Study on Flotation Therapy in Business

To achieve a net revenue sales of CA$ 350,0001 within two years, MRS needs to
address the following critical issues:
1. Priority should be given to quality and operations management to generate
higher revenue. Before implementing any new techniques or adapting to any
changes, an analysis of all competitive advantages should be taken into
consideration. Flotation therapy business belongs to the industry having huge
competition, and to acquire a leading position in market, it is necessary to
implement innovative ideas. Address the net income loss, which is due to a
decrease in revenue, and even the current liabilities of the company need to
increase so that the daily requirement of the therapy center is fulfilled.
2. To increase revenue and to achieve the required target, Metta needs to
maintain customer satisfaction. The most challenging part of opening up a
therapy and spa center is to make a proper marketing strategy. Address the
loss of marketing strategy and construction activities that has an impact on
the customer relationship. If adequate customer satisfaction is not achieved,
then ultimately, revenues will get affected, leading to net loss.
3. Address the inefficiency related to the debt-equity ratio, which reflects a
negative gearing position of the business. Even the profitability of the
company is not stable and to acquire investments; it needs to be positive. A
company can attract investments if the financial statements of the company
reflect a stable efficiency and profitability position.
Critical Opportunity:
As the flotation therapy is in demand, the Metta Company needs to take benefits
of the competitive advantage and should efficiently manage the staffing process
and the marketing activities to attract more customer satisfaction and to achieve
high sales revenue. More innovative designs and quality of the float tanks should
be used by business, which will satisfy customer needs and can even get
positive reviews, which will lead to attracting more customers.
Situational Analysis
Implementing a flotation therapy business needs much planning by the
management team. One of the obstacles in the implementation process is
requirement of capital. Priority should be given to the management levels, which
are not efficiently functioning. Even SWOT analysis contributes to a significant part
of the situational activities. The management needs to analyze the internal and
external environment associated with the spa and therapy business. Marketing
research is to be for identifying potential customers and for assessing the
competitors (Burns
et al. 2014).
1 The value of CA$ 350,000 is achievable as by implementing the flotation
therapy, Metta can provide excellent services to its customers and if customer
satisfaction is gained then ultimately it will result in increase in sales revenue.
As revenue will increase, net profit will generate and the profitability will be
stable for the company.

Decision criteria
1. Must achieve sales revenue of minimum CA$ 182,177 by December 2016 and try
to maintain a positive profitability ratio; thus, the profit margin should be stable for
any company.
2. Must adhere to company values to achieve the goals of the business and to gain
profits.
3. Must increase the efficiency ratio to provide benefits and gains to the
shareholders as they only offer finance to the Company.
4. Must increase the liquidity ratio as it is associated with the current obligation of
the business, and for smooth functioning, specific short-term commitments need to
be fulfilled by the company.
Financial (Fill in the conclusion)
Liquidity
Current Ratio 7.46
Conclusion: The
business has a
favorable current ratio
as even after paying off
its existing obligation,
the company has an
extra amount of assets
for its further
requirements.
Stability
Debt. Equity -2.89
Conclusion: The net
value of the company is
negative as its total
liabilities are more than
total assets. The net
worth of the company is
negative, which is not
favorable for business
and shareholders.
Profitability
Profit Margin -1.14

Conclusion: Due to net
loss, the profitability
ratio is negative. Sales
revenue cannot cover
up the number of
expenses incurred for
selling products and
services. The income
needs to be increased
to get a positive
profitability ratio.
Vertical Analysis
Revenue 100%
Less: Operating Expenses
Wages and Salaries
(including benefits) 45.60%
Accounting and Legal 4.30%
Advertising and Promotions 26.90%
Business Fees and Licenses 0.40%
Cleaning Services 2.50%
Courier and postage 0.30%
Equipment Rental 3.60%
Insurance 4.50%
Interest and Bank charges 0.50%
Office Supplies 2.60%
Meals and Entertainment 0.10%
Research 0.70%
Rent 100.70%
Repairs and Maintenance 0.10%
Subcontractor 0.40%
Supplies( Salt and Toiletries) 10.90%
Telephone 1.30%
Utilities 8.30%
Total Operating Expenses 213.80%
net Income(Loss) 113.80%
Conclusion:
There is net loss for the
accounting year 2015 as
total operating expense is
more than total revenue.
The rent incurred is much
higher than sales revenue
and even the wages and
salaries incurred are
45.60 percent, which is
contributing high amount
of operating cost. Both
the costs are necessary
for the operation of the
business and cannot be
avoided; the company
needs to cut it other costs
or needs to increase the
sales revenue to attain
net profit result.