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VNS is a socially and environmentally conscious health club that is concerned not only with physical beauty but also with mental well being. It is a health club with environmental and social concerns that sets it apart from other clubs; all products used are plant safe and cruelty free. We at VNS feel that pampering our clients' leads to the health and well being of the greater society, therefore, we address the special health concerns of our clients with exercise, yoga, and meditation. The goals of our company are to be profitable and build a product line through name recognition. It is the immediate goal to launch an additional product line into the beauty market, while the long-term goal is to go public with several health club facilities and an active product line.
1.1 Keys to Success
• • • •
Create an environment for people to feel good about themselves, both physically and mentally. Provide services for those seeking natural means to strengthen and heal their bodies due to injury or illness. Provide services for the needs of women in shelters and those struggling financially. Provide special activities for various holidays.
• • • •
Break even by the end of year two. Have an increase in new clients quarterly. Have the company's work in the community covered in the local media. Ability to increase the percentage of profits donated to charities.
The goal of our company is to enhance the lives of men and women by providing an atmosphere that aids the body with relaxation techniques and health conscious alternatives.
VNS has been a dream for the founders; it was essential for a salon/health club/spa to nurture mind, body, and spirit. This combination is hard to come by in Varanasi, and so the four founders decided to create the VNS health club and sought the backing of three angel investors. VNS is located in the Lanka Varanasi (Near BHU), Utter Pradesh, and provides a magical setting for this soothing building. It is downtown and in the heart of our target market.
2.1 Start-up Summary
The table that follows details projected starting costs.
Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Research and development Expensed equipment Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets
7,500 Rs.500 Rs.5,000 Rs.0 Rs.500 Rs.4,500 Rs.0 Rs.2,500 Rs.4,500 Rs.25,000
Rs.500,000 Rs.5,000 Rs.75,000 Rs.0 Rs.580,000
spa.5. Each of these services is designed to nurture one's complete self. full-body pampering in the spa.580.000 Rs. Future services include a product line that is pure and natural: no animal testing.000 Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Rs.000 Rs. We specialize in improving the mind. body.500. and fitness classes in the health club. and styling in the salon. and the use of only organic ingredients.605. color.500.600.0 Rs. VNS would like to create similar clubs in other cities as well.000 Rs.000 (Rs.0 Rs. Another goal for the future is making our kitchen available for rent by start-up restaurants hoping to introduce their food to our clientele.0 Rs.605. improve self image.000 Rs.000) Rs.000 Rs.000 Rs. Ideally.605.000 Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Investor 1 Investor 2 Invertor 3 Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Rs.575.0 Rs.000 Rs. Each part of the club offers different services: haircuts.000 Rs.200. .25.000 Rs.80.000 Rs. in turn.200.200. and. and soul. and health club.580.580.5.000 Total Capital and Liabilities Total Funding Rs.0 Rs.000 Rs.25.Total Requirements Rs.000 Services VNS is a combination salon.000 Rs.
We firmly believe that women would take advantage of our services more often than men would. They are often in their late twenties through their mid forties. Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR Women 4% 400. Another advantage to the Varanasi market is the high level of travel to the area. We wanted to create a safe environment where people feel comfortable and get the attention they need with out feeling ostracized or sick. however. Often in the working world it is necessary to look healthy and fit.000 888. 4. we break our market into two segments: Women and Other. Women between the ages of 18 and 70 are the vast market. They also have the financial opportunity to regularly treat themselves to a facial or massage. We offer special classes.931 546.877 1.922 4. Our first target market is the corporate workers of Varanasi. and homeopathic opportunities for people with specific needs. For men.640 449. because they are in stressful jobs and could use relaxation and exercise.500 928. The chart and table below outline the target markets we have chosen. with an emphasis on professional women in their mid twenties through their mid fifties. professionals concerned about their appearance are our main market. we offer exercise facilities to keep people fit and happy.000 416. We target anyone who is searching for a natural method to heal body and soul.765 970. Also. women battling or recovering from a serious injury or illness are another specific target market. massage. Varanasi provides an ideal market.000 472. It is also one of the fastest growing areas in the Utter Pradesh. We have chosen these people.014.53% 4.53% 850. The second group we target is people either recovering from an injury or people who have a condition which needs special attention. VNS aims to provide health and spa services to those seeking physical and mental well being. for simplicity's sake.2 Target Market Segment Strategy .000 432. This also increases our possible consumer base. therefore.500 496.00% Total 4. especially among Tourist. with a continually expanding consumer base. ranging from early twenties to mid forties. Utter Pradesh.978 5.946 467.Market Analysis Summary The initial market for VNS is Varanasi. regardless of age or income. With its growing population of moderate to high income professionals.00% Other 5% 450.1 Market Segmentation Our market segmentation is specific to two target groups.125 520.944 4.
and spas in the Varanasi area. Advertising in local Varanasi magazines and newspapers helps get VNS to the mass public. All these promotional methods mesh together to form a sturdy advertising base for the company to grow on. 5. but it's concerns as well. and brunch. as does the availability of all services under one roof. and mailings and newsletters keep our client base in touch.300 each and will be offered special benefits and packages. Because VNS is a full-service salon. highlighting monthly specials and other events that are important to the company. . health clubs.3 Market Needs Our market's needs are simple: people want to look and feel good. People will be allowed to purchase tickets for Rs. we have created a monthly newsletter. body. These ideals provide VNS with a competitive edge because we are committed not only to the needs of the community. and soul. It has been determined that our target markets are also interested in social issues such as the environment and community. Community outreach to women's shelters and special days at the salon and spa help women nurture their spirit to help them become more productive. Interacting and volunteering with local hospitals and survivor support groups makes the health and homeopathic healing area known. there is no direct competition.1 Competition Our indirect competition includes salons. Offering special classes for those with serious health concerns sets us apart.1 Competitive Edge Our competitive edge is that we offer a relaxing atmosphere that can refresh the mind.We have designed several ways to receive positive attention and publicity for our first year. We plan to open on Mother's day. Initial corporate discounts provide for a demand on the salon as early as the grand opening.3. 4. facials. manicures. Strategy and Implementation Summary The VNS name will became familiar to the Varanasi community on different levels and by various methods. To continue customer awareness. 4. offering people a tour of the facilities. We aim to please people who want this.
425 3.000 Spa 2. full price is charged to non-members for services.275 6.755 18.2. with memberships in which there is a monthly charge that provides discounts on services. and the summary follows in the table. Our main goal is to foster relationships with clients and keep them through quality of service and products.000 . First.500 9. 5. The second method of sales will be encouraged through repeat business and word-of-mouth advertising. Sales Forecast Year 1 Year 2 Year 3 Unit Sales Salon 3.2 Sales Strategy Our revenue is earned in several ways.500 4.5.000 Exercise/Therapy 14.300 Other 600 800 1.1 Sales Forecast The Sales Forecast is in monthly detail in the chart.000 22.
125.125 Rs.800 36.8.000 Total Sales Rs.055 28.157.000 Exercise/Therapy Rs.45.12.00 Rs.946.418 Rs.57.45.9.00 Rs.193.300 Unit Prices Year 1 Year 2 Year 3 Salon Rs.000 Spa Rs.00 Rs.00 Rs.00 Sales Salon Rs.55.540.00 Exercise/Therapy Rs.60.500 Rs.668 Rs.162.125 Rs.18.104.22.168.600 Rs.00 Other Rs.50 Rs.00 Rs.000 Rs.00 Spa Rs.198.600 Rs.9.500 Rs.000 Rs.15.Total Unit Sales 21.00 Rs.500 Other Rs.500 .109.9.370.699.00 Rs.180.420.
3.300 Other Rs. and ongoing development. human resources.7.800 Rs.1.00 Rs.0 Rs.1.0 Spa Rs. each with specific areas of expertise: financials.425 Rs.00 Direct Cost of Sales Salon Rs. publicity.1.500 Rs.3.Direct Unit Costs Year 1 Year 2 Year 3 Salon Rs.500 Rs.500 Rs.400 Rs.1.0. The salon will have two full-time stylists and the spa with be staffed with a full-time beauty technician and masseur.1.3.275 Rs.0.0 Rs.00 Exercise/Therapy Rs.12.9.00 Rs.00 Spa Rs.2.000 Subtotal Direct Cost of Sales Rs. 22.214.171.124.126.96.36.199 Personnel Plan .00 Rs.300 Management Summary VNS’s location in Varanasi will be staffed according to department.400 Rs.00 Rs.00 Rs.2.00 Other Rs.3.00 Rs. Management will have four managers.3.00 Rs. The health department will have three part-time instructors working on rotating shifts.000 Exercise/Therapy Rs.16.00 Rs.
560 Rs.36.325.000 Spa Rs.000 Rs. Details are in the appendix.720 Rs.336.30.000 Rs.000 Salon Rs.000 Rs.000 Health Rs.0 Rs.000 Rs.30. Personnel Plan Year 1 Year 2 Year 3 Management Rs.000 Other Rs.31.0 Rs.31.35.34.000 Rs.372.32.000 Rs.000 Rs.The Personnel Plan follows.720 Rs.0 Total People 11 11 11 Total Payroll Rs.275.000 .240.32.425.
making the location self supporting.with their pay tied to the success of the company. utilities. including exercise equipment. The eventual goal is to go public with a product line and locations around the country. We have included financial assumptions below. With a foundation of start-up investment from angel investors. The equipment. VNS has a small staff of service providers whose payroll is subsidized by tips from clients.1 Important Assumptions The main assumptions are the continued market need and the ability to deliver. Leasing the location with the option to purchase the property is ideal for the company. 7.Financial Plan The plan for VNS' financial future is steady growth. The company will break-even shortly after the second year. was purchased with start-up funds. and payroll. The managers are paid modestly. leaving VNS with little monthly costs beyond rent. VNS has a solid cash base from which to establish itself and build name recognition. General Assumptions .
25% 7.42% 25.3 Break-even Analysis The Break-even Analysis in this plan makes many assumptions to achieve an estimate. our inventory remains steady at approximately two months in stock.00% 25.00% 8.25% Tax Rate 25. 7. The direct costs of providing our services is small. where sales are expected to rise substantially. annual growth is imperative.42% Other 0 0 0 7. so increasing the number of clients receiving services will aid the bottom line. and utility costs are all considered as fixed costs. Salary for employees. . The inventory turnover increase shown in the chart is the result of rounding. While there are times of the year. lease. especially holidays.00% 8.2 Key Financial Indicators Key to the financial success of VNS is continued annual growth. Almost all cost in the operations will remained fixed.Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 8.25% 7.00% Long-term Interest Rate 7.
19.36 .0.Break-even Analysis Monthly Units Break-even 2.653 Monthly Revenue Break-even Rs.005 Assumptions: Average Per-Unit Revenue Rs.53.98 Average Per-Unit Variable Cost Rs.
52.060 7.Estimated Monthly Fixed Cost Rs. .4 Projected Profit and Loss We expect to return increasing profits over the next three years.
600 Rs.300 .9188.8.131.520 Rs.420.668 Rs.Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales Rs.699.500 Direct Cost of Sales Rs.16.400 Rs.
22% 98.000 Rs.0 Utilities Rs.000 Rs.400 Rs.168 Rs.425.000 .45.0 Leased Equipment Rs.107.300 Gross Margin Rs.0 Rs.000 Rs.16.0 Rs.12.98.000 Sales and Marketing and Other Expenses Rs.0 Rs.Other Rs.000 Rs.200 Gross Margin % 184.108.40.2063.520 Rs.0 Rs.687.200 Rs.000 Rs.500 Rs.000 Rs.0 Rs.930.23% 98.000 Rs.220.127.116.11.200 Rs.0 Total Cost of Sales Rs.54.000 Depreciation Rs.000 Rs.336.000 Insurance Rs.000 Rent Rs.7.0 Rs.40.372.28% Expenses Payroll Rs.12.
4.175.250 Other Rs.200 Rs.200 Rs.Payroll Taxes Rs.754.93.0 Total Operating Expenses Rs.950 Interest Expense Rs.106.0 Rs.4.150 Rs.229 Net Profit/Sales -50.0 Rs.553) Rs.1.131.000 Rs.624.553) Rs.29% 0.0 Rs.0 Taxes Incurred Rs.720 Rs.050 Rs.000 Rs.175.45% 13. .211.86% 7.5 Projected Cash Flow The following chart and table show the cash flow for VNS.000 Rs.44.211.721 Net Profit (Rs.3.553) Rs.250 Profit Before Interest and Taxes (Rs.683.950 EBITDA (Rs.0 Rs.84.211.0 Rs.
699.420.0 Rs.500 Subtotal Cash from Operations Rs.420.668 Rs.699.668 Rs.600 Rs.0 Rs.500 Additional Cash Received Sales Tax.0 .Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales Rs.946.946. HST/GST Received Rs.600 Rs. VAT.
420.New Current Borrowing Rs.0 Rs.699.767 Rs.0 Rs.000 Rs.0 Rs.946.668 Rs.336.372.0 New Other Liabilities (interest-free) Rs.635 Rs.0 Subtotal Cash Received Rs.0 New Investment Received Rs.657 .425.600 Rs.0 Rs.000 Bill Payments Rs.0 Rs.385.0 Sales of Other Current Assets Rs.0 Rs.657 Subtotal Spent on Operations Rs.810.0 Rs.323.0 New Long-term Liabilities Rs.695.0 Rs.0 Rs.0 Rs.0 Sales of Long-term Assets Rs.272.000 Rs.500 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending Rs.0 Rs.767 Rs.635 Rs.608.0 Rs.
767 Rs.0 Other Liabilities Principal Repayment Rs.708 7.0 Rs.0 Rs.6 Projected Balance Sheet The following table shows the projected Balance sheet.695.968) Rs.0 Rs.0 Purchase Long-term Assets Rs.0 Rs.0 Purchase Other Current Assets Rs.0 Principal Repayment of Current Borrowing Rs.0 Rs. HST/GST Paid Out Rs.833 Rs.033 Rs.187.312.0 Rs.315.0 Rs.635 Rs.843 Cash Balance Rs.0 Rs.135.0 Long-term Liabilities Principal Repayment Rs. Pro Forma Balance Sheet .0 Rs.865 Rs.3.Additional Cash Spent Sales Tax.0 Rs.0 Rs.0 Dividends Rs.451.0 Rs.810.608.0 Rs.0 Subtotal Cash Spent Rs. VAT.0 Rs.657 Net Cash Flow (Rs.
393.000 Total Current Assets Rs.968 Long-term Assets Long-term Assets Rs.0 Rs.388.968 .345 Rs.388.393.0 Total Assets Rs.0 Accumulated Depreciation Rs.529.865 Rs.1.451.0 Rs.533 Rs.2.75.0 Rs.533 Rs.529.75.312.0 Total Long-term Assets Rs.315.480 Rs.75.Year 1 Year 2 Year 3 Assets Current Assets Cash Rs.000 Rs.000 Rs.0 Rs.033 Rs.708 Inventory Rs.345 Rs.500 Rs.0 Rs.3.260 Other Current Assets Rs.0 Rs.
32.25.233.000 Retained Earnings (Rs.085 Rs.000) (Rs.0 Rs.598 Rs.25.26.497.0 Subtotal Current Liabilities Rs.553) (Rs.229 Total Capital Rs.0 Rs.150 Rs.141 Long-term Liabilities Rs.0 Rs.211.748 Rs.26.600.0 Rs.25.363.553) Rs.000 Rs.403) Earnings (Rs.0 Rs.236.131.748 Rs.600.25.0 Other Current Liabilities Rs.26.32.000 Rs.32.0 Rs.141 Paid-in Capital Rs.085 Rs.141 Current Borrowing Rs.Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable Rs.600.085 Rs.0 Total Liabilities Rs.448 Rs.3.366.748 Rs.827 .
63% 0.00% .30% 19.00% 100.345 Rs.10% Total Current Assets 100.598 Rs.00% 100.00% 100.39% 0.31% 35.29% 15.00% 66.393.363.60% Other Current Assets 19.15% 31.62% 3.00% Long-term Assets 0.Total Liabilities and Capital Rs.497.90% Percent of Total Assets Inventory 0.00% 39.448 Rs.366.00% Total Assets 100.7 Business Ratios Ratio Analysis Year 1 Year 2 Year 3 Industry Profile Sales Growth 0.968 Net Worth Rs.00% 0.07% 14.533 Rs.00% 61.827 7.00% 100.388.00% 100.529.00% 0.
20% 93.54% 93.80% Long-term Liabilities 0.00% Selling.00% 100.51% 97.54% 11.94% 37.39 0.00% 100.06% 34.28% 0.00% 27.46% 6.73 .71 16.40% Net Worth 93.06% 62. General & Administrative Expenses 148.80% 6.46% 6.29% 0.60% 18.43 14.60% Percent of Sales Sales 100.70% Main Ratios Current 15.00% 100.20% Advertising Expenses 18.10 Quick 15.49 1.00% 0.78% 84.22% 98.49 14.Current Liabilities 6.00% Gross Margin 98.80% 6.23% 98.34% 73.44% 8.59% 2.61 16.40% Profit Before Interest and Taxes -50.60% Total Liabilities 6.00% 0.45% 2.
34% 3.79 n.a Accounts Payable Turnover 11.46% 6.23 5.21% 1.06% 62.08 1.80% 6.67 12.00% Pre-tax Return on Assets -54.45% 13.17 n.68 n.90% Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin -50.86% n.86% 26.17 12.20% 7.a Payment Days 28 29 27 n.78 1.40% Pre-tax Return on Net Worth -58.36% n.45% 1.Total Debt to Total Assets 6.a Activity Ratios Inventory Turnover 3.a Total Asset Turnover 1.a Return on Equity -58.53 6.21% 0.a Debt Ratios .15% 35.07% 33.29% 0.
00 0.56 0.a Current Liab.a .07 0.448 Rs. 1.Debt to Net Worth 0.92 0.a Sales/Net Worth 1.363.a Acid Test 15.43 14.a Interest Coverage 0.00 n.827 n.497.56 n.39 n.366.00 1.00 n.90 n.a Current Debt/Total Assets 6% 7% 6% n.16 1.00 n.a Additional Ratios Assets to Sales 0.00 1.91 1.61 16.00 0.00 0.598 Rs.a Liquidity Ratios Net Working Capital Rs.00 0.06 n.07 0. to Liab.a Dividend Payout 0.
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