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Executive Summary

Kedai Gunting Rambut Krishnan aims to provide optimal satisfaction to the customers with in the business environment Taman Maju and hope to have number of branches in other areas within Perak. This plan seeks to generate a significant increase in Gunting Rambut Krishnan sales and profits from the services provided to the customers and also ensuring the customers are retained, this is done to various feasible studies, marketing research and the analysis, compared to the preceding year. The highlights of this plan are the targeted profit margin and better sales. The quantified profits on the services done are presented in the tables presented in that later plan. These figures represent the key prospects available for Kedai Gunting Rambut Krishnan. These targets are attainable through a proactive approach to the clients, teaming-up with technology providers, and partnering with reputable local suppliers and provision learning areas for the staff to reduce competition, improve pricing, and reduce risks and mostly giving the most preferred services by the customers. This business plan has been created on the basis of yearly and seasonally market research. Data conclude the size and growth of the market and segments, customer needs, perception, and buying behavior trends have been on the upswing, and are expected to continue in this trend for the other years. Kedai Gunting Rambut Krishnan is able to fill the hole in the marketing niche, and will benefit from operations beginning in coming years starting from next year 2012.

Vision and Mission Statement


According to Scarborough (2011), throughout history, the greatest political and business leaders have been visionaries. An example is Dr. Martin Luther King Jr. I have a dream speech. A vision is the result of an entrepreneurs dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see. Scarborough (2011) also stated that a clearly defined vision helps a company in four ways: a. Provide Direction: Entrepreneur use vision to focus everyone attention on the future and determine the path the business will take to get there. b. Determines Decisions: Influences the decisions of the business that the managers and owners make. This influence can be positive or negative depending on how well defined the vision is.

c. Motivates People: A clear vision can excites and ignites people to action. d. Allows for Perseverance when Facing Challenges: New companies, their founders and their employees often face many challenges and hardships form variable of sources. Having a vision serves as the companys guiding stars when facing a crisis. For Kedai Gunting Rambut Krishnan, their vision is: We believe that customer satisfaction is our strength and with the new millennium young generation requirement we are devoted to grow with Seri Iskandar customers by providing high quality and lower prices daily services with no interruption. A mission statement however addresses a basic question of any business venture, what business are we in? Establishing the purpose of the business in writing must come first in order to give the business a sense of direction. As an enduring declaration of a companys purpose, a mission statement is the mechanism for making it clear to everyone the company touches why we are here and where are we going. Without a concise, clear and meaningful mission statement, a company risk wondering aimlessly in the marketplace, with no idea of where to go or how to get there. A great mission statement sets the tone for the entire company and focuses its attention in the right direction. For Kedai Gunting Rambut Krishnan, their Mission Statement in the business is:
Kedai Gunting Rambut Krishnan is committed to customers satisfaction. Our friendly and professional stylist team provides the best hair cut and shaving in Seri Iskandar within enjoyable environment with exceptional practices.

Companys History
Kedai Gunting Rambut Krishnan is a sole proprietorship company and was founded by Mr. Krishnan A/L Kalimuthu on 3rd of August 2001 in Ayer Tawar, Perak. Five years after that, a second shop was established in Seri Iskandar, Perak in April 2011. The shop was founded by Mr. Krishnan based on his desired of pursuing a career in hair stylist upon his graduation from high school. After that, Mr. Krishnan began taking a diploma in hair styling and after successfully obtained it, he work with his brother, a fellow barber for about 20 years. After he believe he has learnt everything that is to know on hair cutting and styling business, he set up his first barber shop with the help of his older brother in Ayer Tawara and five years later in Seri Iskandar. Both shops incorporated the same style, size and location. All of his workers are foreign workers from India and are experienced in hair cutting business before came here to Malaysia. In this business, Kedai Gunting Krishnan only serves male customers. Throughout the 10 years of serving customers from various races and country, he has established a strong base of regular and loyal customers. Most of twhe customers come in evening and weekend and their number doubled during public holidays. In the future, Mr. Krishnan wanted to build another barber shop and maybe established a franchise throughout the country.

Business and Industry Profile


Goals are broad, long-range statements of what a company plans to achieve in the future that guide its overall direction. It addresses the question, what do I want my company likes in the future? Kedai Gunting Krishnans goals are: 1. To become the main choice of barber shop for the male population of Seri Iskandar and Ayer Tawar. 2. To defeat the competitors and become the leader in the market. 3. Develop the business and set up another barber shop in another area in near future. Objectives however are more specific targets of performance. Common objectives concern profitability, growth, efficiency, markets, financial resources, physical facilities, organizational structure, employee welfare and social responsibilities. Well written objectives must be specific, measurable, assignable, realistic (yet challenging), timely and written down. Kedai Gunting Krishnans objectives are: 1. To exceed the customers expectations by providing a satisfactory hair cutting services. 2. To increase the annual revenue of the company by 10% every year by increasing the number of customers through superior performance and mouth-to-mouth referral. 3. Have a cliental return rate of nearly 90% from overall customers that come to the shop and establish a group of loyal customers. Besides goals and objectives, it is also important to know the companys current position in the industry. This can be done by using the PESTLE analysis and the SWOT

analysis to determine the external factors that affecting an organization decision making, performance and strategy. The PESTLE analysis examines the external market, the customers needs and wants that can be ascertained. Through the PESTLE analysis, an organization can assess if they can deliver the customers wants providing. The factors that affecting Kedai Gunting Krishnan are: a. Political Factors This factor identifies the changes in the position politician take on issues. This referred to the government policy such as the degree of intervention in the economy. As all employees under him are foreigners (from India), they needed to deal with Malaysian legal issues like being documented and getting employee Visa. The barber shop has to function following the Malaysian government policy. b. Economical Factors This factor indentifies trends such as changes in personal disposable income, interest rates, inflation and unemployment rates. Kedai Gunting Rambut Krishnan income is subjected to Malaysian laws of taxation. If this barber shop has higher income growth, it may boost the demand on the barber services contributing also to the increase of work opportunities as the business provide more work positioning. c. Socio-Cultural Factors This factor indentifies trends in societys beliefs, behaviors, values and norms; for example, the number of part time workers, attitudes towards global warming and makeup of the family structure. The customers of Kedai Gunting Krishnan in Seri Iskandar are multiracial as it is located in the near proximity of Universiti Teknologi Petronas, a university with students came from Malaysia and other countries. The different cultures bring behavior into Mr. Krishnans barber shop forcing him to deal with these customer habits and also train his employees on how to deal with new customers attitudes.

d. Technological Factors This factor indentifies changes in the application of technology. An example is the current trend of preference of customers in online transaction. In order to attract more customers and keep the existing ones, Mr. Krishnan has equipped the barber shops with modern equipment, ergonomic furniture and computer so that the barber shops can be more structured and the customers can use the internet facilities and do a payment using credit card instead of cash in hand. The customers waiting can also use the entertainment available such as television and radio that can increase the customer satisfaction. e. Legislative Factors This factor is closely linked to the political factors but also included trends in court decisions such as liability compensation. Mr. Krishnan practice One Malaysia principle which brings all the customers together. The fact that the increasing number of international customers demanded Mr. Krishnan to treat all the customers equally as any other local customers. Kedai Gunting Krishnan also practices the Perak state legislation. f. Environmental Factors This factor included the weather and climate change. With the major changes occurring due to global warming and with greater environment awareness, this external factor is becoming significant issue for firms to consider. The barber shops operation is not a threat to the environment and obeys Malaysian DOE regulations. The HSE requirements also are practiced by Kedai Gunting Krishnan. The disposal of the excess hair must be properly done so that it does not disturb the environment. SWOT analysis is used to determine an organization internal factor; Strengths and Weaknesses and also the external factor; Opportunities and Threats. For Kedai Gunting Krishnan, the SWOT analysis is:

a. Strength (Factors within the organization control and can be facilitate the achievement of the organization goals and objectives) Competitive advantage in the line of service compared to other neighbor barber shops. First come first serve practice. Affordable prices. Additional free packages. Short waiting time in peak hours. Hair cut quality and variable options styles. Professional employees. Open every day. Good reputation among the customers.

b. Weaknesses (Factors within the control of the organization however hinder the achievement of the organization goals and objectives) A lot of customers in line waiting during the weekends and peak hours such as Wednesday during weekly market. Lack of updated hair style magazines and posters with more cutting styles options. No official training of personnel on the new cutting styles. Lack of customers entertainment while waiting for turns.

c. Opportunities (Factors beyond the control of the organization and can facilitate the organization goals and objectives.)

Strategic spot location of the barber shop. Satisfied customers introduce to the barber shop more customers. Weekly marker that bring many clients in a single day. A fulfilled customer need.

d. Threats (Factors beyond the control of the organization, however hinders the achievement of the organization goals and objectives.) More barber shops opening. On long school holidays the number of customers decrease as most students go back to their home town. People buying their own hair clipper to cut their hair. New regulations on barber shop operations

Business Strategy
If a firm is able to keep up profits that exceed the average for its line of service or products, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage. An organization is said to gain a competitive advantage when the firm is able to deliver the same benefits as its competitors but at lower cost (cost advantage), or delivers benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

Cost and differentiation advantages are also known as positional advantages since they describe the firms position in the industry as a leader in either cost or differentiation. A resource-based view emphasizes that the firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage:

According to the resource-based view, in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. Without this superiority, the competitors simply could replicate what the firm was doing and would fall under me-too situation. a. Resources Resources are the firm specific assets useful for creating a cost differentiation advantage and that few acquire easily. For Kedai Gunting Rambut Krishnan, the resources are the barber shop building which is a rental one, reputation of the barber shop, equipment, inventory (the products in use like blades or scissors) and the job engaged staff. b. Capabilities

Capabilities refer to the barbers ability to utilize its resources effectively. Kedai Gunting Krishnan has the ability to use their hair clippers for a long period of time without any breakdown compared with its competitors. Mr. Krishnan also has the ability to obtain large amount of blades in large quantities. c. Distinctive Competencies This refers to the barber shops resources and capabilities all together. This will enable innovation, efficiency, quality and customer responsiveness, all of which can be leveraged to create a cost advantage or a differentiation advantage. d. Cost Advantage and Differentiation Advantage Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product. Kedai Gunting Rambut Krishnan positioned itself in the stylist business through its choice of low cost and differentiation. This decision made by Mr. Krishnan as a manager, was a central component of the barbers competitive strategy. Another important decision is how broad or narrow a market segment to target. e. Value Creation This refers to the value the barber shop creates by performing a series of activities or value chain as shown in the model below.

The main goal of these activities is to create value that exceeds the cost of providing the service, thus generating an income margin.
i.

Inbound logistics Inbound logistics are activities that include the receiving, warehousing, and inventory control of input materials. Mr. Krishnan keeps the inventory of every input material

such as blades, powder, brush, shaving cream, etc and he has a small room where he stores all received inventory. The cash received from the service done is kept within the proper electronic cash box where access to the cash box is limited to him and his assistant in case of his absence. No warehousing is required as there is not much to store. ii. Operations Operations are the value-creating activities that transform the inputs into the final products. In Kedai Gunting Rambut Krishnan the inputs are the customers with their hair and or shaving to be done and the output is their hair and or shaving done. So, their operations are quite structured. iii. Outbound logistics Outbound logistics are the activities required to get the finished services to the customer, including warehousing, order fulfillment and others. Since some customers have staff preferences they sometimes have to wait a little longer for their stylist to get done with the other customer to get his order fulfilled. iv. Marketing and Sales Marketing and sales are those activities associated with getting customers to acquire a hair cut or shaving service, including channel selection, advertising, pricing and others. Getting the customers to acquire Kedai Gunting Rambut Krishnan services is quite easy since the barber shop has a good reputation among customers. No advertisement is done by the barber shop, but the satisfied clients that increase in number everyday do the word to word advertisement. v. Services Services are those activities that maintain and enhance the services value including customer support, repair services, discount packages and others. Mr. Krishnan barber shop support its customers by giving them the best of their services and sometimes offering discounts and also by practicing first come first serve but

sometimes by the customer request the older customers can be exception of this practice. In a nut shell, any or all of the above activities may be vital in developing a competitive advantage for the Kedai Gunting Rambut Krishnan. To achieve a competitive advantage, the barber shop must perform one or more value creating activities in a way that creates more overall values than competitors do.

Features and Benefits


Features of the Shop It is a customer based shop where their desires are met especially whatever they seek. The different things offered are relaxation points and enough seats for the customers to relax before they are being served. The barber chairs and facial steamers shall be installed in the shop, and more so the music system will be provided where there will be a complete relaxation of the customers. There are various types of hair dryers to be placed in the system which includes a beehive hairdryer, stand hairdryer and a hang hairdryer which can suits the ergonomic preferences of the customers. There will be different form of massages which will be mainly focusing on the feet and the head as well the shoulders of the customers in case they have requested and their opinions of it would be considered. The staffs will be both male and female who can

help on certain areas and guide the customers in taking what they are in need of. The families side is constructed where there will be a small garden for children to play while their parents would be getting their services without a lot of distraction. We look forward to compartmentalize the shop in the future and include other important features to make it more attractive to the customers and ensure the existing customers are retained. 1. Key features to Success Since the business is at it starts-up stage, we hope to make it modest and expand it at a reasonable rate, which will make it prudent to achieve the key areas of success which are: Customer attention. Professionalism. Convenience.

Services Benefits The Kedai Gunting Krishnan provides hair styling for families which include haircuts for men and women, permanents and hair coloring for women, as well as haircuts for children. Shampoos will be offered for all adult services. Service is offered on a walk in basis or by appointment. We will also sell hair care products that are forecasted to account for 10% of sales. These professional quality supplies will include shampoos, conditioners, brushes, combs, and other styling aids to meet the needs of the customers. The other benefits to the customers are beauty creation and development of it to an individual. Relaxation, a healthy glow and a friendly atmosphere are some of the benefits that a barber shop or a salon offers customers. More so the main benefits include beauty treatments to meet your needs, therapies for stress and tension, and professional staffs that can meet any of your beauty and nice look needs.

Marketing Strategy
The imperative thing in all forms of industries is customer satisfaction, and looking into the trend of beauty and handsomeness modeling, Kedai Gunting Krishnan aim is to satisfy the customers through a structured and defined successful way by increasing sales in the business through pleasing and attracting the customers. Since the business is getting better, the customer satisfaction is our priority and it is concurrent with a consolidated decent client base. Though the endeavors are challenging and prone to futility, our main aim is to penetrate the market by attracting as many clients as possible and retaining them in our business. The marketing strategies; principal and philosophy are to Reach Out to New Customers and retain them this is enhance by allocating money for marketing purposes, which is translated to newspapers and other forms of advertisements. The allocation of resources is done

systematically and intelligently and making sure time is highly invested than money due to meager resources. The following are guiding principles to guard and enhance the business; that is the Marketing mission and objectives Marketing Mission To provide reasonable prices, convenient for all types of hair styles, and our sole purpose is to attract and maintain customers, and adhering to this optimal, everything will be in order and the services will be to the expectations of valued customers. Marketing Objectives Increase number of customers by 5 % per quarter a year Maintain and sustain a positive and steady growth each month Decrease the possessed customers cost by 6% per year

Financial Objectives Grow profit margin by 4 % per year Profitability achieved within the first year of ince3ption Increase the products and services by 5 % per year

The ways to attract the customers is to use local and international salon Promotion Company specializing in the field of marketing. The sales will be increased due to the boom of the clients which will increase the reputation and proper recommendations to the colleagues on the services through word of mouth hence it will immensely create a successful program in advertising. To ensure the customers are reached the following targets are prioritize. The Target Marketing

There are three sections or different market segments identified to be the focus these are: Men: The fact that the area is mainly 65 to 75 percent and most of them do attend the salons or barber shops to make their hair short , it will be lucrative and faster, and as their will be increase jobs can be created to increase the services to customers. Women: women like specific salons where they can afford with a desired service, though the quality wise is not that much we will have reasonable services to all the women with their preferred tastes. As per the mission and objectives the responsibility on providing optimal services to them is a way out to the growth of our business. Families: Mothers, young ones are provided a special package where kids are offered toys to play with and providing child-friendly hair style. The kids will be offered special rates due to the fact that their growth is too fast especially the hair and they will be in need of regular services which is not time consuming unless the child is fearful. Positioning The location is decided to be at a very convenient and it will be positioned as a full service saloon. It will offer most o f the satisfactory services to the customers where it will not give them a room to find other services from other areas. This will leverage its competitive edge to attain its defined positioning; Competitive edge is based on superior customer services. The hair cutting and styling can pull customers hence a care of standout superior customer attention is quickly optimized and the operation it kept effective and efficient. Investing time and money. The staff needs to be trained to get better experiences such that they can easily serve the customers effectively and with time branches can be created and they can serve in other areas where there is high demand of hair fashion and other styles. Adaptability to compete with the existing similar ventures will be highly improved to give it a better a competitive edge.

Strategy Pyramids The main objective is positioning the Salon as full service premier within the locality of the University. This is to create customer awareness on the services offered, and work smartly in building customer loyalty and referrals. Keeping in mind the scoreboards of the business is to serve effectively at a professional level with a fully delivered satisfactorily customer service at reasonable rates. This will be communicated through the newspapers and on internet social sites. Marketing Mix The approaches for the marketing mix consists of; pricing, distribution, advertising and promotion and lastly customer service. Pricing: The prices will be based on a competitive pricing model with other similar service providers. Distribution: After having a quantifiable growth the outlets can be established and all the products will be distributed at the central place. Advertising and Promotion: On monthly basis there will be campaigns to

communicate the core valued services to the customers More so a further step has to be established to have some designs or advertisement on places where there is high traffic jam to attract the attention of the people. Customer Service. The exceptional customer service will be provided since our workers will be trained in giving services to the customers. The training will help the customers to be problem solvers and create independence on dealing with certain issues amicably. Marketing Research At the initial phases of the marketing build up, a number of focus groups were given attention to gain into the buying behavioral patterns of prospective customers. The focus was to all people but it is still consider random people to look for the services. The survey was done by asking their views on the current services and what should they

expect to be improved, and what type of service is convenient.

The plans for the

business are shared with few of them to keep their hopes on what would come to satisfy their needs. The information gathered made sense than what was thought of. There are various marketing strategies which are established to pull a large number of customers which will be elaborated below. The most effective means are detailed though the saying It takes money to make money holds truth in the strategies developed to build customer base. a. Data capture Identify the people and work so hard to capture their attention towards the business. Further on collecting their email addresses, as well as other preferences to coordinate the operation plan. The e-mail versatility makes it cheaper to advertise and allowing customers to know the current and new plans to be structured in the business. Ensure the history of the individuals who are coming for the services is properly tracked and encourage them to be loyal customers by ensuring that their services are done perfectly. b. Develop a marketing strategy The size of the business should capture and accommodate; to be potential customers as well effective plans should be the routine practices until a better growth of the business is achieved. The marketing efforts to be put forward are; having direct contacts with the customers such that the business administration will promptly act on the comments and suggestions made by the clients. c. Using the technology The current technology has simplified our daily activities, and a full utilization on the modern technology will catapult the business to a better position. The photos of the pretty and handsome girls and boys should be posted and brief highlights of the individual will foster and promote the services needed by the customers. d. The power of Internet

The business will be collecting email addresses of the people who are rendered services, this create a network with the customers and build a comprehensive relationship with the customers. This can be done by emailing them and providing some special offer, and encourage them to recommend on some of the products and services that they are interested in. e. Advertising The advertising is essential that measures the response all their advertising campaigns to assess whether it was a viable investment and how investment decisions future. One wonders how many people responded to your ad, how many of them were converted to the sale, worth to you? Some tips: as one that attracts attention is basically a title change may cause increased 50-100%, in response, the ad needs to appeal directly to the interests of your audience objective. People do not buy your product or service. They buy the benefits your product or service offer. Therefore, spend some time to emerge

Competition and Buying Patterns


The competition is an eminent element is the business and it has to be addressed through the mentioned components to have a competitive edge in the business. The following are the identified competitors. Tradition barbers: They have a walk-in service whereby they dont really work with appointments. They provide services to the customers in whatever way the customer needs. They mainly provide straight-forward haircuts and they are not that expensive so they are usually preferred by low-income group. The disadvantage is that they are so conservative in styling capacity, and sometimes it is only one person which operates it and can have a long queue. Quick Salons: These are mostly termed as Best Cuts. They are so attractive to the customers because they do have all in one, in that the stores are the same from place to place and some people like their services.

Independent Salons: They focus on a specific area or niche and they serve only limited number of people at a smaller scale. The buying pattern of men and women varies for the fact that works best for is the one which is not so complicated and it is of convenience. Women concerns on hair styling create bond with the stylists and once it is done perfectly; loyalty and trust are manifested.

Competitive forces The forces are referenced to Michael Porters forces and they are listed as diagram below. The identified forces are the collective elements which would shape and strengthen the business growth amongst the existing and ones to be established.

Economic Barriers Economies of scale Product differences Brand Identity Access to distribution Power of Suppliers Government SUPPLIE Policy RS Low-cost product design

NEW ENTRAN COMPETITO TS

Rivalry Determinants Product differences RS Threat Switching costs Brand identity of New Concentration and Entrants balance Informational complexity Diversity of competitors INTENSITY OF Power ofGrowth of the business RIVALRY

Buyers

BUYERS

Threat of Substitute Intensity s

of Rivalry SUBSTITUT

Determinants of supplier Power The concentration of the suppliers Differentiation of inputs Cost relative to purchases Presence of substitutes Pull through Impact of different inputs

Price Sensitivity Product differences Brand Identity Impact on quality Decision making

Determinants of Substitution Threats Relative Price performance of substitutes Switching costs Buyers Propensity Analyzing the barber shop using this model we will end up with:

a. The level of rivalry among barber shops is very low as there are only two barber shops presently operating. b. The potential for entry into the barber shop line of business is not difficult. Anyone with good initiative can start a barber shop business. c. The power of suppliers is not a problem as the equipment and product used in this line of business can be acquired at any place without any restriction or shortage on supply and the demand of these equipment and products is quite low make their prices affordable. d. The power of customer is very important and the business is very stable as the demand on barber shop services keeps increasing.

e. There is no threat of substitute to hair cut, as everyone has to get their hair cut once and a while and is normal custom for all multicultural residents have a haircut.

Description of Management Team


Name Date of Birth : Krishnan A/L Kalimuthu : 26th Sept 1959

Academic Backgrounds Graduate from secondary school from Sekolah Menengah Jenis Kebangsaan Ayer Tawar, Perak in 1977. Diploma in hair stylist from College

Working Experience and Achievement 2 years of working experience as barber at Kedai Gunting Rambut Delima, Ayer Tawar upon obtaining diploma. 20 years of working as barber and assistant manager for Kedai Gunting Rambut Kalimuthu.

Establish Kedai Gunting Rambut Krishnan in Ayer Tawar on 3rd of August 2001. Set up 2nd Kedai Gunting Rambut Krishnan in Seri Iskandar on 15th of April 2006.

Role in the Organization Founder and president of Kedai Gunting Krishnan. Recruiter for employees from India. Design the market plan and strategy for the organization.

Plan of Operation
Kedai Gunting Rambut Krishnan consists of the owner and 12 employees, 6 in each shop. In every shops, the workers act as barbers, recipient and one of them act as assistance manager when Mr. Krishnan is not around. Mr. Krishnan generally controls the financial aspect of the shops. Below is the organizational chart for Kedai Gunting Rambut Krishnan:

Founder and President Krishnan A/L Kalimuthu

Ayer Tawar Subsidiary, Assistant Manager Balbir A/L Muthuringgam

Seri Iskandar Subsidiary, Assistant Manager Muthusami A/L Vitaham

Operation Staffs

Administration Staffs

Operation Staffs

Administration Staffs

Financial Plan
Mr. Krishnan at Kedai Gunting Rambut Krishnan needs to expand his barber shop services to copy with the high demand of customer looking for his service. In the last three year Kedai Gunting Rambut Krishnan has registered an increase in number of clientele where some of them had to move to other barber shop because of time constraint since they cannot wait that long to get the service. The financials that are enclosed are real data from the past previous years. No assumptions were made since Mr. Krishnan as the barber shop manager always kept the data recording of his business. Revenues have been increasing at an annual rate of

10.58% from 2008 to 2009 and 4.85% from 2009 to 2010 where from 2008 to 2009 there was an historical jump on revenues. The reason why from 2009 to 2010 the revenue growth is less than the 2008 to 2009 is because the business has reached the sales climb and the business has not yet reached the profits peak the reason why the revenues are expected to stay steady throughout the following years to account for normal flow of new clients coming into the Kedai Gunting Rambut Krishnan barber shop. It is important to notice that as Kedai Gunting Rambut Krishnan barber shop sales come from services we do not have cost of goods sold in our calculations. For our calculations we included all costs, nevertheless, in the operating expenses section of the Income Statement table the product sales are a minimal part of our market. We also have to point out that we are not quite sure how much revenue will derive from clients who are looking for full service (hair cut and shaving) as the majority of the customers just come for hair cut, so we had to take the liberty of considering only those having only a hair cut so we could make our calculations more linear with an estimated monthly revenue of RM6,300. To add that under other in the Income Statement are included services like massages that will be a newly introduced service starting by the end of 2010 and we are not quite sure how much revenue this service will generate. But, we are confident that in time this service will be a large part of our revenue and just to play on the safe side we estimate that this service revenue to be only RM1,800 a month for the first year. To guarantee the start-up funds lender that the Kedai Gunting Rambut Krishnan barber shop owner is financially stable, a personal financial statement is enclosed illustrating other sources of income that include interest and dividend income from investments (RM3,500), salary income (RM3,000), and commission income (RM2,000).

Break-even Analysis
The break-even analysis shows that Kedai Gunting Rambut Krishnan barber shop has a good balance of fixed cost and sufficient sales strength to remain healthy and competitive. Kedai Gunting Rambut Krishnan barber shop break-even point is only 1,050 clients a month and this was derived by using average revenue of RM6 per client, and Mr. Krishnan withdrawal of RM1,500 per month.

Note: Break-even point is where the line intersect with 0


Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even RM6,300.00 1,050.00

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost RM6.00 RM0.00 RM6,300.00

Past Income Statement


As we can see from the Gunting Rambut Krishnan barber shop Income Statement from year 2008 to year 2010 Mr. Krishnan barber shop has registered an increase in net profit, where the net profit sales increased from 6.39% in 2008 to 13.86% 2010. We expect the income to hit over RM75,600 at the year ending of 2011 for the Kedai Gunting Rambut Krishnan barber shop business. This increase will be assured by the Kedai Gunting Rambut Krishnan reputation of its services and customer relationship driven strategy.

Kedai Gunting Rambut Krishnan, Income Statement for the year ended 12/30/2008, 12/31/2009 and 12/31/2010
2008 Sales Cost of Goods Sold Other RM65,200 RM0 RM0 2009 RM72,100 RM0 RM0 2010 RM75,600 RM0 RM0

Total Cost of Sales

RM0

RM0

RM0

Gross Margin Gross Margin (%) Expenses: Payroll Sales and Expenses Depreciation Leased Equipment Utilities Insurance Rent Other Payroll Taxes Other

RM65,200 100%

RM72,100 100%

RM75,600 100%

RM50,200 Marketing and Other RM1,500 RM900 RM0 RM600 RM700 RM1,200 RM0 RM5,020 RM0

RM51,200 RM1,800 RM900 RM0 RM600 RM700 RM1,200 RM0 RM5,120 RM0

RM52,200 RM2,000 RM900 RM0 RM600 RM700 RM1,200 RM0 RM5,220 RM0

Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred (18%) Net Profit Net Profit/Sales (%)

RM60,120 RM5,080 RM0 RM914.40 RM4,165.60 6.39%

RM61,520 RM10,580 RM0 RM1,904.40 RM8,675.60 12.03%

RM62,820 RM12,780 RM0 RM2,300.40 RM10,479.60 13.86%

Past Cash Flow


Mr. Krishnan expects to manage cash flow over the next years simply by growth of the cash flow of the business. It is promissory that the barber shop business will generate more than enough cash flow to cover all of its expenses. Kedai Gunting Rambut Krishnan Statement of Cash Flows Year Ended 12/30/2008, 12/31/2009 and 12/31/2010

2008 Cash Received Cash from Operations: Cash Revenues Cash form Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Other Expense Sales Tax Principal Repayment of Current Loan Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

2009

2010

RM65,200 RM0 RM65,200

RM72,100 RM0 RM72,100

RM75,600 RM0 RM75,600

RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM65,200 2008 RM0 RM54,333 RM54,333

RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM72,100 2009 RM0 RM60,083 RM60,083

RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM0 RM75,600 2010 RM0 RM63,000 RM63,000

RM0 RM0 RM0 RM0 RM5,000 RM0 RM0 RM0 RM59,333 RM5,867 RM5,867

RM0 RM0 RM0 RM0 RM5,000 RM0 RM0 RM0 RM65,083 RM7,017 RM12,884

RM0 RM0 RM0 RM0 RM5,000 RM0 RM0 RM0 RM65,000 RM7,600 RM20,484

Past Balance Sheet


As shown in Kedai Gunting Rambut Krishnan barber shop balance sheet, Mr. Krishnan barber shop had a healthy growth in the net worth from approximately RM 1,198.60 in 2008 to RM20,353.80 by the end of year 2010.

Kedai Gunting Rambut Krishnan, Balance Sheet at 12/30/2008, 12/31/2009 and 12/31/2010

Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total long-term Assets Total Assets Liabilities and Owner's Equity Accounts Payable Current Loan Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities

2008 RM5,867 RM400 RM6,267 RM9,000 RM900 RM8,100 RM14,367 2008 RM956 RM0 RM0 RM956 RM13,167 RM14,123

2009 RM12,884 RM400 RM13,284 RM9,000 RM1,800 RM7,200 RM20,484 2009 RM1,240 RM0 RM0 RM1,240 RM8,167 RM9,407

2010 RM20,484 RM400 RM20,884 RM9,000 RM2,700 RM6300 RM27,184 2010 RM1,560 RM0 RM0 RM1,560 RM3,167 RM4,727

Paid-in Capital Common Stock Retained Earnings Earnings Total Owners' Equity Total Liabilities and Owners' Equity Net Worth

RM0 RM0 (RM2,967) RM4,165.60 RM1,198.60 RM15,321.6 0 RM1,198.60

RM0 RM0 RM1,198.60 RM8,675.60 RM9,874.20 RM19,281.2 0 RM9,874.20

RM0 RM0 RM9,874.20 RM10,479.6 0 RM20,353.8 0 RM25,080.8 0 RM20,353.8 0

Business Ratios
Kedai Gunting Rambut Krishnan barber shop business ratios for the past years of this paln are shown below. Unfortunately we have been unable to find the standard Industrial Classification in Malaysia for comparison.

Kedai Gunting Rambut Krishnan Ratios


Ration Analysis 2008 2009 2010

Revenues Growth Liquidity Ratios: Current Ratio Quick Ratio Leverage Ratios Debt Ratio Debt to Net Worth Ratio Times Interest Earned Operating Ratios: Average Inventory Turnover Ratio Average Collection Period Ratio Average Payable Period Ratio Net to Total Assets Ratio Net Sales to Working Capital Ratio Profitability Ratios: Net Profit on Sales Ratio Net Profit to Asset Ratio Net Profit to Equity Ratio

0.00%

10.58%

4.85%

6.56% 6.13%

10.71% 10.39%

13.39% 13.13%

98.30% n.a n.a

45.92% n.a n.a

17.38% n.a n.a

n.a n.a n.a 4.54 12.28

n.a n.a n.a 3.52 5.99

n.a n.a n.a 2.67 3.91

6.39% 28.99% n.a

12.03% 42.35% n.a

13.86% 38.55% n.a

Investment Proposal
The Borrower: Mr. Krishnan as the manager of his barber shop Kedai Gunting Rambut Krishnan, located in Bandar Seri Iskanda, 31750 Tronoh, Perak Darul Ridzuan.

Purpose of the Financing:

Mr. Krishnan wants to expand and modernize his barber shop so that it can copy with high flow rate of customers and also to introduce new services such as massages.

Amount Requested: Participation in the form of a secured loan in Malaysian Ringgit in an amount of up to RM60 million equivalents.

Plans for Repayment: The proposed loan will be in local currency and additional local currency where principal will be amortized. The maximum tenor of the loan will not exceed 8 years. The interest rate will be the market rate for this type of borrower and instrument. The loan will be structured into two tranches. The proposed loan will be secured by a first charge over all the assets including Mr. Krishnan personal assets.