Business Plan for H&T Massage Therapy

This business plan outlines the objectives, goals, and strategies for H&T Massage Therapy, a massage business targeting long-hour working people and older adults in Sydney. The plan includes market analysis, target market segmentation, competition analysis, pricing strategy, promotion plan, and more. The business aims to differentiate itself through its ambience, service, and product mix, and plans to expand to other locations in the future.

Business plan
1

Table of Contents
The Business Idea, objectives and goals....................................................................................4
1.0 Market analysis....................................................................................................................5
1.1 Target market size & segments........................................................................................5
1.2 Market trend.....................................................................................................................7
1.3 Life cycle/seasonality.......................................................................................................8
1.4 Target market characteristics/customer profile................................................................9
1.5 Competition....................................................................................................................10
1.6 Competitive advantage...................................................................................................11
1.7 Location and/or distribution methods............................................................................11
1.8 Product mix....................................................................................................................11
1.9 Pricing............................................................................................................................12
1.10 Promotion.....................................................................................................................12
1.11 Forward contracts/letter of interest..............................................................................13
1.12 Preliminary sales projections.......................................................................................13
1.13 Future business opportunities.......................................................................................13
2. Business Operations &Resources........................................................................................13
2.4 Location and type of business premises.........................................................................13
2.5 Distribution channels.....................................................................................................13
2.7 Staffing plan...................................................................................................................14
2.12 Technical expertise required........................................................................................15
2.13 Management expertise required...................................................................................15
2.14 Professional advisers....................................................................................................15
3. Financial Viability................................................................................................................15
3.1 Statement of financial position & needs........................................................................15
3.2.1 To cover operating costs and break-even....................................................................21
2

3.2.2 To cover desired net profit..........................................................................................21
3.2.3 At the businesses full potential or practical productive capacity................................24
3.3 Financial viability of the business idea..........................................................................24
4. Capital Requirements...........................................................................................................26
4.1 Capital requirements for business start-up.....................................................................26
4.2 Equity capital and details of business ownership...........................................................27
4.3 Loan capital....................................................................................................................28
4.4 Acquiring capital............................................................................................................28
5. Conclusion & Recommendations.........................................................................................29
5.1 Conclusion......................................................................................................................29
5.2 Recommendations..........................................................................................................29
Reference..................................................................................................................................31
3

H&T Massage Therapy
The Business Idea, objectives and goals
I’m going to start up a massage business in Prospect main road and I’m looking for any
available space close to the shopping area. My client that I aim to service will focus more on
the people working long period of day and the old people around 50 to 80 of age. My clinic
will be a big shop with all separate rooms inside to make my clients feel the most
comfortable as they expected.
Business objective
(long term directions)
Goals to achieving the objective (short term directions)
The things you need to do to reach your objective
1 In 2 years gain
double the clients
of first year (10 to
15 clients a day)
Advertising my business on new papers, social media such as
create Facebook and follow local business and healthcare
professionals, develop websites, yellow page, etc. Leave
business cards in gym, health care professional, psychology
clinic, medical clinic, health food store, nail & hair salon, etc.)
Giving out promotion such as 20% for the first week if share
and like the Facebook page; or half off for the first-time
customer.
Be a true professional therapy while treating clients, treating
them with warmth and respect, and to stay in touch.
2. Increase profit by
30% in 3 months
Gain more customers. Increase the price
Doing retail by selling massage oil, lotions, scrubs, hot packs,
massage tools, massage books.
Increase staff members.
3. Open up another
business in a
second location
after 3 years
Target new customer. Add and create new products to retail
market to make more profit
Open a private account to start saving money for the second
business
Find a good location for the second business that is easy to
grow and expand.
Get idea from current clients where I should open my next
business that could be more convenient for them or their
4

family, friends.
1.0 Market analysis
1.1 Target market size & segments
The current business plan is about the message business. Location wise the business is
expected to open at the shopping area. The following business plan would be based on the
specific objectives and the subsequent goal to achieve those objectives is also explained. This
chosen location would be shopping area or Sydney. The segmentation of the business is done
through demographic and geographic segmentation process. The geographic segmentation of
Sydney city is targeted in this business plan. In the demographic segmentation the targeted
options are the older age of 50 to 80 years of age group people. Then the occupation wise
demographic segment is also targeted. Here the long hour working population this is on
average 25 to 50 years of age group people are also targeted. Population wise the diagram
below shows that the long hour working population has the highest potential customer. The
population trend here is showing the aging trend. In next 10 years the retirement age
population would increase by 30.9% whereas working age population would increase by
26.5% (forecast.id, 2018).
5

[Source: forecast.id, 2018]
The size of the market can be understood from the household income. The diagram below
shows that the higher income group numbers of housefuls are greater than the national
average. This is promising sign. The weekly household earning of more than $2500 or greater
have close to 28.3% of total number (Profile.id, 2018). Therefore a sizable population having
higher spending capacity is appropriate for the current business to target.
6

[Source: Profile.id, 2018]
1.2 Market trend
Throughout Australia the wellness index is improving as shown in the below diagram. People
are less indulging unhealthy activity like the drinking or smoking, having less medical
condition, eating better and engaging with healthy business activity. The health and well spa
industry in Australia has close to $438m as revenue with an annual growth rate of 3.3% in
last five years (ibisworld, 2018). These last five years time period the completion in the
market increased and that impacted profitability slightly. The main demand driving factors
here are the busier lifestyle and growth in the discretionary income. In this industry expense
on the labour is highly and capital intensity is low (ibisworld, 2018). But is last five years the
upward trend in the capital expenditure is the reason for higher investment by the owners on
the service delivery premises.
7

[Source: roymorgan, 2015]
1.3 Life cycle/seasonality
There is less scope for seasonality factor in the massage business. Still the sales drop in the
winter time. But there are great health benefits that the customer can have during winter time
massage treatment. On the other hand business lifecycle wise there would be different
considerations. At the introduction stage of this business the early marketing effort would be
essential to win first set of customers. Here the discounts or the high quality service would
matter most. At the next stage of growth the strong customer base development would a high
priority. as strong business competency proper skilled massage service provider team
development would be important. During this time strong customer loyality program would
be developed. Apart from that word of mouth publicity and referral incentive skills would
also be important for the growth. During this growth stage the business wuld open in other
prospective locations. During the maturity stage with expected expense pattern the business
8

would hold customer count and income. During this time strong customer relationship
management approach would be followed. The last stage of decline would aim at two
strategies. One option would be winding up the business but restricting the business to re-
enter the growth strategy would be important here.
1.4 Target market characteristics/customer profile
The working age population in Australia are working hard. The trend below shows that
people at higher age are more likely to engage in the overtime working. On the other hand
men more than women are more engaged with the overtime working (Bagshaw and Hanna,
2017). These people need more wellness services to reduce their stress. Therefore current
business have great prospect because of this working culture. Another significant trend is the
increment of women in the working class population. 34% level of 1996 increased to 56% in
current time in terms of working women population (Bagshaw and Hanna, 2017). Therefore
female would be another significant segment for the current business. Another significant
trend of the working population is the increase in the retirement age of the people. It has been
seen that around 45 years aged people in Australia now plans to work up to 65 rather than up
to age of 63 years from 10 years ago. At current status around 13% people are engaged in
working who are 65 or more years old (heraldsun, 2016). Therefore the business can have a
customer at a early age of a working class people and can expect to have a long term
relationship to have long term customer value.
9

[Source: Bagshaw and Hanna, 2017]
1.5 Competition
There are many competitor businesses in the Sydney locality. Some of the strong contenders
and their services are discussed below. The message business provides different experiences
to their customers. These experiences are delivered in the form of massage therapy brought
from different part of the world. These are the special competency, differentiation point and
competitive advantage of the businesses in the market.
Fleur de Lys- in their massage service they provide the experience of Maroccan Hammam.
One of their special services is the romantic couple spa (fleurdelysmedispa, 2018).
Lee Massage & Acupuncture- they provide massage service with the acupuncture therapy to
differentiate their services. The services are the remedial massage, feet reflexology,
acupuncture service and so on (leemassage, 2018). The organisation has proper customer
locality program in the form of gift voucher.
10

Grand royal Thai massage- they provide the massage of Thai origin. Different services are
the ancient Thai and relaxing Thai type of massages, oil deep muscle massage, and
reflexology foot and so on (grandroyalthaimassage, 2018). the organisation also provides
sales discounts to their customer and in recent time they have invested on the premises to
attract more customer.
1.6 Competitive advantage
The main completive advantage of the current business is the ambience and service to the
customer. The current research for the business shows that the investment in the premises of
the massage shop is the approach of value addition. This business is also having that
approach. There would be separate large rooms with specialised massage therapist to deliver
the best satisfaction to the customers. There would be chosen to the customer in terms of
massage types. The competitor’s analysis shows that the other business does not provide any
choice to the customer in terms of type of massages but provide choice in their service live.
In the current business there would horizontal and vertical extension of different services for
the customer to choose from (Teece, 2010). These service type and premise facility and
ambience would be main competitive advantage for the business.
1.7 Location and/or distribution methods
The distribution channel is simple for the business. At the initial stage the business would
operate from one location in a busy shopping area of Sydney. The distribution channel
extension would be done at the end of the year 3 where the business would open in another
location based on the demand (Hollensen, 2010).
1.8 Product mix
In the horizontal product line there would be Swedish, Thai, Maroccan Hammam and
Acupuncture based Massage Therapy. Under all of the different types of massage therapy
some standardise service would be developed (Wilson et al., 2012). These standardise
services are Hot Stone, Aromatherapy, Deep Tissue, Shiatsu, Pregnancy, Reflexology
massage therapy.
11

1.9 Pricing
The current business is providing lot of options to the customer with high quality of facility
and ambience of the premise. This is differentiation approach of business strategy. In
accordance to that the pricing policy is developed (Wilson et al., 2012). In this business
quality leadership pricing policy would be followed where the services would be charged at
higher the market average price to the customer at the beginning time of business operation
and price would increase as the business grows. But the price would not stop to average
market price as the value based pricing policy is followed where the business would provide
higher customer service and satisfaction compared to the competitor’s service (Wilson et al.,
2012). With growing business the quality of service would continuously increases in the
operation. This would higher price demanding factor for the current business.
1.10 Promotion
The business marketing promotion would follow the integrated approach marketing
communication. From the communicational mix the direct advertising, social media
advertising, direct selling, public relation and the sales promotion. As public relation process
the business would try to have article in the local newspaper. As per of the social media
strategy dedicated Facebook page and service video in YouTube would be developed. A
dedicated business website with high level of mobile device compatibility along with linking
with the social media is developed (Fill and Turnbull, 2016). A regular monitoring of the
website traffic flow and social media impression would be done. The direct selling approach
would be followed to promote the business by visiting the local gym, psychology clinic, and
professional health care serice provider, store of health food, hair and nail salon and so on.
The promotion would be done in the printed and online yellow page. The sales promotion
would work through the social media approach where up to 20% discounts would be
provided for Facebook page like or sharing the business links and a 50% discount would be
given for the new customers.
12

1.11 Forward contracts/letter of interest
The forward contract would be done with the supplier of the business to have the supplier at
an affordable rate (Schwenzer et al., 2012). These items would be hot pack, scrubs, lotions,
oil, massage book, massage tool and so on.
1.12 Preliminary sales projections
The sales projection of the current business for the first year is provided in the appendices 3.
The sales volume and price has continuously improved month after month. The market
survey, marketing promotional activity is the main base of the projection of sales volume in
the business. In the current marketing promotion the digital media promotion is followed
(Zott et al., 2011). Here the social and online media analytics has been used to understand the
demand pattern also.
1.13 Future business opportunities
The future business opportunity is the new business location opening based on the demanded
location.
2. Business Operations &Resources
2.4 Location and type of business premises
The business would operate from a busy shopping location of Sydney city. The business
premises would be well developed to provide best facilities to the customers (Storey, 2016).
2.5 Distribution channels
The current business would operate from one location and after three year another location
would be added in the distribution channel.
13

2.7 Staffing plan
Position name Number of staff
Office manager 1
Receptionist 2
Financial coordinator 1
Bookkeeper 3
Supervising 1
Specialist 3
Therapist 10
Cleaning staff 5
Marketing 3
Position Roles and responsibility
Owner Business operation, human resource management
Office manager Managing and efficiently running the office.
Receptionist Receiving the clients
Financial coordinator Maintaining business financials and providing
insights to the owner for decision making
Bookkeeper Recoding financial information
Supervising Supervising client services.
Specialist Guiding therapist and also provide special
treatment to the client when needed.
Therapist Providing satisfactory massage service
14

Cleaning staff Maintaining premise and keeping it clean
Marketing Promoting the business
2.12 Technical expertise required
In this technical expertise part the main advantage is the own experience in the massage
therapy. In the current business model there are different type of massage therapy from
different region would be offered to the customers. Therefore a variety skill level is required
among the massage therapist. Apart from that other technical, marketing support, front desk
support staffs needs to have proper skill level to be effective (Burns and Dewhurst, 2016).
2.13 Management expertise required
Current business is depending on high differentiation strategy. Considering this the operation
needs to be managed through proper approach. This is a small business and because of that a
flat structure of the organisation would be maintained. This approach would provide greater
control over the business and be helpful for the better quality delivery t the customers.
Considering all of these the business would require higher operational knowledge, better
business finance expertise (Burns and Dewhurst, 2016). On the other hand the marketing
support would be another important aspect that the business needs to develop prior starting
the business to improve its survival and growth prospect.
2.14 Professional advisers
The business needs advisor for the taxation and funding assistance. The legal assistance
would also be gained from the external advisor.
3. Financial Viability
3.1 Statement of financial position & needs
Personal financial living needs:
Personal net worth:
15

The business owner is all set to open H&T Massage Therapy centre in a rented commercial
complex close to the shopping area and the business is looking for offering massage service
to the persons who are in the age group of 50-80 years and are looking for a good relaxation
option.
Here the business owner is assumed to be wealthy enough and has financed the part of the
total start-up funding requirements of the business which is AUS $664275 .The rest of the
start-up fund requirement has been fulfilled by taking a bank loan of AUS$ 299 993.
The owner has also invested a seed capital of AUS $ 350,000 as liquid cash (collected
additionally from friends and family.) in the business so that the business can operate with a
strong financial base.
So the sum total of the net worth of the owner that is invested in the business is AUS
$664275.
Personal Drawings:
The business owner has invested so much in the business and that is why he has decided to
withdraw his total persona living needs from the profit to be earned from the business. The
amount of total personal living needs of the owner is AUS $20000 and the owner is drawing
this amount from profit. The personal living needs of the owner include the items vehicle fuel
expense, fooding, clothing entertainment, medical Expenses, Utility bills.
Capital requirements to set up the business:
The capital or fund needed to start-up the business includes the items of “Start Up Expenses
($179,500)”, “Start-up Assets ($331,775)”,” Capital Equipment and Supplies($153,000)” all
that are being funded partially by taking the bank loan and partially by the owners equity.
Owners desired net profit:
The business has been expected to earn a positive profit of AUS $ 26184 from the 12th month
of the business.
Business expenses:
The business is expected to incur an operating expense which is accountings 39 %( AUS$
41388) of the total gross profit earned from the sales mix (AUS$67,572) in the 12th month of
16

the projection period and after that the operating expense of the business is growing at an
average rate of 17% on a monthly basis. The growth of the operating expense has occurred
for making the required expansion of the business.
Break even calculation:
The business is expected to breakeven in the 9th month where from the business is expected
to earn the positive profit
Sales mix:
The business is selling the massage service and the retail sales of massage making therapeutic
service for earning revenue and these two are the two main sources of revenue earnings for
the business.
Profit and loss statement:
The profit and loss statement defines that the business on an average has earned a gross profit
margin of 91.43% but has started to earn a positive net profit margin from the 10th month
when from the business has break even. From the 10th month the business has earned an
average profit of 8%.
Cash flow forecast:
The cash flow statement demonstrates that the owner has invested a liquid cash of
AUS$350000 in the business and this investment has helped the business to earn positive
closing cash and the end of each month and the business has managed to earn strong positive
closing cash balances at the end of each month.
Significance of the financial figures being calculated:
The financial figures that are being calculated or projected in the different financial
statements must be achieved otherwise it will be difficult to run the business beyond the
projection period.
Contingency plan:
The business owner is thinking of a contingency plan-A, and plan-B in case the business
appears as a failure.
17

Contingency plan-A: Apply for additional bank loan and to object some fresh cash in the
business so that the business can be revived within six month.
Contingency plan-B:The business will declare itself as bankrupt and the business will be then
liquidated by appointing a liquidator as per the local rules and regulations.
Finance Item Statement of
financial
position/need
Identify the $
amount
Comments on the amount you have identified
and state its significance to you. If it is not
achieved what does it mean for you and what is
your contingency plan if it cannot be achieved?
Personal drawings monthly20000( ) The business owner has invested so much in the
business and that is why he has decided to
withdraw his total persona living needs from the
profit to be earned from the business. The
amount of total personal living needs of the
owner is AUS $20000 and the owner is drawing
this amount from profit. The personal living
needs of the owner include the items vehicle fuel
expense, fooding, clothing entertainment,
medical Expenses, Utility bills.
18

Finance Item Statement of
financial
position/need
Identify the $
amount
Comments on the amount you have identified
and state its significance to you. If it is not
achieved what does it mean for you and what is
your contingency plan if it cannot be achieved?
Personal net worth AUS $664275 . The business owner is all set to open H&T
Massage Therapy centre in a rented commercial
complex close to the shopping area and the
business is looking for offering massage service
to the persons who are in the age group of 50-80
years and are looking for a good relaxation
option.
Here the business owner is assumed to be
wealthy enough and has financed the part of
the total start-up funding requirements of the
business which is AUS $664275 .The rest of the
start-up fund requirement has been fulfilled by
taking a bank loan of AUS$ 299 993.
.
The owner has also invested a seed capital of
AUS $ 350000 as liquid cash (collected
additionally from friends and family.) in the
business so that the business can operate with a
strong financial base.
So the sum total of the net worth of the owner
that is invested in the business is $498,565
Capital requirements to
set up the business
$664,275 The capital or fund needed to start-up the
business includes the items of “Start Up
Expenses ($179,500)”, “Start-up Assets
($331,775)”,” Capital Equipment and
Supplies($153,000)” all that are being funded
partially by taking the bank loan and partially by
the owners equity.
19

Finance Item Statement of
financial
position/need
Identify the $
amount
Comments on the amount you have identified
and state its significance to you. If it is not
achieved what does it mean for you and what is
your contingency plan if it cannot be achieved?
Desired net profit AUS $26184 on 12
th month
The business has been expected to earn a
positive profit of AUS $26184 from the 12th
month of the business and in the 9th month the
business is expected to see a 343% growth in the
business.
Business expenses AUS$ 41388 at 12th
month
The business is expected to incur an operating
expense which is accountings 97 %( AUS$
24516) of the total income earned from the sales
mix (AUS$25200) in the first month of the
projection period and after that the operating
expense of the business is growing at an average
rate of 17% on a monthly basis. The growth of
the operating expense has occurred for making
the required expansion of the business.
Charge out rate / Mark-
up % (describe the
approach you will use
to charge for your
goods/services)
$ 61 Here a massage therapy session per customer
takes 1.5 hour and in a day on an average around
454 customers are expected to attend the
parlour. So the daily labour hours being spent is
around 680 hours .The daily expense of 41,388
has been divided usage of hours which gives a
charge out rate of $ 61
20

Finance Item Statement of
financial
position/need
Identify the $
amount
Comments on the amount you have identified
and state its significance to you. If it is not
achieved what does it mean for you and what is
your contingency plan if it cannot be achieved?
Cash flow position 2,725,425 (Aus$
cash flow of the 12th
month )
The cash flow statement demonstrates that the
owner has invested a liquid cash of
AUS$350000 in the business and this
investment has helped the business to earn
positive closing cash and the end of each month
and the business has managed to earn strong
positive closing cash balances at the end of each
month.
.
3.2.1 To cover operating costs and break-even
Break even sales of $45,268 has to be attained to achieve the breakeven and to cover the
operating expense of business.
0
10000
20000
30000
40000
50000
60000
70000
80000
et rojfi tN P
otal costT
$45268
In case the business fails to attain the break-even sales then the following contingency plans
can be applied.
21
Breakeven

Contingency plan-A: Apply for additional bank loan and to object some fresh cash in the
business so that the business can be revived within six month (Tsorakidis et al., 2011).
Contingency plan- improve marketing plan for improving sales volume.
3.2.2 To cover desired net profit
Projected Profit & Loss Statement
for
2019
2019-July-2020 June
Sales 100% $73,906
Less Cost of Sales 9% $6,335
Gross Profit 91% $67,572
Less Overhead Expenses
Pay Roll 7,918.54
Marketing & promotion 13,514.30
Advertisement Expenses 6,757.15
Rent 6,334.83
office utilities 2,639.51
repair and maintenance 2,639.51
Miscellaneous 1,583.71
-
-
-
-
-
-
-
-
22

-
-
-
-
-
-
-
-
-
-
Total expenses $41,388
Net Profit (Loss) $26,184
The object of the business was to have close to 10 to 15 customers every day in the business.
As per that desired objective the initial customer volume is estimated. In the business
objective it is also stated that the business would aim to double the number of customer in
two years. Considering that the growth in customer number is estimated from one month to
another month (Fridson and Alvarez, 2011). The sales figure that came up after these
projections is $73906. This sales figure through gradual increase would breakeven at 10th
month and be able to register a gross profit margin of 91.43% with a sales level of $45268
The business profitability is shown after deducting the personal drawings of the owner. The
business loan would start its repayment from the 2nd year onward. Therefore it was not
considered in the first years account.
Prepared for: 2019
or the monthF 12
period:
2019-July-
2020 June
JUL
AU
G SEP OCT
NO
V DEC JAN FEB
MA
R APR
MA
Y JUN
vehicle fuel e pensex 3,000
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
3,0
00
fooding clothing, 12,000 12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
12,
000
23

entertainment
medical pensesEx 1,000
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
1,0
00
ti
lity billsU 4,000
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
4,0
00
otal varia leT b
infre uent expensesq 20,000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
B. Total Expenses 20,000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
20,
000
The sales may not meet the expected business net income. Under that circumstance the
repayment of the loan would be difficult. Then loan restructuring would be tried with the
bankers. The next approach would be to reduce the personal drawings by 50 and this
approach would improve profitability of the business. The current objective of the business is
to increase the price of the services as the business starts it’s fast growing phase through
delivering greater value to the customer (Fridson and Alvarez, 2011). This approach is
expected to improve profitability of the business and to facilitate this process further an
improved social media marketing campaign would be developed so that customer number
increment projection can be improved further.
3.2.3 At the businesses full potential or practical productive capacity
In the developed premise there are 10 rooms for the massage service delivery. On an average
one customer would need 1.5 hour from start to completion of the massage. In one day the
therapist would be able to deliver 5 such session at max. Therefore total message sales
customer number would be 50 customers a day. At the current level of sale the business is
24

able to make an 8% profit from its sale in the first year. The desired profit is 30%. Therefore
the sales volume as well as the margin needs to be improved. It took 10 month to breakeven
which is showing lower profit percentage. In the second years operation the current sale
growth trend would be able to achieve the expected profit. The possible scope to increase the
sale volume would also be an opportunity to improve the profitability (Scarborough,
2016). Considering this it would not be required to operate the full potential.
3.3 Financial viability of the business idea
The cash flow position of the business provides the liquidity position of the business. The
cash flow is positive in the current business which is a positive sign for the business. The
profitability position of the business is showing better position at the end of the year.
Therefore the financial position is looking viable. But one concern is the borrowed fund from
the friends and family amount of $350000. As the better cash flow and profitability position
expected from the business from the second year this borrowed fund needs to be reduce show
that the business can be self sufficient to repay the loan payment from the second year
onward (Ehiedu 2014).
The growth trend in the second year is showing a very bright picture. As the business starts to
reduce its obligation from the next year onward the self sufficiency of the business would
improve as it progresses. If the financial position does not turn up as expected, especially
from the cash flow position, the business would try to include the friend as the partner of the
business (Scarborough, 2016). This is one of the contingency plans of the business. The
situation may happen that the business may not be able to retain current profitability position.
Under that scenario the business would use the new source of funding to improve services to
improve profitability.
Financial
Worksheet
10 - Cash
Flow
Prepare
d for:
For the
12 month
period:
Your ownership
structure is
currently set as:
Have you set your
OWNERSHIP
STRUCTURE Type
on the Introduction
& Assumptions
page?
2019 2019-July-2020
June
Sole Trader or
Partnership
25

CASH FLOW FORECAST
RECEIPTS -
Cash in
St
art
Up
Ju
ly
A
ug
us
t
Se
pte
mb
er
Oct
obe
r
No
ve
mb
er
De
ce
mb
er
Ja
nu
ary
Fe
br
ua
ry
Ma
rch
Apr
il
Ma
y
Jun
e
Tot
als
Cash Sales
(excluding GST)
3
75
,2
00
3
75
,2
00
3
53,
72
4
3
32,
752
3
17,
00
4
2
95,
79
1
2
79,
41
2
2
68,
99
4
2
66,
63
4
2
80,
133
2
87,
881
2
98,
403
$3,
731,
127
GST received on
income
0 3
7,
52
0
3
7,
52
0
3
5,3
72
3
3,2
75
3
1,7
00
2
9,5
79
2
7,9
41
2
6,8
99
2
6,6
63
2
8,0
13
2
8,7
88
2
9,8
40
$
373,
113
Owners funds 35
00
00
$
350,
000
Loan funds $
-
$
-
Total receipts 3
50
,0
00
4
12
,7
20
4
12
,7
20
3
89,
09
6
3
66,
027
3
48,
70
5
3
25,
37
0
3
07,
35
4
2
95,
89
3
2
93,
29
7
3
08,
146
3
16,
669
3
28,
243
$4,
454,
240
PAYMENTS -
Cash out
Payments
subject to GST
Purchase of non-
current assets
3
34
,7
75
$
334,
775
Start-Up Costs 1
79
,5
00
$
179,
500
Purchase of
goods / materials
0 2
,1
60
2
,1
60
2
,16
0
2
,20
3
2
,69
7
2
,75
1
3
,02
6
3
,32
8
3
,66
1
5
,23
5
5
,75
9
6
,33
5
$
41,4
75
Pay Roll $
-
Direct Cost of
Sales
$
-
Salary of massage
therapist and
astheticians
1
,8
00
1
,8
00
1
,80
0
1
,83
6
2
,24
7
2
,29
2
2
,52
1
2
,77
4
3
,05
1
4
,36
3
4
,79
9
5
,27
9
$
34,5
62
3
60
3
60
3
60
3
67
4
49
4
58
5
04
5
55
6
10
8
73
9
60
1
,05
6
$
6,91
2
Total operating
expenses
$
-
26

2
4,
51
6
2
4,
51
6
2
4,5
16
2
5,0
06
3
0,6
08
2
8,9
28
2
6,2
23
2
1,7
45
2
3,9
19
3
4,2
05
3
7,6
25
4
1,3
88
$
343,
194
Personal
drawings
$
-
0 2
0,
00
0
2
0,
00
0
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
2
0,0
00
$
240,
000
0 $
-
0 $
-
0 $
-
0 $
-
0 $
-
0 $
-
$
-
$
-
$
-
Total payments
subject to GST 5
14
,2
75
4
8,
83
6
4
8,
83
6
4
8,8
36
4
9,4
13
5
6,0
01
5
4,4
29
5
2,2
74
4
8,4
01
5
1,2
42
6
4,6
75
6
9,1
43
7
4,0
57
$1,
180,
419
GST on payments 5
1,
42
8
4
,8
84
4
,8
84
4
,88
4
4
,94
1
5
,60
0
5
,44
3
5
,22
7
4
,84
0
5
,12
4
6
,46
8
6
,91
4
7
,40
6
$
118,
042
Payments not
subject to GST
BAS remittance
- GST 4
4,3
34
GS
T to
pay
7
8,5
70
GS
T to
pay
6
6,3
12
GST
to
pay
- PAYG
instalment 379 37
9
379
Loan interest $
-
Loan repayments $
-
$
-
$
-
Drawings 2
0,
2
0,
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
2
0,0
$
240,
27

00
0
00
0
00 00 00 00 00 00 00 00 00 00 000
Total payments 5
65
,7
03
7
3,
72
0
7
3,
72
0
7
3,7
20
1
19,
067
8
1,6
01
7
9,8
72
7
7,5
02
1
52,
19
1
7
6,3
66
1
57,
834
9
6,0
57
1
01,
463
$1,
728,
815
CASH
POSITION -
Cash
reconciliation
Bank balance at
beginning month 0 -
21
5,
70
3
1
23
,2
98
4
62,
29
8
7
77,
675
1
,02
4,6
35
1
,29
1,7
38
1
,53
7,2
36
1
,76
7,0
88
1
,91
0,7
90
2
,12
7,7
21
2
,27
8,0
33
2
,49
8,6
44
Add Total Receipts 3
50
,0
00
4
12
,7
20
4
12
,7
20
3
89,
09
6
3
66,
027
3
48,
70
5
3
25,
37
0
3
07,
35
4
2
95,
89
3
2
93,
29
7
3
08,
146
3
16,
669
3
28,
243
Less Total
Payments 5
65
,7
03
7
3,
72
0
7
3,
72
0
7
3,7
20
1
19,
067
8
1,6
01
7
9,8
72
7
7,5
02
1
52,
19
1
7
6,3
66
1
57,
834
9
6,0
57
1
01,
463
Bank balance at end
of month -
21
5,
70
3
1
23
,2
98
4
62
,2
98
7
77,
67
5
#
###
###
##
1
,29
1,7
38
1
,53
7,2
36
1
,76
7,0
88
1
,91
0,7
90
2
,12
7,7
21
2
,27
8,0
33
2
,49
8,6
44
2
,72
5,4
25
4. Capital Requirements
4.1 Capital requirements for business start-up
Total capital required for the start-up business is $6,64,275. The capital would be used for the
following expense purposes.
Capital requirements to set up the business
Start Up Expenses
Legal Services $75,000
28

Printing, Collateral $5,000
Construction/Design $62,000
Insurance $5,000
Monthly rent for premises $15,000
Research and Development $2,500
Advertising $5,000
Other $10,000
Total Start-up Expenses $1,79,500
Start-up Assets
Cash $1,50,000
Start-up Inventory $6,000
Other Current Assets $1,75,775
Long-term Assets $0
Total Assets $3,31,775
Capital Equipment and Supplies
Hydraulic Massage table - ($5000 x 5) $25,000
Esthetical massage Equipment $3,000
Fixture & Furniture $1,00,000
Software & Computers $10,000
Jacussies($3000*5) $15,000
Total $1,53,000
Total Assets & expenses & capital to
be funded
$6,64,275
4.2 Equity capital and details of business ownership
1. Personal invested money amount is $3,98,565.
2. In the current business no personal asset would be used.
29

3. The business would have only one owner.
4. In this business rest of the capital is arranged through the bank loan route. Around 60%
personal capitals is invested in the business. Therefore majority of the business funding is
done through personal funding sources which are a high risk proposition (Ehiedu 2014).
Under the business failure circumstances the owner stand a change of losing a significant
person fund.
Cash available 159,426
Bonds and shares 239,139
Bank loan 265,710
Total Assets: $
664,275
4.3 Loan capital
1. Apart from the personal funding the rest would be funded through bank loan.
2. 40% fund requirement of the business would be met through bank loan.
3. This would be a long term loan for the business. The loan would be paid from the second
year onward. The business is expected to cross the breakeven from the 9th month onward.
Therefore a good 15 month time period would be there for accumulating some profit from the
business (Higgins, 2012). The start of the loan repayment would start from the first quarter of
the 2nd year. The payment would be done quarterly basis at a rate of 15%. After the risk
assessment from the bank the interest rate is decided at 10.2% annually. This would be a
30

fixed interest rate for the loan. This long term loan would not have any application or annual
frees.
4. Being a long term loan the business would be able to repay the loan. The current loan is
taken at higher rate of interest which helped to get unsecured loan. Therefore the collateral
risk is low but the higher interest rate is risk. To avoid the higher interest risk the loan
repayment would be done as early as possible.
4.4 Acquiring capital
1. The business capital arranged through personal contribution would have one issue. Around
of the person contributed fund would be arranged through liquidating some personal asset.
Therefore faster liquidation with desired value generation would have to be done efficiently
and effectively (Higgins, 2012). On the other hand the current business is a start-up business
and the market research shows that business sector had around 3.5% growth in last five year.
Considering this getting a unsecured loan for the business from the bank would be a
challenge.
2. Under the circumstance of fund raising difficulty the business would have problem to
invest highly on the premises. Out of 60% personal funding close to 20% fund would come
from the uncertain source. Here the possible risk is delay in generating fund or having lower
fund from the liquidation process. Therefore the business would not miss out on total 20%
proportion of personal contribution. On the other hand not being able have a long term loan
agreement would be a difficult proposition for the business. Under this circumstance the
business would not be able to start its operation (Fridson and Alvarez, 2011). Under this
circumstance the business would look for the partnership option to arrange the required fund
and have at list 20% funding through the short term bank loan.
5. Conclusion & Recommendations
5.1 Conclusion
After analysing all the different aspect of the business it can be said that the business would
be able to remain viable in its operation. The personal skills level and all the employee skill
level would be highly useful for the current expected service delivery to the customers. The
31

investment plan would be able to develop better facility and premise for the customers. The
current business plan has some important risk factor for the owner but the future projection is
showing less likelihood of that to happen. The cash flow and the portability position of the
business is going to be stronger which would reduce the critical risk factor for the business
also (Storey and Greene, 2010). The marketing and promotion plan of the business would be
sufficient to generate appropriate incomes. The legal requirement analysis shows that the
business would be able to fulfil all the different legal requirements. Therefore in all the
different aspect of this new business formation shows that there is a strong viability of this
business.
5.2 Recommendations
The business idea has shown its strength to become viable. Considering this the business can
be started from the next financial year. The business model is looking sound and does not
need any changes (Stokes et al., 2010). If the business profitability or the sales revenue does
not match the current projection, the business model then would have some change in the
following recommended way.
Recommendation 1- Under the current business model different types of massage therapy
from different region would be provided as services. At that time most profitable types of
massage therapy would be continued. This approach would reduce additional products or
services of the business as they are not performing properly. This streamlining of the services
would improve efficiency and productivity.
Recommendation 2- Another approach would be improving service quality of these best
performing service and develop some premium service out of these lot (Storey and Greene,
2010). This would improve margin from the services.
Recommendation 3-The personal funding is almost ready for the investments expect the part
when a personal asset needs to be liquidated. Because of that reason the remaining time of the
financial year would be utilised. This time also would be utilised as the loan fund generation
process. Current the business is not looking for any partnership approach but as the
contingency measure it would be applied.
Recommendation 4-Further research can be done to understand the customer expectations
which are not fulfilled from the local massage businesses (Stokes et al., 2010). This help in
improving the differentiation points of the business.
32

33

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