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Business Plan Development and Analysis

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Added on  2020/01/15

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This assignment involves developing a detailed business plan for a hypothetical company. It includes conducting market research, identifying target audiences, outlining marketing and sales strategies, analyzing financial requirements and projections, and creating a critical path diagram and Gantt chart to illustrate the project timeline. The document also presents a break-even analysis to determine the profitability point of the business.

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The Shades – Hair and Beauty Salon
Business Plan

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TABLE OF CONTENT
Chapter 1 Introduction.....................................................................................................................6
1.1 Background ...........................................................................................................................6
1.2 Scenario chosen ....................................................................................................................6
1.3 The Business Opportunity ....................................................................................................7
Rational behind the business idea ......................................................................................7
Significance of the research ...............................................................................................7
Target market, customer and accessibility .........................................................................8
Business Model ..................................................................................................................8
1.4 Timescale ..............................................................................................................................8
1.5 Structure of Work .................................................................................................................9
CHAPTER 2- – Business Opportunity and Concept ....................................................................11
Business idea .............................................................................................................................11
Mission.......................................................................................................................................11
Vision.........................................................................................................................................11
Analysis of mission and vision statement .................................................................................11
Products and services.................................................................................................................12
Positioning.................................................................................................................................12
Scale and growth anticipation....................................................................................................13
Business model..........................................................................................................................13
Chapter 3: Feasibility.....................................................................................................................14
3.1 Research Methodology............................................................................................................14
3.1.1 Define Research problem..................................................................................................14
3.1.2 Design for Market Research.............................................................................................14
3.1.3 Information types and sources that are required...............................................................15
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3.1.4 Proposed Methods of Data Analysis.................................................................................15
3.1.5 Formulation of Findings...................................................................................................16
3.2 Market research and product services......................................................................................16
Type of research design.............................................................................................................16
Market segmentation..................................................................................................................16
Identification of product and service.........................................................................................17
Gap in the market.......................................................................................................................17
3.3 Industry/market analysis..........................................................................................................17
3.3.1 Porter’s five forces............................................................................................................17
3.3.2 Product life cycle of Beauty Salon...................................................................................18
3.4 Organization feasibility............................................................................................................19
3.5 Financial Feasibility.................................................................................................................21
3.5.2 Project funding..................................................................................................................21
3.5.3 Sales forecast....................................................................................................................22
3.5.3 Cash flow projections.......................................................................................................22
3.5.4 Profit and loss projections.................................................................................................22
3.5.5 Break even analysis..........................................................................................................23
3.5.6 Risk Evaluation.................................................................................................................23
3.6 Resource requirement evaluation.............................................................................................23
CHAPTER 4..................................................................................................................................25
STRATEGIC ANALYSIS AND BUSINESS MODELS .............................................................25
4.1 Strategic analysis of business idea...........................................................................................25
Value chain analysis..................................................................................................................25
SWOT analysis..........................................................................................................................25
4.2 Sources of competitive advantage and sustainability..............................................................27
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SWOT Analysis.........................................................................................................................27
VRIO evaluation of sustainability of competitive advantage....................................................28
4.3 Concepts in strategy.................................................................................................................29
Ansoff matrix.............................................................................................................................29
Mc Kinsey 7S framework..........................................................................................................29
Porter’s Generic Strategies........................................................................................................31
4.4 Business model........................................................................................................................32
Business Canvas Model.............................................................................................................32
CHPATER 5 ................................................................................................................................34
BUSINESS PLAN REVIEW.........................................................................................................34
5.1 Overall assessment of business plan........................................................................................34
5.1.2 Legal issues.......................................................................................................................34
5.1.3 Financial Requirement......................................................................................................35
Project funding...........................................................................................................................35
Sales forecast.............................................................................................................................36
Income Statement......................................................................................................................36
Cash flow statement...................................................................................................................36
Break Even Analysis..................................................................................................................37
5.1.4 Risk issues.........................................................................................................................38
5.1.5 Marketing matters.............................................................................................................39
5.1.6 Organisation feasibility.....................................................................................................39
5.1.7 Overall resources sufficiency............................................................................................40
5.2 Proposed plan of action............................................................................................................41
5.3 Discussion on critical success and failure factors....................................................................42
REFLECTION PART ...................................................................................................................44

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REFERENCES..............................................................................................................................52
APPENDIX....................................................................................................................................54
Total fund required....................................................................................................................54
Sales forecast.............................................................................................................................54
Income Statement......................................................................................................................54
Cash flow statement...................................................................................................................54
Break Even Analysis..................................................................................................................55
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Title - The Shades – Hair and Beauty Salon Business Plan
Chapter 1 Introduction
1.1 Background
Before going out somewhere, people have the tendency to get into personalized
beautification ritual. It makes their appearance beautiful and shining in front of others. By seeing
this tendency into consideration, the demand for beauty and care services have increased
significantly. The beauty industry has been expanding over decades in dramatic manner. It also
offers wide range of opportunities for many new entrepreneurs. The opportunities are open
because people are always concerned about their looks within the society. They want their
physical appearance to be reflected in good manner. Hence starting a hair and beauty salon in the
present scenario can be a feasible option. This business development proposal is about opening a
beauty salon named the Shades. It will be a full time service business positioned in London. The
mission will be to provide high quality services which enhances the physical appearance and
mental relaxation of the people. Hair, nails and skincare will be the main area of services. It has
been noticed that beauty industry has been favourable to several entrepreneurs. Consumes are
showing their more willingness to shop around in order to avail the best treatment deals. It is
expected that the Shades will be able to live up to the beauty expectations of the consumers.
1.2 Scenario chosen
In order to develop a business development proposal, author has the option to selection
difference scenarios. These are as follows:
a new company start up as an entrepreneur
Your own company as an existing company owner
Your current employing organization
A commercial or not-for-profit organization
From the above available scenarios, “A New Company Start-Up as an Entrepreneur” has
been selected for the development of this project. Selection this scenario is always a difficult
process for the researchers because everything is initiated from the zero level. However the
process is quite intellectual and informative. It requires collection of information regarding the
industry under which the proposed project has been set. It will help in utilizing the knowledge
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and assist in understanding the market situation of the desired business. The proposed business
has the potential to achieve the expected goals and objectives of the new venture.
About the venture
The Shades is a full service hair and beauty salon, offering excellent service, quality
products and a great atmosphere for males and females. The salon is positioned in London. The
mission of the business is to supply high quality services which enhances the physical
appearance and mental relaxation of the people. The Shades will offer its clients a very pleasant
and intriguing environment. Focus will be on gaining the customer loyalty so that people can
come to the door of the Shades again and again. There will be no compromise with the quality of
the cosmetics that will be used. Hair, nails and skincare will be the main area of services.
Telephone and online booking facility will be given to the customers for their convenience. It is
expected that the Shades will be able to achieve its goals and objectives.
1.3 The Business Opportunity
Rational behind the business idea
Every business concept is backed up with a suitable rationale. Having an MBA degree, it
was always the author’s dream to have his own venture. However before taking this step, he has
worked in the cosmetics industry for 5 years. He is quite familiar with the beauty and salon
industry as he was dealing with these kind of products only. At the starting there was no plan to
start a new venture like this but gradually the things started developing. He increased his
thinking and knowledge in these areas. After performing a high level of research, he came to a
conclusion that he will be opening a beauty salon for the customers. It is evident from the fact
that number of salons and beauty shops are increasing day by day. The customers are always
ready to invest on their physical appearance. The demand for these services is also increasing
day by day. The proposed business idea sound a viable opportunity for the entrepreneur.
Relevant goals and objectives have been established with regard to the Shades. It is expected that
the new venture will be able to establish its remarkable presence in the hair and beauty industry.
Significance of the research
Every research is performed with an appropriate significance. The following is a business
development proposal about opening a hair and beauty salon in the Barbican Centre of London.
The significance of this study is that it will be an inspirational work for several entrepreneurs.
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The readers will be able to avail vast amount of strategic knowledge and information. Several
critical business areas will be scanned which are crucial from investigation point of view. The
hair and beauty industry of UK will be scanned in appropriate manner. Various opportunities
available in the market will be identified. Further it can be an inspirational work for other
researchers who desires to perform research about the following subject. Various strategic
models will be applied to see whether the business idea is feasible or not.
Target market, customer and accessibility
It is important to access the target market. The Shades is positioned in Barbican Centre of
London. The target market will be the upper middle class urban people who are really concerned
about their physical appearance. Hair, nails and skincare will be the main area of services. It
includes students, college goings, urban professionals etc. Services will be available for both
males as well as females. The beauty salon will be placed in the middle of the town and will have
high level of accessibility. It will serve customers from nearby residential areas. The target
market is feasible and it is expected that it will help in achieving the desired goals and objectives.
Business Model
The Shades will be operating on the basis of brick and mortar model. However online and
telephone portals are also available for bookings. It will be a high class hair and beauty salon
giving excellent services, quality products and a great atmosphere. The clients will be offered a
very pleasant and intriguing environment. There will be a use of high quality cosmetics. The
salon will open at 9 am in the morning and will closed at 9 pm in the evening.
1.4 Timescale
ACTIVITY/WEEK 1 2 3 4 5 6 7 8 9 10 11 12
Identified the problem
Systematic analysis to choose
the topic for the study
Chose the research
Conduct strategic review for
secondary data collection
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Set the objectives
Primary data collected from
customers
Identified research approach
Design research methodology
Preparation of structured
questionnaire
Make Fill up the questionnaire
from customers
Organize collected data in
excel sheets
Apply suitable technique to
analysis data
Interpretation of the data
Evaluation and finding of the
research
Recommendation and
suggestions for further study
Outline the findings chapter
Create report in a presentable
manner
Submission to instructor and
awaiting for feedback
Revising the final draft
Submit report
Present report to the audience
1.5 Structure of Work
There is a need to follow an appropriate structure for the report. The rest of the project is
organized in the following manner:
Chapter 2 – Business Opportunity and Concept
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This chapter will talk about the opportunity available to the new venture. The whole
concept will be described. It will contain the mission, vision and the proposed products &
services. The justification behind all the choosing scenarios will be made.
Chapter 3 – Feasibility Analysis
This chapter reviews the feasibility of the proposed business concept. It will include
sections such as research methodology, market research, industry analysis, organizational
feasibility, financial feasibility etc. The feasibility analysis is very important from success point
of view. It will help in realizing whether the proposal is beneficial for the investment or not.
Chapter 4 – Strategic Analysis and Business Model
This chapter will do the strategy analysis of the business idea and also explains the
development model. Sources of competitive advantage and sustainability will be find out. The
strategies will be framed for the purpose of success. Use of different strategic models will also be
reflected with regard to the selected subject.
Chapter – 5 Business Plan
The last chapter indicates the picture of the overall business proposal. It will include
sections such as marketing plan, organizational plan, operational plan and financial plan. It is
expected that the development proposal will assist in achieving the business goals and objectives.
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CHAPTER 2- – Business Opportunity and Concept
Business idea
Business plan is prepared about the hair and beauty salon. It has been observed in the
UK that people are paying due attention on their skin colour and face beauty. Along with this,
people are caring more about their nails. It is observed that people often like to to take hair and
beauty services when they are going ton join specific ceremony like weeding or award
distribution etc (Quach and et.al., 2012). Hence, demand for such kind of services is growing
rapidly in the UK. Business idea is to open such a salon in the London in order to tap available
opportunity in the market. This business idea is selected for opening a business because beauty
industry is growing at a rate of 16% in the UK and in time of recession also it manage to grow in
UK at same pace. Hence, this industry have good growth potential. This is the reason due to
which it is planned to open hair and beauty salon in London.
Mission
To grow business at CAGR or compounded annual growth rate at 16% on year on year
basis in 5 years. Business firm wants to expand business in London by opening multiple chain of
the Shade in mentioned city.
Vision
Our business main vision is to make available quality service on time to the people by
using well known beauty products and professionals.
Analysis of mission and vision statement
Both mission and vision statement always remain correlated to each other. Mission
indicate long term objectives of the firm. Whereas, vision indicate short term objective of the
firm. Mission of the firm is to grow business at CAGR or compounded annual growth rate of
16%. This growth rate is determined because beauty industry is growing at same pace (Cohen,
2010). Hence, it means that firm can maximum increase its business at a growth rate at which
industry is growing currently. Hence, mission of firm is to increase business at 16%. Mission of
firm is concise and in first five years it is focusing on growing its business only in London.
Strategy behind same is to enhance business in London and to cover its maximum area in
upcoming five years. In order to achieve mission it is necessary to determine some objectives.
These objectives are determined under vision statement. In this statement it can be seen that firm
main objective is to make available quality service to the customers and on time. In this regard
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firm is planning to employ professionals that are master in providing service that firm wants to
provide to its customers. By doing so firm will create its good image among the customers and
will capture large market share in London. In this way firm will complete its objective to achieve
growth rate of 16% in next five years.
Products and services Hair- Firm will provide hair related services and under this hair cut services will be
provided to the customers. Professionals will be able to provide every type of hair style
services to the customers. Along with this hair colour services will also be provided to the
customers in the salon (Wu, Yeh and Woodside, 2014). Different type of colour will be
available to customers in order to prevent showing whiteness of hair. Nails- Under nail service services like manicures and pedicures will be provided to the
customers at salon. Cleaning and filling of nails will also be done at salon. Along with
this nails will also be decorated with coloured varnish etc. By using airbrush designs will
also be painted on nails. Hence, varied services related to nails will be provided in firm
salon.
Skincare- Various skin care services will be provided at salon. Under this services like
removing unwanted hairs, making skin fair, advising customer on proper skin care and
service regarding evaluating customer skin health will be provided to the customers.
Hence, these are the products and services that firm will provide to its guests in the salon.
Positioning
It is a marketing technique under which firm create its special image among the
customers on the basis of its USP. Full form of USP is unique selling proposition which indicate
strong points of the firm (Eckstein and Nguyen, 2011). Shades salon will employ high level of
professionals in its premises for providing services to the customers. It will act as USP for the
firm because if there will be professionals in salon then surely quality of service relieved will
also high. Hence, firm can do institutional advertising and can position its product on the basis of
its service quality. Firm can also provide its service at reasonable price instead of premium price.
By doing so firm can create its specific image among the customers that if “ quality service at
reasonable price”. This strategy will also create good image of the firm among the customers and
firm will in this way position its product among the customers.
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Scale and growth anticipation
On the basis of past records and review of various publications it is anticipated that
industry will grow at 16% on year on year basis. It is observed that when recession comes in UK
in that situation also this industry give good return to the entrepreneurs. Hence, there is lots of
growth opportunities in this industry. Firm can at least achieve 8% growth in single year if we
look at the industry growth rate.
Business model
In business break and mortar model will be followed and under this services will be
provided through salon. However, orders will be received both through online and offline. With
increase in revenue in business new branches will be opened in the London. By doing this a
chain of Shades salon will be established in London.
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Chapter 3: Feasibility
3.1 Research Methodology
3.1.1 Define Research problem
A) Problem Formulation
Beauty salon and health care accessories are highly in demand and people in London are
especially bend towards their lifestyle. To open unisex salon will help the course of entrepreneurs
to establish business in the market easily as compared to other venture and it is just because of its
demand in the market. However, the success and constant growth of The Shades Salon depends
upon the types and quality of services to the people. Location selected is popular in terms of
tourists and people while on holidays especially spends on their personal accessories and beauty
thus, the major problem herein occurs about the quality of services offered to the people.
B) Aim of current market research
The main purpose behind market research is to identify the demand and expectations of
customers regarding different essential services of salon so that services can be developed
accordingly. Further, by the means of this owners will also come to know about the type of
brands men, women prefers for their hair, nails and other skin care so that desired services can be
given to the people.
C) Objectives
On the basis of mission and vision stated by owners of the company, its major objectives
are as follows which will help in defining the expectations of owners towards the concept and its
functioning.
To grow business with the rate of 16% per annum.
Once established, owners expecting to expand business by opening multiple chain of The
Shades.
To provide quality of Hair, Nails and Skin care services to the customers so that long
term relationship can be developed.
To understand the needs and wants of people and satisfy through professional guidance.
3.1.2 Design for Market Research
There are several alternatives of market research design available. However, it is the duty
of entrepreneur to make sure that they use the best suitable for their purpose so that valuable and
reliable information can be gathered to enhance the functioning of The Shades. Thus, research
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designs are exploratory, descriptive, qualitative, quantitative and or casual research. According
to the concept of present business plan, researcher is focusing on exploratory research design
because it will assist in exploring the market of London regarding expectations of customers,
types of lifestyles, sales growth and demand in the market etc. Following are the main purpose of
selecting exploratory research design:
Exploratory research will assist in assessing and evaluating the gap in the market of
London as salon industry is growing at significant pace.
By the means of this, researcher will be able to identify the areas of the market
where demand is not saturated as people of London always focuses on exploring their
lifestyle through different hair styles, nail arts and maintain health concerns with the
help of waxing, facials, massages etc.
Market segmentation analysis will be focused on analysing the types of target market
available for the owners of The Shades.
Demographic segmentation is based on: male, female and children.
Geographic segmentation is based on: Urban and population density.
Behavioural segmentation is based on: attitudes
Psychographic segmentation is based on: social, cultural, religious values of target
market.
Price segmentation is based on: Luxury, economy and value price
With the help of exploratory research market accessibility will be verified.
3.1.3 Information types and sources that are required
Different sources will be used in gathering valuable and reliable information for the
business plan. In regards to secondary sources: books, journals, websites, internet sources etc.
will be considered.
3.1.4 Proposed Methods of Data Analysis
Once the data is collected it is important for the researcher to analyse the collected
information appropriately. Herein, research opting different methods to analyse the data which
are as follows:
Descriptive presentation and analysis through graphs, charts for better understanding of
owners or investors.
Use of statistical techniques
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3.1.5 Formulation of Findings
The main purpose of above defined tools and techniques is to gather valuable and suitable
data or information about the market, customers, products, services and competition so that
establishment of new salon venture The Shades can be executed in appropriate manner. By the
means of this, types of services, pricing strategies, and marketing tactics all will be defined for
the successful establishment of new venture.
3.2 Market research and product services
Type of research design
In order to conduct research it is very important to select appropriate research design.
Selection of appropriate research design helps one in selecting appropriate method for data
collectio (Cohen, 2010)n. There are three type of research design namely exploratory descriptive
and experimental research design. Exploratory research design is used by one when he does not
know anything about research topic and wants to deeply analyse specific things. Whereas,
descriptive research design refers to the methods of data collection that are used when researcher
already knows something about research topic and he wants to know more about the research
topic (Quach and et.al., 2012). On other hand there is a experimental research design which is
used to do scientific research. In order to prepare a business plan in proper way exploratory
research design will be used in the research. This is because researcher does not know anything
about the industry and market and it is very important to get overview of same. Hence,
exploratory research design will be used in the research.
Market segmentation
It is a method that is used to divide entire market in to several parts. From these divisions
of the market target customers for the firm product are identified. On the basis of psycographic
and demographic features market segmentation will be done for the firm. There is close
relationship between people lifestyle and salon services they consume. Hence, customers will
divided on the basis of lifestyle under psycogrpahic factor of segmentation (The 6 secrets that
will help your hair salon and day spa succedd, 2014). In terms of income also customers will
divided for the firm under demographic features of market segmentation. Hence, it can be said
that for the firm customers will be segmented on the basis of their income level and lifestyle.
Based on these factors profile of different customers profile will be prepared and best suitable
customers will be set as target customers for the firm. In salon experts will provide their service
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and of high quality. Hence, customers that have affluent lifestyle and have good spending power
will be firm target customers. Shade hair and beauty salon will also provide service to other type
of people but affluent people will be specially target customers of the firm.
Identification of product and service
Product and service that firm will provide are as follows. Hair- Under this hair cut services will be made available to the people and experts will
provide service that have expertise in different haircut services, Nails- Under this various services related to nails will be provided to the customers like
pedicure and manicures etc.
Skincare- Many skincare services will be provided to the customers in the salon like hair
removal services and making skin fair etc.
Gap in the market
There is a gap in the market and on evaluation of various websites where information
about multiple hair salon contained it is identified that most of salon in London are mainly
focusing on hair services. Product portfolio of each salon to some extent is different from each
other. For example Primmo hair studio in London is providing hair cut and highlight treatments
related to head. Whereas, Lemonge clinic providing services like hair removal waxing an
threading. But it is not providing hair cut services. This means that product portfolio varies from
one salon to other salon. All services are not available at single salon. This is big market gap and
shades hair and beauty salon will take advantage of this. It will be provide hair cut, nails and all
skincare services under one roof.
3.3 Industry/market analysis
3.3.1 Porter’s five forces
In context to marketing, Porter’s five forces aims at assessing the selection industry on
the basis of 5 significant aspects which are as follows:
Threat of new entry: Looking at the salon industry of UK, it can be said that threat is new
entrant is relatively high. It because of the fact that, individual’s care about their skin,
hair etc. have enhanced to a significant level and in order to satisfy those varied salon and
other related to ventures have been developed. Considering the sales growth and
profitability, entrepreneurs are ready to invest large amount to enter into the industry
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which indeed increases the threat of new enter which indeed leads to high competition for
the existing venture.
Bargaining power of customers: In beauty salon and skin care industry bargaining power
of customers is relatively high. The rationale behind this is that people have wide range
of options to select from salon and other skin related services. London which is
considered as the hub for better lifestyle and skin related services.
Bargaining power of suppliers: With the presence of wide range of suppliers for beauty
services and salon their bargaining power is relatively low. On the basis of market
research there are several ventures small, medium and large offering salon and health
care services in London that leads to low their power of charging high prices or creating
monopoly.
Threat of substitute: Substitute in beauty salon and skin care services is relatively low
because all the ventures existing in the market offers same types of services but at
different level which differentiate them from others.
Intense rivalry: Competition in every industry increasing day by day and with ease of
entry and low threat of substitute, competition in salon industry is relatively high. This is
one of the major threat that, owners of The Shades have to consider as already there are
several venture exiting in the market of London which offers salon and skin care services
will increase the threat of generating higher demand or sales for the new venture.
3.3.2 Product life cycle of Beauty Salon
Figure 1: Product life cycle of Beauty Salon
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(Source:)
Introduction: Salon business venture highly depends upon the customer loyalty at the
initial stage. However, effective marketing strategies may leads influence or encourage
competitor’s customers to switch and try new venture (The Shade beauty salon).
Therefore, offering attractive services at affordable prices will motivate customer to visit
again which indeed helps in establishing business more appropriately.
Growth: Once the initial phase is carried out in effective manner through the use of better
marketing, pricing and innovative services strategies cited venture will enter into growth
phase. In this section, offering superior quality of services to ensue repeat purchase from
customers is paramount. Hiring professional, stylist may assist in enhancing the level of
satisfaction for the customers.
Maturity: Under this stage, beauty salon will begin to experience a leveling-off regarding
revenues growth as income, customer count and expenses become more predictable.
Maintaining relationship with existing customers and by offering quality of differentiated
services will assist in preventing income from falling.
Decline: There are several reasons through which a beauty salon can reach to its decline
stage. In context to sole proprietorship, owner’s retirement leads to end of business.
Large chain of salon may decline the sales or small or medium sized salon which indeed
to force them to close the business.
3.4 Organization feasibility
It is conducted to identify whether proposed plan is organized in term of management
expertise and organizational competence. In this it is also identified that promoters that play a
critical role in growth of an organization are motivated to successfully launch the business.
Organizational feasibility can be measured on following factors. Motivation and competence of promoters- Promoters of an organization are fully
motivated to establish and run business. They are fully competent and have some years of
experience in salon business. They are fully motivate to open a business because there is
a huge gap in the market and by filling this gap firm can capitalize available
opportunities. Hence, this project is viable and become profitable for the firm. Market understanding by management team- There is proper understanding of market
among members of management team. As stated above that some of the members of
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team have experience of salon industry. Research is also conducted on the current market
and on this basis great understanding about the market is developed among the managers.
Hence, management team understand the market. Business structure- Salon will be opened under sole proprietorship business structure
and under this there will be a owner who will manage all operations of salon. There will
be two managers that will act on instruction of owner of business. There is high risk in
business operations because there are number of competitors in salon industry that are
providing quality services to the customers. Hence, there is a high risk in salon business.
Firms operating in this industry are following fierce business strategies in order to
increase their market share. Hence, firm will need to craft different business strategy in
order to capture market. Availability of personnel- There will be two managers in an organization and these two
will manage all HR and marketing operations of the business. Under these managers 6
employees will work that will be expert in their relevant field. Principles and practice of business- A system of corporate governance will be
established in Shade hair and salon and under this rules and regulations related to firm
business operations will be prepared. Same will be used to handle specific internal
conditions that will be faced by the firm in its business. Training will be given to
employees time to time in order to maintain their efficiency level. Proper customer policy
will be prepared that will be followed while providing services to the customers and
dealing with their grievances to management. Ethical standards related to anti
discrimination will also be prepared in an organization. Government relations- In order to maintain good relationship with government all rules
and regulations will be followed in an organization. Managers of an organization will be
responsible to make sure that all liabilities of the firms towards government in terms of
compliance with law will be followed time to time.
Social and cultural values- Social and cultural value system will also be developed in
Shade hair and salon and under this same treatment will be given to employees
irrespective of their religion and caste and colour. In this way group solidarity will be
maintained in an organization.
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3.5 Financial Feasibility
This is one of the significant aspect of a business plan and it is important for the
researcher to carry out this section in appropriate and reliable manner. In order to start a business
assessing its financial feasibility is must because it helps in providing information related to sales
forecast, inflow and outflow, prediction of operating expenses and economic feasibility of project
so that smart decision can be made in implementation of the business activities.
3.5.1 Assumptions:
To initiate business financial feasibility, entrepreneur have to make assumptions on the
basis of current economic condition of the market. In this regard, following are the financial
assumptions of The Shades Beauty Salon:
Estimated sales growth of beauty salon by 16% every year on the basis of demand and
changing perceptions of people towards beauty and skin care services.
Salon will work for 30 days in a month.
Considering the inflation rate of UK, owner expects to incur 5% increase costs on utilities
every year.
Rent on premises is 3% of sales.
Capital will be raised through the proportionate of 60% bank, 20% promoters and 20%
angel investors.
Tax rates are assumed at 10% on profits
10% of hike will be given to employees or staff member of The Shades.
Marketing and promotional expenditure will be increased by 10% every year.
Depreciation on fixed assets is estimated at 12% per annum on straight line method.
Service fee to professionals for training and development will be given.
Interest charged on loan will be at 7.63%.
Miscellaneous expenditure will be decreased by 3% per annum.
Cost of goods sold assumed at 30% per annum.
3.5.2 Project funding
According to the business plan, owners are focusing on raising initial investment of
50000 funds through different sources which are based on proportionate: 60% of bank loan, 20%
of owner’s capital and 20% angel investors.
Sources of funds Amount (£)
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bank loan 30000
Owner's capital 10000
Angel investors 10000
Total Fund required 50000
3.5.3 Sales forecast
Particulars Year 1 Year 2 Year 3
Average Customers per day 15 17 20
Avg spend 50 50 50
Sales 270000 313200 363312
On the basis of market research, sales is expected to grow 16% per annum to generate
reliable profits for the firm. In this regard, average customers per day are expected 15 in first
year and increased by 16% every year with the average spending of £50. However, average
spending is bifurcated on the basis of three types of services offered by the new venture i.e.
haircut, nail art and skin care services.
3.5.3 Cash flow projections
Cash flow
Summary
Opening Balance 0 3000 240200 379120
Total Cash Inflow 50000 273000 553400 742432
Total Cash Outflow 47000 190151.2 208102 227682
Closing Balance 3000 82848.8 345298 514750
On the basis of cash flow summary, salon will maintain positive cash balance every year.
Despite, low balance of £3000 in pre-operating year, The Shades will be able to generate better
closing balance in coming year if they are able to offer quality of services in all three
departments to the customers.
3.5.4 Profit and loss projections
Gross Profit 189000 219240 254318.4
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Operating Profit 7100 26394 43864.54
Net Profit 4329.9 22381 38791
From the financial projection it has been evaluated that, company will earn net profit
after the functioning of 1st year. However, it is the duty of owners and its staff members to ensure
that they maintain level of efficiency to generate higher profits in coming years.
3.5.5 Break even analysis
On the basis of break-even analysis, The Shades Beauty Salon have to attract around
4900 customers first year so as to attain no profit no loss situation.
3.5.6 Risk Evaluation
To carry out a business plan it is important for the researcher to assess all the risks and
uncertainties associated with the project so that smart and effective results can be identified.
Large amount of assets is required by the Salon owners to initiate the business activates thus,
despite of purchasing it and increasing the cash outflow. They can use leasing technique for some
of the assets to minimize the initial start-up equity risk.
3.6 Resource requirement evaluation
In order to open and run an organization various types of resources are required by the
firm. Some of the resource's that are required by Shades salon are finance, human, technical,
physical and organizational resources. These resources in context of firm are explained below. Financial- Funds will be raised from promoters, friends, family and lenders. 30% of total
required funds will raised from promoters and 10% will be raised from friends and
relatives. Remaining 60% portion of the required capital will be raised by taking a bank
loan. Hence, in this way entire capital will be raised from different sources of finance. Technical- For providing a services to the customers various types of machines and
equipments will be required by the firm. All machines will be purchased that are updated
with latest technology. All these equipments will be purchased from single supplier and
by doing so good amount of discount will be obtained. This will reduce cost of purchase
for the firm, Human resources- In an organization there will be total 8 employees. Managers would
be responsible to perform HR and marketing operations of the firm. Out of these there
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will be two mangers and 6 will be technical experts that will provide varied services to
the customers. These all will run entire business operations of salon. Physical- In terms of office facilities various machines will be available in salon and
there will be sufficient space. There will be chairs, mirrors, reception desk, computer
system, shampoo bowls. Hair dryers, laundry equipments to clean towels and many small
equipments will be purchased in order to provide services to the customers.
Organization Business relationships- Managers of firm will focus on developing business relationship
with suppliers and customers that can be put in class of premium customers. By
maintaining healthy business relationship with suppliers equipments can be purchased at
reasonable price. They can be convinced to take firm service and by providing them
good quality service word of mouth marketing can be done about firm service. This will
also help firm is increasing its customer base very quickly. Buyers and suppliers- Firm will provide service to all types of customers whether they
are high income, middle income of low income customers. But main focus will be on
those customers that have good income level and taking varied services of the firm. Firm
will maintain contact with few suppliers and every time will purchase materials from
same suppliers. This will help firm in getting good amount of discount on purchase made
every time with the same supplier. Intellectual property- Intellectual property will be core competency of an organization
and under this firm will hire technical experts for each and every type of service. By
doing so high quality of service will be made available to the customers. Public liability insurance- Public liability insurance will also be done tom get approval
from any unfortunate event. Government approval and support- UK government is fully commuted towards helping
individuals in opening their business. Government is providing grants to the those who
intends to open salon business in London. In order to get approval for the business if
there are some formalities then same will be completed to commence business
operations.
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CHAPTER 4
STRATEGIC ANALYSIS AND BUSINESS MODELS
4.1 Strategic analysis of business idea
Value chain analysis
Under value chain analysis activities of an organization are identified from beginning to
end. In case of Shade salon activities commenced from purchase of raw items and machines from
suppliers. Same are used to provide services to the customers. After receiving these raw products
same are used by the employees of an organization to provide services to the customers. Here,
value chain comes to end for the firm. This is the process that firm follow in order to provide
valuable services to the customers. It is very important to analyse value chain of the firm because
entire cost for the firm comes from this value chain. If same will be analysed properly then firm
will be able to identify activities where cost is so high. By preparing a cost control strategies
same can be controlled by the firm in order to elevate its profitability. In order to control cost
firm will purchase in bulk from supplier every time. Machines and other related products will be
purchased from same supplier every time. This will reduce cost for the firm
SWOT analysis
It is a very important tool that is used by the business managers to identify strength,
weakness, opportunity and threat of the firms. On the basis of identification of these things
managers of the firm identify the way in which they needs to go in terms of strategy formulation
for the business. SWOT analysis for Shades hair and salon is given below.
Strength Wide product portfolio- Shades hair
and beauty salon have wide range of
product portfolio. It is providing wide
rnage of services like haircut, nail
cleaning and skin care services. There
is great demand for these services in the
UK market. Hence, providing a wide
range of product portfolio is strength of
the firm.
Weakness
Focus on multiple services in
commencing year- Firm strength is
also its weakness because from
commencing year firm is focusing on
multiple services. There is a chance that
firm failed to get success that it intends
to achieve in its business. If this will
happen then it will negatively affect the
firm. Competitors of the firm are
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Service delivery by experts- Shades
hair and services is providing excellent
quality of services to the customers
because it have experts that have
expertise in delivery of specific type of
services. Other salons are also
providing services but that are not of
excellent quality. Hence, it can be said
that firm is differentiated from its
competitors in terms of service quality. Good business structure- Shades hair
and salon have good business structure.
It has two managers and six other
employees. Two mangers are sufficient
to maintain control over six employees.
Usually, it is observed that salons have
owner and he alone handle all
employees. This affects management
quality of salon. In Shades hair and
salon there is good business structure
and firm have core competency over its
competitors.
focusing on few services and are
maintaining quality in same. Hence,
strong point is also weak point of the
firm.
No focus on promotion of product or
salon name- The big mistake that
Shades hair and services make is that it
does not give focus on advertising its
product. Due to this reason people does
not know about its name. It will take
long time to firm to get popular among
the people. Hence, non advertisement
of firm name is big mistake.
Opportunity Increasing demand for non hair cut
services- In UK with passage of time
demand for non hair cut services is
increased. This include services like
manicure and pedicure etc. People are
preferring to take such services from
the salon which are providing excellent
quality of services to their customers.
Threat
Increasing number of competitors-
There is huge growth potential in this
industry and due to this reason many
individuals are attracting towards the
salon industry for opening their
business. Hence, with passage of time
number of competitors that firm face
will increase and this will put negative
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Shades salon is focusing on providing
quality services through experts of
specific service. Hence, increasing
demand for non hair cut services will
certainly provide lots of opportunity to
an organization.
impact on the firm.
Presence on numerous players in the
market- Currently, in the hair and
salon market there is a very tough
competition and number of competitors
are present in the market. When firm
will open its business it will have to
face intense competition from these
competitors. Hence, it can be said that
presence of numerous players in the
market is one of the big threat that firm
is facing in its business.
4.2 Sources of competitive advantage and sustainability
SWOT Analysis
SWOT analysis is strategic planning tool which assist in evaluating the internal position
of business enterprise. According to the present given scenario, it is important for the
entrepreneurs to evaluate the internal strengths so that owners can grab the opportunities
presented in the market to execute smooth business functioning and generate desired outcomes.
The main purpose of using this framework is that it helps in utilizing the pieces of data and
information gained from the situation analysis. SWOT analysis possess great importance in terms
of strategic planning because it considers both internal and external environment.
Strengths Weaknesses
Wide product range
Innovative services
Good business structure
Lack of brand awareness
Inexperienced human resource
Lack of financial resource for more updation
Focus on multiple services in commencing
year.
Opportunities Threats
Ever-evolving hair trends and styles Competition
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Constantly updating styling model
Introduction of new products line
Create strategic adaptation to overcome
impending challenges
VRIO evaluation of sustainability of competitive advantage
VRIO refers to the framework that assist in evaluating the capability of resources in
achieving the competitive advantage.
Resources Value Rare Imitate Durable Competitive
advantage
offered
Site &
Location
5 4 5 3 Sustainable
advantage
Brand
strength
5 5 5 4 Sustainable
advantage
Positioning 4 4 5 4 Sustainable
advantage
Superior
services
4 5 4 5 Sustainable
advantage
Managerial
vision
5 4 4 3 Sustainable
advantage
Valuable: The main purpose of opening beauty salon is to provide superior quality of
services to the customers with the help of available resources so that their needs and
wants can be satisfied. Furthermore, branded products and accessories for enhancing the
beauty and skin care for the people are considered as valuable. Availability of trending
marketing strategies will assist the course of new venture to create appropriate brand
strength within the market.
Rare: Combination of all three services are rare for the Shades as it will help them in
attaining competitive advantage within the target market. However, there are very few
salon in London which offer hair style services, nail art services and skin care services
under one roof. Thus, this is rare resource for The Shades and it will help them to acquire
competitive edge within tough market of London.
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Imitate: Owners of The Shades are focusing on hiring highly professional employees in
all the categories so that it is not easy for other imitate. The services offered by experts
will assist the course of new venture in achieving competitive advantage.
Durable: Resources itself does not provide the competitive advantage to any firm, it is the
capability of company to make optimum utilisation of available resources so that
competitive edge can be achieved.
4.3 Concepts in strategy
There are many tools that can be used in strategy formulation by Shades hair and beauty
salon. Some of these tools are described below in terms of firm.
Ansoff matrix
The matrix produced by Ansoff help managers in identification of strategy that they must
formulate in the business. It indicate strategies that can be prepared when there is new product,
already developed product, new market and existing market. According to this matrix if firm is
launching new product and it is in existing market then it must follow product development
strategy. Shades hair and salon services fall in this category because salon market is not new and
firm is newly introducing in the market. Hence, it will need to develop its product and services
in order to gain market share in highly competitive industry (Eckstein and Nguyen, 2011). If
product is new and market is also new then firm must follow a diversification strategy and under
this it must make available different products and services to the customers. This is because by
doing so it in initial stage in the market can cover huge market share in the industry. If there is
existing product in the market and market is also existed then firm will follow a market
penetration strategy in its business. Under this it will prepare fierce business strategy in order to
increase its market share in the industry. If firm is selling already existing product and market is
new then it must follow market development strategy and must prepare a strategy that will help
itself in increasing its market. Hence, this model is very useful and indicate a clear direction in
which firm needs to prepare its strategy. Shades hair and salon will follow product development
strategy under this matrix.
Mc Kinsey 7S framework
This model is used to measure state of various things in the firm. Components of this
model are strategy, structure, systems, shared values, style, staff and skills etc (Suzuki,
Watanabe and Suzuki, 2012). These components are seven internal aspects of an organization
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that must be in alignment to each other. These components are described below. Strategy- It refers to the plan that is devised by the firm to maintain its competitive
advantage over its competitors. Managers of firm must evaluate business conditions time
to time in order to make sure that changes are made in strategy according to change in
business conditions. In order to prepare successful business strategy firm must keep its
eye on changes that are taken place on the business environment. These changes must be
considered while preparing strategy for the business. Structure- It refers to division of activities and integration as well as coordination
mechanism of an organization. In order to implement strategy in proper manner there
must be appropriate structure at Shades hair and salon. If there will be absence of
appropriate structure of business then strategy will not implement properly. This is
because if there will not be proper structure then there will be less integration and
coordination among departments. Hence, it is very important to make sure that there is
appropriate structure in an organization. In context of Shades hair and salon an
organization stricture can be prepared under which under owner of salon both managers
will work and all instruction they will take from former entity regarding every action they
wants to take in an organization. Technical experts providing varied services in Shades
hair and salon will work under instructions of managers. Hence, in this way appropriate
organization structure for organization will be prepared and it will help in effective
implementation of business strategy at ground level. System- It refers to daily activities and procedures that are followed to provide services to
the customers. In salon hair cut and other services are provided and technical experts of
services must try to identify a simple way to perform any specific operations by doing so
this things can be done in easy way without doing any mistake. Shared values- It refers to value system of an organization which indicate the things that
employees of an organization must do and not do while working in an organization.
These values are shared by the employees of an organization. In Shades hair and salon
also value system will be developed under which all employees will be treated equally
and their will be no discrimination between them. This will promote group solidarity in
an organization. Style- It refers to leadership style that is followed in an organization. There are many
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types of leadership style autocratic, democratic and situation style. It will be better for
Shed salon hair services to make sure that democratic leadership style is followed in an
organization. This is because this leadership style will be followed then managers of an
organization will receive valuable suggestions from employees and they will be able to
formulate sound business strategy. Staff- In Shades salon and hair services there will be staff of 2 managers and 6 technical
experts. This is appropriate mix of superior and subordinates for an organization. This is
because 3 employees will remain in control of one manager. Hence, there will be
effective management in organisation.
Skills- It refers to actual skills and competence of employees working in an organisation.
Shades hair and salon will provide training to its employees time to time so there
efficiency level can be improved.
Porter’s Generic Strategies
In general, Porter’s Generic strategies focuses on evaluating how company peruse
competitive advantage across its chosen market scope (Kaufer and et.al., 2011). There are four
major types of strategies presented in this model which assist the course of entrepreneurs to
expand its business operations and generate competitive advantage.
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Figure 2: Porter's Generic Strategies
(Source:)
Cost leadership strategy: This is one of the generic strategies that focuses on gaining
competitive advantage through the means of reducing costs or by charging low price than
industry average. In this penetration pricing is given emphasis so that competitive edge
can be achieved within the market.
Differentiation strategy: This strategy focuses on encouraging individual to develop
different products and services or more attractive than the competitors in the market so
that target audience can be influenced to buy the products. Successful differentiation
strategy consist of good research, development and innovation as well as effective market
research so that better understanding can be developed for framing suitable sales and
marketing strategies.
Focus strategy: This strategy encourage company to emphasis on particular niche markets
and by understanding the dynamics of the market, unique needs and wants of market can
be satisfied.
According to the current business plan, owners of The Shades are recommended to use
differentiation strategy because with the help of this they can vary their products and services
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from the competitors. Furthermore, by the means of this strategy, entrepreneur can focus on
using herbal or natural products which assist in providing better skin and hair care for the
customers and enhance their level of satisfaction. Furthermore, making the use of natural
branded products in all three segment can retain large number of audience for the new venture
which indeed assist in attain future growth and development. Operating in such a competitive
market with the help of this strategy company can also use penetration pricing strategy to attract
more number of audience and generate better sales.
4.4 Business model
Business Canvas Model
In general, business canvas model is a strategic management tool that assist in illustrating
the firm’s or products value proposition, key resources, customers and finances. However, every
entrepreneur has its own way of carrying out its business and on the basis of which its model is
designed. Herein, researcher has focused on developing business canvas model of The Shades
Beauty Salon so they different essential elements of business can be evaluated.
The Shades
Beauty Salon
Channel Value
Propositions
Key
Activities
Key resources Core customers
Traditional
marketing i.e.
- Newspaper
- Posters
- Hoardings
Digital
marketing i.e.
- Social media
- Facebook
- Twitter
- YouTube
- Quality of Hair,
skin and nail art
services.
- Charging lower
than industry
average.
- Providing
healthy
environment for
the customers.
- Reducing
waiting time
- Haircut and
Styling
- Nail art and
maintenance
services.
- Skin care
services i.e.
waxing,
massage,
facial etc.
- Professional
staff
- Use of Herbal
& Natural body
products.
-
Complementary
hair wash
services.
- Male
- Female
- Children
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- Inculcating
suggestions from
industry
professionals or
experts.
Cost & Budget
- Fixed assets of £15000
- Legal and Registration charges
£2000
- Marketing Promotions £10000
- Working capital of £5000
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CHPATER 5
BUSINESS PLAN REVIEW
5.1 Overall assessment of business plan
5.1.1. Product service idea
Shade salon will provide varied services and same are described below. Hair services- Various services related to hair will be provided by the Shade salon to its
customers. In market research it has been find out that youngsters are crazy about the
different type of hairstyles and they are trying new one in order to get better look. Thus,
there is great demand for different type hair style and most of youngsters like to visit
salons that can give them good hairstyle. Hence, firm will provide excellent hair cutting
services to the customers and by doing this it will develop its loyal customer base. In
addition to this service firm will also provide hair colour services to its customers. Hence,
it can be said that under hair services firm will provide varied services to its customers. Nails services- In market research it is find out that girls are laying down special
emphasis on maintaining their long nails and in this regard they are increasingly use
services like manicure and pedicure etc. Market research is showing that there all salons
are not providing such kind of services and quality of service is not good in all salons.
Hence, there is lot of scope for the firm and by providing high quality of service firm can
increase its customer base easily.
Skincare- In market research it was identified that whether they are male or female both
are giving due attention on maintaining their skin fair. Comparative to boys girls are
specially paying due attention on maintaining fairness of their skin. Hence, skincare
services will also be provided by the firm on its premises. Under this it will provide hair
removal services and advise will also be provided to the customers regarding steps that
they can take in order to maintain fairness of their skin. Hence, it is estimated that there
will be great demand of skincare services of the firm.
5.1.2 Legal issues
There will sole proprietor status as a legal status of the firm. Firms legal status may be
either as sole proprietor or partnership or company. Shed salon is not opened in partnership and it
is also not a company. In sole proprietorship business there is a single person that run an
organization and organization structure also remain small. In case of Shed salon also there is a
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simple organisation structure under which sole trader which is owner of business will control
activities of the managers and latter entity will control functions of the former entity. Hence, in
this way activities of employees will be controlled in an organisation.
5.1.3 Financial Requirement
Assumptions:
To initiate business financial feasibility, entrepreneur have to make assumptions on the
basis of current economic condition of the market. In this regard, following are the financial
assumptions of The Shades Beauty Salon:
Estimated sales growth of beauty salon by 16% every year on the basis of demand and
changing perceptions of people towards beauty and skin care services.
Salon will work for 30 days in a month.
Considering the inflation rate of UK, owner expects to incur 5% increase costs on utilities
every year.
Rent on premises is 3% of sales.
Capital will be raised through the proportionate of 60% bank, 20% promoters and 20%
angel investors.
Tax rates are assumed at 10% on profits
10% of hike will be given to employees or staff member of The Shades.
Marketing and promotional expenditure will be increased by 10% every year.
Depreciation on fixed assets is estimated at 12% per annum on straight line method.
Service fee to professionals for training and development will be given.
Interest charged on loan will be at 7.63%.
Miscellaneous expenditure will be decreased by 3% per annum.
Cost of goods sold assumed at 30% per annum.
Project funding
According to the business plan, owners are focusing on raising initial investment of
50000 funds through different sources which are based on proportionate: 60% of bank loan, 20%
of owner’s capital and 20% angel investors.
Sources of funds Amount (£)
bank loan 30000
Owner's capital 10000
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Angel investors 10000
Total Fund required 50000
Sales forecast
Particulars Year 1 Year 2 Year 3
Average Customers per day 15 17 20
Avg spend 50 50 50
Sales 270000 313200 363312
Income Statement
Income Statement Year 1 Year 2 Year 3
Revenue
Sales from Products and services sold 270000 313200 363312
Less: COGS (30%) 81000 93960 108993.6
Gross Profit 189000 219240 254318.4
Operating Expenses
Market Research 5000 0 0
Utilities (Electricity/water/telephone) 12000 12600 13230
Promotion and advertisement 10000 11000 12100
Rent on premises 8100 9396 10899.36
Insurance 3000 3000 3000
Salary 132000 145200 159720
Service Fee 5000 5000 5000
Miscellaneous Expenses 5000 4850 4704.5
Depreciation 1800 1800 1800
Less: Total Operating Expenses 181900 192846 210453.86
Operating Profit 7100 26394 43864.54
Less: Interest 2289 1526 763
PBT 4811 24868 43101.54
Less: Tax 481.1 2486.8 4310.154
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Net Profit 4329.9 22381 38791
Cash flow statement
Cash flow statement Pre-Operating Year Year 1 Year 2 Year 3
Cash Inflow
Opening Balance 0 3000 240200 379120
Cash Sales 0 270000 313200 363312
Owner's capital 10000 0 0 0
Bank Loan 30000 0 0 0
Angel Investors 10000
Total Cash Inflow 50000 273000 553400 742432
Cash Outflow
Fixed Assets 15000 0 0 0
Market Research 5000 0 0 0
Utilities (Electricity/water/telephone) 0 12000 12600 13230
legal registration charges 2000 0 0 0
Service fee 0 5000 5000 5000
Promotion and advertisement 10000 10000 11000 12100
Working Capital 5000 0 0 0
Rent 0 8100 9396 10899.36
Interest 0 2289 1526 763
Depreciation 0 1800 1800 1800
Insurance 0 3000 3000 3000
Tax 0 481.1 2486.8 4310.154
Salary 0 132000 145200 159720
Miscellaneous Expenses 10000 5000 4850 4704.5
Loan Repayment 0 10000 10000 10000
Total Cash Outflow 47000 189670.1 206859 225527
Closing Balance 3000 83329.9 346541 516905
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Break Even Analysis
Average selling Price 50
Variable Cost 15
Contribution 35
Total Fixed cost 171900
Contribution 35
BEP 4911.429
per day Units 15
days 327
Weeks 47
Months 12
On the basis of above financial projection it has been evaluated that, investing funds in
opening new venture of beauty salon is feasible for the entrepreneur as it will generate better
results within 1.5 years. However, on the basis of income statement new business will start
generating profits from its initial year but with maintain the type of services and innovation will
assist in generating higher profits for the firm. Further, positive balances of cash flows indicates
that, with high demand in the market, The Shades will sustain in the market for longer period of
time. Lastly, on the basis of break-even analysis, cited salon should serve around 4900 people in
first year to attain no profit no loss situation. Further, with estimated 15 clients every day with
assist in reaching break-even point in 327 days, or 47 weeks or 12 months.
5.1.4 Risk issues
Every business is exposed to several types of risks because there is highly competitive
environment in which firm is operating its business. In business it is estimated that there will be
average customers of 15, 17 and 20 for the business firm. This hunch may prove incorrect
because there are number of salons that are already present in the London. On other hand, firm is
not doing marketing of its product. Hence, it may face problems in receiving target number of
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customers on single data as target is set in the business plan. In order to receive customer traffic
per day and to receive customers more then estimated firm can bring some loyalty schemes and
under this those people that are regularly coming in salon will receive loyalty card from the firm.
People that will have firm loyalty cards will get some discount on services. In this way risk
mitigation strategy will work for the benefit of the firm. Elevation in cost is another risk for the
firm and in future price of machines and equipment's that firm is purchasing may increase. Result
will be that machine that firm is purchasing at 100 will cost to 150 in future time period. Hence,
in order to handle elevation in price risks firm will make purchase of machines from two
suppliers and in same way products like shampoo will also be purchased from two suppliers. Due
to every time purchase from same people good relationship will be developed with suppliers and
bargaining power of the firm will also increase. Hence, firm will be able to purchase items at low
price and by doing this it will be able to control its cost of purchase. Thus, by repeatedly
purchasing products from same supplier risk of elevation in purchased items price will be
reduced. In business some times bitterness comes in firm and supplier relationship and due to
this reason supply of raw material reduced for the firm and its profit decreased. In order to
handle such risk it is decided to purchase raw material from two suppliers. If relationship will
become poor with one supplier then raw materials will be purchased from other suppliers. By
doing so risk of reduction in supply of goods from supplier side will be handled by the firm.
5.1.5 Marketing matters
Marketing is important part of management and firms needs to perform their marketing
function in better way in order to perform marketing function in better way. In this regard,
market segmentation for the firm is done (Kaufer and et.al., 2011). It is a technique that is used
to identify target customers for the firm on which entire attention in will be given in terms of
service delivery. In case of Shade salon market segmentation is done on the basis of
psycographic and demographic features. It was important to include both factors in the market
segmentation because by using same in appropriate way right customers can be identified as
target customers for the firm. In market research it was find out that there are two kind of
customers that comes in salon. One that have good income level and other that have low or
medium income level. In terms of lifestyle also people can be differentiated from each other.
Some people that comes in salon have affluent lifestyle and some have simple lifestyle. Hence, it
was decided to divide market on the basis of demographic and psycographic factors. On the basis
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of these factors it is identified that those people that have high income level and affluent lifestyle
are the main target customers of the firm. Firm will focus on these type of people in order to sale
its product in order to sale its products and services.
5.1.6 Organisation feasibility
It is conducted in order to identify whether proposed business can be opened as
organization. In this regard an organization can be analysed on the basis of various factors. In
this regard it is identified that to what extent promoters are motivated for opening this business.
Promoters are those who makes investment in the company and takes related managerial
decisions in the business. There are ample opportunities in the salon industry and there is also a
gap in the market. Firm strategy is to provide all services under one roof. Normally, salons are
providing limited services and are concentrated on specific services. But in case of Shed salon
services scene is different and multiple services are provided to the people in salon. This thing
motivate promoters to make investment in proposed business. For starting a market it is not
sufficient to understand a business it is also important to understand a market. If managers of an
organisation will not have knowledge of the market then it will not be possible to run a business
in proper manner. Hence, those person are taken as promoters in the business that have good
product and market knowledge. By doing so its is ensured that firm will be able to handle every
situation and it will be able counter threat and capitalize available opportunities. Business
structure as stated above is taken as sole proprietorship and under this business structure it is
very easy to run business smoothly. Hence, in such a business structure it is very easy to
implement strategy determined by the business managers. In the business structure of an
organisation there will be two managers and 6 employees. These six employees will be expert in
different type of services like haircut, skincare and nail cleaning etc. All managers will work
under control of owner of business and all employees will be responsible to follow instructions
of managers. In an organization there will be an effective system of corporate governance and
this will be done to make sure that limit of each individual person is determined and no one go
beyond that limit. By using corporate governance it is is ensured that there are pre determined
rules and regulations in order to deal with each and every situation. The main benefit that
organisation will receive by developing corporate governance is that in every situation managers
will not need to think about action that need to be taken in specific situation. Government rules
and regulations will be followed time to time in order to make sure that firm is complied with all
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rules and regulations and government can not take any action against them. Due attention is
given on developing good social and cultural system in an organisation. By doing this it is
ensured that full respect will be given to to employees that belong to different cultures in an
organisation. There will be no discrimination among employees of an organisation on the basis
of social and cultural factors.
5.1.7 Overall resources sufficiency
For every organization some of the resources are very important and this include
financial, technical, human resources and physical. In case of Shade salon due attention is given
on all these factors. Finance play a very important role in growth of an organisation and it can be
raised from the market. There is cost of this sources of finance and due to this reason 40%
proportion of the required amount of fund is taken from promoters, friends and relatives.
Whereas, 60% portion of the fund is taken from banks. By doing this cost of finance is controlled
for the firm. This also help in controlling future liabilities of an organisation. In case of technical
resources attention in on purchase of machines like dryers and small equipments etc. It is decided
that all these equipment's will be purchased from single supplier. The main strategy behind this is
that if firm will repeatedly purchase machines and raw items from single supplier then firm will
be in position to demand discount on purchase. This will reduce cost of purchase for the firm.
Human resources are the important asset of the firm and due to this reason it is decided that for
each service professional experts will be employed by the firm for all services that it proposed to
make available to its customers. If there will be professional experts in the firm then there will
be very high quality of service that is will be delivered to the customers. Focus is given on use of
furniture and fixtures at salon. Physical evidence also put lots of positive impact on the
customers. Hence, there will be number of equipments in the salon so that needs of customers
can be satisfied in proper way. There will be sufficient number of chairs, mirrors and desks in the
salon. There will be sufficient space in salon and these things will be arranged systematically
which will give good appearance to salon from inside. Apart from this there will be hair dryers,
shampoo bowls, computers and laundry equipment's in the salon. Hence, availability of these
things and equipment's will certainly help Shed salon in providing quality service to its
customers.
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5.2 Proposed plan of action
Interpretation
Network diagram indicate the sequence in which activities of the project must be
performed in order to complete project in time and at minimum cost (Quach and et.al., 2013).
From diagram critical path can be seen and same will be followed as sequence in order to
complete a project. 1+2+3+4+5+6 activities are coming in critical path these activities will be
performed in the given sequence. This method is also used to determine time that is required to
complete each and every activity of the project. This method indicate the maximum time that can
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Illustration 1: Critical path diagram
Illustration 2: GANTT chart

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be taken to complete project on time. If project manager takes more then maximum time to
complete a project the cost of same will increase for the firm and it will badly affects firm
profitability. Total time taken by the project will be 10 weeks. If project time period will increase
above this duration then also project cost will increase for the firm. This means that project each
activity must be completed in maximum allotted time and ensure project must also be complete
in determined time period. By doing this project can be complete at minimum cost.
5.3 Discussion on critical success and failure factors
In every business there are lots of factors that affects business. Some of these factors
positively affects business firms. Whereas, some of these factors negatively affects business
firms. In case of Shade salon also there are some of the success and failure factors. There are
many success factors for the firm. Firm product portfolio is excellent and it is selling wide range
of services from its premises. In market research it was identified that most of salon in London
are providing some specific services. Like specific salon is providing haircut services and some
are providing skincare services. Means that single salon is not providing all type of services. This
is there major weak point. In Shade salon all services will be provided under one rood whether
they are haircut, nails cleaning and skin care services. This will acts as success factor for the firm
in two ways. One way is that when one will comes in premises of Shade salon and services and
will take service which is of excellent quality then he would like to take other services of the
Shade salon and services. The second way in which firm will benefit from this factor is that all
services will be provided at same premises. Hence, if one needs haircut and skin cleaning
services then he would like to take service from the Shade salon. On this way product portfolio
will acts as success factor for the firm. Shade salon is not focusing on promotion of its services
and institutional advertising. There is difference between both type of advertising because in case
of service advertising products and services of the firm are advertised and in case of institutional
advertising name of the firm is advertised by the firm instead of its products and services. This is
the major difference between both type of advertisement. Firm does not do both type of
advertisement and it is major weak point of the firm. Doing an advertisement of the product is
very important because if firm name and its products will not be advertised then target customers
will not comes to know about firm. Result will be that cash flow will be low in the firm from its
commencing year. Hence, non advertisement of firm products and services is the main weak
point of the firm.
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Assumptions made in business plan
It is assumed that there will be eight employees in an organization and there will be three
service experts and two managers in an organisation.
It is assumed that average customers per day in salon will be 15,17 and 20 for three years.
It is assumed that average spending by customers will be 50 for all three years.
It is assumed that salary per month for the manager will be 1800 per month, for hair
cutting staff it is 1200 and salary of nail art and skin care will be 1000 and 1500.
Total fixed cost is assumed to be 1,71,900 which is sum of costs like rent on premises,
depreciation, insurance, salary and service fee.
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REFLECTION PART
Reflective statement is an essential aspect of a research or business plan. However, this
statement showcase the experience that investigator attained during the whole study. Herein,
researcher has developed a business plan for opening a salon in London. To present the
knowledge and experienced gained by present study, researcher uses different steps to reflect his
own learning i.e. gained knowledge, contribution of learning, utilisation of theories, gap
knowledge, Address learning skills, barriers in MBA experience, ways to address gap.
Gained knowledge- The business plan that is prepared above indicate the viability of the salon
business in London for Shades salon. During preparation of this business plan I learn lots of
things and gained knowledge. Hence, it can be said that by preparation of business plan my
knowledge level about salon industry get developed. By preparing a business plan In acquired a
deep practical knowledge about the marketing principles specially market segmentation,
different sources of finance and way in which entire capital allocation must be done among
different sources of finance. Hence this make me capable to arrange finance for the business in
systematic way and at minimum cost. During project preparation I also gained a knowledge
about human resources which is a major discipline of the management. On this basis I determine
the number of employees that needs to be employed in an organisation and the way in which
their functions can be controlled in an organisation. It is not easy to open a salon business in
London because it is capital of UK and already number of salons that are providing excellent
quality of services are present in the mentioned city. It is very difficult to earn profit in the
business and even establishing is same is one of very difficult task. Hence, I conduct market
research and under this I do deep study of the salon business and industry. In this regard I
analyse business environment of this industry very deeply.
In market research I identified that there are many types of risk associated with the
project like risk related to finance, acquiring well trained workforce and rules and regulations of
the government. Hence, it is very important to manage these risks in order to run business
smoothly. In order to conduct market research I collected data from various journals and books
as well as online published articles. Review of all these things greatly helps me in conducting
my study. I online published articles information related to business and irrelevant industry are
available. In these articles critical evaluation of the industry is available and this helps in
understanding positive and negative sides of industry performance to the business firms. On the
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basis of information available on various websites on earlier stage it can be easily identified that
if business is opened in the industry then what type of risk firm will face in its business. Through
review of articles information about available opportunities is also easily available. Hence, I
review lots of articles and comes to know about the current condition of the industry. I also
review journals in which different writers which were professional lecturers research papers were
published. Through, review of journal I came to know about the results that they derived from
their research about salon industry. I also get an information about their views related to salon
industry. Hence, this helps me in giving proper direction to my research. I also review books in
which information related to past performance of industry was obtained. Through, research from
books I gained a knowledge about the past year growth rate of salon industry and this help me in
projecting growth rate of my business for future time period.
Contribution to learning- In my MBA study I learnt many models and theories that are related
to analysis of business and industry as well as business conditions in which they are operating.
Some of theories that I learn are 7 P’s of marketing, BCG matrix, Ansoff matrix a and PESTL
as well as Porter Five forces model which is used to analyse whole market and industry in a
legitimate manner. Along with this I also learn about Gibbs reflective model which helps me in
understanding industry and business and helps in preparing better business plan for the firm in
salon industry. I applied many models and theories in this business plan and comes to know
about the way in which these theories applied practically in the business. This enhance my
knowledge level and also increase my learning about these models. At the time of preparation of
business plan I apply these theories and same helped me in acquiring good knowledge of salon
industry of UK and also helps me in comprehending complexity of business environment in
which is operating its business.
Due to good understanding of the models I am able to convert my learning in to practical
form. Means that due to proper understanding of various models and theories I become able to
apply them practically in the business plan. Through deep understanding of these theories I am
able to make real implementation of these theories. Deep understanding help me in applying
these models and theories in better way due to this reason I prepare this business plan in better
way. During preparation of my business plan many theories and techniques that I have learn from
my teachers and lecturers were applied and same helps me in giving suitable platform to present
my business idea in systematic way. Apart from this, I give my hundred percentage best to prove
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viability of my business idea on the basis of various aspects like finance, human capital and other
resources. In business plan I divide entire finance requirement among promoters, family and
friends as well as relatives and bank loan. I divide entire amount that needs to be raised for the
business among promoters, family and friends as well as relatives and bank loan in agreed
proportion. By doing this I ensured that there will be less dependency of firm on bank for
funding business project and also makes sure that there will be less finance cost on the business.
Hence, in this way on finance factor I prove viability of my business idea. I order to make
business viable on HR front I lay down special emphasis on hiring minimum number of
employees. I prepare a plan under which it was determined that employee that I will hire for
business will have excellent quality and will be able to deliver high quality of service to the
customers. By doing this I ensured that I have good intellectual capital in my business that is
capable to provide excellent service quality and serve number of people in single day. Hence, on
human resource front also I reduce a cost and also ensure that I have good workforce. Hence, on
this aspect also project seems viable for the firm.
Utilization of those theories- During my study I learnt about various theories such as external
and internal analysis, value chain analysis, Porter generic strategy and Ansoff matrix, Mc Kinsey
and SWOT model. I applied these theories and models in my business plan. Value chain analysis
was applied in business plan in order to indicate all activities of salon business in a systematic
way. Along with this Porter generic strategy model was also applied in the business plan and cost
reduction, differentiation and other one strategy was clearly evaluated and applied on the firm
salon business. All these models and theories were applied practically on salon business of the
firm. Ansoff matrix was applied on the firm and under this best strategy was identified for Shade
salon in to compete in the market.
MC Kinsey model was also applied on the business firm and activities that must be
performed in alignment to each other was identified. At last SWOT model was applied on the
firm which indicate strength, weakness, opportunity and threat for the firm. Hence, by applying
these models I evaluate business in proper way. By applying these models and theories I was
able to understand the practical application of these concepts specially when one wants to open a
new business in real world. Apart from this, during preparation of business plan in different stage
I learn many concepts and practical applicability of business idea in day to day business function.
In other words it can be said that in different phase of development of business plan I came to
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know about many new concepts that can be easily applied in day to day business function of
salon. I review various book and journals in order to identify gaps in the industry. On doing
market research I find out that there is huge gap in the industry and most of salons are focusing
on specific services and they are provided limited services to the customers in their salon. This
means that one salon is providing hair cut services and skincare services. Whereas, other salon is
providing nail cleaning and skin care services. This thing is observed in case of most of salons
and this was identified as an important gap in the industry. Hence, it was decided that in case of
Shade salon multiple services will be provided to the customers and under one roof. By doing so
customer base can be increased by the firm easily and those who wants multiple services in
single time period will take service of the Shed salon. Hence, in this way gap was identified in
the industry and opportunity is created for the firm.
Gap in knowledge- On the basis of above evaluation I can say there are certain areas of business
plan in which I was lacking essential knowledge. However, I came to know this when I have to
make in-depth analysis of different sections which are considered as the significance aspects of
the whole plan. During this, I experienced the gap in knowledge and further indebted the areas
which requires improvement. In context to business growth perspective, I came to know that
with varied gaps present in the market related to extreme level of competition, resemblance of
services, and attractiveness of different services as well as the strategies used by large salon
enterprises to eliminate the small or new venture of salon. However, gathering information all
these aspects helped me in developing suitable base or platform for initiating the start-up
activities of business so as to carry out business plan successfully.
Considering this and my own personal learning aspects, I was very confident regarding
my theoretical knowledge regarding different financial methods and marketing principles but
while developing the business plan I faced several problems due to gap in knowledge as I was
failing to implement theoretical concepts in practical prospects. This indeed create various
obstacles for the me but as I am a good learner, through the help of my mentor support and
guidance I was able to practically implement different strategic and marketing models on
assessing the internal and external prospects of new venture. Along with this, preparing financial
statements on the basis of industry growth rate and other factors I was able to use breakeven
analysis for real business. After enhancing my knowledge regarding the same I was able to
justify the objectives set for the business plan so that owners and entrepreneurs can assess the
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reliability and validity of the entire plan. By conducting market research my knowledge
regarding salon industry in UK also improved. However, I attained certain shocking and
expected information which are related to competition, growth rate etc. Wide range of companies
operating in the salon and skin care industry that it is not only to establish business but also
sustain for longer period of time. However, market research helped in me in gaining adequate
and valuable information related to different aspects of salon industry which helped me to carry
out industry analysis, competitive analysis etc. In addition to this, I gathered wide range of
information while conducting the business plan related to positioning, segmenting and targeting
strategies though the means of which I was able to develop suitable and reliable market strategies
for my business plan so that it can be established in suitable manner. This indeed assisted me in
enhancing my theoretical knowledge to a great extent as well as I learnt how to use such
information and implement them in practical conditions so that reliable and desired results and
outcomes can be generated. Therefore, with the help of qualitative study I was able to understand
the actual condition of market and accordingly develop the strategies to establish business plan in
the best possible way.
Addressing Learning Skills- Skills and capabilities are important aspect for an individual in
order to carry out any work in appropriate and reliable manner set of skills is required. Similarly,
for preparing a business plan for any new venture irrespective to industry requires varied skills
and capabilities. However, execution of the research or business plan also helps in learning new
things as well as develop various skills for future development. Therefore, carrying of current
business plan, I was able to enhance my learning in different areas such as theoretical, practical,
communication and judgemental skills. But considering other skills related to assessing industry
or market as well as assumption in financial aspects need to be improved so that more effective
results and outcomes can be generated.
In this regard, while conducting this business plan on salon industry I was able to develop
my financial analyst skills as I forecasted sales on the basis current position of industry. Along
with this I prepared different financial statement such as income, cash flow according to the
standards and principles of IFRS and GAAP. This helped me a lot to understand the actual
financial Performa of a company and how it is prepared and used. Similar to this, one more skills
I developed regarding financial aspect of business plan was conducting breakeven analysis. This
is important aspect from business point of view because assessing when business will attain the
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no profit no loss situation helps in taking smart and effective decisions regarding initiating with
the proposal or not. Therefore, financial feasibility possess great importance for business and for
me developing different skills possess great importance in terms of preparing more realistic
business plans for different entrepreneurs in different industry in ease and reliable manner.
Furthermore, this business plan assisted me or provided me great opportunity to apply all
the management concepts that I have learnt in MBA. I have started applying the theoretical
knowledge to my routine so that I can execute any type of work with more reliability and
suitability. This indeed helped me to increase my learning curve and provided my more
opportunities to enhance my skills and abilities. The given research studies and those done so far
has improved my analytic skills as a researcher. I further learnt the skill related to reflection.
Here, I got a chance to reflect on the bulk of the information that has been collected by me. It
further made me sound to present the findings in best possible manner. I also developed the
ability to pay close attention to detail and making my work well organized and presentable by all
possible means. In addition to this, my skills related to presenting the reports and illustration of
each aspect of business plan have improved a lot as I can assure readers and learners would
improve their knowledge about salon industry and its related aspects through current business
plan in reliable way. On the basis of critical thinking I have applied my knowledge to the
problems so that I can give suitable solutions to them. In this regard, to assess in the internal
external aspects of new venture I applied SWOT analysis and Porter’s five forces to make in-
depth analysis for the market to target and on the basis of capabilities of business concept.
Barriers met- While conducting this business plan as a researcher point of view I have learnt
various new things that are related to marketing, financial, salon industry but all these things
went beyond my expectations. It is because of the fact that, I know very basic about management
theories and models so that practical implications was quit tough as I faced several problems. But
in the feasibility and industry analysis I used models such as SWOT, Porter’s five force,
McKenzie 7s Model, Porter’s generic and Ansoff matrix etc. to generate desired results and
outcomes. To conduct this study was having short duration that could be counted as a barrier.
However, I have overcome this barrier through applying time management concepts to the study.
I have given sufficient time to each chapter so that the results can be come up with fruitful
outcomes. In addition to that, the limited time of this study was also a barrier that influence the
collection of data. All the information for this study has been collected through secondary
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sources. In the shorter duration of project, it was too problematic to access sufficient literature.
However, I have completed this investigation while assessing the information collected from
range of secondary sources.
In the present study, the major barrier that came across were relate to time and costs
constraints. In order to overcome these barriers I used varied models and theories. In this regard,
I faced issue in linking the problems to models as it was time consuming and required lot of in-
depth knowledge. But with the help of proper guidance and support from my colleagues and
mentors I was able to handle these issues on routine basis and conducted my business plan with
full ethical consideration and compliance of proper rules and regulations. Furthermore, while
conducting product and service feasibility I faced certain issues related to identifying the
preference of customers. Existence of wide range of salon was creating major problem for me
but with the concept of trio combination of haircut, nail art and skin care helped me to define the
unique selling point of new venture The Shades as well as helped in showcasing the factors for
competitive advantage.
Ways to address gap- I faced a lots of problems in preparing a business plan because my MBA
study fundamental were not so strong. This was big gap between skills that I must possess and
same that I currently have. Hence, I decided to improve my skills and knowledge related to my
MBA domain. In this regard, I prepare my action plan and it will prove beneficial for me. I
needed to bring improvement in my information collection, making the market research,
communication and leadership skills. In order to improve data collection skills I will start
reviewing online articles and this will help me in gathering good quality of data. I will pick any
research topic and on same I will visit different websites. This will help me in identifying that
which type of content is appropriate for the research and which not. This will help me in
identification of various websites from which data related to my MBA specialization can be
obtained easily. In order to conduct market research in better way I will review research reports
related to particular industry that us prepared by companies like Nielsen and KPMG. In reports
prepared by these companies there is overview of entire industry and various facts and figures
are also available easily. Hence, in this way I will be able to conduct my market research in
better way and my required skills will also get developed easily related to market research. In
order to improve communication and leadership skills I will improve my listening skills and will
use concise sentences. By doing this message that I intend to communicate to someone will be
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understand by front person clearly. Furthermore, the strategies indulged by me related to risks
assessment and analysis approaches assisted me to measure and solve the issues related to
different section of business plan in effective and reliable manner. Furthermore, with risk
management strategies I was able to understand all the uncertainties associated with the business
concept and developed suitable strategies and plan to resolve them for successful establishment
and running of business activities in initial stage. Furthermore, I can say that the skills and
knowledge I gained while conducting this business plan will assist me in my career development
plan. In addition to this, the guidance and support provided by my mentor and family and
friends. Further, they motivated me to carry out the study as well as helped in each and every
situation so that I can face any situation and generate desired result. Now I can say that,
confidence that I gain through this will help me in carrying out future business plans and lengthy
research in effective and efficient manner.
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REFERENCES
Books & journal
Cohen, R.L., 2010. When it pays to be friendly: employment relationships and emotional labour
in hairstyling. The Sociological Review. 58(2). pp.197-218.
Cohen, R.L., 2010. When it pays to be friendly: employment relationships and emotional labour
in hairstyling. The Sociological Review. 58(2). pp.197-218.
Eckstein, S. and Nguyen, T.N., 2011. The making and transnationalization of an ethnic niche:
Vietnamese manicurists1. International Migration Review. 45(3). pp.639-674.
Eckstein, S. and Nguyen, T.N., 2011. The making and transnationalization of an ethnic niche:
Vietnamese manicurists1. International Migration Review. 45(3). pp.639-674.
Kaufer, D. and et.al., 2011. Bringing social media to the writing classroom: Classroom salon.
Journal of Business and Technical Communication. 25(3). pp.299-321.
Quach, T. and et.al., 2012. Developing a proactive research agenda to advance nail salon worker
health, safety, and rights. Progress in community health partnerships: research,
education, and action. 6(1). pp.75-82.
Quach, T. and et.al., 2012. Developing a proactive research agenda to advance nail salon worker
health, safety, and rights. Progress in community health partnerships: research,
education, and action. 6(1). pp.75-82.
Quach, T. and et.al., 2013. Reducing chemical exposures in nail salons through owner and
worker trainings: an exploratory intervention study. American journal of industrial
medicine. 56(7). pp.806-817.
Suzuki, Y., Watanabe, J. and Suzuki, R., 2012. Tactile Score, a knowledge media of tactile sense
for creativity. In Intelligent Interactive Multimedia: Systems and Services. Springer
Berlin Heidelberg.
Wu, P.L., Yeh, S.S. and Woodside, A.G., 2014. Applying complexity theory to deepen service
dominant logic: Configural analysis of customer experience-and-outcome assessments of
professional services for personal transformations. Journal of Business Research. 67(8).
pp.1647-1670.
Online
The 6 secrets that will help your hair salon and day spa succedd, 2014. [Online]. Available
through: < https://www.entrepreneur.com/article/236745>. [Accessed on 11th March
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2016].
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APPENDIX
Total fund required
Sources of funds Amount (£)
bank loan 30000
Owner's capital 10000
Angel investors 10000
Total Fund required 50000
Sales forecast
Particulars Year 1 Year 2 Year 3
Average Customers per day 15 17 20
Avg spend 50 50 50
Sales 270000 313200 363312
Income Statement
Income Statement Year 1 Year 2 Year 3
Revenue
Sales from Products and services sold 270000 313200 363312
Less: COGS (30%) 81000 93960 108993.6
Gross Profit 189000 219240 254318.4
Operating Expenses
Market Research 5000 0 0
Utilities (Electricity/water/telephone) 12000 12600 13230
Promotion and advertisement 10000 11000 12100
Rent on premises 8100 9396 10899.36
Insurance 3000 3000 3000
Salary 132000 145200 159720
Service Fee 5000 5000 5000
Miscellaneous Expenses 5000 4850 4704.5
Depreciation 1800 1800 1800
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