaxing and memorable experience, so thatcustomers can always depend on our brand of service when they arrive. 5. 4. 1 Sales Forecast The important elements of the Sales Forecast are shown in the chart and table below. Initial sales forecasts indicate vigorous first yearsales,almost doubling by theend of second year, then leveling out somewhat by theend of third year. These figures are based only on revenue from minimum average estimates from salon stylings and spa massages only, with sales cost reflective of the 60% commission earnings to each stylist/therapist.Sales Forecast Year 1 Year 2 Year 3 Sales Salon Styles Only Revenue $717,500 $1,400,000 $1,600,000 Spa Massage Only Revenue $182,500 $350,000 $400,000 Total Sales $900,000 $1,750,000 $2,000,000 guide Cost of Sales Year 1 Year 2 Year 3 Salon Styles Only Revenue $429,300 $840,000 $960,000 Spa Massage Only Revenue $109,500 $210,000 $240,000 Subtotal Direct Cost of Sales $538,800 $1,050,00 0 $1,200,000 5. 4. 2 Sales Programs 1. Our comprehensive brochure will apologizethe holistic nature of our services, and how this benefits the customer. 2.Our website will be comprehensively informative of our services and their benefits. 5. 5 Strategic Alliances We will form alliances with our referral practitioners, local restaurants, offices, and businesses who will be strategically beneficial for generating new customers we will also form alliances withlocal certified massage schools and hair styling schools. 5. 6 Milestones The following table lists important store milestones, with dates, implementation duty, and budgets for each. The milestone schedule emphasizes the timeliness for implementation per the sales and marketing targets listed in detail in the previous topics.Milestones Milestone Start Date End Date Budget Manager Department Business Plan 1/15/2001 2/1/2001 $0 Steve Owner Financial Backing 2/1/2001 2/5/2001 $200,000 Steve Owner Design Contractor Retainer 2/5 /2001 5/1/2001 $5,000 Steve Owner Construction Contractor Retainer 2/5/2001 5/1/2001 $20,000 Steve Owner Lease Agreement 1/17/2001 2/12/2001 $20,000 Steve Owner Logo Design 2/12/2001 3/1/2001 $1,000 Steve Owner Business Cards (Initial) 2/19/2001 3/1/2001 $300 Steve Owner Brochures 3/1/2001 5/1/2001 $3,000 Steve OwnerGrand Opening 5/1/2001 6/1/2001 $0 Steve Owner Seven Customers Per Stylist/Therapist 8/1/2001 9/1/2001 $0 Steve Owner Totals $249,300 Management Summary The prudence philosophy of SoulSpace is based on respect for each of our fellow employees, respect for every customer, and individual responsibility. SoulSpaces success is dependent on the warmth and uniqueness of its atmosphere which is generated by a fun-loving and caring employee. The management team will consist of the owner, general manager, and colleague manager (if deemed necessary).We will hire only those whom demonstratethe qualities necessary for working in a nurturing environment, and the willingness to move forward in study of energetic principals if not already so trained. We will be hiring the ultimate people persons. 6. 1 Organizational Structure Our initial team consists of 14 employees, inclusive of a general manager and an assistant manager,both of whom will be active stylists/therapists. Employees will be in from the two store divisions of spa and salon. On the salon side there will be 10 stylists and one or two receptionists.There will be room for expansion to 12-15 stylists and three receptionists. The spa side will consist of three massage therapists, one energy therapist, one nail specialist, and one receptionist. There will be room for expansion to five to septet massage therapists, andtwo to three energy therapists. 6. 2 Management Team Steven J. Long, co-owner, presidentFounded SoulSpace in 2001. He has a degree in psychology from NC State, aconcentration in industrial/organizational with emphasis on communication.He has been a Reiki Master Usui Shiki Ryoho since 1 996 and operates part-time healing practice from home. He haseight years management experience, six in retail, two in electronic component rep field for distribution. Mr. Long spentthree years in the modeling industry, one as model and two as the manager of an agency in Raleigh in 1991. Deborah L. Long, co-ownerDebby will not be directly involved in daily operations, but will assist Steve in general organizational planning and vision implementation. Debby currently is the number one co-location sales manager for SpectraSite, Inc. here she has worked for two years. She spent several years as an executive assistant at TDK of Americas Distribution Sales Center in Chicago, and at Cotton Incorporated. She is a level two Usui Shiki Ryoho. Linda Hill-Chinn, co-owner, CFOLinda is retired after having spent 15 years as senior national staffing specialist for the American Hospital Association in Chicago, as well as serving on their board of directors for several national projects. She also sp ent several years managing Planned Parenthood of Chicago.Linda holds a Masters of sociologyfrom Brown University. Jennifer McElravey, general manager For the past nine years, Jennifer has been one of the top stylist for Mitchells Hair Design of Raleigh and is currently a level five stylist, Salon Designer of the Year 94-97, and receivedextra training at Vidal Sassoon of London, Highest Salon Retail Sales four different years. Jennifer is also a level two Usui Shiki Ryoho. 6. 3 Management Team Gaps We believe the experience of our team covers the needs to make the business plan for SoulSpace a very successful reality.The assistant manager is not named here because that position will be named from the pool of stylists/therapists that will be hired previous to our opening. 6. 4 Personnel Plan The Personnel Plan below reflects our projected need at opening, and carries through the second year expansions. Personnel Plan Year 1 Year 2 Year 3 Steve Long, Owner, President $65,040 $65,040 $ 65,040 General Manager $60,000 $60,000 $60,000 %100 Commissioned Employees $150 $156 $156 Receptionist $15,360 $15,360 $15,360 Receptionist $15,360 $30,620 $30,620 Total People 17 18 18 Total payroll $155,910 $171,176 $171,176Financial Plan The premier element in our financial plan is initiating, maintaining, and improving the factors that create, stabilize, and increase our cash flow 1. We must create visibility so as to create customer flow. 2. We must maintain a dependable,happy employee force so as to minimize turnover. 3. Create a brisk turnaround time on our retail and art products, always maintaining viable stock levels. 7. 1 Important Assumptions The key underlying assumptions of our financial plan shown in the following general assumptions table are 1. We assume access to equity capital and financing to support our financial plan. 2.We assume our financial progress based on true-to-life(prenominal) sales to minimum sales against highest expenses. 3. We assume there wi ll not be an economic crash that would greatly hinder our target markets access to their personal luxury funds. General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current enliven Rate 10. 00% 10. 00% 10. 00% Long-term Interest Rate 10. 00% 10. 00% 10. 00% Tax Rate 2. 50% 0. 00% 2. 50% Other 0 0 0 7. 2 Key Financial Indicators Our most important Key Financial Indicator is when each stylist averages seven customers per day and each therapist averages three customers per day. . 3 Break-even Analysis For our Break-even Analysis we assume estimated monthly operational costs which include payroll, rent, utilities, and other running costs (not including employee draw fund considerations). payroll department alone is only estimated to about 1/2 of those costs. The analysis shows what we need to generate inrevenues per month to break even. This total is 13% less than estimated monthly store gross. This estimation does not include revenue from any other store sources, and is based o n a salon customer average of $36 and spa customer average of $60. Our average per customer revenue is estimated at $39.Considering our minimal assumptions show a monthly total customer average of 1,922, we therefore believe our break-even figures can be readily maintained. Break-even Analysis Monthly Revenue Break-even $73,567 Assumptions Average Percent Variable Cost 60% Estimated Monthly Fixed Cost $29,525 7. 4 Projected Profit and Loss There are two important assumptions with our Projected Profit and Loss statement 1. Weexpect to have to pay out from the Draw Fund occasionally. 2. Our revenue is based on minimum estimated averages against highest expense expectations. Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $900,000 $1,750,000 $2,000,000 Direct Cost of Sales $538,800 $1,050,000 $1,200,000 Other $0 $0 $0 Total Cost of Sales $538,800 $1,050,000 $1,200,000 Gross Margin $361,200 $700,000 $800,000 Gross Margin % 40. 13% 40. 00% 40. 00% Expenses Payr oll $155,910 $171,176 $171,176 Sales and Marketing and Other Expenses $34,000 $39,000 $41,000 Depreciation $0 $0 $0 Rent $120,000 $120,000 $120,000 Leased Equipment $0 $0 $0 Utilities $9,000 $9,000 $9,000 Insurance $12,000 $12,000 $12,000Payroll Taxes $23,387 $25,676 $25,676 Other $0 $0 $0 Total Operating Expenses $354,297 $376,852 $378,852 Profit Before Interest and Taxes $6,904 $323,148 $421,148 EBITDA $6,904 $323,148 $421,148 Interest Expense $0 $0 $0 Taxes Incurred ($2,907) $0 $10,529 exculpate Profit $9,810 $323,148 $410,619 light up Profit/Sales 1. 09% 18. 47% 20. 53% 7. 5 Projected Cash Flow Considering our business is a luxury, retail-oriented business with customers who will pay primarily with credit cards, our cash flow is not dependant on the issuance of invoices and the vagaries of Accounts Payable.We will need a minimum of financing to cover the cash flows of the first year of operations. After that, the cash flow becomes continual. Pro Forma Cash Flow Ye ar 1 Year 2 Year 3 Cash certain Cash from Operations Cash Sales $900,000 $1,750,000 $2,000,000 Subtotal Cash from Operations $900,000 $1,750,000 $2,000,000 Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0 Subtotal Cash Received $900,000 $1,750,000 $2,000,000 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $155,910 $171,176 $171,176 Bill Payments $719,414 $1,263,200 $1,423,005 Subtotal Spent on Operations $875,324 $1,434,376 $1,594,181 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Current Assets $0 $0 $0Purcha se Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $875,324 $1,434,376 $1,594,181 Net Cash Flow $24,676 $315,624 $405,819 Cash Balance $84,676 $400,299 $806,118 7. 6 Projected Balance Sheet Our Projected Balance Sheet shows we will not have any difficulty meeting our debt obligations as long as our revenue projections are met. Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets Cash $84,676 $400,299 $806,118 Inventory $54,450 $106,111 $121,269 Other Current Assets $0 $0 $0 Total Current Assets $139,126 $506,410 $927,387 Long-term Assets Long-term Assets $0 $0 $0 Accumulated Depreciation $0 $0 $0 Total Long-term Assets $0 $0 $0 Total Assets $139,126 $506,410 $927,387 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $63,316 $107,452 $117,811 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $63,316 $107,452 $117,811 Long-term Liabilities $0 $0 $ 0 Total Liabilities $63,316 $107,452 $117,811 Paid-in Capital $160,000 $160,000 $160,000 Retained Earnings ($94,000) ($84,190) $238,958Earnings $9,810 $323,148 $410,619 Total Capital $75,810 $398,958 $809,577 Total Liabilities and Capital $139,126 $506,410 $927,387 Net Worth $75,810 $398,958 $809,577 7. 7 Business Ratios The follow table contains important business ratios for thephysical fitness facilitiesindustry, as fit(p) by the Standard Industry Classification (SIC) code, 7991. Ratio Analysis Year 1 Year 2 Year 3 Industry Profile Sales Growth 0. 00% 94. 44% 14. 29% 15. 90% Percent of Total Assets Inventory 39. 14% 20. 95% 13. 08% 3. 60% Other Current Assets 0. 00% 0. 00% 0. 00% 31. 10%Total Current Assets 100. 00% 100. 00% 100. 00% 39. 00% Long-term Assets 0. 00% 0. 00% 0. 00% 61. 00% Total Assets 100. 00% 100. 00% 100. 00% 100. 00% Current Liabilities 45. 51% 21. 22% 12. 70% 34. 80% Long-term Liabilities 0. 00% 0. 00% 0. 00% 27. 60% Total Liabilities 45. 51% 21. 22% 12. 70% 62. 40% Net Worth 54. 49% 78. 78% 87. 30% 37. 60% Percent of Sales Sales 100. 00% 100. 00% 100. 00% 100. 00% Gross Margin 40. 13% 40. 00% 40. 00% 0. 00% Selling, General amp Administrative Expenses 39. 37% 21. 53% 18. 94% 73. 20% Advertising Expenses 1. 11% 0. 86% 0. 5% 2. 40% Profit Before Interest and Taxes 0. 77% 18. 47% 21. 06% 2. 70% Main Ratios Current 2. 20 4. 71 7. 87 1. 10 Quick 1. 34 3. 73 6. 84 0. 73 Total Debt to Total Assets 45. 51% 21. 22% 12. 70% 62. 40% Pre-tax Return on Net Worth 9. 11% 81. 00% 52. 02% 3. 00% Pre-tax Return on Assets 4. 96% 63. 81% 45. 41% 7. 90% Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin 1. 09% 18. 47% 20. 53% n. a Return on Equity 12. 94% 81. 00% 50. 72% n. a Activity Ratios Inventory Turnover 10. 91 13. 08 10. 56 n. a Accounts Payable Turnover 12. 6 12. 17 12. 17 n. a Payment days 27 24 29 n. a Total Asset Turnover 6. 47 3. 46 2. 16 n. a Debt Ratios Debt to Net Worth 0. 84 0. 27 0. 15 n. a Current Liab. to Liab. 1. 00 1. 00 1. 00 n. a Liquidity Ratios Net Working Capital $75,810 $398,958 $809,577 n. a Interest Coverage 0. 00 0. 00 0. 00 n. a Additional Ratios Assets to Sales 0. 15 0. 29 0. 46 n. a Current Debt/Total Assets 46% 21% 13% n. a Acid Test 1. 34 3. 73 6. 84 n. a Sales/Net Worth 11. 87 4. 39 2. 47 n. a Dividend Payout 0. 00 0. 00 0. 00 n. a