Le Scandinave Destination Spa and Resort

Le Scandinave Destination
Spa and Resort
Business Plan
Ginelle Pidwerbesky
12/4/2009
Table of Contents
Le Scandinave Destination Spa and Resort .................................................................................................. 1
1.0
Executive Summary ........................................................................................................................... 4
2.0
Business Overview ............................................................................................................................ 5
2.1
Introduction .................................................................................................................................. 5
2.2
Mission Statement ........................................................................................................................ 5
2.3
Objectives...................................................................................................................................... 5
3.0
Operations Plan................................................................................................................................. 6
3.1
Location......................................................................................................................................... 6
3.2
Site Plan......................................................................................................................................... 7
3.3
Average Business Operations ....................................................................................................... 8
3.4
Suppliers........................................................................................................................................ 8
3.5
Service Providers ........................................................................................................................... 8
3.6
Capital Budget ............................................................................................................................... 8
3.7 Operating Expenses ............................................................................................................................ 9
4.0
Human Resources Plan ..................................................................................................................... 9
4.1 Organizational Structure ..................................................................................................................... 9
4.2 Job Descriptions ................................................................................................................................ 10
4.3 Human Resource Strategy ................................................................................................................ 12
4.4 Human Resource Costs ..................................................................................................................... 12
5.0
Marketing Plan ................................................................................................................................ 13
5.1 Competitors and our Competitive Advantage .................................................................................. 13
5.3 Competitive Advantage..................................................................................................................... 15
5.4 Target Market ................................................................................................................................... 16
5.5 Marketing Strategy ........................................................................................................................... 16
5.6 Marketing Budget ............................................................................................................................. 18
5.7 Business Partnerships ....................................................................................................................... 19
5.8 Pricing Policy ..................................................................................................................................... 19
6.0
Financial Plan .................................................................................................................................. 20
6.1 Financial Structure ............................................................................................................................ 20
6.2 Dividend Policy .................................................................................................................................. 20
6.3 Ratio Analysis ....................................................................................... Error! Bookmark not defined.
Le Scandinave 2
6.4 Financial Analysis .............................................................................................................................. 20
7.0
Le Scandinave Destination Spa and Resort Summary..................................................................... 21
Appendices.................................................................................................................................................. 22
Appendix A – Capital Costs ......................................................................................................................... 22
Appendix B – Financial Statements (See attached) .................................................................................... 23
Le Scandinave 3
1.0 Executive Summary
Le Scandinave was created to provide residents and visitors of Saskatchewan a place to relax,
rejuvenate and refresh. This full service spa and resort is the only one of its kind in the province
and will be located ten minutes south of Saskatoon. Le Scandinave will help remedy the
increasing level of stress faced by the working class of our society, by offering a range of
relaxation services in one convenient location.
The organization will be managed by Ginelle Pidwerbesky. Ginelle is in her third year of Human
Resources in the Edwards School of Business and will be graduating with her degree in April
2010. Ginelle worked for Agriteam Services as a Human Resource Assistance gaining
experience on employee management, scheduling, hiring, firing and other human resource
policies. In addition, she has managed the books for two different farm related organizations
and has the ability to carry out all of the accounting and payroll demands of Le Scandinave.
Ginelle is comfortable and skilled at handling and facilitating a large group of employees.
The following document provides information on the operations, human resource, marketing
and financial aspects of this new business venture. We believe that the wide range of services
offered by Le Scandinave will ensure a high level of relaxation for any individual.
Le Scandinave 4
2.0 Business Overview
2.1 Introduction
Le Scandinave is a destination spa and resort that offers a wide range of spa and relaxation
services including:






Massage - Swedish, Hot Stone, Yoga, Duo
Pedicures & Manicures - indoor and outdoor
Body Wraps
Steam Bath
Finnish Sauna
Various Relaxation Spots
Additional amenities include:
 Boutique - Sandals, T-Shirts, Swimwear, Purses
 Bistro - Sandwiches, Salads, Smoothies, Specialty Coffees
The main feature of the resort is the Scandinavian bath process whereby customers alternate
body warming in the Hot Baths, Finnish Sauna or Steam Room with refreshing cold-water
plunges and relaxation sessions. After completing 3 or 4 times, the process is designed to
cleanse skin, improve physical condition and provide a sense of well-being. Being the only full
service destination resort in Saskatchewan, Le Scandinave plans on providing a place for
Saskatoon residents and visitors to the province a place to Rejuvenate, Revitalize and Relax.
2.2 Mission Statement
We are committed to becoming a leader in the spa and alternative health care industries by
ensuring exceptional customer service and the utmost level of relaxation.
2.3 Objectives
Our primary objectives over the next year are to:
-
Obtain a bank loan of $2,800,000 to assist with the start up costs and initial operating
costs for Le Scandinave
Obtain additional investments of $1,000,000 to cover remaining start up and initial
operating costs
Generate a large enough customer base that we can average 28 customers per day
Generate a net profit in the first year by developing a strong client base and keeping
overhead costs to a minimum
Le Scandinave 5
3.0 Operations Plan
3.1 Location
Le Scandinave will be located a quick 10 minute drive south side of The City of Saskatoon.
Figure 3.1 below shows the exact location of the resort. This location was chosen for a number
of reasons:






Short commute for customers driving out from the city after a day of work
Overlooks the riverbank
On route to Dakota Dunes Golf Course
In close proximity to high income neighbourhoods such as Riverside Estates and The
Willows
Within R.M. of Corman Park limits and therefore receives township amenities
Easy access from highway 219
Figure 3.1 – Location Map
Le Scandinave 6
3.2 Site Plan
Le Scandinave will span over five acres. There will be a large parking lot for all patrons and
employees. The main facility, a 10,000 square foot building, will house the bistro, boutique,
massage and esthetician rooms, changing area, steam room and main reception area. The main
patio area will consist of a large Finnish sauna, two hot baths and two cold plunges, both of
which are 12ft by 24ft. In addition, there will be a number of relaxation areas throughout,
including a fire pit. The 1000 square foot building on the far side of the resort will be used as a
yoga studio and for additional relaxation spots. The diagram below gives a general idea of the
resort layout.
Hot Baths
Sauna
Main Facility
-
Relaxation
Area
&
Yoga Studio
Cold Plunge
Hot Baths
Bistro
Boutique
Massage Rooms
Change room &
lockers
- Steam Room
Parking Lot
Cold Plunge
Front Deck
Figure 3.2 – Site Plan
Le Scandinave 7
3.3 Average Business Operations
Le Scandinave will be open 365 days of the year. Hours of operation are as follows:
Monday, Tuesday, Saturday & Sunday
10:00AM to 8:00PM
Wednesday, Thursday & Friday
10:00AM to 9:00PM
3.4 Suppliers
Office supplies including furniture, computers and fixtures will all be supplied by Staples.
Boutique supplies such as fixtures, hangers and equipment will be supplied by Valley Store
Equipment. Tables, coolers and cooking supplies for the Bistro will all be provided by Mountain
Equipment Co. Initial spa equipment such as massage beds and other equipment will be
supplied by the Beautishape Corporation in Mississauga, On. For ongoing supplies such as spa
accessories, personal care and skin care products, Eclipse Beauty Supply Ltd. in Burnaby, BC will
be used.
3.5 Service Providers
Initial set-up of the resort consists of constructing the two buildings and landscaping. Building
construction will be completed by Wright Construction and landscaping and pool development
will be done by Brightwater Pools and Construction, both of which are located in Saskatoon.
SaskPower will be supplying our power and SaskEnergy will supply our natural gas. Water and
sewage needs will be handled by the City of Saskatoon as we are still within city limits. Sasktel
will be our phone and internet services provider.
Any minor maintenance including landscaping work such grass cutting, watering plants, etc. and
pool maintenance will be done by our in house pool staff. The accountant on staff will ensure
all payroll and accounting matters are attended too. However, Meyers Norris Penny will be
used for any additional matters. Marsh Canada will be handling all insurance costs and any
additional legal services will be handled by Cuelenaere, Kendall, Katzman and Watson.
3.6 Capital Budget
The highest cost in the capital budget is the construction and utility set up of the two buildings.
In addition, pool installation is costly. A more detailed breakdown of the costs can be found in
Appendix A.
Le Scandinave 8
Initial Capital Set-up
Land
Buildings & Utility Set-up
Pool & Water Set-up
Fixtures & Equipment
Costs
55,000
2,439,000
912,000
250,000
Total
$3,656,000
Table 3.1 - Capital Budget
3.7 Operating Expenses
Table 3.2 outlines the operating expenses for Le Scandinave in the first year of operation. The
main expense for the company is its wage expense. Employee benefits are calculated using the
following percentages: EI at 2.42%, CPP at 4.95% and WC at 2.0%.
Operating Expenses
Telephone & Internet
Utilities
Wages
Employee Benefits
9.4%
Property Taxes
Insurance
Capital Cost Allowance
Natural Gas
Accounting & Legal Fees
Marketing Expenses
Interest Expense
General Supplies
Office Supplies
Spa Supplies
TOTAL
8,500
32,458
513,333
48,900
22,200
18,500
75,750
43,059
25,000
98,350
280,000
12,000
5,500
18,300
$1,201,050
Table 3.2 – Operating Expenses
4.0 Human Resources Plan
4.1 Organizational Structure
Figure 4.1 outlines the hierarchical structure at Le Scandinave. The Spa supervisor will only be
hired once full capacity is reached. At that point, some of the manager’s duties, such as
scheduling massage therapists and estheticians, would be re-allocated. No university degree
will be required for the Spa, Boutique and Bistro Supervisors. However, Massage Therapists
and Estheticians will all need certification.
Le Scandinave 9
Manager
Spa
Supervisor
Massage
Therapists
Pedicure &
Manicurists
Pool Staff
Front Desk
Boutique
Supervisor
Bistro
Supervisor
Boutique
Staff
Bistro Staff
Figure 4.1 – Organizational Chart
4.2 Job Descriptions
The following is a list of daily, weekly, monthly and yearly job duties for all Le Scandinave staff:
Manager
Daily/Weekly/Monthly:
 Oversees all operations
 Resolve conflicts between employees
 Resolve major conflicts with guests
 Prepare schedules for Pool Staff, Massage Therapists, Front Desk Clerks, Pedicurists &
Manicurists
 Monitor staffing levels, hiring & firing
Yearly:
 Compile financials
 Ensure taxes are completed & filed
 Analyze past year performance
 Develop a strategy for upcoming years
 Evaluate managers & staff
Pool Staff
 Overseeing the maintenance of pumps & equipment
 Clean & maintain pool deck throughout shift
Le Scandinave 10




Perform minor resort maintenance duties
Maintain pool color, chemistry & cleanliness
Monitorinventory levels of chemical & other pool maintenance supplies
Develop & maintain a friendly relationship with members of the pool
Front Desk
 Book, change & cancel spa appointments
 Provide detailed descriptions of spa treatments, packages, services & facility features
 Handle guests’ questions & concerns professionally & courteously
 Provide customers with towels and locker keys
 Take payment for all services provided
 Maintain a clean, safe & organized work area
Massage Therapists:
 Massage customers for therapeutic & remedial purposes
 Maintain massage rooms
Pedicure & Manicurists:
 Perform pedicures & manicures to customers
 Maintain clean work space by disinfecting all equipment
Boutique Supervisor
 Order product & maintain inventory levels
 Create schedule for boutique staff
 Monitor & update sales display areas
 Maintain sales records & ensure sales targets are met
 Provide on-the-job training for new employees
 Resolve conflict between boutique employees
 Maintain time cards daily & records overtime
 Handle customer complaints
Boutique Staff:
 Greet customers
 Open & close cash registers
 Maintain knowledge of current promotions and products
 Process payments of various kinds
 Offer advice to customers
 Clean & dusts shelves, counters & tables
 Exchange merchandise & accept returns
 Bag or package purchases, wrap gifts
 Stock and replenish selves
Le Scandinave 11
Bistro Supervisor
 Maintain knowledge of health and safety guidelines
 Order product & maintain inventory levels
 Create schedule for bistro staff
 Provide on-the-job training for new employees
 Ensure that building & equipment are safe & sanitary
 Maintain times cards daily & record overtime
Bistro Staff:
 Greet customers & take their order
 Prepare and serve sandwiches, salads, smoothies & specialty coffee
 Maintain proper food handling, safety & sanitation standards
 Process payments of various kinds
 Open & close cash registers
 Maintain cleanliness & sanitation for all tables, floors, windows, equipment, counters
 Check supplies & restock items to ensure a sufficient supply
4.3 Human Resource Strategy
Le Scandinave plans on putting a large focus on attracting and retaining good quality
employees. Due to the fact that we are located outside of the city we feel it is important to
lead the market in wages. We are an organization who values employee stability and we want
customers to build relationships with the esthetician or massage therapist. In turn, this will cut
down on employee turnover and training costs.
We plan on operating a high-involvement organization with an informal means of
communication and decentralized decision making. We will promote tasks that are both
interesting and challenging to our employees and provide a level of autonomy in which
employees can exercise. Feedback will be encouraged and acknowledged. Supervisors will be
trained to facilitate instead of control and direct their subordinates as we strive to provide
sufficient resources so that our employees can exercise self-control and motivation. In addition
to the base pay received, employees will receive indirect pay such as free admission to the
resort and discounts on spa services, boutique products and bistro food.
4.4 Human Resource Costs
Table 4.1 provides a list of the salary/wage rates for all employees at Le Scandinave. In
addition, it outlines the number of personnel that will be required in order to efficiently run the
resort. Estheticians and Massage Therapists will be calculated as a reflection of sales. The 7
estheticians and 6 massage therapists relates to the number of clients that those employees
can service in a day. As previously stated, there will be no spa supervisor employed until the
Le Scandinave 12
point of full capacity. The total wage expense for the organization will be $513,333. To reiterate, we plan to lead the market in wages and salary so we can ensure good quality
applicants. The high wage expense is a reflection of this.
Wages
Manager
Bistro Manager
Bistro Server
Boutique Manager
Boutique Service Rep
Spa Supervisor
Estheticians
Massage Therapists
Pool Staff
Receptionist
Yoga Instructor
TOTAL
7
6
# of Personnel
1.0
1.0
1.5
1.0
1.5
2.1
1.3
2.0
2.0
0.5
Salary/Wages
55,000
45,000
27,000
45,000
27,000
45,000
42,000
46,000
28,000
40,000
38,000
Total
55,000
45,000
40,500
45,000
40,500
90,000
61,333
56,000
80,000
19,000
$513,333
Table 4.1 – Wage Expenses
5.0 Marketing Plan
5.1 Competitors and our Competitive Advantage
Le Scandinave does not have any direct competitors in that no other company in Saskatchewan
offers the same wide range of services. The resort and spa will, however, indirectly compete
with other spas, recreation facilities with pools and yoga studios in and around Saskatoon.
There is currently 20 spa's located in Saskatoon, 42 in all of Saskatchewan. By conducting
research, we discovered that the estimate population required to sustain a personal service
business is 2340. The population of Saskatoon as of December 31, 2008 is 209,400 meaning
that the city is able to support a total of 89 personal service businesses. Table 5.1 provides a
list of the competing spas in the city. However, Le Scandinave is the only spa that offers
pedicures, manicures and massages outdoors during the summer months. In addition, the
resort has the ability to accommodate large groups for weddings, mother’s day parties, etc.
Le Scandinave 13
Spa Competitors
Angels Salon Spa
Anthony Michael’s Hair-Tanning
Blondo’s on Broadway
Boutique Beyouteful
Chel Salon Spa
Clearly Nails etc.
Deja Vu Salon
Edgewater Spa
Ethos
Glo Esthetics & Body Spa
Just for You Spa
Make-Up Studio
Ohara’s Garden Sanctuary
Paramount Day Spa & Salon
Riverstone Massage Therapy
Solar Styling Salon
Spa Ahava
Sunsera Salons
Susan Kesler Make-Up Academy
Yu Spa
Table 5.1 – Spa Competitors
Table 5.2 provides a list of recreation facilities that have pools in the city. Le Scandinave has a
competitive advantage in that all of these pools are either indoors or are only open during the
summer. Le Scandinave will be open year round with access to outdoor pools even during the
winter months. In addition, Le Scandinave enforces a minimum age requirement of 18 years of
age to ensure that a high level of relaxation is met. There will be no background noise from
aquatic lessons or waterslides.
Indirect Pool Competitors
YMCA Saskatoon
George Ward Swimming Pool
Harry Bailey Aquatic Centre
Lakewood Civic Centre
Lathey Swimming Pool
Lawson Civic Centre
Mayfair Swimming Pool
Riversdale Swimming Pool
Table 5.2 – Indirect Pool Competitors
Table 5.3 shows a list of yoga studios in Saskatoon. Of the 7 yoga studios, none of them offer
lessons at a time that is subject to customer request. At Le Scandinave, customers are allowed
to book Yoga classes at whatever time they choose as long as there is 12 people or more
Le Scandinave 14
attending the class. In addition, none of these locations offer the same incredible riverside
views as Le Scandinave.
Yoga Studio Competitors
Laffing Out Loud Lafter Yoga
Yoga Downtown
RP’s Alternative Health Care
Yoga Studio
Hot Yoga on 20th
Renew Yoga Fitness Healing
The Yoga Mat Studio
Table 5.3 – Yoga Studio Competitors
Although Le Scandinave has no direct competitors, the list of destination spas in Table 5.4
would be a close comparison. There are only three other destination spas in the province. Le
Scandinave’s competitive advantage is that we offer a full range of services not offered at any
of the other three resorts. In addition, the Scandinavian Bath system is available only in
Whistler, Ontario & Quebec. The most important factors is Le Scandinave’s location; we are a
quick drive away from the City of Saskatoon.
Destination Spa Competitors
Name
Elk Ridge Resort
Manitou Springs Resort
Temple Gardens Mineral Spa
Location
Waskesiu Lake
Manitou Beach
Moose Jaw
Distance from Saskatoon
2 hours 50 minutes / 143.38 miles
1 hour 28 minutes / 76.42 miles
2 hours 19 minutes / 139.93 miles
Table 5.4 – Destination Spa Competitors
5.3 Competitive Advantage
In summary, Le Scandinave retains the following competitive advantages that are not offered
by any of their indirect competitors:






Open year round
Wide range of services at one convenient location
18 years of age minimum enforced
Indoor and Outdoor services offered
LOCATION: Close proximity to Saskatoon
Only Scandinavian bath system in the province
Le Scandinave 15
5.4 Target Market
Le Scandinave will be targeting women aged 18-65. The primary focus is on business women
living in high income neighbourhoods in Saskatoon. We expect those particular patrons to visit
the spa 2-3 times per week. In addition, individuals visiting the province will be a target market.
Those travelling to the province on business can come to the spa for the afternoon or during a
day off. Tourists coming in will no longer have to drive to Moose Jaw to get the destination spa
experience. A partnership will be put together with select Saskatoon hotels to pick up
customers, bring them to the spa for the day and drop them off back at the hotel when they are
done. In addition, a shuttle service could be set up with Dakota Dunes to provide shuttle
services to both out of town attractions. The ultimate goal is to provide a variety of relaxation
services to those looking to unwind after a long day of work or travel in the most convenient
method possible.
Table 5.5 gives a list of the following Saskatoon neighbourhoods in which Le Scandinave plans
on targeting. Any neighbourhood with an average family income of $70,000 or more was
considered. As an added benefit, all of the neighbourhoods listed are located on the east side
of the city which makes for easy access as Le Scandinave is on the east side of the rive.
Neighbourhood
AREA ONE –EAST
Arbor Creek
Briarwood
College Park East
Erindale
Lakeridge
Lakeview
Silverspring
Silverwood Heights
AREA TWO-EAST
Adelaide/Churchill
Grosvenor Park
Nutana
Varsity View
Lawson Heights
River Heights
TOTAL
Population
Average Family Income
1,765
1,685
4,625
4,465
4,120
7,565
3,525
11,095
$107,040
$132,451
$70,114
$94,455
$91,421
$84,667
$78,914
$78,913
3,535
1,365
6,145
3,490
4,815
4,385
35,520
$71,746
$94,420
$84,282
$78,012
$78,130
$90,089
$1,234,654
Table 5.5 – Neighbourhood Profiles
5.5 Marketing Strategy
To attain consumer attention, Le Scandinave Spa and Resort will be advertising and promoting
using a number of different methods. We will run advertisements year round in the Saskatoon
Le Scandinave 16
phonebook and on a Billboard along highway 39. Seasonal ads will be placed in the Star Phoenix
and in a variety of tourist magazines and newsletters. All advertisements will promote the
soothing and relaxing atmosphere of the resort. In addition, a list of the services offered and
spa location information will be provided. We will advertise on two radio stations, Magic 98.3
and C95, in hopes of reaching a diverse group of people. A substantial amount of money will be
allocated to company signage and displays. We would like to target as many locations around
the city as possible and therefore will give consideration to signage on Circle Dr and Idylwyld as
they are both high traffic streets. Finally, business cards and brochures will be distributed in
and around Saskatoon targeting hotels for tourist attention.
Figure 5.1 is a brochure sample that will be used by Le Scandinave for advertising purposes.
How to enjoy the Scandinavian
Baths:
Le
Scandinave
Saskatoon



The Scandinave Baths and
Resort are renowned for
their ability to cleanse the
skin and provide a sense of
well-being.




What to Bring:
To get the most out of you Le
Scandinave Baths experience, please
bring the following:



Bathing suits
Sandals
Robe
We will provide...



2 Fresh towels
Locker & Key
Shampoo, Conditioners, & Soap
in showers
Purchase your Day Pass or
Membership at Reception
Change into your Bathing Suit and
Sandals
Rinse off in the change room
showers
Warm-up in a hot bath, the steam
room or sauna
Cool off with a quick cold plunge
or shower
Find a quiet place to relax –
indoor or outdoor
Repeat and enjoy the baths for as
long as you want!
No reservations required for
Scandinavian Baths.
To fully appreciate the benefits
of the Scandinavian Baths, we
suggest a 2-4 hour visit.
We invite you to try our Finnish
Sauna, Steam Bath, Hot Baths &
Cold Plunges. Complete the
experience by enjoying the
serenity of the Relaxation Areas
and Outdoor Fireplace.
Other Amenities
Bistro - offering sandwiches, salads,
smoothies and specialty coffees
Boutique – a unique selection of
swimwear, T-Shirts, purses and
sandals
Figure 5.1 – Brochure Front
Le Scandinave 17
Spa Rules & Conditions



Hours of Operation:
Must be 18 years or
older
Saskatoon
Rates per person, taxes
not included
Bathing suit mandatory,
sandals recommended
Monday, Tuesday , Saturday & Sunday
10:00AM to 8:00PM
Wednesday, Thursday & Friday
10:00AM to 9:00PM
Figure 5.2 – Brochure Back
Attention will also be given to the promotion and development of the organization. Le
Scandinave will have a fully functioning website which will link to a full list of services and their
prices. For further publicly purposes, we will become a member of the Leading Spas of Canada
and receive attention by utilizing the Spa Directory. Promotional flyers will be distributed to the
targeted neighbourhoods listed above and additional funds will be used for trade shows and
any other public or media related events.
5.6 Marketing Budget
The success of Le Scandinave Spa and Resort rests solely on the number of customers we can
attract. For that reason we have decided to $98,350 to marketing in the first year. Table 5.6
outlines a breakdown of the marketing costs.
Le Scandinave 18
Marketing Expenses
Advertising
Saskatoon Phonebook Advertising
4,500
Brochures/Business cards
9,600
Signage/Displays
18,500
Newspapers/ Tourist Guides
6,500
Billboard along Highway 39
9,000
Radio Ad
18,000
$58,100
Total Advertising
Promotion & Development
Mailing Lists
Public and Media Events
Web page
Leading Spas of Canada Membership
6,700
20,400
4,700
450
Total Promotion
$40,250
Total Marketing Expenses
$98,350
Table 5.6 – Marketing Expenses
5.7 Business Partnerships
With the workforce aging and baby boomers retiring, businesses will be looking for ways to
enhance their reward systems in order to attract and retain employees. Le Scandinave plans
embrace this opportunity by partnering with Saskatoon businesses and offering memberships
to company employees at subsidized rates.
5.8 Pricing Policy
Customers will gain complete access to the resort for the entire day at a rate of $40. Spa
services will be priced in relation to the market, meaning that customers will be paying the
same amount as they would at a competing high-end spa. As a result, massages will be offered
at $120, pedicures at $69, manicures at $49 and body wraps at $95. Yoga classes will be $13
per person for a session of twelve people or more.
Boutique prices will be slightly higher than the competing market because they will be exclusive
to the city. Purses can be purchased for $95, sandals for $39, T-shirts for $35 and swimwear for
Le Scandinave 19
$110. The Bistro will offer sandwiches and salads for $6 and specialty coffees and smoothies
for $8. Prices will inflate at a rate of 3% and for additional information such as five year
projections please refer to the financial statements in Appendix B.
6.0 Financial Plan
6.1 Financial Structure
To finance the $3,800,000 required for start-up and initial operation, we will use a combination of Bank
Debt and Common Shares. A loan of $2,800,000 will be obtained from the Bank of Nova Scotia and the
addition $1,000,000 will be financed through the selling of common shares. Table 6.1 provides an
outline.
Financing Budget
Bank Debt
Common Shares
Total
2,800,000
1,000,000
3,800,000
Table 6.1 – Financing Budget
6.2 Dividend Policy
For the first two years, Le Scandinave will re-invest any profits generated to ensure stability and
continued operation. If the organization is success and projections prove to be correct, a net income of
$305,000 in the third year, $532,407 in the second year and $783,206 in the fourth year will be acquired
and the organization will begin to pay dividends to its common share holders: $100,000 in year one,
$250,000 in year two and $500,000 in year three.
6.4 Financial Analysis
The relatively large Net Present Value of $645,638 shows that Le Scandinave can produce more
than the required return of 25% and be profitable. An Internal Rate of Return of 40.3% is the
result of using a high level of debt financing to fund the organization. Although this can be risky
as we will be faced with higher interest payments, the projected cash flows to cover such
payments should be sufficient.
Le Scandinave 20
7.0 Le Scandinave Destination Spa and Resort Summary
The province of Saskatchewan is currently lacking in a full service destination resort. Le
Scandinave plans to change that by giving the residents and visitors of this province a place to
rejuvenate, relax and refresh. A detailed financial analysis of this new business venture proves
that Le Scandinave has the ability to provide a high level of relaxation, using a variety of
different services, yet still produce healthy margins.
Le Scandinave 21
Appendices
Appendix A – Capital Costs
Description
Land Cost
Buildings & Utility Set Up
Main Facility 10,000 sq-ft
Secondary Facility 1,000 sq-ft
Natural Gas Set-up
Electricity Set-up
Total Buildings & Utility Set-up
Pool & Water Set-up
Pool Installation (28,000 x 4)
Landscaping
Town Water Set-up
Pool & Water Set-up
Fixtures & Equipment
Spa Equipment
Boutique Set-up
Bistro Set-up
Office Set-up
Main Facility Set-up
Fixtures & Equipment
TOTAL CAPITAL COSTS
Estimated Cost
Source
55,000
2,200,000
220,000
10,500
8,500
Wright Construction
Wright Construction
SaskEnergy
SaskPower
2,439,000
112,000
790,000
10,000
Brightwater Pools
Brightwater Pools
City of Saskatoon
912,000
95,000
28,500
30,500
15,500
80,500
J’Vita Wholesale
Valley Store Equipment
Mountain Equipment Co.
Staples
Various Sources
250,000
$3,656,000
Le Scandinave 22
Appendix B – Financial Statements (See attached)
Le Scandinave 23