Pre-Feasibility Study: Beauty Clinic

Pre-Feasibility Study
Beauty Clinic
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN
3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
March 2008
Pre-Feasibility Study Beauty Clinic
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. Therefore,
the content of this memorandum should not be relied upon for making any decision,
investment or otherwise. The prospective user of this memorandum is encouraged to
carry out his/her own due diligence and gather any information he/she considers
necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or other
form.
DOCUMENT CONTROL
Document No. PREF-60
Revision 2
Prepared by SMEDA Punjab
Approved by Provincial chief-Punjab
Revision Date March 2008
Issued by Library Officer
PREF-60/March, 2008/Rev-2
1 INTRODUCTION ........................................................................................................ 4
1.1 Project Brief ........................................................................................................4
1.2 Opportunity Rationale..........................................................................................4
1.3 Proposed Capacity ...............................................................................................4
1.4 Total Project Cost ................................................................................................5
2 Current Industry Structure .........................................................................................5
3 Marketing .....................................................................................................................5
3.1 Guidelines for Beauty Clinic Business .................................................................6
3.2 Total Market Size and Growth .............................................................................6
4 Beauty Products Used................................................................................................... 7
5 Human Resource Requirement .................................................................................... 7
6 Equipment Details ........................................................................................................ 8
6.1 Equipment List ....................................................................................................8
6.2 Alternate Option for Equipment ...........................................................................9
7 Land and Building ........................................................................................................ 9
7.1 Total Land Requirement ......................................................................................9
7.2 Covered Area Requirement ..................................................................................9
7.3 Recommended Mode ...........................................................................................9
7.4 Suitable Locations..............................................................................................10
7.5 Utilities Requirements........................................................................................10
8 Project Economics ...................................................................................................... 10
8.1 Initial Project Cost .............................................................................................10
8.2 Financing Plan ...................................................................................................10
8.3 Project’s Returns................................................................................................11
Estimated Time for Project Completion .........................................................................11
9 Key Success Factors.................................................................................................... 11
10 Threats for the business ............................................................................................. 12
11 Regulations ................................................................................................................. 12
12 Financial Analysis....................................................................................................... 13
12.1 Financial Statements ..........................................................................................13
12.2 Projected Income Statement...............................................................................14
12.3 Projected Cash Flow Statement..........................................................................15
12.4 Projected Balance Sheet.....................................................................................16
13 Key Assumptions ........................................................................................................ 17
13.1 Equipments Assumptions...................................................................................17
13.2 Operating Assumptions......................................................................................17
13.3 Economy Related Assumptions..........................................................................17
13.4 Expense Assumptions ........................................................................................17
13.5 Financial Assumptions .......................................................................................17
13.6 Miscellaneous Assumptions ...............................................................................18
3
PREF-60/March, 2008/2Rev 2
1 INTRODUCTION
1.1 Project Brief
The proposed project entails setting up a beauty clinic. Being one of the major players in
service sector, beauty clinics provide a wide range of services relating to beauty
treatment for women and men. These services range from threading, facial and haircut to
complex and more professional services like electrolysis, permanent make-up, diet and
skin related consultations provided by qualified dieticians and dermatologists (skin
specialists). The proposed beauty clinic will provide all these services under one roof.
1.2 Opportunity Rationale
Due to vast media exposure over past few years, women, as well as men, have become
more conscious about their looks. In Pakistan, beauty care industry has grown over the
years and is basically female oriented. However, some big names in this industry have
recently opened beauty saloons for men as well. It is easy to open beauty parlours as
space and skill requirement is very basic. But a beauty clinic provides more professional
services with qualified staff including doctors and experienced support staff and
therefore, requires more planning and arrangement. Quite a few beauty clinics have
opened in Lahore, Islamabad, Karachi and other relatively larger cities of Pakistan, which
are catering to the demand of the people, but still there is a lot of unfulfilled demand as
can be judged from excessive rush at the existing beauty clinics.
The business is service-oriented and carries large potential for profits due to its unique
nature and uncontrolled spending of people, especially on marriages. Unfulfilled demand,
constantly changing beauty requirements due to change in fashion, and good profit
margins are few of the incentives for new entrants in this business, especially for those
who are committed to providing quality service.
1.3 Proposed Capacity
The proposed Beauty Clinic will handle 28 customers per day. This is worked out as
follows:
Facial Hair Makeup

Beds Dressing Chairs
Chairs
Number 3 4 2
Working hours per day 8 8 8
Effective hours per day 24 32 16
Hours utilized by one client 3 2 4
Maximum clients entertained 8 16 4
per day
Capacity per day 28
4
1.4 Total Project Cost
Total project cost is 1.726 million rupees approximately. Out of the total project cost,
850,184 rupees would be used for the purchase of fixed asset.
The following services would be offered at the proposed Beauty Clinic:
Types of Services Particulars of Services

Body treatment Diet consultation
Application of body scrubs, face masks and body
masks
Massaging
Manicure – hands washing & massaging
Pedicure – feet washing & massaging
Nail extension and extrusion
Beauty treatment Facial
Bleaching of body hair
Waxing of body hair
Makeup (bridal and party)
Threading of body hair
Skin consultations
Hair treatment Hair cut
Hair dressing
Hair coloring
Hair streaking
2 CURRENT INDUSTRY STRUCTURE

The number of beauty clinics in Pakistan has increased at a fast pace over the last few
years. The size of this sector of service industry is still growing. Due to very low
amount of investment that is required to start a beauty parlour, the number of such
establishments has cropped up in houses all over the country. In Lahore, more
professional and large clinics have been set up in commercial areas like M. M. Alam
Road, Defence, and Main Boulevard Gulberg. Professional experts are currently
operating approximately 15 large beauty clinics in Lahore.
Similarly, large Beauty Clinics have also been opened in prime business locations in
Karachi and Islamabad.
3 MARKETING
Proper marketing is essential to attract clients for a newly established beauty clinic. Once
a reasonable clientele is achieved, the stress on marketing can be decreased as it is
automatically done through recommendations from existing clients to potential clients. It
at least takes a year to establish and achieve a reasonable clientele for a new beauty
clinic.
5
Major marketing effort is done through advertisement. This includes putting up

billboards, giving advertisements in fashion magazines and newspapers, publishing photo
shoots in magazines, flyers, etc. The distinguished features of the business, for example,
modern technology and foreign qualified staff, can be highlighted in the advertisements.
In the beginning, discounts on different services can also be provided as well as some
complementary services can be offered. In additions to this summer deals and winter
packages can also be introduced.
An effective marketing campaign plays a key role in the initial and successive success of
a beauty clinic. A lot of importance should be given to a proper launching as initial
impression on general public will benefit beauty clinic in the long run. For this purpose,
the electronic as well as print media should be effectively used.
Other marketing tactics should include the use of celebrities in advertisements, free
memberships for initial customers without any charge, and regular reminders through
phone and letters about the next due date of their treatment.
As part of the overall marketing strategy of the proposed beauty clinic, customers will be
requested to fill feedback forms. This will act as an effective tool for translating
customers’ requirements into better service.
3.1 Guidelines for Beauty Clinic Business
To enter into Beauty Clinic business, following basic guidelines would be helpful for any
newcomer:
 Hire qualified beauticians and give them regular training and arrange refresher courses
for them.
 Ensure good quality of service at all times, and be consistent. This is the basic key for
running a successful beauty clinic.
 Use very good quality beauty products. Preferably imported and branded.
 Cater to the needs of the clients individually to have satisfied customers.
 Preferably, the business should be set up in a commercial area, which should be easily
accessible for the clients.
 The ambience of the clinic has to be according to the taste of targeted customers.
Preferably, it has to be homely, as the customers come to beauty clinics for treatment
as well as relaxation.
 The charges for different services should be set keeping in mind the price charged by
the competition.
3.2 Total Market Size and Growth
The market size is growing every day and there is a huge potential for the new entrants.
The major market players around the country are Depilex and Nabila. In Lahore, the big
names also include New Look, Alle’nora, Samia’s, Bellisma, Muneeba and Elysium.
6
The clinics, which entered this market in the beginning, have grown considerably since
then. A few of these clinics have established their outlets outside Pakistan, particularly in
Gulf countries.
Due to the absence of any administrative body or association, no statistical data is
available to show the exact number of clinics operated by qualified professionals and by
unqualified-cum-experienced beauticians.
4 BEAUTY PRODUCTS USED

Following products would be used in the proposed beauty clinic. The table also mentions
the treatments in which these products would be used: For this feasibility report their total
expense for the year is assumed to be 10% of the revenue.
Beauty Products Used In
Foundation, eye shadows, Makeup – bridal and party
lipsticks, lip pencils and blushers
Scrubs Manicure/pedicure, facial and body scrubs
Toners Facial
Moisturizers Manicure/pedicure, facial, masks and massaging
Face masks Facial and masks
Bleach cream Bleaching
Hot wax Waxing
Hair colour Hair coloring and streaking
5 HUMAN RESOURCE REQUIREMENT

Following staff would be required for the proposed project:
Staff Req Salary Per Salary Per
d. Month Annum
Dermatologist1 1 10,000 120,000
Dieticians2 1 10,000 120,000
Foreign qualified beautician 2 18,000 432,000
Local qualified beautician 3 7,000 252,000
Support staff (trainee beauticians) 5 4,000 240,000
Receptionist 1 5,000 60,000
Office girl 1 3,500 42,000
Guard 1 5,000 60,000
Sweeper 2 2,500 60,000
Total 17 1,386,000
1
This represents an average monthly salary based on projections for the first year, as dermatologists and
dieticians work on part-time basis and are given a set percentage of consultation fee, usually 60% for the
Consultant and 40% for the Clinic.
2
Same as above.
7
6 EQUIPMENT DETAILS
6.1 Equipment List
Following equipment would be required for the proposed beauty clinic. Equipment is
chosen keeping in mind the services that would be offered at the clinic. Approximate
prices are also given along with the list:
Equipment/Machines3 Required Cost Per Machine Total Cost
(Rupees) (Rupees)
Electric facial unit 1 37,000 37,000
Steamer for hair 2 6,800 13,600
Steamer for facial 2 7,000 14,000
Pedicure machine 1 4,500 4,500
Back wash for washing
hair 1 22,000 22,000
Warmer for hot wax 1 2,500 2,500
Magnifying glass 1 3,200 3,200
Computers 1 25,000 25,000
Telephones 3 2,500 7,500
Software 1 30,000 30,000
Total 159,300
Furniture& Fixtures Cost Per Unit Total Cost
(Rupees) (Rupees)
Carpeting 400 55 22,000
Back rack 93.73 800 74,984
Reception & cash counter 1 25,000 25,000
Display counter 3 6,000 18,000
Flooring 760 180 136,800
Main door 1 25,000 25,000
Parlor façade 180 80 14,400
Counter chair 2 3,500 7,000
Facial beds 3 3,500 10,500
Hair dryer 4 3,000 12,000
Hair dressing 4 16,000 64,000
Make up chair 2 7,500 15,000
Waiting area chairs 12 1,000 12,000
Waiting area sofa set 1 30,000 30,000
Air conditioners 5 26,000 130,000
3
Mr. Raza, Ali Electronics,E-1186 Muhammadi Bara Shah Alam Market,Lahore. Tel:042-7654153,
Cell:0302-4011009&0302-4111404
8
Television sets 2 20,000 40,000

False Ceiling 760 45 34200
Lighting 1 20000 20000
Total 690,884
6.2 Alternate Option for Equipment
An alternative option for the project is to purchase local equipment, which would cost
considerably less then the imported equipment mentioned above. However, quality
would be compromised with local equipment. As the nature of the business requires
maintaining high quality, it is recommended to use imported equipment.
7 L AND AND B UI L DI NG
7.1 Total Land Requirement
Approximately 5,400 square feet covered area is required for the proposed Beauty
Clinic.
7.2 Covered Area Requirement
Following is the covered area requirement split into various departments and sections:
Sections/Departments Area (sq. ft.) Per Total Area (sq.
Section ft.)
Hair Dressing Area 200 sq. ft. per chair 800
Beauty Therapy Area (Facial 250 sq. ft. per bed 750
etc.)
Manicure/Pedicure Area 600
Makeup Room 300 sq. ft. per chair 600
Waiting Area For 12 people 1,100
Reception 300
Store 550
Office 400
Wash Rooms 300
Total area 5,400
7.3 Recommended Mode
It is recommended to take a 12 marla double storey house on rent to start this project.
Starting the clinic in a rented building would significantly reduce the initial capital cost
of the project. A building having 2,700 square feet area can be rented for approximately
80,000 rupees per month in any good commercial area of large cities of the county.
Comparatively, if land is purchased, and a new building is constructed, it would cost
approximately 15 million rupees. This makes a huge difference in project cost.
9
Sq, ft. Rent Per sq. Ft Monthly Rent Rent Expense 1st Year
2,700.0 29.63 80,001 960,012
7.4 Suitable Locations
The clusters of beauty clinics exist predominantly in Lahore, Karachi and Islamabad. As
most of the clinics are based in these major cities, it is recommended that the project
should be located in anyone of these cities. However, the basic criteria for the selection
of location within these cities should be the prime business area and easy approach for
customers.
7.5 Utilities Requirements
This beauty clinic should have the basic utilities like electricity, telephone, gas, and
water.
8 PROJECT ECONOMICS
8.1 Initial Project Cost
Following is the breakup of the initial project cost:

Project Cost Costs (Rs)
Capital Cost
Equipment 159,300
Furniture & Fixtures 690,884
Pre-operating Costs4 352,503
Total Capital Cost 1,202,687
Working Capital
Initial investment in beauty and makeup products 43,725
(Imported – two months consumption)
Rent payment (6 months in advance) 480,006
Total Working Capital 523,731
Total Project Cost 1,726,418
8.2 Financing Plan
Financing
Equity financing – 50 % 863,209
Debt financing – 50 % 863,209
4
These include initial promotion expenses, initial marketing expenses.
10
8.3 Project’s Returns
Project
Net Present Value (NPV) @ 20% Rs.1,725.29
Internal Rate of Return (IRR) 42%
Simple Payback Period 4 Years
Estimated Time for Project Completion
1. 15 days for completion of initial formalities, i.e., selection of suitable

location and renting of building etc.
2. 1 month for sanction of loan (in case, if financing has to be arranged through
bank).
3. 1 month for purchase / import of equipments.
4. 1 month for furnishing and staff appointments.
5. This project can take-off within 1-2 months, as some of the activities will be
in progress simultaneously.
6. In case of self financed project, and if the building is also rented, then this
setup can be started even within a few weeks time period.
9 KEY SUCCESS FACTORS

The ever-growing population of marriageable aged girls and boys, and consequent
constant growth in demand for the services to be offered by the proposed beauty clinic is
the basic rationale for setting up such an enterprise.
Although, this proposed project promises a good return on investment and reasonable
profit potential, but it requires regular and proper attention from the entrepreneur. To run
a professional Beauty Clinic is a full time job and requires continuous hard work and
attention. Anyone who is not qualified and is not prepared to put in best possible effort;
concentration and hard working should not attempt to enter in this business. A beauty
clinic requires about a time period of one year to establish itself properly, which requires
very aggressive marketing efforts at the entrepreneur's end.
Another important success factor of this business in Pakistan would be consistency of
service. If one customer leaves the clinic unsatisfied, the reputation of the place is
adversely affected, as marketing is mostly done through word of mouth after the first few
months.
Following are other key points that can be taken as key success factors:
 Qualified staff
 Know-how and knowledge of the services
 Continuous training of staff
 Ambience of the place
 Personalised Customer service
11
10 THREATS FOR THE BUSINESS

Finding qualified staff in Pakistan is quite difficult as there are no local colleges giving
any degrees or certifications in this field.
A high turnover is also observed in qualified and trainee staff, as they tend to leave for
establishing their own beauty parlours in their homes.
Another important threat to a beauty clinic is breaking the “trust” of the client. As the
clinic is involved in skin treatment and hair treatment etc. the client trusts the beautician
to use highest quality products, which can be broken by inferior quality of service or
beauty products used.
11 REGULATIONS
There are no specific trade regulations applicable on this industry and there is also no
regulatory body formed as such to administer the activities of Beauty Clinics.
These clinics are assessed normally under the local Income Tax Law.
12
12 FINANCIAL ANALYSIS
12.1 Financial Statements
The following table summarizes the projected sales of various services that will be
rendered in the next ten years based on which the projected income statements have been
prepared.
Table 12-1 Projected Level of Services (Number of Clients’ Visits)

Years 1 2 3 4 5 6 7 8 9 10
Facial 238 255 272 292 312 334 357 382 409 438
Manicure/Pedicure 390 714 447 478 511 547 585 626 670 717
Waxing 630 674 721 772 826 884 945 1,012 1,082 1,158
Hair Cut 450 495 545 599 659 725 797 877 965 1,061
Consultation 337 361 386 413 442 473 506 541 579 620
Bridal Make ups 81 87 93 99 106 114 122 130 139 149
Party Make up 143 153 164 175 187 201 215 230 246 263
Table 12-2 Projected Sales Value (Rupees in thousands)
Years 1 2 3 4 5 6 7 8 9 10
Facial 1,000 1,060 1,124 1,191 1,262 1,338 1,419 1,504 1,594 1,689
Manicure/Pedicure 450 477 506 536 568 602 638 677 717 760
Waxing 800 848 899 953 1,010 1,071 1,135 1,203 1,275 1,352
Hair Cut 1,200 1,272 1,348 1,429 1,515 1,606 1,702 1,804 1,913 2,027
Consultation 1,500 1,590 1,685 1,787 1,894 2,007 2,128 2,255 2,391 2,534
Bridal Make ups 14,000 14,840 15,730 16,674 17,675 18,735 19,859 21,051 22,314 23,653
Party Make up 4,000 4,240 4,494 4,764 5,050 5,353 5,674 6,015 6,375 6,758
13
12.2 Projected Income Statement
Rs(000)
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Sales/Revenue 3,669 4,326 4,764 5,418 6,171 7,048 8,029 9,138 10,411 11,874
Cost of Sales 1,869 2,008 2,138 2,297 2,475 2,703 2,922 3,163 3,432 3,731
Gross Profit 1,800 2,318 2,626 3,120 3,697 4,345 5,107 5,975 6,980 8,143
Operating Expenses:
Administrative Expenses 723 710 698 688 679 672 626 603 585 569
Rent 960 1,056 1,162 1,278 1,406 1,546 1,701 1,871 2,058 2,264
Operating Profit 117 552 767 1,155 1,612 2,127 2,781 3,501 4,337 5,310
Financial Charges 115 91 66 42 18 (0) (0) (0) (0) (0)
L C + Bank Charges 100 110 121 133 146 161 177 195 214 236
Profit before Taxation (98) 352 579 979 1,448 1,966 2,604 3,306 4,123 5,074
Taxation 43% (42) 151 249 421 622 845 1,120 1,422 1,773 2,182
Profit after Taxation (56) 200 330 558 825 1,121 1,484 1,884 2,350 2,892
Acc. Profit b/f - (56) 144 475 1,033 1,858 2,979 4,463 6,347 8,697
Accumulated Profit c/f (56) 144 475 1,033 1,858 2,979 4,463 6,347 8,697 11,590
14
PREF-60/Feburary, 2008/ Rev 2
12.3 Projected Cash Flow Statement
(000)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Profit before Financial

Charges & Taxation 117 552 767 1,155 1,612 2,127 2,781 3,501 4,337 5,310
Amortization 36 31 26 22 19 16 14 12 10 8
Depreciation 16 14 13 12 10 9 8 8 7 6
168 597 806 1,189 1,641 2,153 2,803 3,520 4,354 5,325
Working Capital Change 57 (7) (1) (5) (7) (6) (10) (13) (15) (19)
Cash from other Sources

Owners 863 - - - - - - - - -
Bank Finance 863 - - - - - - - - -
1,726 - - - - - - - - -
Total Sources 1,952 590 805 1,183 1,634 2,147 2,792 3,507 4,338 5,306
Applications:
Fixed Assets 159 - - - - - - - -
Preliminary Expenses 240
Re -Payment of Loan 287 263 239 215 191 - 0 - 0 - 0 - 0 - 0
L C Charges 100 110 121 133 146 161 177 195 214 236
Tax - 42 151 249 421 622 845 1,120 1,422 1,773 2,182
744 524 609 769 960 1,007 1,297 1,616 1,987 2,418
Cash Increase/(Decrease) 1,207 66 195 414 675 1,140 1,496 1,891 2,351 2,888
Opening Balance - 1,207 1,273 1,468 1,882 2,557 3,697 5,193 7,084 9,435
Closing Balance 1,207 1,273 1,468 1,882 2,557 3,697 5,193 7,084 9,435 12,323
15
PREF-60/March, 2008/Rev 2
12.4 Projected Balance Sheet
Rs(000)
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Tangible Fixed Assets 143 129 116 105 94 85 76 69 62 56

Preliminary Expenses 204 173 147 125 106 91 77 65 56 47
Current Assets:
Accounts Receivable 122 144 159 181 206 235 268 305 347 396
Cash in Hand / Bank 1,207 1,273 1,468 1,882 2,557 3,697 5,193 7,084 9,435 12,323
1,677 1,720 1,891 2,293 2,964 4,107 5,614 7,522 9,899 12,822
Owners Equity:
Capital 863 863 863 863 863 863 863 863 863 863
Accumulated Profit (56) 144 475 1,033 1,858 2,979 4,463 6,347 8,697 11,590
Long Term Loan 691 518 345 173 (0) (0) (0) (0) (0) (0)
Current Liabilities:
Current Portion
Accounts Payable 179 194 208 224 242 266 288 312 339 369
1,677 1,720 1,891 2,293 2,964 4,107 5,614 7,522 9,899 12,822
16
PREF-60/March, 2008/Rev 2
13 KEY ASSUMPTIONS
The principal assumptions made in preparation of the business plan are set out below:
13.1 Equipments Assumptions
Equipments
Facial Beds 3
Hair Dressing Chairs 4
Make Up Chairs 2
Capacity
Clients per day (In Numbers) 28
13.2 Operating Assumptions
Hours Operational per day 8

(effective hours after taking into account the slack hours)
Days operational per month 25
Days operational per year 312
13.3 Economy Related Assumptions
Annual Growth rates:

- Sale Price of Services 6%
- Beauty Product Costs 10 %
- Salaries & Wages 5%
- Electricity Cost 5%
- Maintenance Cost 1%
- Marketing Expenses (Decreasing Rate) 5%
- Rentals 10 %
13.4 Expense Assumptions
Cost of beauty products consumption per month operating at 10% of the

100 % capacity revenue
Terms with Consultants (Consultants : Clinic) 60 : 40
Service hours required:
- Facial & related services 3 hours
- Hair Cuts & related services 2 hours
- Make Ups & related services 4 hours
13.5 Financial Assumptions
Project Life 10 Years

17
PREF-60/March, 2008/ Rev2

Debt Equity Ratio 50:50

Interest rate on Long Term Loan 16 %
Long Term Debt Tenure 5 years
Net Present Value Rate (Weighted Average Cost of Capital) 20 %
Income Tax Rate 43 %
13.6 Miscellaneous Assumptions
Inventory Level Maintained 2 months

Letter of Credit Settlements for import of Beauty Products 30 days
Repayment of Long Term Loan Year End
Deprecation Rate 10 % per annum
Depreciation Method Straight Line
18
PREF-60/March, 2008/Revb 2

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Pre-Feasibility Study

Small and Medium Enterprises Development Authority

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

1.1 Project Brief

1.2 Opportunity Rationale

1.3 Proposed Capacity

Facial Hair Makeup

1.4 Total Project Cost

Types of Services Particulars of Services

2 CURRENT INDUSTRY STRUCTURE

Major marketing effort is done through advertisement. This includes putting up

3.1 Guidelines for Beauty Clinic Business

3.2 Total Market Size and Growth

4 BEAUTY PRODUCTS USED

5 HUMAN RESOURCE REQUIREMENT

6.1 Equipment List

Television sets 2 20,000 40,000

6.2 Alternate Option for Equipment

7.1 Total Land Requirement

7.2 Covered Area Requirement

7.3 Recommended Mode

7.4 Suitable Locations

7.5 Utilities Requirements

8.1 Initial Project Cost

Following is the breakup of the initial project cost:

8.2 Financing Plan

8.3 Project’s Returns

Estimated Time for Project Completion

1. 15 days for completion of initial formalities, i.e., selection of suitable

9 KEY SUCCESS FACTORS

10 THREATS FOR THE BUSINESS

12.1 Financial Statements

Table 12-1 Projected Level of Services (Number of Clients’ Visits)

Table 12-2 Projected Sales Value (Rupees in thousands)

12.2 Projected Income Statement

12.3 Projected Cash Flow Statement

Profit before Financial

Cash from other Sources

12.4 Projected Balance Sheet

Tangible Fixed Assets 143 129 116 105 94 85 76 69 62 56

13.1 Equipments Assumptions

13.2 Operating Assumptions

Hours Operational per day 8

13.3 Economy Related Assumptions

Annual Growth rates:

13.4 Expense Assumptions

Cost of beauty products consumption per month operating at 10% of the

13.5 Financial Assumptions

Project Life 10 Years

PREF-60/March, 2008/ Rev2

Debt Equity Ratio 50:50

13.6 Miscellaneous Assumptions

Inventory Level Maintained 2 months

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