Lumière Nail Bar Business Plan — Break-Even and Debt Service
The treatment volume needed to cover the cost base, and debt service across the twelve-month capital moratorium.
Break-Even and Debt Service
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market and Positioning
- 3. How a Salon Actually Makes Money
- 4. The Membership Programme
- 5. SWOT and Competitive Position
- 6. Operations and the Capacity Build
- 7. Compliance and Standards
- 8. Management and Team
- 9. Financial Plan
- 10. Break-Even and Debt Service
- 11. Investment Analysis
- 12. Sensitivity and Scenario Analysis
- 13. Risk Analysis
- 14. Implementation Roadmap
- 15. Key Performance Indicators
- 16. Key Assumptions
- 17. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Capacity Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 10.1 Break-even
- 10.2 Debt service
10.1 Break-even
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Gross margin |
33.3% |
43.4% |
45.6% |
49.1% |
49.9% |
|
Overhead plus debt service, R |
2 428 750 |
3 043 882 |
3 318 882 |
3 748 882 |
3 973 880 |
|
Break-even revenue including debt service, R |
7 293 544 |
7 013 553 |
7 278 250 |
7 635 198 |
7 963 687 |
|
Planned revenue, R |
4 222 000 |
7 626 000 |
9 306 000 |
12 643 000 |
13 610 000 |
|
Break-even as a share of planned revenue |
172.8% |
92.0% |
78.2% |
60.4% |
58.5% |
|
Equivalent nail utilisation at break-even |
76.0% |
51.5% |
49.3% |
40.5% |
41.0% |
|
Headroom, R |
(3 071 544) |
612 447 |
2 027 750 |
5 007 802 |
5 646 313 |
Break-even is crossed during Year 2, when planned revenue of R7.63 million clears a break-even of R7.02 million. By Year 5 break-even sits at 58.5 per cent of planned revenue — a margin of safety of R5.65 million, which in operating terms is a nail utilisation of about 41 per cent against a plan of 70 per cent. That is a comfortable margin, and it exists because the membership base carries fixed cost that would otherwise have to be earned hour by hour.
|
Break-even measure at Year 5 |
Value |
Interpretation |
|---|---|---|
|
Gross margin |
49.9% |
Blended across treatments at 52%, retail at 44% and membership at 100% |
|
Break-even revenue including debt service |
R7 963 687 |
Against R13 610 000 planned |
|
Break-even as a share of planned revenue |
58.5% |
A margin of safety of 41.5 points |
|
Equivalent nail utilisation |
41.0% |
Against a plan of 70%, holding membership and rate at plan |
|
Break-even membership base |
258 members |
The threshold at which cumulative five-year profit turns positive |
10.2 Debt service
|
R |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Opening balance |
1 300 000 |
1 300 000 |
1 034 868 |
733 280 |
390 224 |
|
Interest at 13.75% |
178 750 |
178 750 |
142 294 |
100 826 |
53 656 |
|
Capital repaid |
— (moratorium) |
265 132 |
301 588 |
343 056 |
390 224 |
|
Total debt service |
178 750 |
443 882 |
443 882 |
443 882 |
443 880 |
|
Closing balance |
1 300 000 |
1 034 868 |
733 280 |
390 224 |
0 |
|
of which current portion |
265 132 |
301 588 |
343 056 |
390 224 |
0 |
|
of which non-current portion |
1 034 868 |
733 280 |
390 224 |
0 |
0 |
|
EBITDA |
(843 000) |
708 000 |
1 367 000 |
2 907 000 |
3 259 000 |
|
Debt service cover |
n/a — EBITDA negative |
1.60x |
3.08x |
6.55x |
7.34x |
|
Gearing |
50.3% |
44.9% |
27.4% |
9.3% |
0.0% |
Gearing peaks at 50.2 per cent at the end of Year 2, when the accumulated deficit is deepest and the facility has barely begun to amortise, and falls to nil by Year 5 as the debt is retired.