Executive Summary
Blue Giraffe Spa is a new upscale destination in Beaverton, Oregon, offering a complete day spa experience. We offer seven ultra-chic, ultra-comfortable treatment rooms with the finest spa linens and equipment. We offer massage in a variety of styles - traditional Swedish Massage, Deep Tissue work, Hot Stone Massage, Reflexology, Sports, Pregnancy and others. We also offer facial and body treatments, like a Vitamin C Antioxidant Facial and Pevonia's Anti-Free Radical Treatment. The day spa has the latest in anti-aging products and techniques but does NOT offer services on hair such as cutting, styling and coloring. The only time a pedicure would be provided, is when it's part of a full treatment, like a Blue Giraffe Foot and Leg Reflexology Treatment. In fact, for location, we prefer being located near hair and nail salon for co-marketing opportunities.
Our goal is to tailor the client's experience based on initial interview information, as well as feedback during the treatments, to ensure the client's comfort and satisfaction, and to increase repeat business. We are mindful of the overall experience - using only the finest oils and lotions, beauty treatments and aromatherapies. Special lighting, music, decor, and textiles are used throughout the spa to complete the comfortable, plush environment and enhance the client's overall spa experience.
There are about 19,900 spas in the U.S., according to ISPA (International Spa Association), and seven out of ten are day spas. In 2010, Spa Industry revenues totaled over $12 billion annually, with Day Spas accounting for over $7 billion of this figure. In 2010, there were 150 million spa visits in the United States.
There are several existing day spas and a number of individual LMTs (Licensed Massage Therapists) in Beaverton, Oregon, but none with our service/product range within a five mile radius. To find a such a comprehensive day spa, residents currently have to travel into the city (Portland, Oregon). The going rate for massage in Beaverton, Oregon is $70-$90 per hour, which is slightly above most of the other residential areas in the metropolis, which can even be as low as $40 per hour in saturated or low-income areas.
Primary Financial Objectives
1. Achieve $31,000 in sales the third month after opening by performing 14 services per day.
2. Achieve $62,550 in sales the six month after opening by performing 29 services per day.
3. Have a local client return rate of 90% by the end of the first six months.
4. Become an established community Spa destination by the end of the first 12 months.
5. Perform 53 services per day by the end of the first year.
This business plan has been developed to track progress prior to grand opening and following through with a five-year projection. In addition, this plan has been written to secure a small portion of the start-up funding necessary for Blue Giraffe’s successful kick-off.
Project Description
Blue Giraffe Spa is a new destination offering customers the combination of massage, body treatments, facials and anti-aging treatments. The settings are upscale, beautiful and serene. We cater to both men and women and offer the latest in skin care products and therapies. Progress Ridge, where we plan to locate, has a daily traffic count of 75,000 cars. It is also only two blocks from a commuter train stop, and has an upscale hair and nail salon which would complement our services nicely.
Services are provided by licensed therapists and aestheticians who are independently contracted and paid on a commission basis. The upside of the commissioned employee is that there is very little overhead without sales; employees only make money when the business makes money.
We also offer a full retail line that complements the services menu. Products included are high-end cosmetics, creams, candles, and other beauty products. These high-end items tend to retail at a minimum of $20-$25 per item and have 50% mark-up, or higher.
Cost Estimate
The following table outlines start-up expenses related to leasing, build-out and start-up expenses in opening Blue Giraffe Spa. The bulk of the start-up costs will be invested by the owner and the remainder will be funded through short-term financing. Details are provided in the tables below.
Start-up Expenses
Legal $2,500
Printing, stationery, bags, grand opening coupons $3,500
Brochures $500
Construction/Design $45,000
Insurance $2,000
Rent $17,000
Research and Development $0
Advertising $5,000
Accountant $950
Linens $4,000
Other $0
Total Start-up Expenses $80,450

Start-up Assets Cash Required $35,000
Start-up Inventory $6,000
Other Current Assets $32,095
Long-term Assets $0
Total Assets $73,095
Total Requirements $153,545

Other Current Assets purchased at start-up are as follows:

Massage table equipment - $3,795 (5 complete)
Aesthetician Equipment - $2,800 (2 room setup)
Decor and Furnishings - $13,000
Envision Software & Equipment - $4,000
Signage - $3,500
Backbar Supplies - $5,000
Advanced Cost Estimating Technique
Expected Cost
Answer: Pexp = (Popt + 4 x Pmost + Ppess) / 6
Pexp = ($80 + 4 x $65 + $50) / 6 =
Pexp = ($80 + $260 + $50) / 6 =
Pexp = ($390) / 6 = $65.00

Expected Amount
Pexp = (Popt + 4 x Pmost + Ppess) / 6
Pexp = (60 + 4 x 53 + 45) / 6 =
Pexp = (60 + 212 + 45) / 6 =
Pexp = (317)/ 6 = 52.8

Complex Method For Estimating Monthly Sales
$80 x 60 = $4800.00
$65 x 53 = $3445.00
$50 x 45 = $2250.00

Cost Assumptions
The startup table assumes a realistic growth trend. There are four main areas of income: massage, aesthetician, retail and out-call. For the forecast, massage and aesthetician services were conservatively estimated at $65 per service with 35% of that going to the service provider. The basis for these projections is a conservative estimate of 7 services per day the first month in business, and 53 services per day by the end of the first year. At 53 services per day, we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day. Outcall services will enhance the bottom line by allowing us to generate sales without using any of our retail space. Out call also averages a higher per service charge, averaging around $80 per service with 65% to the therapist and virtually no overhead.
Financial Analysis
The premier element to our financial plan is initiating, maintaining, and improving the factors that create, stabilize and increase our cash flow. Because of the commission structure of our contractor payments, our variable costs will exceed fixed costs for all years of this plan, which should help stabilize the cash flow - we only pay commission when we make a sale. We will surpass the break-even point by month four, and end the first year with a net profit margin of almost 11%. By quickly repaying our loan while increasing sales, and managing costs, we will increase the net worth of the business substantially in the first year, and continue increasing it for the foreseeable future.
Because we are paying our service-provider on commission, our variable costs will exceed our fixed costs. This keeps our overhead low, and means we paying ONLY for hours when they actually provide services. Keeping such a large pool of reliable massage therapists and aestheticians as we are recruiting will keep us from losing business with no-shows, especially since we will schedule our contractors, as much as possible, for full days or half-days, rather than individual appointments.
Fixed expenses are the customary: rent, electric, advertising, and insurance. There are four main areas of income: massage, aesthetician retail and out call. Massage and aesthetician services are $65 per service minimum, with 55% of that going to the service provider. The basis for the sales projections is a conservative estimate of 7 services per day the first month in business and 53 services per day by the end of the first year. At 53 services per day we would still only be operating 75% to capacity with 7 treatment rooms operating 7 days a week, 8-10 hours per day.
On retail products, the gross margin is consistently 50% across the board. The retail lines go in conjunction with the spa services as an extension of the spa experience. The more customers, the more retail sales that will be driven. These high-end cosmetics and spa products are hard to find items that generate repeat purchases.