A CUT ABOVE BUSINESS PLAN
By: Brent Tournier 11039360
For: Professor Marvin Painter
Class: Commerce 447
Date: December 3, 2010
Page 2 of 28
Business Plan
OWNERS
Brent Tournier & Stephanie Muller
Box 1093
1010 8th Street
Rosthern, SK S0K 3R0
(306) 232 5114
brent_tournier@hotmail.com
Page 3 of 28
I.
Table of Contents
I.
Table of Contents .................................................................................................................................... 3
II.
Executive Summary ................................................................................................................................ 4
III.
General Company Description ............................................................................................................. 5
IV.
Products and Services ............................................................................................................................. 7
V.
Marketing Plan ......................................................................................................................................... 8
VI.
Operational Plan .................................................................................................................................... 12
VII.
Management and Organization ........................................................................................................... 15
VIII. Personal Financial Statement............................................................................................................... 16
IX.
Startup Expenses and Capitalization .................................................................................................. 17
X.
Financial Plan ......................................................................................................................................... 18
XI.
Appendices ............................................................................................................................................. 27
Page 4 of 28
II.
Executive Summary
A Cut Above is a hair salon that will be owned by Brent Tournier and Stephanie Muller. Stephanie will be
responsible for the day-to-day operations of the business, while Brent will focus more on the business aspect
including the bookkeeping duties. The salon will offer haircuts, styling, colouring, tanning, waxing and gel
nails. A Cut Above will hire one additional stylist who will rent a chair at a rate of $500 per month. Any
income the stylist generates will be the solely the stylists. In year three, an additional stylist will be hired.
The salon will be located in Carman, Manitoba. Carman is 60 kilometres southwest of Winnipeg, and is home
to over 3000 people. The community is located in the heart of a rich agricultural belt, which allows for a high
level of disposable income. There are also several small communities within a 20 kilometre radius of Carman.
The physical location of the salon is on a very busy street that joins two major highways. There is ideal
parking both in the front and the rear of the building.
There are currently two other salons in Carman: Diane’s and Classic Hair Design. Diane’s is a typical rural
community salon, as it is located in her house. The salon utilizes a medium pricing point and has a well
established reputation, which make up Diane’s competitive advantage. Classic Hair Design is very comparable
to Ultracuts. It has a low pricing point but focuses on speed and quantity rather than quality and customer
experience.
A Cut Above’s target market will be females. The major primary target will be females aged 24-55, who have
a household income of more than $55,000. The other primary target will be females aged 15-23, who are
students. A Cut Above will strive to convince their target market that they do not need to travel to Winnipeg
for their hair appointments, but rather they can enjoy the elegance of a high end salon at the comfort of a
small town price. The secondary target market will be males of all ages. This group will make up the majority
of walk-in clients.
A Cut Above will require $70,000 for start-up costs. This will include $55,000 for the building and $15,000
for improvements and equipment. The $70,000 will be financed through $42,000 put forth by Brent and
Stephanie, while the other $28,000 will be borrowed from the Royal Bank of Canada. The loan will be
amortized over five years at a rate of 3.6%.
The salon has projected to be 50% booked in the first year, 70% in the second, 80% in the third, and 85% in
both the fourth and fifth years. At an estimated spending of $50 per client per appointment, the first year will
require 2.4 clients per day to break even, while the second needs 2.5, the third 2.7, the fourth 2.6 and the fifth
2.5. The salon will pay dividends of $10,000 (Year 2), $20,000 (Year 3), $25,000 (Year 4) and $30,000 (Year 5).
The salon has an internal rate of return of 50.7%.
Page 5 of 28
III. General Company Description
Who we are:
A Cut Above will be a hair salon that specializes in both male and female cuts, colours, and styling. The salon
will also offer tanning, waxing and gel nails. The business will be located in Carman, Manitoba which
currently has a population of approximately 3000 permanent residents. Carman is located in a rich agriculture
belt resulting in numerous residents experiencing a high level of disposable income. The town itself is located
60 kilometres from Winnipeg.
The salon will be co-owned by Brent Tournier and Stephanie Muller. Brent is 23 years old and is a marketing
major at the University of Saskatchewan. He currently works for RBC as an account manager and officiates
elite levels of hockey throughout Saskatchewan. Stephanie is 22 years old and is currently employed by Hair
Style Inn in Saskatoon at the Lawson Heights Mall. She received her journey person’s certificate last year.
Mission Statement:
“We at A Cut Above promise to work with you, our customer, to deliver the experience and satisfaction of a
high end salon at the comfort and price of a small town.”
Company Goals and Objectives:
Our short term goals include maintaining an 85 percent booking of clients starting at the beginning of year
four. As well, we plan to install a third chair in the salon after year two. Long-term, we are aiming to establish
a strong local business and franchising is currently not part of that plan.
Business Philosophy:
It is crucial to the success of our business that we maintain a high level of customer satisfaction. Being that
we are situated in a rural community, reputation is very important in relation to business success. If we can
promise to provide a 100% satisfaction guarantee, it will help to ensure that our customers are happy time
after time.
A Cut Above will target residents of Carman, Manitoba and the surrounding municipality which is home to
approximately 3000 residents. The primary target market will be females aged 15-55, as this demographic is
more focused on current trends in the hair industry, which is one of A Cut Above’s competitive advantages
over the other two salons in Carman.
Page 6 of 28
The hair industry is a very stable industry and would not be described as a growth industry. Hair stylists enjoy
a secure position as information technology has a minor effect on their industry. However, a constant threat
is recession. In times of recession, high end salons see their business decrease as people look for ways to save
money. Unfortunately one of these ways is getting cheaper haircuts or finding someone to cut their hair for
free. However, A Cut Above protects their business by committing two thirds of personal equity to the
business, to lower break-even numbers. In Carman, there is a large market of customers currently travelling to
Winnipeg for haircuts, so A Cut Above plans to tap into this market and establish their business as a reliable,
cost-effective way of getting all the benefits of a city hair cut or style in the comfort of a small town.
A Cut Above will be operated as a Canadian Controlled Private Corporation, because of tax reasons and
limited liability. As a small business, A Cut Above will be eligible for the small business tax deduction.
Although there are fewer liability risks associated with operating a hair salon, it is still important to ensure our
personal assets are secure. Initially, we had considered a partnership but the small business tax credit and
liability reasons proved to make a Canadian Controlled Private Corporation the more logical choice.
Page 7 of 28
IV. Products and Services
A Cut Above will offer stylish haircuts that follow current trends in a relaxed atmosphere comparable to that
of a medium to high end city salon. The stylists will be responsible for staying up to date on current trends.
Waxing, tanning and gel nails will also be offered. The gel nails and waxing will be booked in the same
manner as the haircuts and styles, while the tanning (which will be bought in increments of 100 minutes) will
be more of a walk in basis.
A Cut Above will have a competitive advantage as there are currently not any young stylists in the Carman
area. Stephanie will be able to bring the valuable experience she has gained from working in a high traffic
salon in Saskatoon to A Cut Above. She will be better be able to communicate the wants and needs of
females.
The pricing structure is as follows:
Page 8 of 28
V.
Marketing Plan
Carman is located in a rich agricultural prairie belt, which provides a high level of disposal income. As such, A
Cut Above realizes that there is money to be spent on haircuts and styles, but it is important that proper
methods are used to fully capture the intended market share.
Market research
Primary market research was conducted through phone calls to competitors. We inquired about pricing
structure as well as hours and offerings. Secondary research was conducted by asking family members and
friends who currently reside in Carman. Also, we used internet search tools to gather information about
competitors and statistics about Carman and the surrounding area.
Economics
The total market in Carman is more than 3000 people, as there are several small farming communities within
20 kilometres of the town. We are hoping to become a majority market share holder with the bulk of our
customers being return customers. There is a strong demand currently in the market but the supply is not
strong enough to satisfy the customers, as many people are travelling to Winnipeg for haircuts and style. Our
goal will be to capture this market, as well as a significant portion of the other customers who currently visit
one of the other two salons in Carman.
There are no major barriers to entry, but the toughest factor that stands in the way of success is ensuring that
we properly promote A Cut Above to ensure awareness is raised. If we cannot capture a large market share,
we will not succeed. Our target market is as follows:
Customers
Primary
Primary
Secondary
Age:
24-55
15-23
All
Gender:
Female
Female
Male
Location:
Carman and Area
Carman and Area
Carman and Area
Income Level:
$55,000 +
$0-$40,000
$40,000 +
Page 9 of 28
Class:
Middle to Upper
Middle to Upper
Middle to Upper
Occupation:
Farmer’s Wives and
Professionals
Students
Trades and Professionals
Competition
Diane’s
107 4th Street
Carman, Manitoba
(204) 745 2122
Classic Hair Design
85 5th Ave South East
Carman, Manitoba
(204) 745 2383
Table 1: Competitive Analysis
A Cut Above
Strength
Weakness
Diane’s
Classic Hair
Design
Importance to
Customer
Price
Highest
Quality and
Experience
Costs more
Medium
Lowest
5
Quality
Highest
Superior Quality
and Latest
Trends
Time
consuming
Medium
Lowest
5
Wide
Extensive Style
Knowledge
None
Medium
Narrow
4
High
Delivering a high
quality service
and friendly yet
classy
atmosphere
If too busy,
receptionist
tasks may get
neglected.
High
Medium
4
Reliability
High
100%
satisfaction
guaranteed
Unsatisfied
customers
cost time and
money
Medium
Medium
4
Expertise
Highest
Journey person’s
certificate
None
Medium
Lowest
4
Company
Reputation
Low
New business, so
have fresh
opportunity
Need to
penetrate
market
High
Medium
4
Location
Best
High traffic area
with lots of
parking
None
Medium
Good
4
FACTOR
Selection
Service
Page 10 of 28
FACTOR
Appearance
Advertising
A Cut Above
Strength
Weakness
Diane’s
Classic Hair
Design
Importance to
Customer
High
New, stylish
salon with
modern interior
May give
impression of
expensive
pricing
Lowest
Medium
3
High
Need to mass
advertise to
penetrate market
Competition
has leg up as
they are
already
established
Medium
Medium
4
*Note: Rating in column titled “importance to customer” is rated from 1-5, with 5 being the highest
A Cut Above will have a competitive advantage through its appearance of a high end salon with stylists who
are journey persons and familiar with popular trends in the industry. Our 100% satisfaction guarantee will
allow customers to feel safe and build trust in their new stylist. Although our pricing point will be higher, the
experience and satisfaction will ensure the benefits outweigh the cost.
Strategy
We will need to utilize mass marketing to ensure that we raise full awareness of A Cut Above. This will be
done through newspaper ads, flyers, signage, website and word of mouth advertising.
Promotion
Newspaper Ads
An ad will be run in the weekly newspaper with a monthly cost of $49.99. The ad will include a catchy
picture, our slogan and our address. The ad will be placed in The Valley Leader which is distributed to
residents of Carman as well as the surrounding communities.
Flyers
Flyers will be placed in the mailboxes at the post office in Carman. This will be a large form of indirect
marketing in an effort to raise awareness. The flyers will include a coupon (30% off first hair cut or style), as
well as communicating the services offered and location. The flyers will cost approximately $100 and will be
distributed twice during the year.
Signage
A sign will be built and placed outside of the salon on the side walk to gather attention of both pedestrians
and vehicles passing by. The sign will display the name of the salon and hours or current promotions. The
sign will have a onetime fee of $700.
Page 11 of 28
Website
The website will be built by Brent’s brother-in-law so costs will be minimized. The website will be updated
monthly to advertise current specials. There will be a booking slot for appointments where clients can book
in their own appointments. The website will then automatically notify Stephanie via email to her Blackberry
so she can make the necessary adjustments. We have allocated $600 extra in the first year to build the website
and register the domain name.
Word of Mouth
This will be a major source of advertising as people in small towns are in constant communication with one
another. It is crucial that A Cut Above establish themselves as a premier salon and build a strong reputation
early so that the success can be communicated and help promote the salon.
Pricing
A Cut Above has set its prices higher than the competition, but lower than city salons. The primary reason is
that we want to establish the salon as high class but ensure that it is still cheaper than city salons so that price
can be a driving force to get clients in the door.
Sales Forecast
The projected sales forecast is outlined in detail in the financial portion of this business.
Page 12 of 28
VI. Operational Plan
Location
The proposed location is 69 South Main Street in Carman, Manitoba. Carman is located in southern
Manitoba, approximately 60 kilometres from Winnipeg. The building is currently for sale at an asking price of
$49,000. The building is 1288 square feet in size and features a 16 seat patio located in the rear of the
building. The building was previously operated as a restaurant and experienced numerous improvements in
2006. The building also features air conditioning which is very important as the blow dryers and equipment in
the salon emit large quantities of heat that could cause an unpleasant experience for the customer.
The location of the salon is very important to ensure success. As the salon will be a new business in Carman,
it needs to be in a high traffic area that will spark interest. The proposed location of 69 South Main Street is
located on a major highway that runs directly through the centre of Carman. The traffic is steady which
makes the location very desirable. Importantly, there is also easy access to the salon. There is parking in front
of the building and there is also a large parking lot in the rear of the building. Customers will be able to book
appointments via our web page, through walk-ins or by phone.
The initial expected expenses for the improvements are estimated at $4,000. The costs are quite low because
they only include materials. Brent’s father is a journeyman carpenter and his brother-in-law is a double
journeyman plumber and electrician, which will help minimize the costs of the improvements. Finances will
be discussed more in the financial section.
We feel that our proposed hours of operation will allow for the salon to be open during peak hours, while not
forcing the salon to operate outside of 40 hours per week. This will be very important because in the early
years of its business life, the salon will require more external work while the salon is not open. The scheduled
hours of operation are:
Tuesday
10:00AM-6:00PM
Wednesday
10:00AM-6:00PM
Thursday
11:00AM-9:00PM
Friday
10:00AM-6:00PM
Saturday
10:00AM-4:00PM
Page 13 of 28
The building will require some other improvements to ensure full functionality. The following is the
proposed layout for A Cut Above:
Personnel

There will be two employees initially (Stephanie and additional stylist)

Both stylists will be skilled labourers

The correct employee will be sought out through newspaper advertisement and word of mouth

Stephanie will receive 60% commission from her appointments, while additional stylist will receive
100%, but will pay $500 per month for chair rental. Stylist will use product supplied by salon.

Both Stephanie and additional stylist will be responsible for performing receptionist duties. If
business becomes too busy, then receptionist will be hired.

Additional stylist will be employed in year three to help meet demand
Page 14 of 28
Credit Policies
Accounts Receivable
A Cut Above has decided against issuing credit to our customers. We feel that it will only cause problems and
believe that by not issuing credit, sales will not be affected. The salon focuses on the sale of a service rather
than solely on products, so consumers are accustomed to paying for a service immediately afterwards.
Accounts Payable
A Cut Above will pay for hair product immediately after purchase is made. The only accounts payable will be
for utility bills, which do not offer a discount for paying early. As such, A Cut Above will pay utility bills
when received.
Page 15 of 28
VII. Management and Organization
Stephanie will be responsible for managing the day to day business operations. She has been working in the
hair industry for four years and received her journey person’s certificate last year. In the unfortunate event of
dismemberment or death, A Cut Above will cease operations.
Brent will be responsible for the bookkeeping duties and financial issues. He is set to graduate from the
Edwards School of Business in April 2011. He is currently employed by the Royal Bank of Canada as an
account manager and has been promised employment upon his graduation. Through Brent’s employee
discounts, A Cut Above will have discounted service fees and lending rates.
At the beginning of operations, one other hair stylist will be hired. This hair stylist must be a certified journey
person. In year three another stylist will be hired.
Professional and Advisory Support
Due to the small size of the business, there is no need for a formal board of directors. However, A Cut
Above will have the following professional and advisory support:
Financial Support
Ian Poetker
RBC Senior Account Manager Business Personal
Main Branch Saskatoon
(306)-933-3454
Industry Support
Laddie Weselowski
Hair Style Inn
Lawson Heights Saskatoon
(306)- 242-4222
Legal Support
Lee and Lee Law Office
Carman, Manitoba
(204)-745-6751
Page 16 of 28
VIII. Personal Financial Statement
Brent and Stephanie’s Financial Net Worth
Assets
Cash
$11,000
Vehicles
20,000
Property
225,000
Total Assets
$254,000
Liabilities
Mortgage
$150,000
Total Liabilities
$150,000
Net Worth
$104,000
*The $42,000 required for start-up capital will be generated through equity that has been built in property.
Page 17 of 28
IX. Startup Expenses and Capitalization
The initial start-up costs of the business will total $70,000. This will include $55,000 for the building and
$15,000 for the equipment. Of this $70,000, 60% will be funded through our personal assets, while the other
40% will come from bank debt. The bank debt will be amortized over 5 years through RBC at a staff rate of
3.6%.
The $55,000 will include the cost of the building, closing costs and $4,000 for improvements. The building is
currently listed at $49,000 but we will offer $45,000. Financially we have allowed for up to $55,000 for the
building, but the property has been on the market for almost a year, so we are expecting to purchase the
property for less than the asking price. The property is currently fully furnished, therefore any equipment that
can be reused will be, and any equipment that is not needed will be sold. This includes numerous tables and
chairs.
The $15,000 for equipment will include the following major items:
Type
Cost ($)
Tanning Bed
6000
Couch and Chair for sitting area
1000
Hair Styling Chairs
1000
Fridge and Stove for staff room
Included
Sink
200
Cash Register
Included
Two Desks
1000
TOTAL
$9200
As outlined by the table, the expected cost for large items is $9,200 which will allow $5,800 for miscellaneous
items and unexpected expenditures. There are many small items that will need to be purchased, which is why
we have allocated a total of $15,000.
Page 18 of 28
X.
Financial Plan
A Cut Above
Income Statement
For the year ended
Revenue
2010
2011
2012
2013
2014
Sales
52,000
74,256
90,889
97,342
104,254
Chair Rental
6,000
6,000
12,000
12,000
12,000
Total Revenue
58,000
80,256
102,889
109,342
116,254
Property Taxes
3,000
3,060
3,121
3,184
3,247
Utilities
2,000
2,040
2,081
2,122
2,165
Wages
31,200
44,554
54,534
58,405
62,552
Repair and Maintenance
1,500
1,530
1,561
1,592
1,624
Other Variable Costs
520
743
909
973
1,043
Capital Cost Allowance
2,600
4,856
4,330
3,895
3,434
Advertising
3,000
1,600
1,600
1,600
1,600
Product Expenses
3,640
5,198
6,362
6,814
7,298
Debt Interest
1,019
830
633
430
219
Total operating Expenses
48,479
64,410
75,130
79,015
83,181
Taxable Income
9,521
15,846
27,759
30,327
33,073
Income Taxes
1,476
2,456
4,303
4,701
5,126
Net Income
8,045
13,390
23,456
25,626
27,947
Operating Expenses
Page 19 of 28
Retained Earnings
Account
Beg RE
0
8,045
11,435
14,892
15,518
Net Income
8,045
13,390
23,456
25,626
27,947
Dividends
-
(10,000)
(20,000)
(25,000)
(30,000)
End RE
8,045
11,435
14,892
15,518
13,464
Balance Sheet
Year
Current Assets
2010
2011
2012
2013
2014
Cash
5,438
8,288
9,481
8,206
3,579
Total Current Assets
5,438
8,288
9,481
8,206
3,579
Buildings
55,000
55,000
55,000
55,000
55,000
Furniture and Fixtures
15,000
15,000
16,000
16,000
16,000
Accumulated CCA
(2,600)
(7,456)
(11,786)
(15,681)
(19,115)
Total Non-Current Assets
67,400
62,544
59,214
55,319
51,885
Total Assets
72,838
70,832
68,695
63,525
55,464
Long Term Debt
22,793
17,397
11,804
6,007
0
Total Liabilities
22,793
17,397
11,804
6,007
0
Common Shares
42,000
42,000
42,000
42,000
42,000
Non-Current Assets
Liabilities
Page 20 of 28
Retained Earnings
8,045
11,435
14,892
15,518
13,464
Total Equity
50,045
53,435
56,892
57,518
55,464
Total Liab & Equity
72,838
70,832
68,695
63,525
55,464
Cash Flow Statement
For the year ended
2010
2011
2012
2013
2014
Net Income
8,045
13,390
23,456
25,626
27,947
CCA
2,600
4,856
4,330
3,895
3,434
Operating Cash Flow
10,645
18,246
27,786
29,521
31,380
Buildings
(55,000)
-
-
-
-
Furniture and Fixtures
(15,000)
-
(1,000)
-
-
Total
(70,000)
-
(1,000)
-
-
Long Term debt
22,793
(5,396)
(5,593)
(5,796)
(6,007)
Common Shares
42,000
-
-
-
-
Dividends
-
(10,000)
(20,000)
(25,000)
(30,000)
Total
64,793
(15,396)
(25,593)
(30,796)
(36,007)
Net Cash Flow
5,438
2,850
1,193
(1,275)
(4,627)
Cash Bal Beg of Year
-
5,438
8,288
9,481
8,206
Cash Bal End of Year
5,438
8,288
9,481
8,206
3,579
Investment Activities
Financing Activities
Page 21 of 28
Schedule 1: Economic Variables
Debt Interest Rate
Inflation
Inflation Factor
2010
3.6%
2.0%
1.02
2011
3.6%
2.0%
1.02
2012
3.6%
2.0%
1.02
2013
3.6%
2.0%
1.02
2014
3.6%
2.0%
1.02
Schedule 2: Revenues
2010
2011
2012
2013
2014
Number of Customers/day
Number of Days/year
Average Purchase/customer
4
260
$
50.00
6
260
$
51.00
7
260
$
52.02
7
260
$
53.06
7
260
$
54.12
Total Sales
52,000
74,256
90,889
97,342
104,254
Chair Rental
6,000
6,000
12,000
12,000
12,000
Total Revenue
58,000
80,256
102,889
109,342
116,254
Growth Rate Number of Customers
25%
40%
20%
5%
5%
Revenues
Mens Cuts
15% 7,800
11,138
13,633
14,601
15,638
Ladies Cuts
15% 7,800
11,138
13,633
14,601
15,638
Mens Color
5% 2,600
3,713
4,544
4,867
5,213
Ladies Color
25% 13,000
18,564
22,722
24,336
26,063
5% 2,600
3,713
4,544
4,867
5,213
Perm
15% 7,800
11,138
13,633
14,601
15,638
Nails
5% 2,600
3,713
4,544
4,867
5,213
Nails Fill
5% 2,600
3,713
4,544
4,867
5,213
Tanning
10% 5,200
7,426
9,089
9,734
10,425
74,256
90,889
97,342
104,254
Kids Cut
Total Revenues
52,000
Page 22 of 28
Schedule 3: Operating Expenses
2010
2011
2012
2013
2014
Property Taxes
3,000
3,060
3,121
3,184
3,247
Utilities
2,000
2,040
2,081
2,122
2,165
44,554
54,534
58,405
62,552
1,530
1,561
1,592
1,624
743
909
973
1,043
Steph Wage
Repair and Maintenance
Other Variable Costs
60% 31,200
1,500
1% 520
Capital Cost Allowance
2,600
4,856
4,330
3,895
3,434
Advertising Expense
3,000
1,600
1,600
1,600
1,600
Debt Interest
1,019
830
633
430
219
5,198
6,362
6,814
7,298
64,410
75,130
79,015
83,181
Product Expenses
Total operating Expenses
Schedule 5: Capital
Budget
7% 3,640
48,479
2010
Buildings
55,000
Furniture and Fixtures
15,000
Total
70,000
Schedule 6: Financing Budget
Bank debt
2011
2012
2013
2014
1,000
-
2010
1,000
2011
-
2012
-
2013
2014
40% 28,000
Equity
42,000
Total
70,000
-
-
-
-
Page 23 of 28
Schedule 7: Debt Ammortization
Beg Balance
2010
5
2011
2012
2013
2014
-
22,793
17,397
11,804
6,007
Addition
28,000
-
-
-
-
Payment
6,226
6,226
6,226
6,226
6,226
Interest
1,019
830
633
430
219
Principal Reduction
5,207
5,396
5,593
5,796
6,007
End Balance
22,793
17,397
11,804
6,007
0
Schedule 8: CCA
Class: Buildings
Beg Balance
2010
4% 0
2011
2012
2013
2014
53,900
51,744
49,674
47,687
Addition
55,000
-
-
-
-
CCA Expense
1,100
2,156
2,070
1,987
1,907
End Balance
53,900
51,744
49,674
47,687
45,780
13,500
10,800
9,540
7,632
Class: Furniture and Fixtures
Beg Balance
20% -
Addition
15,000
-
1,000
-
-
CCA Expense
1,500
2,700
2,260
1,908
1,526
End Balance
13,500
10,800
9,540
7,632
6,106
Total CCA Expense
2,600
4,856
4,330
3,895
3,434
Schedule 9: Income Taxes
Input Corporate Tax Rates
Federal Small Business
Small Business Tax Credit
Federal Small Business
2010
27.0%
16.0%
500,000
2011
2012
Saskatchewan Small Business Rate
Saskatchewan M & P Rate
Saskatchewan Corporate Rate
2013
2014
4.5%
10.0%
12.0%
Page 24 of 28
Limit
Federal Corporate Rate
Saskatchewan Small Business Limit
1
2
3
18.0%
16.5%
15.0%
Income Before Taxes
9,521
15,846
27,759
30,327
33,073
Accumulated Loss Carryforward
-
-
-
-
-
Loss Carryforward Used
-
-
-
-
-
Taxable Income
9,521
15,846
27,759
30,327
33,073
Federal Tax
2,571
4,278
7,495
8,188
8,930
Small Bus Tax Credit
(1,523)
(2,535)
(4,441)
(4,852)
(5,292)
Provincial Tax
428
713
1,249
1,365
1,488
Total Taxes
1,476
2,456
4,303
4,701
2
3
4
5,126
15.5%
5
Schedule 10: Investment Analysis
Required ROI
1
500,000
5
15.0%
4
15.0%
17.5%
Net Cash Flow
5,438
2,850
1,193
(1,275)
(4,627)
Dividends
-
10,000
20,000
25,000
30,000
Terminal Value
144,989
Total Cash Flow to Equity Investors
5,438
Equity Investment
42,000
Payback
Gross
233,568
Net
191,568
12,850
21,193
23,725
170,362
Page 25 of 28
Net Present Value
Total Cash Flow to Equity
73,511
(42,000)
5,438
12,850
IRR
21,193
23,725
3
4
5
20,000
25,000
30,000
50.7%
External Cash Flow
1
Dividends
2
-
10,000
Terminal Value
Total External cash flow
170,362
144,989
(42,000)
ERR
Break-Even Analysis
Year One
Days Open: 260
Costs: $45,479
Average Purchase per customer: $50
Required Clients per day: 2.4
Year Two
Days Open: 260
Costs: $62,810
Average Purchase per customer: $51
Required Clients per day: 2.5
Year Three
Days Open: 260
Costs: $73,530
Average Purchase per customer: $52.02
Required Clients per day: 2.7
-
10,000
46.8%
20,000
25,000
174,989
Page 26 of 28
Year Four
Days Open: 260
Costs: $77,415
Average Purchase per customer: $53.06
Required Clients per day: 2.5
Year Five
Days Open: 260
Costs: $81,581
Average Purchase per customer: $54.12
Required Clients per day: 2.5
Page 27 of 28
XI. Appendices
Location of Carman
Outside of Proposed Salon Location
Page 28 of 28
Interior Photos of Current Location