Pricing

Service Name Price/Service Discount Discounted Price

Hair Cut 100 100

Hair Cut (Student) 100 15% 85

Shave 75 75
Shave (Student) 75 10% 65
Hair Cut & Shave 160 160
Hair Cut & Shave (Student) 160 20% 128
Beard Trim 50 50
Customized Hair Cut 220 220
Customized Hair Cut (Student) 220 10% 198

Stylish Beard Cut 100 100

Here we choose the combination of value based pricing and competitive pricing. For setting a
price we focused on the other saloon which already exists. We analyzing their pricing and try
to choose our pricing close enough to their and also we set the price based on how much the
customer believes what we’re selling is worth,

We also offer some discounts to the students to attract them as they are our most targeted
customer. For having this discount, they have to come to our saloon with their uniform or ID
card or any kind of prove of their studentship.

11. Financial Plan

Assumptions

Some important assumptions before the financial planning:

 The business is expected to gain profit from the 2nd year. It might seem absurd as our
initial investment is so high, but quite feasible since the market is very responsive
towards newness and our variable cost is quite low.

The debt ratio of the invested money is less than our personal funding. Though the
total amount of debt is quite high, but the profit margin of the business will make it
easier to repay the debt.

It is assumed that the bank interest rate would be around 10 to 15 percentage.

The copyright act gives the business security from duplication for the next 70 years.

The sales forecast is made on the basis of market where growing number of
infrastructures would make it possible to increase sale every year.

It shouldn’t take much time to reach breakeven point.

The risk management team is prepared to overcome and be ready with any strategic
planning regarding any issues due to high profit gain.

Sales Forecast

Service Name Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
 Hair Cut 18250 18250 56575 56575 56575
Hair Cut (Student) 21900 25550 62050 62050 62050
Shave 10950 12775 45625 45625 45625
Shave (Student) 5475 7300 21900 21900 21900
Hair Cut & Shave 9125 10950 25550 25550 25550
Hair Cut & Shave (Student) 7300 7300 20075 20075 20075
Beard Trim 14600 18250 49275 49275 49275
Customized Hair Cut 5475 7300 23725 23725 23725
Customized Hair Cut 9125 10950 29200 29200 29200
(Student)
Stylish Beard Cut 10950 14600 18250 18250 18250
Total Customer 113150 133225 352225 352225 352225

Revenue Forecast

Year 2021 2022 2023 2024 2025

Total Cost 12918262.5 15163925 39633525 39633525 39633525

Though from the very beginning, our revenue is high, still we are in loss in the first year
because of the high cost in the first month. And as the fixed cost is high but not the variable
cost, we will be in the profitable position in a big margin from the second year.

Manufacturing Cost

Year 2021 2022 2023 2024 2025

Total Cost 1009100 1164900 1902000 1902000 1902000

Our manufacturing cost is quite low in comparison with total cost. It helps us to grow rapidly
in the business. For the first two year we will use two buses but from the third year, the
number of our buses will increases into five. So we can deliver more services that is why our
manufacturing cost is increasing at the third year.

Distribution & Transportation Cost

 Year 2021 2022 2023 2024 2025
Total Cost 1931250 220000 3421875 780000 780000

Our distribution and transportation cost which is basically the fixed cost for our business is
very high in the first year. But it would not be a problem as our revenue is also high from the
beginning.

Promotional Cost

Types of Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
Promotion
Campaign 300000 100000 375000 500000 500000
TVC 500000 300000 400000 400000 400000
Digital AV 100000 50000 275000 275000 250000
Bill-Board 50000 50000 150000 200000
Others 100000 100000 100000 100000 100000
Total Cost 1050000 600000 1150000 1425000 1450000

Labor Cost

Year 2021 2022 2023 2024 2025

Total Cost 8739131.25 9861962.5 23716762.5 23716762.5 23716762.5

As we all the six owners will be working as a manger, we will take less salary for the first
two years which is 30000 each. But from the third year, we will increase the salary for more
20000.

Our key employee is our barbers. We won’t give them the fixed salary. They will get 50% of
per service. Which will lead the to earn almost 30000 per month by working only 5 ours. And
if the work for fulltime which is 10 hours per day, they can earn above 60000 per month.

Cost of Goods Sold:

Types of Cost 2021 2022 2023 2024 2025

Manufacturin 1009100 1164900 1902000 1902000 1902000
g
Distributing 1931250 220000 3421875 780000 780000
Total Cost 2940350 1384900 5323875 2682000 2682000
Operating Expense

Types Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
Promotional 1050000 600000 1150000 1425000 1450000
Customer 150000 200000 300000 300000 300000
Relationship
Employee 50000 250000 800000 800000 800000
Benefit
Labor Cost 8739131.25 9861962.5 23716762.5 23716762.5 23716762.5
Others 250000 250000 250000 250000 250000
Expenses
Total Cost 10239131.25 11161962.5 26216762.5 26491762.5 26516762.5
Total Expenses

Year 2021 2022 2023 2024 2025

Total 13179481.25 12546862.5 31540637.5 29173762.5 29198762.5

Source and Application of Fund

Debt Financing 40% 1400000

Owners’ Equity 60% 2100000

Founder 420000

Co-Founder 1 336000

Co-Founder 2 336000

Co-Founder 3 336000

Co-Founder 4 336000

Co-Founder 5 336000
Total Equity 2100000

3500000

Forecasted Income Statement

 Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
Revenue 12918262.5 15163925 39633525 39633525 39633525
COGS 2940350 1384900 5323875 2682000 2682000
Gross Profit 9977912.5 13779025 34309650 36951525 36951525
Operating 10239131.25 11161962.5 26216762.5 26491762.5 26516762.5
Expenses
Operating Income -261218.75 2617062.5 8092887.5 10459762.5 10434762.5
Interest Paid 400000 400000 600000
Interest Expenses 210000 210000 150000 90000
Net Income -471218.75 2007062.5 7542887.5 9769762.5 10434762.5

Forecasted Balance Sheet

Asset

Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
Property Plant & 1931250 220000 3421875 780000 780000
Equipment
Intangible Assets 1050000 600000 1150000 1425000 1450000
Other long term 450000 700000 1350000 1350000 1350000
investments
Capital Work in Progress 3079225 6146900 15907525 18407525
Investment Property 105000 2315000 2240000 380000
Total Non Current 3536250 4599225 14383775 21702525 22367525
Assets

Inventory 1009100 1164900 1902000 1902000 1902000

Short term investments 2160000 2160000 3600000 3600000 3600000
Amount receivable from 2250000
related parties
Cash & cash equivalents 2940350 1384900 5323875 2682000 2682000
Advances, Deposits & 50000 400000 200000
Payments
Total Current Assets 6159450 5109800 13275875 8184000 8184000

Total Assets 9695700 9709025 27659650 29886525 30551525

Liabilities and Equity

 Year 2021 Year 2022 Year 2023 Year 2024 Year 2025
Stated capital 2100000
Retained Earnings -471218.75 2007062.5 7542887.5 9769762.5 10434762.5
Total Equity 1628781.25 2007062.5 7542887.5 9769762.5 10434762.5

Interest Bearing 1400000

Borrowings
Total Non 1400000
Current
Liabilities

Trade & other 6459131.25 7581962.5 19816762.5 19816762.5 19816762.5

payables
Amount due to 87787.5
related parties
Other Liabilities 120000 120000 300000 300000 300000
Total Current 6666918.75 7701962.5 20116762.5 20116762.5 20116762.5
Liabilities

Total Liabilities 9695700 9709025 27659650 29886525 30551525

Equity and
Liabilities

Cash Flow Projections

During the 5 years of our financial plan, we are hoping to convert all our assets into cash. All
the outward cash is expected to come in more than what went out. Thus, the business is
assumed and hoped to be a profitable business from the 2 nd year. For example, the balance
sheet projects that almost BDT 1cr is invested as cash outflow, and in income statement it is
seen that income of cash flow inwards the company is much more than that, more than that.

Performance Indicator

Types of Ratio Yeas 2021 Year 2022 Year 2023 Year 2024 Year 2025
Current Ratio 0.923882566 0.663441298 0.659940932 0.406824905 0.406824905
Inventory 12.80176643 13.01736201 20.83781546 20.83781546 20.83781546
Turnover (times)
Interest 12.46220238 53.95258333 116.2195833
Coverage Ratio
Debt to Equity 0.666666667 0.476190476 0.285714286
Ratio
Return on 0.234462578 0.308691338 0.394830752 0.393515705
Investment
Return on Assets 0.207005425 0.776894436 0.353213526 0.341546371
Asset Turnover 1.332370278 1.561838084 1.432900452 1.3261336 1.297268303
(times)

Current Ratio: The current ratio helps a company to understand its liquidity and how easily
the company will be able to pay off its liabilities. An initial current ratio of 0.924 means the
business can start paying off all the debts and loans from the very first month. Also, higher
current ratio means that the business can ask for loans from bank when needed. Over the 5
years the current ratio is expected to grow which indicates that the business can easily pay off
all the debts and loans. As the current ratio is low, it means that the business might be using
its assets properly. But it is safe to say that the financial plan does not cover the growth and
expansion plan. So expanding the business with new strategies would occur with the assets
that the business will generate.

Inventory Turnover: Inventory turnover shows how much the business can turns its
inventories into sales. So it is important to have a high rate. As for our business, the amount
is not very high in the beginning. Furthermore, the increasing of inventory turnover indicates
how well our business will grow in future.
Interest Coverage: A high amount of interest coverage means that the business that pay off
the loan taken from the bank. Having an interest coverage near 12 in 2 nd year means that we
are starting to pay our debt. And at the last month we don’t have any interest coverage
provide us the information that we will clear all loans before entering into 5th year.

Debt to Equity: Debt to equity ratio compares the investment of the investors and business
owners. The high debt to equity ratio is one major risk for this business. In our business,
initially we have a higher debt to equity ratio. But it starts decreasing massively in the
following year which indicates a good growth in the market.

Return on Investment: Keeping the time value of money over the 5 year period, the return
on investment in our business is very impressive. This suggests that the activities this
company do will make sure that the net profit after all the expenses is more than the initial
investment. Over the 5 years, even when investment increases, the return keeps on increasing
which results in higher net profit for the business.

Return on Assets: Again with a very high amount of return on assets from the very first
month, the business is expected to turn the assets into high profit. This just shows that the
business can turn the assets into net profit easily and effectively. In the third year, it decreases
because of the money we invested to buy 3 more buses.

Asset Turnover: This ratio suggests how a company is doing in terms of turning its assets
into revenue or sales. As the ratio is quite same for the time being, it indicates a constant
smooth growth of our business.

Breakeven point

To calculate the breakeven point in units, we have divided the total fixed cost with the
difference of selling price and variable cost. The two denominator cost is the cost per unit,
which is also called contribution margin.

So breakeven point (in times):

We will be in the loss in the 1st year of our business. But as our business growth is so high,
we will be in the breakeven point at the second year. In fact we will be at the breakeven point
at the very first month in the second year.