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 Punjab 3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE Sindh 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 35610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE Khyber Pakhtunkhwa Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 111-111-456 Fax: (091) 5286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE Balochistan Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 helpdesk-qta@smeda.org.pk

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

TABLE OF CONTENTS
1 DISCLAIMER .......................................................................................................................................... 2 2 PURPOSE OF THE DOCUMENT ......................................................................................................... 3 3 INTRODUCTION TO SMEDA .............................................................................................................. 3 4 INTRODUCTION TO SCHEME ........................................................................................................... 4 5 EXECUTIVE SUMMARY ...................................................................................................................... 4 6 BRIEF DESCRITION OF THE PROJECT & PRODUCT ................................................................. 4 7 CRITICAL FACTORS ............................................................................................................................ 5 8 INSTALLED & OPERATIONAL CAPACITIES................................................................................. 5 9 POTENTIAL TARGET MARKET / CITIES ....................................................................................... 5 10 PROJECT COST SUMMARY ............................................................................................................... 5 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 PROJECT ECONOMICS .................................................................................................................... 5 PROJECT FINANCING....................................................................................................................... 7 PROJECT COST ............................................................................................................................... 7 SPACE REQUIREMENT..................................................................................................................... 8 MACHINERY AND EQUIPMENT REQUIREMENT ................................................................................ 9 FURNITURE, FIXTURES AND INTERIOR DECORATION ................................................................... 10 OFFICE EQUIPMENT ...................................................................................................................... 11 RAW MATERIAL REQUIREMENTS .................................................................................................. 11 HUMAN RESOURCE REQUIREMENT .............................................................................................. 12 REVENUE GENERATION ................................................................................................................ 13 OTHER COSTS ............................................................................................................................... 13

11 CONTACT DETAILS OF EXPERTS & CONSULTANTS ............................................................... 13 12 ANNEXURES ......................................................................................................................................... 14 12.1 12.2 12.3 12.4 12.5 INCOME STATEMENT ..................................................................................................................... 14 BALANCE SHEET ........................................................................................................................... 15 CASH FLOW STATEMENT ............................................................................................................... 16 USEFUL PROJECT MANAGEMENT TIPS ......................................................................................... 17 USEFUL LINKS ............................................................................................................................... 17

13 KEY ASSUMPTIONS............................................................................................................................ 18

1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and information on the subject. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. 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, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision; including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

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Pre-feasibility Study

Beauty Clinic

2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Beauty Clinic Business by providing them a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form the basis of any investment decision.

3 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.

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Pre-feasibility Study

Beauty Clinic

4 INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially by the National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries+ across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5 EXECUTIVE SUMMARY
This particular Pre-feasibility is for establishing a Beauty Clinic. Demographics and increasing fashion awareness create an opportunity, particularly for women entrepreneurs, to start this venture. The important aspects that should be taken into account while making investment decisions are efficient marketing, induction of qualified beauticians and provision of quality services at reasonable prices. The total project cost is Rs. 2.11 million out of which Rs. 1.61 million is the capital cost and Rs. 0.50 million for working capital. The debt and equity ratio is 90% and 10%. The project NPV is around Rs. 11.78 million, with an IRR of 60%, and payback period of 2.39 years. The project is proposed to be set up in a suitable locality of any of the urban centers of Pakistan. It will provide employment to 08 individuals directly. The total capacity of the clinic will be to handle 8,400 customers per annum. The services to be extended by the beauty clinic shall include a wide array of face and body treatments including make-up, manicures/pedicures and hairdressing services. The proposed potential location for the project is in urban cities such as Lahore, Karachi, Islamabad, Quetta and Peshawar etc.

6 BRIEF DESCRITION OF THE PROJECT & PRODUCT

This specific project pertains to setting up a beauty clinic as there is an increasing demand for beauty care services. The clinic will be established in a rented premise having a covered area of 2,500 sqft.

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Pre-feasibility Study

Beauty Clinic

Party and bridal makeup, facial, body treatment and hairdressing are the major service categories. The clinic will have 8 employees including the owner/ manager. The beauty clinic is proposed to operate as a Sole Proprietorship.

7 CRITICAL FACTORS
The entrepreneur should have basic knowledge and experience in the requisite field. Efficient sourcing of quality inputs/materials to maintain price and quality relationship. Induction of qualified beauticians and support staff and their regular training. Effective marketing would be the key element in the initial and subsequent success of the beauty clinic. Location of the business addressing accessibility considerations of the target market.

8 INSTALLED & OPERATIONAL CAPACITIES

The project will engage 08 permanent staff including owner/manager and 04 trainee beauticians providing beauty care services. The clinic will function 8 hours daily and the total capacity of the beauty clinic will be to entertain 8,400 customers annually. In first year, the clinic will operate at 35% capacity by handling 2,940 clients.

9 POTENTIAL TARGET MARKET / CITIES

The said project can be started in any suitable area of urban centres because of the changing lifestyle of people across Pakistan.

10 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of the project under the Prime Ministers Youth Business Loan. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as annexures. 10.1 Project Economics All the figures in this financial model have been calculated for a target of 28 clients per day (i.e. 8,400 clients per year). However, it is assumed that during

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Pre-feasibility Study

Beauty Clinic

the first year of the operations the project will cater for around 2,940 clients (i.e. 35% of overall client service facility) of various service categories. The service details of first year clients are as follows: Table 1: Category Wise Service Capacity in Year 1 Sr. No Description 1 2 3 4 5 6 7 8 9 Facial Waxing and Threading Bridal Make Ups Party Make Ups Manicure / Pedicure Body Treatments (Body Scrubs, Body Mask and Massaging) Hair Cuts Hair Dying Hair Styling (Straightening, Rebounding, Curling and etc) Total No of Clients Year 1 441 441 147 294 235 206 441 441 294 2,940

The following table shows internal rate of return and payback period. Table 2: Project Economics Description Internal Rate of Return (IRR) Payback Period (Years) NPV (Rs.) Details 60% 2.39 11,797,520

Returns on the scheme are based on the services rendered to the clients and estimated margin on consumed raw materials.

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Pre-feasibility Study

Beauty Clinic

10.2 Project Financing Following table provides details of the equity required and variables related to bank loan; Table 3: Project Finance Description Total Equity (10%) Bank Loan (90%.) Markup to the Borrower (%age/annum) Tenure of the Loan (Years) Grace Period (Year) 10.3 Project Cost Following requirements have been identified for operations of the proposed business. Table 4: Capital Invetsment for the Project Capital Investment Machinery and Equipment Furniture, Fixtures and Interior Decoration Office Equipment Pre-operating costs Total Capital Cost Working Capital Equipment Spare Part Inventory Raw Material Inventory Upfront Building Rent* Cash Total Working Capital Total Investment Amount Rs. 204,000 1,167,400 34,500 204,000 1,609,900 Amount Rs. 5,470 164,089 180,000 150,000 499,559 2,109,459 Details Rs. 210,946 Rs. 1,898,513 8% 8 1

*3 months security and 1 months advance rent @ Rs. 60,000 per month

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Pre-feasibility Study

Beauty Clinic

10.4 Space Requirement Approximately 2,500 square feet covered area is required for the proposed Beauty Clinic. The covered area requirement mainly splits into following main sections: Main Sections Hair Dressing Area Beauty Area (Facial Beds etc.) Manicure/Pedicure Area Makeup Room Waiting Area Reception Store Office Wash Rooms It is recommended to take a 10 Marla double storey house on rent to start this project. Starting the beauty clinic in a rented building would significantly reduce the initial capital cost of the project. The estimate rent of a 10 Marla double story house in an upper middle class locality of large cities is assumed at Rs. 60,000 per month. 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.

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Pre-feasibility Study

Beauty Clinic

10.5 Machinery and Equipment Requirement Following table provides the list of machinery and equipment required for the proposed services of beauty clinic. Table 5: List of Machinery and Equipment
Sr. No 1 2 3 4 5 6 7 8 9 10 Description Electric Facial Unit Steamer for Hair Steamer for Facial Pedicure Machine Back Wash for Washing Hair Warmer for hot Wax/Cold Wax Magnifying Glass Hair Dryer Hair Straighter Accessories Total Quantity 1 2 2 2 1 2 1 4 2 Unit Cost (Rs.) 45,000 15,000 15,000 8,000 20,000 5,000 3,000 5,000 2,500 25,000 Total Cost (Rs.) 45,000 30,000 30,000 16,000 20,000 10,000 3,000 20,000 5,000 25,000 204,000

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Pre-feasibility Study

Beauty Clinic

10.6 Furniture, Fixtures and Interior Decoration The major expenses of beauty clinic mainly comprised of the furniture, fixtures and interior decoration. The details of furniture, fixtures and interior decoration requirement for the proposed venture are as follows: Table 6: Furniture, Fixtures and Interior Decorations
Sr. No Description 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Facial Beds Hair Dressing (Chair & Mirror) Make-up Chair & Mirrors Waiting Area Chairs Waiting Area Sofa set Carpeting (Sq. ft) Back Rack (Sq. ft) Reception & Cash counter Display Counter Wood Flooring (Sq. ft) Main Door Sign Board Clinic Faade (Sq. ft) Counter Chair False Ceiling (Sq. ft) Lighting Air Conditioners UPS and Batteries Generator LCD TV Fans Back Mirrors Miscellaneous Total Quantity/ Area 3 4 3 8 1 400 100 1 3 760 1 160 2 760 1 3 2 1 2 8 2 Cost/Rate (Rs.) 20,000 25,000 30,000 3,000 35,000 30 750 25,000 10,000 150 15,000 90 5,000 50 30,000 45,000 17,500 200,000 35,000 2,500 5,000 25,000 Total Amount (Rs.) 60,000 100,000 90,000 24,000 35,000 12,000 75,000 25,000 30,000 114,000 15,000 14,400 10,000 38,000 30,000 135,000 35,000 200,000 70,000 20,000 10,000 25,000 1,167,400

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10.7 Office Equipment Following table provide the list of office equipment required for the proposed project: Table 7: Office Equipment
Sr. No Description 1 2 3 Computer Printer (s) Telephone Sets Quantity Unit Cost (Rs.) 1 1 3 20,000 10,000 1,500 Total (Rs.) 20,000 10,000 4,500 34,500

10.8 Raw Material Requirements As mentioned above the proposed venture mainly provides the beauty and hair treatment services to the women clients. A large number of cosmetics and other beauty products are used in a beauty clinic. A brief list of these products is provided in the table below. For this project it is assumed that cost of beauty products will be the 25% of the sales value. Table 8: Raw Materials (Beauty Products) Beauty Products Foundation, eye shadows, face powders, lipsticks, lip pencils, blushers and etc. Scrubs, Massage Creams Toners and Cleaners Moisturizers Face masks Bleach cream Hot wax and Cold Wax Hair color and hair developers Used In Makeup bridal and party Manicure/pedicure, facial and body scrubs Facial Manicure/pedicure, facial, masks and massaging Facial and masks Bleaching Waxing Hair coloring and streaking

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10.9 Human Resource Requirement The required HR for successfully operating the proposed project mainly includes: Table 9: Human Resource Requirement Sr. No 1 2 3 6 7 Description Owner/ Manager Beauticians (Hair Dressers and Make-up) Support Staff Girls Guard Trainee Beautician* No of Persons 1 4 2 1 4 Salary per Month / Person (Rs.) 40,000 16,000 10,000 10,000 -

*Trainee beauticians will be hired on three months tenure as part of "Beautician Learning Course" without any fee or remunerations. After successful completion of the course trainees would be awarded beautician certificates, however their permanent hiring will depend on need basis. The "Beautician Learning Course" will be a regular activity of the proposed business venture. The table above provides details of human resource required for successful operationalization of such project. The Owner/Manager shall formulate the policies and take strategic decisions. Above HR team shall be engaged in order to manage the operational affairs of this project under the supervision of Manager Operations. The appropriate experience along with high level of skill set would be required for the key professionals.

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10.10 Revenue Generation Table 10: Sales Revenue for Proposed (1st Year) Sr. No 1 2 3 4 5 6 7 8 9 Category of Services Facial Waxing and Threading Bridal Make Ups Party Make Ups Manicure / Pedicure Body Treatments (Body Scrubs, Body Mask and Massaging) Hair Cuts Hair Dying Hair Styling (Straighting, Rebounding, Curling and etc) Total Average Price 1,000 750 20,000 3,500 1,000 1,000 800 1,000 2,000 No of Clients 441 441 147 294 235 206 441 441 294 2,940 Sales Revenue 441,000 330,750 2,940,000 1,029,000 235,000 206,000 352,800 441,000 588,000 6,563,550

The profitability of the project is highly dependent on quality of services and extensive marketing and promotion of the project to attract the clients as per the calculated estimates. In addition to that retention of clients will have a high impact on profitability. 10.11 Other Costs This service oriented project requires heavy marketing and promotion activities, for which approximately 15% of total sales revenue (i.e. Rs. 985,000) will be consumed on marketing and promotion expenses annually with 10% increase. Similarly, electricity expenses are estimated to be around Rs.30,000 per month with an annual increase of 10%. Moreover, expenses on fuel of generator and miscellaneous will also be the part of other related costs.

11 CONTACT DETAILS OF EXPERTS & CONSULTANTS

Principal Qasr e- Behbood School M Block, Model Town Extension, Lahore 042 99230852

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12 ANNEXURES
12.1 Income Statement
Income Statement
Year 1 6,563,550 Year 2 8,270,073 Year 3 10,130,839 Year 4 12,157,007 Year 5 14,360,465 Year 6 16,753,876 Year 7 19,350,726 Year 8 22,165,378 Year 9 24,936,050 Year 10 26,182,852

Revenue Cost of sales Cost of goods sold 1 Operation costs 1 (direct labor) Cost of Beauty Parlour Maintenance Operating Cost Electricity Operating Expenses Water Operating Expenses Gas Total cost of sales Gross Profit General administration & selling expenses Administration expense Administration benefits expense Building rental expense Communications expense (phone, fax, mail, inter Office expenses (stationary, entertainment, janit Promotional expense Professional fees (legal, audit, consultants, etc.) Depreciation expense Amortization of pre-operating costs Subtotal Operating Income Gain / (loss) on sale of office equipment Earnings Before Interest & Taxes Interest expense on long term debt (Project Loan) Subtotal Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX

30% 15% 1% 5%

52%

1,969,065 1,008,000 65,636 360,000 18,000 6,000 3,426,701 3,136,850

2,481,022 1,159,200 95,106 396,000 19,800 6,600 4,157,728 4,112,345

3,039,252 1,333,080 133,980 435,600 21,780 7,260 4,970,952 5,159,887

3,647,102 1,533,042 184,893 479,160 23,958 7,986 5,876,141 6,280,866

4,308,139 1,762,998 251,165 527,076 26,354 8,785 6,884,518 7,475,947

5,026,163 2,027,448 336,980 579,784 28,989 9,663 8,009,027 8,744,849

5,805,218 2,331,565 447,594 637,762 31,888 10,629 9,264,657 10,086,070

6,649,613 2,681,300 589,603 701,538 35,077 11,692 10,668,824 11,496,553

7,480,815 3,083,495 762,799 771,692 38,585 12,862 12,150,248 12,785,802

7,854,856 3,546,019 921,080 848,861 42,443 14,148 13,227,407 12,955,445

9% 1% 11% 0% 1% 15% 1% 2% 0%

600,000 90,000 720,000 30,000 60,000 984,533 65,636 144,040 20,400 2,714,608 422,242 422,242 157,576 157,576 264,666 264,666

690,000 103,500 792,000 34,500 69,000 1,240,511 82,701 144,040 20,400 3,176,652 935,694 935,694 144,262 144,262 791,432 41,215 750,217

793,500 119,025 871,200 39,675 79,350 1,519,626 101,308 144,040 20,400 3,688,124 1,471,763 1,471,763 126,764 126,764 1,344,999 124,250 1,220,750

912,525 136,879 958,320 45,626 91,253 1,823,551 121,570 144,040 20,400 4,254,164 2,026,703 2,026,703 107,813 107,813 1,918,890 231,278 1,687,612

1,049,404 157,411 1,054,152 52,470 104,940 2,154,070 143,605 144,040 20,400 4,880,491 2,595,456 13,800 2,609,256 87,289 87,289 2,521,967 352,991 2,168,975

1,206,814 181,022 1,159,567 60,341 120,681 2,513,081 167,539 145,946 20,400 5,575,392 3,169,457 3,169,457 65,062 65,062 3,104,395 498,598 2,605,796

1,387,836 208,175 1,275,524 69,392 138,784 2,902,609 193,507 145,946 20,400 6,342,174 3,743,896 3,743,896 40,990 40,990 3,702,906 648,226 3,054,680

1,596,012 239,402 1,403,076 79,801 159,601 3,324,807 221,654 145,946 20,400 7,190,699 4,305,855 4,305,855 14,920 14,920 4,290,935 809,780 3,481,155

1,835,414 275,312 1,543,384 91,771 183,541 3,740,407 249,360 145,946 20,400 8,085,536 4,700,266 4,700,266 4,700,266 932,580 3,767,687

2,110,726 316,609 1,697,722 105,536 211,073 3,927,428 261,829 145,946 20,400 8,797,269 4,158,176

4,158,176 4,158,176 769,953 3,388,224

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12.2 Balance Sheet

Balance Sheet
Year 0 Assets Current assets Cash & Bank Equipment spare part inventory Raw material inventory Pre-paid building rent Total Current Assets Fixed assets Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Deferred tax Long term debt (Project Loan) Long term debt (Working Capital Loan) Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES 150,000 5,470 164,089 180,000 499,558 528,319 8,322 237,765 198,000 972,405 1,164,715 12,309 334,951 217,800 1,729,775 2,305,241 17,836 462,232 239,580 3,024,889 3,960,009 25,441 627,914 263,538 4,876,901 6,145,589 35,840 842,451 289,892 7,313,772 8,827,627 49,985 1,118,985 318,881 10,315,478 12,000,957 69,136 1,474,009 350,769 13,894,871 15,652,920 93,917 1,906,999 385,846 18,039,681 20,087,421 119,075 2,302,701 424,431 22,933,628 27,221,914 27,221,914 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

204,000 1,167,400 34,500 1,405,900

183,600 1,050,660 27,600 1,261,860

163,200 933,920 20,700 1,117,820

142,800 817,180 13,800 973,780

122,400 700,440 6,900 829,740

102,000 583,700 44,032 729,732

81,600 466,960 35,225 583,785

61,200 350,220 26,419 437,839

40,800 233,480 17,613 291,893

20,400 116,740 8,806 145,946

204,000 204,000 2,109,458

183,600 183,600 2,417,865

163,200 163,200 3,010,795

142,800 142,800 4,141,469

122,400 122,400 5,829,041

102,000 102,000 8,145,504

81,600 81,600 10,980,864

61,200 61,200 14,393,910

40,800 40,800 18,372,374

20,400 20,400 23,099,974

27,221,914

43,741 43,741

56,065 56,065

70,063 70,063

86,020 86,020

104,283 104,283

125,273 125,273

149,511 149,511

177,208 177,208

204,542 204,542

168,306 168,306

1,898,513 1,898,513

1,898,513 1,898,513

41,215 1,687,687 1,728,902

165,464 1,459,363 1,624,828

396,742 1,212,089 1,608,831

749,734 944,290 1,694,024

1,248,332 654,265 1,902,597

1,896,558 340,167 2,236,725

2,706,338 2,706,338

3,638,918 3,638,918

4,408,870 4,408,870

210,946 210,946 2,109,458

210,946 264,666 475,612 2,417,865

210,946 1,014,883 1,225,829 3,010,795

210,946 2,235,632 2,446,578 4,141,469

210,946 3,923,244 4,134,190 5,829,041

254,978 6,092,220 6,347,197 8,145,504

254,978 8,698,016 8,952,994 10,980,864

254,978 11,752,696 12,007,673 14,393,910

254,978 15,233,850 15,488,828 18,372,374

254,978 19,001,537 19,256,514 23,099,974

254,978 22,389,761 22,644,738 27,221,914

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12.3 Cash flow Statement

Cash Flow Statement
Year 0 Operating activities Net profit Add: depreciation expense amortization of pre-operating costs Deferred income tax Equipment inventory Raw material inventory Pre-paid building rent Accounts payable Cash provided by operations Financing activities Project Loan - principal repayment Additions to Project Loan Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH Year 1 264,666 144,040 20,400 (2,852) (73,676) (18,000) 43,741 378,319 Year 2 750,217 144,040 20,400 41,215 (3,988) (97,186) (19,800) 12,324 847,221 Year 3 1,220,750 144,040 20,400 124,250 (5,527) (127,281) (21,780) 13,998 1,368,849 Year 4 1,687,612 144,040 20,400 231,278 (7,605) (165,681) (23,958) 15,957 1,902,043 Year 5 2,168,975 144,040 20,400 352,991 (10,399) (214,537) (26,354) 18,262 2,453,379 Year 6 2,605,796 145,946 20,400 498,598 (14,145) (276,534) (28,989) 20,991 2,972,063 Year 7 3,054,680 145,946 20,400 648,226 (19,151) (355,023) (31,888) 24,238 3,487,428 Year 8 3,481,155 145,946 20,400 809,780 (24,781) (432,990) (35,077) 27,697 3,992,130 Year 9 3,767,687 145,946 20,400 932,580 (25,158) (395,702) (38,585) 27,334 4,434,501 Year 10 3,388,224 145,946 20,400 769,953 119,075 2,302,701 424,431 (36,236) 7,134,493

(5,470) (164,089) (180,000) (349,558)

1,898,513 210,946 2,109,458

(210,825) (210,825)

(228,324) (228,324)

(247,275) (247,275)

(267,798) 44,032 (223,767)

(290,025) (290,025)

(314,097) (314,097)

(340,167) (340,167)

(1,609,900) (1,609,900) 150,000

378,319

636,396

1,140,526

1,654,768

(44,032) (44,032) 2,185,581

2,682,038

3,173,330

3,651,962

4,434,501

7,134,493

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12.4 Useful Project Management Tips Marketing Product Development & Packaging: Expert's help may be engaged for product/service and packaging design & development Ads & Point of Sales Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product broachers from good quality service providers Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as promotional tool. Product cost estimates should be carefully documented before price setting.

Human Resources Adequacy & Competencies: Skilled and experienced beautician should be considered an asset for the business. Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation. Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure of best practices is the route to success.

12.5 Useful Links Prime Ministers Office, www.pmo.gov.pk Small and Medium Enterprises Development Authority, www.smeda.org.pk National Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL), www.fwbl.com.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries & Production, www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education, http://moptt.gov.pk Government of Punjab, www.punjab.gov.pk Government of Sindh, www.sindh.gov.pk Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

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Pre-feasibility Study

Beauty Clinic

Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir, www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Securities & Exchange www.secp.gov.pk Commission of Pakistan (SECP),

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk State Bank of Pakistan (SBP), www.sbp.org.pk Pakistan Institute of Fashion Design (PIFD), www.pifd.edu.pk Pakistan Fashion Design Council (PFDC), www.pfdc.org

13 KEY ASSUMPTIONS
Equipment Assumptions Equipments Facial Beds Hair Dressing Chairs Make Up Chairs Capacity Assumptions Capacity Clients per day (In Numbers) Production Capacity Utilization Maximum Capacity Utilization Operating Assumptions Hours Operational per day Days operational per year Growth Rates Production Capacity Utilization Growth Rate Sales Price Growth Rate Cost of Beauty Products (%age as of Total Sales) 7% 5% 30% 8 300 28 35% 90% 3 4 2

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

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