The New HC Business Proposal

[Zack Tan]

Hi Bros.,
Due to warm encouragements from many bros. I've decided to formulate a business plan. I had done some initial leg works and I certainly hope that you see the funny side of it and have a good laugh. Without much ado, herein is my business plan proposal:
(1) THE INTRODUCTION:
(a) OVERVIEW: With the increasing disenchantment and discontentment of the HC services in S'pore coupled with the increasing demand for premium HC services and ambience, it is opportune for a new entrance to this business. It's presence in S'pore would enhanced the well being of her citizens and foreign talents.
(b) THE COMPANY: A new joint venture (JV) company is to be set up and incorporated in S'pore. The number of shareholders will be to be determine in due course.
(c) THE JV OBJECTIVES: The main objective of this JV is to develope a cost effective but yet highly customers oriented HC operation in S'pore as a profitable business stream by serving and penerating the existing market with a wide range of superior services, cosy condusive environment, and top quality gals. Within the period of one year, the JV should carve out a market niche to rival the best in S'pore.
(d) THE BUSINESS: In phase 1, to provide a comprehensive HC services which will include many form of massages, foot reflexology, suana/steam services, movie/entertainment lounge, and hot jacuzzi pool.
IN phase 2, to incorporate a wine cum music bar to cater for a wider market and enhanced profitabilty.
(e) LOCATION: Prime district but preferable outside of CBD. Must be easily acessable with large convenient car park. Must be discreet and quiet.
(2) MARKET AND MARKET STRATEGIES: To make the new JV a household name in the local HC scene with the aim of establishing it as an excellent and consistent services provider. It's targetted customers are: DOM (Dirty Old Man), R&F (The Rich and Famous), FYM (Frustrated Young Man), LMM ( Lonely Middle-aged Man), and the increasing population of LFT (Lonely Foreign Talent). Within a year, the new JV should have penetrated these niche market and aim to be the best in this HC field.
(3) THE OPERATION: The JV could buy into an existing business or set up but for the sake of this exercise, we assume a start up from sketch. The JV will start up with a floor area of 3,000 sq. ft. in a good accessible location. The premises should be of an adequate size to cater for the operation and future needs.
(4) TRAINING AND RECRUITMENT: IN order to ensure that the JV will perform to the expected standard, recruitment and training are of paramount importance. The training will be done in-house but if necessary external courses esstential for top performances will be given. We expect customers to volunteer and serve as training models...ke,ke.
(5) MANAGEMENT: The board of directors to be form and appointed. The remunerations of appointment holders are deliberately set lower than their real market worth due to infant stage of the JV and also not to over burden the young company. In order to provide an adequate future compensation and motivation factor for their sacrifices, it's proposed that a compensation package to be rewarded to the directors based on the performances of the JV. The directors remunerations is fixed at $1,000 per month with 16% CPF contribution and a 13th month AWS for year 1. The remunerations will be subjected to review in year 2.
(6) FINANCIAL STATEMENT: The accompanying financial estimates for the JV is based on present circumstances, the most likely set of conditions, and the limited knowledge of the business. Certain assumptions are made that may have an effect on the bottom line. Therefore, actual performances may varies from projection because events, and the circumstances frequently do not occur as envisaged, so exerciseof judgement and common sense is required. The following assumptions are:
(a) Financial year begins 1/1 to 31/12
(b) Employer contribution on CPF is 16% and annual wage supplement of 1 month. Overtime of 30% per month and wage adjustment of 5% a year.
(c) 2 Directors with fixed wages of $1,000 per month
(d) 1 manager with fixed wages of $3,000 per month
(e) 2 receptionists cum admin. clerks with basic wages of $1,500 per month
(f) 15 gals with basic wages of $500 per month plus incentive roll back estimated $600 per month
(g) 2 general cleaners and service attendants with basic wages of $800 per month
(h) Insurance premium for building, fixtures, furnitures, office equipments, workman comp., public liabilty, and accidents is estimated at $2,000 per month.
(i) medical charges are estimated at $300 per month
(j) Foreign workers levy is $240 per gal per month
(k) Market promotions and advertising costs about $2000 per month
(l) Rental of premises est. at $5 per sq ft.
(m) Audit and legal costs about $1500 per month
(n) Bank and interest charges est. $ 2000 per month
(o) Utilities charges about $ 3000 per month
(q) Telephone and fax charges about $500 per month
(r) Miscellaneous and general expenses about $1000 per month
(7) CAPITAL EXPENDITURES:
(a) OFFICE EQUIPMENTS:
Computers, Communications equipments, photo copier, stationeries, office furnitures about $20,000
(b) OPERATION EQUIPMENTS:
Beddings, sheets, towers, soaps, lotions, cabinets, air conditions, water dispensers, pantries, Micro wave oven, refrigerator, ETC. about $ 30000.
(c) 3 years straight line depreciation on fixed assets with 10% residue value. Calculated as follows: Total Capital expenditure (a)+(b) $50000x0.9 divide by 3 divide by 12 =$1250 per month
(8) Direct Costs:
(a) Utilities $3000
(b) Rental of Premises $15000
(c) Directors remunerations $2000
(d) Manager wages $3480
(e) 2x Recept. wages $3480
(f) 2x Gen. Helpers wages $1600
(g) 15x Gals wages + top up + CPF $17400
TOTAL: $45960 per month
(9) Indirect, sales, and adminstration costs:
(a) Insurances $2000
(b) Med. charges $ 300
(c) Audit & Legal fees $2000
(d) Bank & Interest $2000
(e) Marketting $2000
(f) Telephone $500
(g) Miscellaneous $1000
TOTAL: $9800 per month
Therefore total costs per month is (8) +(9) = $55760 per month
(10) RENOVATION COSTS PLUS EQUIPMENTS ( Jaccuzzi, audio and video equipments, decorations, wall papers, wood works, lightings, floorings, carpets, hot water heaters, etc.) estimated $200000.
Therefore depreciation for this work s out on 3 years straight line as foolows:$200000x0.9 divide by 3 divide by 12= $ 5000 per month.
(11) SALES REVENUES:
(a) Assumptions : Working hours 11am to 11pm(12 hours operational)
Entrance charge of $40 per person per session
12 rooms x 60% utility time
30 days in a month of working thru' a year
Foot flexology charges of $ 25 per session x 50% utility
(b) WORKINGS : Massages $40 x 7.2 ( 12 roomsx 60%) x12 ( op. hours) x 30
days =4103680 per month
Foot flexology $25 x 0.5 ( 1 person x 50%) x 12 x 25 days =
$4500 per month
(c) Therefore total sales revenues (a) + (b) = $ 108,180 per month
(12) INCOME STATEMENT:
Total Sales Revenues $108180
Total costs (Direct & Indirect) $55760
Gross profit $52420
Less Depreciation (Capital exp. + Renovation) $6250
P.B.T (Profit before tax) $46170
Bros. Guzzler, Kilrein, Corner, Horse....like that OK or not....want to join? Looks like quite profitable leh...ke,ke. I stand corrected.
Cheers,

[imom]

So, CE + Working Capital (assumed at 6 months) roughly equals $550k to $600k.... I think we need about 6-8 investors. Assuming NPAT of around $30k, that makes ROI roughly 20months. Sounds reasonable...

The key is to get at least 4 angpais. That should more or less make up your 60% utilisation....

Whatever it is, i want to be HR Director!! Heh heh...

[HorseD77]

Bro Zack

Wow, looks impressive - have printed out a copy ofr closer analysis tonight!

[kilrein]

Darn... I have given back to my teacher most of my accounting knowledge. Heh...

Anyway, on a more serious note:

1) I assume utilities cost include the outsourcing of laundry services. Given the likely massive amount of laundry that needs to be cleaned everyday, is $3k a month enough. Not too sure coz I don't know the market well enough.

2) I might sound like a broken record but a question of interest would be: how well are current established HCs earning? Something to benchmark our ROI on.

3) Going on to Phase 2, for direct costs, we will probably have to factor in COGS of F&B as well.

4) I think the revenue estimation is inflated. I understand that most joints give the girls a cut of the massage revenue (around $10 out of the $40?). Of coz we will not tax the extras they earn from specials. Similarly, I understand most joints also impose a "financial disincentive scheme" i.e. if the gals MIA, they have to pay for the "opportunity cost" incurred due to their absence.

5) Probably need to incur cost on the "watchman"... the person to help us kua zui in case AV raid.

6) I think for a JV of our size... no need audit lah... I think got new regulation exempt small firms from mandatory audit. So we could save a bit from there.

So roughly, the initial outlay should be 150k + whatever working capital we need to tong while we build up our reputation (which could be a few months). Can't really expect 60% utilisation right from the start... unless we managed to secure good ang pais who can bring in their regulars right from the start.

Just my 2-cents worth... but yeah... this looks real interesting.

I think it's not that simple. Just turn to biz opportunity in ST. You'll find a HC for sale or take over every other day. Might be easier to just take over a existing one. Anyway for those facilities mentioned, you'll need min about 8K sq ft (like Lexon). Also rental should be about $6 PSF. Therefore you'll be looking at about $40K+ pm. Of course you can look for outskirts for $5 and below but then the location might not be ideal. Good luck.

[banana]

Originally Posted by Zack Tan

Hi Bros.,
Due to warm encouragements from many bros. I've decided to formulate a business plan. I had done some initial leg works and I certainly hope that you see the funny side of it and have a good laugh. Without much ado, herein is my business plan proposal:

great business proposal write-out, but sorri to pour cold water on u. do u have the know-how and the right team to run the show? it is not the angpais that make the money but the correct syenergy of ppl that form your team.

[Zack Tan]

Originally Posted by banana

great business proposal write-out, but sorri to pour cold water on u. do u have the know-how and the right team to run the show? it is not the angpais that make the money but the correct syenergy of ppl that form your team.

Bro. Banana,
Thank you for your comments. Dun't worry about pouring cold water. I'm just doing up a prelimary paper to check the feasibility and viability of setting up a HC bussiness in S'pore given its high O/H costs. I'm not from this trade and so do not possess any know how. Are you conversant in this field and perhaps offer your expert advices?
Bro. Cheongboy,
Of course not so easy lah, otherwise everybody will be doing it right? Yes it may be easier and more cost effective to buy over an existing hc business but there are also some downside to this. In doing a business plan, you need to make some assumptions to the best of one's knowledge and these stand to be corrected. Some may view the costs and sales turnover as overly optimistic and maybe unrealistic. It's just a start and the final paper should reflect all the views and as realistic as possible the bottom line. Of course in any business you need to carry out a market audit and a due diligence. It's a test of entrepreneurship to make it happen and work.
Cheers,

[xxyz]

i can help!!!! i am working in an accounting area.....

[banana]

Originally Posted by Zack Tan

Bro. Banana,
Thank you for your comments. Dun't worry about pouring cold water. I'm just doing up a prelimary paper to check the feasibility and viability of setting up a HC bussiness in S'pore given its high O/H costs. I'm not from this trade and so do not possess any know how. Are you conversant in this field and perhaps offer your expert advices?

ur business plan is not complete. u do well in the budgeting section. u still have to talk about the team, business opportunity and backup plan.

the team: the expert that run the business and make the business work.

bussiness opportunity: why u wanna be involved in this trade. what is ur niche. why you can be better than the rest, what make u special, that ppl wanna come? promixty, products, etc.

backup plan: what if the whole thing is a flop? wat is the next step, pump in more cash? relocate? cut loses?

let see what u have next? waiting... keep it up!

[kilrein]

I think preferably, one of the shareholders/directors should be someone who is already in this line. Experience counts. That someone should know where to find girls and more importantly, girls who can stick with the HC. Girls like Eva of BHC is a prize. She stuck with the same boss for years, all the way from Roppongi to BHC. And still so ang pai, making tons of money for the boss.

And bro banana is right... as per what any biz ad course would teach... the organisation as a whole must share the common vision and the common values... that will steer the organisation in the common, desired direction. Easily said than done... but yes, the management team must have mo qi.

So bro Zack... don't give up ah! I am sure we can work his through. Cheers!

[Mister911targa]

I C a fantastic Team in d forming here!
Juz my thoughts...
Judging from ur writting form:
Bros imom, Zack Tan (of course i do feel they also possess effective PRskills)would be best in numbers, technical stuff, oiling the daily systemics.

Bro Kilrein definitely a people person! effective manager. Dealing Wls, staff n Customers your forte.

Bro Banana the helicopter view adviser to the Team.

With d key personnell sharing PR skills; The Money Men( imom, Zack Tan) The Peoples' Man(Kilrein) 4 a start is positive man!
Cheer On A TEAM!

Mister911targa

[Reaper]

Dear Bros,

Let me carry on a little on what bro banana said. Should the business fail, who will the finger be pointed at? I have come across numerous private own establishments whithin the F&B Industry where the boss come in, take $500 from the cash register on a daily basis and just walk off.I know it is a different industry altogether but it is still also a service orientated industry. Lines must be drawn very very clearly between business partners & friendship. I have seen many friendships ruined because of a failed business.
Official letters must be drafted,preferbly by lawyers so that it makes it a binding contract. If you really intrested on setting up a "service oriented" business, drop me a pm and I would be more than happy to tell you all the good times & horror stories, (some personal) and all the requirements neede.

CHEERS

[banana]

any VC here? can pump i in a few millions so that we can open chain store like hotel81. we can have something like SPA88. SPA88 chinatown, SPA88 balestier, SPA88 classic, etc...

[banana]

got a better idea, give me $50k and i will give u ROI of 100% within 10 mths. any VC here? PM me for more details.

[banana]

Originally Posted by Reaper

Dear Bros,

Let me carry on a little on what bro banana said. Should the business fail, who will the finger be pointed at? ... Official letters must be drafted,preferbly by lawyers so that it makes it a binding contract. If you really intrested on setting up a "service oriented" business, drop me a pm and I would be more than happy to tell you all the good times & horror stories, (some personal) and all the requirements neede.

CHEERS

wat bro reaper talking abt is business practice. so it is important to have the business plan draft and the next move into infrastructure of the business that will solve bro reaper concern. infrastructure is important bcos how a business substain itself depend on it.