1.

Financial Plan

The vital element of the financial plan is maintaining, improving and initiating those factors
which create, increase and stabilize the cash flows. The goal for the first month is a profitable
business. For the fact that for the business to grow we do not have to wait for clients to learn
about it since the stylist and the brands on board already have an existing client base. While
increasing sale and quickly repaying the loan, and managing cost, the net worth of the business
will be increased substantially in the first year and will continue to increase in the foreseeable
future.
1.1.Financial Assumptions.
1.1.1. Revenue will grow at an annual rate of 12%, increasing to 15% for the next month
due to a historical jump in revenues at this time of financial year. It is anticipated that
the increase will stay steady throughout the following year and will account for
normal flow of new clients (Application Users) and other Salon (brands)
incorporating themselves into our business.
1.1.2. We will not use cost of goods sold in our calculations of net service value, but will be
including all related recurring expenses, as for example payroll and supplies.
1.1.3. As we also be offering products for sale, the only direct cost in the sales forecast will
be for it.
1.1.4. The product sales will be a minimal part of our market. There is surety as to how
much revenue will be derived from products, thereby we took a low-ball approach
and estimated sales of Rs.40,000
1.1.5. In order to assure, start-up funds lenders and that the owners are financially stable, a
financial statement enclosed herewith illustrates other sources of income that include
interest and dividend income from investments, commission income and salary
income.
1.1.6. There is an assumption of cash payments for all services except for revenue projected
as insurance reimbursement, with collection days at 60.
1.1.7. Interest rates, tax rates and personnel burden are based on conservative assumptions
1.1.8. Due to the economy, there is an assumption that our services and affordable prices
will attract more customers
1.1.9. We assume that there are no changes to the salon service industries.

1.2.Strategic Approaches to Financial Projection

This mean the outright spending of money, or the involvement of allocation of time to meet
them. As said that without a solid financial plan, things can soon get out of control and fail
“money pit”. For each marketing strategy, budget and resources have been properly allocated.
Most importantly, we have not forget to take advantage of what we can do for free i.e. training
staff to cross-sell. The approaches used for financial projection are in terms of:
1.2.1. Market Share and Survey
 Almost 81,000 beauty salons and barber shops brought in an estimated Rs. 15 billion
in annual sales in 2017, according to survey. Where small salons contributed heavily
to the industry, with the 61 largest companies just drawing 28% of overall revenue.
The targeted clientele and price of the business actually runs the gamut from luxury
high end services to budgeted hair cuts salons.

1.2.2. Target Market

People between the age of 30-50 years spends 15-20% above the average on beauty
products and services. The best target market for our business consists of households
with children, for the fact they spend 25-30 % more than average. Selling hair and
skin care product together with salon services for men is also a growing market, too.
If one wants to sale hair and beauty products in addition to salon services, one must
therefore focus on households with female, children as they spend upto 83% more
than household with no kids.

1.2.3. Growth Trends

The potential of growth for beauty salons n actual depends on various factors, that
may include the characteristics of target market as well as the growth of next
population. A check and update on latest beauty techniques, for example hair coloring
service, skin care treatments, should also be there to take advantage. It is expected
that the revenue will grow on the industry to 3.3 % annually through 2020, fairly as
people will have more disposable income to spend on higher end services, i.e.
massages, facials and special skin care treatments. As per the Professional Beauty
Association, the number of positions in the beauty industry is also likely to grow by
18% between 2019-2029, therefore finding experienced salon staff may get bit
difficult.

1.2.4. Competitors
With the financial profits projected to Rs.40 Billion by 2020, E-Salon app will be
launched, creating more competition for already existing business. Reports and
survey show that there will be 1.3 Million salon and barber shop owners by 2020, it
will be very much feasible for our business. The cost of starting a beauty service
business is minimal, with some expenses, says FORBES, so competition may get
stiffer in some areas.

1.3.Break Even Analysis.

The break-even analysis depicts that Trend Setters has a fairly good balance of fixed costs
and sufficient sales strength to remain healthy. The calculation is thus focused on service
sales. The conservative forecast shows the E-Salam just passing the break-even point through
most of the first.
 9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
0 200 400 600 800 1000 1200 1400 1600

BREAK-EVEN ANALYSIS
Monthly Revenue Break-Even Rs.700
Assumptions:
Average Percent Variable Cost 6.54%
Estimated Monthly Fixed Cost Rs.2500
1.4.Projected Profit and Loss
The table below shows the conservative profit and loss projection for the first year. The table
includes the payment for all independently contracted salon and technicians as well as for all
regularly occurring supply expenses associates with service sales.

FY 2020 FY 2021 FY 2022

Sales Rs.166,400 Rs.211,022 Rs.239,875

Cost of Goods Sold Rs.4,320 Rs.4,300 Rs.4,400

Gross Margin Rs.162,080 Rs.206,722 Rs.235,475

Gross Margin % 97.40% 97.96% 98.17%

Expenses

Salary Expense Rs.46,400 Rs.52,520 Rs.54,876

Marketing/Promotion Rs.22,800 Rs.24,000 Rs.26,000

Depreciation Rs.8,146 Rs.8,146 Rs.8,146

Utilities Rs.4,200 Rs.4,200 Rs.4,200

Insurance Rs.1,200 Rs.1,200 Rs.1,200

Rent Rs.22,740 Rs.22,740 Rs.22,740

Independently Contracted
Rs.40,400 Rs.55,000 Rs.69,000
Stylists and Saloon

Supplies Rs.6,000 Rs.6,000 Rs.6,000

------------ ------------ ------------

Total Operating Expenses Rs.158,846 Rs.181,684 Rs.200,393

Profit Before Interest and Taxes Rs.3,234 Rs.25,038 Rs.35,082

Taxes Incurred Rs.911 Rs.7,011 Rs.9,881

Net Profit Rs.2,323 Rs.18,027 Rs.25,200

Net Profit/Sales 1.40% 8.54% 10.51%

1.5.Sales Forecast
It is imperative to state that the sales/service forecast is based on the data gathered during our
feasibility studies and also some of the assumptions readily available on the filed with reference
no existing similar business in the market along with the need of easy salon service.
We are familiar with the fact that we are well positioned and we will definitely attract clients that
will not only patronize our application, but also our services and products offered later on. This
meant that that there will be a generation of additional income from these sources. Below, is our
business sales projection and based on the type of services and products that will be offered
through our app.

 First Year-: Rs. 166,400

 Second Year-: Rs. 211,022
 Third Year-: Rs. 250,000

The Projection is done based on the assumptions that there won’t be any application offering
same additional services like us within our region radium from our facility and based on what is
obtainable in the industry.

Yearly Sales Forecast

2022

2021

2020

0 50,000 100,000 150,000 200,000 250,000

Service Product Sales Others (including consultation serivces)

1.6. Expense Forecast

The major expense include, salary, marketing, depreciation, utilities, insurance, rent, supplies
and independently contracted stylist.
For the First Year the Total Expense is Rs.158,586, whereas for the second year Rs.181,846 and
for the coming year it is Rs.200,393. The table below shows the estimated expenses for the three
years

Expenses

Salary Expense Rs.46,400 Rs.52,520 Rs.54,876

Marketing/Promotion Rs.22,800 Rs.24,000 Rs.26,000

Depreciation Rs.8,146 Rs.8,146 Rs.8,146

Utilities Rs.4,200 Rs.4,200 Rs.4,200

Insurance Rs.1,200 Rs.1,200 Rs.1,200

Rent Rs.22,740 Rs.22,740 Rs.22,740

Independently Contracted
Rs.40,400 Rs.55,000 Rs.69,000
Stylists and Saloon

Supplies Rs.6,000 Rs.6,000 Rs.6,000

------------ ------------ ------------

Total Operating Expenses Rs.158,846 Rs.181,684 Rs.200,393

Yearly Expense Budget

250000
200000
150000
100000
50000
0
2020 2021 2022

Salary Expense Marketing Promotion Depreciation

Utilities Insurance Rent
Independly contracted stylist Supplies Total Expenses