Men’s Salon Business Plan
Jonpaul’s is an upscale old-world barber shop that offers progressive gentlemen a haven to relax and experience grooming and services in a masculine and therapeutic atmosphere. Aimed at an exclusive market, we provide "World Class Services" not available elsewhere in Gigaburb. Our goal is to increase our client base and become a trusted destination for our community to refresh, replenish, and network.
Jonpaul’s is a gentleman’s club that offers a comforting and stimulating atmosphere for customers to relax and rejuvenate. Our goal is to provide world-class services and become a trusted escape from the stresses of life.
The keys to our success are:
1. Location: Providing an easily accessible location for clients.
2. Environment: Creating a relaxing and professional atmosphere for our services.
3. Convenience: Offering a wide range of services in one location with extended business hours.
4. Reputation: Building a reputation for superior personal service.
5. Effective advertising: Targeting corporate clients with our advertising efforts.
Our objectives for Jonpaul’s are as follows:
1. Exceed customer expectations and create a service-based company.
2. Increase sales by the end of Year 2 and double revenue by the end of Year 3.
3. Increase client base by at least 20% each year through superior performance and referrals.
4. Achieve a client return rate of 90% by the end of Year 1.
5. Become a well-established community destination by the end of Year 1.
Jonpaul’s is a full-service gentleman’s barber shop that focuses on providing world-class grooming services to our clients. We prioritize high-quality products and offer an enjoyable and relaxing atmosphere at a reasonable price. Our motto is “World Class Service Begins Here”.
After an unsuccessful search for an existing high-end barber shop to purchase, we have decided to start our own exclusive barber shop from scratch. The start-up capital will be used for design, leasehold improvements, and equipment. We have allocated enough funds to cover operational expenses for the first two months.
Start-up Requirements
Start-up Expenses
Legal – $2,500
Stationery etc. – $1,000
Brochures, Logo, and Design – $3,000
Consultants-Interior Design – $2,000
Insurance – $3,000
Rent – $14,000
Leasehold Improvement construction – $115,000
Expensed Equipment – $38,000 in S-Assets – $17,000
Other – $5,000
Total Start-up Expenses – $162,500
Start-up Assets
Cash Required – $40,000
Start-up Inventory – $10,000
Other Current Assets – $38,000
Long-term Assets – $0
Total Assets – $88,000
Total Requirements – $250,500
Start-up Funding
Start-up Expenses to Fund – $162,500
Start-up Assets to Fund – $88,000
Total Funding Required – $250,500
Assets
Non-cash Assets from Start-up – $48,000
Cash Requirements from Start-up – $40,000
Additional Cash Raised – $0
Cash Balance on Starting Date – $40,000
Total Assets – $88,000
Liabilities and Capital
Liabilities
Current Borrowing – $0
Long-term Liabilities – $225,000
Accounts Payable (Outstanding Bills) – $0
Other Current Liabilities (interest-free) – $25,500
Total Liabilities – $250,500
Capital
Planned Investment
Investor 1 – $0
Investor 2 – $0
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $0
Loss at Start-up (Start-up Expenses) – ($162,500)
Total Capital – ($162,500)
Total Capital and Liabilities – $88,000
Total Funding – $250,500
2.2 Company Locations and Facilities
Jonpaul’s is located in The Mall, a 160,000 foot shopping and entertainment center in Gigaburb. The suite is 1,950 sq. ft at $24.50/sq. ft. with a 3-year lease. This site is a high profile area with easy access and ample parking.
The Mall is anchored by Regal Cinema, the largest theater chain in the Gigaburb market with a 16-screen, state of the art complex. In addition to specialty retail and service shops within the center, there is a food pavilion anchored by Starbucks, Macaroni Grill, Garrison’s, and Rio Bravo. Other tenants include Ben & Jerry’s, Las Vegas Golf, specialty furniture, boutiques, antiques, and specialty children shops.
The Mall is located on the corner of a highly traveled State Highway and a Metro Road in the high growth, affluent area of Gigaburb. The Mall’s primary trade area will serve the burgeoning country club communities and exclusive neighborhoods within a fifteen-minute drive from the site. According to Equifax National Decision Systems, the primary trade area in 2000 had a population of 317,931 that is projected to reach 358,716 by 2005.
2.3 Company Ownership
Jonpaul’s is a privately held S corporation co-owned by Cathy Leskie and her husband Dr. Jonpaul Leskie. Cathy Leskie has 10 years experience in the hair and spa industry. She studied in the U.S. and Europe and continues to stay on top of the latest styles, trends and products. Cathy has worked as a stylist, then as a manager – managing 16 stylist in a prestigious upscale salon.
Dr. Jonpaul Leskie – is President/CEO of Jp Leskie & Associates, a Technology Consulting Firm. Dr. Leskie is a pioneer and innovator with over 30 years experience in the computer, e-business and telecommunications industry. Dr. Leskie has a proven track record of success in launching new business and directing operations for Fortune 500 companies worldwide.
To achieve our objectives, Jonpaul’s is seeking loan financing. This loan will be paid from the cash flow from the business, and will be secured by the assets of the company, and backed by the character, experience and personal guarantees of the owners.
Products and Services
Jonpaul’s is considered an upscale full-service barber shop – services exclusively for men. We offer our clients a gentleman’s club atmosphere, with a wide range of services and products that include:
Services:
1. Hair: Cut and style, one step hair color, highlights, toner, corrective color, hair and scalp treatments
2. Shaves: Traditional straight razor shaves, hot towels, and balm treatment
3. Nails: Manicures, pedicures
4. Waxing Services: Eyebrow shaping
5. Men’s Services: Essential facials and peels, sports massage, deep tissue massage
6. Hair Laser Removal: Hair removal on neck, back, ears, etc.
7. Shoe Shine: Shoe shine service in the waiting room or while services are being performed.
Products:
1. London: Shave creams, soap, bath oils, shaving accessories exclusively for men
2. United States: Shave creams, skin care, shaving accessories exclusively for men.
Explanations and/or consultations will be provided on all services and products if needed.
3.1 Product and Service Description
Laser Hair Removal
3.2 Competitive Comparison
There are many salons in The Mall’s area, but no direct competitors. There is no one place in the greater Gigaburb area that offers a high-end gentleman’s barber shop exclusively for men, where a gentleman can sit back, relax in a gentleman’s club atmosphere and experience the art of traditional grooming services in an environment that is masculine and therapeutic.
3.3 Sales Literature
Service brochure, logo/slogan with advertising to be included, and a planned website.
3.4 Fulfillment
Jonpaul’s services sell themselves. World Class Service performed in an upscale environment will attract clientele. Our prices are very reasonable for the quality of services provided. We have an agreement with a U.S. based importer of our London products, which keeps our product price at its lowest price point.
3.5 Technology
Jonpaul’s will sell complimenting products of the highest quality, and latest scientific development.
Our gentleman’s shop computer system incorporates the latest hardware and software to manage appointments, client database, point of sale, email capabilities, Web-enabled networking, inventory, bar code reading, historical data, employee records, transaction history, accounts receivable/payable and payroll. Back-up of the system is performed daily.
Clients will be emailed appointment confirmation messages two days prior to appointment. In addition, they will also receive a personal phone call one day prior to appointment to confirm appointment. A thank you note will be emailed automatically after services have been performed.
Our gentleman’s shop will incorporate a wireless network within the facilities. It will serve as an internal network and provide a service for our clients that need to access the Internet while visiting our facilities.
3.6 Future Products and Services
Jonpaul’s will consider branding its own product line in the future. In addition, it may offer chiropractic services and acupuncture services on an as needed basis. Jonpaul’s will always remain involved with the best men’s hair styling and health techniques offered, and will implement them if deemed appropriate and feasible for Jonpaul’s clientele.
Market Analysis Summary
Jonpaul’s will focus on the professional male. An Internet study revealed that 85% of professional men had personal hair grooming services performed during the workday. The space at The Mall fits the demographics for our business. Applied Geographic Solutions estimates that 59,251 people live within a three-mile radius of our facility and 42,759 work there. They estimate 161,848 live within a five-mile radius and 109,867 work there. There are 15 business parks totaling 6,206 businesses located within a seven-mile radius.
4.1 Market Segmentation
Our target market will be barber shop services for the professional male. Based on our Internet survey, 80% of our services will be associated with hair, hair color, shaves, shoe shine; 15% will come from facial, massage, nail, and tanning services; and 5% will come from products. Thus, our target market will be male professionals and retirees, from the age of 25, with individual and household incomes greater than $75,000.
The following table and chart depict our potential customers with a conservative annual growth rate of 4%. The annual growth rate for the area has been 7.5% since 1990.
Market Analysis:
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers
$75K to $100K 1mi. Radius of Facility 3,816 3,969 4,128 4,293 4,465 4.00%
$75K to $100K 3 mi. Radius of Facility 10,403 10,819 11,252 11,702 12,170 4.00%
$75K to $100K 5 mi. Radius of Facility 18,140 18,866 19,621 20,406 21,222 4.00%
$100K to $150K 1mi. Radius of Facility 9,352 9,726 10,115 10,520 10,941 4.00%
$100K to $150K 3 mi. Radius of Facility 10,224 10,633 11,058 11,500 11,960 4.00%
$100K to $150K 5 mi. Radius of Facility 20,540 21,362 22,216 23,105 24,029 4.00%
$150K + 1 mi. Radius of Facility 19,432 20,209 21,017 21,858 22,732 4.00%
$150K + 3 mi. Radius of Facility 10,045 10,447 10,865 11,300 11,752 4.00%
$150K + 5 mi. Radius of Facility 20,229 21,038 21,880 22,755 23,665 4.00%
Total 122,181 127,069 132,152 137,439 142,936 4.00%
4.2 Target Market Segment Strategy
The members of these market segments have luxury money on hand, and lead professional lives filled with busy schedules. All persons need hairstyling regardless of income level, and make an effort to find money available to style their “look.”
4.2.1 Market Trends
Despite the massive growth in residential and corporate complexes and substantial employment within 7 miles of The Mall, a gap currently exists in the retail trade and entertainment area. The shopping center is strategically located between two major malls, each occupying more than 1.2 million square feet. Virtually no high-end restaurants or commercial support services existed in the Gigaburb vicinity until The Mall was developed. Our facility will be located in this center, which provides a huge competitive advantage.
A population of nearly 205,000 people, consisting of young, upper-class families with an average household income of $92,247, exists within a seven-mile radius of the center. The immediate area surrounding The Mall has impressive demographics as well, with an average household income of $119,423 within a three-mile radius. The average new house sale price in The Mall area in 1998 was $377,249, up from $227,000 in 1990. Many companies are locating their corporate headquarters in the Gigaburb vicinity, not just administrative offices. Several office buildings and hotels are located within a short drive of our gentleman’s shop.
4.2.2 Market Growth
Our gentleman’s shop’s trade area’s best growth potential is in terms of daytime employment. The total daytime business population in a three-mile radius is 42,759 with the residential population at 59,251. The total daytime business population in a five-mile radius is 109,867 with the residential population at 161,848. The nearby business parks also have ample land for future office development. A predictable source of daytime employment growth is the planned expansion of existing companies.
The Mall is the only shopping and entertainment center site within an 8-mile radius. Jonpaul’s is the only gentleman’s shop exclusively for men at The Mall. The future looks very promising for a thriving business with a continual presence of clients.
4.2.3 Market Needs
The traditional barber shop has been traditionally replaced by unisex salons and spas which focused mainly on women. Professional men are more health and style conscious, especially men who have achieved a modicum level of professional success. They are willing to pay for products and services that are geared specifically toward men. They are looking for an environment that consistently offers quality service, products, and camaraderie. They look for a gathering place where they can openly discuss politics, watch sports or stock market news on TV, read the newspaper, network, get a cup of gourmet coffee, buy an imported cigar, and get a shoe shine.
The surrounding area of The Mall and Country County has become a bastion for the successful, consistently being the fastest-growing areas in our state. This has created a community of wealth, mobility, and growth. State Highway is a major north/south highway that connects the northern suburbs to midtown Gigaburb. The section of State Highway near our site is two lanes in each direction and includes an interchange at Metro Road. In 1998, the State DOT recorded an ADT volume on State Highway of 46,082 vehicles per day, up from the 1997 traffic count of 38,375. This number is expected to continue to increase substantially over the next few years.
4.3 Service Business Analysis
We are part of the retail health and beauty industry which has four major 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 a wide range but not including those sold by salons and spas.
The industry is now starting to realize that the traditional barber shop needs to be added to their list of major types. The European market has catered to men since their first barber shop in 1805. The traditional barber shop in Europe is starting to expand its services to include massage, facials, manicures, and pedicures based on the suggestions of the “progressive gentleman”. High standards of grooming have always been a tradition in Europe. U.S. professionals who travel abroad have experienced these services and are looking for similar services here in the U.S.
4.3.1 Main Competitors
The main competitor is VanAstorBilts located across town. Strengths of VanAstorBilts are its wide array of spa services. The weaknesses of VanAstorBilts are the limited number of services dedicated specifically to male clients, i.e. hair grooming, shaves, shoe shines. VanAstorBilts services and products cater more toward the female professional. We feel the presence of Jonpaul’s is not a direct competitor to VanAstorBilts and vice versa.
Our market advantage is wide open and will give us the opportunity to service a large population base of professional males that is not currently being well-served.
4.3.2 Competition and Buying Patterns
Clients choose men’s grooming services based on proximity to their daily travels from home and work, reputation for high-quality service, and good pricing. With our combined services and catering to the male professional, we don’t feel we have competition. Any competition will mainly be from unisex salons or combination unisex spa-salons.
4.3.3 Business Participants
Industry participants are those whose services include salon and spa offerings. Salon services concern hair styling, while spa services concern body relaxation and rejuvenating offerings such as massage, nail, and face works.
No one industry participant has focused specifically on men only.
We will bring a unique mode of relaxation and fulfillment to the discerning gentleman. 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, workplace, and community. Our value proposition is that we help our community become a better place to live and work.
5.2 Competitive Edge
Our competitive edge is a combination of unique services, outstanding location, and interaction with our clients. By providing our clients a gentleman’s club atmosphere and world-class services, we build relationships of trust and satisfaction. Our clients will come to depend on our unique services and fulfilling environment.
5.3 Marketing Strategy
Our marketing strategy is the key to our success:
1. Emphasize our name, unique services, and environment through advertising.
2. Focus on the convenience of our location.
3. Build community and corporate relationships through unique and quality service, a friendly caring atmosphere, and delivering world-class service.
5.3.1 Promotion Strategy
Our promotional strategy will be two-fold: first-phase promotion will advertise before, during, and six months following our opening; the second-phase advertising will deal with long-term advertising.
First Phase Promotions:
– Advertising: We will utilize local newspapers, local social magazines, local radio, and mail-outs to households within a 10-mile radius and local businesses within a five-mile radius.
– Internet: We will have a comprehensive website.
– Alliances: We will place our brochure within the offices of our corporate referral clients.
Second Phase Promotions:
– Advertising: We will continue to place ads in local social magazines year-round. Mail-outs will be done again within a 10-mile radius one year after takeoff, then again only every three to five years. Radio and television ads will be done only during sale promotions in the holiday season.
– Internet: We will continue to have a comprehensive website. After the first six months and certainly after the first year, we will evaluate advertising on target client websites.
– Alliances: This type of advertising will be implemented once we have grown beyond our revenue objective.
5.3.2 Marketing Programs
Owner Cathy Leskie and Jonpaul Leskie will be responsible for marketing Jonpaul’s through advertising channels. The general manager will assist with the implementation of alliance advertising partnerships. Our advertising budget is $10,000 for the first year. Advertising will begin two weeks prior to opening.
5.3.3 Positioning Statement
We will automatically position ourselves as the top exclusive gentlemen’s grooming shop in the greater Gigaburb area. Considering that none of the other competitors will offer the range of men’s services that we will, nor will their staff be trained like ours, and that there are no barbershops of our type in our target locations, we will be able to provide services to The Mall 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 substantially over or under standard prices for our services. We will be paying our employees a straight percentage of their total individual client sales plus a bonus – that’s more than our competitors. This will allow us to hire the best employees and have a built-in motivational factor that will keep them empowered to enhance their opportunity.
5.4 Sales Strategy
Our umbrella sales strategy is to sell Jonpaul’s to the male professional as a uniquely desirable destination that will enhance their lives.
We will sell Jonpaul’s through each employee’s skill, courtesy, and warmth, creating a trusting impression on all clients and establishing loyalty and return visits. We will ensure each visit to Jonpaul’s is a relaxing and memorable experience, so that clients can always depend on our brand of service when they arrive.
5.4.1 Sales Programs
– Our comprehensive brochure will explain the nature of our services and how they benefit our clients.
– Our website will be comprehensively informative of our services, environment, and their benefits.
5.4.2 Sales Forecast
Initial sales forecast indicates first-year revenue of $799,000 increasing to $1.0 million by the end of the second year, then $1.4 million by the end of the third year. These figures are based on revenue from minimum average estimates from barber shop hair styles and additional services, with sales costs reflective of the 45% commission earnings to each barber/therapist.
Sales Forecast
Sales:
– Barber Shop Hair Only Revenue: $572,880 (Year 1), $775,680 (Year 2), $1,080,000 (Year 3)
– Misc. Service i.e. Shave, Shine, Color etc.: $156,518 (Year 1), $187,821 (Year 2), $225,385 (Year 3)
– Product: $69,726 (Year 1), $83,671 (Year 2), $100,040 (Year 3)
– Total Sales: $799,124 (Year 1), $1,047,172 (Year 2), $1,405,425 (Year 3)
Direct Cost of Sales:
– Barber Shop Hair Only Revenue: $255,794 (Year 1), $349,056 (Year 2), $486,000 (Year 3)
– Misc. Service i.e. Shave, Shine, Color etc.: $70,429 (Year 1), $84,519 (Year 2), $101,423 (Year 3)
– Product: $34,868 (Year 1), $41,835 (Year 2), $50,020 (Year 3)
– Subtotal Direct Cost of Sales: $361,091 (Year 1), $475,410 (Year 2), $637,443 (Year 3)
5.5 Strategic Alliances
We will form alliances with referral clients, local restaurants, offices, and businesses strategically beneficial for generating new clients. We will also form alliances with local barber schools and spas.
5.6 Milestones
The following table lists important store milestones with dates, implementation duty, and budgets for each. The milestone schedule emphasizes timely implementation per the sales and marketing targets mentioned earlier.
Milestones:
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Business Plan | 1/1/2002 | 3/1/2002 | $0 | Jp Leskie | Owners |
| Financial Lending | 2/1/2002 | 3/15/2001 | $0 | Jp Leskie | Owners |
| Incorporation | 3/15/2002 | 4/1/2002 | $350 | Jp Leskie | Owners |
| Lease Agreement/Settlement | 3/25/2002 | 4/5/2002 | $0 | Jp Leskie | Owners |
| Leasehold Improvements | 4/5/2002 | 5/30/2002 | $105,000 | Cathy/Jp Leskie | Owners |
| Equipment Order/Installed | 4/15/2002 | 5/30/2002 | $45,000 | Cathy Leskie | Owners |
| Inventory | 5/1/2002 | 5/30/2002 | $10,000 | Cathy Leskie | Owners |
| Logo Design | 3/15/2002 | 5/1/2002 | $1,000 | Cathy/Jp Leskie | Owners |
| Business Cards | 5/1/2002 | 5/15/2002 | $500 | Cathy/Jp Leskie | Owners |
| Brochures | 5/1/2002 | 5/15/2002 | $3,000 | Cathy/Jp Leskie | Owners |
| Staff Hiring/Training | 5/1/2002 | 5/30/2002 | $1,000 | Cathy Leskie | Owners |
| Jonpaul’s Grand Opening | 6/15/2002 | 1/15/2003 | $0 | Cathy/Jp Leskie | Owners |
| Totals | $165,850 | ||||
Management Summary:
The management philosophy of Jonpaul’s is based on respect for each employee and client and individual responsibility. Jonpaul’s success depends on the warmth and uniqueness of its atmosphere, which is created by fun-loving and caring employees. The management team consists of the owners and an assistant manager if necessary. We only hire those who demonstrate the necessary qualities for working in a professional environment and a willingness to continue their education. We hire exceptional individuals to provide world-class service.
6.1 Organizational Structure:
Our initial team includes the owner and 10 employees. On the shop floor, we will have six barbers, one nail specialist, one shoe shine person, and one receptionist. Initially, there will be one full-time combination aesthetician/massage therapist. As our client base grows, we will add additional barbers who will work two shifts per day per station. We expect to have 12 employees by the end of the first year and 14 employees in years two and three.
6.2 Management Team:
Cathy Leskie, co-owner and president, has 10 years of experience in the hair and spa industry. She has studied in the U.S. and Europe and stays up to date on the latest styles, trends, and products. Cathy has worked as a stylist for six years and as a manager for four years, overseeing 16 stylists in a prestigious upscale salon.
Dr. Jonpaul Leskie, co-owner, will not be directly involved in daily operations but will assist Cathy in general organizational and business planning. Currently, Jonpaul is the President/CEO of Jp Leskie & Associates, a Technology Consulting Firm. Dr. Leskie has over 30 years of experience in the computer, e-business, and telecommunications industry and a proven track record of success in launching new businesses and directing operations for Fortune 500 companies worldwide.
6.3 Management Team Gaps:
We believe our team has the necessary experience to make the business plan for Jonpaul’s a success. We will review the current talent of the salon and make adjustments as needed. We plan on outsourcing payroll and benefits.
6.4 Personnel Plan:
The Personnel Plan below shows our projected needs at the opening and for the second year expansions.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Cathy Leskie | $72,000 | $72,000 | $72,000 |
| 100% Commissioned Employees | $150 | $165 | $175 |
| Assistant | $15,360 | $16,500 | $17,500 |
| Receptionist | $15,360 | $16,500 | $17,500 |
| Total People | 12 | 14 | 14 |
| Total Payroll | $102,870 | $105,165 | $107,175 |
The most important element in our financial plan is creating, maintaining, and improving factors that generate, stabilize, and increase cash flow:
- Create visibility to attract customers.
- Maintain a dependable, cheerful employee force to minimize turnover.
- Ensure a brisk turnover on retail products while maintaining adequate stock levels.
7.1 Important Assumptions:
The key assumptions of our financial plan are:
- We have access to equity capital and financing to support our plan.
- Our financial progress is based on realistic sales and minimizing expenses.
- There will not be an economic crash that would hinder our target market’s access to luxury products.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | |||
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 8.50% | 8.50% | 8.50% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
7.2 Key Financial Indicators:
Our most important financial indicator is when each barber averages seven clients per day and each specialist averages three clients per day.
7.3 Break-even Analysis
Our Break-even Analysis assumes monthly operational costs, including payroll, rent, utilities, and other expenses (excluding employee draw fund considerations). Payroll alone is estimated at $9,800 per month, including taxes.
The analysis indicates the monthly revenue needed to break even, as shown below. This amount is lower than the estimated monthly gross and does not factor in revenue from other sources. The average client charge for a barber shop is $35, and for miscellaneous services, it is $50. Our yearly average charge per client is estimated at $48. With a monthly average of 1,063 clients based on our conservative assumptions, we are confident in maintaining our break-even point.
Break-even Analysis:
Monthly Revenue Break-even: $36,989.
Assumptions:
– Average Percent Variable Cost: 45%.
– Estimated Monthly Fixed Cost: $20,275.
7.4 Projected Profit and Loss:
Two important assumptions with our Projected Profit and Loss statement:
1. Our revenue is based on minimum estimated averages against highest expense expectations.
2. Our major expense of rent and utilities is fixed for the next five years.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $799,124 $1,047,172 $1,405,425
Direct Cost of Sales $361,091 $475,410 $637,443
Other Costs of Goods $0 $0 $0
Total Cost of Sales $361,091 $475,410 $637,443
Gross Margin $438,033 $571,762 $767,982
Gross Margin % 54.81% 54.60% 54.64%
Expenses
Payroll $102,870 $105,165 $107,175
Sales and Marketing and Other Expenses $20,000 $15,000 $20,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $9,000 $9,000 $9,000
Insurance $12,000 $12,000 $12,000
Rent $84,000 $84,000 $84,000
Payroll Taxes $15,431 $15,775 $16,076
Other $0 $0 $0
Total Operating Expenses $243,301 $240,940 $248,251
Profit Before Interest and Taxes $194,733 $330,822 $519,731
EBITDA $194,733 $330,822 $519,731
Interest Expense $18,464 $17,215 $15,773
Taxes Incurred $52,880 $94,082 $151,187
Net Profit $123,388 $219,525 $352,770
Net Profit/Sales 15.44% 20.96% 25.10%
Projected Cash Flow
Our business is a luxury, retail-oriented business with clients who will primarily pay with credit cards.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $799,124 | $1,047,172 | $1,405,425 |
| Subtotal Cash from Operations | $799,124 | $1,047,172 | $1,405,425 |
| 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 | $0 |
| New Investment Received | $10,000 | $0 | $0 |
| Subtotal Cash Received | $809,124 | $1,047,172 | $1,405,425 |
Projected Balance Sheet
Our Projected Balance Sheet shows no difficulty meeting debt obligations as long as revenue projections are met.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $183,882 | $381,453 | $717,825 |
| Inventory | $38,936 | $51,262 | $68,734 |
| Other Current Assets | $38,000 | $38,000 | $38,000 |
| Total Current Assets | $260,817 | $470,715 | $824,559 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $260,817 | $470,715 | $824,559 |
| Liabilities and Capital | |||
| Current Liabilities | |||
| Accounts Payable | $53,781 | $60,395 | $79,147 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $25,500 | $25,500 | $25,500 |
| Subtotal Current Liabilities | $79,281 | $85,895 | $104,647 |
| Long-term Liabilities | $210,649 | $194,407 | $176,729 |
| Total Liabilities | $289,930 | $280,302 | $281,376 |
| Paid-in Capital | $10,000 | $10,000 | $10,000 |
| Retained Earnings | ($162,500) | ($39,112) | $180,413 |
| Earnings | $123,388 | $219,525 | $352,770 |
| Total Capital | ($29,112) | $190,413 | $543,183 |
| Total Liabilities and Capital | $260,817 | $470,715 | $824,559 |
| Net Worth | ($29,112) | $190,413 | $543,183 |
Business Ratios
The following table contains important business ratios for the barber shop industry (SIC code 7241).
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 31.04% | 34.21% | 10.40% |
| Percent of Total Assets | ||||
| Inventory | 14.93% | 10.89% | 8.34% | 4.60% |
| Other Current Assets | 14.57% | 8.07% | 4.61% | 36.80% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 53.10% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 46.90% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | ||||
| Accounts Payable | 30.40% | 18.25% | 12.69% | 29.70% |
| Long-term Liabilities | 80.76% | 41.30% | 21.43% | 24.70% |
| Total Liabilities | 111.16% | 59.55% | 34.12% | 54.40% |
| Net Worth | -11.16% | 40.45% | 65.88% | 45.60% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 54.81% | 54.60% | 54.64% | 0.00% |
| Selling, General & Administrative Expenses | 39.37% | 33.64% | 29.54% | 69.20% |
| Advertising Expenses | 1.00% | 0.00% | 0.00% | 2.50% |
| Profit Before Interest and Taxes | 24.37% | 31.59% | 36.98% | 4.30% |
| Main Ratios | ||||
| Current | 3.29 | 5.48 | 7.88 | 2.08 |
| Quick | 2.80 | 4.88 | 7.22 | 1.55 |
| Total Debt to Total Assets | 111.16% | 59.55% | 34.12% | 54.40% |
| Pre-tax Return on Net Worth | -605.48% | 164.70% | 92.78% | 6.90% |
| Pre-tax Return on Assets | 67.58% | 66.62% | 61.12% | 15.20% |
| Net Profit Margin | 15.44% | 20.96% | 25.10% | n.a |
| Return on Equity | 0.00% | 115.29% | 64.94% | n.a |
| Inventory Turnover | 10.91 | 10.54 | 10.62 | n.a |
| Accounts Payable Turnover | 11.19 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 26 | n.a |
| Total Asset Turnover | 3.06 | 2.22 | 1.70 | n.a |
| Debt to Net Worth | 0.00 | 1.47 | 0.52 | n.a |
| Current Liab. to Liab. | 0.27 | 0.31 | 0.37 | n.a |
| Net Working Capital | $181,537 | $384,820 | $719,912 | n.a |
| Interest Coverage | 10.55 | 19.22 | 32.95 | n.a |
| Assets to Sales | 0.33 | 0.45 | 0.59 | n.a |
| Current Debt/Total Assets | 30% | 18% | 13% | n.a |
| Acid Test | 2.80 | 4.88 | 7.22 | n.a |
| Sales/Net Worth | 0.00 | 5.50 | 2.59 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Appendix
Sales Forecast
| Sales Forecast | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Barber Shop Hair Only Revenue | $40,040 | $41,440 | $42,840 | $44,240 | $45,640 | $47,040 | $48,440 | $49,840 | $51,240 | $52,640 | $54,040 | $55,440 | |
| Misc. Service i.e. Shave, Shine, Color etc. | $10,417 | $10,833 | $11,267 | $11,717 | $12,186 | $12,673 | $13,180 | $13,708 | |||||
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