Jacobs Barber Shop

START UP BUSINESS PLAN 2005 - 2008

Owner: Jeff Jacobs

Address: Curve Lake First Nation
GD, Curve Lake, Ontario
K0L 1R0
Phone: (705) 657-1068
Fax: (705) 657-1069
E-mail: [email protected]

Prepared by:

ABC CONSULTING
 JACOBS BARBER SHOP
T ABLE OF CON TENTS

DESCRIPTION PAGE

S ECTION #1 I NTRODUCTION 1

S ECTION #2 M ANAGEMEN T P LAN 2

2.1 O WNERSHIP S TRUCTURE 2
2.2 M ANAGEMENT PLAN 2

S ECTION #3 A SSESSING THE M ARKET 4

3.1 D EFINITION OF THE I NDUSTRY 4
3.2 I NDUSTRY O VERVIEW 4
3.3 KEY T RENDS AND C HARACTERISTICS OF THE I NDUSTRY 5
3.4 L OCAL M ARKET D EMOGRAPHICS & T ARGET M ARKETS 5
3.5 M ARKET S UMMARY 7
3.6 SWOT A NALYSIS 8
3.7 C OMPETITIVE A NALYSIS 9

S ECTION #4 M ARKETING P LAN 10

4.1 KEY S ERVICES AND P RODUCTS 10
4.2 PRICING S TRATEGIES 11
4.3 D ISTRIBUTION 12
4.4 P ROMOTIONAL PLAN 12

S ECTION #5 O PERATION AL P LAN 13

5.1 G ENERAL O PERATING P ROCEDURES & F ACILITY 13
5.2 O PERATIONAL W ORKFLOW 14
5.3 H UMAN R ESOURCE R EQUIREMENTS 14
5.4 I NSURANCE R EQUIREMENTS 15
5.5 G OVERNM ENT R EQUIREMENTS 15
5.6 W ORKING C APITAL R EQUIREMENTS 16
5.7 C APITAL R EQUIREMENTS 16
5.8 I NVENTORY R EQUIREMENTS 17

S ECTION #6 F INANCIAL P LAN 18

6.1 C OSTS AND F INANCING 18
6.2 F INANCIAL P ROJECTIONS AND N OTES TO P ROJECTIONS 19

A TTACHMEN TS

#1 R ESUME OF O WNER
#2 P ROOF OF A BORIGINAL A NCESTRY
#3 P ROOF OF E QUITY
#4 E QUIPMENT AND I NVENTORY Q UOTES
#5 L EASE A GREEMENT
#6 F UNDING A PPLICATIONS (ABC, COM MERCIAL L OAN , INAC OR AEDF)
SECTION #1.0 I NTRODUCTION
Mr. Jeff Jacobs is a youth member of Curve Lake First Nation and wishes to start up his own
company, Jacobs Barber Shop (JBS). Jacobs Barber Shop will be located on the territory of Curve
Lake First Nation within the community’s small business center unit 3. Jeff decided to
start up a barber business for two main reasons which are: to utilize his hair cutting
expertise and experience and because there are no other barbers within a 20 km radius.

Jacobs Barber Shop will target the market area of Curve Lake First Nation and the surrounding
region. Moreover, JBS will target the following markets which are:

1. The entire Aboriginal male population of Curve Lake First Nation;

2. The permanent non-Aboriginal male population of Curve Lake First Nation; and
3. The seasonal male population of Curve Lake First Nation.

In order to properly service the identified markets, this company will sell a wide array of
men’s barber services and products which include:

(a) Classic and contemporary cuts and styles;

(b) Hair washes and face shaves;
(c) Retail gels, combs, brushes, shampoos and other miscellaneous items.

Mr. Jacobs expects that his business will officially open in the summer of 2004. More
specifically, the official startup date for the company has been set for June 2004.

In order to properly start up Jacobs Barber Shop, Jeff has identified that the following key
capital, marketing and administrative investments must be made which are:

► Make a moderate investment into specialized barber equipment and tools;

► Invest into minor leasehold improvements;
► Invest into the design and implementation of a well targeted promotional strategy; and
► Make a minor investment into working capital and inventory.

In addition to the above required investments, Mr. Jacobs has secured a lease agreement
with Curve Lake First Nation. The unit is within the communities’ mini mall and has many
great attributes like location, free parking and ease of access.

It is estimated that the total costs to start up Jacobs Barber Shop is $22,710. The total capital,
marketing and business support costs are $14,800, $5,910 and $2,000 respectively.

The remainder of this document will outline all key aspects of this proposed enterprise.
Included in the following pages are a detailed management plan, market and industry
assessment, marketing and operational plan and a detailed financial plan.

PAGE 1 OF 25
SECTION #2.0 M ANAGEMENT P LAN

2.1 OWNERSHIP STRUCTURE

Jacobs Barber Shop will be owned and operated as a sole proprietorship by Mr. Jeff Jacobs.
This legal business structure well suits the needs of the owner and business alike. At the
time of opening, Mr. Jacobs will have his company registered within the province of
Ontario. The company’s Master Business License will allow the company to open and
maintain a commercial bank account. The cost for business registration is reflected in the
financial projections of this plan.

2.2 MANAGEMENT TEAM

Mr. Jacobs has always dreamed of owning his very own barber shop. Starting up this
company is like a dream come true. After living with his family until he was 19, Jeff decided to
leave his home town to pursue a career in hair cutting. After completing a 1 year course at a
local college that specializes in hair cutting, Jeff went on to work for Joe’s Hair Cuts in Ottawa.
Jeff worked for this shop for 10 years until the owner retired. At this time, Jeff was forced to
find new employment and did so at a small unique shop in downtown Ottawa called Mark’s
Cuts. Up until this time, Jeff worked for this same company which was for over 8 years. During
the past 18 years, Jeff has acquired many invaluable skills and knowledge regarding hair cutting
and the overall industry. Within both Joe’s Hair Cuts and Mark’s Cuts, Jeff was required to fulfill
important management roles as well as provide hairc uts. Some of Jeff’s personal and
professional highlights include:

► Successfully completed a one-year hair cutting course at Humber College in Toronto, ON;
► Has attended and completed various hair cutting courses and seminars to maintain
touch with specialized techniques and issues surrounding the industry;
► Has over 18 years of hair cutting experience;
► Has provided haircuts for many Canadian celebrities;
► Has held various middle management duties and roles under various employers;
► Is knowledgeable of various traditional and new styles of men’s haircuts;
► Is very approachable and has honed his people skills.

As indicated above, Jeff has many great attributes which he will bring to his business in
order to ensure its success. Moreover, he has invested almost half of his life providing
great hair cutting services to many satisfied customers. As the owner and operator of Jacobs
Barber Shop, Jeff will need to fulfill the following key roles and responsibilities which include:

► The overall management of JBS;

► Oversee all financial aspects of the company;
► Is responsible for maintaining the company’s equipment;
► Will maintain and ensure good customer and supplier relations;
► Is in charge of accounts receivable and payable;
► Will manage the human resources of the company;
► Provide hair cutting services to his customers;
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► Maintain all administrative duties of the company.

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In addition to these duties, Jeff will be required to fulfill other key duties such as:

(a) Properly prepare and submit Aboriginal Business Canada claims;

(b) Work with and submit periodical reports to his lending institution;
(c) Set up administrative and accounting systems to ensure they are effective
and operating properly.

The above duties can be very time consuming and may affect the overall viability of
this company. It is for this reason that Mr. Jacobs has contacted a local Aboriginal
Consultant to assist with completing these duties. Mr. Michael Jacobs of Crane Aboriginal
Management Services has been contacted and will be hired for a fee of $2,000 to provide
these key services. A proposal for these needed services is provided in the attachments.

Jeff will also utilize the services of his wife Patsy. Mrs. Jacobs will assist weekly with completing
various administrative duties. She is currently employed at the Curve Lake Government
Services Building as Executive Secretary and is very knowledgeable and experienced in
administration. Mrs. Jacobs will be paid $15 hour and it is anticipated that she will work 2
hours weekly. Annually this assistance will cost
$1,440 (48 weeks).

Jeff has contacted his uncle Ken Jacobs to act as his business advisor. Ken has been actively
involved within the Aboriginal public sector and works for Indian and Northern Affairs
Canada. Ken has agreed to provide free business advice when requested.

Jeff has also contacted the Canadian Association of Barbers (CAB) and will become a member of
this association. The cost of this membership is $500 annually. In return, the CAB will provide
JBS with up to date industry and market information regarding various issues. This association
will also bring the business its solid reputation and comfort to customers. Also, JBS will
be listed on its annual barber shop directory.

In the event that Mr. Jeff Jacobs cannot perform his duties as owner, he has contacted his
close friend and fellow barber, Mr. Matt Johnson to ensure his business keeps operating.
Matt is retired and has many years’ experience as a barber and also lives nearby. Matt
has agreed that in the case of an emergency or sickness, he will take over all duties of Jeff
at a cost of $400 per week.

Overall, Mr. Jacobs has a plethora of skills, knowledge and experience he will utilize to
successfully manage his company and will ensure a solid foundation is in place. Given the
capabilities of the owner along with other professionals and associations willing to assist
with this company ensures no management gaps are left exposed. Resumes for Mr. Jeff
Jacobs, Mrs. Patsy Jacobs, Mr. Ken Jacobs and Mr. Matt Johnson are provided in the
attachments of this plan.

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SECTION #3.0 INDUSTRY AND M ARKET ASSESSMENT
The following section will provide comprehensive facts and statistics regarding the hair
cutting industry and local market. Also included is a detailed competitive analysis.

3.1 DEFINITION OF THE HAIR CUTTING INDUSTRY

Jacobs Barber Shop will operate within and belong to the Canadian Barber Shop industry (SIC
9711). A definition for this industry was extracted from the Statistics Canada web-site and is
provided below.

The Canadian Barber Shop industry is comprised of establishments engaged in providing men’s
barbering and hair styling services.

3.2 BARBER AND BEAUTY SHOP INDUSTRY IN CANADA

The following information for the barber and beauty shop industry was collected and
released by Statistics Canada in 2003. Barber and beauty shops are part of the service
producing industries playing a dominant role in the national economy and which
collectively account for over two-thirds of the employment generated in Canada. Barber
and beauty shops are primarily engaged in providing men’s barbering or hairstyling and
women’s hairdressing and beauty services.

The fact that most Canadian barber and beauty shops are small independent operations is
indicated by 2002 industry sales figures. Over 99% of sales were made by businesses with
sales less than $2 million. The large number of businesses in the industry, 15,770 in 2002, is a
result of the relative ease and low cost of business startup, and has led to intense competition
between barber and beauty shops. Most independent operators began in the business
by working for someone else’s shop and felt they could succeed on their own.

In 2002, 86% of sales were generated by services with 14% resulting from merchandise sales.
Approximately 77% of employees were full time with 23%-part time.

Revenue in shops across Canada dropped marginally from $1.675 million in 2001 to $1.673
million in 2002. For a very long period of time, this industry has put up great performance
statistics in terms of sales to assets. Brian Luborsky who is the chairman and CEO of Premier
Salons International of Markham, Ontario says “It costs $50,000 to set up shop. I can do
$250,000 in sales a year out of my stores. Now, say I make 10% on that: I’m getting a 50%
return on investment, and that’s hard to beat”.

Overall, this service industry is performing well and achieving moderate growth annually.

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3.3 KEY TRENDS AND CHARACTERISTICS OF THE INDUSTRY

The following industry characteristics and trends were extracted from various industry
publications and reports.

► The barber and beauty shop industry is expected to grow at an annual 4% over the
next three years. This means that for years 2003, 2004 and 2005 the industry will
represent a total of $1.739m, $1.809m and 1.881m respectively;
► Many traditional barbers are successfully attending training to learn new
contemporary cuts demanded by various demographic segments;
► The average price for haircuts in Canada for youth, adults and seniors is $12, $15 and
$11 respectively (includes barber shops only). Therefore, the average hair cut price is
$12.66;
► Youths averaged 8 - 10 cuts per year while male adults and seniors average 12 annually;
► Barber shops and barbers who operate full time have and maintain a solid
clientele. Approximately 75% of a shops clientele are repeat customers;
► Approximately 5% of a shops customers request shaving or shampooing services;
► Common amenities provided by shops included multiple magazine and
newspaper subscriptions, music and free candy or snacks for their customers;
► The average income for workers in this industry is $20,000;
► Most barber shop business occurs without an appointment.

The above vital information will be utilized to determine key aspects of Jacobs Barber Shop
such as: operations and sales projections.

3.4 LOCAL MARKET DEMOGRAPHICS AND TARGET MARKETS

The following sub-sections will identify critical demographic information regarding the
community of Curve Lake First Nation. Also included is a breakdown of the company’s key
target markets.

Curve Lake First Nation is located approximately 20 kilometers north of Peterborough,

Ontario. The total on and off reserve population for this First Nation is 4,000 and 1,000
respectively. This information was extracted from the community profiles page of INAC’s
web-site. The approximate geographic land mass of this community is 876 hectares. The
service sector accounts for half of the labour workforce, with these being divided almost
equally between government and non-government services. The construction and trade
industries account for an additional one quarter of the labour force, with the remaining
workers employed in forestry, agriculture, manufacturing, transportation, communications and
other utilities and miscellaneous industries. In total, there are approximately 25 local
businesses and organizations in Curve Lake.

Other primary research conducted by ABC Consulting reveals that there are approximately
1,000 households within the territory of Curve Lake First Nation. This statistic was
calculated by taking the total on reserve population and dividing it by the national
Aboriginal average of peoples per household which is 4.

After intensive research, no reputable statistics were found for local household income.
PAGE 6 OF 25
It is for this reason that the demographic statistics for Peterborough, Ontario were adopted.
These statistics were

PAGE 7 OF 25
gathered by the city’s Economic Development Department. This Department
estimates that the average household income for this market area is $42,000. This statistic
combined with the total number of households equals a purchasing power of $4.2 million
annually.

Within this market area, Jacobs Barber Shop will target the following primary, secondary and
tertiary markets:

1. The entire Aboriginal male population of Curve Lake First Nation;

2. The permanent non-Aboriginal male population of Curve Lake First Nation; and
3. The seasonal male population of Curve Lake First Nation.

Below is a detailed description of the company’s three identified target markets.

1. Aboriginal Male Population

This is the company’s largest and only primary market segment. It is foreseen that the
company will target all youth ages 5 - 16, adults ages 17 - 60 and seniors ages 61 and up. This
market will consist of the on reserve population only. Within Curve Lake First Nation, there
is a total on reserve population of 4,000. Within this statistic, approximately 55% of the
population is male. Therefore, the total market size equals 2,200. Vital statistics released by this
First Nation indicate that of the male population 50% are youth, 40% are adults and 10% are
seniors. These percentages applied to their applicable market equals 1,100 youth, 880 adults
and 220 seniors. Youth is defined as 0 - 16 years of age. I n a n accurately estimate the
youth population of this community, ABC Consulting contacted the First Nations
membership department and found out that 80% of youth are aged 5 - 16. Therefore, the
company’s youth market is 880 in size.

2. No n -Aboriginal Male Populati on

This is the company’s secondary and second largest market. This market includes all
non-Aboriginal male permanent residents of Curve Lake First Nation. Statistics for this
market were collected and released by the First Nations Capital Department. This
includes all permanent leaseholders of land which is estimated to be 330 leases or
households. It is also estimated that within each household there is 1.5 males. Therefore,
the total market size for this market can be calculated by multiplying the number leases
or households by the estimated number males per household which equals 495.

3. Seasonal Male P o p u l a ti o n

The annual seasonal male population will be the company’s tertiary and smallest market.
Within Curve Lake First Nation there are many leaseholders who only occupy their
cottages during differing times of the year. Most of this market will visit and stay two to
three months during the summer. Statistics compiled by the communities Capital
Department reveal that there are approximately 250 seasonal leaseholders or households.
It is also estimated that within each household there is 1 male. Therefore, the total
market size for this market can be calculated by multiplying the number of households
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by the number of males per household which equals 250.

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3.5 MARKET SUMMARY

Statistics compiled and released by Statistics Canada and the Barber’s Association of Canada
(BAC) for 2002 indicate that the average Canadian male spends approximately $100 annually on
haircuts. Average spending on shampoos, gels and personal care items such as combs and
brushes was $40 annually. Given this vital end user information and the statistics
compiled in the previous section an accurate calculation of Jacobs Barber Shop market
can be achieved. Table #1 summarizes the total market size of this company.

MARKET SUMMARY
Table #1

Market Total in Hair Cut Market Size Re tail Market Size

Market
Primary 2,200 2,200 x $100 = 2,200 x $40 =
Seconda 495 495 x $100 = 495 x $40 =
ry
Tertiary 250 250 x $100 = 250 x $40 =
Totals

The above table indicates that the total market size in dollars for haircuts within the company’s
primary, secondary and tertiary market is approximately $294,500. The same information for
retail products such as shampoos, gels, brushes and combs is $117,800. Overall, the total market
size in dollars for Jacobs Barber Shop is an estimated $412,300.

The following table illustrates the projected market share and sales for Jacobs Barber Shop
for Year 1 specific to haircuts and retail products by target market.

PROJECTED MARKET SHARE

Table #2

Hair Cuts Retail

Products
Market Total Size % of Market Share Total Sales Total Size % of Market Total
Share Sales
Primary $220,000 30% $66,000 $88,000 5% $4,400

Secondary $49,500 15% $7,425 $19,800 1% $198

Tertiary $25,000 10% $2,500 $10,000 1% $100

Totals $294,500 25% Average $75,925 $117,800 3% Average $4,698

Given that the average price for haircuts in Canada is $12.66, the company will perform
approximately 5,997 haircuts in its first year of operation. This seems reasonable compared to
the number days the company is proposed to operate which is 312 annually. Therefore,
the company will need to perform an average 19 cuts per day. Each cut approximately
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takes a total of 12 minutes each which equals approximately 3.8 hours of hair cutting per day.

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For the sale of its retail products, the company has estimated that the average sale will be $5.
Therefore, the company will need to sell 940 units of gel, shampoos, brushes or combs
(combined). This sales figure is very conservative.

Hair washes and face shave statistics were compiled and reveal that 10% of the total
market request these specialized barbering services. The average sale for these services is
$5. It is projected that JBS will perform 5,997 haircuts in the first year. If 5% of customers
pay for a shave or hair wash, additional sales will be derived. Therefore, the projected sales
figure for this service can be calculated by using the following equation.

Total Hair Cuts x % Demand for Service X Average Sale = Total Sales
for Service

or

5,997 x .05% = 299 x $5 = $1,495

The above calculation conservatively suggests that the company will achieve total sales of
$1,495 for its hair washing and shaving services. This sales figure is very conservative given
the demographic statistics presented.

In year 1, the company expects to achieve sales of $75,925, $4,698 and $1,495 for its hair
cutting services, retail products and specialized barbering services respectively. In total, the
company expects first year sales of $82,118. This sales figure is very conservative and attainable
and has been compiled by utilizing many reputable sources of applicable statistics.

3.6 SWOT ANALYSIS

An examination of the company’s strengths, weaknesses and the industry and market
opportunities and threats will assist in determining areas of concern and of future
potential. The following table highlights this key information below.

SWOT ANALYSIS
Table #3

► Great and close location which is very accessible to each market with
free parking;
► Bank machine within a close proximity of the business;
S TRENGTHS
► An excellent knowledge of the company’s primary and secondary market;
► Many years’ experience in providing the proposed services and products.

► Little knowledge regarding the company’s tertiary market;

W EAKNESSES ► No established clientele;
► Possible difficulties in reaching the company’s tertiary markets.

► Providing a specialized service where need remains constant;

► No other competition within the immediate marketplace;
O PPORTUNITIES
► Large and growing market;
► Entry into the industry is fairly low cost with great potential.

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 ► Existing nearby competitors have an already established clientele base
T HREATS which consists of a portion of the target market of JBS.

3.7 COMPETITIVE ANALYSIS

Currently there are no existing competitors within the community of Curve Lake First
Nation. The nearest competitors are 15 to 20 kilometers away. In total, three distant and
direct competitors exist within the nearby communities of Lakefield, Bridgenorth and
Buckhorn. The following table provides a detailed analysis of each competitor.

Competitive Analysis
Table #4

Years in Average Price Value Added

Competitor Location Services Clientele
Business for Cuts Services

Cuts/Shaves/ Magazines and

Joe’s Lakefield Established 10 $14.00
Washing Daily Papers

Cuts/Shaves/ Magazines, Daily

Sam’s Bridgenorth Established 22 $13.00
Washing Papers and Candy

Cuts and Magazines and

Al’s Buckhorn Established 8 $12.00
Washes Daily Papers

Cuts/Shaves/ Magazines, Daily

Not
JBS CLFN Washes & 0 $12.66 Papers, Candy and
Established
Retail Products Debit Machine

Each competitor along with JBS will operate within the same days and hours which are Monday
thru Saturday 9 am to 6 pm. Also, each of JBS’s competitors only accept cash payments and
don’t provide free parking to their customers

After analyzing the above table, Mr. Jacobs has identified the following key competitive
advantages his company has over its competition which are:

(a) Great location within a central area of all proposed target markets;
(b) More value added services such as available debit payment options;
(c) Offers retail products specific to the needs of the market;
(d) Owner possesses years of hair cutting experience and knowledge in the industry;
(e) Free parking with bank machine close by;
(f) Tax exempt products and services.

Mr. Jacobs will expose these key advantages to convert loyal and potential customers
to utilize the services of his business.

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SECTION #4.0 MARKETING P LAN
The following section will identify the key services and products the company will sell along
with all pricing, promotion and distribution strategies that will be utilized.

4.1 SERVICES AND PRODUCTS

Jacobs Barber Shop will generate revenues by selling barbering services and specialized
barbering products. The following is a list and short description of these services and products.

1. General and Contemporary Hair Cuts (youth, adult and senior)

JBS will provide its customers with a wide array of traditional and new haircuts. There are
approximately 20 different cuts which Jeff will provide. Among these the most popular
include the mushroom cut; ski jump; brush cut and crew cut. Along with these cuts Jeff will
offer two different types of cuts at the back which include a taper and square cut. The
average cut will take approximately 12 minutes.

2. Face Shave
JBS will provide face shaving services to its customers (beards and moustaches). This will be
done by applying a house face cream and shaving where desired by a customer with a
straight blade. Jeff has many years ‘experience in using, maintaining and sharpening a
straight blade razor. This type of razor will be used as it is the most effective method. The
average shave will take about 10 minutes. After the shave is finished, Jeff will provide his
customers with a hot cloth and aftershave lotion.

3. Hair Wash and Rinse

JBS will offer hair washing and rinsing prior to or after cuts and or shaves. The company
will use a house shampoo and conditioner. This service will be offered to all customers.
It is estimated that this service will take 5 - 7 minutes in duration. All towels for drying will be
provided by JBS.

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4. Hair Brushes and Combs
JBS will retail various types of hair brushes and combs. These products will be displayed
at the front of the store.

5. Shampoos / Conditioners and Gels

JBS will retail specialized and name brand shampoos, conditioners and hair gels. These
products will be displayed near the front of the store. Only one size of these products will be
offered.

As indicated above, JBS will provide its customers with a very healthy depth and breadth
of products and services. Details regarding the company’s suppliers for its retail
products are provided in the operational plan of this document.

4.2 PRICING

The company will utilize two main pricing methods to sell its services and products. For its
retail products, the company will utilize a market based mark-up pricing strategy. Therefore,
JBS will determine its retail prices for these products by taking the wholesale cost and
applying the industry standard mark-up. The industry standard mark up for products number
4 and 5 is 100%.

For the company’s services, a set price for each will be determined that is inclusive of
direct costs and desired profit. The following table outlines the key information
regarding price structure for the company’s services and products.

PRICE AND PRICE STRUCTURES

Table #5

Price Cost Profit

Product / Service $ % $ % $ %
$12 100 $1.20 10 $10.80 90
Cuts
$15 100 $1.50 10 $10.50 90
(Youth, Adult & Senior)
$11 100 $1.10 10 $10.90 90

Face Shave $6 100 $.60 10 $5.40 90

(Beard & Moustache) $4 100 $.40 10 $3.60 90

Wash & Rinse $5 100 $.50 10 $4.50 90

Brushes & Combs $5 100 $2.50 50 $2.50 50

Hair Products $5 100 $2.50 50 $2.50 50

The above prices and costs are well within the industry norm and will assist the company to
achieve its desired profit goals.

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4.3 DISTRIBUTION METHODS

The distribution strategy of the company is very simple and within industry norms. The
company will provide all of its barbering services at the place of business. The
company’s retail products will be sold by its owner and / or staff.

4.4 PROMOTIONAL STRATEGY

Jacobs Barbering Services belongs to an industry where little advertising and promotion
must be undertaken. However, there is a standard level of activities which should be
implemented to ensure specific objectives of the company are achieved. It is for this
reason that JBS will design and implement a well-defined and targeted promotional strategy
that will:

I. Educate and remind all three main markets of the location of the business, its
operating days and hours and its services and products;
II. Ensure the company maintains an image of professionalism and quality;
III. Generate a consistent level of sales during low periods of the year.

Due to the mediums available within the local marketplace of Curve Lake First Nation, Jacobs
Barber Shop expects full market reach. The following advertising mediums will be utilized to
attain this goal.

Firstly, a company identity package will be created. This package will consist of business
cards, envelopes, letterhead and a digital logo. This package will be put together by a
local and reputable company. A copy of the company’s digital logo will be attained on CD
and utilized throughout the company’s other mediums. The quantities of each package item
will be determined by Jeff Jacobs. A quote for this service was attained and is expected to
cost $2,000.

Secondly, direct mail outs will be created and distributed throughout the entire
community of Curve Lake. This will be done by placing 5.5 x 8 inch cards in local mailboxes of
the Aboriginal and non- Aboriginal population. The cost of this activity will be minimal as
all the direct mailings will be created on the company’s computer. The fee being
charged to complete this task by the local post office is 10 cents per insert. It is estimated
that the company will distribute 1,600 inserts at a frequency of 4 times annually. In total, the
company will distribute 6,400 inserts annually at a cost of $640.

Thirdly, the company will invest into interior and exterior signage. An interior sign (4ft x 6ft) will
be purchased to display all products and services and their prices for customers. An
exterior sign will be purchased to hang at the front of the mini mall where the business
will be located. This sign will be 15ft x 12ft and will display the company’s name, logo,
address and contact number. A quote for both signs has been attained and costed at $400
and $600 respectively.

Fourthly, the owner will purchase two sets of aprons for the barbers and customers. These sets
will be purchased from a local supplier of these products for $175 each. Each set contains 12
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aprons.

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Fifthly, Jacobs Barber Shop will advertise locally by utilizing broadcast and print mediums.
The following table illustrates this.

JACOBS BARBER SHOP PRINT & BROADCAST ADVERTISEMENTS

Table #6

Medium Source Location Market Frequency Cost

Reach
Wolf Radio Excellent Monthly
Lakefield Good Monthly
Harold
Curve Lake Excellent Bi-Weekly
Paper
Total Cost

The company’s owner, Jeff Jacobs expects that the company will receive frequent good word of
mouth advertising. There is no cost for this form of medium, but the benefits are great.
Overall, the total costs for the company’s start up and on-going advertising activities are as
follows:

Identity Package $2,000.00

Direct Mailings $ 640.00
Signage $1,000.00
Apparel $ 350.00
Broadcast and Print Ads $1,920.00

Total Advertising Costs $5,910.00

SECTION #5.0 OPERATIONAL P LAN

The following section will outline the general operating procedures, facilities, operational
workflow, human resource, insurance, government, working capital, capital and inventory
requirements.

5.1 GENERAL OPERATING PROCEDURES AND FACILITY

The proposed regular operating hours and days of Jacobs Barber Shop is Monday thru
Saturday 9am - 6pm. These operating days and hours are subject to change depending
upon the market needs. The company will also be properly prepared to accept cash and
debit payments only. No credit will be given to any customers of the business.

Jacobs Barber Shop has arranged to lease unit #3 of Curve Lake First Nation’s mini mall. This
unit is located at the front of the mall facing north. The unit is 800 square feet in size and is
fully equipped with the necessary electrical, plumbing and lighting fixtures. The lease
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agreement will be signed a month prior to the opening of the business. Mr. Jacobs has
carefully read and understands the terms of the lease agreement. The lease agreement is
for a period of 3 years and includes security. At this time, the owner has the option to
renew the lease. The cost to lease this unit is $400 per month or $4,800

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annually.

After viewing the unit, Mr. Jacobs has determined that he will need to make a minor
investment into leasehold improvements. These improvements will include renovating
the bathroom and finishing the interior with trim and paint. The cost to complete this work
is an estimated $2,000. This includes both labor and material. The leasehold improvements
will be the property of the company until the lease agreement expires or the value
depreciates down to zero.

5.2 OPERATIONAL WORKFLOW

The operational workflow of the company is simple. The company will not take
appointments for haircuts and service will be based on a first come first serve basis.
Below is the four step operational workflow of the company.

1. Customer(s) arrive at store;

2. Barber will seat customers one at a time in the barber chair;
3. Perform desired barbering services; and
4. Collect payment.

5.3 HUMAN RESOURCE REQUIREMENTS

It is anticipated that the company will need to hire 1- p a r t time barber and 1 janitor who
will be employed on a casual basis. The part time barber will be hired to give the
company’s owner a break weekly. This employee will work Thursdays for 9 hours and will be
paid $13 per hour. This person that occupies this position must be fully capable of
performing all job functions listed in the products and services table.

A casual janitor position will need to be filled to perform some maintenance

requirements of the company. The janitor will work 2 hours per week and will be paid $10 an
hour. This position will require little experience, but will require some WHMIS training as the
chemicals used by cleaners today must be handled safely. This training is available at no
charge through the local training board. The responsibilities of this position includes: cleaning
the floors; counters; and chairs.

The hiring process will consist of a job advertisement posted at the First Nation offices and in
the local newsletter. This will minimize any advertising costs and allow for preference to be
given to persons of Aboriginal decent. In the event the position is not filled, an advertisement
will be placed in the local newspaper to attract a good pool of respondents. Interviews
will be held 1 - 2 months prior to the official opening of the business. Preference for
both positions will be given to persons of Aboriginal descent. E.I. (Employment Insurance)
will not be offered by the company as they are not required under the Canada Employment
Insurance Act.

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For the protection of the business against litigation that must be paid out by the
company and workplace claims that may be required to be paid out, W.S.I.B (Workplace Safety
and Insurance Board) will be provided to the employees under the Ontario Workplace
Safety Insurance Act. The added Barber falls under category 944 at a rate of $2.36 per $100
of payroll and janitorial services falls under category 923 at a rate of $3.23 per $100 of payroll.
Based on the amount of wages being paid, the cost to the business will be minimal at a total
cost of approximately $132.64 and $31.08 respectively. The cost of approximately $165 will
easily offset the cost of any claims should they have one. Optional insurance is also
available to the owner through this program.

The following table illustrates the company’s human resource schedule for 2004, 2005 and 2006.

HUMAN RESOURCE SCHEDULE

Table #7

Employee 2004 2005 2006

Barber (P.T.) $5,616.00 $5,616.00 $5,616.00
Janitor $960.00 $960.00 $960.00
Total $6,576.00 $6,576.00 $6,576.00

Mr. Jeff Jacobs will work between 45 and 55 hours per week and will make an annual draw of
$35,000. This level of draw is deemed sufficient and will allow the owner to have a comfortable
living. As the owner, Mr. Jacobs will be required to handle the entire administrative portfolio of
the business. This includes all marketing, bookkeeping and legal aspects of the business. Also
included in the owner responsibilities will be the lead in all customer service aspects including
the handling of complaints and the resolution of such issues.

Leland’s Home Improvements is a local carpentry company that provides renovation

services. A quote has been attained by this company to provide the needed
leasehold improvements. The estimated cost for this service is $2,000. Arrangements have
been made to have this company provide the needed work prior to the official opening of
the business.

5.4 INSURANCE REQUIREMENTS

Jacobs Barber Shop will need to incur costs for commercial insurance. Insurance
coverage is needed for business liability and the assets of the business. The unit being
leased is already covered under the First Nation’s insurance policy. A quote for these
insurance needs has been attained from Johnson’s Insurance and is estimated to cost $2,000
annually.

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5.5 GOVERNMENT REQUIREMENTS

As the business is located within a First Nation, there are very few tax issues which must be
addressed. By law, the company is required to collect GST and PST based on the location of
the sale. If a transaction is First Nation to First Nation, tax collection is not required, however,
in any other instance it is. Also, as the income of Jeff is non-taxable when generated on a First
Nation, there is no legal requirement to report income to Revenue Canada. As sales begin
to increase, the owner must be properly prepared to address any issues that may arise from
an income tax inquiry.

5.6 WORKING CAPITAL REQUIREMENTS

JBS will generate sufficient working capital to sustain operations, but due to the demands
imposed at start up, the company will need to have $3,000.00 for working capital.

5.7 CAPITAL REQUIREMENTS

As documented throughout this plan, it is estimated that the company will need to make
an investment of $14,800 into new capital. The following table illustrates these investments.
Accompanying quotes are provided in the attachments of this plan.

CAPITAL REQUIREMENTS
Table #8

Capital Cost
Item
1 Hydraulic Barber Chair $2,500

Clippers, brushes other barber specific tools $800

Leasehold Improvements $2,000

Working Capital $3,000

Barber Wash Tub $500

Cash Register & Debit Machine $500

Sound System $800

Inventory $1,175

Mirrors $500

Computer and peripherals (includes software) $3,025

T OTAL C APITAL C OSTS $14,800

*Please note all costs include applicable taxes, delivery and set up.

By making the above investments, the company will possess everything it needs to
achieve and exceed its company and financial goals.

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5.8 INVENTORY REQUIREMENTS

It is estimated that the company’s inventory of hair products and accessories will turn 4
times annually. Therefore, at start up, the company will need to make an investment into
beginning inventory of $1,175. The inventory breakdown of products is 50% hair brushes and
combs and 50% shampoos, conditioners and gels respectively.

All products of the company will be purchased from Franks Hair Products (FHP). This company
is a local wholesaler of these products. No credit has been established with this supplier
and they do not deliver their products. The wholesale prices for these products are within
industry norms and allow the company to attain projected profit levels. An opportunity
to expand offered products exists as FHP has a wide selection of products.

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SECTION #6.0 FINANCIAL P LAN
6.1 COSTS AND FINANCING

In order to properly establish Jacobs Barber Shop, Mr. Jeff Jacobs has proposed a financing
package that consists of owner’s equity, government assistance and traditional borrowing.
Table #9 illustrates the proposed costs and financing.

COSTS AND FINANCING

Table #9

Cost Financing
s
Capital Capital
Inventory $1,175 J. Jacobs Cash Equity (10%) $1,480
Leasehold Improvements $2,000 Aboriginal Business Canada (50%) $7,400
Equipment $3,100 Curve Lake First Nation Loan $5,920
Chair $2,500
Office Equipment $3,025
Working Capital $3,000
Total Capital $14,800 Total Capital Financing $14,800

Marketing Marketing
Start-up and On-going Activities $5,910 Aboriginal Business Canada $3,546
Cash from Operations (40%) $2,364
Total Marketing $5,910 Total Marketing Financing $5,910
Business Support Business Support
Aftercare Services $2,000 Aboriginal Business Canada $1,500
Cash from Operations (25%) $ 500
Total Business Support $2,000 Total Business Support Financing $2,000
TOTAL PROJECT COSTS $22,710 TOTAL PROJECT FINANCING $22,710

As identified in the above table, Mr. Jeff Jacobs will make a cash investment into the
business of 10% or $1,480 towards capital costs.

Aboriginal Business Canada (ABC) will be approached to make a contribution of $7,400, and
$1,500 towards capital, marketing and business support. Due to the age of the owner, this
project fits under ABC’s Youth priority area and meets all program criteria. To fund the
remaining $5,920 of capital costs, Mr. Jacobs will apply for a commercial loan from his First
Nation’s Economic Development Committee. This loan will be repaid over 3 years at an
annual rate of interest of 9%. Bridge financing for approved Aboriginal Business Canada
funds will be sought through the owner’s personal banking institution. This is reflected in the
financial projections.

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Cash from operations will fund the remaining costs for marketing and business support.
It should be noted that without assistance from Aboriginal Business Canada, this project will
not proceed.

6.2 FINANCIAL PROJECTIONS AND NOTES

The following pages contain the financial projections and notes to financial projections for years
2004, 2005 and 2006. Included is a monthly cashflow statement, projected income statements,
balance sheets, sources and uses of funds statement, amortization schedule and a
mortgage amortization schedule. A break even analysis is also included.

Cashflow

The cashflow of the company remains strong throughout the startup period of the
company. Without assistance from the federal government, this start up would not survive.
Mr. Jacobs will continue to monitor the cashflow of the company to ensure that
projected sales and expenses were not seriously over or understated.

Sales

The company will generate sales by selling its mix of barbering services and products.
As detailed in Section #3.0, the company is projected to generate a healthy and
conservative level of sales. In year 1 the company will generate sales of $82,118. The
following table illustrates sales for years 2 and 3 by applying an annual percentage of increase.

SALES PROJECTIONS
Table #10

Product / Sales Yr. 1 % Increase Yr. Sales Yr. 2 % Increase Yr. Sales Yr. 3
Service 2 3

Cuts $75,925 3% $78,203 1% $78,985

Retail Products $4,698 2% $4,792 2% $4,888

Specialized $1,495 2% $1,525 2% $1,556

Services
Total Sales $82,118 1.8% 84,520 1.01% 85,429

In year 2005 and 2006 the company’s total sales are projected to be $84,520 and $85,429
respectively. The applied annual increase in sales of the company’s products and services are
very conservative.

Costs of Goods Sold

The costs of goods sold for Jacobs Barber Shop includes materials and wholesale
products. The percentages of these costs have been outlined in Section #4.0 of this plan. See
section for details.

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Expenses

Expenses were based on the following facts and assumptions.

Capitalization Expenses
As documented throughout the plan.

Marketing Expense
Based on activities outlined in marketing plan.

Association and Business Registration Expense

As quoted by the Canadian Association of Barbers.

Wages Expense
As outlined in the company’s human resources requirements.

Lease Expense
As indicated in the lease agreement.

Utilities Expense
Based on quote from Hydro One

Communications Expense
Based on quote from Bell Canada. Cost includes message services, call identity and
waiting and other monthly services plus anticipated long distance calls.

Repairs and Maintenance Expense

Based on small business profile as a percent of sales.

General and Office Supplies Expense

Based on assumption.

Insurance Expense
Based on quote for this expense.

Magazine Subscription Expense

Based on actual quotes and costs of yearly subscriptions.

Miscellaneous Expense
Based on assumption in all years.

Debit Machine Expense

At a rate of 1% of sales.

Bank Charges and Interest Expense

Based on quote from CIBC.

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Loan Interest and Principle Repayment
Based on the mortgage schedule for a $5,920 loan over 3 three years at a 9% annual interest
rate.

Break-Even Analysis

By analyzing the financial data presented in the financial projections for Year 1, the
company’s total variable costs and fixed costs are $59,279 and $21,946.

The variable costs of the company include: materials, wholesale costs, 50% of marketing, 75% of
wages, repairs and maintenance, general and office expense, miscellaneous expense, debit
expense, professional fees and owner’s draws.

The fixed costs of the company include: 50% of marketing, membership expenses, 25% of wages,
lease expense, utilities, communication expenses, insurance, magazine subscriptions, bank
charges and interest, loan principle and interest and depreciation.

A calculation of the company’s break-even point in sales for year 1 was calculated by using the
following equation.

Total Fixed Costs / Contribution Margin % = Break-Even Point in

Sales or

$21,946 / .28% = $78,378

In order to break-even in year 1, the company will need to generate sales of $78,378.

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JACOBS BARBER SHOP 12
MONTH CASHFLOW
CASH IN Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 TOTAL
Beginning Cash $0 $0
Hair Cutting Revenue $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $6,327 $75,925
Retail Products $392 $392 $392 $392 $392 $392 $392 $392 $392 $392 $392 $392 $4,698
Specialized Barbering Services $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $1,495
Cash Equity $1,480 $1,480
Aboriginal Business Canada $7,400 $3,546 $1,500 $12,446
CLFN Commercial Loan $5,920 $5,920
Bridge Financing $12,446 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $12,446
TOTAL CASH IN $26,689 $14,243 $10,389 $6,843 $8,343 $6,843 $6,843 $6,843 $6,843 $6,843 $6,843 $6,843 $114,410
COST OF GOODS SOLD
Material (barbering supplies) $645 $645 $645 $645 $645 $645 $645 $645 $645 $645 $645 $645 $7,742
Wholesale Cost of Products $196 $196 $196 $196 $196 $196 $196 $196 $196 $196 $196 $196 $2,349
TOTAL COGS $841 $841 $841 $841 $841 $841 $841 $841 $841 $841 $841 $841 $10,091
GROSS REVENUE $25,848 $13,402 $9,548 $6,002 $7,502 $6,002 $6,002 $6,002 $6,002 $6,002 $6,002 $6,002 $104,319
CASH OUT
Capitalization Activities $11,800 $11,800
Marketing Activities $3,670 $160 $160 $320 $160 $160 $160 $320 $160 $160 $160 $320 $5,910
Association and Registration Costs $580 $580
Salary and Wages $682 $682 $682 $682 $682 $682 $682 $682 $682 $682 $682 $682 $8,181
Lease Expense $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800
Utilities Expense $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400
Communications Expense $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $1,440
Repairs and Maintenance $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600
General and Office Supplies $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200
Insurance Expense $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $2,000
Magazine Subscription Expense $500 $500
Miscellaneous Expense $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600
Debit Machine Expense $68 $68 $68 $68 $68 $68 $68 $68 $68 $68 $68 $68 $821
Bank Charges and Interest $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $480
Loan Interest $44 $43 $42 $41 $40 $39 $38 $37 $36 $34 $33 $32 $460
Principle Repayment $144 $145 $146 $147 $148 $149 $150 $152 $153 $154 $155 $156 $1,799
Bridge Loan Repayment $7,400 $3,546 $1,500 $12,446
Professional Fees $2,000 $2,000
Owner's Draws $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $2,917 $35,000
TOTAL CASH OUT $23,532 $12,542 $8,688 $5,302 $6,642 $5,142 $5,142 $5,302 $5,142 $5,142 $5,142 $5,302 $93,017
NET CASH FLOW $2,316 $860 $860 $700 $860 $860 $860 $700 $860 $860 $860 $700 $11,302
CUMULATIVE CASH FLOW $2,316 $3,177 $4,037 $4,738 $5,598 $6,459 $7,319 $8,020 $8,880 $9,741 $10,601 $11,302

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JACOBS BARBER SHOP
PROJECTED INCOME STATEMENT
Year 1 Year 2 Year 3
Projection Projection Projection
REVENUES
Hair Cutting Revenue $75,925 $78,203 $78,985
Retail Products $4,698 $4,792 $4,888
Specialized Barbering Services $1,495 $1,525 $1,556

TOTAL REVENUES $82,118 $84,520 $85,429

COST OF GOODS SOLD

Materials (barbering supplies) $7,742 $7,973 $8,054
Wholesale Cost of Products $2,349 $2,396 $2,444
TOTAL COST OF GOODS SOLD $10,091 $10,369 $10,498

GROSS MARGIN $72,027 $74,151 $74,931

SELLING & ADMIN EXPENSES

Marketing Activities $5,910 $4,000 $5,000
Association Membership $580 $500 $500
Salary and Wages (Including WSIB) $8,181 $8,181 $8,181
Lease Expense $4,800 $4,800 $4,800
Utilities Expense $2,400 $2,600 $2,800
Communications Expense $1,440 $1,600 $1,700
Repairs and Maintenance Expense $600 $1,000 $1,100
General and Office Supplies Expense $1,200 $1,300 $1,400
Insurance Expense $2,000 $2,200 $2,400
Magazine Subscription Expense $500 $500 $500
Misecellaneous Expense $600 $1,000 $1,100
Debit Machine Expense $821 $845 $854
Bank Charges and Interest $480 $550 $600
Loan Interest $460 $291 $106
Professional Fees $2,000 $1,000 $1,000
Depreciation $2,528 $2,528 $2,528
TOTAL SELLING & ADMIN EXPENSES $34,500 $32,895 $34,570

NET PROFIT (LOSS) FROM OPERATIONS $37,527 $41,256 $40,361

Add: Contribution from ABC for Marketing and Business Support $5,046 $0 $0

NET PROFIT (LOSS) FROM OPERATIONS $42,573 $41,256 $40,361

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JACOBS BARBER SHOP
3 YEAR PROJECTED BALANCE SHEET
OPENING Year 1 Ending Year 2 Ending Year 3 Ending
ASSETS
Current Assets
Cash $3,000 $11,302 $13,118 $13,854
Inventory $1,175 $1,175 $1,175 $1,175
Total Current Assets $4,175 $12,477 $14,293 $15,029

Fixed Assets
Leasehold Improvements $2,000 $2,000 $2,000 $2,000
Barber Equipment $3,100 $3,100 $3,100 $3,100
Hydraulic Chair $2,500 $2,500 $2,500 $2,500
Office Equipment $3,025 $3,025 $3,025 $3,025
Less: Accumulated Depreciation $0 $2,528 $5,056 $7,584
Plus: Land $0 $0 $0 $0
Total Fixed Assets $10,625 $8,097 $5,569 $3,041

TOTAL ASSETS $14,800 $20,573 $19,862 $18,070

LIABILITIES
Current Liabilities
Accounts Payable $0 $0 $0 $0
Current Portion of Loan $1,799 $1,968 $2,153 $0
Long - Term Liabilities
Long Term Portion of Debt $4,121 $2,153 $0 $0

TOTAL LIABILITIES $5,920 $4,121 $2,153 $0

OWNER'S EQUITY

Aboriginal Business Canada Contr. $7,400

Contributed Assets Equity $0
Cash Equity Injection $1,480
Beginning Owner's Equity $0 $8,880 $16,453 $17,709
Net Income $0 $42,573 $41,256 $40,361
Less: Owner's Draw $0 $35,000 $40,000 $40,000

OWNER'S/PARTNER'S EQUITY $8,880 $16,453 $17,709 $18,069

TOTAL EQUITY AND LIABILITIES $14,800 $20,573 $19,861 $18,069

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 JACOBS BARBER SHOP
PROJECTED SOURCES AND USES OF FUNDS
Year 1 Year 2 Ending Year 3 Ending
Ending
Net Profit $42,573 $41,256 $40,361
Add: Depreciation $2,528 $2,528 $2,528
Less: Owner's Draws $35,000 $40,000 $40,000

Cash From Operati ons $10,101 $3,784 $2,889

Financing Activities
Government Sources $7,400
Cash Equity Injection $1,480
Term Debt $5,920
Less: Repayment of Debt $1,799 $1,968 $2,153

Total Financing $13,001 -$1,968 -$2,153

Capitalization Activities
Capitalization Activities $11,800 $0 $0

Total Capitalization Activities $11,800 $0 $0

Net Cash From Operations $11,302 $1,816 $737

Beginning Cash $0 $11,302 $13,118

Ending Cash $11,302 $13,118 $13,854

JACOBS BARBER SHOP

AMORTIZATION SCHEDULE
Year 1 Ending Year 2 Ending Year 3 Ending
Leasehold Improvements $2,000
Useful Life 5 $400 $400 $400
Barber Equipment $3,100
Useful Life 5 $620 $620 $620
Hydraulic Chair $2,500
Useful Life 10 $500 $500 $500
Office Equipment $3,025
Useful Life 3 $1,008 $1,008 $1,008
Total Depreciation $2,528 $2,528 $2,528

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