Cover Page
Business Plan for St. George Day Spa
St. George Day Spa
1919 S. Woodland Blvd
Sparta, MS 20140
Phone:386-555-5555
Fax: 386-555-4444
Email: stgeorgespa.com
Table of Contents
1.0 Executive Summary
2.0 Company Summary
1. 2.1 Start-up Summary
a. Table: Start-up
3.0 Services
4.0 Market Analysis Summary
a. Table: Market Analysis
5.0 Strategy and Implementation Summary
1. 5.1 Sales Forecast
a. Table: Sales Forecast
2. 5.2 Milestones
a. Table: Milestones
6.0 Management Summary
7.0 Financial Plan
1. 7.1 Projected Profit and Loss
a. Table: Profit and Loss
2. 7.2 Business Ratios
a. Ratio Analysis
1.0 Executive Summary
St. George Day Spa is the new high end get away journey in Sparta, MS, that will
offer a comprehensive spa experience. We have the most ultra-comfortable
treatment rooms that offer the finest spa linens and equipment. Massages are
provided in a variety of styles - traditional Swedish Massage, Deep Tissue work, Hot
Stone Massage, Prenatal and others. We also offer facial and body treatments, like
an Antioxidant Facial and Micro-Retinal Peel Treatment. We also offer manicure and
pedicures that will exfoliate and hydrate. Our day spa has the latest when it comes
to anti-aging products and techniques but does not offer services on hair such as
cutting, styling and coloring. In fact, for location, we prefer being located near
business for co-marketing opportunities such as a hair and nail salon.
The development of thisbusiness plan is to track the progress that will occur prior to
grand opening and a follow through with the five-year projection. This plan has also,
been written in order to secure a portion for start-up funding that will be necessary
for Spa's successful opening.
1.1 Objectives
1. Achieve $29,000 in sales the third month after opening by performing 13 services
per day.
2. Achieve $60,550 in sales the six month after opening by performing 27 services
per day.
3. Have a return rate of 90% of local clients by the end of six months.
4. Become the communities Spa get away by the end of the first 12 months.
5. Perform 51 services per day by the end of the first year.
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1.2 Mission
Our mission is to run and maintain a profitable business by providing our customers
with high-end therapeutic massage and facial and anti-aging treatment services in a
caring and professional environment by our licensed providers. We will provide
massage in a variety of styles - traditional Swedish Massage, Sports Massage, Deep
Tissue work, Hot Stone Massage, Prenatal, and others.
Our goal is to tailor services to the client's based on initial interview information, as
well as the feedback that we will gather from the treatments, to ensure that the
client's comfort and satisfaction is at its best, and to increase repeat business. We
will be using only the finest oils and lotions, beauty treatments and aromatherapies
with our customers. The spa will have special lighting, music, and decor throughout
the spa to complete the comfortable, soothing environment to heighten the client's
overall spa experience.
1.3 Keys to Success
1. Marketing, Marketing, Marketing - Owner is a proven, 10-year sales executive. Marketing
will be the strength to our success.
2. Professionalism: Includes everything from maintaining every customers confidentiality, to
hiring only the best LMT and Aestheticians.
3. Individual Attention: Each client's experience will be tailored to his or her personal
preference.
4. Repeat business/Recommendations: giving exceptional service that brings people back for
regular treatments, encourages clients to recommend us to family and friends, and other
health professionals to recommend their clients.
5. Unique Treatments: We have the latest techniques along with the best products from around
the world.
6. Fantastic Location: Sparta, MS.
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2.0 Company Summary
St. George Day Spa is a new get away that offers its customers a combination of
massage, body treatments, pedicures and manicures, facials and anti-aging
treatments. We cater to both men and women offering the latest in skin care
products and therapies located in a serene and upscale setting.
2.1 Start-up Summary
The following outlines start-up expenses related to leasing and start-up expenses in
opening St. George Day Spa. The bulk of the start-up cost is invested by the owner.
The remaining balance will be funded through short-term financing.
Table: Start-up
Requirements
Start-up Expenses
Legal
Printing, stationery, bags, grand
opening coupons
Brochures
Construction/Design
$2,500
$3,500
$450
$45,000
Insurance
Rent
Advertisement
Accountant
Linens
Total Start-up Expenses
$2,000
$17,000
$5,000
$950
$4,000
$80,450
Start-up Assets
Cash Assets
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$35,000
$6,000
$32,095
$0
$73,095
Total Requirements
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$153,545
3.0 Services
St. George Day Spa is a new get away that offers customers the combination of
massage, body treatments, pedicures and manicures, facials and anti-aging
treatments. All services are provided by licensed therapists and aestheticians. They
are independently contracted and are paid on a commission basis. The upside to
commissioned basis employees is that there is little overhead without sales. If the
business makes money the employees make money.
We also offer a full retail line that complements the service menu. Products included
items such as creams, candles and other high-end beauty products. These type of
items tend to retail at a minimum of $15-$30 per item and have a 45% mark-up or
higher.
4.0 Market Analysis Summary
There are about 20,000 spas in the U.S.according to International SPA
Association, and seven out of ten are day spas. Today, Spa Industry
revenues total $14 billion annually, with Day Spas accounting for over $70 billion
of this figure.
There are a few day spas near Sparta, MS but none of them offer our range of
services or products within a seven mile radius. To find a spa like ours residents
currently have to travel 40 miles away into a larger city.
St. George Day Spa are targeting potential clients within a seven-mile radius of the
Woodland Plaza with a household income of $25,000. Our secondary market will
include visitors or tourists staying at the local hotels. We are going to assume that
approximately 13% of the U.S. population has never tried a spa. We will assume that
the other 71% has tried a spa and would try one again, if the right offer and services
appealed to them. St. George Day Spa Market Analysis table will reflect the local
population and those potentials that will visit our area who we might target.
Table: Market Analysis
Year 1
Potential
Customers
Within 7 miles
over $25k
Other-visiting
area
Total
Year 2
Year 3
Year 4
Year 5
Growth
CAGR
2%
284,900
288,883
292,869
296,911
337,885
4.35%
0%
150,00
150,000
150,000
150,000
150,000
0.00%
2.91%
434,950
438,883
442,869
446,911 487,885
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5.0 Strategy and Implementation
Summary
Our strategy is to have the far best services in our business, and execute an
aggressive marketing plan in the community. We will have competitive prices for our
area and have a large pool of skills, commissioned therapists giving us a financial
advantage.
Our marketing strategy will consist of the following:
Local Advertising & Seasonal Promotion- Grade opening party with promotion
for the first 30 days along with advertising in the local newspaper and mail out local
fliers. There will be ongoing advertisement and specials plans will be made for
seasonal events such as Valentine’s Day, Mother’s Day, Father’s Day, Prom,
Christmas, and New Year’s.
Local Networking- This will be done through wedding planners, women’s groups,
and charity groups.
Hotel Referrals- Those hotels that do not offer spa services can send their guests
to us or they will be able to use our out-call spa services. Prior to opening, contact
will be made with the managers of the local hotels to guarantee that they are aware
of our services.
2.91%
Online Website- St. George Day Spa will show up on the major search engines. Our
website has all our services and contact information one there. There is also a
Contact area for any questions. Once the website is up and running we will
eventually have the capability of having customers make their own appointments
without calling us.
Local Traffic- We are going to be located in a high-traffic strip mall that is on the
high-end and modern. We are positioning ourselves next to a complementary
business such as a hair salon that do not offer massages, hand or feet treatments or
provide facial treatments.
5.1 Sales Forecast
The four main areas of income are: massage, facials and anti-aging treatments or
aestheticians, out-call services, and retail. The Sales Forecast table is a conservative
estimate with the spa having 8 services per day for the first month of being opened
and by the end of the first year having 51 services per day. Looking at being opened
six days a week, with an average of 8-10 hours per day. Our out-call services will
allow us to have to utilize our retail space but at the same time generating sales.
Out-call services will have nearly no overhead, and average price per service call
being $80 with 65% going to the therapist.
With the retail products we will have a gross margin that will be consistently of 50%.
Retail products will line up with the spa services being offered to enhance the overall
spa experience. These products will be hard to find items which will help generate
any repeat purchases.
Table: Sales Forecast
Sales
Massage Therapy
Aestheticians
Out-Call Services
Retail
Total Sales
Direct Cost of Sales
Linens & Cleaning
Oils & Lotions
Cost of Retail
products/50% of sales
Subtotal Direct Cost
of Sales
Year 1
Year 2
Year 3
Year 4
$527,830 $550,000 $560,000 $575,000
$177,410 $180,000 $185,000 $186,000
$23,600
$27,000
$30,000
$35,000
$94,845 $100,000 $125,000 $150,000
$823,685 $857,000 $900,000 $946,000
Year 1
$3,644
$14,577
Year 2
$3,875
$6,140
Year 3
$3,875
$6,800
$47,423
$50,000
$62,500
$65,544
$59,925
$73,175
Year 5
$580,000
$190,000
$37,000
$175,000
$982,000
Year 4
$3,980
$7,420
$75,000
Year 5
$4,035
$8,040
$87,500
$86,400
$99,575
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5.2 Milestones
The table below lists important milestones, dates, implementation duty, and budget
for each for St. George Day Spa.
Table: Milestones
Milestone
Business Plan
Financial Backing
Design Contractor
Retainer
Construction
Contractor Retainer
Lease Agreement
Brochures
Logo Design
Business Cards
Grand Opening
53 Clients per Day
Totals
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Start Date End Date Budget
4/7/2014
4/13/2014 $0
7/10/2014 12/31/2014 $165,000
Manager
Owner
Owner
Department
Owner
Owner
1/1/2015
1/15/2015 $5,000
Owner
Owner
1/6/2015
1/16/2015 $10,000
Owner
Owner
2/2/2015
2/10/2015
2/20/2015
2/20/2015
5/1/2015
5/1/2015
2/6/2015
2/12/2015
2/25/2015
2/25/2015
5/1/2015
5/1/2016
Owner
Owner
Owner
Owner
Owner
Owner
Owner
Owner
Owner
Owner
Owner
Owner
$20,000
$500
$150
$20
$0
$0
$200,670
6.0 Management Summary
St. George Day Spa is a Sole Proprietorship owned by Melinda Snow. Melinda Snow
will be the functional developer and manager for St. George Day Spa. Melinda has
worked in the management area for over 19 years and has been working in the
training simulation field for the past nine years. During the past 4 years Melinda has
worked with creating and maintaining budgets. At her current position with Raydon
Corporation, she has maintained a $1.4 million warranty reserve with proven
success.
The front office individual will be hired within one month of St. George Day Spa
Grand Opening. This individual will answer the phone, main the front desk, have
cashier duties, and make appointments. Do to the forecast of generating business by
the end of six months a second office personal will be hired on.
The owner and the front desk personnel will be the only salaries. The rest of the
payroll will be commissioned based personnel only and will only get paid when the
business is making money. The Licensed Massage Therapists will be receiving a 55%
commission on each session price. The aesthetician services will bring in an average
of 40% commission, and out-calls will be 65%, since there will be traveling involved
and will be mainly massage calls.
7.0 Financial Plan
Our financial plan will depend on important assumptions. We are assuming that cash
payments will be done on all services. We are also assuming that there is a strong
economy, without any major recessions.
7.1 Projected Profit and Loss
Our variable costs are going to exceed our fixed costs because we are paying
commission to our service providers. By doing this it helps keep overhead low, and
we will only be paying for hours when a services is provided. By keeping a large
quantity of reliable massage therapist and aestheticians on hand that can be
recruited when needed, this will help us from losing profit with there are no-shows.
The fixed expenses are expected: insurance, rent, electric, advertisement. We have
four main areas that will provide income: massage, facials and anti-aging treatments
or aestheticians, out-call services, and retail. The massage and aestheticians services
will bring in on average $65 per service. Out of that 55% will go to the service
provider. Our sales forecasting is a conservative estimate with the spa having 8
services per day for the first month of being opened and by the end of the first year
having 51 services per day. Looking at being opened six days a week, with an
average of 8-10 hours per day. Our out-call services will allow us to have to utilize
our retail space but at the same time generating sales. Out-call services will have
nearly no overhead, and average price per service call being $80 with 65% going to
the therapist.
With the retail products we will have a gross margin that will be consistently of 50%.
Retail products will line up with the spa services being offered to enhance the overall
spa experience. These products will be hard to find items which will help generate
any repeat purchases.
Table: Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales
Year 1
$823,685
$65,644
$376,611
$442,254
Year 2
$857,000
$59,925
$392,050
$451,975
Year 3
$900,000
$73,175
$401,500
$474,675
Year 4
$946,000
$86,400
$413,400
$499,800
Year 5
$982,000
$99,575
$419,050
$518,625
Gross Margin
Gross Margin %
$381,431
46.31%
$451,975
47.26%
$474,675
47.26%
$499,800
47.17%
$518,625
47.19%
Expenses
Payroll
Marketing/Promotion
$137,510
$7,500
$145,000
$5,000
$155,00
$5,000
$160,000
$8,000
$167,000
$5,000
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Phone
Software Support
Other
$0
$66,000
$3,000
$1,500
$0
$1,500
$0
$6,700
Total Operating
Expenses
$226,710
Profit Before Interest and
Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
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$50
$66,000
$3,100
$700
$0
$1,600
$495
$6,700
$50
$66,000
$3,200
$700
$0
$1,700
$495
$6,700
$231,645 $241,845
$154,721
$173,380
$183,480
$154,721
$2,132
$42,612
$173,430
$1,568
$48,107
$183,530
$9800
$51,404
$109,978
13.35%
$50
$66,000
$3,300
$700
$0
$1,800
$495
$6,700
$50
$66,000
$3,400
$700
$0
$1,900
$495
$6,700
$250,045 $254,245
$196,155
$209,130
$196,205
$392
$54,814
$209,180
$49
$58,891
$123,705 $131,096 $140,949 $150,190
14.43% 14.57%
14.90%
15.29%
7.2 Business Ratios
By looking at St. George Day Spa projected sales forecasts there would be a positive
cash flow after two months. With the business being a sole proprietorship the owner
can make adjustments where needed if there becomes a shortage of cash flow.
When it comes to the projected balance sheet the Accounts Receivables would not
carry any items.
With that said we expect to keep a healthy ratios when it comes to the profitability,
risk and return. The first year growth rate will not be as favorable as the second
year. The ratio analysis below is based on the Standard Industrial Classification (SIC)
code 7991.0103, with Spas being shown to compare with other industries profile
ratios.
Ratio Analysis
Sales Growth
Year 1
0.00%
Year 2
4.04%
Year 3
5.02%
Year 4
5.11%
Year 5
3.81%
Industry
Profile
3.43%
Percent of Total Assets
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
3.78%
4.64%
11.98%
100.00%
3.08%
3.25%
9.18%
99.44%
2.18%
2.92%
6.76%
99.18%
1.95%
2.39%
5.26%
99.37%
1.49%
1.99%
4.22%
99.50%
4.05%
4.35%
30.50%
38.90%
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General &
Administrative
Expenses
Advertising Expenses
Profit Before Interest
and Taxes
Main Ratios
Current
Quick
Total Debt to Total
Assets
Pre-tax Return on Net
Worth
Pre-tax Return on
Assets
Additional Ratios
Net Profit Margin
Return on Equity
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
0.00%
100.00%
0.56%
100.00%
0.82%
100.00%
0.63%
100.00%
0.50%
100.00%
61.10%
100.00%
40.46%
0.00%
40.46%
59.54%
19.01%
0.00%
19.01%
80.99%
12.73%
0.00%
12.73%
87.27%
8.93%
0.00%
8.93%
91.07%
7.19%
0.00%
7.19%
92.81%
20.63%
25.37%
46.00%
54.00%
100.00%
46.31%
100.00%
47.26%
100.00%
47.26%
100.00%
47.17%
100.00%
47.19%
100.00%
100.00%
90.28%
0.00%
94.36%
0.01%
90.99%
0.01%
0.00%
0.01%
0.00%
0.01%
69.59%
2.76%
18.78%
20.23%
20.39%
20.74%
21.30%
4.07%
2.47
2.36
5.23
5.06
7.79
7.56
11.12
10.86
13.83
13.55
1.17
0.82
40.46%
19.01%
12.73%
8.93%
7.19%
58.83%
95.65%
60.66%
44.05%
35.25%
29.64%
4.43%
56.95%
49.13%
38.44%
32.11%
27.51%
10.76%
Year 1
13.35%
68.94%
Year 2
14.43%
43.68%
Year 3
14.57%
31.64%
Year 4
14.90%
25.38%
Year 5
15.29%
21.29%
n.a
n.a
2.39
77
10.15
2.39
148
5.04
2.39
156
5.8
2.39
143
6.07
2.39
157
6.7
n.a
n.a
n.a
7.12
27
3.07
12.17
40
2.45
12.17
29
1.9
12.17
29
1.55
12.17
30
1.29
n.a
n.a
n.a
0.68
1
0.23
1
0.15
1
0.1
1
0.08
1
n.a
n.a
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total
Assets
Acid Test
Sales/Net Worth
Dividend Payout
$159,528
72.59
$281,282
110.57
$410,428
187.22
$551,427
500.4
$701,667
4,267.96
n.a
n.a
0.33
0.41
0.53
0.64
0.77
n.a
40%
2.26
5.16
0
19%
4.9
3.03
0
13%
7.39
2.17
0
9%
10.64
1.7
0
7%
13.35
1.39
0
n.a
n.a
n.a
n.a
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Reference
Data was taken from the resource below and used in this plan. I also used the
template from this website.
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