Clark and Family Inc - Establishment of a Luxury Day Spa in Camden Beach - Example

BUSINESS PROPOSAL FOR A LUXURY SPA Owners: Clark and Family Inc. Authors: Address: Phone: E-mail: Fax: Executive summary This is a business proposal by Clark and Family on the establishment of a luxury day spa in Camden Beach. We are a family involved in the hospitality industry. We offer free lance hospitality services such as massages, manicures, pedicures, facials, body treatments, waxing, reflexologies and the likes. Our target audience is ahigh end Camden Beach residents and any other interested parties. We operate on call where we visit the customers’ home and offer them our services in the comfort of their residence. We have been receiving more calls than we have enough staff for and, therefore, the future of our business and customer base is exponentially expanding. In the beginning,we used to get three or four clients a week, but at the moment we are receiving up to twenty calls a day from clients interested in our services. Our company is very adequately scalable, as we intend to grow our business, but maintain the quality of our services. This will involve training our personnel on our quality requirements. We intend to open several branches in high end neighbourhoods in the future and possibly at one time, expand even internationally. The company. The family has been in the hospitality business for six years nowbut has been on a free lance basis with an office located at Camden Beach. Our employees operate on call. The owners, Mr. and Mrs. Clarke,have great knowledge in this business. Mr. Clarke had a Masters Degree in Business Administration from Harvard University. Mrs. Clarke has a degree in Hospitality from the University of Yale. Together we have run a successful business for the past six years and have managed to rise it from nothing to a company with a yearly turnover of $120,000. We felt that investing in a spa would ease the workload and commuter hustle and also increase the number of clients due to a central location for the required services. We are starting the spa now since we both feel we should be self employed and also due to the strained schedule of meeting our customers’ demands. I am retiring from my day job to focus on this venture and we are determined to turn this investment into a multimillion dollar business in the next five years. We are hereby requesting $100,000 to assist in establishing this business. We intend to combine this with our savings of an equal amount and invest it in the construction and establishment of the business, which on calculations resulted to roughly $200,000. This money will help bring up an establishment which will assist us in increasing the number of our customers as well as providing this rare service to the residents of Camden Beach. We expect to double our turnover in the next year and repeat this feat in the coming five years. In this way, we will be able to repay the funds in at most three years with an interest of at least 8% compounded annually. We hope that our request is granted (Quoteroller (2014). Contents Contents 4 Introduction 5 Mission 5 Services offered 6 Market analysis 9 Industry Analysis 9 Competition 10 Primary target market 10 Marketing 10 Financial plan for the first three years (bplans 2014) 11 Critical risks 14 References 15 Introduction This idea was fronted by Mrs. Clarke, who has been the manager of the business. It is an idea that arose after the demand for her services in hospitality grew to more than she could manage to supply. The number of clients requesting her services has grown exponentially, and two years ago she had to hire seven employees to try and satisfy the customer base. However, the number of customers kept increasing and at the moment. More than 20 customers a day are calling her office to request for her services. This led to the idea of bringing the clients to her, instead of taking her services to the clients. She floated this idea to her clients and an astonishing 97% of the 116 customers consulted, agreed that it was a good idea to have a central location for her to offer her services. Hence the idea was hatched. She fronted the idea to me and I did the math and being a Business Major, I feel it is a highly viable business idea. One for which I am willing to retire from my day job for. We have done the required research on the idea and have a site which would be perfect for this. We have also researched on the equipment costs as well as the construction of the actual spa and feel that a financial input of $200,000 will be adequate. Mission Goal: To grow this business into a multimillion dollar business. Objectives: To provide luxury hospitality treatments to the people of Camden Beach. To establish a central point to offer these services. To facilitate the service of all customers by increasing the number of staff members. Customers: We are targeting high end customers in posh estates. This will assure them of exclusivity and privacy as well as their personal security. We will not allow any media in the premises for our celebrity clientele. These customers are willing to pay big money for exclusivity and we intend to tap into this factor (Enterpreneur 2014). The Industry: Recent studies have shown that the demand for high end hospitality is growing. With the recent increase in the number of people moving into leafy suburbs, exclusivity is key to their development. Therefore, the demand for our services is expected to growas has been witnessed by the increased number of customers. Our Strengths: We are a very solid team of individuals in the company. My wife has been the manager of the company and I have been in charge of the finances. Our team of employees is very effective and up to date, we have not received a single complaint about the quality of our services. We intend to keep this unity strong and establish a very effective business company of likeminded individuals(Software 2014). Status of ownership: Our company is a sole proprietorship company and is owned jointly by me and my wife under one registration as well as one bank account. Services offered Our spa will offer a number of services. These include aromatherapy, facials, massages, body treatments, waxing and hair removal, specialty massages, and other aesthetician services that will provide our company with high margins of profits on a daily basis. Plans may include other services such a physical exercise gym and yoga studio. The Products are as listed in detail with their costs (Champneys 2014): Relaxation Massage and Pregnancy massage: This is a massage thathelps the client in relaxing their body. Cost:$150 per hour Aromatherapy: This is a method of body and mind relaxation which involves the use of scented incense sticks and candles. The client is given a massage while the incense sticks are lit. This helps in quick relaxation of the body and mind. Cost: $200 per hour Hot Stone Massage: Is amassage that is aimed at increasing lymph and blood flow. It removes blockages and speeds up recovery after injury. Cost:$210 per hour Facials: This is a form of facial cleansing consisting of a massage and application of cosmetic creams. Source: https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQyWIP_H9THbehCgJ4a1_jrg9Q2xEYNTojfXM_rkWUsHUv2IY4nawjyDzbW Cost:$160 per hour Deluxe manicure: This is specialised treatment of the fingernails, including application of special nail polish. Cost:$55 Deluxe pedicure: This is the specialised treatment of the feet and the toenails. Cost:$140 Waxing: This is theremoval of body hair by use of wax and a stripper. Cost: underarm $25, arm $50, half leg $45, full leg $80, bikini $40, Brazilian$90, chest $55, back $65, brow $20, chin or lip18. Sauna: This is detoxification of the body by use of steam Cost: $100 per hour Personal Training: Personal trainers have unique exercise regime for individual customers. These include yoga, pilates and gym exercises. Costs: 60-minute session 6 sessions......................................$400 12 sessions....................................$750 24 sessions....................................$1,500 36 sessions....................................$2100 30-minute speed session 6 sessions......................................$240 12 sessions....................................$450 24 sessions....................................$840 36 sessions....................................$1,300 Health drinks: These will be offered for customers interested in their internal health. Cost: $3-$10 We plan to introduce other services depending on the requests of the clients. Market analysis Industry Analysis Spas and other salons that provide no accommodation services provide our economy with an estimated $10 billion a year in taxes and revenues. It is estimated that there are over 10,000 spa establishments in the country, those in hotels being included. These spas,however, offer their services to anybody who is interested. We intend to make our spa a members only spa to serve only high end residents and tap into their assurance of security. No other spa in the country has done this so far. With spas giving annual payrolls of billions of dollars, we expect that our business will be able to tap into this industry and rake in a good amount of profits. Competition This is an area where we are lucky, since there is currently no spa in a fifteen mile radius, hence the high demand for our services. Therefore introducing a spa at this time will help us win over the clientele and establish loyalty with our customers. We will roll out a client loyalty programme that will reward loyal customers and this will keep our customers with us, even in the event of another spa being established. Primary target market We are targeting customers with high incomes who reside in the leafy suburbs. These are customers who are able to easily afford luxury spa treatment and will havecontinued membership year after year. They are also customers who will easily consume any additional services we offer. Marketing Marketing Objectives: The main objective in our marketing strategy is to: Start a local campaign by reaching the target audience using flyers, local newspaper advertisements, television advertisements and by word of mouth. To develop an online presence by creating a website with our services and contact information which our clients can access Marketing Strategies: The company will to the best if its ability reach out to its customer base by local advertising through traditional print. The company will also print about 100 t-shirts to give to the first 100 clients as a form of promotion. This is bound to increase the number of initial customers. We also intend to develop a comprehensive website that will incorporate all the necessary information about the spa. This is very important since most people use the internet today to find services such as spas that are close to them. Financial plan for the first three years (bplans 2014) FINANCING Equity Contributions Management Investment $100,000 Total Equity Financing $100,000 Banks and Lenders Lenders $100,000 Total Debt Financing $100,000 TOTAL FINANCING $200,000 General Assumptions Year 1 2 3 Short Term Interest Rates 8% 8% 8% Long Term Interest Rates 9% 9% 9% Federal Tax Rate 32.5% 32.5% 32.5% State Tax Rate 5% 5% 5% Personnel Taxes 15% 15% 15% Projected Costs for year 1 ITEM COST Construction of spa $96,570 Cost of Equipment $52,396 Utilities $2,320 Salaries $21, 456 Licensure & Professional fees $4, 220 Marketing $10,000 Insurance $1,600 Miscellaneous Costs $11438 TOTAL COST $200,000 Projected Sales Client Membership Registration @ $500 per person $50,000 Client Service Fees $100,000 Gross Income $150,000 Deductions Federal Tax $48,750 Loan Repayment $67,550 TOTAL DEDUCTIONS $116,300 Net Profit = $33,700 Year 2. Projected Costs: ITEM COST Utilities $2,320 Salaries $21, 456 Licensure & Professional fees $4, 220 Marketing $3,000 Insurance $1,600 TOTAL COST $32,596 Projected Sales Client Membership Registration @ $500 per person $75,000 Client Service Fees $125,000 Gross Income $200,000 Deductions Federal Tax $65,000 Loan Repayment $67,550 TOTAL DEDUCTIONS $132,550 Net Profits = 68,554 Year 3 Projected Costs: ITEM COST Utilities $2,780 Salaries $30, 456 Licensure & Professional fees $4, 890 Marketing $10,000 Insurance $1,600 TOTAL COST $49,726 Projected Sales Client Membership Registration @ $500 per person $100,000 Client Service Fees $175,000 Gross Income $275,000 Deductions Federal Tax $89,375 Loan Repayment $67,550 TOTAL DEDUCTIONS $156,925 Net Profits = 136903 Critical risks We face the risk of possible allergic reactions with some of our clients who may have highly sensitive skin. They could experience some minor to severe reactions especially if they are not aware of their allergies. However, we willensure that each client fills in a form which indicates any allergic reactions they might have prior to any treatment so that their needs are dully catered for without risk of any medical emergencies. If at all any medical emergencies arise, we will be located in proximity to the hospital and we will provide the necessary transport to rush the client over for medical attention. Another possible risk we may experience at the spa is minor injuries. These may include slips and falls. To counter this we wish to provide the necessary grip in bathing areas, showers and have regular mopping of floors to prevent unnecessary wetness. There is also the risk of burns and scalds from extremely hot water. We wish to prevent this by ensuring proper water temperature regulation by our staff as well as well serviced mechanical devices References Bplans.co.uk, (2014). Health Spa Sample Business Plan - Financial Plan. [online] Available at: http://www.bplans.co.uk/health_spa_business_plan/financial_plan_fc.cfm [Accessed 23 May. 2014]. Champneys.com, (2014). Day Spa Menu Treatment List | Champneys. [online] Available at: http://www.champneys.com/day-spas/treatments/ [Accessed 23 May. 2014]. Entrepreneur, (2014). How to Open a Salon or Day Spa. [online] Available at: http://www.entrepreneur.com/article/79550 [Accessed 23 May. 2014]. Quoteroller.com, (2014). Business Plan Template | Executive Summary. [online] Available at: http://www.quoteroller.com/proposal-templates/business-plan-template/ [Accessed 23 May. 2014]. Software, P. (2014). Day Spa Business Plan Sample - Company Summary | Bplans. [online] Bplans.com. Available at: http://www.bplans.com/day_spa_business_plan/company_summary_fc.php [Accessed 23 May. 2014]. Spaelysium.com, (2014). Salon services and spa therapies price list - hair, manicures, waxing, facials, massage. [online] Available at: http://spaelysium.com/price.asp [Accessed 23 May. 2014]. Thefinanceresource.com, (2014). TheFinanceResource.com - Free Day Spa Business Plan. [online] Available at:http://www.thefinanceresource.com/free_business_plans/free_day_spa_business_plan.aspx [Accessed 23 May. 2014]. Read More