Arab Open University

Tutor Marked Assignment (TMA) – PT3 Form

Academic Year 2019-2020 Semester: Fall

Branch: Jeddah Program: BUS115
Course Title: Entrepreneurship and small business
Course Code: BUS115
management
Student Names: Badr Aldeen Tawakol Students ID’s: 9201709733
Student Names: Mahmood saeed Alzubaidi Students ID’s: 9201708743
Student Names: Raghed khaled Students ID’s: 201602474

Section Number: 2201 Tutor Name: Abdullah alhashani

Total Mark: Awarded Mark:

Mark details
Business
Questions Presentation Q3 Q4 Total
Plan
Allocated Marks Weight 50 50 100
Marks

Criteria Presentation Referencing Word E- Total

Count Library
Marks deduction Up to 5 5 5 5 20
Marks

100 Student’s Total Mark /50

Notes on plagiarism:
A. According to the Arab Open University By-laws, the following acts represent cases of cheating
and plagiarism:
 Verbatim copying of printed material and submitting them as part of TMAs without
proper academic acknowledgement and documentation.
 Verbatim copying of material from the Internet, including tables and graphics.
 Copying other students’ notes or reports.

Tutor Name: Tutor Signature: Date returned:

  Using paid or unpaid material prepared for the student by individuals or firms.

B. Penalties for plagiarism ranges from failure in the TMA to expulsion from the university.

Declaration: I hereby declare that the submitted TMA is my own work and I have not copied any
other person’s work or plagiarized in any other form as specified above.
Student Signature

…………………….
Tutor’s Feedback

Table of Contents
Introduction..................................................................................................................................3

2.1 Start-up Summary......................................................................................................................4

Need real financials?........................................................................................................................5

Products and Services......................................................................................................................6

4.3 Sales Forecast............................................................................................................................7

4.4 Milestones..................................................................................................................................8

5.1 Personnel Plan.........................................................................................................................10

6.1 Important Assumptions............................................................................................................11

6.2 Projected Cash Flow................................................................................................................12

Introduction
Trend Setters is a full-service beauty salon dedicated to consistently providing high customer
satisfaction by rendering excellent service, quality products, and furnishing an enjoyable
atmosphere at an acceptable price/value relationship. We will also maintain a friendly, fair, and
creative work environment, which respects diversity, ideas, and hard work.

Our Mission: To supply services and products that enhance our clients' physical appearance and
mental relaxation.
Our Motto: "The Trend Begins Here!"
The timing is right for starting this new venture. Patiently searching for six months for the
perfect location, one was finally found. The demand from the owner's clients, as well as the
ambitions of the owner to one day start her own salon, and the procurement of highly
professional and qualified beauticians to support the salon, has made this business one of great
potential.

Curley Comb, co-owner with Roller Comb, Jr., her husband, has worked in a prestigious, upscale
salon in MyTown, Texas for the past two years. Curley has created a large client following
through hard work and dedication. Curley, and her talented team of beauticians, has what it takes
to make this venture an extremely successful one. We expect our growing reputation to lead to
new clients and beauticians to support our anticipated growth.

To achieve our objectives, Trend Setters is seeking additional loan financing. This loan will be
paid from the cash flow from the business, and will be collateralized by the assets of the
company, and backed by the character, experience, and personal guarantees of the owners.

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1.1 Keys to Success

The keys to success in our business are:

·         Location: providing an easily accessible location for customers.

·         Environment: providing an environment conducive to giving relaxing and

professional service.

·         Convenience: offering clients a wide range of services in one setting, and extended
business hours.

·         Reputation: reputation of the owner and other "beauticians" as providing superior
personal service.

Company Summary

Trend Setters will, upon commencement of operations, sell a wide range of beauty services and
products. We will provide quality hair, nail, and skin services, along with top lines of beauty
products. What will set Trend Setters apart from the competition is our commitment to providing
all of these services in one convenient location.
The salon will be located in a retail strip mall at 1234 Stylish Road, MyTown. The salon will
utilize 1,540 square feet. The location is strategically situated on one of the busiest streets in
MyTown. It is a high profile area, with easy access from all parts of town.

2.1 Start-up Summary

After spending several months searching for a salon to purchase, the owners decided to start a
salon from the ground up. The start-up capital will be used for the design, leasehold
improvements, and equipment of the salon.

Leasehold improvements will amount to approximately $32,500, and salon equipment will cost about
$27,000. The owner will invest $500 for cash-on-hand at starting date.

START-UP REQUIREMENTS

Start-up Expenses

Rent deposit $1,817

Other $0

TOTAL START-UP EXPENSES $1,817

Start-up Assets

Cash Required $500

Other Current Assets $600

Long-term Assets $59,500

TOTAL ASSETS $60,600

Total Requirements $62,417

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START-UP FUNDING

Start-up Expenses to Fund $1,817

Start-up Assets to Fund $60,600

TOTAL FUNDING REQUIRED $62,417

Assets

Non-cash Assets from Start-up $60,100

Cash Requirements from Start-up $500

Additional Cash Raised $0

Cash Balance on Starting Date $500

TOTAL ASSETS $60,600

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $61,917

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

TOTAL LIABILITIES $61,917

Capital
Planned Investment

Owner $500

Investor $0

Additional Investment Requirement $0

TOTAL PLANNED INVESTMENT $500

Loss at Start-up (Start-up Expenses) ($1,817)

TOTAL CAPITAL ($1,317)

TOTAL CAPITAL AND LIABILITIES $60,600

Total Funding $62,417

Products and Services

Trend Setters is considered an upscale full-service beauty salon. We will offer a wide range of
services that include:

·         Hair: cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing,

weaving, waving.
·         Nails: manicures, pedicures, polish, sculptured nails.
·         Skin Care: European facials, body waxing, massage.
Strategy and Implementation Summary

Skill at what we do, good customer service, and creating a pleasant environment for our
customers will be important to implementing our business plan.

4.1 Competitive Edge

Trend Setters wants to set itself apart from other beauty salons that may offer only one or two
types of services. Having come from such a salon, Curley has realized, from talking with her
clients, that they desire all of the services that we are proposing, but they remain frustrated
because they must get their hair done at one place, and nails done at another. Although the focus
of Trend Setters is hair services, we do wish to offer our clients the convenience of these other
services in one location.

There are a number of salons like ours, but they are mainly in the very high income parts of
MyTown and surrounding areas. We do not intend to compete with these so called "Day Spas."
We wish to offer a middle ground for those clients who can't quite afford those high-end luxury
salons.

Our business atmosphere will be a relaxing one where clients can kick back and be pampered.
Soft drinks will be offered to clients as they enter for service. Televisions will be located in the
waiting and hair-drying area area.

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4.2 Marketing Strategy

Our marketing strategy is a simple one: satisfied clients are our best marketing tool. When a
client leaves our business with a new look, he or she is broadcasting our name and quality to the
public. Most of our clients will be referrals from existing clients.

No major advertising campaigns are anticipated. Our research has shown that word of mouth is
the best advertising for this type of business. We will, however, run specials throughout the
week. We

will also ask clients for referrals, and reward them with discounted or free services depending on
the number of clients they bring. We will also offer discounts to the new clients who have been
referred. There are plans for a lottery that will offer a free trip to, say, Cancun. A client would
simply refer new clients to us, and we will place a card in a box for each client he or she brings.
The more they bring, the more chances they have of winning the trip.

4.3 Sales Forecast

The following table and charts show our projected sales. We expect income to increase steadily
over the next three years, as the reputation of the salon, its stylists and services become apparent
to the general public. Second year revenues also anticipate the addition of one new stylist.

Note that we list no direct cost of sales here for services, only for products, since our service
costs are more accurately tracked as regular monthly expenses for supplies in the Profit and Loss
table.

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We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.

Create your own business plan

SALES FORECAST

YEAR 1 YEAR 2 YEAR 3

Sales

Owner $49,600 $57,040 $65,696

Stylist #1 $49,600 $57,040 $65,596

Barber #1 $16,800 $19,320 $22,218

Stylist #2 $22,800 $25,622 $29,465

Stylist #3 $0 $22,000 $24,000

Nails and massage $18,000 $20,000 $22,000

Product sales $9,600 $10,000 $11,000

TOTAL SALES $166,400 $211,022 $239,975

Direct Cost of Sales Year 1 Year 2 Year 3

Product Costs $4,320 $4,300 $4,400

Other $0 $0 $0

Subtotal Direct Cost of Sales $4,320 $4,300 $4,400

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4.4 Milestones
Sample Milestones topic text.

The milestones table and chart show the specific detail about actual program activities that should be
taking place during the year. Each one has its manager, starting date, ending date, and budget. During
the year we will be keeping track of implementation against plan, with reports on the timely completion
of these activities as planned.

MILESTONES

Milestone Start Date End Date Budget Manager Department

Sample Milestones 1/4/2008 1/4/2008 $0 ABC Department

Finish Business Plan 8/20/2010 9/19/2010 $100 Dude Boss

Acquire Financing 8/30/2010 10/19/2010 $200 Dudette Legumers

Ah HA! Event 9/9/2010 9/14/2010 $60 Marianne Bosses

Ah Merde Alors!
Event 10/9/2010 10/14/2010 $250 Marionette Bouc émissaire

Grande Opening 10/19/2010 10/24/2010 $500 Gloworm Nobs

Marketing Program
Starts 9/19/2010 10/14/2010 $1,000 Glower Marketeers

Plan vs. Actual

Review 2/14/2011 2/21/2011 $0 Galore Alles

First Break-even 6/18/2011 7/18/2011 $0 Bouys Salers

Month

Hire Employees 5/17/2011 6/16/2011 $150 Gulls HRM

Upgrade Business
Plan Pro 8/5/2011 8/7/2011 $100 Brass Bossies

Totals $2,360

Management Summary

Trend Setters will be organized and managed in a creative and innovative fashion to generate
very high levels of customer satisfaction, and to create a working climate conducive to a high
degree of personal development and economic satisfaction for employees.

Training classes to help improve employee product knowledge and skills will be conducted on a
regular basis. As the business grows, the company will consider offering an employee benefit
package to include health and vacation benefits for everyone.

5.1 Personnel Plan

The personnel plan calls for a receptionist who will greet customers and receive payments for
services and products. There will be five hair stylists, one barber, one nail technician, one
facialist, and a massage therapist. Everyone but the receptionist will be contract workers, and
will be paid a sliding commission scale based on the amount of revenue created. Future plans
include the hiring of a shampoo technician as the business expands.

In the first year, assumptions are that there will only be three hair stylists, a barber, and part time
nail, facial, and massage technician until the business can build a reputation that will attract
others to work there.

PERSONNEL PLAN

YEAR 1 YEAR 2 YEAR 3

Owner (Stylist) $24,000 $25,000 $26,000

Receptionist $14,400 $15,120 $15,876

Shampoo Tech $8,000 $12,400 $13,000

TOTAL PEOPLE 3 3 3

Total Payroll $46,400 $52,520 $54,876

Financial Plan

Our goal is to be a profitable business beginning in the first month. The business will not have to
wait long for clients to learn about it since the stylists will already have an existing client base.

To assure the start-up funds lender that the owners are financially stable, a personal financial
statement is enclosed illustrating other sources of income that include interest and dividend
income from investments ($2,840), salary income ($29,658), and commission income ($15,000).

6.1 Important Assumptions

The financials that are enclosed have a number of assumptions:

Revenues will grow at an annual rate of 15%, increasing 20% in November and December due to
a historical jump in revenues at this time of year. We anticipate this increase to stay steady
throughout the following year to account for the normal flow of new clients coming into the
salon. Estimates for sales revenue and growth are intentionally low, while anticipated expenses
are exaggerated to the high side to illustrate a worst case scenario.

We did not use cost of goods sold in our calculations of net service sales, but included all related
recurring expenses, such as payroll and supplies, in the operating expenses area of the profit and
loss table. The only direct costs in the sales forecast are for projected product sales.
Product sales are a minimal part of our market. We are not quite sure how much revenue will be
derived from products, so we took a low-ball approach and estimated sales of $800 a month.
Also in the sales projections table are services such as nails and massages. We are not quite sure
how much revenue these two services will generate. We are certain that in time these services
will be a large part of our revenue, but to err on the conservative side, we estimate revenues from
these services to be only $1,500 a month for the first year.

GENERAL ASSUMPTIONS

YEAR 1 YEAR 2 YEAR 3

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

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6.2 Projected Cash Flow

We expect to manage cash flow over the next three years simply by the growth of the cash flow
of the business. The business will generate more than enough cash flow to cover all of its
expenses.
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PRO FORMA CASH FLOW

YEAR 1 YEAR 2 YEAR 3

Cash Received

Cash from Operations

Cash Sales $166,400 $211,022 $239,975

SUBTOTAL CASH FROM OPERATIONS $166,400 $211,022 $239,975

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 $166,400 $211,022 $239,975

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $46,400 $52,520 $54,876

Bill Payments $99,540 $128,730 $147,285

SUBTOTAL SPENT ON OPERATIONS $145,940 $181,250 $202,161

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 $12,000 $12,000 $12,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

SUBTOTAL CASH SPENT $157,940 $193,250 $214,161

Net Cash Flow $8,460 $17,772 $25,814

Cash Balance $8,960 $26,733 $52,547

Reference
 Raina, S. (2019). To achieve our objectives,. Business Plan - Hair, [online]
Volume 61(2), p. 148. Available at: http://www.proquest.com/products-
services/ProQuesst-Research-Library.html [Accessed 8 Apr. 2019].
 Raina, S. (2018). Trend Setters.  full-service beauty salon. 148. Available at:
http://itejb-witech.blogspot.com/2013/05/business-plan-haair-and-beauty-
salon.html [Accessed 8 Apr. 2018].