The Bathhouse Financial Model allows you to see how your changes impact the profit and loss statement, cash flow analysis, and balance sheet in real-time. Please see the video below!
1.0 Executive Summary
The purpose of this business plan is to raise $165,000 for the development of a classically styled bathhouse based in Wilmington, Delaware. Bathhouse, LLC (“the Company”) was founded by Brett Knowles. The business will generate revenues from a wide range of services offered at the facility. In order to create recurring income, the business will implement a membership based program.
1.1 The Services
As stated above, the Company intends to offer the Wilmington general public a wide range of wellness services from its luxurious location. The facilities will feature steam rooms, onsite massage therapy, and related services. In regards to revenue, the Company will charge a flat fee of $30 for access to the facility per session. Massage therapy and other personalized treatments will be billed separately as these services will be provided by independent contractors.
In order to create recurring streams of revenue, the Company will implement a membership program that will provide unlimited access to the facility for a flat monthly fee of $100. Members will also receive discounted access for onsite services.
The Company’s services will be further discussed in the third section of this document.
1.2 Financing
At this time, Mr. Knowles is seeking $165,000 via a commercial business loan in order to establish the operations of the Bathhouse. This business plan assumes that the Company will receive a seven-year term loan that carries an 8.5% interest rate. The funds will be primarily used for the following as it relates to the development:
• Location development in Wilmington
• General furniture, fixtures, and equipment
• Wellness equipment
• Working capital
Given the highly predictable streams of revenue from services rendered coupled with recurring income from memberships, the Company is a strong candidate for expansion financing. The Company would only seek to acquire a second business loan in the event that a new location is developed.
1.3 Mission Statement
Bathhouse’s mission is to provide comprehensive wellness services at a luxurious environment for clients in the Wilmington market area.
1.4 Management Team
Brett Knowles is a highly experienced entrepreneur that will be able to quickly bring the operations of this bathhouse to profitability. He will focus on creating immense brand name awareness for the business over the next three years.
1.5 Sales Forecasts
1.6 Expansion Plan
A major focus of the Company’s growth will come from the ongoing expansion of the Company’s membership program. This recurring income will fuel the growth of the business while boosting its valuation. Management may develop additional locations after the third year of business.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Bathhouse, LLC. The business is registered as a limited liability company in the State of Delaware.
2.2 Required Funds
Management is seeking $165,000 via a bank loan and $35,000 from an investor. The funds will be used as follows for the Bathhouse development:
2.3 Investor Equity
Mr. Knowles is seeking to work with a private investor in order to acquire the $35,000 of equity funding necessary to commence operations. The terms of this investment will be determined.
2.4 Management Equity
This will be determined during negotiation.
2.5 Exit Strategy
In the event that Mr. Knowles and his business partner(s) want to sell the business, they will coordinate these efforts with a business broker, the Company’s CPA, and the Company’s attorney. This event is not expected to occur for a substantial period of time. Based on the anticipated profitability of the business, the Company could have a valuation of $500,000 by Year 3.
3.0 Operations
As stated in the executive summary, the Bathhouse will provide a large spectrum of services specific for improving the health and wellness of the Company’s clients. The business will feature a number of steam rooms, infrared saunas, onsite massage therapy, and related holistic treatments. The facilities will feature classic elements of a bathhouse.
As it relates to massage therapy, the Company will work with Wilmington area massage therapists that will render these services onsite. They will work in an independently contracted capacity. These individuals will receive 70% of their aggregate billings.
One of the most important components of the Company’s operations will come from the membership program that Management intends to implement at the onset of operations. This recurring income, over the next three years, will cover a substantial portion of the Company’s operational costs. This will also significantly boost the valuation of the business.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the business plan will focus on the general economic climate, the bathhouse industry, the customer profile, and competitive matters that the Company will face moving forward.
At this time, the economy is in a strong position for ongoing growth. Interest rate and inflation, as a result of proper monetary policy, are declining. It is expected that the US Federal Reserve will continue to implement policies that will reduce these metrics while also continuing to foster growth.
However, any issues related to inflation rates or interest will not impact the Bathhouse’s ability to generate revenue and remain profitable. The Company earns substantial gross margins from its services. Additionally, the target market area is wealthy and less subject to challenging economic climates.
4.2 Industry Analysis
Bathhouses and related wellness locations generate $8 billion of revenue each year. There are 30,000 companies that own and operate one more locations that provide these services to the general public. The industry employs 200,000 people.
This industry is mature and its future growth will be similar to that of the economy as a whole. One of the newest trends within this industry is to incorporate online reservation functionality so that people can acquire reservations and pay fees prior to their arrival at a bathhouse. Management will always use the latest in state-of-the-art technology in all facets of operation.
4.3 Customer Profile
The Company will implement the following demographic profile when marketing the Bathhouse, LLC to the general public:
• Annual income of $75,000 to $150,000
• Lives or works within six miles of the location in Wilmington
• Will spend $30 to $100 per visit to the location
In this section of the business plan, you can discuss why you specifically chose your target market for establishing your bathhouse. You can also indicate the size of the market, its population density, median household size, median household income, and other important metrics. One of the other things you should include is an examination of population growth trends and how many people fall into your demographic profile.
4.4 Competition
As with most personal care and wellnesses businesses, there are always competitors in any market that are going to render similar services. In the competitive section of the business plan, you can indicate the ways in which you will differentiate your bathhouse from that of other companies. You can indicate the size of your competitors and their anticipated revenues. This will also provide you with substantial insight into your targeted market.
5.0 Marketing Plan
Bathhouse, LLC will benefit from the highly visible location that Management has source in this market. The location will feature substantial exterior signage the indicate the classically styled nature of the bathhouse. In addition to the high visibility location, the Company will use numerous online strategies to increase visibility.
5.1 Marketing Objectives
• Maintain a search engine friendly and ecommerce enabled website specific for the target market.
• Maintain an expansive presence on social media to promote the location as well as membership.
• Develop referral relationships with real estate brokerages and agents.
5.2 Marketing Strategies
As stated above, Bathhouse has sourced an expansive location in the target market. This location is visible to thousands of passers-by, daily. Over time, and as more people become aware of the location, the traffic to the business will naturally increase.
The Company’s website will be a state-of-the-art platform that will allow individuals to see the operations of the Bathhouse while making reservations to receive services at the location. Users can also enroll as members on the platform. The website will feature numerous videos and images of the location, its steam rooms, infrared saunas, and other wellness aspects of the facilities. The website will undergo regionally focused search engine optimization.
Of special importance to the Company’s marketing operations will be the use of social media. Bathhouse, LLC will maintain pages on Facebook, Instagram, YouTube, and Tik Tok. Videos of the facilities will be uploaded to both Tik Tok and YouTube. The Company will frequently offer discounts on services, access, and membership throughout the course of each year. The links to the Company’s social media pages will be included on the business’ website.
The Company will maintain referral relationships with real estate brokerages. Often, people that move to a new market will ask for recommendations for local businesses. The Company sees a significant opportunity to receive ongoing recommendations from these people.
5.3 Pricing
The Company will charge $30 for access to the facilities. The membership operations will produce $100 per month per member. Massage therapy services will be billed at $100 per hour.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Management will acquire a $165,000 loan.
• Bathhouse, LLC will acquire a $35,000 investment.
• The business will be profitable and cash flow positive in each year of operation.
7.2 Sensitivity Analysis
Bathhouse, LLC’s revenues are only minimally sensitive to negative economic changes. The business will generate substantial gross margins on all bathhouse services while maintaining a fixed cost operating infrastructure. This will ensure that the Company can remit all financial obligations on a monthly basis while achieving a significant return on investment.
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
