Beauty Clinic (Rs. 1.35 Million)

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 Khyber Pakhtunkhwa 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) 111-111-456 Tel: (081) 2831623, 2831702
Fax: (042) 36304926-7 Fax: (021) 35610572 Fax: (091) 5286908 Fax: (081) 2831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
May, 2014
Pre-feasibility Study Beauty Parlor (Rs.1.35 Million)
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 PROJECT ECONOMICS .......................................................................................... 5
10.2 PROJECT FINANCING ............................................................................................ 7
10.3 PROJECT COST .................................................................................................... 7
10.4 SPACE REQUIREMENT .......................................................................................... 8
10.5 MACHINERY AND EQUIPMENT REQUIREMENT.......................................................... 9
10.6 FURNITURE, FIXTURES AND INTERIOR DECORATION .............................................. 10
10.7 OFFICE EQUIPMENT ............................................................................................ 11
10.8 RAW MATERIAL REQUIREMENTS .......................................................................... 11
10.9 HUMAN RESOURCE REQUIREMENT ...................................................................... 12
10.10 REVENUE GENERATION....................................................................................... 12
10.11 OTHER COSTS ................................................................................................... 13
11 CONTACT DETAILS OF EXPERTS & CONSULTANTS ......................................... 13
12 ANNEXURES ........................................................................................................... 14
12.1 INCOME STATEMENT ........................................................................................... 14
12.2 BALANCE SHEET................................................................................................. 15
12.3 CASH FLOW STATEMENT ..................................................................................... 16
12.4 USEFUL PROJECT MANAGEMENT TIPS ................................................................. 17
12.5 USEFUL LINKS .................................................................................................... 17
13 KEY ASSUMPTIONS ............................................................................................... 19
Pre-feasibility Study Beauty Parlor (Rs. 1.35 million)
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
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 2
Pre-feasibility Study Beauty Parlor (Rs. 1.35 Million)
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 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.
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 Parlor. 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. 1.35 million out of which Rs. 0.96 million is the capital
cost and Rs. 0.39 million for working capital. The debt and equity ratio is 90%
and 10%. The project NPV is Rs. 4.87 million, with an IRR of 49%, and payback
period of 2.71 years.
The project is proposed to be set up in a suitable locality of any of the urban
centers of Pakistan. The proposed venture will provide direct employment to 07
individuals. The total capacity of the parlor will be to handle 5,940 customers per
annum. The services to be extended by the beauty parlor shall include a wide
range of personal care services including make-up, manicures / pedicures, hair
styling, waxing, and other services.
The proposed potential location for the project is in urban cities across Pakistan
such as Lahore, Karachi, Islamabad, Quetta, Multan, Peshawar and other cities.
6 BRIEF DESCRITION OF THE PROJECT & PRODUCT

This specific project pertains to setting up a beauty parlor as there is an
increasing demand for beauty care services. The parlor will be established in a 5
marla rented premise.
Party and bridal makeup, facial, and hair styling are the major service categories.
The parlor will have 7 employees including the owner / manager. The beauty
parlor 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 make-up and hair styling artists and support staff and
their regular training.
Effective marketing would be the key element in the initial and subsequent
success of the beauty parlor.
Location of the business addressing accessibility considerations of the target
market.
8 INSTALLED & OPERATIONAL CAPACITIES

The project will engage 07 permanent staff including owner / manager and 03
beauticians providing beauty care services. The parlor will function 8 hours daily
and the total capacity of the beauty parlor will be to entertain 5,940 customers
annually. In first year, the parlor will operate at 60% capacity by handling 3,564
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 18
clients per day (i.e. 5,940 clients per year). However, it is assumed that during
the first year of the operations the project will cater for around 3,564 clients (i.e.
60% 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 No of Clients Year 1
1 Facial 535
2 Waxing and Threading 535
3 Bridal Make Ups 356
4 Party Make Ups 356
5 Manicure / Pedicure 178
6 Miscellaneous 178
7 Hair Cuts 535

8 Hair Dying 535
9 Hair Styling (Straightening, Curling and etc) 356
Total 3,564
The following table shows internal rate of return, payback period and net present
value.
Table 2: Project Economics
Description Details
Internal Rate of Return (IRR) 49%
Payback Period (Years) 2.71
Net Present Value (NPV) Rs. 4,870,532
Returns on the scheme are based on the services rendered to the clients and
estimated margin on consumed raw materials.
10.2 Project Financing

Following table provides details of the equity required and variables related to
bank loan;
Table 3: Project Finance
Description Details
Total Equity (10%) Rs. 134,608
Bank Loan (90%.) Rs. 1,211,469
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Year) 1
10.3 Project Cost

Following requirements have been identified for operations of the proposed
business.
Table 4: Capital Invetsment for the Project
Capital Investment Amount Rs.
Machinery and Equipment 144,000
Furniture, Fixtures and Interior Decoration 692,500
Office Equipment 81,000
Pre-operating costs 39,913
Total Capital Cost 957,413
Working Capital
Equipment Spare Part Inventory 4,247
Raw Material Inventory 127,413
Upfront Building Rent* 90,000
Cash 167,004
Total Working Capital 388,664
Total Investment 1,346,077
*3 months advance rent @ Rs. 30,000 per month
10.4 Space Requirement

Approximately 5 marla premises is required for the proposed Beauty Parlor. The
covered area includes following sections:
Main Sections
Hair Dressing Area
Manicure/Pedicure Area
Makeup Area
Facial Area
Threading/Polishing Area
Waiting Area
Reception
Store
Office
Wash Rooms
It is recommended to take a 5 Marla double storey house on rent to start this

project. Starting the beauty parlor in a rented building would significantly reduce
the initial capital cost of the project. The estimate rent of a 5 Marla double story
house in an upper middle class locality of large cities is assumed at Rs. 30,000
per month.
10.5 Machinery and Equipment Requirement

Following table provides the list of machinery and equipment required for the
proposed services of beauty parlor.
Table 5: List of Machinery and Equipment
Sr. Unit Cost Total Cost
Description Quantity
No (Rs.) (Rs.)
1 Electric Facial Unit 1 35,000 35,000
2 Steamer for Hair 1 15,000 15,000
3 Pedicure Machine 2 8,000 16,000
Back Wash for Washing
4 1 20,000 20,000
Hair
Warmer for hot Wax / Cold
5 2 5,000 10,000
Wax
6 Hair Curling Equipment 1 3,000 3,000
7 Hair Dryer 2 5,000 10,000
8 Hair Straighter 2 2,500 5,000
9 Accessories 30,000 30,000
Total 144,000
Machinery & Equipment can be purchased from local whole sale market.
10.6 Furniture, Fixtures and Interior Decoration

The major expenses of beauty parlor 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
Total
Sr. Quantity Cost/Rate
Description Amount
No / Area (Rs.)
(Rs.)
1 Beds (for Facial & Waxing) 2 20,000 40,000
Hair Dressing/Threading (chair &
2 3 25,000 75,000
Mirror)
3 Make-up Chair & Mirrors 2 30,000 60,000
Chairs (for Waiting Area and
4 4 3,000 12,000
manicure/pedicure)
5 Waiting Area Sofa set 1 25,000 25,000
6 Back Rack 50 750 37,500
7 Reception & Cash counter 1 25,000 25,000
8 Display Counter 1 10,000 10,000
9 Main Door Sign Board 1 15,000 15,000
10 Counter Chair 2 4,000 8,000
11 Lightening 1 40,000 40,000
12 Air Conditioners 3 50,000 150,000
13 UPS and Batteries 1 30,000 30,000
14 Generator 1 75,000 75,000
15 LCD TV 1 40,000 40,000
16 Fans 6 2,500 15,000
17 Back Mirrors 2 25,00 5,000
18 Miscellaneous 30,000 30,000
Total 692,500
10.7 Office Equipment
Following table provide the list of office equipment required for the proposed
project:
Table 7: Office Equipment
Sr. No Description Quantity Unit Cost (Rs.) Total (Rs.)
1 Computer 1 25,000 25,000
2 Printer (s) 1 10,000 10,000
3 Telephone Sets 2 1,000 2,000
4 Refrigerator 1 30,000 30,000
5 Burner/stove 1 2,000 2,000
6 Water Dispenser 1 12,000 12,000
81,000
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 parlor. 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 30% of the sales value.
Table 8: Raw Materials (Beauty Products)

Beauty Products Used In
Foundation, eye shadows, face powders,
Makeup bridal &
lipsticks, lip pencils, blushers, hina (black, red),
party
eye lash extensions, and etc.
Scrubs, Massage Creams/Oils, Polishers/Bleach Manicure / pedicure,
Creams, Masks, Cleansers, etc. facial, Polisher
Hot wax and Cold Wax Waxing
Hair dyes, cutting scissors, combs, brushes, Hair coloring, cutting/
rollers, clips, foil papers, hair caps, etc styling
Manicure/pedicure kits, nail paints, nail
Manicure / pedicure
extensions, nail polish & remover, etc
Beauty care products can be purchased from main supplier or from the local whole sale market.
10.9 Human Resource Requirement

The required HR for successfully operating the proposed project mainly includes:
Table 9: Human Resource Requirement
Salary per
No of
Sr. No Description Month /
Persons
Person (Rs.)
1 Owner / Manager 1 25,000
2 Beauticians (Hair Stylist and Make-up) 3 20,000
3 Support Staff Girls 2 10,000
4 Guard 1 10,000
Total 7
The Owner / Manager shall formulate the policies and take strategic decisions.
Whereas rest of the team shall be engaged in order to manage the operational
affairs of this project under the supervision of Manager. The appropriate
experience along with high level of skill set would be required for the key
professionals.
10.10 Revenue Generation

Table 10: Sales Revenue estimated during First Year of Operations
Sr. Average No of Sales

Category of Services
No Price Clients Revenue
1 Facial 600 535 321,000
2 Waxing and Threading 500 535 267,300
3 Bridal Make Ups 7,500 356 2,673,000
4 Party Make Ups 3,000 356 1,069,200
5 Manicure / Pedicure 300 178 53,460
6 Miscellaneous 300 178 53,460
7 Hair Cuts 500 535 267,300
8 Hair Dying 500 535 267,300
9 Hair Styling (Straightening, 350 356 124,740

Curling and etc)
Total 3,564 5,096,520
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. 764,478) will be
consumed on marketing and promotion expenses annually. Similarly, electricity
expenses are estimated to be around Rs. 35,000 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
Pakistan Hairdressers and Beauticians Association
22, Qazi Court, Bhadurabad Roundabout, Karachi
021-4559191
www.phaba.com.pk
All Pakistan Hair Dressers & Beautician Federation
16-F, Hameed Nizami (Temple Road), Saffa Wala Chowk, Lahore
042-36373183
12 ANNEXURES
12.1 Income Statement

Calculations SMEDA
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 5,096,520 6,073,353 7,194,587 8,479,335 9,949,087 11,627,995 12,790,794 14,069,874 15,476,861 17,024,547
Cost of sales
Cost of goods sold 1 1,528,956 1,822,006 2,158,376 2,543,801 2,984,726 3,488,398 3,837,238 4,220,962 4,643,058 5,107,364
Operation costs 1 (direct labor) 960,000 1,104,000 1,269,600 1,460,040 1,679,046 1,930,903 2,220,538 2,553,619 2,936,662 3,377,161
Cost of Beauty Parlour Maintenance 50,965 69,844 95,148 128,960 174,010 233,881 295,859 374,261 473,441 598,903
Operating Cost Electricity 420,000 462,000 508,200 559,020 614,922 676,414 744,056 818,461 900,307 990,338
Operating Expenses Water 18,000 19,800 21,780 23,958 26,354 28,989 31,888 35,077 38,585 42,443
Operating Expenses Gas 12,000 13,200 14,520 15,972 17,569 19,326 21,259 23,385 25,723 28,295
Total cost of sales 2,989,921 3,490,849 4,067,625 4,731,751 5,496,627 6,377,911 7,150,838 8,025,765 9,017,776 10,144,504
Gross Profit 2,106,599 2,582,504 3,126,963 3,747,585 4,452,459 5,250,084 5,639,956 6,044,108 6,459,085 6,880,043
General administration & selling expenses

Administration expense 420,000 483,000 555,450 638,768 734,583 844,770 971,486 1,117,208 1,284,790 1,477,508
Administration benefits expense 63,000 72,450 83,318 95,815 110,187 126,716 145,723 167,581 192,718 221,626
Building rental expense 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861
Communications expense (phone, fax, mail, internet, etc.) 31,500 36,225 41,659 47,908 55,094 63,358 72,861 83,791 96,359 110,813
Office expenses (stationary, entertainment, janitorial services, etc. 42,000 48,300 55,545 63,877 73,458 84,477 97,149 111,721 128,479 147,751
Promotional expense 764,478 911,003 1,079,188 1,271,900 1,492,363 1,744,199 1,918,619 2,110,481 2,321,529 2,553,682
Professional fees (legal, audit, consultants, etc.) 50,965 60,734 71,946 84,793 99,491 116,280 127,908 140,699 154,769 170,245
Depreciation expense 99,850 99,850 99,850 99,850 99,850 104,326 104,326 104,326 104,326 104,326
Amortization of pre-operating costs 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991
Subtotal 1,835,784 2,111,553 2,426,546 2,786,062 3,196,093 3,667,900 4,079,824 4,541,336 5,058,653 5,638,804
Operating Income 270,814 470,951 700,416 961,523 1,256,366 1,582,183 1,560,132 1,502,772 1,400,432 1,241,239
Gain / (loss) on sale of office equipment - - - - 32,400 - - - -

Earnings Before Interest & Taxes 270,814 470,951 700,416 961,523 1,288,766 1,582,183 1,560,132 1,502,772 1,400,432 1,241,239
Interest expense on long term debt (Project Loan) 100,551 92,056 80,890 68,797 55,701 41,517 26,156 9,521 - -
Subtotal 100,551 92,056 80,890 68,797 55,701 41,517 26,156 9,521 - -
Earnings Before Tax 170,263 378,895 619,527 892,726 1,233,066 1,540,666 1,533,976 1,493,252 1,400,432 1,241,239
Tax - - 21,953 56,409 107,460 155,633 154,295 146,488 132,565 108,686

NET PROFIT/(LOSS) AFTER TAX 170,263 378,895 597,574 836,317 1,125,606 1,385,033 1,379,681 1,346,764 1,267,868 1,132,553
12.2 Balance Sheet

Calculations SMEDA
Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 167,004 416,814 696,473 1,161,701 1,824,580 2,725,369 3,869,980 4,946,598 5,918,615 6,959,098 9,967,976
Equipment spare part inventory 4,247 6,111 8,742 12,441 17,626 24,875 33,040 43,885 58,291 77,425 -
Raw material inventory 127,413 174,609 237,871 322,400 435,025 584,701 739,647 935,654 1,183,602 1,497,256 -
Pre-paid building rent 90,000 99,000 108,900 119,790 131,769 144,946 159,440 175,385 192,923 212,215 -
Total Current Assets 388,664 696,534 1,051,986 1,616,332 2,409,000 3,479,891 4,802,108 6,101,521 7,353,430 8,745,994 9,967,976
Fixed assets
Machinery & equipment 144,000 129,600 115,200 100,800 86,400 72,000 57,600 43,200 28,800 14,400 -
Furniture & fixtures 692,500 623,250 554,000 484,750 415,500 346,250 277,000 207,750 138,500 69,250 -
Office equipment 81,000 64,800 48,600 32,400 16,200 103,379 82,703 62,027 41,352 20,676 -
Total Fixed Assets 917,500 817,650 717,800 617,950 518,100 521,629 417,303 312,977 208,652 104,326 -
Intangible assets
Pre-operation costs 39,913 35,921 31,930 27,939 23,948 19,956 15,965 11,974 7,983 3,991 -
Total Intangible Assets 39,913 35,921 31,930 27,939 23,948 19,956 15,965 11,974 7,983 3,991 -
TOTAL ASSETS 1,346,077 1,550,106 1,801,716 2,262,221 2,951,048 4,021,476 5,235,376 6,426,472 7,570,064 8,854,311 9,967,976
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable 33,766 41,012 49,640 59,939 72,269 86,205 98,051 111,945 128,324 109,435
Total Current Liabilities - 33,766 41,012 49,640 59,939 72,269 86,205 98,051 111,945 128,324 109,435
Other liabilities
Long term debt (Project Loan) 1,211,469 1,211,469 1,076,938 931,242 773,452 602,566 417,496 217,066 - - -
Long term debt (Working Capital Loan) - - - - - - - - - - -
Total Long Term Liabilities 1,211,469 1,211,469 1,076,938 931,242 773,452 602,566 417,496 217,066 - - -
Shareholders' equity
Paid-up capital 134,608 134,608 134,608 134,608 134,608 237,987 237,987 237,987 237,987 237,987 237,987
Retained earnings 170,263 549,158 1,146,732 1,983,049 3,108,655 4,493,688 5,873,369 7,220,133 8,488,001 9,620,554
Total Equity 134,608 304,871 683,766 1,281,340 2,117,657 3,346,642 4,731,675 6,111,356 7,458,120 8,725,987 9,858,541
TOTAL CAPITAL AND LIABILITIES 1,346,077 1,550,106 1,801,716 2,262,221 2,951,048 4,021,476 5,235,376 6,426,472 7,570,064 8,854,311 9,967,976
12.3 Cash flow Statement
Calculations SMEDA
Cash Flow Statement
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 170,263 378,895 597,574 836,317 1,125,606 1,385,033 1,379,681 1,346,764 1,267,868 1,132,553
Add: depreciation expense 99,850 99,850 99,850 99,850 99,850 104,326 104,326 104,326 104,326 104,326
amortization of pre-operating costs 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991 3,991
Deferred income tax - - - - - - - - - -
Equipment inventory (4,247) (1,864) (2,630) (3,699) (5,185) (7,249) (8,165) (10,845) (14,405) (19,134) 77,425
Raw material inventory (127,413) (47,196) (63,262) (84,529) (112,625) (149,676) (154,946) (196,006) (247,948) (313,654) 1,497,256
Pre-paid building rent (90,000) (9,000) (9,900) (10,890) (11,979) (13,177) (14,495) (15,944) (17,538) (19,292) 212,215
Accounts payable 33,766 7,246 8,628 10,300 12,330 13,936 11,846 13,894 16,379 (18,889)
Cash provided by operations (221,660) 249,810 414,190 610,925 820,668 1,071,675 1,329,681 1,277,048 1,189,083 1,040,483 3,008,878
Financing activities
Project Loan - principal repayment - (134,531) (145,697) (157,790) (170,886) (185,070) (200,430) (217,066) - -
Additions to Project Loan 1,211,469 - - - - - - - - - -
Issuance of shares 134,608 - - - - 103,379 - - - - -
Cash provided by / (used for) financing activities 1,346,077 - (134,531) (145,697) (157,790) (67,507) (185,070) (200,430) (217,066) - -
Investing activities
Capital expenditure (957,413) - - - - (103,379) - - - - -
Cash (used for) / provided by investing activities (957,413) - - - - (103,379) - - - - -
NET CASH 167,004 249,810 279,659 465,228 662,879 900,789 1,144,611 1,076,617 972,017 1,040,483 3,008,878
12.4 Useful Project Management Tips

Marketing
Ads & Point of Sales Promotion: Business promotion and dissemination
through banners and launch events is highly recommended.
Price - Bulk Discounts, Cost plus Introductory Discounts: Price should
never be allowed to compromise quality of services. 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
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
Government of Balochistan, www.balochistan.gov.pk
Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir, www.ajk.gov.pk

State Bank of Pakistan (SBP), www.sbp.org.pk
Technical Education & Vocational Training Authority (TEVTA),
www.tevta.gop.pk
Punjab Vocational Training Council (PVTC), www.pvtc.gop.pk
13 KEY ASSUMPTIONS
Capacity Assumptions
Capacity Clients per day (In Numbers) 18
Production Capacity Utilization 60%
Maximum Capacity Utilization 85%
Operating Assumptions
Hours Operational per day 8
Days operational per year 330
Growth Rates
Production Capacity Utilization Growth Rate 5%
Sales Price Growth Rate 10%
Cost of Beauty Products (%age as of Total Sales) 30%

Beauty Clinic (Rs. 1.35 Million)

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Beauty Clinic (Rs. 1.35 Million)

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Pre-Feasibility Study

Small and Medium Enterprises Development Authority

2 PURPOSE OF THE DOCUMENT

6 BRIEF DESCRITION OF THE PROJECT & PRODUCT

8 INSTALLED & OPERATIONAL CAPACITIES

9 POTENTIAL TARGET MARKET / CITIES

10 PROJECT COST SUMMARY

10.1 Project Economics

7 Hair Cuts 535

Internal Rate of Return (IRR) 49%

Payback Period (Years) 2.71

Net Present Value (NPV) Rs. 4,870,532

10.2 Project Financing

10.3 Project Cost

10.4 Space Requirement

It is recommended to take a 5 Marla double storey house on rent to start this

10.5 Machinery and Equipment Requirement

10.6 Furniture, Fixtures and Interior Decoration

10.7 Office Equipment

10.8 Raw Material Requirements

Table 8: Raw Materials (Beauty Products)

10.9 Human Resource Requirement

10.10 Revenue Generation

Sr. Average No of Sales

1 Facial 600 535 321,000

2 Waxing and Threading 500 535 267,300

3 Bridal Make Ups 7,500 356 2,673,000

4 Party Make Ups 3,000 356 1,069,200

5 Manicure / Pedicure 300 178 53,460

6 Miscellaneous 300 178 53,460

7 Hair Cuts 500 535 267,300

8 Hair Dying 500 535 267,300

9 Hair Styling (Straightening, 350 356 124,740

Total 3,564 5,096,520

The profitability of the project is highly dependent on quality of services and

10.11 Other Costs

11 CONTACT DETAILS OF EXPERTS & CONSULTANTS

12.1 Income Statement

General administration & selling expenses

Gain / (loss) on sale of office equipment - - - - 32,400 - - - -

Tax - - 21,953 56,409 107,460 155,633 154,295 146,488 132,565 108,686

12.2 Balance Sheet

Liabilities & Shareholders' Equity

12.3 Cash flow Statement

12.4 Useful Project Management Tips

12.5 Useful Links

Government of Azad Jamu Kashmir, www.ajk.gov.pk

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