Feasibility Study and Business Plan Development: One vehicle for acquiring an un
ID: 2581794 • Letter: F
Question
Feasibility Study and Business Plan Development:
One vehicle for acquiring an understanding of the entrepreneurial process is through the preparation of a start-up business plan. The focus of this experience is to select a concept and create a complete and persuasive business plan. Writing a business plan requires you to ask tough questions about the nature of the business.
What are the benefits of your product or service?
What is the target market and how will you penetrate it?
How will you develop and produce the product or service?
What is required from the management team?
What are the risks of the venture and what can you do to reduce them?
What are the financial implications of the plan?
What resources, including funding, are required to successfully create the business plan?
To understand the related entrepreneurial process, students will take a hands-on approach. Students will decide upon a concept and develop a feasibility study after being approved. Based on that work, you will develop a comprehensive business plan. In most cases, the primary objective of your business plan will be to receive funding if you want to become an entrepreneur. Your plan will be prepared in three phases and you will submit the plan as a written and soft document and present it to the class.
Phase 1: Concept Approval – The initial task is to select and propose a business idea to the instructor for approval. ( Project type is Beauty Salon ).
Phase 2: The Feasibility Plan – This experience begins with the creation of a feasibility plan. This will evolve into a business plan that will be a tool to assist you to put the concepts we have addressed in class in action. Resources will be provided to help you with the plan, including software that can assist you through the process. After you propose and select the type of business and begin the process of assessing its feasibility and potential, the objective is to make this a positive, obtainable, and valuable experience.
Phase 3: The Business Plan – The course is designed to provide resources to assist you throughout the development of the plan. This includes the opportunity to review previous plans. You can “approach” a mentor that will be an industry or subject matter expert to assist you with the planning process.
The Written Plan: The body of the written business plan should be no more than 25 pages including the executive summary and all financial statements. The business plan’s financial section will include a complete set of financial statements (income statement, balance sheet, cash flow) for the initial three to five years of the venture. An assumption list will accompany the statements. Detailed spreadsheets and appendices can follow the text; however, the total plan should not exceed 30 pages.
Plans must include an explanation of the offering to investors that indicate the investment required, expected ROI, deal structure, marketing plan, operations plan, and management team description. Potential exit or company sustainability strategies also must be included.
Business Plan Presentation: Strong written and oral skills greatly facilitate success in the business world. Those individuals that can effectively communicate their ideas will have an advantage over those that cannot.
( Will be Project type is Beauty Salon ). Use an assumption list the statements
Explanation / Answer
Trend Setters is a full-service beauty salon dedicated to consistently providing high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at an acceptable price/value relationship. We will also maintain a friendly, fair, and creative work environment, which respects diversity, ideas, and hard work.
Our Mission: To supply services and products that enhance our clients' physical appearance and mental relaxation.
Our Motto: "The Trend Begins Here!"
The timing is right for starting this new venture. Patiently searching for six months for the perfect location, one was finally found. The demand from the owner's clients, as well as the ambitions of the owner to one day start her own salon, and the procurement of highly professional and qualified beauticians to support the salon, has made this business one of great potential.
Curley Comb, co-owner with Roller Comb, Jr., her husband, has worked in a prestigious, upscale salon in MyTown, Texas for the past two years. Curley has created a large client following through hard work and dedication. Curley, and her talented team of beauticians, has what it takes to make this venture an extremely successful one. We expect our growing reputation to lead to new clients and beauticians to support our anticipated growth.
To achieve our objectives, Trend Setters is seeking additional loan financing. This loan will be paid from the cash flow from the business, and will be collateralized by the assets of the company, and backed by the character, experience, and personal guarantees of the owners.
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
1.1 Keys to Success
The keys to success in our business are:
· Location: providing an easily accessible location for customers.
· Environment: providing an environment conducive to giving relaxing and professional service.
· Convenience: offering clients a wide range of services in one setting, and extended business hours.
· Reputation: reputation of the owner and other "beauticians" as providing superior personal service.
Company Summary
Trend Setters will, upon commencement of operations, sell a wide range of beauty services and products. We will provide quality hair, nail, and skin services, along with top lines of beauty products. What will set Trend Setters apart from the competition is our commitment to providing all of these services in one convenient location.
The salon will be located in a retail strip mall at 1234 Stylish Road, MyTown. The salon will utilize 1,540 square feet. The location is strategically situated on one of the busiest streets in MyTown. It is a high profile area, with easy access from all parts of town.
2.1 Start-up Summary
After spending several months searching for a salon to purchase, the owners decided to start a salon from the ground up. The start-up capital will be used for the design, leasehold improvements, and equipment of the salon.
Leasehold improvements will amount to approximately $32,500, and salon equipment will cost about $27,000. The owner will invest $500 for cash-on-hand at starting date.
START-UP REQUIREMENTS
Start-up Expenses
Rent deposit
$1,817
Other
$0
TOTAL START-UP EXPENSES
$1,817
Start-up Assets
Cash Required
$500
Other Current Assets
$600
Long-term Assets
$59,500
TOTAL ASSETS
$60,600
Total Requirements
$62,417
Need real financials?
We recommend using LivePlan as the easiest way to create automatic financials for your own business plan.
Create your own business plan
START-UP FUNDING
Start-up Expenses to Fund
$1,817
Start-up Assets to Fund
$60,600
TOTAL FUNDING REQUIRED
$62,417
Assets
Non-cash Assets from Start-up
$60,100
Cash Requirements from Start-up
$500
Additional Cash Raised
$0
Cash Balance on Starting Date
$500
TOTAL ASSETS
$60,600
Liabilities and Capital
Liabilities
Current Borrowing
$0
Long-term Liabilities
$61,917
Accounts Payable (Outstanding Bills)
$0
Other Current Liabilities (interest-free)
$0
TOTAL LIABILITIES
$61,917
Capital
Planned Investment
Owner
$500
Investor
$0
Additional Investment Requirement
$0
TOTAL PLANNED INVESTMENT
$500
Loss at Start-up (Start-up Expenses)
($1,817)
TOTAL CAPITAL
($1,317)
TOTAL CAPITAL AND LIABILITIES
$60,600
Total Funding
$62,417
Products and Services
Trend Setters is considered an upscale full-service beauty salon. We will offer a wide range of services that include:
· Hair: cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing, weaving, waving.
· Nails: manicures, pedicures, polish, sculptured nails.
· Skin Care: European facials, body waxing, massage.
Strategy and Implementation Summary
Skill at what we do, good customer service, and creating a pleasant environment for our customers will be important to implementing our business plan.
4.1 Competitive Edge
Trend Setters wants to set itself apart from other beauty salons that may offer only one or two types of services. Having come from such a salon, Curley has realized, from talking with her clients, that they desire all of the services that we are proposing, but they remain frustrated because they must get their hair done at one place, and nails done at another. Although the focus of Trend Setters is hair services, we do wish to offer our clients the convenience of these other services in one location.
There are a number of salons like ours, but they are mainly in the very high income parts of MyTown and surrounding areas. We do not intend to compete with these so called "Day Spas." We wish to offer a middle ground for those clients who can't quite afford those high-end luxury salons.
Our business atmosphere will be a relaxing one where clients can kick back and be pampered. Soft drinks will be offered to clients as they enter for service. Televisions will be located in the waiting and hair-drying area area.
To develop good business strategies, perform a SWOT analysis of your business. It's easy with our free guide and template. Learn how to perform a SWOT analysis
4.2 Marketing Strategy
Our marketing strategy is a simple one: satisfied clients are our best marketing tool. When a client leaves our business with a new look, he or she is broadcasting our name and quality to the public. Most of our clients will be referrals from existing clients.
No major advertising campaigns are anticipated. Our research has shown that word of mouth is the best advertising for this type of business. We will, however, run specials throughout the week. We will also ask clients for referrals, and reward them with discounted or free services depending on the number of clients they bring. We will also offer discounts to the new clients who have been referred. There are plans for a lottery that will offer a free trip to, say, Cancun. A client would simply refer new clients to us, and we will place a card in a box for each client he or she brings. The more they bring, the more chances they have of winning the trip.
4.3 Sales Forecast
The following table and charts show our projected sales. We expect income to increase steadily over the next three years, as the reputation of the salon, its stylists and services become apparent to the general public. Second year revenues also anticipate the addition of one new stylist.
Note that we list no direct cost of sales here for services, only for products, since our service costs are more accurately tracked as regular monthly expenses for supplies in the Profit and Loss table.
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
SALES FORECAST
YEAR 1
YEAR 2
YEAR 3
Sales
Owner
$49,600
$57,040
$65,696
Stylist #1
$49,600
$57,040
$65,596
Barber #1
$16,800
$19,320
$22,218
Stylist #2
$22,800
$25,622
$29,465
Stylist #3
$0
$22,000
$24,000
Nails and massage
$18,000
$20,000
$22,000
Product sales
$9,600
$10,000
$11,000
TOTAL SALES
$166,400
$211,022
$239,975
Direct Cost of Sales
Year 1
Year 2
Year 3
Product Costs
$4,320
$4,300
$4,400
Other
$0
$0
$0
Subtotal Direct Cost of Sales
$4,320
$4,300
$4,400
Need real financials?
We recommend using LivePlan as the easiest way to create automatic financials for your own business plan.
Create your own business plan
4.4 Milestones
Sample Milestones topic text.
The milestones table and chart show the specific detail about actual program activities that should be taking place during the year. Each one has its manager, starting date, ending date, and budget. During the year we will be keeping track of implementation against plan, with reports on the timely completion of these activities as planned.
MILESTONES
Milestone
Start Date
End Date
Budget
Manager
Department
Sample Milestones
1/4/2008
1/4/2008
$0
ABC
Department
Finish Business Plan
8/20/2010
9/19/2010
$100
Dude
Boss
Acquire Financing
8/30/2010
10/19/2010
$200
Dudette
Legumers
Ah HA! Event
9/9/2010
9/14/2010
$60
Marianne
Bosses
Ah Merde Alors! Event
10/9/2010
10/14/2010
$250
Marionette
Bouc émissaire
Grande Opening
10/19/2010
10/24/2010
$500
Gloworm
Nobs
Marketing Program Starts
9/19/2010
10/14/2010
$1,000
Glower
Marketeers
Plan vs. Actual Review
2/14/2011
2/21/2011
$0
Galore
Alles
First Break-even Month
6/18/2011
7/18/2011
$0
Bouys
Salers
Hire Employees
5/17/2011
6/16/2011
$150
Gulls
HRM
Upgrade Business Plan Pro
8/5/2011
8/7/2011
$100
Brass
Bossies
Totals
$2,360
Management Summary
Trend Setters will be organized and managed in a creative and innovative fashion to generate very high levels of customer satisfaction, and to create a working climate conducive to a high degree of personal development and economic satisfaction for employees.
Training classes to help improve employee product knowledge and skills will be conducted on a regular basis. As the business grows, the company will consider offering an employee benefit package to include health and vacation benefits for everyone.
5.1 Personnel Plan
The personnel plan calls for a receptionist who will greet customers and receive payments for services and products. There will be five hair stylists, one barber, one nail technician, one facialist, and a massage therapist. Everyone but the receptionist will be contract workers, and will be paid a sliding commission scale based on the amount of revenue created. Future plans include the hiring of a shampoo technician as the business expands.
In the first year, assumptions are that there will only be three hair stylists, a barber, and part time nail, facial, and massage technician until the business can build a reputation that will attract others to work there.
PERSONNEL PLAN
YEAR 1
YEAR 2
YEAR 3
Owner (Stylist)
$24,000
$25,000
$26,000
Receptionist
$14,400
$15,120
$15,876
Shampoo Tech
$8,000
$12,400
$13,000
TOTAL PEOPLE
3
3
3
Total Payroll
$46,400
$52,520
$54,876
Financial Plan
Our goal is to be a profitable business beginning in the first month. The business will not have to wait long for clients to learn about it since the stylists will already have an existing client base.
To assure the start-up funds lender that the owners are financially stable, a personal financial statement is enclosed illustrating other sources of income that include interest and dividend income from investments ($2,840), salary income ($29,658), and commission income ($15,000).
6.1 Important Assumptions
The financials that are enclosed have a number of assumptions:
Revenues will grow at an annual rate of 15%, increasing 20% in November and December due to a historical jump in revenues at this time of year. We anticipate this increase to stay steady throughout the following year to account for the normal flow of new clients coming into the salon. Estimates for sales revenue and growth are intentionally low, while anticipated expenses are exaggerated to the high side to illustrate a worst case scenario.
We did not use cost of goods sold in our calculations of net service sales, but included all related recurring expenses, such as payroll and supplies, in the operating expenses area of the profit and loss table. The only direct costs in the sales forecast are for projected product sales.
Product sales are a minimal part of our market. We are not quite sure how much revenue will be derived from products, so we took a low-ball approach and estimated sales of $800 a month. Also in the sales projections table are services such as nails and massages. We are not quite sure how much revenue these two services will generate. We are certain that in time these services will be a large part of our revenue, but to err on the conservative side, we estimate revenues from these services to be only $1,500 a month for the first year.
GENERAL ASSUMPTIONS
YEAR 1
YEAR 2
YEAR 3
Plan Month
1
2
3
Current Interest Rate
10.00%
10.00%
10.00%
Long-term Interest Rate
10.00%
10.00%
10.00%
Tax Rate
30.00%
30.00%
30.00%
Other
0
0
0
Need real financials?
We recommend using LivePlan as the easiest way to create automatic financials for your own business plan.
Create your own business plan
6.2 Projected Cash Flow
We expect to manage cash flow over the next three years simply by the growth of the cash flow of the business. The business will generate more than enough cash flow to cover all of its expenses.
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
PRO FORMA CASH FLOW
YEAR 1
YEAR 2
YEAR 3
Cash Received
Cash from Operations
Cash Sales
$166,400
$211,022
$239,975
SUBTOTAL CASH FROM OPERATIONS
$166,400
$211,022
$239,975
Additional Cash Received
Sales Tax, VAT, HST/GST Received
$0
$0
$0
New Current Borrowing
$0
$0
$0
New Other Liabilities (interest-free)
$0
$0
$0
New Long-term Liabilities
$0
$0
$0
Sales of Other Current Assets
$0
$0
$0
Sales of Long-term Assets
$0
$0
$0
New Investment Received
$0
$0
$0
SUBTOTAL CASH RECEIVED
$166,400
$211,022
$239,975
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations
Cash Spending
$46,400
$52,520
$54,876
Bill Payments
$99,540
$128,730
$147,285
SUBTOTAL SPENT ON OPERATIONS
$145,940
$181,250
$202,161
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
Principal Repayment of Current Borrowing
$0
$0
$0
Other Liabilities Principal Repayment
$0
$0
$0
Long-term Liabilities Principal Repayment
$12,000
$12,000
$12,000
Purchase Other Current Assets
$0
$0
$0
Purchase Long-term Assets
$0
$0
$0
Dividends
$0
$0
$0
SUBTOTAL CASH SPENT
$157,940
$193,250
$214,161
Net Cash Flow
$8,460
$17,772
$25,814
Cash Balance
$8,960
$26,733
$52,547
START-UP REQUIREMENTS
Start-up Expenses
Rent deposit
$1,817
Other
$0
TOTAL START-UP EXPENSES
$1,817
Start-up Assets
Cash Required
$500
Other Current Assets
$600
Long-term Assets
$59,500
TOTAL ASSETS
$60,600
Total Requirements
$62,417
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.