Business plan lotus spa
Content
Business Plan
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THAI LOTUS SPA COMPANY Red Road Bangkok 10000 Thailand 26/06/2009 Prepared by Shermarn
& Pauline For lotus spa company
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Foreword
Lotus Spa with a innovation of healing body and mind Through a unique combination of offered services to those who receive our healthcare spa service. Enhancing our own accountability has left us better placed to establish an effective framework for spa service that is independent of government as the dominant provider of healthcare in Thailand and independent of dominance by any single group. We are setting the strategic direction of the organization and this Business Plan in many respects informs and foreshadows the longer-term Strategic Plan that we intend to do and publish in the course of this year (2009). We will take all the key decisions, and will be responsible for overseeing the operational performance healthcare service as a whole, ensuring that the organization delivers to the standards required of it. We look forward to working with our key interest groups across the four areas of Thailand to take forward what is a challenging but achievable set of key aims and objectives. Our Business Plan sets out the key components of a regulatory framework that is capable of adapting to meet the needs of customers and changing healthcare way.
Shermarn , Pauline July 2009
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BUSINESS PLAN LOTUS SPA
26/06/2009
Supervisor : Shermarn ,Pauline Professional adviser : Mr. Dick Bos Thai Lotus Spa company 2009© Red Road ,Bangkok 10000 Thailand Contact: Customer service center Office Hour 10.00 am – 10.00 PM +66-354-2544 [email protected] www.thailotuspa.com
Cover image Credit: www.thaigoodview.com
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Contents
Executive summary Ch 1 The company 1.1 History 1.2 Mission statement 1.3 Product and service 1.4 Current Status 1.5 Legal Status and ownership 1.6 Basic Corporation information 1.7 Company structure Ch 2 Industry Analysis 2.1 Industry definition 2.2 Industry size, growth and sales projections 2.3 Industry characteristics 2.4 Industry trends Ch 3 Market Analysis 3.1 Marketing segmentation and target market selection 3.2 Buyer behavior 3.3 Competitor analysis 3.4 Estimation of annual sales and market share Ch 4 Marketing Plan 4.1 Market strategy 4.1.1 Position strategy 4.1.2 Points of differentiation 4.2 Pricing strategy 4.3 Sales process and promotion mix 4.4 Distribution and sales Ch 5 Operations and Product Development Plan 5.1 Operations plan 5.2 Product ( or service ) development plan Ch 6 Financial analysis 6.1 Start up Expenses 6.2 Assumption sheet 6.3 Pro forma financial statement 6.3.1 Opening Day Balance Sheet (beginning of year) 6.3.2 Profit and Loss projection (12 months) 6.3.3 Cash flow (12 months) 6.3.4 Projected balance sheet (end of year) 6.4 Ratio analysis 5 5 5 5 6 6 6 6 7 7 7 8 8 8 8 9 9 10 10 10 10 11 11 12 12 13 14 15 16 16 17 17 18
5 6.5 Break Even Analysis 6.6 Profit Projection (5 years) Recommendation Review Appendix 19 20
Executive Summary
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Lotus Spa is a new upscale destination in Freeway in Bangkok, Thailand, offering a complete day spa experience. We offer seven ultra-boutique, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles - traditional Thai Massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial Treatment. Lotus Spa has the latest in anti-aging products and techniques but does not offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it's part of a full treatment like Calendula Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities. This business plan has been developed to track progress prior to grand opening and following through with a five-year projection. In addition, this plan has been written to for Spa's successful.
1. The company
1.1 History
The timing is right for starting this new venture. We are patiently searching for six months for the perfect location, one was finally found in January 2009 in the Freeway Red Road in Bangkok Thailand. The demand from the owner's clients, as well as the ambitions of us, and the procurement of highly professional and qualified beauticians and healthy, has made this business one of great potential. Shermarn co-owner with Pauline own the company. We have been working in a famous upscale spa in our Town. We have been creating a large client following through hard work and dedication. Our talented team of beauticians and physicians has what it takes to make this venture an extremely successful one. We expect our growing reputation to lead to new clients and beauticians to support our anticipated growth. To achieve our objectives, we are seeking additional loan financing. This loan will be paid from the cash flow from the business and will be collateralized by the assets of the company, and backed by the character, experience, and personal guarantees of the owners.
1.2 Mission statement
Our mission is to run a profitable business by providing high-end therapeutic massage and beautiful services in a caring, upscale, professional environment. We offer massage in a variety of styles - traditional Thai Massage, Sports Massage, Deep Tissue work, Sports Massage, Hot Stone Massage, Reflexology, and others. Our licensed aestheticians offer the latest in skin treatments, body treatments and anti-aging therapies. Our goal is to tailor the client's experience based on initial interview information, as well as feedback during the treatments, to ensure the client's comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience - using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client's overall spa experience.
1.3 Products and services
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Lotus Spa offers therapeutic massage services, body treatments, facials and anti-aging treatments. Services are provided by licensed therapists and aestheticians who are independently contracted and paid on a commission basis. The upside of the commissioned employee is that there is very little overhead without sales; employees only make money when the business makes money. We also offer a full retail line that complements the services menu. Products included are high-end cosmetics, creams, candles, and other beauty products. These high-end items tend to retail at a minimum of $20-$25 per item and have 50% mark - up, or higher.
1.4 Current status
Lotus Spa is a new destination offering customers the combination of massage, body treatments, facials and anti-aging treatments. The settings are upscale, beautiful and serene. We cater to both men and women and offer the latest in skin care products and therapies. Red Road Freeway, Bangkok Thailand, where we plan to locate, has a daily traffic count of 10,000 cars. It is also only two blocks from a commuter train stop, and has an upscale hair and nail salon which would complement our services nicely.
1.5 Legal status and ownership
Lotus Spa is a privately held partnership, owned by Ms. Shermarn and Ms. Pauline. In the course of fund raising, we will explore the feasibility of both a partnership, and a limited liability partnership.
1.6 Basic corporate information
After spending several months searching for a spa to purchase, we decided to start a Lotus Spa from the ground up. The bulk of the start-up costs will be invested by us and the remainder will be funded through short-term financing. Details are provided Other Current Assets purchased at start-up are as follows: Massage table equipment - $3,795 (5 complete) Aesthetician Equipment - $2,800 (2 room setup) Decor and Furnishings - $13,000 Envision Software & Equipment - $4,000 Signage - $3,500 Back bar Supplies - $5,000
1.7 Company structure
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Shermarn Managing director
Pauline HRM director
L None Executive Director
A Finance director
B Marketing director
C IT manager
D Research director
E Accountant
F Purchasing manager
I G Secretary H Sales manager Customer service manger
K Line manager
2. Industry analysis 2.1 Industry definition
Lotus Spa our sole purpose is to provide guests with lifestyle improvements and health enhancement through professionally administered spa services, physical fitness, education, nutritional advice on a residential basis.
2.2 Industry size, growth and sales projections
Nowadays in Thailand we are more concerning about our health and this makes this kind of business very popular recently and it tends to be larger and larger from metropolis to downtown. The Target group is particular in Women because as we know well that they like to pamper themselves to be “Good-looking” without concerning cost According to this, it is rapidly growing the sales could be lower due to many competitions. For Lotus Spa we have placed ours as a medium Spa and Beauty industry.
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Staffs of Spa industry and health care is projected to increase 27 percent through 2014 in Thailand, compared with 14 percent for all industries combined The slowest growing industry segment to 69 percent in the much smaller Spa health care services. About 40,000 establishments Spa care industry; they vary greatly in terms of size, staffing patterns, and organizational structures. About 76 percent of Spa care establishments are offices of physicians, or other health practitioners. Although hospitals constitute only 2 percent of all health care establishments.
From: http://www.industry.go.th/ops/pio/lamphun/Lists/News/Disp.aspx?List=ac4ae0a1-8bae4b99-b985-9fa9ee646282&ID=143 2.3 Industry characteristics
We are part of the retail health and beauty industry that we have served at our Lotus Spa Facility and delivered to local hotels also medical spa focus mainly on massage therapy, facials and Resurfacing
2.4
Industry trends
In the rapidly changing health care industry in Thailand, technological advances have made many new procedures and methods of diagnosis and treatment possible. Spa development plans, such as less invasive surgical techniques, skin grafts, so we are willing to continue to increase the longevity and improve the quality of life of many customers. In addition, advances in information technology continue to improve customers and worker efficiency with devices such as hand-held computers to maintain and track customers who are unaware of us as well as star beyond our competitors and any threat.
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3.1
Market Analysis
Marketing segmentation and target market selection
We are primarily targeting potential clients within our facility’s zone with a household income over $5,000. Our secondary market will include visitors staying in a local hotel. Within Thailand approximately 14% of the population has never tried a massage. We will assume that a conservative 70% of these two categories has tried a massage and would undergo one again, if offered appealing services at the right price. Our market Analysis table thus reflects 70% of the local and visiting population who might be targeted.
3.2
Buyer behavior
Within this task, clients who use spa services fall into four basic groups: 1. Clients pampering themselves Massage Therapy, and facial treatments (We have a contact of professional referral in area) Often also seeing a chiropractor or physical therapist (more often referral from chiropractor) In some case, insurance will pay for short-term therapy only, although clients will normally supplement out-ofpocket Individuals with medium disposable income Sometimes have chronic pain or old injury issues Massage 1 - 4 times a month for relaxation Huge anti-aging and beauty market potential Traffic continues to be a huge problem in Metropolis and our therapies are valuable for this segment of the population Local hotels that do not offer spa services will be able to refer to our local facility or use our out-call services.
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2. Clients who prefer alternative health care Use massage as preventative health care Use other alternative practices - e.g. acupuncture, Chiropractor, Naturopath, Herbalist, etc. Try to have massage as regularly as they can afford - usually once per month Commuters in Metropolis suffer through some of the worst traffic in the country. As the population grows, the traffic worsens and the need for massage therapies increases. Extended hours will capitalize on those who want an appointment on their way home from work.
3. Serious Athletes Injury and workout recovery also preventative. Many serious runners, surfers, bicyclists and college athletes in the local area. Massage for improved performance - great for word-of mouth referrals if they see results.
3.3
Competitor analysis
Customers choose spa services based on proximity to their daily commute, quality and an exceptional experience. With our combined services, we expect to dominate Party Spa market. There is not one direct competitor of this nature within the area where we are intending to locate. The closest competitor is the Leelawadee Spa which is a Hair salon that offers additional, limited, spa services. The Siam Hotel also offers massage treatments, but we will mostly cater to visitors to the area and not the local residential base. Finally, Ravanda Spa, located in Plaza Center is not a traditional day spa but combines a day spa with a female gymnasium. No men are allowed at Ravanda Spa, either. The going rate for massage in Freeway County is $70-$90 per hour which is slightly above most of the other residential areas in Metropolis which can even be as low as $40 per hour in saturated or low-income areas.
3.4
Estimation of annual sales and market share
Market Analysis
Year 1 Potential Customers Within 5 Miles over $25k Other-Visiting Hotel in Area Total Growth 2% 0% 2.91% 284,950 150,000 434,950 288,883 150,000 438,883 292,869 150,000 442,869 296,911 150,000 446,911 337,885 150,000 487,885 Year 2 Year 3 Year 4 Year 5 CAGR 4.35% 0.00% 2.91%
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4 Marketing Plan
4.1 Market strategy
Our strategy is to implement the most aggressive marketing and networking in the community followed by the best services in the business. Our prices are competitive for the area, and our personnel plan, which includes using a pool of skilled, commissioned therapists and aestheticians, will give us a financial advantage.
4.1.1 Position strategy and Points of differentiation
Local Advertising & Seasonal Promotions - Local newspaper advertising, local fliers, grand opening party and promotion for first 30 days. Continue regular advertising and plan for seasonal events like Song Grand Festival, Mother's Day and New Year's. Local Networking - Charities, women's groups, country clubs, wedding planners, and membership with the Metropolis Chamber of Commerce. Health Care Referrals-Prior to opening, work current contacts and create new contacts with health care providers, especially chiropractors. Also, become a Provider with health insurance companies that offer Alternative Care to their members. Most people don't know that massage therapy is usually paid by insurance when billed correctly and when prescribed by a physician. Lotus Spa already has practice management software to handle medically billable massage. When the insurance does not cover the entire amount of a service the client will pay the difference. For that reason, we will not want to participate with any health insurance that require write-off for amounts over the usual and customary fee (which tends to be too low). A list of acceptable insurance company plans will be maintained and those clients will be able to handle massage therapy through their insurance. Any opportunity to convince allopathic physicians to see massage as having long-term healing benefits for their patients will also be taken, since they hold key to having massage paid for as medically necessary. The client will also help drive that with the physicians if they are properly educated. Hotel Referrals - Hotels that do not offer their own spa services will send their guests to our spa or use our out-call spa services. Prior to opening, we will make contacts with managers and concierges at local hotels to ensure they are aware of the services available. Promotions will be offered to professionals in these industries to build relationships. Online Website - our spa will show up on major website in Thailand e.g. Mthai.com, Kapook.com and in the phone directory (Yellow pages). The website will have a full menu of services and eventually have the ability to schedule appointments on-line. The spa software we are using will allow a user to see the schedule and make and appointment without making a phone call. Location traffic - It is imperative that we be located in a high-traffic strip mall that is high-end, modern, and clean. We prefer locating near a complementary business like a nail or hair salon that does not offer any massage or facial treatments.
4.2 Pricing strategy
We define it as several levels strategies follow: Premium Pricing We use a high price where there is uniqueness about the product or service to approach a substantial competitive advantage exists. Such high prices are charge for luxuries such as rooms, beautician courses and delivery service. Penetration Pricing The price charged for services is set artificially low in order to gain market share. Once this is achieved, the price is increased. Economy Pricing This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. We have economy services for, such as hands massage. Price Skimming
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Charge a high price because we have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market. Once other spas were tempted into the market and the services were produced at a lower unit cost. Promotional Pricing Pricing to promote our services is a very common application. There are many promotional pricing including approaches such as Buy One Get One Free.
4.3Sales process and promotion mix
We have at our disposal four major methods of promotion. Taken together these comprise the promotion mix of each method is offered while in the next section a comparison of each method of promotion is presented.
• Advertising – we pay promotions using multimedia deliver the Lotus Spa’s message such as health magazines. While we
have involved one-way communication with mass feedback opportunity for the customer experiencing that the advent of Internet such as Lotus’s website, community profiles (Fackebook,Youtube) that allow customers to provide quick feedback.
• Sales Promotion – we involve the use of special short-term techniques in the form of incentives, to encourage customers
to respond or undertake some activity. For instance, the use of retail coupons with expiration dates requires customers to act while the incentive is still valid.
• Public Relations – we also referred to as publicity, this type of promotion uses third-party sources, and particularly the
news media, to offer a favorable mention of our company or services without direct payment to the publisher of the information.
• Personal Selling – we involve personal contact between company alliance and those who have a role in purchase
decisions (member of a company buying center). Often this occurs face-to-face or via telephone, though newer technologies allow this to occur online via video conferencing or text chat. .
4.4 Distribution and sales
If, as it has been said, the top item which determine success in business is location then a busy location at Plaza center in a thriving residential community represents our top marketing strategy. We are focusing on the sales, marketing and management and delegating the massage and aesthetician therapies to employees--business profitability potential is exponentially maximized over a one or two person operation by a direct care-giver without any marketing, management or sales background. As the owners, we have done extensive market research and visited some of the best spas in Thailand and have taken ideas from the best to offer an upscale, ultra-amenity, spa experience. Once a client experiences the comfortable, high-end level of personalized care that we offer, we are confident that we will have a return client.
5 Operations and Product Development Plan
5.1Operations plan
Lotus Spa Operations Development Plan is designed to provide for upgrading and development of all those function, standards, services, systems, and regulatory activities which will allow safe, timely and economical integration of Lotus Spa into all-weather operations in Spa community. We describe a five-year development program our objectives are to improve our services System so as to enable us to utilize our unique employees’s capabilities. It includes the collection of ingredients treatment (both near and long term) for ensuring full integration into Lotus Spa
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of this rapidly growing segment of aviation. These areas are covered in the plan: (1) Technical Operations; (2) communication Systems Development; (3) Cost Control; (4) Weather Environment; (5) Spa Services Certification Standards; (6) Risk reduction.
5.2 Service development plan
Strategy To raise the profile of Lotus Spa this will help by improving uptake of services and increasing public consideration of customers. This Services Development Plan is intended to serve our strategy and therefore indirectly to increase the Lotus Spa’s effectiveness. In developing a Services Development Plan we have built the following ideas in mind. Sustainability – effective service provision should depend as little as possible upon the individuals annually elected as CEO Officers. Specificity – we are seeking to offer services which will appeal specifically to our clients. Long-term financial returns – we are investing now in order to establish stable and diverse income streams for the future. Plans To implement this strategy we are developing plans in the following: Management If once plan have been agreed we will seek the advice of other relevant authorities in drawing up an operating schedule for the proper management of all our activities. Provision of Services Purpose Significant revenue on those items upon which it does make a profit (e.g. ingredients, Staffs) Nevertheless Lotus Spa provides a number of popular and valuable member services Service Provision This view emphasizes that a range of services is available it’s not just a service material but also service mind. We are friend this redefinition has begun , has led to substantially increased turnover since the start of term (against comparable recent periods). This indicates that service uptake has increased, as well as improving the financial viability of the activity. Coffee Bar Purpose Lotus Spa is looking at ways to increase involvement of workers and university students, to increase uptake of the services it offers and to attempt to make more relationship community. At the same time we are keen to ensure sustainability and to develop systems which will handle increased activity without consuming the time of elected us. In pursuing these aims we would like to consider the possibility of providing a coffee bar during customer’s relaxing. Consultation We would like to seek advice from Health officers. Timescale . We and relevant workers are keen to actively pursue each of the activities described, and wishes to present the plans for their information, for approval, and for any advice which members wish to offer on the content of the plans and how best to take them forward.
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6 Financial analysis
6.1 Start up Expenses
Start-up
Requirements
Start-up Expenses Legal Printing, stationery, bags, grand opening coupons Brochures Construction/Design Insurance Rent Research and Development Advertising $2,500 $3,500 $500 $45,000 $2,000 $17,000 $0 $5,000
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Accountant Linens Other Total Start-up Expenses $950 $4,000 $0 $80,450
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets $35,000 $6,000 $32,095 $0 $73,095
Total Requirements
$153,545
Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required $80,450 $73,095 $153,545
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $38,095 $35,000 $11,455 $46,455 $84,550
Liabilities and Capital
Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities $35,000 $0 $0 $0 $35,000
Capital
Planned Investment Owner Investment from Sale of Home N/A $130,000 $0
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Additional Investment Requirement Total Planned Investment $0 $130,000
Loss at Start-up (Start-up Expenses) Total Capital
($80,450) $49,550
Total Capital and Liabilities
$84,550
Total Funding
$165,000
6.2
Assumption sheet
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. We assume cash payments for all services, except for the 1% of sales projected as insurance reimbursements, with collection days at 90. The collection days are for insurance billings only. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Two of the more important underlying assumptions are: -We assume a strong economy, without major recession. -We assume, of course, that there are no changes to the Medical/insurance Industry, such as the nationalization of health care. General Assumptions
Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 5.65% 28.17% 0 Year 2 2 7.00% 5.65% 28.00% 0 Year 3 3 7.00% 5.65% 28.17% 0 Year 4 4 7.00% 5.65% 28.00% 0 Year 5 5 7.00% 5.65% 28.17% 0
6.3 6.3.1
Cash
Pro forma financial statement Opening Day Balance Sheet (beginning of year)
Assets $30,000 Liabilities and Owners' Equity Liabilities
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Accounts Receivable $30,200 Notes Payable Accounts Payable Total liabilities Tools and equipment $12,841 Capital Stock Retained Earnings Total owners' equity Total $10,000 $20,550 Total $73,059 $30,000 $84,550 Owners' equity $54,000
6.3.2
Profit and Loss projection (12 months)
Because we are paying our service-provider on commission, our variable costs will exceed our fixed costs. This keeps our overhead low, and means we are paying only for hours when they actually provide services. Keeping such a large pool of reliable massage therapists and aestheticians as we are recruiting will keep us from losing business with no-shows, especially since we will schedule our contractors, as much as possible, for full days or half - days, rather than individual appointments. Fixed expenses are the customary: rent, electric, advertising, insurance. There are four main areas of income: massage, aesthetician retail and out call. Massage and aesthetician services are $65 per service minimum, with 55% of that going to the service provider. The basis for the sales projections is a conservative estimate of 7 services per day the first month in business and 53 services per day by the end of the first year. At 53 services per day we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day. On retail services/product, the gross margin is consistently 50% across the board. The retail lines go in conjunction with the spa services as an extension of the spa experience. The more customer’s sales will be driven. These high-end spa services are hard to find items that generate repeat purchases.
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Profit and Loss projection
Year 1 Sales Direct Cost of Sales Massage Therapists' commission Aestheticians' commission Out-call Services commission Total Cost of Sales $823,685 $65,644 $290,307 $70,964 $15,340 $442,254 Year 2 $857,000 $59,925 $302,500 $72,000 $17,550 $451,975 Year 3 $900,000 $73,175 $308,000 $74,000 $19,500 $474,675 Year 4 $946,000 $86,400 $316,250 $74,400 $22,750 $499,800 Year 5 $982,000 $99,575 $319,000 $76,000 $24,050 $518,625
Gross Margin Gross Margin %
$381,431 46.31%
$405,025 47.26%
$425,325 47.26%
$446,200 47.17%
$463,375 47.19%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Advertising Insurance Payroll Taxes Phone Software Support Other $137,510 $7,500 $0 $66,000 $3,000 $3,000 $1,500 $0 $1,500 $0 $6,700 $145,000 $5,000 $50 $66,000 $3,100 $3,000 $700 $0 $1,600 $495 $6,700 $155,000 $5,000 $50 $66,000 $3,200 $3,000 $700 $0 $1,700 $495 $6,700 $160,000 $8,000 $50 $66,000 $3,300 $3,000 $700 $0 $1,800 $495 $6,700 $167,000 $5,000 $50 $66,000 $3,400 $3,000 $700 $0 $1,900 $495 $6,700
Total Operating Expenses
$226,710
$231,645
$241,845
$250,045
$254,245
Profit Before Interest and Taxes
$154,721
$173,380
$183,480
$196,155
$209,130
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EBITDA Interest Expense Taxes Incurred $154,721 $2,132 $42,612 $173,430 $1,568 $48,107 $183,530 $980 $51,404 $196,205 $392 $54,814 $209,180 $49 $58,891
Net Profit Net Profit/Sales
$109,978 13.35%
$123,705 14.43%
$131,096 14.57%
$140,949 14.90%
$150,190 15.29%
6.3.3
Cash flow (12 months)
Based on our conservative sales forecasts, the following Cash Flow table shows Lotus Spa with a consistently positive Cash Flow. After two months, the spa will show a consistent increase in the cash balance. Because the business is a partnership, our draw is obviously the area of cash flow where adjustments can be made if Cash Flow becomes tight.
6.3.4
Projected balance sheet
The only Accounts Receivable carried is any Insurance Billings that are not paid during the month. Although some insurance companies pay promptly, within 10 working days, others take more than 6 weeks to pay. We have set our collection days for this small percentage of non-cash sales at 90 days, to be conservative. The Balance Sheet shows a steady increase in earnings and net worth over the next five years. Pro Forma Balance Sheet
Year 1 Assets Year 2 Year 3 Year 4 Year 5
Current Assets
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Cash Accounts Receivable Inventory Other Current Assets Total Current Assets $213,263 $10,123 $12,441 $32,095 $267,923 $293,531 $10,759 $11,357 $32,095 $347,742 $414,568 $10,357 $13,868 $32,095 $470,888 $547,351 $11,876 $14,577 $32,095 $605,899 $697,823 $11,301 $15,132 $32,095 $756,351
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets $0 $0 $0 $267,923 $2,000 $50 $1,950 $349,692 $4,000 $100 $3,900 $474,788 $4,000 $150 $3,850 $609,749 $4,000 $200 $3,800 $760,151
Liabilities and Capital
Year 1
Year 2
Year 3
Year 4
Year 5
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities $81,795 $26,600 $0 $108,395 $48,260 $18,200 $0 $66,460 $50,660 $9,800 $0 $60,460 $53,072 $1,400 $0 $54,472 $54,683 $0 $0 $54,683
Long-term Liabilities Total Liabilities
$0 $108,395
$0 $66,460
$0 $60,460
$0 $54,472
$0 $54,683
Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital
$130,000 ($80,450) $109,978 $159,528 $267,923
$130,000 $29,528 $123,705 $283,232 $349,692
$130,000 $153,232 $131,096 $414,328 $474,788
$130,000 $284,328 $140,949 $555,277 $609,749
$130,000 $425,277 $150,190 $705,467 $760,151
Net Worth
$159,528
$283,232
$414,328
$555,277
$705,467
6.4
Ratio analysis
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. The ratios for the initial year of growth are, of course, not as favorable as the second year. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7991.0103, Spas, are shown for comparison. Ratio Analysis
Year 1 Sales Growth 0.00% Year 2 4.04% Year 3 5.02% Year 4 5.11% Year 5 Industry Profile 3.81% 3.43%
Percent of Total Assets Accounts Receivable Inventory 3.78% 4.64% 3.08% 3.25% 2.18% 2.92% 1.95% 2.39% 1.49% 1.99% 4.05% 4.35%
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Other Current Assets Total Current Assets Long-term Assets Total Assets 11.98% 100.00% 0.00% 100.00% 9.18% 99.44% 0.56% 100.00% 6.76% 99.18% 0.82% 100.00% 5.26% 99.37% 0.63% 100.00% 4.22% 99.50% 0.50% 100.00% 30.50% 38.90% 61.10% 100.00%
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
40.46% 0.00% 40.46% 59.54%
19.01% 0.00% 19.01% 80.99%
12.73% 0.00% 12.73% 87.27%
8.93% 0.00% 8.93% 91.07%
7.19% 0.00% 7.19% 92.81%
20.63% 25.37% 46.00% 54.00%
Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes 100.00% 46.31% 90.28% 0.00% 18.78% 100.00% 47.26% 94.36% 0.01% 20.23% 100.00% 47.26% 90.99% 0.01% 20.39% 100.00% 47.17% 0.00% 0.01% 20.74% 100.00% 47.19% 0.00% 0.01% 21.30% 100.00% 100.00% 69.59% 2.76% 4.07%
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets 2.47 2.36 40.46% 95.65% 56.95% 5.23 5.06 19.01% 60.66% 49.13% 7.79 7.56 12.73% 44.05% 38.44% 11.12 10.86 8.93% 35.25% 32.11% 13.83 13.55 7.19% 29.64% 27.51% 1.17 0.82 58.83% 4.43% 10.76%
Additional Ratios Net Profit Margin Return on Equity
Year 1 13.35% 68.94%
Year 2 14.43% 43.68%
Year 3 14.57% 31.64%
Year 4 14.90% 25.38%
Year 5 15.29% 21.29% n.a n.a
Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover 2.39 77 10.15 7.12 27 3.07 2.39 148 5.04 12.17 40 2.45 2.39 156 5.80 12.17 29 1.90 2.39 143 6.07 12.17 29 1.55 2.39 157 6.70 12.17 30 1.29 n.a n.a n.a n.a n.a n.a
Debt Ratios Debt to Net Worth Current Liability to Liability 0.68 1.00 0.23 1.00 0.15 1.00 0.10 1.00 0.08 1.00 n.a n.a
Liquidity Ratios
22
Net Working Capital Interest Coverage $159,528 72.59 $281,282 110.57 $410,428 187.22 $551,427 500.40 $701,667 4,267.96 n.a n.a
Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.33 40% 2.26 5.16 0.00 0.41 19% 4.90 3.03 0.00 0.53 13% 7.39 2.17 0.00 0.64 9% 10.64 1.70 0.00 0.77 7% 13.35 1.39 0.00 n.a n.a n.a n.a n.a
6.5
Break Even Analysis
The break-even analysis table shows what we need to make in sales to meet costs. Our variable costs include both the direct costs shown in the Sales Forecast table, for linens, ingredients, equipment, but also include the commissions paid to contracted massage therapists and aestheticians. We should surpass the break-even point by month four of operations.
Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
$31,022 39% $18,893
23
6.6 Profit Projection (5 years)
24
Conclusion and Recommendations
Literature review
25
Appendices
Sales Forecast Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 Sales Massage Therapy Facials and AntiAging Treatments Outcall Services Retail Total Sales 0% $9,000 $14,105 $20,150 $29,250 $40,300 $42,900 $50,375 $56,420 $54,600 $64,480 $68,250 $78,000 0% $3,600 $6,045 $8,060 $9,750 $12,090 $13,650 $16,120 $18,135 $18,200 $22,165 $23,400 $26,195 0% $400 $800 $1,200 $1,600 $1,600 $1,760 $2,080 $2,400 $2,560 $2,800 $3,200 $3,200 Month 10 Month Month 12 11
0% $1,240 $2,480 $3,100 $3,600 $4,650 $6,000 $6,975 $7,750 $9,800 $15,500 $16,500 $17,250 $14,240 $23,430 $32,510 $44,200 $58,640 $64,310 $75,550 $84,705 $85,160 $104,945 $111,350 $124,645
Direct Cost of Sales Linens and Cleaning Oils & Lotions Cost of Retail products / 50% of Sales Subtotal Direct Cost of Sales Personnel Plan 1% 2% 50%
Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 $65 $260 $105 $419 $147 $588 $203 $270 $292 $343 $385 $377
Month 10 $447 $1,789 $7,750
Month Month 12 11 $474 $1,897 $8,250 $537 $2,148 $8,625
$812 $1,080 $1,166 $1,372 $1,539 $1,507
$620 $1,240 $1,550 $1,800 $2,325 $3,000 $3,488 $3,875 $4,900
$945 $1,764 $2,285 $2,815 $3,675 $4,458 $5,202 $5,799 $6,784
$9,986 $10,621 $11,310
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Owner Draw Front Desk Total People 0% $3,750 $5,000 $6,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000 $11,000 $12,500 $12,500 0% $0 $1,500 $1,820 $1,820 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 1 2 2 2 3 3 3 3 3 3 3 3
Total Payroll
$3,750 $6,500 $7,820 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140
General Assumptions Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month 10 11 12
26
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12 Sales Direct Cost of Sales Massage Therapists' commission Aestheticians' commission Out-call Services commission Total Cost of Sales 55% 40% 65% $14,240 $23,430 $32,510 $44,200 $58,640 $64,310 $75,550 $84,705 $85,160 $104,945 $111,350 $124,645 $945 $4,950 $1,440 $260 $1,764 $2,285 $2,815 $3,675 $4,458 $5,202 $5,799 $6,784 $9,986 $10,621 $11,310
1 7.00% 5.65%
2 7.00% 5.65%
3 7.00% 5.65%
4 7.00% 5.65%
5 7.00% 5.65%
6 7.00% 5.65%
7 7.00% 5.65%
8 7.00% 5.65%
9 7.00% 5.65%
10 7.00% 5.65%
11
12
7.00% 7.00% 5.65% 5.65%
30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 0 0 0 0 0 0 0 0 0 0 0 0
$7,758 $11,083 $16,088 $22,165 $23,595 $27,706 $31,031 $30,030 $35,464 $37,538 $42,900 $2,418 $520 $3,224 $780 $3,900 $1,040 $4,836 $1,040 $5,460 $1,144 $6,448 $1,352 $7,254 $1,560 $7,280 $1,664 $8,866 $1,820 $9,360 $10,478 $2,080 $2,080
$7,595 $12,460 $17,372 $23,843 $31,716 $34,657 $40,708 $45,644 $45,758 $56,136 $59,599 $66,768
Gross Margin Gross Margin %
$6,645 $10,971 $15,138 $20,358 $26,924 $29,653 $34,842 $39,061 $39,402 $48,809 $51,751 $57,877 46.66% 46.82% 46.56% 46.06% 45.91% 46.11% 46.12% 46.11% 46.27% 46.51% 46.48% 46.43%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Advertising Insurance Payroll Taxes Phone Software Support Other 15% 20% $3,750 $2,000 $0 $5,500 $250 $250 $125 $0 $125 $0 $100 $6,500 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $7,820 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600
Total Operating Expenses
$12,100 $13,850 $15,170 $16,670 $18,990 $19,490 $19,990 $20,490 $20,990 $21,990 $23,490 $23,490
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
($5,455) ($2,880) ($5,455) ($2,880) $200 ($1,697) $196 ($861)
($32) ($32) $192 ($63)
$3,688 $3,688 $188 $980
$7,934 $10,163 $14,852 $18,571 $18,412 $26,819 $28,261 $34,387 $7,934 $10,163 $14,852 $18,571 $18,412 $26,819 $28,261 $34,387 $184 $2,170 $180 $2,795 $176 $4,109 $172 $5,152 $167 $5,108 $163 $7,464 $159 $7,869 $155 $9,585
27
Net Profit Net Profit/Sales ($3,959) ($2,214) -27.80% -9.45% ($161) -0.50% $2,520 5.70% $5,580 $7,188 $10,567 $13,248 $13,136 $19,192 $20,233 $24,647 9.52% 11.18% 13.99% 15.64% 15.43% 18.29% 18.17% 19.77%
Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12 Cash Received
Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations $14,098 $22,961 $31,535 $42,874 $56,881 $62,381 $73,284 $82,164 $82,605 $101,797 $108,010 $120,906 $0 $0 $5 $153 $485 $987 $1,340 $1,765 $1,941 $2,276 $2,542 $2,575
$14,098 $22,961 $31,539 $43,027 $57,366 $63,368 $74,624 $83,929 $84,546 $104,072 $110,551 $123,480
Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$14,098 $22,961 $31,539 $43,027 $57,366 $63,368 $74,624 $83,929 $84,546 $104,072 $110,551 $123,480
Expenditures
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations $3,750 $6,500 $7,820 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140 $450 $13,633 $17,604 $24,369 $33,257 $42,481 $46,087 $53,355 $58,990 $59,973 $74,670 $75,973 $4,200 $20,133 $25,424 $33,689 $44,897 $54,621 $58,727 $66,495 $72,630 $74,613 $90,810 $92,113
Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700
28
Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0
$4,900 $20,833 $26,124 $34,389 $45,597 $55,321 $59,427 $67,195 $73,330 $75,313 $91,510 $92,813
Net Cash Flow Cash Balance Pro Forma Balance Sheet
$9,197 $2,129 $5,416 $8,638 $11,769 $8,046 $15,197 $16,733 $11,215 $28,759 $19,041 $30,667 $55,652 $57,781 $63,197 $71,835 $83,604 $91,651 $106,847 $123,581 $134,796 $163,555 $182,596 $213,263
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Starting Assets Balance s
Month Month 10 11
Month 12
Curre nt Assets Cash $46,455 $55,652 $57,781 $63,197 $71,835 $83,604 $91,651 Accou nts Recei vable $106,84 $123,58 $134,79 $163,55 $182,59 7 1 6 5 6 $213,263
$0
$142
$611 $1,582 $2,754 $4,028 $4,970 $5,896 $6,673 $7,287 $8,160 $8,958
$10,123
Invent $6,000 $5,055 $3,291 $2,514 $3,097 $4,042 $4,904 $5,722 $6,379 $7,462 $10,985 $11,683 ory Other Curre $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 nt Assets Total Curre $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 nt 1 9 9 1 7 0 5 3 Assets
$12,441
$32,095
$267,923
Longterm Assets Longterm Assets Accu mulat ed Depre ciatio n Total Longterm Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
29
Total $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 Assets 1 9 9 1 7 0 5 3 $267,923
Liabili ties and Capita l
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month Month 10 11
Month 12
Curre nt Liabili ties Accou nts Payab le
$0 $13,053 $16,801 $23,271 $31,845 $40,953 $44,315 $51,390 $57,008 $57,485 $72,148 $73,153
$81,795
Curre nt $35,000 $34,300 $33,600 $32,900 $32,200 $31,500 $30,800 $30,100 $29,400 $28,700 $28,000 $27,300 Borro wing Other Curre nt Liabili ties
$26,600
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Subtot al Curre $100,14 $100,45 $35,000 $47,353 $50,401 $56,171 $64,045 $72,453 $75,115 $81,490 $86,408 $86,185 nt 8 3 Liabili ties
$108,395
Longterm Liabili ties
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total $100,14 $100,45 Liabili $35,000 $47,353 $50,401 $56,171 $64,045 $72,453 $75,115 $81,490 $86,408 $86,185 8 3 ties
$108,395
Paidin $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 Capita 0 0 0 0 0 0 0 0 0 0 0 0 l Retain ed ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 Earnin 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) gs Earnin gs $0 ($3,959) ($6,173) ($6,334) ($3,814) $1,766 $8,954 $19,521 $32,769 $45,905 $65,097 $85,331
$130,000
($80,450)
$109,978
Total $114,64 $134,88 Capita $49,550 $45,591 $43,377 $43,216 $45,736 $51,316 $58,504 $69,071 $82,319 $95,455 7 1 l Total Liabili ties $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 and 1 9 9 1 7 0 5 3 Capita l
$159,528
$267,923
30
Net Worth
Process management Text & Cases Joel D. Wisner Linda L. Stanley Financial Management For decision maker Peter Atrill 4th
URL List
http://www.nald.ca/fulltext/business/NILA.pdf http://74.125.77.132/search?q=cache:wV91wpXMQVQJ:www.solutionsetc.com/entrepreneurship/sbdc/worksheets/Business%2520Plan %2520Template.doc+business+plan+cover+page&cd=2&hl=th&ct=clnk&gl=th http://www.microsoft.com/business/smb/thth/issues/starting/businessplan.mspx
http://www.beautyimagentt.com/ http://www.businessplans.org/Market.html http://www.thai-tour.com/Spa-Resort-Thailand.htm http://www.thaispaassociation.com/TSPA/newsletter.php http://www.tnantaspa.com/ http://www.ajarnkan.com/economic_web/na-07.pdf http://www.dinkytown.net/java/BreakEven.html http://www.samunpri.com/spa/ http://www.google.co.th/imgres? imgurl=http://www.dfat.gov.au/dept/annual_reports/06_07/_lib/img/fins/balanc e_sheet_aj.gif&imgrefurl=http://www.dfat.gov.au/dept/annual_reports/06_07/fi nancialsaustjapan/income_statement_01.html&h=709&w=550&sz=29&tbnid=dklBtef mNmbnfM:&tbnh=140&tbnw=109&prev=/images%3Fq%3Dbalance
31 %2Bsheet&hl=th&usg=__lrgP0TiLxXF1mF39HfQPBMLn8mA=&ei=AFheSq6HA4 jt-Aby4fHmAQ&sa=X&oi=image_result&resnum=7&ct=image http://www.engr.sjsu.edu/fayad/current.courses/cmpe133spring07/docs/projects/Sample-Process-1.pdf http://findarticles.com/p/articles/mi_m3072/is_1_219/ai_112654992/ http://www.va-interactive.com/inbusiness/editorial/sales/ibt/sales_fo.html http://ohioline.osu.edu/cd-fact/1153.html http://www.epos-spa.co.uk/ http://www.va-interactive.com/inbusiness/editorial/sales/ibt/sales_fo.html#9
╦╦╦╦╦╦╦╦╦╦╦╦╦
THAI LOTUS SPA COMPANY Red Road Bangkok 10000 Thailand 26/06/2009 Prepared by Shermarn
& Pauline For lotus spa company
2
Foreword
Lotus Spa with a innovation of healing body and mind Through a unique combination of offered services to those who receive our healthcare spa service. Enhancing our own accountability has left us better placed to establish an effective framework for spa service that is independent of government as the dominant provider of healthcare in Thailand and independent of dominance by any single group. We are setting the strategic direction of the organization and this Business Plan in many respects informs and foreshadows the longer-term Strategic Plan that we intend to do and publish in the course of this year (2009). We will take all the key decisions, and will be responsible for overseeing the operational performance healthcare service as a whole, ensuring that the organization delivers to the standards required of it. We look forward to working with our key interest groups across the four areas of Thailand to take forward what is a challenging but achievable set of key aims and objectives. Our Business Plan sets out the key components of a regulatory framework that is capable of adapting to meet the needs of customers and changing healthcare way.
Shermarn , Pauline July 2009
3
BUSINESS PLAN LOTUS SPA
26/06/2009
Supervisor : Shermarn ,Pauline Professional adviser : Mr. Dick Bos Thai Lotus Spa company 2009© Red Road ,Bangkok 10000 Thailand Contact: Customer service center Office Hour 10.00 am – 10.00 PM +66-354-2544 [email protected] www.thailotuspa.com
Cover image Credit: www.thaigoodview.com
4
Contents
Executive summary Ch 1 The company 1.1 History 1.2 Mission statement 1.3 Product and service 1.4 Current Status 1.5 Legal Status and ownership 1.6 Basic Corporation information 1.7 Company structure Ch 2 Industry Analysis 2.1 Industry definition 2.2 Industry size, growth and sales projections 2.3 Industry characteristics 2.4 Industry trends Ch 3 Market Analysis 3.1 Marketing segmentation and target market selection 3.2 Buyer behavior 3.3 Competitor analysis 3.4 Estimation of annual sales and market share Ch 4 Marketing Plan 4.1 Market strategy 4.1.1 Position strategy 4.1.2 Points of differentiation 4.2 Pricing strategy 4.3 Sales process and promotion mix 4.4 Distribution and sales Ch 5 Operations and Product Development Plan 5.1 Operations plan 5.2 Product ( or service ) development plan Ch 6 Financial analysis 6.1 Start up Expenses 6.2 Assumption sheet 6.3 Pro forma financial statement 6.3.1 Opening Day Balance Sheet (beginning of year) 6.3.2 Profit and Loss projection (12 months) 6.3.3 Cash flow (12 months) 6.3.4 Projected balance sheet (end of year) 6.4 Ratio analysis 5 5 5 5 6 6 6 6 7 7 7 8 8 8 8 9 9 10 10 10 10 11 11 12 12 13 14 15 16 16 17 17 18
5 6.5 Break Even Analysis 6.6 Profit Projection (5 years) Recommendation Review Appendix 19 20
Executive Summary
6
Lotus Spa is a new upscale destination in Freeway in Bangkok, Thailand, offering a complete day spa experience. We offer seven ultra-boutique, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles - traditional Thai Massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial Treatment. Lotus Spa has the latest in anti-aging products and techniques but does not offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it's part of a full treatment like Calendula Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities. This business plan has been developed to track progress prior to grand opening and following through with a five-year projection. In addition, this plan has been written to for Spa's successful.
1. The company
1.1 History
The timing is right for starting this new venture. We are patiently searching for six months for the perfect location, one was finally found in January 2009 in the Freeway Red Road in Bangkok Thailand. The demand from the owner's clients, as well as the ambitions of us, and the procurement of highly professional and qualified beauticians and healthy, has made this business one of great potential. Shermarn co-owner with Pauline own the company. We have been working in a famous upscale spa in our Town. We have been creating a large client following through hard work and dedication. Our talented team of beauticians and physicians has what it takes to make this venture an extremely successful one. We expect our growing reputation to lead to new clients and beauticians to support our anticipated growth. To achieve our objectives, we are seeking additional loan financing. This loan will be paid from the cash flow from the business and will be collateralized by the assets of the company, and backed by the character, experience, and personal guarantees of the owners.
1.2 Mission statement
Our mission is to run a profitable business by providing high-end therapeutic massage and beautiful services in a caring, upscale, professional environment. We offer massage in a variety of styles - traditional Thai Massage, Sports Massage, Deep Tissue work, Sports Massage, Hot Stone Massage, Reflexology, and others. Our licensed aestheticians offer the latest in skin treatments, body treatments and anti-aging therapies. Our goal is to tailor the client's experience based on initial interview information, as well as feedback during the treatments, to ensure the client's comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience - using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client's overall spa experience.
1.3 Products and services
7
Lotus Spa offers therapeutic massage services, body treatments, facials and anti-aging treatments. Services are provided by licensed therapists and aestheticians who are independently contracted and paid on a commission basis. The upside of the commissioned employee is that there is very little overhead without sales; employees only make money when the business makes money. We also offer a full retail line that complements the services menu. Products included are high-end cosmetics, creams, candles, and other beauty products. These high-end items tend to retail at a minimum of $20-$25 per item and have 50% mark - up, or higher.
1.4 Current status
Lotus Spa is a new destination offering customers the combination of massage, body treatments, facials and anti-aging treatments. The settings are upscale, beautiful and serene. We cater to both men and women and offer the latest in skin care products and therapies. Red Road Freeway, Bangkok Thailand, where we plan to locate, has a daily traffic count of 10,000 cars. It is also only two blocks from a commuter train stop, and has an upscale hair and nail salon which would complement our services nicely.
1.5 Legal status and ownership
Lotus Spa is a privately held partnership, owned by Ms. Shermarn and Ms. Pauline. In the course of fund raising, we will explore the feasibility of both a partnership, and a limited liability partnership.
1.6 Basic corporate information
After spending several months searching for a spa to purchase, we decided to start a Lotus Spa from the ground up. The bulk of the start-up costs will be invested by us and the remainder will be funded through short-term financing. Details are provided Other Current Assets purchased at start-up are as follows: Massage table equipment - $3,795 (5 complete) Aesthetician Equipment - $2,800 (2 room setup) Decor and Furnishings - $13,000 Envision Software & Equipment - $4,000 Signage - $3,500 Back bar Supplies - $5,000
1.7 Company structure
8
Shermarn Managing director
Pauline HRM director
L None Executive Director
A Finance director
B Marketing director
C IT manager
D Research director
E Accountant
F Purchasing manager
I G Secretary H Sales manager Customer service manger
K Line manager
2. Industry analysis 2.1 Industry definition
Lotus Spa our sole purpose is to provide guests with lifestyle improvements and health enhancement through professionally administered spa services, physical fitness, education, nutritional advice on a residential basis.
2.2 Industry size, growth and sales projections
Nowadays in Thailand we are more concerning about our health and this makes this kind of business very popular recently and it tends to be larger and larger from metropolis to downtown. The Target group is particular in Women because as we know well that they like to pamper themselves to be “Good-looking” without concerning cost According to this, it is rapidly growing the sales could be lower due to many competitions. For Lotus Spa we have placed ours as a medium Spa and Beauty industry.
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Staffs of Spa industry and health care is projected to increase 27 percent through 2014 in Thailand, compared with 14 percent for all industries combined The slowest growing industry segment to 69 percent in the much smaller Spa health care services. About 40,000 establishments Spa care industry; they vary greatly in terms of size, staffing patterns, and organizational structures. About 76 percent of Spa care establishments are offices of physicians, or other health practitioners. Although hospitals constitute only 2 percent of all health care establishments.
From: http://www.industry.go.th/ops/pio/lamphun/Lists/News/Disp.aspx?List=ac4ae0a1-8bae4b99-b985-9fa9ee646282&ID=143 2.3 Industry characteristics
We are part of the retail health and beauty industry that we have served at our Lotus Spa Facility and delivered to local hotels also medical spa focus mainly on massage therapy, facials and Resurfacing
2.4
Industry trends
In the rapidly changing health care industry in Thailand, technological advances have made many new procedures and methods of diagnosis and treatment possible. Spa development plans, such as less invasive surgical techniques, skin grafts, so we are willing to continue to increase the longevity and improve the quality of life of many customers. In addition, advances in information technology continue to improve customers and worker efficiency with devices such as hand-held computers to maintain and track customers who are unaware of us as well as star beyond our competitors and any threat.
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3.1
Market Analysis
Marketing segmentation and target market selection
We are primarily targeting potential clients within our facility’s zone with a household income over $5,000. Our secondary market will include visitors staying in a local hotel. Within Thailand approximately 14% of the population has never tried a massage. We will assume that a conservative 70% of these two categories has tried a massage and would undergo one again, if offered appealing services at the right price. Our market Analysis table thus reflects 70% of the local and visiting population who might be targeted.
3.2
Buyer behavior
Within this task, clients who use spa services fall into four basic groups: 1. Clients pampering themselves Massage Therapy, and facial treatments (We have a contact of professional referral in area) Often also seeing a chiropractor or physical therapist (more often referral from chiropractor) In some case, insurance will pay for short-term therapy only, although clients will normally supplement out-ofpocket Individuals with medium disposable income Sometimes have chronic pain or old injury issues Massage 1 - 4 times a month for relaxation Huge anti-aging and beauty market potential Traffic continues to be a huge problem in Metropolis and our therapies are valuable for this segment of the population Local hotels that do not offer spa services will be able to refer to our local facility or use our out-call services.
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2. Clients who prefer alternative health care Use massage as preventative health care Use other alternative practices - e.g. acupuncture, Chiropractor, Naturopath, Herbalist, etc. Try to have massage as regularly as they can afford - usually once per month Commuters in Metropolis suffer through some of the worst traffic in the country. As the population grows, the traffic worsens and the need for massage therapies increases. Extended hours will capitalize on those who want an appointment on their way home from work.
3. Serious Athletes Injury and workout recovery also preventative. Many serious runners, surfers, bicyclists and college athletes in the local area. Massage for improved performance - great for word-of mouth referrals if they see results.
3.3
Competitor analysis
Customers choose spa services based on proximity to their daily commute, quality and an exceptional experience. With our combined services, we expect to dominate Party Spa market. There is not one direct competitor of this nature within the area where we are intending to locate. The closest competitor is the Leelawadee Spa which is a Hair salon that offers additional, limited, spa services. The Siam Hotel also offers massage treatments, but we will mostly cater to visitors to the area and not the local residential base. Finally, Ravanda Spa, located in Plaza Center is not a traditional day spa but combines a day spa with a female gymnasium. No men are allowed at Ravanda Spa, either. The going rate for massage in Freeway County is $70-$90 per hour which is slightly above most of the other residential areas in Metropolis which can even be as low as $40 per hour in saturated or low-income areas.
3.4
Estimation of annual sales and market share
Market Analysis
Year 1 Potential Customers Within 5 Miles over $25k Other-Visiting Hotel in Area Total Growth 2% 0% 2.91% 284,950 150,000 434,950 288,883 150,000 438,883 292,869 150,000 442,869 296,911 150,000 446,911 337,885 150,000 487,885 Year 2 Year 3 Year 4 Year 5 CAGR 4.35% 0.00% 2.91%
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4 Marketing Plan
4.1 Market strategy
Our strategy is to implement the most aggressive marketing and networking in the community followed by the best services in the business. Our prices are competitive for the area, and our personnel plan, which includes using a pool of skilled, commissioned therapists and aestheticians, will give us a financial advantage.
4.1.1 Position strategy and Points of differentiation
Local Advertising & Seasonal Promotions - Local newspaper advertising, local fliers, grand opening party and promotion for first 30 days. Continue regular advertising and plan for seasonal events like Song Grand Festival, Mother's Day and New Year's. Local Networking - Charities, women's groups, country clubs, wedding planners, and membership with the Metropolis Chamber of Commerce. Health Care Referrals-Prior to opening, work current contacts and create new contacts with health care providers, especially chiropractors. Also, become a Provider with health insurance companies that offer Alternative Care to their members. Most people don't know that massage therapy is usually paid by insurance when billed correctly and when prescribed by a physician. Lotus Spa already has practice management software to handle medically billable massage. When the insurance does not cover the entire amount of a service the client will pay the difference. For that reason, we will not want to participate with any health insurance that require write-off for amounts over the usual and customary fee (which tends to be too low). A list of acceptable insurance company plans will be maintained and those clients will be able to handle massage therapy through their insurance. Any opportunity to convince allopathic physicians to see massage as having long-term healing benefits for their patients will also be taken, since they hold key to having massage paid for as medically necessary. The client will also help drive that with the physicians if they are properly educated. Hotel Referrals - Hotels that do not offer their own spa services will send their guests to our spa or use our out-call spa services. Prior to opening, we will make contacts with managers and concierges at local hotels to ensure they are aware of the services available. Promotions will be offered to professionals in these industries to build relationships. Online Website - our spa will show up on major website in Thailand e.g. Mthai.com, Kapook.com and in the phone directory (Yellow pages). The website will have a full menu of services and eventually have the ability to schedule appointments on-line. The spa software we are using will allow a user to see the schedule and make and appointment without making a phone call. Location traffic - It is imperative that we be located in a high-traffic strip mall that is high-end, modern, and clean. We prefer locating near a complementary business like a nail or hair salon that does not offer any massage or facial treatments.
4.2 Pricing strategy
We define it as several levels strategies follow: Premium Pricing We use a high price where there is uniqueness about the product or service to approach a substantial competitive advantage exists. Such high prices are charge for luxuries such as rooms, beautician courses and delivery service. Penetration Pricing The price charged for services is set artificially low in order to gain market share. Once this is achieved, the price is increased. Economy Pricing This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. We have economy services for, such as hands massage. Price Skimming
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Charge a high price because we have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market. Once other spas were tempted into the market and the services were produced at a lower unit cost. Promotional Pricing Pricing to promote our services is a very common application. There are many promotional pricing including approaches such as Buy One Get One Free.
4.3Sales process and promotion mix
We have at our disposal four major methods of promotion. Taken together these comprise the promotion mix of each method is offered while in the next section a comparison of each method of promotion is presented.
• Advertising – we pay promotions using multimedia deliver the Lotus Spa’s message such as health magazines. While we
have involved one-way communication with mass feedback opportunity for the customer experiencing that the advent of Internet such as Lotus’s website, community profiles (Fackebook,Youtube) that allow customers to provide quick feedback.
• Sales Promotion – we involve the use of special short-term techniques in the form of incentives, to encourage customers
to respond or undertake some activity. For instance, the use of retail coupons with expiration dates requires customers to act while the incentive is still valid.
• Public Relations – we also referred to as publicity, this type of promotion uses third-party sources, and particularly the
news media, to offer a favorable mention of our company or services without direct payment to the publisher of the information.
• Personal Selling – we involve personal contact between company alliance and those who have a role in purchase
decisions (member of a company buying center). Often this occurs face-to-face or via telephone, though newer technologies allow this to occur online via video conferencing or text chat. .
4.4 Distribution and sales
If, as it has been said, the top item which determine success in business is location then a busy location at Plaza center in a thriving residential community represents our top marketing strategy. We are focusing on the sales, marketing and management and delegating the massage and aesthetician therapies to employees--business profitability potential is exponentially maximized over a one or two person operation by a direct care-giver without any marketing, management or sales background. As the owners, we have done extensive market research and visited some of the best spas in Thailand and have taken ideas from the best to offer an upscale, ultra-amenity, spa experience. Once a client experiences the comfortable, high-end level of personalized care that we offer, we are confident that we will have a return client.
5 Operations and Product Development Plan
5.1Operations plan
Lotus Spa Operations Development Plan is designed to provide for upgrading and development of all those function, standards, services, systems, and regulatory activities which will allow safe, timely and economical integration of Lotus Spa into all-weather operations in Spa community. We describe a five-year development program our objectives are to improve our services System so as to enable us to utilize our unique employees’s capabilities. It includes the collection of ingredients treatment (both near and long term) for ensuring full integration into Lotus Spa
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of this rapidly growing segment of aviation. These areas are covered in the plan: (1) Technical Operations; (2) communication Systems Development; (3) Cost Control; (4) Weather Environment; (5) Spa Services Certification Standards; (6) Risk reduction.
5.2 Service development plan
Strategy To raise the profile of Lotus Spa this will help by improving uptake of services and increasing public consideration of customers. This Services Development Plan is intended to serve our strategy and therefore indirectly to increase the Lotus Spa’s effectiveness. In developing a Services Development Plan we have built the following ideas in mind. Sustainability – effective service provision should depend as little as possible upon the individuals annually elected as CEO Officers. Specificity – we are seeking to offer services which will appeal specifically to our clients. Long-term financial returns – we are investing now in order to establish stable and diverse income streams for the future. Plans To implement this strategy we are developing plans in the following: Management If once plan have been agreed we will seek the advice of other relevant authorities in drawing up an operating schedule for the proper management of all our activities. Provision of Services Purpose Significant revenue on those items upon which it does make a profit (e.g. ingredients, Staffs) Nevertheless Lotus Spa provides a number of popular and valuable member services Service Provision This view emphasizes that a range of services is available it’s not just a service material but also service mind. We are friend this redefinition has begun , has led to substantially increased turnover since the start of term (against comparable recent periods). This indicates that service uptake has increased, as well as improving the financial viability of the activity. Coffee Bar Purpose Lotus Spa is looking at ways to increase involvement of workers and university students, to increase uptake of the services it offers and to attempt to make more relationship community. At the same time we are keen to ensure sustainability and to develop systems which will handle increased activity without consuming the time of elected us. In pursuing these aims we would like to consider the possibility of providing a coffee bar during customer’s relaxing. Consultation We would like to seek advice from Health officers. Timescale . We and relevant workers are keen to actively pursue each of the activities described, and wishes to present the plans for their information, for approval, and for any advice which members wish to offer on the content of the plans and how best to take them forward.
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6 Financial analysis
6.1 Start up Expenses
Start-up
Requirements
Start-up Expenses Legal Printing, stationery, bags, grand opening coupons Brochures Construction/Design Insurance Rent Research and Development Advertising $2,500 $3,500 $500 $45,000 $2,000 $17,000 $0 $5,000
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Accountant Linens Other Total Start-up Expenses $950 $4,000 $0 $80,450
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets $35,000 $6,000 $32,095 $0 $73,095
Total Requirements
$153,545
Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required $80,450 $73,095 $153,545
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $38,095 $35,000 $11,455 $46,455 $84,550
Liabilities and Capital
Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities $35,000 $0 $0 $0 $35,000
Capital
Planned Investment Owner Investment from Sale of Home N/A $130,000 $0
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Additional Investment Requirement Total Planned Investment $0 $130,000
Loss at Start-up (Start-up Expenses) Total Capital
($80,450) $49,550
Total Capital and Liabilities
$84,550
Total Funding
$165,000
6.2
Assumption sheet
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. We assume cash payments for all services, except for the 1% of sales projected as insurance reimbursements, with collection days at 90. The collection days are for insurance billings only. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Two of the more important underlying assumptions are: -We assume a strong economy, without major recession. -We assume, of course, that there are no changes to the Medical/insurance Industry, such as the nationalization of health care. General Assumptions
Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 5.65% 28.17% 0 Year 2 2 7.00% 5.65% 28.00% 0 Year 3 3 7.00% 5.65% 28.17% 0 Year 4 4 7.00% 5.65% 28.00% 0 Year 5 5 7.00% 5.65% 28.17% 0
6.3 6.3.1
Cash
Pro forma financial statement Opening Day Balance Sheet (beginning of year)
Assets $30,000 Liabilities and Owners' Equity Liabilities
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Accounts Receivable $30,200 Notes Payable Accounts Payable Total liabilities Tools and equipment $12,841 Capital Stock Retained Earnings Total owners' equity Total $10,000 $20,550 Total $73,059 $30,000 $84,550 Owners' equity $54,000
6.3.2
Profit and Loss projection (12 months)
Because we are paying our service-provider on commission, our variable costs will exceed our fixed costs. This keeps our overhead low, and means we are paying only for hours when they actually provide services. Keeping such a large pool of reliable massage therapists and aestheticians as we are recruiting will keep us from losing business with no-shows, especially since we will schedule our contractors, as much as possible, for full days or half - days, rather than individual appointments. Fixed expenses are the customary: rent, electric, advertising, insurance. There are four main areas of income: massage, aesthetician retail and out call. Massage and aesthetician services are $65 per service minimum, with 55% of that going to the service provider. The basis for the sales projections is a conservative estimate of 7 services per day the first month in business and 53 services per day by the end of the first year. At 53 services per day we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day. On retail services/product, the gross margin is consistently 50% across the board. The retail lines go in conjunction with the spa services as an extension of the spa experience. The more customer’s sales will be driven. These high-end spa services are hard to find items that generate repeat purchases.
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Profit and Loss projection
Year 1 Sales Direct Cost of Sales Massage Therapists' commission Aestheticians' commission Out-call Services commission Total Cost of Sales $823,685 $65,644 $290,307 $70,964 $15,340 $442,254 Year 2 $857,000 $59,925 $302,500 $72,000 $17,550 $451,975 Year 3 $900,000 $73,175 $308,000 $74,000 $19,500 $474,675 Year 4 $946,000 $86,400 $316,250 $74,400 $22,750 $499,800 Year 5 $982,000 $99,575 $319,000 $76,000 $24,050 $518,625
Gross Margin Gross Margin %
$381,431 46.31%
$405,025 47.26%
$425,325 47.26%
$446,200 47.17%
$463,375 47.19%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Advertising Insurance Payroll Taxes Phone Software Support Other $137,510 $7,500 $0 $66,000 $3,000 $3,000 $1,500 $0 $1,500 $0 $6,700 $145,000 $5,000 $50 $66,000 $3,100 $3,000 $700 $0 $1,600 $495 $6,700 $155,000 $5,000 $50 $66,000 $3,200 $3,000 $700 $0 $1,700 $495 $6,700 $160,000 $8,000 $50 $66,000 $3,300 $3,000 $700 $0 $1,800 $495 $6,700 $167,000 $5,000 $50 $66,000 $3,400 $3,000 $700 $0 $1,900 $495 $6,700
Total Operating Expenses
$226,710
$231,645
$241,845
$250,045
$254,245
Profit Before Interest and Taxes
$154,721
$173,380
$183,480
$196,155
$209,130
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EBITDA Interest Expense Taxes Incurred $154,721 $2,132 $42,612 $173,430 $1,568 $48,107 $183,530 $980 $51,404 $196,205 $392 $54,814 $209,180 $49 $58,891
Net Profit Net Profit/Sales
$109,978 13.35%
$123,705 14.43%
$131,096 14.57%
$140,949 14.90%
$150,190 15.29%
6.3.3
Cash flow (12 months)
Based on our conservative sales forecasts, the following Cash Flow table shows Lotus Spa with a consistently positive Cash Flow. After two months, the spa will show a consistent increase in the cash balance. Because the business is a partnership, our draw is obviously the area of cash flow where adjustments can be made if Cash Flow becomes tight.
6.3.4
Projected balance sheet
The only Accounts Receivable carried is any Insurance Billings that are not paid during the month. Although some insurance companies pay promptly, within 10 working days, others take more than 6 weeks to pay. We have set our collection days for this small percentage of non-cash sales at 90 days, to be conservative. The Balance Sheet shows a steady increase in earnings and net worth over the next five years. Pro Forma Balance Sheet
Year 1 Assets Year 2 Year 3 Year 4 Year 5
Current Assets
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Cash Accounts Receivable Inventory Other Current Assets Total Current Assets $213,263 $10,123 $12,441 $32,095 $267,923 $293,531 $10,759 $11,357 $32,095 $347,742 $414,568 $10,357 $13,868 $32,095 $470,888 $547,351 $11,876 $14,577 $32,095 $605,899 $697,823 $11,301 $15,132 $32,095 $756,351
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets $0 $0 $0 $267,923 $2,000 $50 $1,950 $349,692 $4,000 $100 $3,900 $474,788 $4,000 $150 $3,850 $609,749 $4,000 $200 $3,800 $760,151
Liabilities and Capital
Year 1
Year 2
Year 3
Year 4
Year 5
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities $81,795 $26,600 $0 $108,395 $48,260 $18,200 $0 $66,460 $50,660 $9,800 $0 $60,460 $53,072 $1,400 $0 $54,472 $54,683 $0 $0 $54,683
Long-term Liabilities Total Liabilities
$0 $108,395
$0 $66,460
$0 $60,460
$0 $54,472
$0 $54,683
Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital
$130,000 ($80,450) $109,978 $159,528 $267,923
$130,000 $29,528 $123,705 $283,232 $349,692
$130,000 $153,232 $131,096 $414,328 $474,788
$130,000 $284,328 $140,949 $555,277 $609,749
$130,000 $425,277 $150,190 $705,467 $760,151
Net Worth
$159,528
$283,232
$414,328
$555,277
$705,467
6.4
Ratio analysis
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. The ratios for the initial year of growth are, of course, not as favorable as the second year. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7991.0103, Spas, are shown for comparison. Ratio Analysis
Year 1 Sales Growth 0.00% Year 2 4.04% Year 3 5.02% Year 4 5.11% Year 5 Industry Profile 3.81% 3.43%
Percent of Total Assets Accounts Receivable Inventory 3.78% 4.64% 3.08% 3.25% 2.18% 2.92% 1.95% 2.39% 1.49% 1.99% 4.05% 4.35%
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Other Current Assets Total Current Assets Long-term Assets Total Assets 11.98% 100.00% 0.00% 100.00% 9.18% 99.44% 0.56% 100.00% 6.76% 99.18% 0.82% 100.00% 5.26% 99.37% 0.63% 100.00% 4.22% 99.50% 0.50% 100.00% 30.50% 38.90% 61.10% 100.00%
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
40.46% 0.00% 40.46% 59.54%
19.01% 0.00% 19.01% 80.99%
12.73% 0.00% 12.73% 87.27%
8.93% 0.00% 8.93% 91.07%
7.19% 0.00% 7.19% 92.81%
20.63% 25.37% 46.00% 54.00%
Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes 100.00% 46.31% 90.28% 0.00% 18.78% 100.00% 47.26% 94.36% 0.01% 20.23% 100.00% 47.26% 90.99% 0.01% 20.39% 100.00% 47.17% 0.00% 0.01% 20.74% 100.00% 47.19% 0.00% 0.01% 21.30% 100.00% 100.00% 69.59% 2.76% 4.07%
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets 2.47 2.36 40.46% 95.65% 56.95% 5.23 5.06 19.01% 60.66% 49.13% 7.79 7.56 12.73% 44.05% 38.44% 11.12 10.86 8.93% 35.25% 32.11% 13.83 13.55 7.19% 29.64% 27.51% 1.17 0.82 58.83% 4.43% 10.76%
Additional Ratios Net Profit Margin Return on Equity
Year 1 13.35% 68.94%
Year 2 14.43% 43.68%
Year 3 14.57% 31.64%
Year 4 14.90% 25.38%
Year 5 15.29% 21.29% n.a n.a
Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover 2.39 77 10.15 7.12 27 3.07 2.39 148 5.04 12.17 40 2.45 2.39 156 5.80 12.17 29 1.90 2.39 143 6.07 12.17 29 1.55 2.39 157 6.70 12.17 30 1.29 n.a n.a n.a n.a n.a n.a
Debt Ratios Debt to Net Worth Current Liability to Liability 0.68 1.00 0.23 1.00 0.15 1.00 0.10 1.00 0.08 1.00 n.a n.a
Liquidity Ratios
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Net Working Capital Interest Coverage $159,528 72.59 $281,282 110.57 $410,428 187.22 $551,427 500.40 $701,667 4,267.96 n.a n.a
Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.33 40% 2.26 5.16 0.00 0.41 19% 4.90 3.03 0.00 0.53 13% 7.39 2.17 0.00 0.64 9% 10.64 1.70 0.00 0.77 7% 13.35 1.39 0.00 n.a n.a n.a n.a n.a
6.5
Break Even Analysis
The break-even analysis table shows what we need to make in sales to meet costs. Our variable costs include both the direct costs shown in the Sales Forecast table, for linens, ingredients, equipment, but also include the commissions paid to contracted massage therapists and aestheticians. We should surpass the break-even point by month four of operations.
Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
$31,022 39% $18,893
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6.6 Profit Projection (5 years)
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Conclusion and Recommendations
Literature review
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Appendices
Sales Forecast Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 Sales Massage Therapy Facials and AntiAging Treatments Outcall Services Retail Total Sales 0% $9,000 $14,105 $20,150 $29,250 $40,300 $42,900 $50,375 $56,420 $54,600 $64,480 $68,250 $78,000 0% $3,600 $6,045 $8,060 $9,750 $12,090 $13,650 $16,120 $18,135 $18,200 $22,165 $23,400 $26,195 0% $400 $800 $1,200 $1,600 $1,600 $1,760 $2,080 $2,400 $2,560 $2,800 $3,200 $3,200 Month 10 Month Month 12 11
0% $1,240 $2,480 $3,100 $3,600 $4,650 $6,000 $6,975 $7,750 $9,800 $15,500 $16,500 $17,250 $14,240 $23,430 $32,510 $44,200 $58,640 $64,310 $75,550 $84,705 $85,160 $104,945 $111,350 $124,645
Direct Cost of Sales Linens and Cleaning Oils & Lotions Cost of Retail products / 50% of Sales Subtotal Direct Cost of Sales Personnel Plan 1% 2% 50%
Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 $65 $260 $105 $419 $147 $588 $203 $270 $292 $343 $385 $377
Month 10 $447 $1,789 $7,750
Month Month 12 11 $474 $1,897 $8,250 $537 $2,148 $8,625
$812 $1,080 $1,166 $1,372 $1,539 $1,507
$620 $1,240 $1,550 $1,800 $2,325 $3,000 $3,488 $3,875 $4,900
$945 $1,764 $2,285 $2,815 $3,675 $4,458 $5,202 $5,799 $6,784
$9,986 $10,621 $11,310
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Owner Draw Front Desk Total People 0% $3,750 $5,000 $6,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000 $11,000 $12,500 $12,500 0% $0 $1,500 $1,820 $1,820 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 $3,640 1 2 2 2 3 3 3 3 3 3 3 3
Total Payroll
$3,750 $6,500 $7,820 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140
General Assumptions Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month 10 11 12
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Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12 Sales Direct Cost of Sales Massage Therapists' commission Aestheticians' commission Out-call Services commission Total Cost of Sales 55% 40% 65% $14,240 $23,430 $32,510 $44,200 $58,640 $64,310 $75,550 $84,705 $85,160 $104,945 $111,350 $124,645 $945 $4,950 $1,440 $260 $1,764 $2,285 $2,815 $3,675 $4,458 $5,202 $5,799 $6,784 $9,986 $10,621 $11,310
1 7.00% 5.65%
2 7.00% 5.65%
3 7.00% 5.65%
4 7.00% 5.65%
5 7.00% 5.65%
6 7.00% 5.65%
7 7.00% 5.65%
8 7.00% 5.65%
9 7.00% 5.65%
10 7.00% 5.65%
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12
7.00% 7.00% 5.65% 5.65%
30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 0 0 0 0 0 0 0 0 0 0 0 0
$7,758 $11,083 $16,088 $22,165 $23,595 $27,706 $31,031 $30,030 $35,464 $37,538 $42,900 $2,418 $520 $3,224 $780 $3,900 $1,040 $4,836 $1,040 $5,460 $1,144 $6,448 $1,352 $7,254 $1,560 $7,280 $1,664 $8,866 $1,820 $9,360 $10,478 $2,080 $2,080
$7,595 $12,460 $17,372 $23,843 $31,716 $34,657 $40,708 $45,644 $45,758 $56,136 $59,599 $66,768
Gross Margin Gross Margin %
$6,645 $10,971 $15,138 $20,358 $26,924 $29,653 $34,842 $39,061 $39,402 $48,809 $51,751 $57,877 46.66% 46.82% 46.56% 46.06% 45.91% 46.11% 46.12% 46.11% 46.27% 46.51% 46.48% 46.43%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Advertising Insurance Payroll Taxes Phone Software Support Other 15% 20% $3,750 $2,000 $0 $5,500 $250 $250 $125 $0 $125 $0 $100 $6,500 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $7,820 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600 $500 $0 $5,500 $250 $250 $125 $0 $125 $0 $600
Total Operating Expenses
$12,100 $13,850 $15,170 $16,670 $18,990 $19,490 $19,990 $20,490 $20,990 $21,990 $23,490 $23,490
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
($5,455) ($2,880) ($5,455) ($2,880) $200 ($1,697) $196 ($861)
($32) ($32) $192 ($63)
$3,688 $3,688 $188 $980
$7,934 $10,163 $14,852 $18,571 $18,412 $26,819 $28,261 $34,387 $7,934 $10,163 $14,852 $18,571 $18,412 $26,819 $28,261 $34,387 $184 $2,170 $180 $2,795 $176 $4,109 $172 $5,152 $167 $5,108 $163 $7,464 $159 $7,869 $155 $9,585
27
Net Profit Net Profit/Sales ($3,959) ($2,214) -27.80% -9.45% ($161) -0.50% $2,520 5.70% $5,580 $7,188 $10,567 $13,248 $13,136 $19,192 $20,233 $24,647 9.52% 11.18% 13.99% 15.64% 15.43% 18.29% 18.17% 19.77%
Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12 Cash Received
Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations $14,098 $22,961 $31,535 $42,874 $56,881 $62,381 $73,284 $82,164 $82,605 $101,797 $108,010 $120,906 $0 $0 $5 $153 $485 $987 $1,340 $1,765 $1,941 $2,276 $2,542 $2,575
$14,098 $22,961 $31,539 $43,027 $57,366 $63,368 $74,624 $83,929 $84,546 $104,072 $110,551 $123,480
Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$14,098 $22,961 $31,539 $43,027 $57,366 $63,368 $74,624 $83,929 $84,546 $104,072 $110,551 $123,480
Expenditures
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9Month 10Month 11 Month 12
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations $3,750 $6,500 $7,820 $9,320 $11,640 $12,140 $12,640 $13,140 $13,640 $14,640 $16,140 $16,140 $450 $13,633 $17,604 $24,369 $33,257 $42,481 $46,087 $53,355 $58,990 $59,973 $74,670 $75,973 $4,200 $20,133 $25,424 $33,689 $44,897 $54,621 $58,727 $66,495 $72,630 $74,613 $90,810 $92,113
Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700 $0 $700
28
Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0
$4,900 $20,833 $26,124 $34,389 $45,597 $55,321 $59,427 $67,195 $73,330 $75,313 $91,510 $92,813
Net Cash Flow Cash Balance Pro Forma Balance Sheet
$9,197 $2,129 $5,416 $8,638 $11,769 $8,046 $15,197 $16,733 $11,215 $28,759 $19,041 $30,667 $55,652 $57,781 $63,197 $71,835 $83,604 $91,651 $106,847 $123,581 $134,796 $163,555 $182,596 $213,263
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Starting Assets Balance s
Month Month 10 11
Month 12
Curre nt Assets Cash $46,455 $55,652 $57,781 $63,197 $71,835 $83,604 $91,651 Accou nts Recei vable $106,84 $123,58 $134,79 $163,55 $182,59 7 1 6 5 6 $213,263
$0
$142
$611 $1,582 $2,754 $4,028 $4,970 $5,896 $6,673 $7,287 $8,160 $8,958
$10,123
Invent $6,000 $5,055 $3,291 $2,514 $3,097 $4,042 $4,904 $5,722 $6,379 $7,462 $10,985 $11,683 ory Other Curre $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 $32,095 nt Assets Total Curre $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 nt 1 9 9 1 7 0 5 3 Assets
$12,441
$32,095
$267,923
Longterm Assets Longterm Assets Accu mulat ed Depre ciatio n Total Longterm Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
29
Total $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 Assets 1 9 9 1 7 0 5 3 $267,923
Liabili ties and Capita l
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month Month 10 11
Month 12
Curre nt Liabili ties Accou nts Payab le
$0 $13,053 $16,801 $23,271 $31,845 $40,953 $44,315 $51,390 $57,008 $57,485 $72,148 $73,153
$81,795
Curre nt $35,000 $34,300 $33,600 $32,900 $32,200 $31,500 $30,800 $30,100 $29,400 $28,700 $28,000 $27,300 Borro wing Other Curre nt Liabili ties
$26,600
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Subtot al Curre $100,14 $100,45 $35,000 $47,353 $50,401 $56,171 $64,045 $72,453 $75,115 $81,490 $86,408 $86,185 nt 8 3 Liabili ties
$108,395
Longterm Liabili ties
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total $100,14 $100,45 Liabili $35,000 $47,353 $50,401 $56,171 $64,045 $72,453 $75,115 $81,490 $86,408 $86,185 8 3 ties
$108,395
Paidin $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 $130,00 Capita 0 0 0 0 0 0 0 0 0 0 0 0 l Retain ed ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 ($80,45 Earnin 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) gs Earnin gs $0 ($3,959) ($6,173) ($6,334) ($3,814) $1,766 $8,954 $19,521 $32,769 $45,905 $65,097 $85,331
$130,000
($80,450)
$109,978
Total $114,64 $134,88 Capita $49,550 $45,591 $43,377 $43,216 $45,736 $51,316 $58,504 $69,071 $82,319 $95,455 7 1 l Total Liabili ties $109,78 $123,76 $133,61 $150,56 $168,72 $181,64 $214,79 $235,33 $84,550 $92,945 $93,778 $99,387 and 1 9 9 1 7 0 5 3 Capita l
$159,528
$267,923
30
Net Worth
Process management Text & Cases Joel D. Wisner Linda L. Stanley Financial Management For decision maker Peter Atrill 4th
URL List
http://www.nald.ca/fulltext/business/NILA.pdf http://74.125.77.132/search?q=cache:wV91wpXMQVQJ:www.solutionsetc.com/entrepreneurship/sbdc/worksheets/Business%2520Plan %2520Template.doc+business+plan+cover+page&cd=2&hl=th&ct=clnk&gl=th http://www.microsoft.com/business/smb/thth/issues/starting/businessplan.mspx
http://www.beautyimagentt.com/ http://www.businessplans.org/Market.html http://www.thai-tour.com/Spa-Resort-Thailand.htm http://www.thaispaassociation.com/TSPA/newsletter.php http://www.tnantaspa.com/ http://www.ajarnkan.com/economic_web/na-07.pdf http://www.dinkytown.net/java/BreakEven.html http://www.samunpri.com/spa/ http://www.google.co.th/imgres? imgurl=http://www.dfat.gov.au/dept/annual_reports/06_07/_lib/img/fins/balanc e_sheet_aj.gif&imgrefurl=http://www.dfat.gov.au/dept/annual_reports/06_07/fi nancialsaustjapan/income_statement_01.html&h=709&w=550&sz=29&tbnid=dklBtef mNmbnfM:&tbnh=140&tbnw=109&prev=/images%3Fq%3Dbalance
31 %2Bsheet&hl=th&usg=__lrgP0TiLxXF1mF39HfQPBMLn8mA=&ei=AFheSq6HA4 jt-Aby4fHmAQ&sa=X&oi=image_result&resnum=7&ct=image http://www.engr.sjsu.edu/fayad/current.courses/cmpe133spring07/docs/projects/Sample-Process-1.pdf http://findarticles.com/p/articles/mi_m3072/is_1_219/ai_112654992/ http://www.va-interactive.com/inbusiness/editorial/sales/ibt/sales_fo.html http://ohioline.osu.edu/cd-fact/1153.html http://www.epos-spa.co.uk/ http://www.va-interactive.com/inbusiness/editorial/sales/ibt/sales_fo.html#9
