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TRANSCRIPT
A CUT ABOVE BUSINESS PLAN
By: Brent Tournier 11039360
For: Professor Marvin Painter
Class: Commerce 447
Date: December 3, 2010
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Business Plan
OWNERS
Brent Tournier & Stephanie MullerBox 1093 1010 8th StreetRosthern, SK S0K 3R0(306) 232 5114 [email protected]
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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
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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
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$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%.
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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
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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.
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.
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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:
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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.
EconomicsThe 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:
CustomersPrimary Primary Secondary
Age: 24-55 15-23 All
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Gender: Female Female Male
Location: Carman and Area Carman and Area Carman and Area
Income Level: $55,000 + $0-$40,000 $40,000 +
Class: Middle to Upper Middle to Upper Middle to Upper
Occupation: Farmer’s Wives and Professionals
Students Trades and Professionals
CompetitionDiane’s107 4th StreetCarman, Manitoba(204) 745 2122
Classic Hair Design85 5th Ave South EastCarman, Manitoba(204) 745 2383
Table 1: Competitive Analysis
FACTOR A Cut Above Strength Weakness Diane’s Classic Hair
DesignImportanc
e to Customer
Price Highest Quality and Experience
Costs more Medium Lowest 5
Quality HighestSuperior
Quality and Latest Trends
Time consuming Medium Lowest 5
Selection WideExtensive
Style Knowledge
None Medium Narrow 4
Service High Delivering a high quality service and friendly yet
classy
If too busy,
receptionist tasks
may get
High Medium 4
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FACTOR A Cut Above Strength Weakness Diane’s Classic Hair
DesignImportanc
e to Customer
atmosphere neglected.
Reliability High100%
satisfaction guaranteed
Unsatisfied
customers cost time
and money
Medium Medium 4
Expertise HighestJourney person’s
certificateNone Medium Lowest 4
Company Reputation
LowNew
business, so have fresh opportunity
Need to penetrate
marketHigh Medium 4
Location BestHigh traffic area with
lots of parking
None Medium Good 4
Appearance High
New, stylish salon with
modern interior
May give impression
of expensive
pricing
Lowest Medium 3
Advertising High
Need to mass
advertise to penetrate
market
Competition has leg
up as they are
already establishe
d
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.
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StrategyWe 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.
PromotionNewspaper AdsAn 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.
FlyersFlyers 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.
SignageA 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.
WebsiteThe 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 MouthThis 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.
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PricingA 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 ForecastThe projected sales forecast is outlined in detail in the financial portion of this business.
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VI. Operational Plan
LocationThe 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
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Thursday 11:00AM-9:00PM
Friday 10:00AM-6:00PM
Saturday 10:00AM-4:00PM
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
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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
Credit Policies
Accounts ReceivableA 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 PayableA 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.
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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 SupportIan PoetkerRBC Senior Account Manager Business PersonalMain Branch Saskatoon(306)-933-3454
Industry SupportLaddie WeselowskiHair Style InnLawson Heights Saskatoon(306)- 242-4222
Legal SupportLee and Lee Law OfficeCarman, Manitoba
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(204)-745-6751
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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.
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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
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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.
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X. Financial Plan
A Cut Above
Income StatementFor the year ended 2010 2011 2012 2013 2014Revenue
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
Operating Expenses
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
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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 SheetYear 2010 2011 2012 2013 2014Current Assets
Cash 5,438
8,288
9,481
8,206
3,579
Total Current Assets 5,438
8,288
9,481
8,206
3,579
Non-Current Assets
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
Liabilities
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
Retained Earnings 8,045
11,435
14,892
15,518
13,464
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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 StatementFor 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
Investment Activities
Buildings (55,000)
-
-
-
-
Furniture and Fixtures (15,000)
-
(1,000)
-
-
Total (70,000)
-
(1,000)
-
-
Financing Activities
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
Schedule 1: Economic Variables 2010 2011 2012 2013 2014Debt Interest Rate 3.6% 3.6% 3.6% 3.6% 3.6%
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Inflation 2.0% 2.0% 2.0% 2.0% 2.0%Inflation Factor 1.02 1.02 1.02 1.02 1.02
Schedule 2: Revenues 2010 2011 2012 2013 2014
Number of Customers/day 4 6 7 7 7Number of Days/year 260 260 260 260 260
Average Purchase/customer $
50.00 $
51.00 $
52.02 $
53.06 $
54.12
Total Sales 52,0
00 74,2
56 90,8
89 97,3
42 104,2
54
Chair Rental 6,0
00 6,0
00 12,0
00 12,0
00 12,0
00
Total Revenue 58,0
00 80,2
56 102,8
89 109,3
42 116,2
54
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
Kids Cut 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
Total Revenues 52,000
74,256
90,889
97,342
104,254
Schedule 3: Operating Expenses 2010 2011 2012 2013 2014
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Property Taxes 3,000
3,060
3,121
3,184
3,247
Utilities 2,000
2,040
2,081
2,122
2,165
Steph Wage 60% 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 1% 520
743
909
973
1,043
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
Product Expenses 7% 3,640
5,198
6,362
6,814
7,298
Total operating Expenses 48,479
64,410
75,130
79,015
83,181
Schedule 5: Capital Budget 2010 2011 2012 2013 2014
Buildings 55,000
Furniture and Fixtures 15,000
1,000
Total 70,000
-
1,000
-
-
Schedule 6: Financing Budget 2010 2011 2012 2013 2014
Bank debt 40% 28,000
Equity 42,000
Total 70,000
-
-
-
-
Schedule 7: Debt Ammortization 2010 2011 2012 2013 2014
Beg Balance 5
-
22,793
17,397
11,804
6,007
Addition
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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 2010 2011 2012 2013 2014 Class: Buildings
Beg Balance 4% 0 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
Class: Furniture and Fixtures
Beg Balance 20% -
13,500
10,800
9,540
7,632
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 2010 2011 2012 2013 2014 Input Corporate Tax Rates Federal Small Business 27.0% Saskatchewan Small Business Rate 4.5%
Small Business Tax Credit 16.0% Saskatchewan M & P Rate 10.0%
Federal Small Business Limit 500,000 Saskatchewan Corporate Rate 12.0%
Saskatchewan Small Business Limit 500,0001 2 3 4 5
Federal Corporate Rate 18.0% 16.5% 15.0% 15.0% 15.0%
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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
5,126
15.5% Schedule 10: Investment Analysis 1 2 3 4 5
Required ROI 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
12,850
21,193
23,725
170,362
Equity Investment 42,000
Payback Gross 233,568
Net 191,568
Net Present Value 73,511
Total Cash Flow to Equity
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(42,000) 5,438 12,850 21,193 23,725 170,362
IRR 50.7%
External Cash Flow 1 2 3 4 5
Dividends -
10,000
20,000
25,000
30,000
Terminal Value 144,989
Total External cash flow (42,000)
-
10,000
20,000
25,000
174,989
ERR 46.8%
Break-Even Analysis
Year OneDays Open: 260Costs: $45,479Average Purchase per customer: $50Required Clients per day: 2.4
Year TwoDays Open: 260Costs: $62,810Average Purchase per customer: $51Required Clients per day: 2.5
Year ThreeDays Open: 260Costs: $73,530Average Purchase per customer: $52.02Required Clients per day: 2.7
Year FourDays Open: 260Costs: $77,415Average Purchase per customer: $53.06Required Clients per day: 2.5
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Year FiveDays Open: 260Costs: $81,581Average Purchase per customer: $54.12Required Clients per day: 2.5
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XI. Appendices
Location of Carman
Outside of Proposed Salon Location
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Interior Photos of Current Location