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School of Chemical and Biomedical Engineering Division of Bioengineering

AY2011-2012 BUSINESS PLAN


BG4902 HUMAN RESOURCE MANAGEMENT & ENTREPRENEURSHIP

Name: Balamurali Foo Chi Zhan Boo Jia Liang Sung Jian Xiong Loy York Song

Matric Number: 081898B19 081896J19 081947L19 081872F19 081989E19

Table of Contents
List of tables.............................................................................................................................. 6 List of figures ............................................................................................................................ 7 Declaration ............................................................................................................................... 8 Business Plan Assignment- Peer Assessment Rating ................................................................ 9 Executive Summary ................................................................................................................ 10 1. Introduction ........................................................................................................................ 11 1.1 The Company ................................................................................................................ 11 1.2 The Product .................................................................................................................. 11 1.3 Stakeholders ................................................................................................................. 12 1.4 The companys resource base ...................................................................................... 13 1.4.1 Tangible resources ................................................................................................. 13 1.4.2 Organizational capability........................................................................................ 13 2. Market Analysis Summary .................................................................................................. 14 2.1 Market Overview .......................................................................................................... 14 2.2 Specific Market Segment .............................................................................................. 14 2.2.1 Target Market Segment ......................................................................................... 14 2.2.2 Size of Target Market Segment.............................................................................. 15 2.3 Market Growth Rate ..................................................................................................... 16 2.4 Market Needs ............................................................................................................... 16 2.5 Competition .................................................................................................................. 17 2.6 Market Opportunity ..................................................................................................... 17 2.6.1 SWOT Analysis ....................................................................................................... 17 3. Development & Production ................................................................................................ 20 3.1 Production Process ....................................................................................................... 20 3.1.1 Development ......................................................................................................... 20 2|Page

3.1.1.1 Employee development .................................................................................. 20 3.1.2.2 Holding area and personal trimming lounge................................................... 20 3.1.2.3 Multiple attractions ........................................................................................ 21 3.1.2.4 Sale of hair care products ............................................................................... 21 3.1.2.5 Membership .................................................................................................... 21 3.1.2 Service and Production Delivery ............................................................................ 22 3.1.2.1 Location of implementation ......................................................................... 22 3.1.2.2 Service delivery ............................................................................................... 22 3.1.2.3 Product delivery .............................................................................................. 22 3.1.3 Difficulties and risks, and strategies to minimize them ......................................... 22 3.1.3.1 Niche market ................................................................................................ 22 3.1.3.2 Damaging of equipment.................................................................................. 23 3.1.3.3 Safety concerns ............................................................................................ 23 3.1.4 Deployment of competencies................................................................................ 23 3.2 Resource Requirements and In-house Strengths ......................................................... 24 3.2.1 Financial ................................................................................................................. 24 3.2.2 Human ................................................................................................................... 25 3.2.3 Technological ......................................................................................................... 25 3.3 Quality Assurance ......................................................................................................... 25 3.3.1 Firms perspective.................................................................................................. 25 3.3.2 Quality dimensions ................................................................................................ 25 3.3.3 Definitions and measurements.............................................................................. 26 4. Marketing Strategy ............................................................................................................. 28 4.1 Market Positioning ....................................................................................................... 28 4.1.1 Market positioning with respect to competitors ................................................... 28 4.2 Marketing Strategies .................................................................................................... 29 3|Page

4.2.1 Product Strategies ................................................................................................. 29 4.2.2 Pricing Strategies ................................................................................................... 31 4.2.2.1 Competition-Based Pricing .............................................................................. 31 4.2.2.2 Market Penetration Pricing ............................................................................. 32 4.2.3 Distribution strategies ........................................................................................... 32 4.2.4 Advertising Strategies ............................................................................................ 33 4.2.5 Promotional Strategies .......................................................................................... 33 4.2.6 Relationship Marketing Strategies......................................................................... 34 4.3 Sales Forecast ............................................................................................................... 35 4.3.1 Sales Forecast for the next 5 years ........................................................................ 35 5. Financial Plan ...................................................................................................................... 36 5.1 Startup .......................................................................................................................... 36 5.2 Break-even Analysis ...................................................................................................... 39 5.3 Revenue Forecast ......................................................................................................... 39 5.4 Financial Statements .................................................................................................... 40 5.4.1 Year of 2013........................................................................................................... 40 5.4.2 Year of 2014........................................................................................................... 41 5.4.3 Year of 2015........................................................................................................... 43 5.4.4 Year of 2016........................................................................................................... 44 5.4.5 Year of 2017........................................................................................................... 46 6. Organization & Management ............................................................................................. 48 6.1 Key Personnel ............................................................................................................... 48 6.1.1 Chief Executive Officer........................................................................................... 48 6.1.2 Chief Financial Officer ............................................................................................ 49 6.1.3 Chief Marketing Officer ......................................................................................... 49 6.1.4 Chief Human Resources Officer ............................................................................. 49 4|Page

6.1.5 Chief Operations Officer ........................................................................................ 49 7. Ownership .......................................................................................................................... 50 8. Critical Risks and Contingencies ......................................................................................... 51 8.1 Declining birth rates in the long run ............................................................................. 52 8.2 Financial constraints ..................................................................................................... 53 8.3 Inexperienced management......................................................................................... 53 8.4 Pricing ........................................................................................................................... 53 8.5 Failure to maintain productivity ................................................................................... 53 8.6 Low retention rate of hairstylists.................................................................................. 54 8.7 Worst case scenario...................................................................................................... 54 9. Milestones .......................................................................................................................... 55 10. Conclusion ........................................................................................................................ 56 11. References ........................................................................................................................ 57 Appendix................................................................................................................................. 58

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List of tables
Table 1: Identification of Stakeholders ................................................................................... 12 Table 2: Key Stakeholders....................................................................................................... 13 Table 3: Age Distribution of the Resident Population [1] ....................................................... 14 Table 4: Top 8 locations in Singapore with the highest target market segment [1] ............... 15 Table 5: Manpower allocation of the hairstylists and operation managers ........................... 24 Table 6: Definitions and measurements of the quality dimensions ....................................... 26 Table 7: Competitor Analysis .................................................................................................. 29 Table 8: Product attributes and benefits ................................................................................ 31 Table 9: Pricing of our main competitors ............................................................................... 31 Table 10: Resident Population by Area and Type of Housing [3] ........................................... 33 Table 11: Equity Distribution .................................................................................................. 50 Table 12: Fundamental Guidelines ......................................................................................... 50 Table 13: Porter's Five Forces ................................................................................................. 52

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List of figures
Figure 1: Google Map image of Jurong West ......................................................................... 15 Figure 2: Singapore total population size [1] .......................................................................... 16 Figure 3: Estimated sales forecast for the next 5 years .......................................................... 35 Figure 4: Sales forecast for best and worst case scenarios .................................................... 36 Figure 5: Teddy Trims Management Structure ....................................................................... 48 Figure 6: Favourable Factors for Business .............................................................................. 51

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Declaration

DECLARATION

We, the members of Team 5 of Tutorial Group B41, declare that this Business Plan document is an original piece of written work by ourselves, and that the idea and contents have not been copied or adapted from any published sources or the Internet.

Team members: Name 1) Balamurali 2) Boo Jia Liang 3) Foo Chi Zhan 4) Sung Jian Xiong 5) Loy York Song

Date: 06/10/11 Signature

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Business Plan Assignment- Peer Assessment Rating


Tutorial Group No: B41 Name of 1) Balamurali Member s Rating 1) Members contribution to the projects content 2) Members attendance at team meetings 3) Members cooperation and assistance to team members 4) Total Rating 60% Remarks 30% Remarks 10% Remarks 2% 2% 2% 2% 2% 6% 6% 6% 6% 6% 12% 12% 12% 12% 12% 2) Boo Jia Liang 3) Foo Chi Zhan Team No: 5 4) Sung Jian Xiong 5) Loy York Song 6)

CRITERIA

100% Signature

20%

20%

20%

20%

20%

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Executive Summary
Teddy Trims is a hair salon which caters to a niche target market of hair services for children aged nine and below. Teddy Trims aims to create a unique and memorable experience for the children as well as for the parents. For many parents, bringing their child for a haircut is often a frustrating experience. Traditional salons provide poor service to children, as they are unable to deal with children who are afraid of getting a haircut. Teddy Trims offers a solution for parents with our unique kids salon. Although 3 other kids salon exists in the market, Teddy Trims will be

differentiated with our meticulous attention to customer service and an emphasis on the element of fun. Teddy Trims will also be a cut above the rest through the provision of quality service with our professional hairstylists trained in child management. Through our unheralded customer attention and unique salon design, it is believed that Teddy Trims will be in an unprecedented position to penetrate the market. The strategic position of our salon in Jurong Point, a mall that is well-travelled by our target market of middle to upper class parents will supplement the companys drive towards serving a large customer base. Teddy Trims will be managed by the five founding members of the company, whom are key personnel of widespread expertise and experience. During the first month of operation, we expect a modest market penetration rate of 2%, with an increase of 0.5% every 3 months. By the end of the 5th year, we expect to obtain a market penetration rate of 6%. Due to our limited retail space, we estimate that the maximum penetration rate would be around 6.5%. In order to increase our maximum possible penetration rate, Teddy Trims would consider expansion through the opening of another outlet in another area after the initial 5 years. A projected amount of $350,000 will be required to start Teddy Trims with $100,000 coming from all investors and the remaining from bank loans. Major proceeds include $150,000 for

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rent deposit, $50,000 for renovation, $15,000 for monthly rental and $15,000 for employee development.

1. Introduction
1.1 The Company
For many parents, bringing their child for a haircut has always been a chore. Traditional salons and barbers are often not designed with children in mind, and a visit to such places often invokes fear among young children. The sight of scissors and the sound of shavers further aggravate the element of fear, making traditional barbers and salons an intimidating place for children. As such, parents often have to spend a large amount of time and effort to coax their child during the haircut. To add on to the problem, many barbers and salons are ill-prepared to be patient and careful when handling children, which often leaves parents dissatisfied with the service. Our salon hopes to solve this problem by bringing to the market our unique concept of a childrens salon that is designed solely with children and parents in mind. With our salon, our company hopes to provide relief for parents and assure them that bringing their child for a haircut does not have to be frustrating, and that it can be a fun experience.

1.2 The Product


Teddy Trims is targeted at children between the ages of 0-9, and it will be a childrens salon that focus on the fun element, with colourful and cheerful dcor carefully selected to create a vibrant ambience, making it a fun and welcoming environment for children. Our salon will also be furnished with books, toys, and even iPads to keep the children entertained while they are getting a haircut. Our commitment to create an element of fun for the children will change their mindset that having a haircut is a fearful experience, and that it can be fun. Furthermore, our hairstylists are specially trained to be gentle and patient when handling children. This will give parents a peace of mind, knowing that their child will be given a professional haircut by someone who is trained to handle children. Hence with our salon, going for a haircut will no longer have to be a stressful experience for both parents and children. 11 | P a g e

1.3 Stakeholders
The stakeholders are identified as shown in Table 1.

Type of Stakeholder
Industry Participants (Major Competitors) Customers (Children) Customers

Assessment
Governed by large hair salon companies Big companies serve as core determinants of competitionShape the hair grooming industry Strategies adopted: technology differentiation i.e. high-tech hair dressing equipment & cost leadership i.e. setting competitive prices More concerned with the quality of service Play a part in terms of returning back to salon

Most Important stakeholders Decision making to patronize service depends on this group Should not (Parents) neglect them Small but significant Issue license for hair stylists Government No government license No licensed hair stylists Shortage of manpower + No confidence in hair salon dealing with their children As students, no initial capital Banks More likely to turn to banks for start-up loans Banks will hold an indirect stake on our hair salon business Provide business insurance Insurers Cover for every operation and the risk our business face Table 1: Identification of Stakeholders

Teddy Trims will serve to increase the value of our stakeholders at all times. Particular attention will be paid to our key stakeholders namely, customers and our competitors. A brief analysis in terms of identifying key stakeholders is illustrated in Table 2.

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Type of Power (Influence Industry)


Low Low
Government Do not perceive hair salon as one of a kind for them to be involved in Influence our pricing strategy Determine profitability margin

Level of Interest

Stakeholder

Description

High

High

Low

High

Large competitors influencing strategy of company Parents Children Banks Insurers

High involvement of finance No influence on target market

Table 2: Key Stakeholders

1.4 The companys resource base


Through our resources, we intend to shape our core competency of delivering superior service and experience to our customers and to develop on-going relationships with our customers. 1.4.1 Tangible resources Our tangible resources include the furnishings and equipment that were invested. They include structures like the playground, the unique personal trimming lounges and the childproof furniture. 1.4.2 Organizational capability Our salon will invest a substantial amount of money on the development of our hairstylists. Our hairstylists will be sent for child management programs to be proficiently trained to handle children.

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2. Market Analysis Summary


2.1 Market Overview
Singapore has approximately 400,000 children aged 9 and below as shown in Table 3 with a major proportion of working parents. This market segment consists of working parents with children who value a work-life balance and are looking to increase spending time with their children. Spending time watching their children enjoying their haircut would be one of the valued moments. With that in mind, we plan to target our marketing campaigns at parents who are the decision makers of their children.

Age 04 59 Total

Population ('000) 188.2 208.1 396.3

Table 3: Age Distribution of the Resident Population [1]

2.2 Specific Market Segment


2.2.1 Target Market Segment Our prospective market segment will cater to the middle and upper income families with children in the major heartlands. These classes of families will see both working parents who value convenience and are able to afford our services. Teddy Trims will be positioned in Jurong West and will service the largest children residence in the West of Singapore as shown in the highlighted portion of Figure 1, detailed analysis will be presented in section 4.2.3, Distribution Strategies.

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Figure 1: Google Map image of Jurong West

2.2.2 Size of Target Market Segment The sizeable market of major heartlands allows for outlets to be located near them and still remain profitable. We narrowed the outlet locations to the top 8 zones with the highest population of children ranging from 9 years and below. Jurong West has been chosen and the selection criterion for our store front is based on the highest population size. [2]

Location 0-4 Ang Mo Kio Bukit Merah Hougang Jurong West Sengkang Tampines Woodlands Yishun 7.6 7.8 8.9 15.5 13.3 11.7 13.8 8.5

Age Group ('000) 5-9 8.2 6.8 10.8 16.8 12.4 13.6 16.6 9.8 Total (0-9) 15.8 14.6 19.7 32.3 25.7 25.3 30.4 18.3

Table 4: Top 8 locations in Singapore with the highest target market segment [1]

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2.3 Market Growth Rate


Singapores total population has seen a steady growth in the past decade as shown in Figure
2. The total population has expanded by 2.1% in 2011 as at end-June 2011 from 2010 due to

the increased number of citizens and non-residents. Based on the 2.1% growth rate as at end-June 2011, we are certain that the market remains viable in the remaining of 2011 and in the years ahead.

Total Singapore Population


6000 5000 Thousand 4000 3000 2000 1000 0 1990 2000 2005 2006 2007 Years 2008 2009 2010 2011

Figure 2: Singapore total population size [1]

2.4 Market Needs


Teddy Trims provides a conducive and friendly environment to ensure that young children receive the best and non-traumatizing haircut treatment. Teddy Trims seeks to offer the following to its customers.
1. Customer Service: Providing services tailored to individual customer with undivided attention and care is what we train all our employees to achieve. 2. Competitive Pricing: Teddy Trims offers specialized services at slightly higher rates compared to regular hair salons. 3. Convenience: Teddy Trims will be located at Jurong point shopping mall in Jurong West, parents will be allowed to accompany their children in a spacious glass enclosure during the hair styling process. This enclosure provides maximum privacy and ensures maximum attention of our hairstylist.

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2.5 Competition
Our competitors include the following:
1. Quick Salons: Quick salons are mostly franchised businesses; hence they offer standardized services across the different branches. Most of their hairstylists vary greatly in terms of skill, and therefore customers satisfaction is not guaranteed. Their target market covers a wide age group, and hence they are not equipped with the necessary facilities catered to the welfare of young children. In addition, their hairstylists may not have the relevant experience when it comes to handling young children. Examples of quick salons include QB house, EC house and Supercuts. 2. Traditional Barbers: They serve customers in a traditional manner such as walk in service and rarely take appointments. They lack modern hair equipment, and are skilled in the conservative way of cutting hair. 3. Niche Salons: These groups of salons target a specific niche of the market segment. They are therefore able to better focus their efforts and serve the customers better. This is where we plan to position ourselves in the market.

2.6 Market Opportunity


2.6.1 SWOT Analysis
Strength

The outlet will be positioned in an excellent retail space located in a mall with high customer traffic. Well-trained employees with good hair cutting skills and a repertoire of hairstyle range coupled with great customer service will be hired to create an outstanding brand image. Our competitive pricing and loyalty packages provide customers a better alternative to our existing competitors. Our wide range of services will provide better customization options for customers to choose from.
Weakness

As a new entrant into a new market, Teddy Trims will lack brand image among most children and parents which will translate to poor productivity of the business. Aggressive marketing strategies which contribute to higher costs will be pursued as a result. Continuous changes in fashion and style will require our business to be constantly updated. As such employees will be sent for training on a regular basis which translates to additional costs. Constant revamping of current hairstyling products will add on to the cost. 17 | P a g e

These costs associated will restrain our budget flexibility, which has the potential to undermine the companys profit.
Opportunities

A growing market trend for kids hair grooming services has been largely observed in an improved economic environment such as Singapore, which is attributed to social factors. An interesting social phenomenon which is being caught on in Singapore and it is referred to as Kids Getting Older Younger (KGOY). This phenomenon is characterized by the quick maturing of children due to influences of media. As such, the needs of children have evolved over the years as compared to the previous generations. Teddy Trims aims to take advantage of this opportunity by satisfying these differentiated needs.

Under the influence of media, children are becoming more aware of their grooming especially with their hair. Professional hair grooming has evolved from a luxury to a basic necessity in todays context. An increasing amount of children have shifted away from the traditional barbershops and towards professional hair salons for their hair grooming needs. This can be attributed to the constant economic growth over the past decade which has increased the affluence level. And thus, it enabled children to afford such services at a younger age. Modern family structures with one or two children supplement this shift towards hair salons as well. The increased tendency for parents to pamper their children has seen increased allocation of financial resources out the children. Hence, the increased purchasing power of these children will serve as a positive correlation that will fuel our business.

The hair salon industries in Singapore generally cater to the adults and teenagers grooming needs and tend to neglect the younger children. A specialized salon dedicated to serving the children is a rare sight in Singapore which suggests untapped childrens hair salon market. By being a pioneer in this unexploited market, we can indeed create sustainable market value for the business.
Threats

Common threats for the business exist in the form of competition and the traditional thinking of parents. Competition is more likely to come from established salons such as Jean 18 | P a g e

Yip, Reds Hairdressing and Supercuts who possess the expertise and financial capabilities to venture into our target market. Others include QB House and Snip Avenue that are strategically positioned in heartlands and provide value for money services.

Traditional parents bear opinions such as the cultivation of superficial views about beauty if children are exposed to beauty at a tender age and that these opinions will affect their perceptions in the future. They will demonstrate strong rejection to our concept which cannot be afforded in the confines of a small population pool in Singapore.

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3. Development & Production


3.1 Production Process
3.1.1 Development

3.1.1.1 Employee development At Teddy Trims, we believe in providing training for our employees such that they are equipped with the appropriate child management skills. All three professional hairstylists and operation managers will have to undergo certified courses where they will pick up relevant skills. Furthermore, the operation managers will also attend basic hairdressing course to familiarise with tools of the trade. 3.1.2.2 Holding area and personal trimming lounge When customers first arrive at the salon, they will be brought to the general holding area which is equipped with numerous toys and books. This is such that the parents can entertain their child while waiting for their turn. Moreover, the holding area also comes with an indoor playground for the more active children.

When it is their turn for the haircut, they will be led to a personal trimming lounge that caters to one customer at a time. This prevents the child from getting distracted by other children. Furthermore, iPads will be provided to the customer such that the child can be entertained during the haircut.

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3.1.2.3 Multiple attractions The highlight of our company is that we focus on the fun element throughout the haircut experience. This is achieved by providing multiple attractions within the salon. Brightly coloured wallpapers and a combination of toys and books will be used to create a vibrant environment to attract the children. iPads will be provided in the personal trimming lounges such that the child will be entertained during the actual process of the haircut. Specialized hair care products for children such as sweet smelling shampoos, wax and hairspray will also be used to entice the children such that they will want to visit our salon again in the future. A rough layout of the salon is shown in the Appendix.

3.1.2.4 Sale of hair care products The specialized hair care products for children will also be available for purchase if the customers are satisfied after using them. 3.1.2.5 Membership In order to reward our loyal customers, we will have a membership program where it comes in the form of a sticker album. At the end of each haircut, the child will earn a sticker from one of the operation managers at the reception counter. Whenever ten stickers are earned, the customer will earn a complimentary hair cut from our company. Moreover, customers will be able to enjoy 50% off on the childs birthday month.

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3.1.2 Service and Production Delivery


3.1.2.1 Location of implementation

As a new start-up, we have decided to locate our first outlet in the predominantly heartland area of Jurong West. In particular, the shopping mall of Jurong Point is chosen as it was recently renovated and currently offers a large range of stores. With over 400 stores conveniently located over 7 floors, it caters to the needs of families and will help to lure in our target market accordingly.

We expect that it will take time to establish a brand and product position, and as well as a good customer base. Hence, we will focus our attention primarily on creating an excellent customer experience at the first outlet before moving on to a wider distribution network of salons. The exact details of how the location is determined will be further explained in section 4.2.3, Distribution Strategies. 3.1.2.2 Service delivery The price of a haircut in a particular hair salon is a statement of its brand position and is indicative of the quality of service provided. As such, we have decided to place the price of our core service at $20.00. The exact details of how we came to this price point will be further explained in section 4.2.2, Pricing Strategies. 3.1.2.3 Product delivery On top of providing the core service of a haircut, we will also be selling various flavours of kids shampoo that our salon uses. The shampoos sweet smell will serve to attract the children when they use it to shower at home. On top of them, the shampoo is also organic and this gives the parents an added sense of assurance when using it for the precious son or daughter. These factors will allow us to make an impression even after the customers have returned to their homes and will serve to entice the parents to patronize our salon again.
3.1.3 Difficulties and risks, and strategies to minimize them 3.1.3.1 Niche market

One of the major difficulties is that we are tackling a niche market that deals specifically with hairdressing for children. This might turn out to be a problem as the hairstylists involved not only have to provide the haircut but will also have to deal with the 22 | P a g e

unpredictable moods of the children as well. Similarly, the operation managers will need to have child management skills as well as knowledge in the field of hairdressing. The solution to this issue is that the hairstylists and operation managers will have to attend certified training lessons such that they will be equipped with the skills that they lack. 3.1.3.2 Damaging of equipment Damaging of equipment such as toys and iPads can be a major problem as their replacements and repairs will incur costs. This is especially the case in our business as young children and toddlers are not mindful when handling such items. As such, we need to ensure that delicate devices such as the iPads are protected in a sturdy casing. Furthermore, we will install several security cameras in the vicinity and use the footage as evidence in the event that any parents deny that the equipment damage is caused by their child. However, we are mindful that this is a last resort as such actions might affect our customer base in the long run. 3.1.3.3 Safety concerns Undoubtedly, safety is a critical issue and we will want to ensure that accidents do not happen to any of our young customers. This is made harder by the fact that young children tend to wander off or run around when they are not controlled. This will in turn increase the occurrence of accidents and the reputation of our company will take a huge hit if it happens. Hence, in order to minimize the chances of this situation transpiring, we will have to ensure that the parents as well as a staff are accompanying the child at all times. 3.1.4 Deployment of competencies As mentioned above, the day-to-day operations of the salon will be carried out by 3 hairstylists and 2 operation managers. The primary job scope of the hairstylists will be to collect the customer from the holding area and lead them to their personal trimming lounge for the haircut service. Upon completion of the haircut, they will hand them over to the operation manager at the reception counter where the payment is made. The job scope of the operation manager will be to welcome incoming customers at the reception counter and also settle the payment after a haircut. The operation manager will 23 | P a g e

also be responsible for scheduling appointments for the customers as well as oversee the general operation of the outlet.

Table 5 shows how the shifts of the various personnel will be allocated. The 6-day shift for the hairstylists will be rotated among the 3 hairstylists on a weekly basis.

Hairstylists Mon A B C X X X X X X Tue Wed

Shifts Thu X Fri X Sat X X X X X Sun X X X

Operation Manager A B Mon X Tue X X Wed

Shifts Thu Fri X X X Sat X X Sun X X

Table 5: Manpower allocation of the hairstylists and operation managers

3.2 Resource Requirements and In-house Strengths


3.2.1 Financial Due to the nature of our venture, a huge start-up cost will be required and this amount of money would come from two primary sources, namely a bank loan and an investment by the owners. This business plan will serve to convince the bank that our proposed idea is feasible and that the loan will go through successfully. Furthermore, the fact that we are investing our own money into the business will give the bank that an added assurance that we are fully committed to our cause. Detailed financial plans will be presented in section 7.1, Financial Resources.

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3.2.2 Human As mentioned above, the day-to-day operations of the salon will be carried out by 3 hairstylists and 2 owners of the company, who will act as operation managers. The hairstylists are all certified professionals and are equipped with child management skills as they have underwent the proper trainings scheduled by our company. The 2 owners of the company are active investors and will also possess hairdressing knowledge such that they can make the appropriate decisions if any situation were to occur. The remaining 3 owners of the company will be silent investors and this allows the company to have a better profit margin. If a second outlet is to be opened, they can then become active investors as they act as the operation managers of that new outlet. 3.2.3 Technological The main technological resource required by our business is the iPads used to entertain the child during the haircut. These devices are a good investment as they not only attract the attention of the child but also provide a sense of interaction as compared to watching a cartoon on a regular television monitor.

3.3 Quality Assurance


3.3.1 Firms perspective At Teddy Trims, we firmly believe that the quality of the whole haircut experience is of prime importance as it allows us to deliver the best service to our customers. We also believe in providing value-added amenities that will help to keep us competitive and differentiate us from our competitors. 3.3.2 Quality dimensions The quality of the haircut experience can be quantified by five main factors, namely the quality of the product, quality of the service, reliability of the equipment, safety of the customer and customer satisfaction.

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3.3.3 Definitions and measurements In order to determine the individual quality dimensions, each of them must be defined and measured so that the overall quality of the haircut experience can be obtained. Table 6 summarizes how our company maintains its quality assurance to the customers. Quality Dimension Quality of the product Definition Determined by the quarterly combined unit sales of shampoo, wax and hairspray. 5: 4: 3: 2: 1: Quality of the service Determined by the average time taken for one haircut. (inclusive of waiting time) 5: 4: 3: 2: 1: Reliability of the equipment Determined by the average number of equipment breakdown per week. 5: 4: 3: 2: 1: Safety of the customer Determined by the number of 5: Measurement > 70 units 50-70 units 30-50 units 10-30 units < 10 units < 20 mins / haircut 20-30 mins / haircut 30-40 mins / haircut 40-50 mins / haircut > 50 mins / haircut 0 time / week 1 times / week 2 times / week 3 times / week > 3 times / week 0 accident 1 accident > 1 accident Excellent Good Average Poor Very Poor /25

accidents that happened within 3: the specified quarter. Customer Satisfaction Determined by the average rating given by customer after each haircut. 1: 5: 4: 3: 2: 1:

Overall Quality Rating:


Table 6: Definitions and measurements of the quality dimensions

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Based on the quarterly results of the quality measurements, appropriate actions would be taken to improve the quality of the whole haircut experience for the next three months. Note that the measurements for the various quality dimensions can be revised accordingly based on the change in size of our customer base.

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4. Marketing Strategy
4.1 Market Positioning
Teddy Trims will primarily position itself as a salon that is designed solely for children between the ages of 0-9. Although our service is targeted at children, the target audiences for our marketing strategies are the parents of the children, as they are often the decision makers. Our salon will position itself as a kids salon that offers a solution for parents whom are often frustrated with traditional salons and barbers who are unable to handle children well during a haircut. Furthermore, such traditional salons and barbers are not designed with children in mind, creating a fearful and intimidating environment for children. Therefore, most children grow up with a fear of getting a haircut and parents often have a difficult time coaxing and convincing their children to go for a haircut. Teddy Trims will position itself as a salon that provides superior service and experience for both the parents and children, while focusing on the fun element in order to create a colourful and welcoming environment for the children. 4.1.1 Market positioning with respect to competitors As mentioned in market trends segment, our main competitors are Junior League, Curly & Spike, and Baby Spa. Although the 3 companies are also in the kids salon business, there are significant differences in their market positioning. The comparison of the market positioning of our 3 main competitors are shown in Table 7 below.

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Competitor Junior League

Market Positioning A children salon that provides convenience for parents

Strength High market presence, with 5 different outlets in Singapore Placed in locations that are convenient for parents e.g. inside ToysRUs Trendy dcor including plush couches and even a fashion runway for children to catwalk Provides a full package of services for children from spas to massages to haircut

Weaknesses Individual salons are small in size Lack of proper dcor and ambience Low customer perceived value Does not focus on those parents who are looking for a simple, fuss-free haircut for their children Not a specialized children salon Haircuts offered may not be professional

Curly & Spike

Baby Spa

A childrens salon that provides stylish and fashionable hair services for children such as hair perm, dye etc. A one-stop shop that provides child services such as spa treatment and haircut

Table 7: Competitor Analysis

From the analysis of our competitors as shown above, we can see that among the weaknesses of our competitors, there is a gap which can be exploited. We can see that currently, there is an opportunity for us to enter the market with our unique concept of a specialized children salon which focuses on the fun element while providing excellent service and experience for both parents and children. Therefore, it is advantageous for us to enter the market, as our unique concept and strength will help differentiate us from our competitors and gain a foothold in the market.

4.2 Marketing Strategies


4.2.1 Product Strategies Our product is defined as the entire experience for both parents and children during the process of getting a haircut. In order to create a pleasant experience, various strategies would be used. First of all, the dcor will be specially designed in order to create a cheerful and colourful environment that is attractive to children. The furnishing will also be selected with kids in mind. As mentioned earlier, instead of traditional seats, children will sit on 29 | P a g e

customized airplane, animal and racing car seats while getting a haircut. The furniture in the salon will also be child-proof, with no sharp edges to ensure the safety of the children. In order to keep the children entertained, the waiting area will be well equipped with books and TVs to ensure that the children will not get restless while waiting for their turn. iPads will also be provided to the children to entertain and distract them while they are having their haircuts. Instead of a traditional salon, where seats are placed in close proximity in front of a mirror, personal trimming lounges will be used for individual haircuts. This provides a cosy and comfortable environment for parents and children. Furthermore, children are less likely to be distracted by others when haircuts are held in the privacy of individual rooms. Our hairstylist will also be specially selected and trained to be patient and gentle when handling children. The equipment and products used in our salon will also be specially selected with kids in mind. For example, the scissors and shavers used will be specially customized. The scissors and shavers will have cartoon designs on them in order to appear less intimidating for children. The shavers used will also be a silent one, and our hairstylists will also be instructed to use the shaver minimally, as the sound of the shaver often intimidates young children. The shampoo used will also be specially formulated to be mild and sweet smelling to cater to children.
Table 8 below summarizes the product strategies and attributes, along with the benefits

which it brings to customers.

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Features Colourful dcor

Function Creates a cheerful and colourful environment Creates a safe environment for children Increases the fun element for children To provide entertainment for children while waiting or while getting a haircut To provide a private and cozy environment for haircuts To provide excellent service with children in mind Ensures that the equipment used are child-friendly To provide a mild and gentle shampoo that is suitable for children

Benefits Attractive and fun environment for the children, makes them feel at ease Parents will not have to worry about their children getting injured at the salon Children will feel more at ease when they are sitting on such seats when getting a haircut Children will feel less restless while waiting for a haircut, and be distracted while getting a haircut Children will feel more at ease and not be distracted by others Children will be handled gently and carefully while getting a haircut Children will feel less intimidated while getting a haircut Parents will feel more at ease that their children are not exposed to harmful chemicals in adult shampoos

Child-Proof Furniture Specially designed airplane and racing car seats Books, TVs and iPads Small individual rooms for haircuts Specially trained hairstylists Customized scissors and shavers Shampoo specially catered for children

Table 8: Product attributes and benefits

4.2.2 Pricing Strategies Our salon has decided to adopt two pricing strategies, namely competition-based pricing strategy and market penetration pricing strategy. 4.2.2.1 Competition-Based Pricing It is important to consider the pricing of our main competitors while determining our own pricing strategy. The prices that our main competitors are currently charging are shown in
Table 9.

Competitor Junior League Curly & Spike Baby Spa


Table 9: Pricing of our main competitors

Pricing $20 $20 $16

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In order to be competitively attractive in terms of pricing, our salon has to closely match the prices charged by our main competitors. However, we feel that it is unwise for us to undercut the prices charged by our competitors, as it gives a perceived lower quality of service in the minds of the consumers. Furthermore, since the market positioning of our salon is one that provides excellent service and experience, setting too low a price will contradict and weaken our brand image and identity. Therefore, based on a competitionbased strategy, our salon has decided to set our price at $20, matching the prices charged by Junior League and Curly & Spike. 4.2.2.2 Market Penetration Pricing Currently, there remains a substantial number of parents whom believe that it is a waste of money to bring their children to specialized salons, and that they rather bring their children to the lower-end salons and barbers (product substitutes) such as Snip Avenue or QB house even if it means having to coax and convince their children whom are reluctant to have a haircut at those places. To convince these parents to try out our services and to switch to our salon, we have decided to use a market penetration pricing strategy. Using this strategy, we will charge a promotional price of $15 during the initial launch of our salon. Furthermore, a lower price would also encourage parents to switch to us from our main competitors such as Junior League, Curly & Spike and Baby Spa. In conclusion, our pricing strategy would be to offer an introductory promotional price of $15, followed by a price of $20 after this initial period. 4.2.3 Distribution strategies Our distribution strategy is focused on setting up a single salon in a location that is highly populated by our target audience. From Table 4, we can see that Jurong West and Woodlands has the highest population of our target audience of kids between 0-9 years old. Another point that we have to consider is the household income of the families living in those areas, as we are targeting our services at middle to upper income families. To estimate the average household income of the families in those areas, we looked at the types of housing available in those areas. Comparing between Jurong West and Woodlands in Table 10, we can see that there are more people living in 5-Room flats, condominiums and 32 | P a g e

landed properties in Jurong West than in Woodlands. Hence, we can conclude that Jurong West is the most favourable location for setting up our children salon.

Area

5-Room and Executive Flats

Condominiums and Private Flats 11,110

Landed Properties 4,106

Total

Jurong West Woodlands

105,910

121,126

107,070

9,023

537

116,630

Table 10: Resident Population by Area and Type of Housing [3]

4.2.4 Advertising Strategies For our salon, we decided to focus our advertising efforts on print media like magazines such as Young Parents, which are commonly read by our target audience. According to statistics released by SPH, 70% readers of young parents are affluent, with a household income of more than $6000 [2]. This makes Young Parents an effective medium to reach out to our target audience. Furthermore, our company has also decided to use social media to reach out to our target audience. Through Facebook, we will post regular updates on our salon and also to collect feedback from our customers. Other than for advertising purposes, social media also serves as a way to create ongoing relationships with our customers. Using social media to reach out to our target audience is also advantageous for us, as none of our competitors have used social media thus far. 4.2.5 Promotional Strategies In order to avoid a cold reception during our official launch period, our company has decided to have a soft launch in order to generate greater publicity and buzz among our target audience before the official opening of our salon.

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During the soft launch period, we intend to offer our services at a heavily discounted rate by issuing vouchers. The distribution of vouchers will be done in collaboration with ToysRus, a major toys retailer in Singapore. The reason ToysRus was chosen is because their customers are similar to our target audience. Offering our services to a limited audience at a heavily discounted rate ensures that our salon will be filled during the soft launch period, will generate publicity and buzz among the public whom are curious to try out our services. Therefore, by having a soft launch period, we can ensure that there will be enough demand during our official launch period. During our official launch period, we will open our services to the general public at an introductory price of $15, as mentioned in section 4.2.2.2. Other than discounts, our salon will also distribute balloons with our logo to children during the launch period in order to generate more awareness of our opening. 4.2.6 Relationship Marketing Strategies Being in an industry where there are low barriers to entry, substitutes and copycat salons can easily enter the market, diluting our market share. Therefore, it is important for us to focus on customer retention and satisfaction by creating on-going relationships with our customers. In order to encourage customer retention and loyalty, our salon will introduce loyalty programs such as loyalty cards whereby customers would receive a free haircut on their 10th visit. The loyalty cards would be printed in the form of sticker albums, and the children would receive a sticker upon each visit to the salon. These sticker albums are more effective than traditional loyalty cards, as it encourages children to return to our salon in order to complete their sticker collection. Furthermore, we will also offer free membership programs where members would enjoy special privileges such as 50% discount on haircuts done during the birthday month of the children. Other than using monetary rewards to encourage customer retention, our salon will also focus on developing interpersonal relationships with our customers by ensuring excellent service quality and customer satisfaction. Furthermore, we intend to send personalized

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birthday greeting cards to the children during their birthday. This develops a unique and long-term relationship with customers, resulting in customer retention and loyalty.

4.3 Sales Forecast


4.3.1 Sales Forecast for the next 5 years Although haircuts are a service that is required all year round, there are still seasonal trends associated with haircuts. These trends are due to school holidays, as parents tend to go on vacation with their children during this period, decreasing the demand for haircuts. Furthermore, the demand for haircuts is also decreased during this period as parents tend to allow their children to keep their hair long during the school holidays. However, we expect the demands for haircuts to increase sharply in early January and July, due to the end of the school holidays. Figure 3 below shows the estimated sales forecast for the next 5 years. The sales forecast was estimated based on the fact that we expect our market penetration rate to be 2% during our initial launch, with a gradual increment of 0.5% every 3 months.
2500 2000 Number of Units 1500 1000 500 0

2013
Haircut

2014

2015

2016

2017

Shampoo, Hair Spray, Hair Wax etc

Figure 3: Estimated sales forecast for the next 5 years

The best and worst case scenarios were also considered. In the worst case scenario, a copycat salon may open up within our vicinity after our first year of operation, diluting our 35 | P a g e

market share. In the best case scenario, our salon may be well accepted by our target audience and our market penetration rate may be better than expected. Figure 4 shows the sales forecast for the best and worst case scenarios.
2500 2000 Number of Units 1500

1000
500 0

2013

2014
Best Case (Haircuts)

2015

2016
Worst Case (Haircuts)

2017

Figure 4: Sales forecast for best and worst case scenarios

5. Financial Plan
5.1 Startup
Startup Expenses (S$) Business Registration Fee Business licensing and permits Supplies: Hair Care Products Rent deposit Renovation Playground Equipment: Trimming sets Racing car seats IPad 2 Surveillance camera system Toys and Story Books Other Employees Development Advertisement Total 65 850 4000 150,000 50,000 1,000 200 300 2000 1000 500 5000 15,000 2,000 $231,915

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Monthly Operating Expenses (S$) Salaries and Wages: 2x Operation manager 3x Hair Stylist Rental Utilities Supplies: Hair care product Promotion Loan payments Office supplies Maintenance Miscellaneous General and Administration: Advertising and Promotion Bank Charges Insurance [4] Total 4400 5400 15,000 100 1000 1000 500 100 200 150 100 50 70 $28,070

Formula for startup fund calculation: ( ( ) )

Sources of startup fund:


Shareholders Investments Bank Loan $100,000 $250,000 $350,000

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Teddy Trims Startup Expenses/Fund Statement For the Year Ended December 31, 2012 Fund in hand: Loan from bank Owners investment Startup Expenses: Business Registration Fee Business licensing and permits Supplies Hair Care Products Rent deposit Renovation Playground Equipment Trimming sets Racing car seats IPad 2 Surveillance camera system Toys and Story Books Other Employees Development Advertisement Total startup expenses Remaining cash in hand 250,000 100,000 350,000 65 850 4000 150,000 50,000 1,000 200 300 2000 1000 500 5000 15,000 2,000 231,915 118,085

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5.2 Break-even Analysis

Profit/loss Vs Number of Units


40000 30000 20000 Profit/loss 10000 0
1403.5 Monthly Break-even Point

-10000
-20000 -30000 -40000

500

1000

1500

2000

2500

3000

3500

Number of Units

Break-even point = where line intersects with 0 Break-even analysis: Monthly Number of Services Provided Break-even Monthly Revenue Break-even

1,404 $28,070

5.3 Revenue Forecast

Year 2013 2014 2015 2016 2017

Service Revenue (S$) 295,000 343,000 375,000 425,000 450,000

Year 2013 2014 2015 2016 2017

Sales Revenue (S$) 22,000 26,000 28,000 32,000 35,000

Profit (S$) 10,000 12,000 13,000 15,000 16,000

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5.4 Financial Statements


5.4.1 Year of 2013 Teddy Trims Projected Income Statement For the Year Ended December 31, 2013 Revenue: Service: Hair cut Sales: Hair care product Total Revenue Expenses and Losses: Costs of goods sold Salaries and wages Selling expenses Promotions/Discounts Rental General and Admin. Exp. Utilities Supplies Interest Expenses Total expenses & losses Net loss 295,000 22,000 317,000

12,600 117,600 5400 12,000 180,000 2640 1,200 12,000 6,000 349,440 (32,440)

Teddy Trims Statement of Cash Flow Projection For Year Ended December 31, 2013 Cash Revenues: Revenue from service sales Revenue from product sales Total Cash Revenues Cash Disbursements: Purchase of supplies Salaries and wages Selling Expenses Promotion expenses paid Rental paid General and administration paid Utilities payment Interest paid Loan payment Total Cash Disbursements Net decrease In Cash Cash Balance, January 1, 2013 Cash Balance, December 21, 2013 295,000 22,000 317,000

24,600 117,600 5,400 12,000 180,000 2,640 1,200 6,000 50,000 399,440 (82,440) 118,085 35,645

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Teddy Trims Projected Balance Sheet December 31, 2013 Asset Inventory Equipment Rental deposit Cash Account Receivable 4,000 9,000 150,000 35,645 68,915 Account payable Total liabilities Equity Owners equity Retained earning Capital Total equity Total liabilities and equity Liabilities 200,000 200,000

267,560

(32,440) 100,000 67,560 267,560

5.4.2 Year of 2014 Teddy Trims Projected Income Statement For the Year Ended December 31, 2014 Revenue: Service: Hair cut Sales: Hair care product Total Revenue Expenses and Losses: Costs of goods sold Salaries and wages Selling expenses Promotions/Discounts Rental General and Admin. Exp. Utilities Supplies Interest Expenses Total expenses & losses Income before taxes Income taxes Net Income 343,000 26,000 369,000

14,000 117,600 5400 12,000 180,000 2640 1,200 12,000 6,000 350,840 18,160 383 17,777

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Teddy Trims Statement of Cash Flow Projection For Year Ended December 31, 2014 Cash Revenues: Revenue from service sales Revenue from product sales Total Cash Revenues Cash Disbursements: Purchase of supplies Salaries and wages Selling Expenses Promotion expenses paid Rental paid General and administration paid Tax paid Utilities payment Interest paid Loan Payment Total Cash Disbursements Net increase In Cash Cash Balance, January 1, 2014 Cash Balance, December 21, 2014 343,000 26,000 369,000

26,000 117,600 5,400 12,000 180,000 2,640 383 1,200 6,000 50,000 401,223 (32,223) 35,645 3,422

Teddy Trims Projected Balance Sheet December 31, 2014 Asset Cash Inventory Equipment Rental Deposit Account Receivable 3,422 4,000 9,000 150,000 68,915 Note payable Total liabilities Liabilities 150,000 150,000

235,337

Equity Capital Retained earning Total equity Total liabilities and equity

100,000 (14,663) 85,337 235,337

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5.4.3 Year of 2015 Teddy Trims Projected Income Statement For the Year Ended December 31, 2015 Revenue: Service: Hair cut Sales: Hair care product Total Revenue Expenses and Losses: Costs of goods sold Salaries and wages Selling expenses Promotions/Discounts Rental General and Admin. Exp. Utilities Supplies Interest Expenses Total expenses & losses Income before taxes Income taxes Net Income 375,000 28,000 403,000

15,000 117,600 5400 12,000 180,000 2640 1,200 12,000 6,000 351,840 51,160 920 50,240

Teddy Trims Statement of Cash Flow Projection For Year Ended December 31, 2015 Cash Revenues: Revenue from service sales Revenue from product sales Total Cash Revenues Cash Disbursements: Purchase of supplies Salaries and wages Selling Expenses Promotion expenses paid Rental paid General and administration paid Tax paid Utilities payment Interest paid Loan payment Total Cash Disbursements Net increase In Cash Cash Balance, January 1, 2015 Cash Balance, December 21, 2015 375,000 28,000 403,000

27,000 117,600 5,400 12,000 180,000 2,640 920 1,200 6,000 50,000 402,760 240 3,422 3,662

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Teddy Trims Projected Balance Sheet December 31, 2015 Asset Cash Inventory Equipment Rental Deposit Account Receivable 3,662 4,000 9,000 150,000 68,915 Note payable Total liabilities Liabilities 100,000 100,000

235,577

Equity Capital Retained earning Total equity Total liabilities and equity

100,000 35,577 135,577 235,577

5.4.4 Year of 2016 Teddy Trims Projected Income Statement For the Year Ended December 31, 2016 Revenue: Service: Hair cut Sales: Hair care product Total Revenue Expenses and Losses: Costs of goods sold Salaries and wages Selling expenses Promotions/Discounts Rental General and Admin. Exp. Utilities Supplies Interest Expenses Total expenses & losses Income before taxes Income taxes Net Income 425,000 32,000 457,000

17,000 117,600 5400 12,000 180,000 2640 1,200 12,000 6,000 353,840 103,160 2063 101,097

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Teddy Trims Statement of Cash Flow Projection For Year Ended December 31, 2016 Cash Revenues: Revenue from service sales Revenue from product sales Total Cash Revenues Cash Disbursements: Purchase of supplies Salaries and wages Selling Expenses Promotion expenses paid Rental paid General and administration paid Tax paid Utilities payment Interest paid Loan payment Total Cash Disbursements Net increase In Cash Cash Balance, January 1, 2016 Cash Balance, December 21, 2016 425,000 32,000 457,000

29,000 117,600 5,400 12,000 180,000 2,640 2063 1,200 6,000 50,000 405,903 51,097 3,662 54,759

Teddy Trims Projected Balance Sheet December 31, 2016 Asset Cash Inventory Equipment Rental Deposit Account Receivable 54,759 4,000 9,000 150,000 68,915 Note payable Total liabilities Liabilities 50,000 50,000

Equity Capital Retained earning Total equity Total liabilities and equity 100,000 136,674 236,674 286,674

286,674

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5.4.5 Year of 2017 Teddy Trims Projected Income Statement For the Year Ended December 31, 2017 Revenue: Service: Hair cut Sales: Hair care product Total Revenue Expenses and Losses: Costs of goods sold Salaries and wages Selling expenses Promotions/Discounts Rental General and Admin. Exp. Utilities Supplies Interest Expenses Total expenses & losses Income before taxes Income taxes Net Income 450,000 35,000 485,000

19,000 117,600 5400 12,000 180,000 2640 1,200 12,000 6,000 355,840 129,160 2583 126,577

Teddy Trims Statement of Cash Flow Projection For Year Ended December 31, 2017 Cash Revenues: Revenue from service sales Revenue from product sales Total Cash Revenues Cash Disbursements: Purchase of supplies Salaries and wages Selling Expenses Promotion expenses paid Rental paid General and administration paid Tax paid Utilities payment Interest paid Loan payment Total Cash Disbursements Net increase In Cash Cash Balance, January 1, 2017 Cash Balance, December 21, 2017 450,000 35,000 485,000

31,000 117,600 5,400 12,000 180,000 2,640 2063 1,200 6,000 50,000 408,423 76,577 54,759 131,336

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Teddy Trims Projected Balance Sheet December 31, 2017 Asset Cash Inventory Equipment Rental Deposit Account Receivable 131,336 4,000 9,000 150,000 68,915 Note payable Total liabilities Liabilities 0 0

363,251

Equity Capital Retained earning Total equity Total liabilities and equity

100,000 263,251 363,251 363,251

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6. Organization & Management


6.1 Key Personnel
Teddy Trims will constitute five key personnel of widespread expertise and experience.
Business Management

Loy York Song Chief Financial Officer

Balamurali Chief Marketing Officer Foo Chi Zhan Chief Executive Officer
Resource Management

Boo Jia Liang Chief Human Resources Officer

Sung Jian Xiong Chief Operations Officer


Figure 5: Teddy Trims Management Structure

6.1.1 Chief Executive Officer As the vice president of the faculty club in Nanyang Technological University and an apprentice in his fathers business, Foo Chi Zhan, has a broad spectrum of business management skills that are vital to sustaining the Teddy Trims firm. He will oversee all the disciplines of the business and provide advice to the various departments.

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6.1.2 Chief Financial Officer Loy York Song, with his treasurer experience in CCA and a minor in business, will be better suited to the financial officer position. With a vast knowledge on finance, he will track the cash flow of the business and source for avenues where finance capital can be pumped in. 6.1.3 Chief Marketing Officer Balamurali is an amicable individual who loves interacting with people. Bala has gained the various know-how of marketing as an intern in two major marketing firms. He will oversee the various collaborations of the business and participate in the advertising strategies. 6.1.4 Chief Human Resources Officer Boo Jia Liang served as the head of the Hall Public Relations committee during his undergraduate studies at the Nanyang Technological University where he maintained public relations with Students Council and the Deans office. He will oversee the recruitment process and the training of employees. 6.1.5 Chief Operations Officer Sung Jian Xiong has spent six months in the manufacturing industry as part of his internship and has overseen many operations. His transferable skills from the industry will best serve our business in our daily operations. He will monitor the entire value chain and the customer relations.

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7. Ownership
Teddy Trims will be structured as a partnership with all five members having an equal stake with no other legal liability. This will provide for accountability of the company by all five members. The total equity and share of the company is as follows:

Shareholders Balamurali Papusamy Boo Jia Liang Foo Chi Zhan Loy York Song Sung Jian Xiong Total Shareholders Equity

Investment $20,000 $20,000 $20,000 $20,000 $20,000 $100,000

Table 11: Equity Distribution

A set of governing guidelines has been established to avoid any misconceptions on the part of the owners. Some vital guidelines are provided in the following table:

S/N 1 2

Governing Guidelines Stipulated salaries will be paid to owners Should any partner wishes to withdraw, only 10% of his investments will be repaid to him

Reasoning Ensure availability of funds to reinvest Ensure maximum commitment of the partner to the business Ensure accountability of business by all partners To emphasize fairness

All partners are responsible for all debts and obligations of the business

Should bankruptcy occur, all remaining assets will be evenly distributed to all five partners

Table 12: Fundamental Guidelines

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8. Critical Risks and Contingencies


Risks undermine the value of the business and a thorough evaluation is required. A generic evaluation was conducted via Porters 5 forces model and indicated in the following Table 13 and Figure 6.
High

New Entrants

Favorable For Business

Low

Low

Suppliers Bargaining Power

Competitive Rivalry
Low

Customers Bargaining Power

Low

Product Substitution
Figure 6: Favourable Factors for Business

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Assessment Criteria
Competitive Rivalry

Analysis
Favourable 3 companies with few outlets in target market Low influence on industry Insignificant competition Favourable Highly untapped market targeted by our business Substitutes: 1) Traditional barbers i.e. Malay barbers 2) Value for money outlets i.e. QB House, Snip Avenue 3) Highly professional salons i.e. Jean Yip Substitutes do not strike balance between quality of service and pricing i.e. Jean Yip: High price for high quality service; Traditional barbers: Low price for low quality of service May turn customers off Hence, low level of threat High threat (Low barrier of entry) Threat from existing hair salons i.e. Jean Yip, Reds Hairdressing and value for money salons i.e. QB House, Snip Avenue Possess financial ability to venture to target market New startups can replicate our concept Unfavourable Four types of suppliers: 1) Toys 2) Books 3) Hair dressing equipment 4) Toiletries i.e. shampoo, comb Bargaining power applicable to toys, books and toiletries Hair dressing equipment is a onetime purchase and only requires regular maintenance on the part of supplier Diverse number of suppliers for all four types Large competition between suppliers Low bargaining power Highly favourable Demand for hair salon services is highly elastic i.e. customers demand may change according to economic situations High bargaining power in terms of pricing for our services Unfavourable to our business

Threat of Substitutes

Threat of New Entrants

Supplier Bargaining Power

Buyer Bargaining Power

Table 13: Porter's Five Forces

8.1 Declining birth rates in the long run


Future decline in births will eventually translate into a smaller target market in the future and thus will affect the sustainability of the business. The demand for our services will drop and our profitability margin will result in the diminution of the value of our business. We have identified several markets in the neighbouring countries such as Australia and Indonesia in the Asia-Pacific region where we will subsequently shift our operations. The accessibility of these regions will allow a smooth transition.

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8.2 Financial constraints


Financial constraints will directly affect our plans to position several outlets in Singapores heartlands. In turn, we will not be able to encompass the entire target market. A slow first and second quarter is expected and will significantly impact our cashflow. A review of our market strategy will be required of the chief marketing officer. Particular attention will be drawn on efforts to invite stakeholders from childrens product related industries to advertise with us and on promotions and discounts to entice the target market.

8.3 Inexperienced management


As students, the owners might be inexperienced in handling the broad aspects of the business. Difficult situations can bring the business to a standstill and this should be avoided or customers will lose their confidence with us. In Singapore, highly established entrepreneurs have initiated training programs as part of their contributions to the society to help budding entrepreneurs to build and manage a start-up. Some even offer franchises that could be bought over. The owners will seek out these entrepreneurs for assistance. What the top management lacks in experience will be gained through knowledge from these entrepreneurs.

8.4 Pricing
With economic uncertainties and inflation surfacing along with competitive pricing, our prices might be deemed as high in future and customers will seek out alternative services. Failure to entice customers will prove difficult to run the business. Our marketing team will evaluate our position via the marketing mix strategy along with our supply value chain to effectively manage our resources in order to pass off our cost savings to the customers.

8.5 Failure to maintain productivity


Generation of enough sales for the day will prove critical to the companys profit margin. Dry spells on certain days could adversely affect our profitability. Collaborations with child care centres where our hair stylists will be sent over to cut the childrens hair will be sourced for. This collaborative idea can be scheduled on days where dry spells are known to occur. Hence, the productivity will be maintained. 53 | P a g e

8.6 Low retention rate of hairstylists


Hair styling may be considered as mundane and the industry is perceived as an inflexible sector with long hours including weekends and late nights. The low remuneration for such hard physical work might further aggravate the issue of non-commitment in the future despite the provision of training to hair stylists. A contract will be developed to bond these stylists to the business. Additional employee benefits will be provided to enhance their experience with us.

8.7 Worst case scenario


Determining that the business is not viable and is unable to support itself on an ongoing basis and nearing bankruptcy will be the worst scenario.[5] Some equipment will be liquidated to cover the liabilities. If insufficient, operations will be shifted to a cheaper retail space or even overseas. In addition, salary cuts can be expected of the top management. Priority will be given to settling the bank loans as soon as possible.

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9. Milestones
2011 2012 Jan Jun Jul Dec Jan Mar Year 2013 Apr June Jul Sep Oct Dec Jan Mar Year 2014 Apr June Jul Sep Oct Dec Jan Mar Year 2013 Apr June Jul Sep Oct Dec Jan Mar Year 2014 Apr June Jul Sep Oct Dec

Objectives
Successful Application of Bank Loans Successful Registration of business permits Sourcing for Supplier Renting, renovation and setting up of Store front Employee Development Soft launch and Opening of Store Front Jurong Point Advertising Campaign A Advertising Campaign B Advertising Campaign C Advertising Campaign D Advertising Campaign E Advertising Campaign F Remain updated with fashion Sales and Marketing

Duration

Oct Dec

3 months 3 months 6 months 6 months 6 months 3 months 6 months 6 months 6 months 6 months 6 months 6 months On-going On-going

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10. Conclusion
With a projected increase in the child population and shifting of family structures where both parents are focused in developing their careers, a large opportunity awaits for Teddy Trims. The children of the future will have a significant purchasing power that will fuel Teddy Trims. The unmet service needs and lack of provision of the fun element in the kids salon niche market will be the key market needs addressed by Teddy Trims. Teddy Trims will introduce a new level of quality for service via our motto, servicing the leaders of tomorrow and become a regionally known brand over the next fifteen years. By doing so, we hope to create a new generation of children who will not be intimidated by miniscule factors such as fear over haircuts as this is when they develop their personality traits. Teddy Trims views itself as the market leader in the next fifteen years with several outlets in the Asia Pacific region. Teddy Trims aims to integrate an extensive range of technologies into our operations to create a virtual if possible 3D experience for the children.

(4991 Words)

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11. References
[1] [2] [3] [4] [5] Singstat. (2011, 3 October). Population Trends. Available: http://www.singstat.gov.sg/pubn/popn/population2011.pdf (10/5). Singapore Press Holdings. Available: http://www.sphmagazines.com.sg/wpcontent/uploads/downloads/2010/06/Young-Parents-Ratecard-2010.pdf (10/5). Singapore Department of Statistics. Available: http://www.singstat.gov.sg/pubn/popn/c2010acr.pdf H. a. S. B. C. Limited. (27 September). Business Insurance. Available: http://www.insurance.hsbc.com.sg/1/2/sghi/business-insurance ProHairStylist. (2010, 30 September). All About the Australian Hairdressing Council. Available: http://prohairstylist.com.au/all-about-the-australian-hairdressing-council/

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Appendix

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