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1.0 Executive Summary
The purpose of this business plan is to showcase the development and expansion of a day spa based in Los Angeles, California. Day Spa, LLC (“the Company”) was founded by Stacy Teller. The business will provide a wide range of hair and nail services as well as massage therapy to its customers. At this time, the Company is seeking $150,000, via an SBA loan, to commence revenue generating operations.
1.1 The Services
The business will feature a luxurious atmosphere that will allow clients to receive their hair, nails, and skin care treatments. At the onset of operations, the business will employ four staff members that will render services.
In order to have smoothness to the Company’s revenues, the business will implement a membership-based program that will allow customers to pay a set monthly fee for ongoing access to specific services while receiving discounts on services such as massages.
The Company will earn secondary revenues from personal care products with a focus on take-home hair and skin treatments.
The third section of this business plan will further document the services and operations of Day Spa, LLC.
1.2 Financing
Stacy Teller is seeking an SBA loan of $150,000. This document assumes that the Company will receive a 7-year loan carrying an 8% interest rate. The Founder will provide $25,000 towards the venture. These funds will be used for the following:
• Day spa location development in Los Angeles
• Furniture, fixtures, and equipment
• Working capital
Given the highly predictable income generated from services rendered, Day Spa, LLC could receive additional financing to establish additional locations in the Los Angeles market. This document assumes that no further funding will be needed over the next three years.
1.3 Mission Statement
Management’s mission is to develop Day Spa into a premier, luxury service provider in the Los Angeles market.
1.4 Management Team
Stacy Teller has eight years of practice as a cosmetologist and esthetician. She will be able to develop Day Spa into a recognized community institution over the next three years.
1.5 Sales Forecasts
1.6 Expansion Plan
The Company will continue to hire additional staff in order to boost the monthly service billings of the business. After Year 3, the Company may establish additional locations in the Los Angeles market. Management may also acquire day spas that are currently in operation and can be rebranded with the Company’s name.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Day Spa, LLC. The business is registered as a limited liability company in the State of California.
2.2 Required Funds
The $150,000 SBA loan will be allocated as follows along with the Founder’s $25,000 investment:
2.3 Management and Investor Equity
Stacy Teller retains a 100% ownership interest in Day Spa, LLC.
2.4 Exit Strategy
Once Management wishes to retire or relocate, she will hire a qualified business broker to assist with the sale to a third party. A formal valuation will be completed and the Company will retain an attorney to handle the contractual matters that accompany the sale. The business could be sold for up to three times earnings.
3.0 Operations
The business luxurious location will provide a number of services and amenities to the general public. These services will include:
• Hair removal and waxing
• Hair styling
• Massage therapy
• Nail services
• Scalp treatments
The business will produce revenue of $50 to $150 per treatment session. As discussed in the executive summary, Day Spa will implement a membership-based program that will provide substantial discounts on all services rendered. The business will also provide free personal care products on a monthly basis as part of this subscription program.
The Company will carry a wide range of personal care products that will complement the day spa services offered. This will be a more moderate income center for the business.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
The economic outlook within the United States is positive. Both interest rates and the rate of inflation have declined significantly, which will ultimately lead to increased spending in the coming years. The Federal Reserve and other makers of monetary policy are expected to continue to engage in prudent measures that will stymie inflation but prevent an economic recession.
Any potential issues with the economy in the future will not have a major impact on Day Spa’s ability to remain profitable and cash flow positive. The business will generate substantial gross margins from all spa services rendered. Additionally, the business will be operating a wealthy area of Los Angeles which is less swayed by negative economic climates.
4.2 Industry Analysis
There are currently 15,000 day spas operating within the United States. These entities produce $19 billion of revenue each year and the industry employs 280,000 people.
One of the common trends within this industry is to integrate online booking functionality into websites. The business, at all times, will use the latest in online communication and booking technology in order to ensure maximum capacity for Day Spa. As discussed earlier, the business will capitalize on the membership trend of this industry as well.
4.3 Customer Profile
Day Spa, LLC will target the following demographics among residents of Los Angeles:
• Annual income of $65,000 to $125,000
• Lives within six miles of the location
• Will spend $100 per visit to the business
Management has specifically chosen the Los Angeles market to develop this day spa given the population density and ongoing demand for high end personal care services this market. The Company will benefit from the wealth of this market, which has a median income that is $25,000 higher than the national average.
4.4 Competition
As with all local and regional businesses, the Company will face ongoing competition from other spas in this market. Day Spa, LLC will maintain a distinct differentiating factor given that it will provide a full range of hair, nail, and skin treatments coupled with massage services. The business will be located on a highly trafficked road, which will provide the Company with increased visibility.
5.0 Marketing Plan
Day Spa will implement numerous advertising and marketing strategies that will drive traffic to the luxurious location. These operations will encompass online marketing, referrals from existing customers and real estate brokerages, and a limited print advertising campaign.
5.1 Marketing Objectives
• Create an immense online presence using a proprietary website and social media.
• Develop referral relationships with real estate agents and brokerages in this market.
• Distribute mailed advertisements within the Los Angeles market area.
5.2 Marketing Strategies
Foremost, the Company will be located in a highly trafficked strip mall that will feature a number of anchor stores. This will allow the location to be seen by thousands of people on a daily basis. The exterior of the location will feature significant signage.
The Company’s website will feature booking functionality so that customers can make appointments directly through the platform. Management will work with a regional web development firm that will also engage in search engine optimization for the Company’s platform. The website will be mobile device friendly.
The business will maintain a presence on Facebook, Instagram, YouTube, and TikTok as the primary social media pages. Ongoing content, images, and videos will be uploaded on a weekly basis. During busy seasons, the business will offer discounts and promotions that will further drive traffic to the Los Angeles location. These platforms will be used to promote the Company’s membership services as well.
Management will also develop referral relationships with area real estate brokerages and agents that will recommend Day Spa to people that have recently moved to the Los Angeles market area.
To a more limited extent, the Company will distribute brochures among people that fall into the demographic profile discussed earlier. The business will acquire mailing lists for this type of advertising.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Day Spa, LLC will acquire a $150,000 loan to establish operations.
• Stacy Teller will make an investment of $25,000.
7.2 Sensitivity Analysis
Day Spa’s revenues are only modestly sensitive to a potential economic recession. As discussed earlier, the business will have high controllable operating costs and it will operate in the population dense market of Los Angeles. The Company will earn substantial gross profits on all service revenues at the location.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
