Portable Massage Business Organization Plan - Example

Business Plan Business Goals and Objectives The short-term goal of the proposed ‘Portable Massage’ is to turnover profit. The aim of any business establishment is to ensure equitable return on investment, as such the proposed business is anticipated to have guaranteed returns that provide profits to the investors. The business targets a turnover of between AED 1.45 million to AED 1.798 million annual turnover for every massage van in service. The proposed business will provide Indonesian massage services, from a moving van, to residents of Sharjah at their convenience, grow the business to include more than 1 van that serves Sharjah and the neighboring townships, and serve, on average, 2900 customers annually for every massage van in service. The long-term goal of the proposed business is to build a brand name that is synonymous with quality massage services, provide other types of massages in addition to the flagship Indonesian massage service, and grow the business to have a national and regional coverage (Chaudhuri and Holbrook 81). In building the brand name, the clients will be made to understand that it is a high quality and reliable alternative to stationary massage centers. As a true alternative it will offer a highly personalized massage experience at competitive prices. The clients must know that contracting massage services from ‘Portable Massage’ will guarantee them professional care. The proposed business initially intends to and will advertise for the provision of pampering massage services that will target high disposable income individuals who experience pain and require massage services once every week, but over time the business will expand its portfolio to include clients recovering from injuries, those preferring alternative medicine, and professional athletes. Those recovering from injuries will include referrals from physical therapists and chiropractors, with the clients expected for their massages and not the insurance. Those using massage as an alternative medicine will be doing so as preventive medicine and will be expected to access massage services as often as they can do so or afford. Professional athletes will access massage services to recover from injuries, prevent injuries, and improve their performance. The current age group targeted will be older than 17 years of age. Any client younger than 18 years of age will not be allowed to access massage services. Over time as the business grows protocols for the massage of minors and provision for guardian consent will be provided to ensure that this age group is captured as massage clients. The business will also employ massage therapists qualified and certified to massage minors. Organizational Structure & Human Resources The initial organization structure will include the four business owners, who are equal partners in the business, and the massage therapist who will also back up as the massage van driver. As the business grows and responsibilities increase additional help will be contracted in the form of legal aid, business consultation, financial services provider, sales and marketing, and graphics. The proposed business will be managed by the four owners who have been assigned offices (see figure 1). Investor 1 has been engaged as the general manager because he has previous experience as part of a small business management. His duties include coordination of all aspects of the business, identification of growth and loss opportunities, and point man for all negotiations. Investor 2 has been appointed as the sales and marketing manager due to his marketing background and academic credentials. His responsibilities will include all marketing activities, addressing customer concerns and feedbacks, and positioning of the business in various platforms. Investor 3 will act as both the clients’ bookings and bills payment manager, and purchases and acquisitions officer. He has an accounting background that will enable him best manage the financial aspects of the business. Investor 4 will be appointed as the liaisons and human resource manager. She has a personnel management background that would facilitate her in her duties. Figure 1. Proposed Portable massage business organization plan The proposed personnel remuneration plan has been presented in table 1. All the workers, including the 4 investors, will be expected to hold jobs and be paid for their services. A new massage therapist will be employed on the second year to provide massage services in the massage van to be purchased at the end of the first year. By the end of the first year there will be five personnel directly employed by the business with an additional one massage therapist employed at the beginning of the second year. All personnel are expected to sign annual contracts that stipulate their working terms, benefits expected and workplace conduct. All salary payments will be made at the end of every month. The personnel remuneration packages have factored inflation and benefits. The indicated remunerations are the gross earnings that have neither been taxed nor remittances to the social security fund and insurances made. Table 1. Proposed personnel remuneration plan for ‘Portable Massage’ covering a three year time period. Personnel plan Annual salary (AED) Personnel position Number Year 1 Year 2 Year 3 General manager 1 120000.00 150000.00 200000.00 Sales and marketing manager 1 120000.00 150000.00 200000.00 Clients and booking manager 1 120000.00 150000.00 200000.00 Purchases and acquisitions manager 1 120000.00 150000.00 200000.00 Liaisons and human resource manager 1 120000.00 150000.00 200000.00 Massage therapist 1 180000.00 200000.00 220000.00 Others (massage therapist) 1 0.00 180000.00 200000.00 Totals 7 780000.00 1130000.00 1420000.00 Business Risks Most new businesses have been reported to fold up due to business owners not having any entrepreneurial background, business education, experience, not conducting a market analysis and not having a comprehensive business plan. All the 4 investors in ‘Portable Massage’ who have also been appointed as top level management have basic business education backgrounds that allow them to better understand their roles and perform their duties. Some of the management personnel have experiences gained from other businesses. The proposed business will employ a professional massage therapist who has been certified and licensed to operate in Sharjah city. A comprehensive market analysis was also conducted and a business plan prepared prior to the business commencing operations. The recommendations of the market analysis and business plan will be applied diligently in the operation of the business (Griffin 64; Kandampully and Suhartanto 346). The second business risk that has been identified is professionalism. The massage therapist employed will be certified and licensed to operate in the city. Legal and professional advice will also be budgeted for and solicited in all aspects of the business operation and management. The business will also seek to join the local chamber of commerce and any other relevant business and professional bodies in the vicinity (Cronin, Brady and Hult 193). The third business risk is failing to register the business and running afoul of local and national government authorities. The business will be registered and all necessary documentations and authorizations amassed before operations commence. Tax return forms will also be completed diligently and in a timely manner (Anderson and Mittal 107; Reinartz and Kumar 107). The fourth business risk is failing to incorporate customer suggestions. A customer feedback system will be created by the liaisons and personnel manager to ensure that all client feedbacks are integrated into business operations and plans. Staff performance and appraisals will also be conducted to evaluate personnel performances. The massage therapist(s) will be expected to attend annual massage therapy conventions and conferences to ensure that they are at par with the latest and most effective massage therapies and technologies (Butcher, Sparks and O’Callaghan 1082). The fifth risk is loss of business premises and injury to personnel through disaster and road accidents. Given that the business is not stationary, there is always a possibility of any number of accidents occurring. Towards this end all personnel will be trained on personal safety measures and insurance cover paid for to ensure that the business is stable (Bloemer, de Ruyter and Wetzels 1082). The sixth risk is marketing. A marketing plan will be drawn to target all potential customers in the area and ensure that they are aware of the massage therapy services being offered, its advantages and how to access the services. Flyers and billboards will be used in the marketing strategy (Bloemer, de Ruyter and Wetzels 1082). Financial Planning This financial plan was been based on conservative estimates and a number of assumptions as presented in table 2. The estimates, assumptions and projects are subject to change and are based on market analysis. All projections and estimates have been calculated as either annual or monthly figures. The payroll estimates are based on the figures presented in table 1. The total sales are based on the business capacity and are the high end estimates of the business capacity while operating at 100 % capacity. The tax rates are based on government and banking sector figures and projections. Table 2. Financial plan assumptions and estimates General assumptions Amount (AED) Time rate Annually Current interest rates 10.00% Long-term interest rates 12.00% Tax rate 25.00% Sales on credit % 30.00% Other 0.00% Annual amount (AED) Calculated totals Year 1 Year 2 Year 3 Payroll expenses 780000 1130000 1420000 Total sales 1624000 3248000 3248000 Sales on credit 487200 974400 974400 The startup costs have been calculated and presented in table 3. The figures include all projected expenses, investments and funding sources for the new business. The figures are projections of what is required for the business to become a reality and take off. Given that the business is a new one there are no liabilities. Table 3. Startup capital and liabilities Startup Requirements Description Value (AED) Startup expenses Legal advice 10000.00 Office supplies and stationary 3000.00 Brochures and flyers 5000.00 Insurance 10000.00 Expensed equipment 80000.00 Other startup expenses 50000.00 Total startup expenses 158000.00 Startup assets needed Cash balance on starting date 0.00 Massage van 250000.00 Other current assets 0.00 Total current assets 250000.00 Long term assets 0.00 Total assets 250000.00 Total Requirements 408000.00 Funding Description Value (AED) Investment Investor 1 100000.00 Investor 2 100000.00 Investor 3 100000.00 Investor 4 100000.00 Other 100000.00 Total investment 500000.00 Current liabilities Accounts payable 0.00 Current borrowing 0.00 Other current liabilities 0.00 Current liabilities 0.00 Long term liabilities 0.00 Total liabilities 0.00 Loss at start up -158000.00 Total capital 342000.00 Total capital and liabilities 342000.00 The key financial indicators have been presented in table 4. Table 4. Key financial indicators Key financial indicators Year 1 (AED) Year 2 (AED) Year 3 (AED) Sales 1624000 3240000 3248000 Margin (%) 100 100 100 Expenses Tax 406000 812000 812000 Salaries 780000 1130000 1420000 Others 68000 80000 80000 Total Expenses 1254000 2022000 2312000 The chart presented shows the key financial indicators for the first three years of business. The business foresees a major growth in sales and operating expenses, but no bump in customer turnover even as a new massage van is purchased at the beginning of the second year. Figure 2. Key financial indicators for Portable Massage business The profit and loss projections (income statements) have been presented in table 6. The business is anticipated to make 22.78325% profit in the first year, 37.59259% profit in the second year and 28.81773 percent profit in the third year. Table 5. Profit and loss projections for Portable Massage Profit and loss projections Description Year 1 (AED) Year 2 (AED) Year 3 (AED) Sales 1624000 3240000 3248000 Direct cost of sales 68000 80000 80000 Other 0 0 0 Total cost of sales 68000 80000 80000 Gross margin 1556000 3160000 3168000 Gross margin % 95.81281 97.53086 97.53695 Expenses Payroll 780000 1130000 1420000 Others 0 0 0 Total expenses 780000 1130000 1420000 Profit before taxation 776000 2030000 1748000 Taxes at 25 % 406000 812000 812000 Net profit 370000 1218000 936000 Net profit/sales % 22.78325 37.59259 28.81773 Cash flow projections are critical to any business’s success as they show how the business will manage all cash inflows and outflows for the whole year. The cash flow projections for the proposed business have been presented in table 6. Table 6. Cash flow projections for Portable massage Cash flow Year 1 (AED) Year 2 (AED) Year 3 (AED) Cash received Cash from operations Cash sales 1624000 3240000 3248000 Cash receivables 0 0 0 Total cash from operations 1624000 3240000 3248000 Additional cash received Investments 500000 0 0 Total cash received 2124000 3240000 3248000 Expenditures Payroll 780000 1130000 1420000 Startup expenses 158000 0 0 Startup asset 250000 0 0 Purchase asset 0 250000 0 Taxes 406000 812000 812000 Other expenses 68000 80000 80000 Total expenses 1662000 2272000 2312000 Net cash flow 462000 968000 936000 Cash balance 24000 370000 1218000 A break even analysis for the proposed business has been conducted and presented in table 7. Based on our massage price ranges that stand between AED 500 and AED 620, if we worked with this prices as the average monthly prices then we would need 369.5767 sessions per month at a session price of AED 500 to make a profit and 287.4486 sessions per month at AED 600 in order to make a profit, assuming that the average session variable cost remains at AED 80. Table 7. Break even analysis for proposed Portable Massage business Break even analysis Annual Monthly Year 1 (AED) Year 2 (AED) Year 3 (AED) Monthly for Year 1 (AED) Monthly for Year 2 (AED) Monthly for Year 3 (AED) Revenues 1624000 3240000 3248000 135333.3 270000 270666.7 Expenses 1254000 2022000 2312000 104500 168500 192666.7 Assumptions Year 1 (AED) Year 2 (AED) Year 3 (AED) Averages Average per session revenue 560 560 560 560 Average per session variable cost 80 80 80 80 Monthly sessions Estimated monthly revenues 135333.3 270000 270666.7 Estimated monthly fixed expenses 104500 168500 192666.7 155222.2 Year 1 Year 2 Year 3 Break-even point in terms of unit sales 217.7083 351.0417 401.389 323.3797 We need 323.3797 sessions per month at a session price of AED 560 in order to start making a profit. AED Average lowest per session 500 369.5767 sessions will be needed every month for the business to realize a profit if it charges AED 500 per session. Average highest per session 620 287.4486 sessions will be needed every month for the business to realize a profit if it charges AED 620 per session. Works Cited Anderson, W. & Mittal, V. “Strengthening the satisfaction–profit chain.” Journal of Service Research, 3, (2000): 107–120. Bloemer, J. de Ruyter, K. & Wetzels, M. “Linking perceived service quality and service loyalty: A multi-dimensional perspective.” European Journal of Marketing, 33, (1999): 1082–1106. Butcher, K. Sparks, B. and O’Callaghan, F. “Evaluative and relational influences on service loyalty.” International Journal of Service Industry Management, 12, 4 (2001): 22-30. Chaudhuri, A. and Holbrook, B. “The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The Role of Brand Loyalty.” Journal of Marketing. 65, (2001): 81-93. Cronin, J., Brady, K. & Hult, G. “Assessing the effects of quality, value and customer satisfaction on consumer behavioral intentions in service environments.” Journal of Retailing. 76(2), (2000): 193-218. Griffin, J. Customer Loyalty: How to earn it, how to keep it. San Francisco: Jossey-Bass Publishers, 2002. Kandampully, J. & Suhartanto, D. “Customer loyalty in the hotel industry: The role of customer satisfaction and image.” International Journal of Contemporary Hospitality Management. 12(6), (2000): 346-351. Reinartz, W. & Kumar, V. The Mismanagement of Customer Loyalty. Harvard: Harvard Business Review, 2002. Read More