Pamperzhou Day Spa
Executive Summary
Opportunity
Problem
Freeway County CA is in need of a spa that offers massages and facials at a competitive price. There are spas that do not cater to men. All people who can afford them, not just women, should be able to get the benefit of massages
Solution
Pamperzhou Day Spa is a new upscale destination in Freeway County, CA, offering a complete day spa experience. We offer seven ultra-chic, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles – traditional Swedish Massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial and Pevonia’s Anti-Free Radical Treatment. The day spa has the latest in anti-aging products and techniques but does NOT offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it’s part of a full treatment, like Kneipp’s Arnica and Calendula Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities.
Market
There are about 12,000 spas in the U.S. and Canada, according to ISPA, and seven out of ten are day spas. Today, Spa Industry revenues total $12 billion annually, with Day Spas accounting for over $7 billion of this figure and growing at 25% per year.
There are several existing day spas and a number of individual LMTs (Licensed Massage Therapists) in Freeway County, but none with our service/product range within a five mile radius. To find a such a comprehensive day spa, residents currently have to travel into the city. The going rate for massage in Freeway County is $70-$90 per hour, which is slightly above most of the other residential areas in the metropolis, which can even be as low as $40 per hour in saturated or low-income areas.
Competition
Customers choose spa services based on proximity to their daily commute, quality and an exceptional experience. With our combined services, we expect to dominate the Day Spa market. There is not one direct competitor of this nature within the area where we are intending to locate.
Why Us?
Pamperzhou Day Spa is a new destination offering customers the combination of massage, body treatments, facials and anti-aging treatments. The settings are upscale, beautiful and serene. We cater to both men and women and offer the latest in skin care products and therapies.
Expectations
Forecast
We will surpass the break-even point by month four, and end the first year with a net profit margin of more than 10%. By quickly repaying our loan while increasing sales, and managing costs, we will increase the net worth of the business substantially in the first year, and continue increasing it for the foreseeable future.
Financial Highlights by Year
Financing Needed
We are planning to invest $135,000 as owner investment.
Opportunity
Problem & Solution
Problem Worth Solving
Freeway County,CA is in need of a spa that offers massages and facials at a competitive price. There are spa’s that do not cater to men, all people who can afford should be able to get the benefit of massages
Our Solution
Our mission is to run a profitable business by providing high-end therapeutic massage and aesthetician services in a caring, upscale, professional environment. We offer massage in a variety of styles – traditional Swedish Massage, Sports Massage, Deep Tissue work, Sports Massage, Hot Stone Massage, Reflexology, and others. Our licensed aestheticians offer the latest in skin treatments, body treatments and anti-aging therapies.
Our goal is to tailor the client’s experience based on initial interview information, as well as feedback during the treatments, to ensure the client’s comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience – using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client’s overall spa experience.
Target Market
Market Size & Segments
As individual as our clients are, they seem to fall into one of four general categories: Injury Recovery, Self-Pampering/Relaxation, Alternative Care Users, and Athletes. Besides the obvious differences in the style of massage or treatments each of these prefer, they also represent separate groups for marketing and retention purposes. In addition, the booming anti-aging market is an additional momentum builder.
The Injury recovery group is usually referred by a Chiropractor, self-referred through our listing on the American Specialty Health Network site, or referred by another client who found massage helpful during an injury recovery. Marketing to this audience is done indirectly, through the referring parties. While car insurance will typically pay for massage for only a limited time (less than one year), many health insurance policies now have Alternative Care coverage with a renewable annual maximum. Most people do not know that regular massage therapy is covered on their insurance when prescribed by a physician. We will work to educate clients of their benefits and be able to bill to insurance on the appropriate patients.
Clients who have the disposable income to indulge in massage and body treatments for self-pampering or relaxation are the core of our long-term repeat customers. These clients will come once a week to once a month for years, and often refer other family and friends. This type of client can be difficult to find – an ad in the local alternative news weekly (especially with a coupon for $5 off) or a donation to a charity auction may result in a one-time visit, or a long-term client. Another source of usually one-time visitors is the Gift Certificate – friends pampering friends for a birthday or other special occasion. Our desired location will provide an excellent demographic to provide this type of client.
The third group are Alternative Care users. These are people who mistrust allopathic medicine, and prefer to use chiropractors, naturopaths, herbalists, and acupuncturists. A local networking group of alternative care providers is a great way to get referrals, as well as placing posters on other practitioners offices, and ads in the local alternative newspaper.
The final group is another backbone of this business – the amateur athletes. There is a large population of runners and bicyclists in the local area, as well as out-of-town participants who return for annual events, and book massages during those times. They are a very loyal group, and will readily give word-of-mouth recommendations, especially if they see massage as having given them a specific boost to their performance. This group will cross over from the Injury group, and become long-term clients after the specific initial injury has healed. They also tend to have chronic injuries or pain, especially as they age, which can encourage them to become repeat clients.
Competition
Current Alternatives
We are part of the retail health and beauty industry, which has four major types:
1) Salons with Day Spa Services: Hair salons that offer limited spa services like massage and facials.
2) Heath & Beauty Products: Stores selling only merchandise products covering the wide range of products available, but not inclusive of those sold by salons and spas.
3) Hotels with Spa Services: Major hotels with on-site spas.
4) Medical Spa: Focus mainly on non surgical cosmetic but also have massage therapy, facials and microdermabrasion.
The closest competitor is the Heavenly Spa which is a Hair salon that offers additional, limited, spa services. The Hyatt Regency Hotel also offers massage treatments, but will mostly cater to visitors to the area and not the local residential base. Finally, Atmosphere Spa, located in Plaza Center is not a traditional day spa but combines a day spa with a female gymnasium. No men are allowed at Atmosphere Spa, either. The going rate for massage in Freeway County is $70-$90 per hour which is slightly above most of the other residential areas in Metropolis which can even be as low as $40 per hour in saturated or low-income areas.
Our Advantages
Our competitive edge is our ability to market effectively and creatively to bring in the clients and then back that up with the best service and products in the business. In addition, our combination of unique services, outstanding location and our interaction with the customers are setting us up for huge success.
Keys to Success
Keys to Success
Our keys to success are:
- Marketing, Marketing, Marketing – Owner is a proven, 15-year sales executive. Marketing will be the first strength to our success and a huge competitive edge.
- Professionalism: Which includes everything from maintaining confidentiality, to hiring the very best LMT and Aestheticians.
- Individual Attention: Each client’s experience will be tailored to his or her preference.
- Repeat business/Recommendations: giving the kind of service that brings people back for regular treatments, and encourages clients to recommend us to friends, and other health professionals to recommend their clients.
- Unique Treatments: We have the latest in techniques with the best products from around the world.
- Fantastic Location: Freeway County.
Execution
Marketing & Sales
Marketing Plan
Local Advertising & Seasonal Promotions – Local newspaper advertising, local fliers, grand opening party kick-off and promotion for first 30 days. Continue regular advertising and plan for seasonal events like Christmas, Valentine’s, Mother’s Day, Prom and New Year’s.
Local Networking – Charities, women’s groups, country clubs, wedding planners, and membership with the Metropolis Chamber of Commerce.
Health Care Referrals – prior to opening, work current contacts and create new contacts with health care providers, especially chiropractors. Also, become a Provider with health insurance companies that offer Alternative Care to their members. Most people don’t know that massage therapy is usually paid by insurance when billed correctly and when prescribed by a physician. Pamperzhou Day Spa already has practice management software to handle medically billable massage. When the insurance does not cover the entire amount of a service the client will pay the difference. For that reason, we will not want to participate with any PPO’s that require write-off for amounts over the usual and customary fee (which tends to be too low). A list of acceptable insurance company plans will be maintained and those clients will be able to handle massage therapy through their insurance. Any opportunity to convince allopathic physicians – MDs – to see massage as having long-term healing benefits for their patients will also be taken, since they hold to key to having massage paid for as "medically necessary." The client will also help drive that with the physicians if they are properly educated.
Hotel Referrals – Hotels that do not offer their own spa services will send their guests to our spa or use our out-call spa services. Prior to opening, I will make contacts with managers and concierges at local hotels to ensure they are aware of the services available. Promotions will be offered to professionals in these industries to create buzz and build relationships.
Online Website – our spa will show up on every major search engine and in the phone directory. The website will have a full menu of services and eventually have the ability to schedule appointments on-line. The spa software we are using will allow a user to see the schedule and make and appointment without making a phone call.
Location traffic – It is imperative that we be located in a high-traffic strip mall that is high-end, modern, and clean. We prefer locating near a complementary business like a nail or hair salon that does not offer any massage or facial treatments.
Sales Plan
If, as it has been said, the top three items which determine success in business are location, location, location, then a busy location at Culway Plaza in a thriving residential community represents our top marketing strategy. With the owner focusing on the sales, marketing and management and delegating the massage and aesthetician therapies to employees–business profitability potential is exponentially maximized over a one or two person operation by a direct care-giver without any marketing, management or sales background.
As the owner, Madame Pamperzhou has done extensive market research and visited some of the best spas in the world — Beverly Hills, Paris, Amsterdam, Vegas and Arizona — and has taken ideas from the best to offer an upscale, ultra-amenity, spa experience. Once a client experiences the luxurious, high-end level of personalized care that we offer, we are confident that we will have a return client.
Operations
Locations & Facilities
Culway Plaza, where we plan to locate, has a daily traffic count of 64,000 cars. It is also only two blocks from a commuter train stop, and has an upscale hair and nail salon which would complement our services nicely.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Construction Contractor Retainer
|
July 11, 2020 | |
|
Design Contractor
|
July 25, 2020 | |
|
Brochures
|
Aug 01, 2020 | |
|
Logo Design
|
Aug 08, 2020 | |
|
Lease Agreement
|
Sept 05, 2020 | |
|
Business Cards
|
Dec 27, 2020 | |
|
Grand Opening
|
Jan 09, 2021 |
Key Metrics
Our key metrics are:
- The # of treatments that we perform a day
- The # of treatments we do a month
- The # of customers who book another treatment on the way out
- Which staff members are the most popular with our clients.
- Training for our staff and if that helps their popularity
- The price we charge vs. the price our competitors charge for service.
Company
Overview
Ownership & Structure
Pamperzhou Day Spa is a Sole Proprietorship owned by Madame Pamperzhou. Madame Pamperzhou functions as developer and manager for Pamperzhou Day Spa
Team
Management Team
Madame has been a marketing and sales professional for over 15 years with a proven track record, who has been working in the medical industry for the last five years. While her tenure with X Company, a leading dental manufacturer, she built the Metropolis territory from $400k per year to over $1.8 million per year. During Madame’s sales career she also built a territory from zero per year to over $3.6 million per year at Y Computer Systems. At her current position with Z Dental Systems, she continues to excel and currently ended 2004 at 117% of the sales budget.
Earlier in her career, as a leasor / manager for an Apartment community, she consistently maintained a 100% lease level while managing a 140-unit apartment community. Prior to that, she worked in the budget department for an overseas United States Military installation in Bamberg, Germany. Madame’s unique cold-calling, sales, budget, management and people skills will be a perfect fit for building the client-base in a new business and seeing it through to success.
Personnel Table
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Owner | $57,600 | $58,752 | $59,927 |
| Front Desk (2.14) | $51,000 | $73,440 | $112,362 |
| Massage Therapist (1.86) | $21,000 | $73,440 | $112,362 |
| Facialist (1.86) | $22,400 | $78,336 | $119,853 |
| Totals | $152,000 | $283,968 | $404,504 |
Financial Plan
Forecast
Key Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. We assume cash payments for all services, except for the 1% of sales projected as insurance reimbursements, with collection days at 90. The collection days are for insurance billings only. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Two of the more important underlying assumptions are:
- We assume a strong economy, without major recession.
- We assume, of course, that there are no changes to the Medical/insurance Industry, such as the nationalization of health care.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
The bulk of the start-up costs will be invested by the owner and the remainder will be funded through short-term financing. Details are provided in the tables below.
Start-up Expenses
Legal $2,500
Printing, stationery, bags, grand opening coupons $3,500
Brochures $500
Construction/Design $45,000
Insurance$2,000
Rent $17,000
Advertising $5,000
Accountant $950
Linens $4,000
The total startup cost is $80,450 which includes: Massage table equipment, Aesthetician Equipment – $2,800 (2 room setup), Decor and Furnishings – $13,000, Envision Software & Equipment – $4,000, Signage – $3,500, Backbar Supplies – $5,000
Sources of Funds
Owner investment of $135,000
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $613,770 | $745,000 | $935,000 |
| Direct Costs | $165,718 | $201,150 | $252,450 |
| Gross Margin | $448,052 | $543,850 | $682,550 |
| Gross Margin % | 73% | 73% | 73% |
| Operating Expenses | |||
| Salaries & Wages | $152,000 | $283,968 | $404,504 |
| Employee Related Expenses | $30,400 | $56,794 | $80,900 |
| Marketing | $5,500 | $6,000 | $6,000 |
| Rent | $66,000 | $66,000 | $66,000 |
| Utilities | $3,000 | $3,000 | $3,000 |
| Advertising | $3,000 | $3,000 | $3,000 |
| Insurance | $1,500 | $1,500 | $1,500 |
| Other | $1,200 | $1,200 | $1,200 |
| Phone | $1,500 | $1,500 | $1,500 |
| Marketing Expense | $2,000 | ||
| Startup Expense listed in Use of funds | $80,450 | ||
| Total Operating Expenses | $346,550 | $422,962 | $567,604 |
| Operating Income | $101,502 | $120,889 | $114,945 |
| Interest Incurred | $354 | ($1) | $0 |
| Depreciation and Amortization | $4,000 | $4,000 | $4,000 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $14,572 | $17,534 | $16,641 |
| Total Expenses | $531,193 | $645,646 | $840,696 |
| Net Profit | $82,577 | $99,354 | $94,304 |
| Net Profit/Sales | 13% | 13% | 10% |
Projected Balance Sheet
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Cash | $70,039 | $56,076 | $58,429 |
| Accounts Receivable | $0 | $0 | $0 |
| Inventory | |||
| Other Current Assets | |||
| Total Current Assets | $70,039 | $56,076 | $58,429 |
| Long-Term Assets | $40,000 | $40,000 | $40,000 |
| Accumulated Depreciation | ($4,000) | ($8,000) | ($12,000) |
| Total Long-Term Assets | $36,000 | $32,000 | $28,000 |
| Total Assets | $106,039 | $88,076 | $86,429 |
| Accounts Payable | $0 | $0 | $0 |
| Income Taxes Payable | $14,572 | $4,384 | $4,157 |
| Sales Taxes Payable | $23,891 | $16,762 | $21,037 |
| Short-Term Debt | $0 | ($1) | ($1) |
| Prepaid Revenue | |||
| Total Current Liabilities | $38,463 | $21,145 | $25,193 |
| Long-Term Debt | |||
| Long-Term Liabilities | |||
| Total Liabilities | $38,463 | $21,145 | $25,193 |
| Paid-In Capital | $135,000 | $135,000 | $135,000 |
| Retained Earnings | ($150,000) | ($167,423) | ($168,069) |
| Earnings | $82,577 | $99,354 | $94,304 |
| Total Owner’s Equity | $67,577 | $66,931 | $61,235 |
| Total Liabilities & Equity | $106,039 | $88,076 | $86,429 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $82,577 | $99,354 | $94,304 |
| Depreciation & Amortization | $4,000 | $4,000 | $4,000 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | |||
| Change in Accounts Payable | $0 | $0 | $0 |
| Change in Income Tax Payable | $14,572 | ($10,188) | ($227) |
| Change in Sales Tax Payable | $23,891 | ($7,129) | $4,275 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $125,040 | $86,037 | $102,352 |
| Investing & Financing | |||
| Assets Purchased or Sold | ($40,000) | ||
| Net Cash from Investing | ($40,000) | ||
| Investments Received | $135,000 | ||
| Dividends & Distributions | ($150,000) | ($100,000) | ($100,000) |
| Change in Short-Term Debt | $0 | $0 | $0 |
| Change in Long-Term Debt | |||
| Net Cash from Financing | ($15,000) | ($100,000) | ($100,000) |
| Cash at Beginning of Period | $0 | $70,039 | $56,076 |
| Net Change in Cash | $70,039 | ($13,963) | $2,352 |
| Cash at End of Period | $70,039 | $56,076 | $58,429 |
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