Pet Grooming Saloon's Financial Future - Example

Introduction and Background

Marketing strategies are aimed to ensure that the product or services reaches the intended customer. The founder (s) should spell out clearly the procedures contained in the marketing section of the business since it will be a catchy area for potential investors. According to Krush et al. (2016) marketing plans should be viable enough so that the service or the product line reaches the market niche with an affordable price. The entrepreneur needs to expound his strategies of reaching the market and methods put in place to counter competition or create barriers to entry. The most effective strategies of reaching the market should be composed of multiple promotional ideas so that the entrepreneur covers a wide geographical niche. In our marketing plan will be draw to ensure that our pet grooming salon and home services penetrates into the market niche to provide a wider service to many. Our geographical niche will be in Doha which is the capital of Qatar. This city has shown great improvement in terms of population growth and stability of the economy. This will provide the best grounds for our business to strive since will shall have wide range of customers to serve. Our business will be the first home grooming services in Doha and therefore we shall enjoy a monopoly during the inception of our business. Subsequently, pet grooming saloon and home services will have the best marketing vehicles to promote our services within the city. We intend to use a mix of advertising methods including social media, website and television broad casts. In order to create a brand recall in the minds of our esteemed clients, the message to be conveyed in our marketing vehicles will be, “Fostering pets at home”.

Pet grooming saloon and home services will strive to offer the best quality services to customers in Doha. Our services will be highly affordable to ensure everyone who owns a pet can comfortably enjoy our services. The business will have professional workers who will not only groom the pets but also offers extra ideas about the health of the pet. To ensure trust and confidence to our customers, any extra services outside grooming will be at a free cost. Moreover, free grooming consultation will be done for free and there is no necessary appointments needed. Our business has great potential to grow and operate at a going concern. This is because we shall have a moving bus that doubles as a shop and a grooming service center. It is therefore, possible to reach the customer at any time because of our mobility. This is advantageous as we do not have to sit back and wait for the customer to come, instead our objectives is to reach as many pet owners as possible. Apart from enjoying a monopoly, the services offered at pet grooming saloon home services will be outstanding and unique. Our bus will be branded with a message, “Fostering pets at home” containing various images of pets plus the grooming tools which include, shampoos, spritzers and brushes displayed in a beautiful way. These pictures on the bus will manifest the image of our business and aid in advertisement to whichever place we shall take our services. The enterprise will offer a wide range of grooming services which entails, nail clipping, micro chipping, blow dry and full bath. We shall operate seven days in a week and willing to fit into the tight schedules of our clients.

Offering

The business is a startup and is expected to grow rapidly in the near future. The initial capital to commence pet grooming salon and home services will amount to 44,650 riyal (QAR). This amount will be funded by promoters of the business and external investors. The owners will contribute 24,650 riyal while 20,000 riyal will be financed by a 5 year loan. Moreover, the business will pay the loan with an interest of 8% compounded annually. The capital will be effectively utilized to ensure that the business has a strong financial base during its initial stages to avoid collapsing. The capital will be used in to acquire business assets and finance all the necessary operating preliminary expenses that the business will incur. The most important fixed asset will be the bus. This will act as a small shop which contains everything that is linked to grooming the pet. Out of the total capital, 20,150 riyal will be spent to buy the bus whose economic life is expected to be 10 year. Depreciation will be charge on a straight line basis throughout the life time of the bus. The car will act as the most precious asset to the business since it will carry all the staff and the equipment of the job. On the other hand, tools and equipment required to performance the job will cost us a total of 10,500 riyal. This amount is inclusive of the chemicals for washing the pets. The main tools will be the blow drier, brushes and other equipment for keeping the pets warm after grooming. Such tools and equipment are estimated to have an economic life of over 3 years. However, their depreciation expenses are assumed to be negligible and thus will not be charged to the comprehensive income statement.

The enterprise will have four employees who have the expertise and knowledge required in grooming the pet. We shall have a high professional staff who will be consulted on matters outside grooming and therefore a total of 4000 riyal will cater for salaries and remunerations. Expenses as stated above will be charged monthly and therefore values to be indicated in the financial statements will be accounted for annually. The founder(s) of Pet grooming salon and home services will be entitled to a monthly salary of 2000 riyal. The enterprise will only have two promoters hence their total salaries will amount to 4000 riyal. They will act as managers to oversee the activities of the business and monitor the performance of staff. Furthermore, they will be entitled to extra bonus which may accrue from their exemplary work. A total of 4,000 riyal will be used to finance any miscellaneous costs that the business will incur in a day to day operations of the enterprise. Such expenses will cover any unforeseen costs which could not have been budgeted. In addition to that, advertising and promotion will cost the company a sum total of 2,000 riyal. This will cover municipal costs, web hosting costs and expenses for incurred in promoting on social media plat forms. The business have no plans to spend any money which is outside the scope of business. Consequently, the business operating costs are expected to accrue evenly throughout the year.

Exist Strategy

The investors and founders of Pet grooming saloon and home services have splendid exist plans. The business owners and shareholders will take the business as a whole. In this case, we focus on draining the business finances in the event it comes to a standstill in future. Regardless of the current performance of the enterprise, investors and equity owners plan to reward themselves with a substantial salary and gigantic bonuses. To achieve the exit strategy the company will be reinvesting an insignificant amount towards its future growth. A chunk of the money will be spent by investors and owners to carry on their personal expenses. In most cases, investors will not have to think hard but instead pull out the money at once. On the other the promoters may choose to liquidate the business and call it a day. In the process of liquidation, company assets are realized and the proceeds used to pay creditors. Once the creditors have been, it is time to pay the shareholders. Liquidation is preferred to any other exist plans given that it has no negotiations procedures and documentation involved to share out the remainder of proceeds. Once the liquidation process is complete, investors and promoters do not have to worry about the future ownership of the company. Instead, the transfer of business will shift hands and investors will not have to bother of the outcome since they have harvested what belonged to them. Once the business door is closed, the entrepreneur forgets about the business and pockets his or her share of the company. The management of the business may be on the hands of the liquidator or kept under receivership.

In the bid to preserve the business legacy the owners may choose to sell off the company to close friends. Some of the interested parties who have expressed their concern about the business include, family members, esteemed clients, friends and employees. However, it is important to sell it to employees since they have the company background and profile at their figure tips. The ideas to pass on company ownership is a win – win strategy for the seller and the buyer. The most pure friendly buy out is when the business is left on the hands of our family. This is important since the directors will be sure that their legacy will be carried out in perpetuity. However, the predicaments associated with this kind of strategy in the scramble for ownership. Majority of the family will begin to compete for the amount of shares in the company which may plunge the business into an oblivion. Elsewhere, the most common exist strategy is the acquisition method where you find another business which is interested to buy our own. This plan involves negotiation with the buyer until a standard agreement is reached. Mostly, those negotiating to take over the company are never the owners of the companies. Therefore if you convince them that the business is worth is billions of riyals, they will crack into the cheque books. If the company decides on the acquisition as an exit strategy, then it should make its house in order to attract potential candidates. Moreover, promotors should never be in a hurry to harvest the investments of the business but rather weigh out options for an exit plan.

Financial Plan

At the epicenter of any business operations is an accounting system. The sources of capital and the financial resources should to be accounted for properly. The business will be financed by owners’ equity and external borrowings in form of a loan. To convince our investors that our business will be viable and profitable, a 5 year pro forma financial statement will be projected to show the company financial performance.

Pro Forma Comprehensive Income Statement

This statement is will show what the company expects to earn every year. It records the firm’s revenues and expenses incurred to generate such income. The items in the pro forma income statement are mere estimates of what the future of business will become.

PRO FORMA COMPREHENSIVE INCOME STATEMENT

PET GROOMING SALOON & HOME SERVICES

5 YEAR PROJECTION

YEAR

1

2

3

4

5

Revenues

QAR 300,000.00

QAR 350,000.00

QAR 450,000.00

QAR 500,000.00

QAR 400,000.00

COGS

QAR 150,000.00

QAR 200,000.00

QAR 250,000.00

QAR 30,000.00

QAR 290,000.00

Net Revenue

QAR 150,000.00

QAR 150,000.00

QAR 200,000.00

QAR 470,000.00

QAR 110,000.00

OPERATING EXPENSES

Salaries &Remunerations

QAR 96,000.00

QAR 98,000.00

QAR 98,000.00

QAR 120,000.00

QAR 80,000.00

Car fuel

QAR 2,400.00

QAR 2,400.00

QAR 2,400.00

QAR 2,400.00

QAR 2,400.00

Depreciation

QAR 2,015.00

QAR 2,015.00

QAR 2,015.00

QAR 2,015.00

QAR 2,015.00

Advertising & promotion

QAR 2,000.00

QAR 2,000.00

QAR 2,000.00

QAR 2,000.00

QAR 2,000.00

Interest

QAR 1,600.00

QAR 1,600.00

QAR 1,600.00

QAR 1,600.00

QAR 1,600.00

Total Expenses

QAR 104,015.00

QAR 106,015.00

QAR 106,015.00

QAR 128,015.00

QAR 88,015.00

Profit/ (Loss)

QAR 45,985.00

QAR 43,985.00

QAR 93,985.00

QAR 341,985.00

QAR 21,985.00

Table I: Pro forma Income statement

The income statement represents the company profitability for the next five years. Depreciation is assumed to accrue evenly through the period. On the other hand, interest in charged on loan at 8% simple interest per annum. In the initial periods of the business, profits will be little since the firm has not picked up and the number of services are still low. However, the proceeding years when business is at it boom the profits big to rise until it levels off in year five due to management exit.

Pro Forma Statement of Financial Position

This is statement will shows the financial position of the firm at a given period. It shows the company assets, liabilities and shareholders’ equity.

PRO FORMA STATEMENT OF FINANCIAL POSITION

PET GROOMING SALOON & HOME SERVICES

5 YEAR PROJECTION

YEAR

1

2

3

4

5

NON CURRENT ASSETS

Vehicle(NBV)

QAR 20,150.00

QAR 18,135.00

QAR 16,120.00

QAR 14,105.00

QAR 12,090.00

Tools and Equipment(NBV)

QAR 10,500.00

QAR 10,500.00

QAR 10,500.00

QAR 10,500.00

QAR 10,500.00

Total fixed assets

QAR 30,650.00

QAR 28,635.00

QAR 26,620.00

QAR 24,605.00

QAR 22,590.00

CURRENT ASSETS

Inventory

QAR 32,000.00

QAR 4,000.00

QAR 7,500.00

QAR 8,000.00

QAR 7,000.00

Accounts Receivable

QAR 9,335.00

QAR 3,500.00

QAR 15,000.00

QAR 2,380.00

QAR 3,000.00

Cash at hand

QAR 24,650.00

QAR 30,000.00

QAR 56,465.00

QAR 45,000.00

QAR 30,000.00

Bank

QAR 20,000.00

QAR 25,000.00

QAR 45,000.00

QAR 304,000.00

QAR 60,000.00

Total Assets

QAR 116,635.00

QAR 91,135.00

QAR 150,585.00

QAR 383,985.00

QAR 122,590.00

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Creditors

QAR 4,000.00

QAR 4,500.00

QAR 6,000.00

QAR 5,000.00

QAR 4,000.00

Accounts Payable

QAR 2,000.00

QAR 4,650.00

QAR 4,600.00

QAR 3,000.00

QAR 4,000.00

LONG TERM LIABILITY

Loan

QAR 20,000.00

QAR 18,000.00

QAR 16,000.00

QAR 14,000.00

QAR 12,000.00

EQUITY

Capital

QAR 44,650.00

QAR 20,000.00

QAR 30,000.00

QAR 20,000.00

QAR 80,605.00

Add Profits

QAR 45,985.00

QAR 43,985.00

QAR 93,985.00

QAR 341,985.00

QAR 21,985.00

Total Equity & Liability

QAR 116,635.00

QAR 91,135.00

QAR 150,585.00

QAR 383,985.00

QAR 122,590.00

Table I: Pro form Balance sheet

The values of fixed assets as shown in the balance sheet are net book value computed after wear and tear.