Tropical Tan, a start-up seeking financing, has an experienced management team, an excellent location, and a sound business strategy. This business plan will outline the company’s needs, target market, sales plan, and financial statements.
Located in Chino Hills, CA, Tropical Tan will serve a market area of 160,000 individuals. Situated in a high traffic strip mall with national chains, the business will focus on providing tanning booths to customers. Additionally, Tropical Tan will offer six high quality tanning beds, along with limited retail sales of tanning lotion, bathing suits/swimwear, and sunglasses.
The objective of this plan is to acquire $50,000 in funding, which will be used for purchasing inventory, tanning beds, and other start-up expenses.
Contents
1.1 Objectives
- Year 1 sales of $380,000, increasing to $425,000 by the end of Year 3.
- A net profit margin over 40%.
- Net income exceeding 10% of sales by Year 3.
1.2 Mission
Tropical Tan will provide clients with the highest quality indoor tanning experience, offering top-of-the-line beds and accelerators. We will differentiate ourselves from competitors by prioritizing customer satisfaction. Our employees will be treated with dignity and provided special benefits, such as moderate health coverage, free tanning sessions, and an annual company picnic. They are the face of Tropical Tan, and their well-being and goodwill are crucial to our success.
1.3 Keys to Success
- Location – situated in a high traffic strip mall near a health club.
- Convenience – offering quick tan beds to minimize time spent and extended business hours.
- Customer Service – focusing on customer comfort and needs.
Company Summary
Tropical Tan will provide upscale tanning booth rentals within a clean and inviting atmosphere. We will also offer quality lotions, swimwear, and sunglasses. Our commitment to superior customer service and high-quality equipment will differentiate Tropical Tan from competitors.
2.1 Company Ownership
Tropical Tan will be a sole proprietorship based in Chino Hills, owned and operated by its principal investors.
2.2 Start-up Summary
Keith and Shelly Harwood have $65,000 to invest in the business and seek an additional $50,000 in financing for salon build-out and start-up. The funds will cover start-up costs, location remodeling, equipment purchase, and initial inventory. Repayment will come from earnings.
Start-up
Requirements
Start-up Expenses
Legal – $250
Stationery etc. – $100
Brochures – $0
Consultants – $0
Insurance – $100
Rent – $1,817
Research and Development – $0
Expensed Equipment – $27,000
Other – $0
Total Start-up Expenses – $29,267
Start-up Assets
Cash Required – $29,333
Start-up Inventory – $250
Other Current Assets – $0
Long-term Assets – $27,000
Total Assets – $56,583
Total Requirements – $85,850
Start-up Funding
Start-up Expenses to Fund – $29,267
Start-up Assets to Fund – $56,583
Total Funding Required – $85,850
Assets
Non-cash Assets from Start-up – $27,250
Cash Requirements from Start-up – $29,333
Additional Cash Raised – $0
Cash Balance on Starting Date – $29,333
Total Assets – $56,583
Liabilities and Capital
Liabilities
Current Borrowing – $0
Long-term Liabilities – $20,000
Accounts Payable (Outstanding Bills) – $850
Other Current Liabilities (interest-free) – $0
Total Liabilities – $20,850
Capital
Planned Investment
Keith Harwood – $40,000
Shelly Harwood – $25,000
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $65,000
Loss at Start-up (Start-up Expenses) – ($29,267)
Total Capital – $35,733
Total Capital and Liabilities – $56,583
Total Funding – $85,850
Products and Services
Tropical Tan provides tanning booth rentals and retail a line of tanning lotions, bathing suits/swimwear, and sunglasses.
Strategy and Implementation Summary
The main priorities of Tropical upon start-up are as follows:
– Maintain positive cash flow and limit expenses to match the financial statements.
– Differentiate the brand and product from the competition by supporting a unique customer experience.
– Outsource important management activities to minimize management team gaps.
By keeping these priorities in mind, the implementation team will achieve solid results.
4.1 Competitive Edge
Tropical Tan’s competitive edge lies in pampering customers by providing extra perks such as bottled water, free lattes, and other perks. Additional perks include:
– Twice yearly client fashion show where participants can model new swimwear.
– Weekly drawings for giveaways including tanning products and restaurant passes.
– Auto-payment option for individual session clients.
Performing a SWOT analysis is essential for developing effective business strategies.
4.2 Sales Strategy
Customers who sign up for an initial tanning session will receive special discounts on future tans and tanning programs. Returning customers will have access to customized tanning plans. The company recommends appropriate tanning frequency and reserves the right to refuse service to clients who abuse tanning.
4.2.1 Sales Forecast
Based on six quick tan tanning beds, $10.00 per session, and approximately 200 clients per day, the sales forecast projects increased sales in late spring and early summer, tapering off in September.
Sales Forecast:
Year 1 Year 2 Year 3
Sales
Tanning Session $387,072 $406,426 $426,747
Lotions/swimwear/sunglasses/etc. $7,272 $7,635 $8,017
Total Sales $394,344 $414,061 $434,764
Direct Cost of Sales:
Year 1 Year 2 Year 3
Lotions/swimwear/sunglasses/etc. $3,100 $3,500 $3,800
Other $0 $0 $0
Subtotal Direct Cost of Sales $3,100 $3,500 $3,800
Management Summary:
The initial management team consists of Keith & Shelly Harwood (owners). An additional management member will be added as we grow. Keith and Shelly have owned and sold several businesses in the last 15 years, including a small convenience store, a plumbing contractor business, and a doggie day care business. They have extensive experience in small business accounting, finance, marketing, and management.
5.1 Personnel Plan:
The personnel plan calls for 2 part-time employees while one or both owners will be there full time. An additional part-time employee will be added during the busier months, May, June, and July.
Personnel Plan:
Year 1 Year 2 Year 3
Part-time Help $7,740 $7,740 $7,740
Part-time Help $7,740 $7,740 $7,740
Part-time Help $1,935 $1,935 $1,935
Owners $48,000 $60,000 $72,000
Total People 3 0 0
Total Payroll $65,415 $77,415 $89,415
Tropical Tan expects a profit margin of over 40% in year one. By year two, the profit margin is expected to increase as the day-to-day activities become less expensive due to the law of diminishing costs.
Sales are expected to grow 15% per year. Total owner financing of $65,000 will be returned to the owners in the form of dividends.
6.1 Important Assumptions:
After researching the tanning industry in and around Chino Hills, the following assumptions have been made:
– Consumers are unhappy with the two existing tanning salons’ equipment. By bringing in top-of-the-line products, we can provide a higher quality service and attract more clients per hour.
– Being located across the street from a popular gym, we anticipate a high amount of foot traffic, resulting in higher sales.
General Assumptions:
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
6.2 Break-even Analysis:
The following chart and table summarize our break-even analysis. With fixed costs of $10,332 per month initially, we need to sell 1,041 monthly tanning sessions at $10.00 each to cover our costs.
Break-even Analysis
Monthly Revenue Break-even: $10,414
Assumptions:
– Average Percent Variable Cost: 1%
– Estimated Monthly Fixed Cost: $10,332
6.3 Projected Profit and Loss
Our projected profit and loss is shown in the table and charts below. Based on our research of the tanning industry, our annual projections are realistic. Detailed monthly projections can be found in the appendix.
Pro Forma Profit and Loss:
Year 1 Year 2 Year 3
Sales $394,344 $414,061 $434,764
Direct Cost of Sales $3,100 $3,500 $3,800
Other Costs of Sales $27,996 $0 $0
Total Cost of Sales $31,096 $3,500 $3,800
Gross Margin $363,248 $410,561 $430,964
Gross Margin % 92.11% 99.15% 99.13%
Expenses
Payroll $65,415 $77,415 $89,415
Sales and Marketing and Other Expenses $600 $600 $600
Depreciation $0 $0 $0
Rent $21,804 $21,804 $21,804
Utilities $4,200 $4,200 $4,200
Insurance $1,200 $1,200 $1,200
Payroll Taxes $9,812 $11,612 $13,412
Loan Repayment $11,952 $11,952 $11,952
Janitorial Service $3,000 $3,000 $3,000
Other $6,000 $6,000 $6,000
Total Operating Expenses $123,983 $137,783 $151,583
Profit Before Interest and Taxes $239,265 $272,778 $279,381
EBITDA $239,265 $272,778 $279,381
Interest Expense $1,626 $965 $310
Taxes Incurred $71,291 $81,544 $83,721
Net Profit $166,347 $190,269 $195,350
Net Profit/Sales 42.18% 45.95% 44.93%
6.4 Projected Cash Flow:
The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the detailed monthly numbers are included in the appendix.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $394,344 | $414,061 | $434,764 |
| Subtotal Cash from Operations | $394,344 | $414,061 | $434,764 |
| 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 | $0 | $0 | $0 |
| Subtotal Cash Received | $394,344 | $414,061 | $434,764 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $65,415 | $77,415 | $89,415 |
| Bill Payments | $152,361 | $146,453 | $149,816 |
| Subtotal Spent on Operations | $217,776 | $223,868 | $239,231 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $6,900 | $6,900 | $6,200 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $224,676 | $230,768 | $245,431 |
| Net Cash Flow | $169,668 | $183,293 | $189,333 |
| Cash Balance | $199,001 | $382,294 | $571,626 |
6.5 Projected Balance Sheet
The balance sheet table shows managed but sufficient growth of net worth and a healthy financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $199,001 | $382,294 | $571,626 |
| Inventory | $1,150 | $1,298 | $1,410 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $200,151 | $383,592 | $573,036 |
| Long-term Assets | |||
| Long-term Assets | $27,000 | $27,000 | $27,000 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $27,000 | $27,000 | $27,000 |
| Total Assets | $227,151 | $410,592 | $600,036 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $11,971 | $12,043 | $12,338 |
| Current Borrowing | ($6,900) | ($13,800) | ($20,000) |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $5,071 | ($1,757) | ($7,662) |
| Long-term Liabilities | $20,000 | $20,000 | $20,000 |
| Total Liabilities | $25,071 | $18,243 | $12,338 |
| Paid-in Capital | $65,000 | $65,000 | $65,000 |
| Retained Earnings | ($29,267) | $137,080 | $327,349 |
| Earnings | $166,347 | $190,269 | $195,350 |
| Total Capital | $202,080 | $392,349 | $587,698 |
| General Assumptions | |||||||||||||
| Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
| Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Pro Forma Profit and Loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | $32,900 | $34,836 | $39,603 | $43,502 | $38,653 | $32,363 | $29,433 | $26,069 | $27,179 | $27,979 | $29,929 | $31,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Cost of Sales | $250 | $250 | $300 | $300 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Costs of Sales | $27,996 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Cost of Sales | $28,246 | $250 | $300 | $300 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Margin | $4,654 | $34,586 | $39,303 | $43,202 | $38,403 | $32,113 | $29,183 | $25,819 | $26,929 | $27,729 | $29,679 | $31,650 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Margin % | 14.15% | 99.28% | 99.24% | 99.31% | 99.35% | 99.23% | 99.15% | 99.04% | 99.08% | 99.11% | 99.16% | 99.22% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payroll | $5,290 | $5,290 | $5,935 | $5,935 | $5,935 | $5,290 | $5,290 | $5,290 | $5,290 | $5,290 | $5,290 | $5,290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales and Marketing and Other Expenses | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rent | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | $1,817 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilities | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payroll Taxes | $794 | $794 | $890 | $890 | $890 | $794 | $794 | $794 | $794 | $794 | $794 | $794 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Repayment | $996 | $996 | $996 | $996 | READ MORE Investment Consulting Business Plan Example
 Hello! I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com. My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals. Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success! | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||