Hair Salon Business Plan

Cranium Filament Reductions
Hair Salon Business Plan

Cranium Filament Reductions is a hair salon offering value-priced services for the
entire family. There are many "quick salons" like Cranium, but many of these provide
only minimal services, whereas the upscale salons can be inconvenient due to scheduling
requirements and cost. We will address a market need for low-cost salons with customer
service.
Hair Salon Business Plan
Cranium Filament Reductions

Executive Summary
Introduction
Cranium Filament Reductions is a hair salon that allows the entire family to have their hair
needs satisfied in one convenient visit.
There are many "quick salons" like Cranium, however, many of these salons, such as Cost
Cutters, only provide the minimum services, whereas the upscale salons can be inconvenient due
to scheduling requirements and cost. The owner of Cranium perceives an unfulfilled customer
need for a low-cost salon that provides maximum flexibility and strong customer attention. Using
this strategy, Cranium will gain significant market share and create critical long-term
relationships with its clients.
The Company
Cranium Filament Reductions is an Oregon corporation owned entirely by Susan Sever
and is located in Shaker Hts., Oregon.
Ms. Sever will be handling all hiring and training, purchasing, and retail sales. She will also
hire a receptionist to manage all of the appointments as well as the people who walk in and be
responsible for the point of sale transactions. Cranium will also be hiring six part-time hair
stylists who will operate on a hourly/commission basis.
Ms. Sever will be using a partial commission basis to create incentives for superior customer
attention. The more her stylists attend to the customer's needs, the more money they will make
off commissions. Cranium will invest time and money into training to ensure that clients receive
the best experience possible making it easier to turn them into long-term customers.
Services
Cranium Filament Reductions provides hair styling for the entire family. This includes hair cuts
for men and women, permanents and hair coloring for women, as well as hair cuts for children.
Shampoos will be offered for all adult services. Service is offered on a walk-in basis or by
appointment. Cranium Filament Reductions will emphasize a customer-centric service where the
customer's needs are always the priority.
Cranium Filament Reductions will also sell hair care products which is forecasted to account for
15% of sales. These professional-quality supplies will include shampoos, conditioners,
reconstructors, brushes, combs, and other styling aids.
The Market
The hair styling industry is highly fragmented with national chains such as Regis Corporation,
which operates diverse franchises catering to all the market segments, and also including
thousands of "mom and pop" salons that are very restricted in scope and services. This makes for
a highly competitive market that has low barriers to entry and exit. In addition, the clients of hair
styling have significant leverage due to the low switching costs they have. However, most
companies have tried to pursue only one general strategy in gaining market share. Cranium
believes that it is possible to offer a differentiated service through improved customer service at
no greater significant cost if the right employee incentives are provided.
With this strategy in mind, the company's goal is to increase the number of clients served by
at least 20% per year.
Cranium Filament Reductions will target three different market segments:
Men will typically make up 70-75% of the clientele.

Females who cannot afford an upscale salon.
Young mothers with children.
1.1 Mission
Cranium Filament Reductions' mission is to provide reasonably priced, convenient hair styling.
We exist to attract and maintain customers. When we adhere to this maxim, everything else will
fall into place. Our services will exceed the expectations of our customers.
1.2 Objectives
The objectives for the first three years of operation include:
1. To create a service-based company whose goal is to exceed customer's expectations.

2. To increase the number of clients served by at least 20% per year through superior performance
and word-of-mouth referrals.
3. To develop a sustainable start-up business, contributing to increased employment of community
residents.
Company Summary
Cranium Filament Reductions, soon to be located in Shaker Hts., OH, will offer reasonably
priced, convenient hair styling. Cranium Filament Reductions will accept walk-ins as well as
appointments for the entire family. Cranium Filament Reductions will grow its market share
based on superior customer attention. Cranium Filament Reductions is a family hair salon,
also known as a "quick hair salon."
2.1 Company Ownership
Cranium Filament Reductions is an Oregon corporation owned entirely by Susan Sever.
2.2 Start-up Summary
Cranium Filament Reductions will incur the following start-up costs:
Computer with point of sale terminal.

Computer with printer for back office.
Five cutting stations, each station requires a barber chair, cabinet, large mirror, blow dryer,
curling iron, electric razor, several pairs of scissors, spray bottle, two sided mirror, and assorted
combs and brushes.
Desk for reception area.
Three couches for the reception area.
Display shelf for sale of retail products.
Assorted plants.
Assorted toys for the children.
Legal fees for business formation and generation/review of contracts.
Please note that the following items that are assets to be used for more than a year will be
considered a long-term assets and will be depreciated using the straight-line method accepted by
G.A.A.P.
Start-up Funding
Start-up Expenses to Fund £1,100
Start-up Assets to Fund £103,900
Total Funding Required £105,000
Assets
Non-cash Assets from Start-up £7,320
Cash Requirements from Start-up £96,580
Additional Cash Raised £0
Cash Balance on Starting Date £96,580
Total Assets £103,900
Liabilities and Capital
Liabilities
Current Borrowing £0
Long-term Liabilities £45,000
Accounts Payable (Outstanding Bills) £0
Other Current Liabilities (interest-free) £0
Total Liabilities £45,000
Capital
Planned Investment
Susan £60,000
Investor 2 £0
Other £0
Additional Investment Requirement £0
Total Planned Investment £60,000
Loss at Start-up (Start-up Expenses) (£1,100)
Total Capital £58,900
Total Capital and Liabilities £103,900
Total Funding £105,000
Start-up
Requirements
Start-up Expenses
Legal £1,000
Stationery etc. £100
Other £0
Total Start-up Expenses £1,100

Start-up Assets
Cash Required £96,580
Other Current Assets £0
Long-term Assets £7,320
Total Assets £103,900
Total Requirements £105,000
Services
Cranium Filament Reductions provides hair styling for the entire family. This includes hair cuts
for men and women, permanents and hair coloring for women, as well as hair cuts for children.
Shampoos will be offered for all adult services. Service is offered on a walk-in basis or by
appointment. Cranium Filament Reductions will emphasize a customer-centric service where the
customer's needs are always the priority.
Cranium Filament Reductions will also sell hair care products which is forecasted to account
for 15% of sales. These professional-quality supplies will include shampoos, conditioners,
reconstructors, brushes, combs, and other styling aids.
Market Analysis Summary

Cranium Filament Reductions will be targeting three diverse groups of customers. Cranium will
work hard to distinctly appeal to each of these groups. By focusing on more than one group,
Cranium is lowering their risk that in a downturn one group will negatively effect the company.
4.1 Market Segmentation
Cranium Filament Reductions will target three different market segments:
Men will typically make up 70-75% of the clientele. Men have shorter hair requiring a faster,
simpler job.
Females who cannot afford an upscale salon. Women tend to favor a female specific upscale
salon if they can afford it. There is not often a difference in quality of an upscale salon relative
to a family hair salon other than a upscale salon will tend to pamper you more, only accepts
appointments, and the facility is generally a bit plusher. Someone who is fiscally responsible as
opposed to someone who likes opulence will favor a family style salon.
Young mothers with children. Most young children are notoriously difficult when it comes to
getting haircuts. A family style salon is a more laid-back place that allows the children to play
while they are waiting and then will work with the parents in calming the kids nerves when they
are ready for their shearing.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Males 9% 54,000 58,860 64,157 69,931 76,225 9.00%
Females 10% 28,000 30,800 33,880 37,268 40,995 10.00%
Mothers with young children 9% 23,400 25,506 27,802 30,304 33,031 9.00%
Total 9.27% 105,400 115,166 125,839 137,503 150,251 9.27%
4.2 Target Market Segment Strategy
Cranium Filament Reductions will target each of the three groups separately. The males will be
targeted by offering a quick, convenient, service. Because men tend to have shorter hair, they
usually require haircuts more often. If they are getting a cut every four weeks and work
normal business hours, most barbers are closed when the male customers have free
time. Cranium Filament Reductions will cater to males with evening hours, no
appointments necessary, and quick turn around times.
Generally females prefer the allure of upscale salons, however, not everyone can afford this
luxury. For this reason Cranium Filament Reductions will provide the same quality hair styling,
without the expensive price. Cranium will target these customers by emphasizing the
sophisticated, ultra-hip styling that Cranium can offer.
Cranium Filament Reductions will also target mothers with children by offering the kids toys to
play with while they wait and child-friendly hair stylists. Additionally, children receive a special
rate reflecting the fact that children's hair grows so fast that it can be expensive to keep up with
regular cuts, as well as the recognition that it generally takes a lot less time to cut a child's hair so
it should be inherently less expensive.
4.3 Service Business Analysis
The "hair" service industry is fairly diverse. On one end of the spectrum you have the
traditional barber, on the other end you have the fashionable boutique salons. Somewhere in
between there are independent hair stylists, franchise barbers and stylists, and beauty salons.
4.3.1 Competition and Buying Patterns
Cranium Filament Reductions' competitors include:
1. Traditional barbers. They rarely serve appointments, it is generally a walk-in service. While
barbers are usually willing to provide whatever cut you are interested, they are generally
providing straight forward haircuts, typically on the conservative side. The advantages of a
barber is they are inexpensive and easy to use. Their disadvantages is often conservative styling
capacities, sometimes a long wait as the barber may be an old timer who enjoys to chit chat.
2. Franchised "quick salons." An example of this would be Supercuts or Best Cuts. In essence this
is a franchised version of Cranium Filament Reductions. The advantage of this style is the store
will be the same from location to location and some people like this predictability.
3. Independent salons. These shops typically focus on a specific niche and do not serve a wide
group of customers. The advantages to these could be an independent salon that fulfills all of
your needs. The disadvantage is that because they tend to be more focused, more often than
not this type of salon will not offer exactly what customers are looking for.
The buying patterns of men and women are quite different. Typically men are more price or
convenience sensitive. Men typically care less about the task of getting their hair cut. For them
whatever is easiest works best. Women on the other hand are more caught up in hair styling and
tend to bond more with their stylists. Because they bond more, they are much more loyal to their
stylist. Once a stylist has earned their trust they are more willing to blindly put their hair in the
stylists hands.
Strategy and Implementation Summary

Cranium Filament Reductions will rely on three separate strategies to grow market share. The
first is superior customer service. Customers will be blown away with the level of service
that they receive. They have expectations of average (at best) customer service from a quick
salon based on past experiences.
Cranium will also be leveraging its high-traffic store front location in a shopping center to drive
people into the store. They will benefit from the shopping center association's marketing efforts
to bring more people to the center.
Lastly, Cranium Filament Reductions will use financial incentives early on to build a large, loyal
customer population.
5.1 Competitive Edge
Cranium Filament Reductions' competitive edge is based on faultless customer service. Cranium
Filament Reductions recognizes that the hair cutting/styling market is crowded so it is difficult to
stand out. Cranium Filament Reductions will stand out by providing superior customer attention.
This is particularly important in the "quick salon" space that Cranium operates in because
margins are a bit lower and the goal of a quick salon is to crank through customers.
Cranium will invest time and money into training to ensure that clients receive the best
experience possible making it easier to turn them into long-term customers. By providing
superior customer service, Cranium will be able to effectively compete against and outlast larger
chains and independent stores.
5.2 Marketing Strategy
Cranium Filament Reductions will be located in a shopping center in Shaker Hts., OH. While the
cost of the lease per foot is higher than in other business areas, the shopping center provides the
best exposure. Additionally, the shopping center association is responsible for marketing the
center's common area which will help draw a lot of traffic to the shopping center.
Cranium Filament Reductions will market themselves as a hair salon that serves everyone, men,
women, and children. This will be done through flyers to be sent out with the local newspaper.
Cranium will also have an in-store promotion for the first few months to lure new people in.
Lastly, Cranium will offer a discount for a few months to people that refer new customers.
5.3 Sales Strategy
Cranium Filament Reductions' sales strategy will be based on extremely professional interactions
with the customer. Typically the "quick salons" concentrate on being quick and inexpensive,
often at the expense of customer service. Anytime that a prospective customer is speaking with
someone at Cranium's the employee will have an opportunity to impress the customer. Employee
training will emphasize seizing these opportunities.
Cranium Filament Reductions will also have the opportunity to increase sales of their retail hair care
products every time they have a customer in the chair. Cranium offers deep discounts on the hair
care products for employees to encourage usage so they can explain to the customer about their
personal experiences. Additionally, Cranium offers a product-based commission structure for the
hair care products where they give away the product to the employee for commissions for selling the
items to their customers. These personal testimonials and commission structure will allow Cranium
to generate good sales from the retail hair care products.
5.3.1 Sales Forecast
The first month will be used to set up the store and hire and train the employees. The store will
be officially open the second month. Sales for month two through will four will be somewhat
slow as Cranium will be building up a customer base. From month four on sales will grow
steadily.
Sales Forecast
Year 1 Year 2 Year 3
Sales
Males £217,112 £395,458 £411,545
Females £21,711 £39,546 £41,155
Women with small children £2,171 £3,955 £4,115
Retail hair care products £36,149 £65,844 £68,522
Total Sales £277,143 £504,802 £525,337
Direct Cost of Sales Year 1 Year 2 Year 3
Males £26,053 £47,455 £49,385
Females £2,605 £4,745 £4,939
Women with small children £261 £475 £494
Retail hair care products £14,460 £26,338 £27,409
Subtotal Direct Cost of

£43,379 £79,013 £82,227
Sales
5.4 Milestones
Cranium Filament Reductions will have several milestones early on:
1. Business plan completion. This will be done as a roadmap for the organization.
2. Set up the store front.
3. Revenue exceeding £100,000.
4. Profitability.
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 £0 ABC Marketing
Set up the store front 1/1/2001 2/1/2001 £0 ABC Department
Revenue exceeding £100,000 1/1/2001 7/1/2001 £0 ABC Department
Profitability 1/1/2001 9/1/2001 £0 ABC Department
Totals £0
Management Summary
Susan Sever received her bachelor's degree from Miami University in Oxford, OH. While
pursuing her degree Susan worked in the restaurant industry. For the four years during school she
was a server in an upscale restaurant. While this provided very good income, particularly on the
weekends, she longed for management experience.
After graduation she sat down with the owner of the restaurant and presented him with a well
reasoned case as to why she should be manager of the establishment. Her main points were her
intimate knowledge of the industry and the restaurant, her superior communication skills with the
customers and her colleagues, and her ambition to succeed. The owner was surprised by the well-
reasoned arguments, enthusiasm, and ambition to take on more work that he promoted her to
manager on the spot.
Susan worked as manager for three years, learning all the intricacies of operating a business.
These were three rewarding, but long, years. Toward the end, the long hours and work at night
took its toll on Susan and she was burned out. When contemplating new opportunities she was
brainstorming a way in which she could combine something she loved with something that she
would be the owner of. She loved hair and had the experience of operating a business so after a
lot of market research she undertook the task of writing a business plan.
6.1 Personnel Plan
Susan will be working full time for Cranium Filament Reductions. She will be handling all hiring
and training, purchasing, and retail sales. Susan will also hire a receptionist to manage all of the
appointments as well as the people who walk in and be responsible for the point of sale. The
receptionist will be paid an hourly wage. Susan will also be hiring six part-time hair stylists who
will operate on a hourly/commission basis.
Susan will be using a partial commission basis to create incentives for superior customer
attention. The more her stylists attend to the customer's needs, the more money they will make
off commissions. Susan is more than happy to pay for this type of performance.
Personnel Plan
Susan £36,000 £40,000 £44,000
Receptionist £17,600 £19,200 £19,200
Part-time hair stylist £33,000 £36,000 £36,000
Total People 8 8 8
Total Payroll £251,600 £275,200 £279,200
Financial Plan
The following sections will outline the important financial data.
7.1 Important Assumptions
The following table details important financial assumptions for Cranium Filament Reductions.
General Assumptions
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
7.2 Break-even Analysis
The Break-even Analysis indicates what Cranium must achieve in monthly revenue to reach the
break even point.
Break-even Analysis
Monthly Revenue Break-even £31,511
Assumptions:
Average Percent Variable Cost 16%
Estimated Monthly Fixed Cost £26,579
7.3 Projected Profit and Loss
The following table and chart shows the projected profit and loss for Cranium
Filament Reductions.
Pro Forma Profit and Loss
Sales £277,143 £504,802 £525,337
Direct Cost of Sales £43,379 £79,013 £82,227
Other Production Expenses £0 £0 £0
Total Cost of Sales £43,379 £79,013 £82,227
Gross Margin £233,764 £425,790 £443,111

Gross Margin % 84.35% 84.35% 84.35%
Expenses
Payroll £251,600 £275,200 £279,200
Sales and Marketing and Other Expenses £1,442 £0 £0
Depreciation £1,464 £1,464 £1,464
Leased Equipment £0 £0 £0
Utilities £1,200 £1,200 £1,200
Insurance £1,500 £1,500 £1,500
Rent £24,000 £24,000 £24,000
Payroll Taxes £37,740 £41,280 £41,880
Other £0 £0 £0
Total Operating Expenses £318,946 £344,644 £349,244
Profit Before Interest and Taxes (£85,182) £81,146 £93,867
EBITDA (£83,718) £82,610 £95,331
Interest Expense £4,500 £4,500 £4,500
Taxes Incurred £0 £22,994 £26,810
Net Profit (£89,682) £53,652 £62,557
Net Profit/Sales -32.36% 10.63% 11.91%
7.4 Projected Cash Flow
The following table and chart shows the projected cash flow for Cranium Filament Reductions.
Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales £277,143 £504,802 £525,337
Subtotal Cash from Operations £277,143 £504,802 £525,337
Additional Cash Received
Sales Tax, VAT, HST/GST Received £0 £0 £0
New Current Borrowing £0 £0 £0
New Other Liabilities (interest-free) £0 £0 £0
New Long-term Liabilities £0 £0 £0
Sales of Other Current Assets £0 £0 £0
Sales of Long-term Assets £0 £0 £0
New Investment Received £0 £0 £0
Subtotal Cash Received £277,143 £504,802 £525,337
Expenditures Year 1 Year 2 Year 3

Expenditures from Operations
Cash Spending £251,600 £275,200 £279,200
Bill Payments £101,816 £172,090 £181,489
Subtotal Spent on Operations £353,416 £447,290 £460,689
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out £0 £0 £0
Principal Repayment of Current Borrowing £0 £0 £0
Other Liabilities Principal Repayment £0 £0 £0
Long-term Liabilities Principal Repayment £0 £0 £0
Purchase Other Current Assets £0 £0 £0
Purchase Long-term Assets £0 £0 £0
Dividends £0 £0 £0
Subtotal Cash Spent £353,416 £447,290 £460,689
Net Cash Flow (£76,273) £57,513 £64,648
Cash Balance £20,307 £77,820 £142,467
7.5 Projected Balance Sheet
The following table and chart shows the projected balance sheet for Cranium
Filament Reductions.
Pro Forma Balance Sheet
Assets
Current Assets
Cash £20,307 £77,820 £142,467
Other Current Assets £0 £0 £0

Total Current Assets £20,307 £77,820 £142,467
Long-term Assets
Long-term Assets £7,320 £7,320 £7,320
Accumulated Depreciation £1,464 £2,928 £4,392
Total Long-term Assets £5,856 £4,392 £2,928
Total Assets £26,163 £82,212 £145,395
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable £11,945 £14,341 £14,968
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £11,945 £14,341 £14,968
Long-term Liabilities £45,000 £45,000 £45,000
Total Liabilities £56,945 £59,341 £59,968
Paid-in Capital £60,000 £60,000 £60,000
Retained Earnings (£1,100) (£90,782) (£37,130)
Earnings (£89,682) £53,652 £62,557
Total Capital (£30,782) £22,870 £85,427
Total Liabilities and Capital £26,163 £82,212 £145,395
Net Worth (£30,782) £22,870 £85,427
7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7231, Beauty Shops, are shown for comparison.
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 82.14% 4.07% 7.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 36.10%
Total Current Assets 77.62% 94.66% 97.99% 52.40%
Long-term Assets 22.38% 5.34% 2.01% 47.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 45.65% 17.44% 10.30% 31.90%
Long-term Liabilities 172.00% 54.74% 30.95% 26.80%
Total Liabilities 217.65% 72.18% 41.25% 58.70%
Net Worth -117.65% 27.82% 58.75% 41.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 84.35% 84.35% 84.35% 0.00%
Selling, General & Administrative

116.65% 73.64% 72.26% 73.40%
Expenses
Advertising Expenses 0.52% #VALUE! #VALUE! 2.50%
Profit Before Interest and Taxes -30.74% 16.07% 17.87% 3.20%
Main Ratios
Current 1.70 5.43 9.52 1.79
Quick 1.70 5.43 9.52 1.34
Total Debt to Total Assets 217.65% 72.18% 41.25% 58.70%
Pre-tax Return on Net Worth 291.35% 335.13% 104.61% 5.20%
Pre-tax Return on Assets -342.78% 93.23% 61.46% 12.50%

Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -32.36% 10.63% 11.91% n.a
Return on Equity 0.00% 234.59% 73.23% n.a
Activity Ratios
Accounts Payable Turnover 9.52 12.17 12.17 n.a
Payment Days 27 27 29 n.a
Total Asset Turnover 10.59 6.14 3.61 n.a
Debt Ratios
Debt to Net Worth 0.00 2.59 0.70 n.a
Current Liab. to Liab. 0.21 0.24 0.25 n.a
Liquidity Ratios
Net Working Capital £8,362 £63,478 £127,499 n.a
Interest Coverage -18.93 18.03 20.86 n.a
Additional Ratios
Assets to Sales 0.09 0.16 0.28 n.a
Current Debt/Total Assets 46% 17% 10% n.a
Acid Test 1.70 5.43 9.52 n.a
Sales/Net Worth 0.00 22.07 6.15 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Appendix
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Males 0% £0 £5,484 £6,254 £8,547 £16,455 £18,545 £21,545 £23,555 £26,874 £28,745 £29,854 £31,254
Females 0% £0 £548 £625 £855 £1,646 £1,855 £2,155 £2,356 £2,687 £2,875 £2,985 £3,125
Women with small
0% £0 £55 £63 £85 £165 £185 £215 £236 £269 £287 £299 £313
children
Retail hair care
0% £0 £913 £1,041 £1,423 £2,740 £3,088 £3,587 £3,922 £4,475 £4,786 £4,971 £5,204
products
Total Sales £0 £7,000 £7,983 £10,910 £21,005 £23,673 £27,502 £30,068 £34,305 £36,693 £38,109 £39,896
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Males £0 £658 £750 £1,026 £1,975 £2,225 £2,585 £2,827 £3,225 £3,449 £3,582 £3,750
Females £0 £66 £75 £103 £197 £223 £259 £283 £322 £345 £358 £375
Women with small
£0 £7 £8 £10 £20 £22 £26 £28 £32 £34 £36 £38
children
Retail hair care
£0 £365 £417 £569 £1,096 £1,235 £1,435 £1,569 £1,790 £1,914 £1,988 £2,082
products
Subtotal Direct Cost of
£0 £1,096 £1,250 £1,708 £3,288 £3,705 £4,305 £4,706 £5,369 £5,743 £5,965 £6,245
Sales
Personnel Plan
Month
Month 1 Month 2 Month 3 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Susan 0% £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000
Receptionist 0% £0 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600 £1,600
Part-time hair stylist 0% £0 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000 £3,000
Total People 1 8 8 8 8 8 8 8 8 8 8 8
Total Payroll £3,000 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600
General Assumptions
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Rate
Long-term
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss
Month Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 11 Month 12
Sales £0 £7,000 £7,983 £10,910 £21,005 £23,673 £27,502 £30,068 £34,305 £36,693 £38,109 £39,896
Direct Cost
£0 £1,096 £1,250 £1,708 £3,288 £3,705 £4,305 £4,706 £5,369 £5,743 £5,965 £6,245
of Sales
Other
Production £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Expenses
Total Cost of
£0 £1,096 £1,250 £1,708 £3,288 £3,705 £4,305 £4,706 £5,369 £5,743 £5,965 £6,245
Sales
Gross Margin £0 £5,905 £6,734 £9,203 £17,717 £19,967 £23,198 £25,362 £28,935 £30,950 £32,144 £33,651
Gross Margin
0.00% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35% 84.35%
%
Expenses
Payroll £3,000 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600
Sales and
Marketing
£100 £122 £122 £122 £122 £122 £122 £122 £122 £122 £122 £122
and Other
Expenses
Depreciation £122 £122 £122 £122 £122 £122 £122 £122 £122 £122 £122 £122
Leased
0% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Equipment
Utilities £100 £100 £100 £100 £100 £100 £100 £100 £100 £100 £100 £100
Insurance £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125
Rent £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000
Payroll Taxes 15% £450 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390 £3,390
Other £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Total
Operating £5,897 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459 £28,459
Expenses
Profit Before
Interest and (£5,897) (£22,554) (£21,725) (£19,256) (£10,742) (£8,492) (£5,261) (£3,097) £476 £2,491 £3,685 £5,192
Taxes
EBITDA (£5,775) (£22,432) (£21,603) (£19,134) (£10,620) (£8,370) (£5,139) (£2,975) £598 £2,613 £3,807 £5,314
Interest
£375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375
Expense
Taxes
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Incurred
Net Profit (£6,272) (£22,929) (£22,100) (£19,631) (£11,117) (£8,867) (£5,636) (£3,472) £101 £2,116 £3,310 £4,817
Net
0.00% -327.55% -276.83% -179.94% -52.93% -37.45% -20.49% -11.55% 0.30% 5.77% 8.69% 12.07%
Profit/Sales
Pro Forma Cash Flow
Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 Month 11 Month 12
Cash Received
Cash from
Operations
Cash Sales £0 £7,000 £7,983 £10,910 £21,005 £23,673 £27,502 £30,068 £34,305 £36,693 £38,109 £39,896
Subtotal Cash
£0 £7,000 £7,983 £10,910 £21,005 £23,673 £27,502 £30,068 £34,305 £36,693 £38,109 £39,896
from Operations
Additional Cash
Received
Sales Tax, VAT,
HST/GST 0.00% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Received
New Current
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Borrowing
New Other
Liabilities £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
(interest-free)
New Long-term
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Liabilities
Sales of Other
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Current Assets
Sales of Long-
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
term Assets
New Investment
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Received
Subtotal Cash £0 £7,000 £7,983 £10,910 £21,005 £23,673 £27,502 £30,068 £34,305 £36,693 £38,109 £39,896
Received
Month
Expenditures
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 10 Month 11 Month 12
Expenditures from
Operations
Cash Spending £3,000 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600 £22,600
Bill Payments £105 £3,285 £7,213 £7,377 £7,872 £9,414 £9,837 £10,430 £10,840 £11,494 £11,863 £12,086
Subtotal Spent
£3,105 £25,885 £29,813 £29,977 £30,472 £32,014 £32,437 £33,030 £33,440 £34,094 £34,463 £34,686
on Operations
Additional
Cash Spent
Sales Tax, VAT,
HST/GST Paid £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Out
Principal
Repayment of £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Current Borrowing
Other Liabilities
Principal £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Repayment
Long-term
Liabilities
Principal £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Repayment
Purchase Other
Current Assets £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Purchase Long- £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
term Assets
Dividends £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal Cash
£3,105 £25,885 £29,813 £29,977 £30,472 £32,014 £32,437 £33,030 £33,440 £34,094 £34,463 £34,686
Spent
Net Cash Flow (£3,105) (£18,885) (£21,830) (£19,067) (£9,468) (£8,341) (£4,935) (£2,962) £864 £2,599 £3,646 £5,210
Cash Balance £93,475 £74,590 £52,760 £33,694 £24,226 £15,885 £10,950 £7,988 £8,852 £11,452 £15,098 £20,307
Pro Forma Balance Sheet
Starting
Assets
Balances
Current
Assets
Cash £96,580 £93,475 £74,590 £52,760 £33,694 £24,226 £15,885 £10,950 £7,988 £8,852 £11,452 £15,098 £20,307
Other
Current £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Assets
Total
Current £96,580 £93,475 £74,590 £52,760 £33,694 £24,226 £15,885 £10,950 £7,988 £8,852 £11,452 £15,098 £20,307
Assets
Long-term
Assets
Long-term
£7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320 £7,320
Assets
Accumulated
Depreciation £0 £122 £244 £366 £488 £610 £732 £854 £976 £1,098 £1,220 £1,342 £1,464
Total Long- £7,320 £7,198 £7,076 £6,954 £6,832 £6,710 £6,588 £6,466 £6,344 £6,222 £6,100 £5,978 £5,856
term Assets
Total Assets £103,900 £100,673 £81,666 £59,714 £40,526 £30,936 £22,473 £17,416 £14,332 £15,074 £17,552 £21,076 £26,163
Liabilities
and Capital
Current
Liabilities
Accounts
£0 £3,045 £6,967 £7,116 £7,559 £9,086 £9,490 £10,069 £10,458 £11,099 £11,460 £11,674 £11,945
Payable
Current
Borrowing £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Other
Current £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Liabilities
Subtotal
Current £0 £3,045 £6,967 £7,116 £7,559 £9,086 £9,490 £10,069 £10,458 £11,099 £11,460 £11,674 £11,945
Liabilities
Long-term
Liabilities £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000 £45,000
Total
Liabilities £45,000 £48,045 £51,967 £52,116 £52,559 £54,086 £54,490 £55,069 £55,458 £56,099 £56,460 £56,674 £56,945
Paid-in
Capital £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000
Retained
Earnings (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100) (£1,100)
Earnings £0 (£6,272) (£29,201) (£51,302) (£70,933) (£82,050) (£90,917) (£96,553) (£100,025) (£99,924) (£97,808) (£94,499) (£89,682)
Total Capital £58,900 £52,628 £29,699 £7,598 (£12,033) (£23,150) (£32,017) (£37,653) (£41,125) (£41,024) (£38,908) (£35,599) (£30,782)
Total
Liabilities £103,900 £100,673 £81,666 £59,714 £40,526 £30,936 £22,473 £17,416 £14,332 £15,074 £17,552 £21,076 £26,163
and Capital
Net Worth £58,900 £52,628 £29,699 £7,598 (£12,033) (£23,150) (£32,017) (£3

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