Galerie de Beaute

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Retail Property Sub-leasing Business Plan

Strategy and Implementation Summary

The funding strategy as it relates to Galerie de Beaute is as follows:

  • Management will contribute personal funding towards working capital. The funding from each partner are from various sources (i.e. home equity line of credit, credit for equipment, etc).
  • Management will also present the business plan to the small business loan officer at our local bank.
  • Management will identify nonprofit organizations which assist start ups (i.e. SCORE, Hometown Economic Development Corporation and First State Community Loan Fund).

Once contact is made with the various funding sources Management will determine which opportunities would best fit our needs. The main point of concern is the long-term interest rate. Management has determined that interest rates 7% or less would best fit our financial plan.

Once funding issues have been resolved Management will turn its attention to leasing the suites. Identifying potential tenants to sign a one year lease is management's priority. The goal is to have approximately 10 tenants committed by the grand opening; thus placing Galerie de Beaute in the position to break even within the 2nd quarter of operation.

5.1 Competitive Edge

Galerie de Beaute's competitive edge is that we are the first enterprise of this kind in Ourstate. All other salons are owned and operated by a few individuals that either are sole proprietors or pay employees 50% to 60% commission. Some owners prefer not to have employees, but rent out remaining booths.

To be considered a booth renter and not an employee by the IRS and the state, a signed lease is required. If an audit is performed and there is no signed lease, this could involve significant liability, including back taxes, interest and penalty.

5.2 Marketing Strategy

The initial marketing strategy requires creating a database of licensed beauty professionals in the state. The list of individuals is of public record and listed on Ourstate's website. Once we have gathered addresses and phone numbers, we will send out direct mail advertisements. We will continue to update our database as information is made available. The second strategy, which will be ongoing, is to acquire tenants by placing advertisements in The News Journal, Community News, and on Galerie de Beaute’s Web page.  In the Business Opportunities section of the classifieds, Galerie de Beaute will advertise for licensed beauty professionals (i.e.  cosmetologists, nail technicians and massage therapists). 

5.3 Sales Strategy

The sales strategy of Galerie de Beaute for year 1 is upon opening to have signed leases for 10 units. Each subsequent quarter increase signed leases by five.

5.3.1 Sales Forecast

The sales forecast for Galerie de Beaute is based on a steady increase in sales in the first year. Sales increase by approximately 8% on the Salon Suites. Because we have more units we expect to sign approximately 1 lease per month after the start up of ten. We anticipate lease renewals for subsequent years thus resulting in 100% occupancy. The direct cost related to each unit is $62.50 per month as it relates to the monthly loan repayment.

Sales Forecast
Year 1 Year 2 Year 3
Salon Suites $153,505 $168,855 $185,740
Nail Technician Suites $22,425 $24,668 $27,134
Massage Suites $10,725 $11,798 $12,977
Facial Suites $8,775 $9,653 $10,618
Barber Suites $17,550 $19,305 $21,236
Total Sales $212,980 $234,277 $257,705
Direct Cost of Sales Year 1 Year 2 Year 3
Salon Suites $11,250 $12,375 $13,613
Massage Suites $688 $756 $832
Facial Suites $508 $558 $614
Barber Suites $1,196 $1,315 $1,447
Nail Technician Suites $1,421 $1,563 $1,719
Subtotal Direct Cost of Sales $15,061 $16,567 $18,224

5.4 Milestones

The lease for 166 S. Fastlane Highway was signed in April 2004, with a start date of June 1, 2004. The month of May has been devoted to investigating additional financing resources, and working with the architect and general contractor to come to an agreement on the best floor plan for this type of environment. This includes taking into consideration the heating and air conditioning of the units, plans that will win approval from the county and plans that will be comfortable for future tenants. June and July will be dedicated to construction, ordering equipment and marketing. We selected the contractor because of his history of getting jobs completed on time. It is crucial that the jobs move quickly. Marketing will be more effective if we can have sample units to show. We will be taking the same approach if we were showing a sample home.

After 3 years of successful operation Galerie de Beaute will research additional sites in Ourstate or Neighboringstate.

Milestone Start Date End Date Budget Manager Department
Negotiate lease for selected site 3/31/2004 4/5/2004 $8,000 Curley Operations
Select Architect and complete floor plans 5/15/2004 6/4/2004 $5,000 Curley/Marcela Operations
Select Contractors 6/4/2004 7/31/2004 $135,000 Marcela Operations
Identify and Order Equipment 7/15/2004 7/21/2004 $44,000 Marcela Operations
Direct Mail Advertisment 6/5/2004 7/31/2004 $150 Curley Marketing
Grand Opening 8/1/2004 8/1/2004 $0 Marcela/Curley Operations
Advertise in the Community News 8/1/2004 9/30/2004 $600 Curley Marketing
Direct Mail Advertisment 10/1/2004 10/31/2004 $150 Curley Marketing
Totals $192,900