Business Plan: Pet Care Service

This report presents a comprehensive financial analysis for a pet care service business. It details various income streams from services like pet spa, massage, and grooming. The report meticulously outlines expenses including salaries, advertising, repairs, rent, utilities, insurance, and professional services. Assumptions underpinning the financial analysis are clearly stated. A cash flow statement projecting income and expenses for two years is included. The report concludes with a list of references used in the analysis.

BUSINESS PLAN
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Table of Contents
FINANCIAL ANALYSIS ....................................................................................................................3
ASSUMPTIONS ...............................................................................................................................10
REFERENCES...................................................................................................................................16
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FINANCIAL ANALYSIS
Financial analysis is one of the most important part of the business as through this it is
possible to manage finance which is one of the most crucial resource of the enterprise. Further, the
present business plan is totally based on pet care service where different type of service will be
delivered to target market. Therefore, it is necessarily required to undertake the part of financial
analysis in appropriate manner so that overall operations of the business can be carried out in
effective manner. Different revenue sources are present with organization as different type of
services are rendered such as pet spa, massage, hydrotherapy, self serving bathing area, hair styling,
doggy facial etc. By providing different type of facilities to the pets high amount of income can be
earned easily and in turn it is beneficial for business in every possible manner.
On the other hand business has to incur different type of expenses and this directly leads to
decline in profitability level of the enterprise. Further, the major expenses of the enterprise are
salary, payroll, advertising, pick and drop facility, accounting and legal etc. All these are major
expenses of the organization and without this it is not at all possible for company to operate
efficiently in the market.
Repairs and maintenance
Repairs and maintenance of 200$ every month is one of the major expense which business
enterprise has to incur for carrying out its operations in effective manner. Further, it is well known
fact that dogs world has installed advanced machines for rendering different type of service to the
pets and due to this reason proper repair facility is required to be given so that quality of service
may not be influenced due to this. Moreover, proper maintenance of machines and other tools is
required so that overall productivity may not be influenced due to this. In short it is one of the major
expense of the firm and without proper repair and maintenance of tools and other type of crucial
equipments need and requirement of target market cannot be met efficiently.
Advertising
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Advertising is also one of the major expense of enterprise as business is totally new in the
market and it is required to promote products and services to the target market so that they can
easily take purchase decision with the help of this. Amount for advertising is $1000 for every
month. Further, effective promotional and marketing strategies have been developed by
management of dogs world so that pet care owners can know the unique services granted by
organization which is different from other pet care service providers in the market. Different
sources of advertising has been undertaken by firm such as print, electronic media etc. All these
sources directly enhances expenditure level of the organization but in turn good response can be
received by firm when its product range is highlighted in front of target market. It is one of the most
important start up expense of Dogs world and in turn can provide large number of benefits to the
enterprise. On the other hand, it is the duty of management to control major expenses so that profit
margin can be easily increased with the help of this.
Pick and drop facility
Pick and drop facility of the pets is another expense of the dogs world and this facility is
beneficial for the pet owners who do not have time to take their pets to places where treatment and
other kind of facilities can be provided to them. Amount for pick and drop facility is 1% of sales
Further, pick and drop facility also increases cost of the business as firm will pay salary to the
drivers who are providing this facility to the pets. It is one of the main expense of the business
enterprise and can assist in gaining competitive advantage to the entity in every possible manner.
Apart from this, pick and drop facility will allow business to serve large number of customers in
short period of time and is one of the best way to provide comfort along with convenience to the
target market.
Accounting and legal
Accounting and legal is another expense for dogs world as it is necessary for enterprise to
comply with the legal requirement and has to maintain proper accounting records so that it is
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possible to operate efficiently as per need and requirement of customers. Amount for accounting
and legal is 500$ every month. Further, it is necessary for business to pay legal fees. It is a kind of
start up expense for the business and complying with the requirement of government authorities is
necessary for the business. Moreover, time to time it is necessarily required for enterprise to comply
with the legal requirement of the government so that it may have positive impact on the brand
image of entity in every possible manner. Proper maintenance of accounts and other type of books
will help in determining whether financial resources of the business have been utilized in efficient
manner or not. This can surely bring favourable results for the business and in turn can act as
development tool for the management in every possible manner.
Rent
Dogs world has to pay rent for the building as to deliver pet care service large space is
required and due to this basic reason firm has taken outdoor space on rent and it can be utilized in
proper manner so that convenient environment can be provided to pets. Rent of the outdoor space is
750$ (Commercial, office space in Ontario., 2015). Apart from this main mission of dogs world is
to deliver best possible service to the target market due to which large space has been taken on rent
keeping in view overall comfort and convenience of customers. Rent will be paid by dogs world on
continuous basis. Moreover, large space is required for rendering different service to the pets and in
starting it is not at all possible for enterprise to purchase property with the motive to deliver
effective services to the pets. Therefore, dogs world will pay rent for the free space taken.
Telephone and website development
Expenses linked with telephone and website development is 800$ every month and it is also
major as telephones will be used by enterprise for contracting its target market and it is also one of
the major expense for organization. Further, organization has developed its own website so that
each and every crucial information can be easily shared with customers. Further, maintenance of
website is also another cost to the company and time to time management has to allocate funds in
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maintenance of site so that best possible services can be provided to customers. Due to this reason
telephone and website maintenance has also been undertaken as one of the major expense
associated with the enterprise and can enhance overall performance in the market.
Utilities
Utilities expenses of Dogs world are electricity, water, gas etc. All these things are
necessarily required by firm to carry out day to day operations. Company will use large number of
equipments for which electricity is must, water is required for rendering services such as pet spa etc.
Therefore, firm has considered utility expenses as important without which it is not at all possible to
carry out operations on continuous basis. Apart from this proper control of activities is required for
business so that cost associated with business can be easily saved with the help of this. Utility
amount is 500$ per month.
Insurance is considered as an expense for dogs world as dogs world will take insurance
facility for equipments and other tools which are necessary for delivering services to the pets.
Further, insurance of building and every employee is necessary which dogs world has taken for
benefit of its staff members. Amount of insurance is 1500$ which dogs world has to pay on monthly
basis.
Salary expenses
Salary will be payable to the financing staff, administration staff, marketing staff and other
workers. Salary will be payable on monthly basis (Harris and Mongiello, 2012). Increment will be
done in the salary on the annual basis by considering their work efficiency, profitability status and
industry standards. Salary will be considered as fixed expenditure because, it will not vary with the
change in total spa services provided to the dog. Due to this aspect, salary will not be fluctuated in
accordance with the sales of the company.
In accordance with the estimated values, average monthly salary of the company will be
$2000 per month for every five employees. In next month $2000 will be provided to seven
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employees. In this amount there will be estimated increase of 10% (Decker, 2015). In situation of
overtime work additional salary will be payable to the workers in accordance with the legislatory
aspects.
Payroll expenses
Payroll expenses can be defined as amount of wages or salary payable to the employees in
against of services provided by them. These expenses will be payable to the beauticians who will
provide spa services to the dog (Kinney and Raiborn, 2010). This expenditure will be consists of
payroll taxes such as matching payment for the social and medicare security.
This amount will vary in accordance with the services provided to the dogs in a month.
These expenses will be associated with the sales revenue of the company. It is because organization
is planning to provide remuneration to the beauticians in terms of the percentage of sales. Estimated
monthly payroll expenses of the business will be 10% of the amount of sales. Increase in payroll
expenses will be done in accordance with the change in the revenue of the Dog's World.
Outside services
Entire activities will not be completed by management of Dog's world as they will be
focused on their core activities. For this aspect additional services will be outsourced. These service
will include pick and drop services, designing of campaign for promotional activities and customer
inquiry services. With the help of these services, organization will be able to operate with more
efficiency and effectiveness.
Cost of these services will vary in accordance with the contract made by organization.
Approximate expenditure on these services will be 2%. With this approach ancillary services will be
accomplished in an effective manner in minimum cost. Organization will take fewer assistance of
outside services in order to enhance their profitability.
Supplies (office and operating)
Operating Supplies and Expenses are inclusive of non-salary related expenditures incurred
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for the accomplishment of daily operational activities of department. OSE charges include
payments for items such as utilities, office supplies, repairs, and small equipment items. These
expenses will be semi-variable in nature.
In order to operate in an effective manner, management of Dog's World is required to make
use of efficient equipment. Further, they are required to make sure that this equipment is working in
proper manner. For this they will be required to make regular repairing of the spa equipment. In
addition to this, management is required to make use of appropriate products in order to enhance
level of customer satisfaction. Supplies will be comprises of boutique section includes beds, pet
food, treats shampoo, and toys. Total expenditure of supply in initial year will be $77994 and next
year this amount will be increased up to $141941.
Taxes (real estate, etc.)
Organization will be required to pay legislatory charges in form of income tax to the
government on the earned income. Initially, tax will be payable on the property acquired by them
for operational activities. Rate for these taxes will be levied in accordance with the provisions of
wealth tax of UK. Further, organization will be required to pay income tax on the net profit of the
business at the rate of 25% (Perez, 2015). In situation of loss, organization will not be required to
pay these charges. In addition to this, they will be able to take benefit of these losses in tax
settlement of next year. Along with this, if organization had exceeded specified limit for salary and
sales then they will be required to charge tax deduction at sources (TDS). This deducted amount
will directly be payable to the government. These taxes are indirect in nature because it is paid and
borne by different parties. Tax of initial year will be $26640 and next year it will be increased with
the change in profits.
Interest
Dog' World be required to pay financial charges on the amount borrowed by them from
financial institution. These expenses are fixed in nature and are part of financing activities. Amount
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of this expenditure will be aligned with the amount of loan taken by the organization. With the
repayment of loan interest charges will also be reduced. These expenditures are charge against
profit thus it will not be affected by sales and profitability of business. Due to this aspect company
will be required to pay interest charges in regular time interval else they have to pay additional
charges. Organization is required to pay interest of $18000 in first year. Due to repayment of loan
interest charges of second year will be $12000 (Lending club., 2015).
Depreciation
Depreciation is non-cash expenses of business. Depreciation can be defined as reduction in
value of the asset due to obsolesce, efflux of time, tear and wear and other incidents. Dog's World is
required will depreciation at the rate of 15% by using straight line method (Finhealth., 2013). In this
method, amount of depreciation is constant through the usage of asset thus it will not variate in
accordance with the reducing value. Amortization will be used for written down the value of
licensing agreement.
Office and administration
For effective management of operational activities, Dog's World is required to manage their
office and administration activities in an appropriate manner (Theeke and Mitchell, 2008). Office
and administration expenses are set of expenses need for administering of business which are not
related to production activities. Approximate expenses of office and administration will be 3% of
sales. These expenses will include accounting staff wages and benefits, depreciation of office
equipment, utilities and insurance expenses.
Entertainment and travel expenses
In order to provide better facilities to the customer, Dog's World had established television
for the dogs. Further, they had also provided playing area to the owner and pet so they spent good
time. For this purpose, they had provided toys and other equipment to them. With the aim to
provide more convenience to the target market, cameras have been installed in each operation room,
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and that makes it possible for pet owners to monitor and control all the activities. On the other hand,
the interaction between staff members and their pets will provide them a piece of mind.
Approximate charges of entertainment and travel in first and second year will be $24000 and
$26400 respectively.
Professional services
Some of the spa services will be provided by expertise persons such as hair styling, doggy
specific fitness services and hydrotherapy. For this aspect, professional will be appointed by the
Dog's World who had good experience in this work (Helfrit, 2001). These services are not used
frequently by the customers. By considering this aspect payment will be made on the basis of each
visit. In addition to this, consultancy seminars will be arranged for employees in order to enhance
their skills and capabilities. Organization is required to charges for professional services in initial
year of $7200. With the increase in sale of second year, this amount also be increased by $720.
ASSUMPTIONS
For conducting financial analysis various assumptions have been taken which is fruitful for
the entire study in every possible manner. Financial assumptions have been taken which has been
shown below:
 Salary for the first year for 6 months is $2000 for 5 employees
 For next 6 months salary of 7 employees will be $2000
 10% increment in expected in next year in salary of employees
 Payroll expenses are 10% of the salary
 Outside services is 2% of sales
 Supplies is 10% of the sales volume
 Amount of repair is $200 pm
 Advertisement amount is $1000 pm
 Pick and drop facility is $420 pm
 Rent is $750 pm
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 Tax rate charged is 25%
 Rate of depreciation taken is 15%
 Office and administration expenses are 3% of sales
 Miscellaneous expenses are 3% of sales
 It is expected that company will reach its break even point till January 2016.
Therefore, these are some of the basic assumptions on which entire financial analysis has
been undertaken and in turn it is possible to know the amount of profits which can be earned by
delivering services to the pets.
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Cash flow statement Pre-operating year Year 1 Year 2
Cash Inflow
Opening balance 87000 400989.6
Owner's capital 500000 0 0
Bank Loan 300000 0 0
Sales Revenue 0 779,940 1013922
Total Cash Inflow 800000 866940 1414911.6
Cash Outflow
Fixed Assets 200000 0 0
Equipment’s 150000 0 0
Infrastructure & Designing 150000 0 0
Furniture & fixtures 100000 0 0
License & Registration 1000 0 0
Market Research 10000 0 0
Travel & Transportation 5000 0 0
Logo designing, Printing 2000 0 0
Construction 50000 0 0
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