SBE Complete

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Executive Summary Kedai Gunting Rambut Krishnan aims to provide optimal satisfaction to the customers with in the business environment Taman Maju and hope to have number of branches in other areas within Perak. This plan seeks to generate a significant increase in Gunting Rambut Krishnan sales and profits from the services provided to the customers and also ensuri ng the customers are retained, this is done to various feasible studies, marketing research and the analysis, compared to the preceding year. The highlights of this plan are the targeted profit margin and better sales. The quantified profits on the services done are presented in the tables presented in that later plan. These fig ur es represen t the key pr osp ects available for Kedai Gu nting Rambut Krishnan. These targ ets are attainable thro ugh a proa ctive app roac h to the clients, teaming -up with technolo gy providers, and partneri ng with reputable local suppliers and provision learning areas for the staff to reduce competition, improve pricing, and reduce risks and mostly giving the most preferred services by the customers. This business plan has been created on the basis of yearly and seasonally market research. Data conclude the size and growth of the market and segments, customer needs, perception, and buying behavior trends have been on the upswing, and are expected to continue in this trend for the other years. Kedai Gunting Rambut Krishnan is able to fill the hole in the marketing niche, and will benefit from operations beginning in coming years starting from next year 2012. Vision and Mission Statement According to Scarborough (2011), throughout history, the greatest political and business leaders have been visionaries. An example is Dr. Martin Luther King Jr. “I have a dream” speech. A vision is the result of an entrepreneur’s dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see. Scarborough (2011) also stated that a clearly defined vision helps a company in four ways: a. Prov ide Direc tion : Entrep rene ur use vision to focus every one atte ntio n on the future and determine the path the business will take to get there. b. Determines Decisions: Infl uences th e de ci si ons of the business that th e mana gers and owners make. Th is in fl ue nc e can be po si ti ve or ne gative depending on how well defined the vision is.

Transcript of SBE Complete

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Executive Summary

Kedai Gunting Rambut Krishnan aims to provide optimal satisfaction to the customerswith in the business environment Taman Maju and hope to have number of branches inother areas within Perak. This plan seeks to generate a significant increase in Gunting

Rambut Krishnan sales and profits from the services provided to the customers andalso ensuring the customers are retained, this is done to various feasible studies,marketing research and the analysis, compared to the preceding year.

The highlights of this plan are the targeted profit margin and better sales. The quantifiedprofits on the services done are presented in the tables presented in that later plan.These figures represent the key prospects available for Kedai Gunting RambutKrishnan. These targets are attainable through a proactive approach to the clients,teaming-up with technology providers, and partnering with reputable local suppliers andprovision learning areas for the staff to reduce competition, improve pricing, and reducerisks and mostly giving the most preferred services by the customers.

This business plan has been created on the basis of yearly and seasonally marketresearch. Data conclude the size and growth of the market and segments, customer needs, perception, and buying behavior trends have been on the upswing, and areexpected to continue in this trend for the other years. Kedai Gunting Rambut Krishnan isable to fill the hole in the marketing niche, and will benefit from operations beginning incoming years starting from next year 2012.

Vision and Mission Statement

According to Scarborough (2011), throughout history, the greatest political and business

leaders have been visionaries. An example is Dr. Martin Luther King Jr. “I have a

dream” speech. A vision is the result of an entrepreneur’s dream of something that does

not exist yet and the ability to paint a compelling picture of that dream for everyone to

see. Scarborough (2011) also stated that a clearly defined vision helps a company in

four ways:

a. Provide Direction: Entrepreneur use vision to focus everyone attention on the

future and determine the path the business will take to get there.

b. Determines Decisions: Influences the decisions of the business that the

managers and owners make. This influence can be positive or negative

depending on how well defined the vision is.

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c. Motivates People: A clear vision can excites and ignites people to action.

d. Allows for Perseverance when Facing Challenges: New companies, their 

founders and their employees often face many challenges and hardships form

variable of sources. Having a vision serves as the company’s “guiding stars”

when facing a crisis.

For Kedai Gunting Rambut Krishnan, their vision is:

We believe that customer satisfaction is our strength and with the new 

millennium young generation requirement we are devoted to grow with Seri 

Iskandar customers by providing high quality and lower prices daily services with

no interruption.

A mission statement however addresses a basic question of any business venture,“what business are we in?” Establishing the purpose of the business in writing must

come first in order to give the business a sense of direction. As an enduring declaration

of a company’s purpose, a mission statement is the mechanism for making it clear to

everyone the company touches “why we are here” and “where are we going”.

Without a concise, clear and meaningful mission statement, a company risk wondering

aimlessly in the marketplace, with no idea of where to go or how to get there. A great

mission statement sets the tone for the entire company and focuses its attention in the

right direction.

For Kedai Gunting Rambut Krishnan, their Mission Statement in the business is:

Kedai Gunting Rambut Krishnan is committed to customers’ satisfaction. Our friendly and 

 professional stylist team provides the best hair cut and shaving in Seri Iskandar within

enjoyable environment with exceptional practices.

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Company’s History

Kedai Gunting Rambut Krishnan is a sole proprietorship company and was

founded by Mr. Krishnan A/L Kalimuthu on 3rd of August 2001 in Ayer Tawar, Perak.

Five years after that, a second shop was established in Seri Iskandar, Perak in April2011. The shop was founded by Mr. Krishnan based on his desired of pursuing a career 

in hair stylist upon his graduation from high school. After that, Mr. Krishnan began

taking a diploma in hair styling and after successfully obtained it, he work with his

brother, a fellow barber for about 20 years.

After he believe he has learnt everything that is to know on hair cutting and

styling business, he set up his first barber shop with the help of his older brother in Ayer 

Tawara and five years later in Seri Iskandar. Both shops incorporated the same style,

size and location. All of his workers are foreign workers from India and are experienced

in hair cutting business before came here to Malaysia.

In this business, Kedai Gunting Krishnan only serves male customers.

Throughout the 10 years of serving customers from various races and country, he has

established a strong base of regular and loyal customers. Most of twhe customers come

in evening and weekend and their number doubled during public holidays. In the future,

Mr. Krishnan wanted to build another barber shop and maybe established a franchise

throughout the country.

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Business and Industry Profile

Goals are broad, long-range statements of what a company plans to achieve in the

future that guide its overall direction. It addresses the question, “what do I want my

company likes in the future?”

Kedai Gunting Krishnan’s goals are:

1. To become the main choice of barber shop for the male population of Seri

Iskandar and Ayer Tawar.

2. To defeat the competitors and become the leader in the market.

3. Develop the business and set up another barber shop in another area in near 


Objectives however are more specific targets of performance. Common objectives

concern profitability, growth, efficiency, markets, financial resources, physical facilities,

organizational structure, employee welfare and social responsibilities. Well written

objectives must be specific, measurable, assignable, realistic (yet challenging), timely

and written down.

Kedai Gunting Krishnan’s objectives are:

1. To exceed the customer’s expectations by providing a satisfactory hair cutting


2. To increase the annual revenue of the company by 10% every year by increasing

the number of customers through superior performance and mouth-to-mouth


3. Have a cliental return rate of nearly 90% from overall customers that come to the

shop and establish a group of loyal customers.

Besides goals and objectives, it is also important to know the company’s current

position in the industry. This can be done by using the PESTLE analysis and the SWOT

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analysis to determine the external factors that affecting an organization decision

making, performance and strategy.

The PESTLE analysis examines the external market, the customers’ needs and wants

that can be ascertained. Through the PESTLE analysis, an organization can assess if 

they can deliver the customers wants providing. The factors that affecting Kedai Gunting

Krishnan are:

a. Political Factors

This factor identifies the changes in the position politician take on issues. This

referred to the government policy such as the degree of intervention in the

economy. As all employees under him are foreigners (from India), they needed to

deal with Malaysian legal issues like being documented and getting employee

Visa. The barber shop has to function following the Malaysian government policy.

b. Economical Factors

This factor indentifies trends such as changes in personal disposable income,

interest rates, inflation and unemployment rates. Kedai Gunting Rambut Krishnan

income is subjected to Malaysian laws of taxation. If this barber shop has higher 

income growth, it may boost the demand on the barber services contributing also

to the increase of work opportunities as the business provide more work


c. Socio-Cultural Factors

This factor indentifies trends in society’s beliefs, behaviors, values and norms; for 

example, the number of part time workers, attitudes towards global warming and

makeup of the family structure. The customers of Kedai Gunting Krishnan in SeriIskandar are multiracial as it is located in the near proximity of Universiti

Teknologi Petronas, a university with students came from Malaysia and other 

countries. The different cultures bring behavior into Mr. Krishnan’s barber shop

forcing him to deal with these customer habits and also train his employees on

how to deal with new customers’ attitudes.

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d. Technological Factors

This factor indentifies changes in the application of technology. An example is

the current trend of preference of customers in online transaction. In order to

attract more customers and keep the existing ones, Mr. Krishnan has equipped

the barber shops with modern equipment, ergonomic furniture and computer so

that the barber shops can be more structured and the customers can use the

internet facilities and do a payment using credit card instead of cash in hand. The

customers waiting can also use the entertainment available such as television

and radio that can increase the customer satisfaction.

e. Legislative Factors

This factor is closely linked to the political factors but also included trends in court

decisions such as liability compensation. Mr. Krishnan practice “One Malaysia”

principle which brings all the customers together. The fact that the increasing

number of international customers demanded Mr. Krishnan to treat all the

customers equally as any other local customers. Kedai Gunting Krishnan also

practices the Perak state legislation.

f. Environmental Factors

This factor included the weather and climate change. With the major changes

occurring due to global warming and with greater environment awareness, this

external factor is becoming significant issue for firms to consider. The barber 

shops operation is not a threat to the environment and obeys Malaysian DOE

regulations. The HSE requirements also are practiced by Kedai Gunting

Krishnan. The disposal of the excess hair must be properly done so that it does

not disturb the environment.

SWOT analysis is used to determine an organization internal factor; Strengths and

Weaknesses and also the external factor; Opportunities and Threats. For Kedai Gunting

Krishnan, the SWOT analysis is:

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a. Strength (Factors within the organization control and can be facilitate the

achievement of the organization goals and objectives)

• Competitive advantage in the line of service compared to other neighbor 

barber shops.

• First come first serve practice.

• Affordable prices.

• Additional free packages.

• Short waiting time in peak hours.

• Hair cut quality and variable options styles.

• Professional employees.

• Open every day.

• Good reputation among the customers.

b. Weaknesses (Factors within the control of the organization however hinder the

achievement of the organization goals and objectives)

• A lot of customers in line waiting during the weekends and peak hours

such as Wednesday during weekly market.

• Lack of updated hair style magazines and posters with more cutting styles


• No official training of personnel on the new cutting styles.

• Lack of customers’ entertainment while waiting for turns.

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

the organization goals and objectives.)

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• Strategic spot location of the barber shop.

• Satisfied customers introduce to the barber shop more customers.

• Weekly marker that bring many clients in a single day.

• A fulfilled customer need.

d. Threats (Factors beyond the control of the organization, however hinders the

achievement of the organization goals and objectives.)

• More barber shops opening.

• On long school holidays the number of customers decrease as most

students go back to their home town.

• People buying their own hair clipper to cut their hair.

• New regulations on barber shop operations

Business Strategy

If a firm is able to keep up profits that exceed the average for its line of service or 

products, the firm is said to possess a competitive advantage over its rivals. The goal of 

much of business strategy is to achieve a sustainable competitive advantage. An

organization is said to gain a competitive advantage when the firm is able to deliver the

same benefits as its competitors but at lower cost (cost advantage), or delivers benefits

that exceed those of competing products (differentiation advantage). Thus, a

competitive advantage enables the firm to create superior value for its customers and

superior profits for itself.

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Cost and differentiation advantages are also known as positional advantages since they

describe the firm’s position in the industry as a leader in either cost or differentiation. A

resource-based view emphasizes that the firm utilizes its resources and capabilities to

create a competitive advantage that ultimately results in superior value creation. The

following diagram combines the resource-based and positioning views to illustrate the

concept of competitive advantage:

According to the resource-based view, in order to develop a competitive advantage the

firm must have resources and capabilities that are superior to those of its competitors.Without this superiority, the competitors simply could replicate what the firm was doing

and would fall under “me-too” situation.

a. Resources

Resources are the firm specific assets useful for creating a cost differentiation

advantage and that few acquire easily. For Kedai Gunting Rambut Krishnan, the

resources are the barber shop building which is a rental one, reputation of the

barber shop, equipment, inventory (the products in use like blades or scissors)

and the job engaged staff.

b. Capabilities

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Capabilities refer to the barber’s ability to utilize its resources effectively. Kedai

Gunting Krishnan has the ability to use their hair clippers for a long period of time

without any breakdown compared with its competitors. Mr. Krishnan also has the

ability to obtain large amount of blades in large quantities.

c. Distinctive Competencies

This refers to the barber shop’s resources and capabilities all together. This will

enable innovation, efficiency, quality and customer responsiveness, all of which

can be leveraged to create a cost advantage or a differentiation advantage.

d. Cost Advantage and Differentiation Advantage

Competitive advantage is created by using resources and capabilities to achieve

either a lower cost structure or a differentiated product. Kedai Gunting Rambut

Krishnan positioned itself in the stylist business through its choice of low cost and

differentiation. This decision made by Mr. Krishnan as a manager, was a central

component of the barber’s competitive strategy. Another important decision is

how broad or narrow a market segment to target.

e. Value Creation

This refers to the value the barber shop creates by performing a series of 

activities or “value chain” as shown in the model below.

The main goal of these activities is to create value that exceeds the cost of 

providing the service, thus generating an income margin.

i. Inbound logistics Inbound logistics are activities that include the receiving, warehousing, and inventory

control of input materials. Mr. Krishnan keeps the inventory of every input material

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sometimes by the customer request the older customers can be exception of this


In a nut shell, any or all of the above activities may be vital in developing a competitive

advantage for the Kedai Gunting Rambut Krishnan. To achieve a competitive

advantage, the barber shop must perform one or more value creating activities in a way

that creates more overall values than competitors do.

Features and Benefits

Features of the Shop

It is a customer based shop where their desires are met especially whatever they seek.

The different things offered are relaxation points and enough seats for the customers to

relax before they are being served. The barber chairs and facial steamers shall be

installed in the shop, and more so the music system will be provided where there will

be a complete relaxation of the customers. There are various types of hair dryers to be

placed in the system which includes a beehive hairdryer, stand hairdryer and a hang

hairdryer which can suits the ergonomic preferences of the customers.

There will be different form of massages which will be mainly focusing on the feet and

the head as well the shoulders of the customers in case they have requested and their 

opinions of it would be considered. The staffs will be both male and female who can

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help on certain areas and guide the customers in taking what they are in need of. The

families side is constructed where there will be a small garden for children to play while

their parents would be getting their services without a lot of distraction. We look forward

to compartmentalize the shop in the future and include other important features to make

it more attractive to the customers and ensure the existing customers are retained.

1. Key features to Success

Since the business is at it starts-up stage, we hope to make it modest and expand it at a

reasonable rate, which will make it prudent to achieve the key areas of success which


• Customer attention.

• Professionalism.

• Convenience.

Services BenefitsThe Kedai Gunting Krishnan provides hair styling for families which include haircuts for 

men and women, permanents and hair coloring for women, as well as haircuts for 

children. Shampoos will be offered for all adult services. Service is offered on a walk in

basis or by appointment. We will also sell hair care products that are forecasted to

account for 10% of sales. These professional quality supplies will include shampoos,

conditioners, brushes, combs, and other styling aids to meet the needs of the customers.

The other benefits to the customers are beauty creation and development of it to anindividual. Relaxation, a healthy glow and a friendly atmosphere are some of the

benefits that a barber shop or a salon offers customers. More so the main benefits

include beauty treatments to meet your needs, therapies for stress and tension, and

professional staffs that can meet any of your beauty and nice look needs.

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Marketing Strategy

The imperative thing in all forms of industries is customer satisfaction, and looking into

the trend of beauty and handsomeness modeling, Kedai Gunting Krishnan aim is to

satisfy the customers through a structured and defined successful way by increasing

sales in the business through pleasing and attracting the customers.

Since the business is getting better, the customer satisfaction is our priority and it is

concurrent with a consolidated decent client base. Though the endeavors are

challenging and prone to futility, our main aim is to penetrate the market by attracting as

many clients as possible and retaining them in our business. The marketing strategies;

principal and philosophy are to “Reach Out to New Customers and retain them” this is

enhance by allocating money for marketing purposes, which is translated to

newspapers and other forms of advertisements. The allocation of resources is done

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systematically and intelligently and making sure time is highly invested than money due

to meager resources.

The following are guiding principles to guard and enhance the business; that is the

Marketing mission and objectives

Marketing Mission

To provide reasonable prices, convenient for all types of hair styles, and our sole

purpose is to attract and maintain customers, and adhering to this optimal, everything

will be in order and the services will be to the expectations of valued customers.

Marketing Objectives

• Increase number of customers by 5 % per quarter a year 

• Maintain and sustain a positive and steady growth each month

• Decrease the possessed customers cost by 6% per year 

Financial Objectives

• Grow profit margin by 4 % per year 

• Profitability achieved within the first year of ince3ption

• Increase the products and services by 5 % per year 

The ways to attract the customers is to use local and international salon Promotion

Company specializing in the field of marketing. The sales will be increased due to the

boom of the clients which will increase the reputation and proper recommendations to

the colleagues on the services through word of mouth hence it will immensely create a

successful program in advertising.

To ensure the customers are reached the following targets are prioritize.

The Target Marketing

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There are three sections or different market segments identified to be the focus these


• Men: The fact that the area is mainly 65 to 75 percent and most of them do

attend the salons or barber shops to make their hair short , it will be lucrative and

faster, and as their will be increase jobs can be created to increase the services

to customers.

• Women: women like specific salons where they can afford with a desired

service, though the quality wise is not that much we will have reasonable

services to all the women with their preferred tastes. As per the mission and

objectives the responsibility on providing optimal services to them is a way out to

the growth of our business.

• Families: Mothers, young ones are provided a special package where kids are

offered toys to play with and providing child-friendly hair style. The kids will be

offered special rates due to the fact that their growth is too fast especially the hair 

and they will be in need of regular services which is not time consuming unless

the child is fearful.


The location is decided to be at a very convenient and it will be positioned as a full

service saloon. It will offer most o f the satisfactory services to the customers where it

will not give them a room to find other services from other areas. This will leverage its

competitive edge to attain its defined positioning;

• Competitive edge is based on superior customer services. The hair cutting and

styling can pull customers hence a care of standout superior customer attention

is quickly optimized and the operation it kept effective and efficient.

Investing time and money. The staff needs to be trained to get better experiencessuch that they can easily serve the customers effectively and with time branches

can be created and they can serve in other areas where there is high demand of 

hair fashion and other styles. Adaptability to compete with the existing similar 

ventures will be highly improved to give it a better a competitive edge.

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Strategy Pyramids

The main objective is positioning the Salon as full service premier within the locality of 

the University. This is to create customer awareness on the services offered, and work

smartly in building customer loyalty and referrals. Keeping in mind the scoreboards of the business is to serve effectively at a professional level with a fully delivered

satisfactorily customer service at reasonable rates. This will be communicated through

the newspapers and on internet social sites.

Marketing Mix

The approaches for the marketing mix consists of; pricing, distribution, advertising and

promotion and lastly customer service.

• Pricing: The prices will be based on a competitive pricing model with other similar 

service providers.

• Distribution: After having a quantifiable growth the outlets can be established and

all the products will be distributed at the central place.

• Advertising and Promotion: On monthly basis there will be campaigns to

communicate the core valued services to the customers More so a further step

has to be established to have some designs or advertisement on places where

there is high traffic jam to attract the attention of the people.

• Customer Service. The exceptional customer service will be provided since our 

workers will be trained in giving services to the customers. The training will help

the customers to be problem solvers and create independence on dealing with

certain issues amicably.

Marketing Research

At the initial phases of the marketing build up, a number of focus groups were given

attention to gain into the buying behavioral patterns of prospective customers. The

focus was to all people but it is still consider random people to look for the services. The

survey was done by asking their views on the current services and what should they

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expect to be improved, and what type of service is convenient. The plans for the

business are shared with few of them to keep their hopes on what would come to satisfy

their needs. The information gathered made sense than what was thought of.

There are various marketing strategies which are established to pull a large number of 

customers which will be elaborated below. The most effective means are detailed

though the saying “It takes money to make money” holds truth in the strategies

developed to build customer base.

a. Data capture

Identify the people and work so hard to capture their attention towards the business.

Further on collecting their email addresses, as well as other preferences to

coordinate the operation plan. The e-mail versatility makes it cheaper to advertise

and allowing customers to know the current and new plans to be structured in the

business. Ensure the history of the individuals who are coming for the services is

properly tracked and encourage them to be loyal customers by ensuring that their 

services are done perfectly.

b. Develop a marketing strategy

The size of the business should capture and accommodate; to be potential

customers as well effective plans should be the routine practices until a better 

growth of the business is achieved. The marketing efforts to be put forward are;

having direct contacts with the customers such that the business administration will

promptly act on the comments and suggestions made by the clients.

c. Using the technology

The current technology has simplified our daily activities, and a full utilization on themodern technology will catapult the business to a better position. The photos of the

pretty and handsome girls and boys should be posted and brief highlights of the

individual will foster and promote the services needed by the customers.

d. The power of Internet

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The business will be collecting email addresses of the people who are rendered

services, this create a network with the customers and build a comprehensive

relationship with the customers. This can be done by emailing them and providing

some special offer, and encourage them to recommend on some of the products and

services that they are interested in.

e. Advertising

The advertising is essential that measures the response all their advertising

campaigns to assess whether it was a viable investment and how investment

decisions future. One wonders how many people responded to your ad, how many

of them were converted to the sale, worth to you? Some tips: as one that attracts

attention is basically a title change may cause increased 50-100%, in response, the

ad needs to appeal directly to the interests of your audience objective. People do

not buy your product or service. They buy the benefits your product or service offer.

Therefore, spend some time to emerge

Competition and Buying Patterns

The competition is an eminent element is the business and it has to be addressedthrough the mentioned components to have a competitive edge in the business. The

following are the identified competitors.

Tradition barbers: They have a walk-in service whereby they don’t really work with

appointments. They provide services to the customers in whatever way the customer 

needs. They mainly provide straight-forward haircuts and they are not that expensive so

they are usually preferred by low-income group. The disadvantage is that they are so

conservative in styling capacity, and sometimes it is only one person which operates itand can have a long queue.

Quick Salons: These are mostly termed as Best Cuts. They are so attractive to the

customers because they do have all in one, in that the stores are the same from place

to place and some people like their services.

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Independent Salons: They focus on a specific area or niche and they serve only limited

number of people at a smaller scale. The buying pattern of men and women varies for 

the fact that works best for is the one which is not so complicated and it is of 

convenience. Women concerns on hair styling create bond with the stylists and once it

is done perfectly; loyalty and trust are manifested.

Competitive forces

The forces are referenced to Michael Porters forces and they are listed as diagram

below. The identified forces are the collective elements which would shape and

strengthen the business growth amongst the existing and ones to be established.






of Rivalry







of New


Power of 



Power of 


Threat of 



Rivalry Determinants 

Product differences

Switching costs

Brand identity

Concentration and


Informational complexity

Diversity of competitors

Growth of the business



Economies of 




Brand Identity

Access to





product design

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Analyzing the barber shop using this model we will end up with:

a. The level of rivalry among barber shops is very low as there are only two

barber shops presently operating.

b. The potential for entry into the barber shop line of business is not difficult.

Anyone with good initiative can start a barber shop business.

c. The power of suppliers is not a problem as the equipment and product used

in this line of business can be acquired at any place without any restriction or 

shortage on supply and the demand of these equipment and products is quite

low make their prices affordable.

d. The power of customer is very important and the business is very stable as

the demand on barber shop services keeps increasing.

Determinants of 



Relative Price

performance of 


Switching costs

Buyers Propensity

Determinants of 

supplier Power

 The concentration of 

the suppliers

Differentiation of 


Cost relative to


Presence of 


Pull through

Impact of different






Brand Identity

Impact on quality

Decision making

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e. There is no threat of substitute to hair cut, as everyone has to get their hair 

cut once and a while and is normal custom for all multicultural residents have

a haircut.

Description of Management Team

Name : Krishnan A/L Kalimuthu

Date of Birth : 26th Sept 1959

Academic Backgrounds 

• Graduate from secondary school from Sekolah Menengah Jenis Kebangsaan

Ayer Tawar, Perak in 1977.

• Diploma in hair stylist from College

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Working Experience and Achievement

• 2 years of working experience as barber at Kedai Gunting Rambut Delima, Ayer 

Tawar upon obtaining diploma.

• 20 years of working as barber and assistant manager for Kedai Gunting Rambut


• Establish Kedai Gunting Rambut Krishnan in Ayer Tawar on 3 rd of August 2001.

• Set up 2nd Kedai Gunting Rambut Krishnan in Seri Iskandar on 15 th of April 2006.

Role in the Organization

• Founder and president of Kedai Gunting Krishnan.

• Recruiter for employees from India.

• Design the market plan and strategy for the organization.

Plan of Operation

Kedai Gunting Rambut Krishnan consists of the owner and 12 employees, 6 in each

shop. In every shops, the workers act as barbers, recipient and one of them act as

assistance manager when Mr. Krishnan is not around. Mr. Krishnan generally controls

the financial aspect of the shops. Below is the organizational chart for Kedai Gunting

Rambut Krishnan:

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Financial Plan

Mr. Krishnan at Kedai Gunting Rambut Krishnan needs to expand his barber shop

services to copy with the high demand of customer looking for his service. In the last

three year Kedai Gunting Rambut Krishnan has registered an increase in number of 

clientele where some of them had to move to other barber shop because of time

constraint since they cannot wait that long to get the service.

The financials that are enclosed are real data from the past previous years. No

assumptions were made since Mr. Krishnan as the barber shop manager always kept

the data recording of his business. Revenues have been increasing at an annual rate of 

Founder and President

Krishnan A/L Kalimuthu

Ayer Tawar Subsidiary,

Assistant Manager 

Balbir A/L Muthuringgam

Seri Iskandar Subsidiary,

Assistant Manager 

Muthusami A/L Vitaham









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10.58% from 2008 to 2009 and 4.85% from 2009 to 2010 where from 2008 to 2009

there was an historical jump on revenues. The reason why from 2009 to 2010 the

revenue growth is less than the 2008 to 2009 is because the business has reached the

sales climb and the business has not yet reached the profits peak the reason why the

revenues are expected to stay steady throughout the following years to account for 

normal flow of new clients coming into the Kedai Gunting Rambut Krishnan barber 


It is important to notice that as Kedai Gunting Rambut Krishnan barber shop sales come

from services we do not have cost of goods sold in our calculations. For our calculations

we included all costs, nevertheless, in the operating expenses section of the Income

Statement table the product sales are a minimal part of our market. We also have to

point out that we are not quite sure how much revenue will derive from clients who are

looking for full service (hair cut and shaving) as the majority of the customers just come

for hair cut, so we had to take the liberty of considering only those having only a hair cut

so we could make our calculations more linear with an estimated monthly revenue of 


To add that under “other” in the Income Statement are included services like massages

that will be a newly introduced service starting by the end of 2010 and we are not quite

sure how much revenue this service will generate. But, we are confident that in time this

service will be a large part of our revenue and just to play on the safe side we estimate

that this service revenue to be only RM1,800 a month for the first year.

To guarantee the start-up funds lender that the Kedai Gunting Rambut Krishnan barber 

shop owner is financially stable, a personal financial statement is enclosed illustrating

other sources of income that include interest and dividend income from investments

(RM3,500), salary income (RM3,000), and commission income (RM2,000).

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Break-even Analysis

The break-even analysis shows that Kedai Gunting Rambut Krishnan barber shop has a

good balance of fixed cost and sufficient sales strength to remain healthy and

competitive. Kedai Gunting Rambut Krishnan barber shop break-even point is only

1,050 clients a month and this was derived by using average revenue of RM6 per client,

and Mr. Krishnan withdrawal of RM1,500 per month.

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

Break-even Analysis:  

Monthly Units Break-even 1,050.00

Monthly Revenue Break-even RM6,300.00


Average Per-Unit Revenue RM6.00

Average Per-Unit Variable Cost RM0.00

Estimated Monthly Fixed Cost RM6,300.00

Past Income Statement

As we can see from the Gunting Rambut Krishnan barber shop Income Statement from

year 2008 to year 2010 Mr. Krishnan barber shop has registered an increase in net

profit, where the net profit sales increased from 6.39% in 2008 to 13.86% 2010.

We expect the income to hit over RM75,600 at the year ending of 2011 for the Kedai

Gunting Rambut Krishnan barber shop business. This increase will be assured by the

Kedai Gunting Rambut Krishnan reputation of its services and customer relationship

driven strategy.

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Kedai Gunting Rambut Krishnan, Income Statement

for the year ended 12/30/2008, 12/31/2009 and 12/31/2010

  2008 2009 2010

Sales RM65,200 RM72,100 RM75,600

Cost of Goods Sold RM0 RM0 RM0

Other RM0 RM0 RM0

 Total Cost of Sales RM0 RM0 RM0

8/6/2019 SBE Complete 29/34

Gross Margin RM65,200 RM72,100 RM75,600

Gross Margin (%) 100% 100% 100%


Payroll RM50,200 RM51,200 RM52,200Sales and Marketing and OtherExpenses RM1,500 RM1,800 RM2,000

Depreciation RM900 RM900 RM900

Leased Equipment RM0 RM0 RM0

Utilities RM600 RM600 RM600

Insurance RM700 RM700 RM700

Rent RM1,200 RM1,200 RM1,200

Other RM0 RM0 RM0

Payroll Taxes RM5,020 RM5,120 RM5,220

Other RM0 RM0 RM0

 Total Operating Expenses RM60,120 RM61,520 RM62,820

Profit Before Interest and Taxes RM5,080 RM10,580 RM12,780

Interest Expense RM0 RM0 RM0

 Taxes Incurred (18%) RM914.40 RM1,904.40 RM2,300.40

Net Profit RM4,165.60 RM8,675.60 RM10,479.60

Net Profit/Sales (%) 6.39% 12.03% 13.86%

Past Cash Flow

Mr. Krishnan expects to manage cash flow over the next years simply by growth of the

cash flow of the business. It is promissory that the barber shop business will generate

more than enough cash flow to cover all of its expenses.

Kedai Gunting Rambut Krishnan

Statement of Cash Flows

Year Ended 12/30/2008, 12/31/2009 and 12/31/2010

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2008 2009 2010

Cash Received

Cash from Operations:

Cash Revenues RM65,200 RM72,100 RM75,600Cash form Receivables RM0 RM0 RM0

Subtotal Cash from Operations RM65,200 RM72,100 RM75,600

Additional Cash Received  

Non Operating (Other) Income RM0 RM0 RM0

Sales Tax RM0 RM0 RM0

New Current Borrowing RM0 RM0 RM0

New Other Liabilities (interest-free) RM0 RM0 RM0

New Long-term Liabilities RM0 RM0 RM0

Sales of Other Current Assets RM0 RM0 RM0

Sales of Long-term Assets RM0 RM0 RM0

New Investment Received RM0 RM0 RM0

Subtotal Cash Received RM65,200 RM72,100 RM75,600

Expenditures 2008 2009 2010

Expenditures from Operations:  

Cash Spending RM0 RM0 RM0

Payment of Accounts Payable RM54,333 RM60,083 RM63,000

Subtotal Spent on Operations RM54,333 RM60,083 RM63,000

Additional Cash Spent  

Other Expense RM0 RM0 RM0

Sales Tax RM0 RM0 RM0

Principal Repayment of Current Loan RM0 RM0 RM0

Other Liabilities Principal Repayment RM0 RM0 RM0

Long-term Liabilities Principal Repayment RM5,000 RM5,000 RM5,000

Purchase Other Current Assets RM0 RM0 RM0

Purchase Long-term Assets RM0 RM0 RM0

Dividends RM0 RM0 RM0Subtotal Cash Spent RM59,333 RM65,083 RM65,000

Net Cash Flow RM5,867 RM7,017 RM7,600

Cash Balance RM5,867 RM12,884 RM20,484

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Past Balance Sheet

As shown in Kedai Gunting Rambut Krishnan barber shop balance sheet, Mr. Krishnan

barber shop had a healthy growth in the net worth from approximately RM 1,198.60 in

2008 to RM20,353.80 by the end of year 2010.

Kedai Gunting Rambut Krishnan, Balance Sheet

at 12/30/2008, 12/31/2009 and 12/31/2010

Assets 2008 2009 2010

Current Assets

Cash RM5,867 RM12,884 RM20,484

Other Current Assets RM400 RM400 RM400

 Total Current Assets RM6,267 RM13,284 RM20,884

Long-term Assets  

Long-term Assets RM9,000 RM9,000 RM9,000

Accumulated Depreciation RM900 RM1,800 RM2,700

 Total long-term Assets RM8,100 RM7,200 RM6300

 Total Assets RM14,367 RM20,484 RM27,184

Liabilities and Owner's Equity 2008 2009 2010

Accounts Payable RM956 RM1,240 RM1,560

Current Loan RM0 RM0 RM0

Other Current Liabilities RM0 RM0 RM0Subtotal Current Liabilities RM956 RM1,240 RM1,560

Long-term Liabilities RM13,167 RM8,167 RM3,167

Total Liabilities RM14,123 RM9,407 RM4,727

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Paid-in Capital RM0 RM0 RM0

Common Stock RM0 RM0 RM0

Retained Earnings (RM2,967) RM1,198.60 RM9,874.20

Earnings RM4,165.60 RM8,675.60RM10,479.60

 Total Owners' Equity RM1,198.60 RM9,874.20RM20,353.80

 Total Liabilities and Owners' EquityRM15,321.60



Net Worth RM1,198.60 RM9,874.20RM20,353.80

Business Ratios

Kedai Gunting Rambut Krishnan barber shop business ratios for the past years of this

paln are shown below. Unfortunately we have been unable to find the standard

Industrial Classification in Malaysia for comparison.

Kedai Gunting Rambut Krishnan Ratios

Ration Analysis 2008 2009 2010

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Revenues Growth 0.00% 10.58% 4.85%

Liquidity Ratios:  

Current Ratio 6.56% 10.71% 13.39%

Quick Ratio 6.13% 10.39% 13.13%

Leverage Ratios  

Debt Ratio 98.30% 45.92% 17.38%

Debt to Net Worth Ratio n.a n.a n.a

 Times Interest Earned n.a n.a n.a

Operating Ratios:  

Average Inventory Turnover Ratio n.a n.a n.a

Average Collection Period Ratio n.a n.a n.a

Average Payable Period Ratio n.a n.a n.a

Net to Total Assets Ratio 4.54 3.52 2.67

Net Sales to Working Capital Ratio 12.28 5.99 3.91

Profitability Ratios:  

Net Profit on Sales Ratio 6.39% 12.03% 13.86%

Net Profit to Asset Ratio 28.99% 42.35% 38.55%

Net Profit to Equity Ratio n.a n.a n.a

Investment Proposal

The Borrower:

Mr. Krishnan as the manager of his barber shop Kedai Gunting Rambut Krishnan,

located in Bandar Seri Iskanda, 31750 Tronoh, Perak Darul Ridzuan.

Purpose of the Financing:

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Mr. Krishnan wants to expand and modernize his barber shop so that it can copy with

high flow rate of customers and also to introduce new services such as massages.

Amount Requested:

Participation in the form of a secured loan in Malaysian Ringgit in an amount of up to

RM60 million equivalents.

Plans for Repayment:

The proposed loan will be in local currency and additional local currency where principal

will be amortized. The maximum tenor of the loan will not exceed 8 years. The interest

rate will be the market rate for this type of borrower and instrument.

The loan will be structured into two tranches. The proposed loan will be secured by a

first charge over all the assets including Mr. Krishnan personal assets.