Pamperzhou Day Spa - Sample Plan

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Confidentiality Agreement

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This is a business plan. It does not imply an offering of securities.

Table of Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1
Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3
Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1
Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2
Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0

Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0

Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2
Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3
Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
6
7
8
8

5.0

Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1
Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3
Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4
Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9
9
9
10
10
12

6.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1
Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1
Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.2
Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.3
Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.4
Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.5
Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.6
Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1.0

1
1
2
2

14
14
15
16
19
21
22

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Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Pamperzhou Day Spa
1.0 Executive Summary

Sa

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Pamperzhou Day Spa is an upscale destination in Freeway County, CA, offering a complete day spa experience. We offer seven ultra-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
Pevonia's Anti-Free Radical Treatment. 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, like Kneipp's Arnica and Calendula Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located to 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 strategy for Spa's successful kick-off.

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Highlights

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$1,000,000
$900,000
$800,000
$700,000

$500,000
$400,000
$300,000
$200,000
$100,000

Sales

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$600,000

Gross Margin
Net Profit

ess

$0
FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

sin

1.1 Objectives

1. Achieve $31,000 in sales the third month after opening by performing 14 services per day.

Bu

2. Achieve $62,550 in sales the six month after opening by performing 29 services per day.

3. Have a local client return rate of 90% by the end of the first six months.
4. Become an established community Spa destination by the end of the first 12 months.

5. Perform 53 services per day by the end of the first year.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 1

Pamperzhou Day Spa
1.2 Mission

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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.

Sa

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.

3.
4.

5.
6.

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2.

Marketing, Marketing, Marketing - Owner is a proven, 15-year sales executive.
Marketing will be the first strength to our success and a huge competitive edge.
Professionalism: Which includes everything from maintaining confidentiality, to hiring the very best LMT and Aestheticians.
Individual Attention: Each client's experience will be tailored to his or her preference. Repeat business/Recommendations: giving the kind of service that brings people back for regular treatments, and encourages clients to recommend us to friends, and other health professionals to recommend their clients.
Unique Treatments: We have the latest in techniques with the best products from around the world.
Fantastic Location: Freeway County.

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2.0 Company Summary

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1.

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1.3 Keys to Success

Pamperzhou 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. Bu

sin

Culway Plaza, where we plan to locate, has a daily traffic count of 64,000 cars. It is also only
2 blocks from a commuter train stop, and has an upscale hair and nail salon which would complement our services nicely.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 2

Pamperzhou Day Spa
2.1 Company Ownership

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Pamperzhou Day Spa is a Sole Proprietorship owned by Madame Pamperzhou. Madame functions as developer and manager for Pamperzhou Day Spa. Madame has been a marketing and sales professional for over 15 years with a proven track record, who has been working in the medical industry for the last five years. While her tenure with X Company, a leading dental manufacturer, she built the Metropolis territory from $400k per year to over
$1.8 Million per year. During Madame's sales career she also built a territory from zero per year to over $3.6 Million per year at Y Computer Systems. At her current position with Z
Dental Systems, she continues to excel and currently ended 2004 at 117% of the sales budget. Earlier in her career, as a leasor / manager for an Apartment community, she consistently maintained a 100% lease level while managing a 140-unit apartment community. Prior to that, she worked in the budget department for an overseas United
States Military installation in Bamberg, Germany. Madame's unique cold-calling, 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.

2.2 Start-up Summary

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The following table outlines start-up expenses related to leasing, build-out and start-up expenses in opening Pamperzhou Day Spa. $130,000 in cash will be invested by the owner and the remaining $35,000 will be funded through short-term financing.
Other Current Assets purchased at start-up are as follows:

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Massage table equipment - $3,795 (5 complete)

Aesthetician Equipment - $2,800 (2 room setup)
Decor and Furnishings - $13,000

Envision Software & Equipment - $4,000

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Signage - $3,500

Bu

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Backbar Supplies - $5,000

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 3

Pamperzhou Day Spa
Table: Start-up
Start-up

Start-up Expenses
Legal
Printing, stationery, bags, grand opening coupons Brochures
Construction/Design
Insurance
Rent
Research and Development
Advertising
Accountant
Linens
Other
Total Start-up Expenses

$500
$45,000
$2,000
$17,000
$0
$5,000
$950
$4,000
$0
$80,450

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

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Requirements

$35,000
$6,000
$32,095
$0
$73,095

$2,500

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Sa

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$3,500

$153,545

Table: Start-up Funding

$80,450
$73,095
$153,545

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Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

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Total Requirements

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Assets
Non-cash Assets from Start-up
Cash Requirementsfrom Start-up
AdditionalCash Raised
Cash Balance on Starting Date
Total Assets

$38,095
$35,000
$11,455
$46,455
$84,550

Liabilitiesand Capital

sin

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities
Total Liabilities

$35,000
$0
$0
$0
$35,000

Capital

Bu

Planned Investment
Kari Cathey Investment from Sale of
Home
N/A
AdditionalInvestment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

Total Capital and Liabilities
Total Funding

$130,000
$0
$0
$130,000
($80,450)
$49,550

$84,550
$165,000

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 4

Pamperzhou Day Spa

le

Start-up

$140,000

mp

$120,000
$100,000
$80,000

Sa

$60,000
$40,000

$0

3.0 Products and Services

Assets

Investment

Loans

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Expenses

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$20,000

Pla

Pamperzhou Day Spa offers therapeutic massage services, body treatments, facials and antiaging 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.

ess

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.

4.0 Market Analysis Summary

sin

There are about 12,000 spas in the U.S. and Canada, 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.

Bu

There are several existing day spas and a number of individual LMTs (Licensed Massage
Therapists) in Freeway County, but none with our service/product range within a five mile radius. To find a such a comprehensive day spa, residents currently have to travel into the city. The going rate for massage in Freeway County is $70-$90 per hour, which is slightly above most of the other residential areas in the metropolis, which can even be as low as $40 per hour in saturated or low-income areas. This larger metropolitan area spent $464 million on entertainment and recreation in 2004.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 5

Pamperzhou Day Spa
4.1 Market Segmentation

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We are primarily targeting potential clients within a five-mile radius of Culway Plaza with a household income over $25,000. Our secondary market will include visitors staying in a local hotel. Within the U.S., approximately 14% of the population has never tried a massage. We will assume that a conservative 70% of these two categories has tried a massage and would undergo one again, if offered appealing services at the right price. Our market Analysis table thus reflects 70% of the local and visiting population who might be targeted.
Within this group, clients who use spa services fall into four basic groups:

Clients recovering from injuries or accidents / Massage Therapy (Madame
Pamperzhou, owner, has professional contacts for referral in this area.)
• Often also seeing a chiropractor or physical therapist (more often referral from chiropractor) • Frequently paid by insurance
• Usually insurance will pay for short-term therapy only, although clients will sometimes supplement out-of-pocket
• Our spa will be set up to take insurance patients and bill to insurance when prescribed by a qualified physician.

2.

Clients pampering themselves / Massage Therapy, Body and Facial
Treatments
• Individuals with high disposable income
• Sometimes have chronic pain or old injury issues
• Massage 1 - 4 times a month for relaxation
• Huge anti-aging and beauty market potential
• Traffic continues to be a huge problem in Metropolis and our therapies are valuable for this segment of the population.
• Local hotels that do not offer spa services will be able to refer to our local facility or use our out-call services.

3.

Clients who prefer alternative health care
• Use massage as preventative health care
• Use other alternative practices - e.g. acupuncture, Chiropractor, Naturopath,
Herbalist, etc.
• Try to have massage as regularly as they can afford - usually once per month
• Commuters in Metropolis suffer through some of the worst traffic in the country. As the population grows, the traffic worsens and the need for massage therapies increases. Extended hours will capitalize on those who want an appointment on their way home from work.

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Serious Athletes
• Injury and workout recovery, also preventative.
• Many serious runners, surfers, bicyclists and college athletes in the local area.
• Massage for improved performance - great for word-of mouth referrals if they see results.
• California climate allows this client-segment to be less seasonal than in most parts of the country.

Bu

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4.

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ro

Sa

1.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 6

Pamperzhou Day Spa

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Market Analysis (Pie)

Within 5 Miles over $25k

Table: Market Analysis
Market Analysis

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Other-Visiting Hotel in Area

2005

2006

2007

2008

2009

Growth
2%

284,950

288,883

292,869

296,911

337,885

CAGR
4.35%

0%

150,000

150,000

150,000

150,000

150,000

0.00%

2.91%

434,950

438,883

442,869

446,911

487,885

2.91%

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Potential Customers
Within 5 Miles over $25k
Other-Visiting Hotel in
Area
Total

4.2 Target Market Segment Strategy

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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.

Bu

sin

The Injury recovery group is usually referred by a Chiropractor, self-referred through our listing on the American Specialty Health Network site, 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 selfpampering 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

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 7

Pamperzhou Day Spa pampering friends for a birthday or other special occasion. Our desired location will provide an excellent demographic to provide this type of client.

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The third group are 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 practitioners offices, and ads in the local alternative newspaper.

Sa

The final group is another backbone of this business - the amateur athletes. There is a large population of runners and bicyclists in the local area, as well as out-of-town participants who return for annual events, and book massages during those times. 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.

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4.3 Service Business Analysis

We are part of the retail health and beauty industry, which has four major types:

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1) Salons with Day Spa Services: Hair salons that offer limited spa services like massage and facials.
2) Heath & Beauty Products: Stores selling only merchandise products covering the wide range of products available, but not inclusive of those sold by salons and spas.

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3) Hotels with Spa Services: Major hotels with on-site spas.
4) Medical Spa: Focus mainly on non surgical cosmetic but also have massage therapy, facials and microdermabrasion.

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4.3.1 Competition and Buying Patterns

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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.

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The closest competitor is the Heavenly Spa which is a Hair salon that offers additional, limited, spa services. The Hyatt Regency Hotel also offers massage treatments, but will mostly cater to visitors to the area and not the local residential base. Finally, Atmosphere
Spa, located in Plaza Center is not a traditional day spa but combines a day spa with a female gymnasium. No men are allowed at Atmosphere Spa, either. The going rate for massage in Freeway County is $70-$90 per hour which is slightly above most of the other residential areas in Metropolis which can even be as low as $40 per hour in saturated or lowincome areas.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 8

Pamperzhou Day Spa
5.0 Strategy and Implementation Summary

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Our strategy is to implement the most aggressive marketing and networking in the community---followed by the best services in the business. Our prices ar competitive for the area, and our personnel plan, which includes using a pool of skilled, commissioned therapists and aestheticians, will give us a financial advantage.

5.1 Competitive Edge

Sa

Our competitive edge is our ability to market effectively and creatively to bring in the clients and then back that up with the best service and products in the business. In addition, our combination of unique services, outstanding location and our interaction with the customers are setting us up for huge success.

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5.2 Marketing Strategy

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Local Advertising & Seasonal Promotions - Local newspaper advertising, local fliers, grand opening party kick-off and promotion for first 30 days. Continue regular advertising and plan for seasonal events: Christmas, Valentine's, Mother's Day, Prom and New Year's.
Local Networking - Charities, women's groups, country clubs, wedding planners, and membership with the Metropolis Chamber of Commerce.

sin

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Health Care Referrals - prior to opening, work current contacts and create new contacts with health care providers, especially chiropractors. Also, become a Provider with health insurance companies that offer Alternative Care to their members. Most people don't know that massage therapy is usually paid by insurance when billed correctly and when prescribed by a physician. Pamperzhou Day Spa already has practice management software to handle medically billable massage. When the insurance does not cover the entire amount of a service the client will pay the difference. For that reason, we will not want to participate with any PPO's that require write-off for amounts over the usual and customary fee (which tends to be too low). A list of acceptable insurance company plans will be maintained and those clients will be able to handle massage therapy through their insurance. Any opportunity to convince allopathic physicians - MDs - to see massage as having long-term healing benefits for their patients will also be taken, since they hold to key to having massage paid for as "medically necessary." The client will also help drive that with the physicians if they are properly educated.

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Hotel Referrals - Hotels that do not offer their own spa services will send their guests to our spa or use our out-call spa services. Prior to opening, I will make contacts with managers and concierges at local hotels to ensure they are aware of the services available.
Promotions will be offered to professionals in these industries to create buzz and build relationships. Online Website - our spa will show up on every major search engine and in the phone directory. The website will have a full menu of services and eventually have the ability to schedule appointments on-line. The spa software we are using will allow a user to see the schedule and make and appointment without making a phone call.
Location traffic - It is imperative that we be located in a high-traffic strip mall that is highend, modern, and clean. We prefer locating near a complementary business like a nail or hair salon that does not offer any massage or facial treatments.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 9

Pamperzhou Day Spa
5.3 Sales Strategy

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If, as it has been said, the top three items which determine success in business are location, location, location, then a busy location at Culway Plaza in a thriving residential community represents our top marketing strategy. With the owner focusing on the sales, marketing and management and delegating the massage and aesthetician therapies to employees--business profitability potential is exponentially maximized over a one or two person operation by a direct care-giver without any marketing, management or sales background.

Sa

As the owner, I have done extensive market research and visited some of the best spas in the world -- Beverly Hills, Paris, Amsterdam, Vegas and Arizona -- and have taken ideas from the best to offer an upscale, ultra-amenity, spa experience. Once a client experiences the luxurious, high-end level of personalized care that we offer, we are confident that we will have a return client.

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5.3.1 Sales Forecast

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The startup table assumes a realistic growth trend. There are four main areas of income: massage, aesthetician, retail and out-call. For the forecast, massage and aesthetician services were conservatively estimated at $65 per service with 35% of that going to the service provider. The basis for these projections is a conservative estimate of 7 services per day the first month in business, and 53 services per day by the end of the first year. At 53 services per day, we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day. Out call services will enhance the bottom line by allowing us to generate sales without using any of our retail space. Out call also averages a higher per service charge, averaging around $80 per service with 65% to the therapist and virtually no overhead.

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On retail products the gross margin is consistently 50% across the board. The retail lines go in conjunction with the spa services as an extension of the spa experience. The more customers, the more retail sales that will be driven. These high-end cosmetics and spa products are hard-to-find items that generate repeat purchases.

Table: Sales Forecast
Sales Forecast

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Sales
Massage Therapy
Facials and Anti-Aging Treatments
Outcall Services
Retail
Total Sales

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Direct Cost of Sales
Linens and Cleaning
Oils & Lotions
Cost of Retail products / 50% of Sales
Subtotal Direct Cost of Sales

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

$527,830
$177,410
$23,600
$94,845
$823,685

$550,000
$180,000
$27,000
$100,000
$857,000

$560,000
$185,000
$30,000
$125,000
$900,000

$575,000
$186,000
$35,000
$150,000
$946,000

$580,000
$190,000
$37,000
$175,000
$982,000

FY 2006
$3,644
$14,577
$47,423
$65,644

FY 2007
$3,785
$6,140
$50,000
$59,925

FY 2008
$3,875
$6,800
$62,500
$73,175

FY 2009
$3,980
$7,420
$75,000
$86,400

FY 2010
$4,035
$8,040
$87,500
$99,575

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 10

Pamperzhou Day Spa

le

Sales Monthly

mp

$140,000
$120,000
$100,000

Massage Therapy

$80,000

Facials and Anti-Aging Treatments

$60,000

Sa

Outcall Services

$40,000

Retail

$20,000

nP

ro

$0

$1,000,000
$800,000
$600,000

ess

$400,000

Pla

Sales by Year

Massage Therapy
Facials and Anti-Aging Treatments
Outcall Services
Retail

$200,000

$0

Bu

sin

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 11

Pamperzhou Day Spa
5.4 Milestones

Table: Milestones
Milestones
End Date
2/20/2004
12/31/2004

1/1/2005

1/15/2005

1/6/2005
2/1/2005
2/11/2005
2/19/2005
2/19/2005
6/1/2005
6/1/2005

Budget
$0
$165,000

Manager
Kari
Kari

Sa

Start Date
2/2/2004
6/4/2004

Department
Owner
Owner

Kari

Owner

1/16/2005

$10,000

Kari

Owner

2/3/2005
2/12/2005
2/23/2005
2/23/2005
6/1/2005
5/31/2006

$20,000
$500
$150
$20
$0
$0
$200,670

Kari
Kari
Kari
Kari
Kari
Kari

Owner
Owner
Owner
Owner
Owner
Owner

ro

$5,000

nP

Milestone
Business Plan
Financial Backing
Design Contractor
Retainer
Construction Contractor
Retainer
Lease Agreement
Brochures
Logo Design
Business Cards (Initial)
Grand Opening
53 Clients per Day
Totals

mp

le

The following table lists important store milestones, with dates, implementation duty, and budgets for each. The milestone schedule emphasizes the timelines for implementation per the sales and marketing targets listed in detail in the previous topics.

Milestones

Business Plan

Pla

Financial Backing
Design Contractor Retainer

Construction Contractor Retainer
Lease Agreement
Brochures

ess

Logo Design
Business Cards (Initial)
Grand Opening

53 Clients per Day

2006

Bu

sin

2005

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 12

Pamperzhou Day Spa
6.0 Management Summary

mp

le

Pamperzhou Day Spa is a Sole Proprietorship owned by Madame Madame Pamperzhou.
Madame Pamperzhou functions as developer and manager for Pamperzhou Day Spa.
Madame has been a marketing and sales professional for over 15 years with a proven track record, who has been working in the medical industry for the last five years. While her tenure with X Company, a leading dental manufacturer, she built the Metropolis territory from $400k per year to over $1.8 Million per year. During Madame's sales career she also built a territory from zero per year to over $3.6 Million per year at Y Computer Systems. At her current position with Z Dental Systems, she continues to excel and currently ended 2004 at 117% of the sales budget.

ro

Sa

Earlier in her career, as a leasor / manager for an Apartment community, she consistently maintained a 100% lease level while managing a 140-unit apartment community. Prior to that, she worked in the budget department for an overseas United States Military installation in Bamberg, Germany. Madame's unique cold-calling, 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.

nP

6.1 Personnel Plan

Pla

Most employees are licensed, contract massage therapists and aestheticians. The employees are 1099 and get paid 100% commission. This alleviates huge overhead for salaries as employees are only paid when sales are generated. 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 Pamperzhou 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.

sin

ess

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.

Table: Personnel
Personnel Plan

Bu

Owner Draw
Front Desk
Total People
Total Payroll

FY 2006
$103,250
$34,260
3

FY 2007
$105,000
$40,000
3

FY 2008
$110,000
$45,000
3

FY 2009
$115,000
$45,000
3

FY 2010
$120,000
$47,000
3

$137,510

$145,000

$155,000

$160,000

$167,000

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 13

Pamperzhou Day Spa
7.0 Financial Plan

Sa

mp

le

The premier element to our financial plan is initiating, maintaining, and improving the factors that create, stabilize and increase our cash flow. Because of the commission structure of our contractor payments, our variable costs will exceed fixed costs for all years of this plan, which should help stabilize the cash flow - we only pay commission when we make a sale. We will surpass the break-even point by month four, and end the first year with a net profit margin of almost 11%. By quickly repaying our loan while increasing sales, and managing costs, we will increase the net worth of the business to over $139,000 in the first year, and continue increasing it for the forseeable future.

7.1 Important Assumptions

ro

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.

1.
2.

nP

Two of the more important underlying assumptions are:

We assume a strong economy, without major recession.
We assume, of course, that there are no changes to the Medical/insurance Industry, such as the nationalization of health care.

General Assumptions

FY 2006
1
7.00%
5.65%
28.17%
0

FY 2007
2
7.00%
5.65%
28.00%
0

FY 2008
3
7.00%
5.65%
28.17%
0

FY 2009
4
7.00%
5.65%
28.00%
0

FY 2010
5
7.00%
5.65%
28.17%
0

Bu

sin

ess

Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Pla

Table: General Assumptions

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 14

Pamperzhou Day Spa
7.2 Break-even Analysis

mp

le

The break-even analysis shows that in the first year, we need to make sales of $34,519 to meet costs. Our variable costs include both the direct costs shown in the Sales Forecast table, for linens, oils, and retail product inventory, but also includes the commissions paid to contracted massage therapists and aestheticians. We should surpass the break-even point by month four of operations.

Table: Break-even Analysis

Monthly Revenue Break-even

$34,785

Assumptions:
Average Percent Variable Cost
EstimatedMonthly Fixed Cost

39%
$21,184

Sa

Break-even Analysis

ro

Break-even Analysis

nP

$20,000
$10,000
$0

($20,000)
($30,000)

Pla

($10,000)

$0

$12,000

$24,000

$36,000

$48,000

$60,000

Monthly break-even point

Bu

sin

ess

Break-even point = where line intersects with 0

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 15

Pamperzhou Day Spa
7.3 Projected Profit and Loss

mp

le

Because we are paying our service-provider on commission, our variable costs will exceed our fixed costs. This keeps our overhead low, and means we paying ONLY for hours when they actually provide services. Keeping such a large pool of reliable massage therapists and aestheticians as we are recruiting will keep us from losing business with no-shows, especially since we will schedule our contractors, as much as possible, for full days or half-days, rather than individual appointments.

Sa

Fixed expenses are the customary: rent, electric, advertising, insurance. There are four main areas of income: massage, aesthetician retail and out call. Massage and aesthetician services are $65 per service minimum, with 55% of that going to the service provider. The basis for the sales projections is a conservative estimate of 7 services per day the first month in business and 53 services per day by the end of the first year. At 53 services per day we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day.

Table: Profit and Loss
Pro Forma Profit and Loss

Cost of Goods Sold
Gross Margin
Gross Margin %

sin

ess

Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Utilities
Advertising
Insurance
Payroll Taxes
Phone
Software Support
Other

Bu

Total OperatingExpenses
Profit Before Interest and Taxes
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

FY 2006
$823,685
$65,644
$290,307
$70,964
$15,340
-----------$442,254

FY 2007
$857,000
$59,925
$302,500
$72,000
$17,550
-----------$451,975

FY 2008
$900,000
$73,175
$308,000
$74,000
$19,500
-----------$474,675

FY 2009
$946,000
$86,400
$316,250
$74,400
$22,750
-----------$499,800

FY 2010
$982,000
$99,575
$319,000
$76,000
$24,050
-----------$518,625

$381,431
46.31%

$405,025
47.26%

$425,325
47.26%

$446,200
47.17%

$463,375
47.19%

$137,510
$7,500
$0
$66,000
$3,000
$3,000
$1,500
$27,502
$1,500
$0
$6,700
-----------$254,212

$145,000
$5,000
$50
$66,000
$3,100
$3,000
$700
$29,000
$1,600
$495
$6,700
-----------$260,645

$155,000
$5,000
$50
$66,000
$3,200
$3,000
$700
$31,000
$1,700
$495
$6,700
-----------$272,845

$160,000
$8,000
$50
$66,000
$3,300
$3,000
$700
$32,000
$1,800
$495
$6,700
-----------$282,045

$167,000
$5,000
$50
$66,000
$3,400
$3,000
$700
$33,400
$1,900
$495
$6,700
-----------$287,645

$127,219
$2,132
$34,896

$144,380
$1,568
$39,987

$152,480
$980
$42,673

$164,155
$392
$45,854

$175,730
$49
$49,483

$90,191
10.95%

$102,825
12.00%

$108,828
12.09%

$117,909
12.46%

$126,198
12.85%

Pla

Sales
Direct Costs of Goods
Massage Therapists' commission
Aestheticians' commission
Out-call Services commission

nP

ro

On retail products, the gross margin is consistently 50% across the board. The retail lines go in conjunction with the spa services as an extension of the spa experience. The more customers, the more retail sales that will be driven. These high-end cosmetics and spa products are hard to find items that generate repeat purchases.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 16

Pamperzhou Day Spa

le

Profit Monthly
$25,000

mp

$20,000

$15,000

Sa

$10,000

$5,000

$0

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

nP

Jul

ro

($5,000)

Profit Yearly

Pla

$140,000
$120,000
$100,000

$80,000

ess

$60,000
$40,000
$20,000

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

Bu

sin

$0

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 17

Pamperzhou Day Spa

le

Gross Margin Monthly
$60,000

mp

$50,000

$40,000

Sa

$30,000

$20,000

$10,000

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

nP

Jul

ro

$0

Gross Margin Yearly

$500,000

Pla

$450,000
$400,000
$350,000
$300,000
$250,000

ess

$200,000
$150,000
$100,000

$50,000

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

Bu

sin

$0

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 18

Pamperzhou Day Spa
7.4 Projected Cash Flow

Cash

Sa

$200,000

mp

le

Based on our conservative sales forecasts, the following Cash Flow table shows Pamperzhou
Day Spa with a consistently positive Cash Flow. After two months, the spa will show a consistent increase in the cash balance. Because the business is a sole proprietorship, the owner's draw is obviously the area of cash flow where adjustments can be made if Cash Flow becomes tight.

$180,000
$160,000
$140,000

ro

$120,000
$100,000
$80,000

Cash Balance

nP

$60,000

Net Cash Flow

$40,000
$20,000
$0

Bu

sin

ess

Pla

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 19

Pamperzhou Day Spa
Table: Cash Flow
Pro Forma Cash Flow
FY 2007

FY 2008

Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations

$799,494
$14,068
$813,562

$831,290
$25,075
$856,365

$875,250
$25,152
$900,402

AdditionalCash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

$0
$0
$0
$0
$0
$0
$0
$813,562

$0
$0
$0
$0
$0
$0
$0
$856,365

FY 2006

FY 2007

$0
$0
$0
$0
$0
$0
$0
$944,481

$0
$0
$0
$0
$0
$0
$0
$982,575

FY 2008

FY 2009

FY 2010

$160,000
$82,585
$242,585

$167,000
$668,749
$835,749

mp

$0
$0
$0
$0
$0
$0
$0
$900,402

nP

$145,000
$632,394
$777,394

$155,000
$615,853
$770,853

$0

$0

$0

$0

$0

$8,400

$8,400

$8,400

$8,400

$1,400

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0
$0
$664,293

$0
$2,000
$0
$787,794

$0
$2,000
$0
$781,253

$0
$0
$0
$250,985

$0
$0
$0
$837,149

$149,269
$195,724

$68,571
$264,294

$119,149
$383,443

$693,496
$1,076,939

$145,426
$1,222,365

Bu

sin

ess

Net Cash Flow
Cash Balance

$137,510
$518,383
$655,893

Pla

AdditionalCash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current
Borrowing
Other LiabilitiesPrincipal Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$954,995
$27,580
$982,575

ro

Expendituresfrom Operations
Cash spending
Bill Payments
Subtotal Spent on Operations

FY 2010

$917,620
$26,861
$944,481

Sa

Expenditures

FY 2009

le

FY 2006
Cash Received

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 20

Pamperzhou Day Spa
7.5 Projected Balance Sheet

mp

le

The only Accounts Receivable carried is any Insurance Billings that are not paid during the month. Although some insurance companies pay promptly, within 10 working days, others take more than 6 weeks to pay. We have set our collection days for this small percentage of non-cash sales at 90 days, to be conservative.
The Balance Sheet shows a steady increase in earnings and net worth over the next five years. Pro Forma Balance Sheet

Sa

Table: Balance Sheet

FY 2006

FY 2007

$195,724

$264,294

$10,123
$12,441
$32,095

$10,759
$11,357
$32,095

$10,357
$13,868
$32,095

$318,505

$439,763

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets

$2,000
$50
$1,950

$4,000
$100
$3,900

$250,383

$320,455

$443,663

FY 2009

FY 2010

$1,076,93
9
$11,876
$14,577
$32,095
$1,135,48
7

$1,222,36
5
$11,301
$15,132
$32,095
$1,280,89
3

$4,000
$150
$3,850
$1,139,33
7

$4,000
$200
$3,800
$1,284,69
3

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$84,042
$26,600
$0
$110,642

$59,689
$18,200
$0
$77,889

$82,470
$9,800
$0
$92,270

$668,635
$1,400
$0
$670,035

$689,193
$0
$0
$689,193

Long-term Liabilities
Total Liabilities

$0
$110,642

$0
$77,889

$0
$92,270

$0
$670,035

$0
$689,193

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilitiesand Capital

$130,000
($80,450)
$90,191
$139,741

$130,000
$9,741
$102,825
$242,566

$130,000
$112,566
$108,828
$351,393

$250,383

$320,455

$443,663

$130,000
$221,393
$117,909
$469,303
$1,139,33
7

$130,000
$339,303
$126,198
$595,500
$1,284,69
3

$139,741

$242,566

$351,393

$469,303

$595,500

sin

ess

Liabilitiesand Capital

$0
$0
$0

Pla

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$383,443

nP

$250,383

FY 2008

ro

Assets

Bu

Net Worth

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 21

Pamperzhou Day Spa
7.6 Business Ratios

le

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. The ratios for the initial year of growth are, of course, not as favorable as the second year. Industry profile ratios based on the Standard
Industrial Classification (SIC) code 7991.0103, Spas, are shown for comparison.
Ratio Analysis

mp

Table: Ratios

FY 2006
0.00%

FY 2007
4.04%

FY 2008
5.02%

FY 2009
5.11%

FY 2010 Industry Profile
3.81%
3.43%

Percent of Total Assets
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

4.04%
4.97%
12.82%
100.00%
0.00%
100.00%

3.36%
3.54%
10.02%
99.39%
0.61%
100.00%

2.33%
3.13%
7.23%
99.12%
0.88%
100.00%

1.04%
1.28%
2.82%
99.66%
0.34%
100.00%

0.88%
1.18%
2.50%
99.70%
0.30%
100.00%

4.05%
4.35%
30.50%
38.90%
61.10%
100.00%

44.19%
0.00%
44.19%
55.81%

24.31%
0.00%
24.31%
75.69%

20.80%
0.00%
20.80%
79.20%

58.81%
0.00%
58.81%
41.19%

53.65%
0.00%
53.65%
46.35%

20.63%
25.37%
46.00%
54.00%

100.00%
47.26%

100.00%
47.26%

100.00%
47.17%

100.00%
47.19%

100.00%
100.00%

90.28%

94.36%

90.99%

0.00%

0.00%

69.59%

0.91%
15.45%

0.58%
16.85%

0.56%
16.94%

0.85%
17.35%

0.51%
17.90%

2.76%
4.07%

2.26
2.15
44.19%
89.51%
49.96%

4.09
3.94
24.31%
58.88%
44.57%

4.77
4.62
20.80%
43.11%
34.15%

1.69
1.67
58.81%
34.89%
14.37%

1.86
1.84
53.65%
29.50%
13.67%

1.17
0.82
58.83%
4.43%
10.76%

FY 2006
10.95%
64.54%

FY 2007
12.00%
42.39%

FY 2008
12.09%
30.97%

FY 2009
12.46%
25.12%

FY 2010
12.85%
21.19%

n.a
n.a

2.39
77
10.15
7.17
27
3.29

2.39
148
5.04
10.19
43
2.67

2.39
156
5.80
7.74
41
2.03

2.39
143
6.07
1.00
205
0.83

2.39
157
6.70
1.00
359
0.76

n.a
n.a
n.a
n.a
n.a
n.a

0.79
1.00

0.32
1.00

0.26
1.00

1.43
1.00

1.16
1.00

n.a
n.a

$139,741
59.69

$240,616
92.08

$347,493
155.59

$465,453
418.76

$591,700
3586.33

n.a
n.a

0.30
44%
2.06
5.89
0.00

0.37
24%
3.81
3.53
0.00

0.49
21%
4.50
2.56
0.00

1.20
59%
1.66
2.02
0.00

1.31
54%
1.82
1.65
0.00

n.a
n.a
n.a
n.a
n.a

ess

AdditionalRatios
Net Profit Margin
Return on Equity

Pla

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

sin

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage

Bu

100.00%
46.31%

ro

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative
Expenses
Advertising Expenses
Profit Before Interest and Taxes

nP

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

Sa

Sales Growth

AdditionalRatios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 22

Appendix
Appendix Table: Sales Forecast
Sales Forecast
Jul
Sales
Massage Therapy
Facials and Anti-Aging Treatments
Outcall Services
Retail
Total Sales
Direct Cost of Sales
Linens and Cleaning
Oils & Lotions
Cost of Retail products / 50% of Sales
Subtotal Direct Cost of Sales

u
B

0%
0%
0%
0%

1%
2%
50%

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

$9,000
$3,600
$400
$1,240
$14,240

$14,105
$6,045
$800
$2,480
$23,430

$20,150
$8,060
$1,200
$3,100
$32,510

$29,250
$9,750
$1,600
$3,600
$44,200

$40,300
$12,090
$1,600
$4,650
$58,640

$42,900
$13,650
$1,760
$6,000
$64,310

$50,375
$16,120
$2,080
$6,975
$75,550

$56,420
$18,135
$2,400
$7,750
$84,705

$54,600
$18,200
$2,560
$9,800
$85,160

Jul
$65
$260
$620
$945

Aug
$105
$419
$1,240
$1,764

Sep
$147
$588
$1,550
$2,285

Oct
$203
$812
$1,800
$2,815

Nov
$270
$1,080
$2,325
$3,675

Dec
$292
$1,166
$3,000
$4,458

Jan
$343
$1,372
$3,488
$5,202

Feb
$385
$1,539
$3,875
$5,799

Mar
$377
$1,507
$4,900
$6,784

in s s e P s n la r
P

S o Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

m a le p Apr

May

Jun

$64,480
$22,165
$2,800
$15,500
$104,945

$68,250
$23,400
$3,200
$16,500
$111,350

$78,000
$26,195
$3,200
$17,250
$124,645

Apr
$447
$1,789
$7,750
$9,986

May
$474
$1,897
$8,250
$10,621

Jun
$537
$2,148
$8,625
$11,310

Page 23

Appendix
Appendix Table: Personnel
Personnel Plan
Owner Draw
Front Desk
Total People
Total Payroll

u
B

Jul
$3,750
$0
1

Aug
$5,000
$1,500
2

Sep
$6,000
$1,820
2

Oct
$7,500
$1,820
2

Nov
$8,000
$3,640
3

Dec
$8,500
$3,640
3

Jan
$9,000
$3,640
3

Feb
$9,500
$3,640
3

Mar
$10,000
$3,640
3

$3,750

0%
0%

$6,500

$7,820

$9,320

$11,640

$12,140

$12,640

$13,140

$13,640

in s s e P s n la r
P

S o Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

m a le p Apr
$11,000
$3,640
3

May
$12,500
$3,640
3

Jun
$12,500
$3,640
3

$14,640

$16,140

$16,140

Page 24

Appendix
Appendix Table: General Assumptions
General Assumptions
Jul
1
7.00%
5.65%
30.00%
0

Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

u
B

Aug
2
7.00%
5.65%
28.00%
0

in s Sep
3
7.00%
5.65%
28.00%
0

s e Oct
4
7.00%
5.65%
28.00%
0

P s Nov
5
7.00%
5.65%
28.00%
0

n la Dec
6
7.00%
5.65%
28.00%
0

Jan
7
7.00%
5.65%
28.00%
0

r
P

Feb
8
7.00%
5.65%
28.00%
0

S o Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Mar
9
7.00%
5.65%
28.00%
0

m a le p Apr
10
7.00%
5.65%
28.00%
0

May
11
7.00%
5.65%
28.00%
0

Jun
12
7.00%
5.65%
28.00%
0

Page 25

Appendix
Appendix Table: Profit and Loss
Pro Forma Profit and Loss
Jul
$14,240
$945
$4,950
$1,440
$260
-----------$7,595

Aug
$23,430
$1,764
$7,758
$2,418
$520
-----------$12,460

Sep
$32,510
$2,285
$11,083
$3,224
$780
-----------$17,372

Oct
$44,200
$2,815
$16,088
$3,900
$1,040
-----------$23,843

Nov
$58,640
$3,675
$22,165
$4,836
$1,040
-----------$31,716

Dec
$64,310
$4,458
$23,595
$5,460
$1,144
-----------$34,657

$6,645
46.66%

$10,971
46.82%

$15,138
46.56%

$20,358
46.06%

$26,924
45.91%

$29,653
46.11%

Total Operating Expenses

$3,750
$2,000
$0
$5,500
$250
$250
$125
$750
$125
$0
$100
-----------$12,850

$6,500
$500
$0
$5,500
$250
$250
$125
$1,300
$125
$0
$600
-----------$15,150

$7,820
$500
$0
$5,500
$250
$250
$125
$1,564
$125
$0
$600
-----------$16,734

$9,320
$500
$0
$5,500
$250
$250
$125
$1,864
$125
$0
$600
-----------$18,534

$11,640
$500
$0
$5,500
$250
$250
$125
$2,328
$125
$0
$600
-----------$21,318

$12,140
$500
$0
$5,500
$250
$250
$125
$2,428
$125
$0
$600
-----------$21,918

r
P

Profit Before Interest and Taxes
Interest Expense
Taxes Incurred

($6,205)
$200
($1,922)

($4,180)
$196
($1,225)

$1,824
$188
$458

$5,606
$184
$1,518

Net Profit
Net Profit/Sales

($4,484)
-31.49%

($3,150)
-13.45%

$1,178
2.66%

$3,904
6.66%

Sales
Direct Costs of Goods
Massage Therapists' commission
Aestheticians' commission
Out-call Services commission

55%
40%
65%

Cost of Goods Sold
Gross Margin
Gross Margin %

Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Utilities
Advertising
Insurance
Payroll Taxes
Phone
Software Support
Other

20%

u
B

in s s e P s ($1,596)
$192
($501)
($1,287)
-3.96%

n la Jan
$75,550
$5,202
$27,706
$6,448
$1,352
-----------$40,708

Feb
$84,705
$5,799
$31,031
$7,254
$1,560
-----------$45,644

S o Mar
$85,160
$6,784
$30,030
$7,280
$1,664
-----------$45,758

m a le p Apr
$104,945
$9,986
$35,464
$8,866
$1,820
-----------$56,136

May
$111,350
$10,621
$37,538
$9,360
$2,080
-----------$59,599

Jun
$124,645
$11,310
$42,900
$10,478
$2,080
-----------$66,768

$48,809
46.51%

$51,751
46.48%

$57,877
46.43%

$34,842
46.12%

$39,061
46.11%

$39,402
46.27%

$12,640
$500
$0
$5,500
$250
$250
$125
$2,528
$125
$0
$600
-----------$22,518

$13,140
$500
$0
$5,500
$250
$250
$125
$2,628
$125
$0
$600
-----------$23,118

$13,640
$500
$0
$5,500
$250
$250
$125
$2,728
$125
$0
$600
-----------$23,718

$14,640
$500
$0
$5,500
$250
$250
$125
$2,928
$125
$0
$600
-----------$24,918

$16,140
$500
$0
$5,500
$250
$250
$125
$3,228
$125
$0
$600
-----------$26,718

$16,140
$500
$0
$5,500
$250
$250
$125
$3,228
$125
$0
$600
-----------$26,718

$7,735
$180
$2,116

$12,324
$176
$3,402

$15,943
$172
$4,416

$15,684
$167
$4,345

$23,891
$163
$6,644

$25,033
$159
$6,965

$31,159
$155
$8,681

$5,440
8.46%

$8,747
11.58%

$11,356
13.41%

$11,172
13.12%

$17,084
16.28%

$17,909
16.08%

$22,323
17.91%

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 26

Appendix
Appendix Table: Cash Flow
Pro Forma Cash Flow
Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

$14,098
$0
$14,098

$22,961
$0
$22,961

$31,535
$5
$31,539

$42,874
$153
$43,027

$56,881
$485
$57,366

$62,381
$987
$63,368

$73,284
$1,340
$74,624

$82,164
$1,765
$83,929

$0
$0
$0
$0
$0
$0
$0
$14,098

$0
$0
$0
$0
$0
$0
$0
$22,961

$0
$0
$0
$0
$0
$0
$0
$31,539

$0
$0
$0
$0
$0
$0
$0
$43,027

$0
$0
$0
$0
$0
$0
$0
$57,366

$0
$0
$0
$0
$0
$0
$0
$63,368

Jul

Aug

Sep

Oct

Nov

$3,750
$468
$4,218

$6,500
$14,171
$20,671

$7,820
$18,546
$26,366

Mar

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current
Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

8.25%

u
B

$0

$0

$700

$700

$0

$0

$0

$0

$0

$0

$0
$0
$0
$4,918

$0
$0
$0
$21,371

$0
$0
$0
$27,066

$9,180
$55,635

Net Cash Flow
Cash Balance

$0
$700

$1,590
$57,225

$4,473
$61,698

in s s e P s n la $9,320
$25,502
$34,822

$11,640
$34,610
$46,250

r
P
Dec

$12,140
$44,160
$56,300

S o m a $82,605
$1,941
$84,546

le p Apr

May

Jun

$101,797
$2,276
$104,072

$108,010
$2,542
$110,551

$120,906
$2,575
$123,480

$0
$0
$0
$0
$0
$0
$0
$104,072

$0
$0
$0
$0
$0
$0
$0
$110,551

$0
$0
$0
$0
$0
$0
$0
$123,480

$0
$0
$0
$0
$0
$0
$0
$74,624

$0
$0
$0
$0
$0
$0
$0
$83,929

$0
$0
$0
$0
$0
$0
$0
$84,546

Jan

Feb

Mar

Apr

May

Jun

$12,640
$47,838
$60,478

$13,140
$55,178
$68,318

$13,640
$60,885
$74,525

$14,640
$61,942
$76,582

$16,140
$76,785
$92,925

$16,140
$78,297
$94,437

$0

$0

$0

$0

$0

$0

$0

$0

$0

$700

$700

$700

$700

$700

$700

$700

$700

$700

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0
$0
$35,522

$0
$0
$0
$46,950

$0
$0
$0
$57,000

$0
$0
$0
$61,178

$0
$0
$0
$69,018

$0
$0
$0
$75,225

$0
$0
$0
$77,282

$0
$0
$0
$93,625

$0
$0
$0
$95,137

$7,505
$69,203

$10,416
$79,619

$6,368
$85,987

$13,446
$99,433

$14,911
$114,344

$9,321
$123,665

$26,790
$150,455

$16,926
$167,381

$28,343
$195,724

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 27

Appendix
Appendix Table: Balance Sheet
Pro Forma Balance Sheet
Jul
Assets

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

$99,433
$5,896
$5,722
$32,095
$143,147

$114,344
$6,673
$6,379
$32,095
$159,490

$123,665
$7,287
$7,462
$32,095
$170,509

$0
$0
$0
$143,147

$0
$0
$0
$159,490

May

Jun

$150,455
$8,160
$10,985
$32,095
$201,694

$167,381
$8,958
$11,683
$32,095
$220,118

$195,724
$10,123
$12,441
$32,095
$250,383

$0
$0
$0
$170,509

$0
$0
$0
$201,694

$0
$0
$0
$220,118

$0
$0
$0
$250,383

Jan

Feb

Mar

Apr

May

Jun

$53,149
$30,100
$0
$83,249

$58,837
$29,400
$0
$88,237

$59,384
$28,700
$0
$88,084

$74,185
$28,000
$0
$102,185

$75,399
$27,300
$0
$102,699

$84,042
$26,600
$0
$110,642

$0
$76,805

$0
$83,249

$0
$88,237

$0
$88,084

$0
$102,185

$0
$102,699

$0
$110,642

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets

$46,455
$0
$6,000
$32,095
$84,550

$55,635
$142
$5,055
$32,095
$92,927

$57,225
$611
$3,291
$32,095
$93,222

$61,698
$1,582
$2,514
$32,095
$97,889

$69,203
$2,754
$3,097
$32,095
$107,149

$79,619
$4,028
$4,042
$32,095
$119,784

$85,987
$4,970
$4,904
$32,095
$127,956

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$0
$0
$0
$84,550

$0
$0
$0
$92,927

$0
$0
$0
$93,222

$0
$0
$0
$97,889

$0
$0
$0
$107,149

$0
$0
$0
$119,784

$0
$0
$0
$127,956

Jul

Aug

Sep

Oct

Nov

$33,142
$32,200
$0
$65,342

$42,573
$31,500
$0
$74,073

$0
$65,342

$0
$74,073

Liabilities and Capital

le p Apr

Starting Balances

r
P
Dec

S o m a Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$35,000
$0
$35,000

$13,561
$34,300
$0
$47,861

$17,706
$33,600
$0
$51,306

$24,360
$32,900
$0
$57,260

Long-term Liabilities
Total Liabilities

$0
$35,000

$0
$47,861

$0
$51,306

$0
$57,260

$130,000
($80,450)
$0
$49,550
$84,550

$130,000
($80,450)
($4,484)
$45,066
$92,927

$130,000
($80,450)
($7,634)
$41,916
$93,222

$130,000
($80,450)
($8,921)
$40,629
$97,889

$130,000
($80,450)
($7,743)
$41,807
$107,149

$130,000
($80,450)
($3,839)
$45,711
$119,784

$130,000
($80,450)
$1,601
$51,151
$127,956

$130,000
($80,450)
$10,348
$59,898
$143,147

$130,000
($80,450)
$21,703
$71,253
$159,490

$130,000
($80,450)
$32,875
$82,425
$170,509

$130,000
($80,450)
$49,959
$99,509
$201,694

$130,000
($80,450)
$67,868
$117,418
$220,118

$130,000
($80,450)
$90,191
$139,741
$250,383

$49,550

$45,066

$41,916

$40,629

$41,807

$45,711

$51,151

$59,898

$71,253

$82,425

$99,509

$117,418

$139,741

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

u
B

in s s e P s n la $46,005
$30,800
$0
$76,805

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 28