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Day Spa Business Plan

In: Business and Management

Submitted By knews
Words 1994
Pages 8
Business Plan Prepared By

Date Prepared

This business plan contains confidential and proprietary information belonging exclusively to Day Spa

Table of Contents

1. Executive Summary………………………………………………………... 3
2. Vision and Mission Statement…………………………………………....... 4
3. Company Overview……………………………………………………….... 5
4. Products/Service Plan…………………………………………………….... 6
5. Marketing Plan……………………………………………………………... 7
6. Management Plan…………………………………………………………... 10
7. Operating Plan……………………………………………………………... 11
8. Financial Plan………………………………………………………………. 12

Executive Summary

Day Spa is a new upscale destination in LA, offering a complete day spa experience. We offer seven chic, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles - traditional Swedish massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial and Sea salt scrubs. The day spa has the latest in anti-aging products and techniques but does not offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it's part of a full treatment, such as the deluxe Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities.
This business plan has been developed to track progress prior to grand opening and following through with a five-year projection. In addition, this plan has been written to secure a small portion of the start-up funding necessary for Spa's successful kick-off.

Vision and Mission Statement
Our mission is to run a profitable business by providing high-end therapeutic massage and aesthetician services in a caring, upscale, professional environment. We offer massage in a variety of styles - traditional Swedish massage, Sports Massage, Deep Tissue work, Sports Massage, Hot Stone Massage, Reflexology, and others. Our licensed aestheticians offer the latest in skin treatments, body treatments and anti-aging therapies.
Our goal is to tailor the client's experience based on initial interview information, as well as feedback during the treatments, to ensure the client's comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience - using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client's overall spa experience. There should not be a one time visit for anyone who has ever entered the doors of Day Spa.

Company Overview

Day Spa is a new destination offering customers the combination of massage, body treatments, facials and anti-aging treatments. The settings are upscale, beautiful and serene. We cater to both men and women and offer the latest in skin care products and therapies.
Treetops Boulevard, where we plan to locate, has a high level of daily traffic. It is also only walking distance from a local salon for the convenience of our clients, and has an upscale and nail salon which would complement our services nicely.
Day Spa is a Sole Proprietorship owned by. functions as developer and manager for Tranquil Day Spa. She has experience in marketing and management. unique sales, budget, management and people skills will be a perfect fit for building the client-base in a new business and seeing it through to success.

Products/Service Plan

Day Spa offers therapeutic massage services, body treatments, facials and anti-aging treatments. Services are provided by licensed therapists and aestheticians who are independently contracted and paid on a commission basis. The upside of the commissioned employee is that there is very little overhead without sales; employees only make money when the business makes money.
We also offer a full retail line that complements the services menu. Products included are high-end cosmetics, creams, candles, and other beauty products. These high-end items tend to retail at a minimum of $20-$25 per item and have 50% mark -up, or higher.

Marketing Plan

Market Analysis

There were an estimated 14,615 spas in the United States in August 2007, up 6% from 13,757 spas in August of 2006. There were 10,128 spas in April of 2004, according to ISPA, and seven out of ten are day spas. Today, Spa Industry revenues total $12 billion annually, with Day Spas accounting for over $7 billion of this figure and growing at 25% per year.
There are several existing day spas and a number of individual LMTs (Licensed Massage Therapists) in Mississippi, but none with our service/product range within a five mile radius. To find such a comprehensive day spa, residents currently have to travel outside of. The going rate for massage in California is $80-$100 per hour.
The Competition Customers choose spa services based on proximity to their daily commute, quality and an exceptional experience. With our combined services, we expect to dominate the Day Spa market. There is not one direct competitor of this nature within the area where we are intending to locate.
The closest competitor is the Trio Hair Skin and Body Clinic which is a Hair salon that offers additional, limited, spa services. The Fairview Inn also offers massage treatments, but will mostly cater to visitors to the area and not the local residential base. Finally, Ageless Remedies, located on Ridgeway is not a traditional day spa but combines a day spa with a female gymnasium.
Marketing Strategy As individual as our clients are, they seem to fall into one of four general categories: Injury Recovery, Self-Pampering/Relaxation, Alternative Care Users, and Athletes. Besides the obvious differences in the style of massage or treatments each of these prefer, they also represent separate groups for marketing and retention purposes. In addition, the booming anti-aging market is an additional momentum builder.
The Injury recovery group is usually referred by a Chiropractor, self-referred, or referred by another client who found massage helpful during an injury recovery. Marketing to this audience is done indirectly, through the referring parties. While car insurance will typically pay for massage for only a limited time (less than one year), many health insurance policies now have Alternative Care coverage with a renewable annual maximum. Most people do not know that regular massage therapy is covered on their insurance when prescribed by a physician. We will work to educate clients of their benefits and be able to bill to insurance on the appropriate patients.
Clients who have the disposable income to indulge in massage and body treatments for self-pampering or relaxation are the core of our long-term repeat customers. These clients will come once a week to once a month for years, and often refer other family and friends. This type of client can be difficult to find an ad in the local alternative news weekly (especially with a coupon for $5 off) or a donation to a charity auction may result in a one-time visit, or a long-term client. Another source of usually one-time visitors is the Gift Certificate friends pampering friends for a birthday or other special occasion. Our desired location will provide an excellent demographic to provide this type of client.
The third group is Alternative Care users. These are people who mistrust allopathic medicine, and prefer to use chiropractors, naturopaths, herbalists, and acupuncturists. A local networking group of alternative care providers is a great way to get referrals, as well as placing posters on other practitioner’s offices, and ads in the local alternative newspaper.
The final group is another backbone of this business - the athletes. There is a large population of runners and bicyclists in the local area who book massages they are a very loyal group, and will readily give word-of-mouth recommendations, especially if they see massage as having given them a specific boost to their performance. This group will cross over from the Injury group, and become long-term clients after the specific initial injury has healed. They also tend to have chronic injuries or pain, especially as they age, which can encourage them to become repeat clients.

Management Plan
Employees are paid on a sliding scale based on production and % service sales to retail. There are more employees of this type available then there are jobs to fill them so it's an employer's market which is another positive. An on-call list of approximately 20 therapists will be available at any given time.
A front office person will be hired within two months of the Day Spa Grand Opening. This person will relieve some of the phone, front desk and cashier duties from the manager. By the end of five months, a second office person will be hired.
The Personnel Plan below reflects our projected need at opening, and carries through five year of expenses. The owner draw and front desk are the only salaries. The rest of the payroll is commission and is only paid when the business is generating sales. Our Licensed Massage therapists will receive commission of 55% of the session price, aesthetician services will average 40% payments, and out-calls are budgeted at 65%, since most require some travel and will be largely massage calls.

Personnel Plan Year 1 Year 2 Year 3 Year 4 Year 5
Owner Draw $103,250 $105,000 $110,000 $115,000 $120,000
Front Desk $34,260 $40,000 $45,000 $45,000 $47,000
Total People 3 3 3 3 3 Total Payroll $137,510 $145,000 $155,000 $160,000 $167,000

Operating Plan
Location and Facilities

Purchasing and Inventory Management Current Assets purchased at start-up are as follows:
Massage table equipment - $3,795 (5 complete)
Aesthetician Equipment - $2,800 (2 room setup)
Decor and Furnishings - $13,000
Envision Software & Equipment - $4,000
Signage - $3,500
Back bar Supplies - $5,000

Financial Plan
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. We assume cash payments for all services, except for the 1% of sales projected as insurance reimbursements, with collection days at 90. The collection days are for insurance billings only. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Two of the more important underlying assumptions are:
1. We assume a strong economy, without major recession.
2. We assume, of course, that there are no changes to the Medical/insurance Industry, such as the nationalization of health care.
Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5
Assets

Current Assets
Cash $213,263 $293,531 $414,568 $547,351 $697,823
Accounts Receivable $10,123 $10,759 $10,357 $11,876 $11,301
Inventory $12,441 $11,357 $13,868 $14,577 $15,132
Other Current Assets $32,095 $32,095 $32,095 $32,095 $32,095
Total Current Assets $267,923 $347,742 $470,888 $605,899 $756,351 Long-term Assets
Long-term Assets $0 $2,000 $4,000 $4,000 $4,000
Accumulated Depreciation $0 $50 $100 $150 $200
Total Long-term Assets $0 $1,950 $3,900 $3,850 $3,800
Total Assets $267,923 $349,692 $474,788 $609,749 $760,151 Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5 Current Liabilities
Accounts Payable $81,795 $48,260 $50,660 $53,072 $54,683
Current Borrowing $26,600 $18,200 $9,800 $1,400 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $108,395 $66,460 $60,460 $54,472 $54,683 Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $108,395 $66,460 $60,460 $54,472 $54,683 Paid-in Capital $130,000 $130,000 $130,000 $130,000 $130,000
Retained Earnings ($80,450) $29,528 $153,232 $284,328 $425,277
Earnings $109,978 $123,705 $131,096 $140,949 $150,190
Total Capital $159,528 $283,232 $414,328 $555,277 $705,467
Total Liabilities and Capital $267,923 $349,692 $474,788 $609,749 $760,151 Net Worth $159,528 $283,232 $414,328 $555,277 $705,467

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