ABC Massage Therapy Business Plan
ABC Massage Therapy Business Plan 2014-2017 Prepared By: 1 Table of Contents Executive Summary Page 4 Company Summary Page 5 Company Objectives Page 6 Competitive Landscape Page 7 Competitive Advantage Page 8 Operational Analysis Service Analysis Page 9-11 Page 11-13 Industry Trends Page 14 Market Needs Page 15 Market Analysis Page 16-17 Market Trends Page 18-19 Marketing Plan Page 20-24 Start-Up Analysis Page 25 Exit Strategy Page 25 Financial Analysis Page 26 Financial Highlights Page 27 Break-Even Analysis Page 28 Income Statement Page 29 Balance Statement Page 30 Appendix: Sales Forecast: Year 1-3 2 Business Plan – ABC Spa Massage Therapy. Executive Summary Massage therapy became widely used in Europe during the Renaissance. In the 1850’s, two American physicians who had studied in Sweden introduced massage therapy to the United States, where it became popular and was promoted for a variety of health purposes. With scientific and technological advances in medical treatment during the 1930’s and 1940’s, massages fell out of favor in North America. Interest in massage therapy revived in the 1970’s and became the “norm” across Canada. Introducing ABC Spa Massage Therapy, a massage therapy clinic operated by a trained and licensed sole proprietor, Joe Smith. ABC Spa Massage Therapy will offer a massage to clients in a variety of styles – including traditional Swedish Massage, Deep Tissue, Sports Massage, and others. To meet a set number of objectives, through both the start-up and development phase, ABC Spa Massage Therapy needs an investment of $000,000 that will help purchase needed equipment, market the services throughout Toronto, and provide operating capital for the first three-to-six months. The unique services of ABC Spa Massage Therapy, at an average rate of $00 for 45 minutes, will be delivered using a special massage oil called “_________”. ABC Spa Massage Therapy will also be utilizing an exfoliating cream called “____________” which will also be available for sale at the clinic and also online on the business’ website for additional revenue. Being a start up business, ABC Spa Massage Therapy estimates, with the financial assistance, this business will have secured approximately 000 transactions within the first 2-3 months combined. The goal by the end of the first year is to average a minimum of 000 transactions per month. The objective for the first year is to generate revenues of $000,000 and by the end of year three, to increase revenue to $000,000. Based on market penetration and share, this is a realistic and attainable goal for ABC Spa Massage Therapy. 3 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Company Summary ABC Spa Massage Therapy is a sole proprietor business owned by Joe Smith of Ontario who has successfully undergone a rigorous 2,200 hour training program to become a Registered Massage Therapist or RMT. ABC Spa Massage Therapy will offer a massage to clients in a variety of styles – including traditional Swedish Massage, Deep Tissue, Sports Massage, and others. Clients will quickly recognize the difference between ABC Spa Massage Therapy and the other local competitors by being transparent and posting certificates and awards on the office wall and including them in printed marketing material. In addition, Joe Smith will be very visible within the community in a number of ways by attending numerous trade-shows and events, massage therapy workshops, and industry related networking groups. Because of his broad background and training, Joe and his hired team, will be able to offer a variety of modalities to better serve the clients' needs. Joe firmly believes in business and massage therapy ethics and will abide by the highest standards of integrity, professionalism, and compassion. The ABC Spa Massage Therapy goals are to abide by the set code of ethics within the industry including client confidentiality while making the business policies publically available and to offer a sliding-scale rate pricing structure. The overall mission is to run a profitable business by providing therapeutic massage in a caring, professional environment. ABC Spa Massage Therapy will tailor the client's experience based on initial interview information, as well as in-the-minute feedback during the massage, to insure the client's comfort and satisfaction, and to increase repeat business. The intention is to offer a massage that is effective, yet respectful of the client's personal boundaries, so that the experience is relaxing and energizing for both the client and the provider. 4 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Company Objectives ABC Spa Massage Therapy has many objectives to meet over the next three years while being mindful of the overall client experience by using quality oils and lotions, appropriate scents, and soothing music, nature sounds or silence - as the client prefers. ABC Spa Massage Therapy will be positioned as a clinic that offers the “freedom from life’s stresses during a 45 minute massage session”. To meet the following objectives, ABC Spa Massage Therapy needs a start-up investment of $000,000 that will help purchase needed equipment, marketing the services throughout Ontario, and provide operating capital for the first three-to-six months. Short-Term Objectives The short-term business objectives within the first year include: • • • • Driving business revenues to over $000,000. Securing and maintaining a profit margin of 00%. Providing approximately 0,000 hours of message therapy. Continuing to build the brands awareness throughout Ontario. To reach these objectives, Joe Smith will need to build a strong presence paired with community awareness and referrals, along with ensuring the client experience is met with consistency. Long Term Objectives The long-term business objectives within the first 3 years include: • • • • Pay back of 00% or $00,000 worth of capital investment loans. Driving business revenues to over $000,000 by year three. Providing approximately 0,000 hours of message therapy. To be in the top 3 of Massage Therapy Clinics within 10km. To reach these objectives, Joe Smith will need to ensure he executes strategic marketing campaigns with the assistance of a marketing agency, that brand positioning is secured, budgets are kept in-line, and that the business continues to stay ahead of massage therapy trends, training, and client needs within the target market. 5 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Industry Trends As Registered Massage Therapists, ABC Spa Massage Therapy will possess liability insurance and adhere to regulations set forth by the College of Massage Therapists of Ontario and the Regulated Health Professions Act. The number of massage therapists has increased very sharply in the last few years. Reflecting on this increase, data from a Statistics Canada's Survey of Household Spending (SHS show that actual household spending (after inflation) on other personal care services (manicures, facial treatments, massages, etc.) increased by 000% (or 0% per year) between 1997 and 2011. This sharply rising trend in the number of massage therapists should continue over the next few years, although at a more moderate pace. According to the 2006 Canadian Spa and Massage Therapy Sector Profile, prepared for the Canadian Tourism Commission, there were more than 0,000 physical (not home-based) locations in Canada at the time of the study, with Ontario accounting for 00 per cent. In 2010, the Canadian industry generated over $0 billion in revenue, with 00 per cent of the revenues derived from treatment rooms such as what ABC Spa Massage Therapy will offer. In 2010, there was an estimated 00.0 million visits to Canadian spas and massage therapists which has also helped the Commercial real estate sector too – the spa industry occupies approximately eight million square feet of indoor space. The spa and massage therapy industry has grown 00 per cent annually on average, with a cumulative growth of 000 per cent from 1996 to March 2006. In 2005, the latest found study, per spa revenues grew 00 per cent, with an increase in the spa workforce at a moderate four per cent. The spa and massage industry in Canada is expected to have great potential in particular in Toronto, as it is a major tourist destination. Spas and massage therapy clinics rely on tourists for approximately 00 per cent of visits – equating to 00 per cent of revenues – with one-third of all spas and massage clinics in Canada qualifying as being tourism-oriented. 6 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Market Needs While massage may have developed a reputation as a “decadent treat” for people who love pampering, new studies are showing it has a wide variety of tangible health benefits for everyone. Research over the past couple of years has found that massage therapy boosts immune function in women with breast cancer, improves symptoms in children with asthma, and increases grip strength in patients with carpal tunnel syndrome, just to name a few. New research is also starting to reveal just what happens in the body after a massage. While there have long been theories about how massage works—from releasing toxins to improving circulation—those have been found with little to know evidence. Massage therapy can be beneficial to people of all ages and conditions and is widely used to help obtain relief from many specific problems, including: • Inflammatory conditions such as arthritis and tendinitis. • Stress relief and associated conditions. • Headaches and migraines. • Muscle related conditions such as spasms, strains and sprains. • Popular back, knee, and shoulder pains. • Repetitive strain injury, in particular around the neck. • Circulatory and Respiratory problems. • Pregnancy and labor discomfort. • Post sport or accident injury and post surgical rehabilitation. Now, one study, for example, found that a single, similar to the 45minute massage that ABC Spa Massage Therapy will offer, has led to a small reduction in the level of cortisol; a stress hormone in the blood, a decrease in cytokine proteins related to inflammation, and allergic reactions, plus a boost in white blood cells that fight bodily infection. A 2010 study with 53 participants also found a decrease in cytokine proteins related to inflammation and allergic reactions. It is also found that a weekly 45 minute massage could also help the elderly and those suffering from musculoskeletal injuries and people with chronic inflammatory disease. 7 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Market Analysis While car insurance will typically pay for a massage for only a limited time period (less than one year), many health insurance policies now have Alternative Care coverage with a renewable annual maximum. The rapid turnover of this group is offset by the fact that they will pay top dollar per session. The key is to keep getting new referrals. The self-pampering clients tend to have more disposable income and can indulge in massage for relaxation. These individuals are the core of long-term repeat customers. These clients will come once a week to once a month for years, and often refer other family and friends. The difficulty working with these clients comes from the 'familiarity breeds contempt" factor – meaning they think they deserve lower rates, seem to cancel on short or no notice, and can come to seem as friends, rather than clients. The challenge here is maintain a professional relationship, while encouraging the warmth and personal connection that is as much a part of their experience as the actual massage. The third group is the alternative care users. These are people who mistrust allopathic medicine, and prefer to use massage therapists, naturopaths, herbalists, 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 problem with this group is that they can tend to have relatively small disposable incomes, so that a massage once every two months may be all they can afford. A relatively large pool of these clients will book only 00% of the available appointments in any given month. The final group which can be another core portion of revenue generation, the amateur athletes. There is a large population of runners and bicyclists in Toronto, as well as out-of-town participants who return for annual events, and book massages during those times. This business tends to be slightly seasonal as most amateur athletes will only train, or gear-up their training during the Spring and Summer months. However, they are a very loyal group, and will readily give word-of-mouth recommendations, especially if they see a massage as having given them a specific boost to their performance. 8 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Financial Analysis Being a start up business, ABC Spa Massage Therapy estimates, with the financial assistance, this business will have secured approximately 000 transactions within the first 2-3 months. The goal by the end of the first year is to average a minimum of 000 transactions per month. The objective for the first year is to generate revenues of $000,000 and by the end of year three, to increase revenue to $000,000. Based on market penetration and share, this is a realistic and attainable goal for ABC Spa Massage Therapy. ABC Spa Massage Therapy will pay back the principal $000,000 to the investors and grant programs over the course of five years at $0,000 per month. As a majority of grant programs do not charge interest, it is expected that this business will only pay back the principal amount. However, if interest payments are required, ABC Spa Massage Therapy would anticipate a 0% rate over the five years. The financial plans, including the income statement and the profit and loss spreadsheets, are based on statistical data and using the highest knowledge of Joe Smith. Thus, this business plan represents a conservative but realistic outlook of this business’ overall future. This business will have sufficient bottom line capital to withstand any small amounts of negative cash flow. The rest of the expenses are based upon traditional business costs and expense trends within the massage therapy industry. The expenses increase each year based on inflation and the necessary needs of a growing business. Direct cost of sales are very low for the business as most costs are fixed. Travel to client sites, printing and paper, and other direct supplies for clients are the only direct costs for services provided directly by ABC Spa Massage Therapy. The marketing is situated at 0% of the monthly profits (including the $000 for Google advertising) in years two and three, which can increase or decrease at the discretion of Joe Smith. 9 Private & Confidential. ABC Spa Massage Therapy. Business Plan – ABC Spa Massage Therapy. Income Statement Year 1 Revenues Sales 30 Minute Massage (In-House) 45 Minute Massage (In-House) 45 Minute Massage (Out-Call) Merchandise Sold Total Sales Investments & Grants Further Investments Received Total Investments Received TOTAL INCOME Expenses Cost of Services Total Cost of Service Total Gross Profit General Expenses Lease and Building Assorted Bank Charges Marketing and Advertising Equipment Purchase/Repairs Laundry and Supplies Depreciation of Assets Employee Salaries (Receptionist) Business Insurance Professional Fees Telecommunication Office Furniture & Supplies Travel and Entertainment Costs Miscellaneous Costs Payroll Taxes & Benefits TOTAL GENERAL EXPENSES Other disbursements Grant & Loan Disbursement TOTAL OTHER EXPENSES TOTAL EXPENSES NET PROFIT BEFORE TAX Income Tax (estimated at 25%) NET PROFIT AFTER TAX Year 2 Year 3 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ 0 $0 $0 $ 0 $0 $0 $ 0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 10 Private & Confidential. ABC Spa Massage Therapy.
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