Lumière Nail Bar Business Plan — Investment Analysis

The project and equity returns, the exit assumption behind them, and what the numbers do and do not support.

Investment Analysis

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11.1 Returns
11.2 Sensitivity of the return to the exit assumption
11.3 What would improve the return

11.1 Returns

Measure	Base case	Comment
Capital deployed over five years	R4 100 000	Fit-out, equipment, launch and working capital
Promoter and investor equity	R2 800 000	68% of capital deployed
Term debt	R1 300 000	Five years at 13.75% with a twelve-month capital moratorium; fully repaid by Year 5
Project internal rate of return	63.3%	Five years plus a terminal value at 3.5 times Year 5 EBITDA
Return to equity	43.5%	No distributions in the projection period; value realised on the terminal position
Money multiple on equity	6.09x	Terminal equity of R17 045 231 against R2 800 000 subscribed
Terminal value	R11 406 500	3.5x Year 5 EBITDA of R3 259 000
Net present value at 20%	R6 224 272	Positive
Cumulative profit after tax, Years 1 to 5	R2 907 449	Start-up losses recovered during Year 4
Cumulative project cash flow before terminal value	R3 642 133	Turns positive on a cumulative basis during Year 3
Revenue per station and room, Year 5	R907 333	The number to benchmark any second site against

Figure 20. Cumulative project cash flow before terminal value.

A capital-light business, and the returns reflect that rather than any heroic assumption

A project return of 63.3 per cent and an equity return of 43.5 per cent follow from one ratio: R3.26 million of Year 5 EBITDA against R4.10 million of capital deployed across the whole five years. A nail station costs R38 000 to fit out and a treatment room R112 000; the largest capital item is the R1.68 million lease improvement that makes the space usable. This is a services business with modest equipment. The corresponding caution is the one the brief itself makes: this is a good single salon, not a scalable platform. R1.91 million of Year 5 profit is a strong result for one site and a small absolute number for an investor. The case for funding site one is that it proves a format worth replicating — and that case is only made if revenue per station reaches R907 333 and the membership base reaches 780.

11.2 Sensitivity of the return to the exit assumption

Figure 21. Returns against the exit assumption.

Exit multiple of Year 5 EBITDA	Terminal value (R)	Project IRR	Terminal equity (R)	Equity IRR
2.5x	8 147 500	55.9%	13 786 231	37.5%
3.0x	9 777 000	59.7%	15 415 731	40.7%
3.5x	11 406 500	63.3%	17 045 231	43.5%
4.0x	13 036 000	66.6%	18 674 731	46.2%
5.0x	16 295 000	72.6%	21 933 731	50.9%

The base case applies three and a half times Year 5 EBITDA, which is deliberately conservative for a single site. A salon is typically valued on a multiple of sustainable earnings, and the multiple is driven by the proportion of contracted recurring revenue and the transferability of the client book rather than by the fit-out. At two and a half times the project still returns 55.4 per cent; at five times it returns 73.1 per cent. Readers should substitute their own multiple, and should form a view on membership churn before they do — because it is the churn rate, not the fit-out, that determines whether a buyer treats the membership base as an annuity or as a list.

11.3 What would improve the return

Lever	Effect on Year 5 EBITDA	Assessment
Utilisation 8 points higher	+R609 248	The largest single-year lever. Off-peak member booking is the mechanism
Membership 30% above plan	+R503 755	Dominates the cumulative outcome even where it is second on a single year
Realised rate 10% higher	+R499 631	Through menu mix and structured systems rather than headline price increases
Direct cost 8% lower	+R545 680	Product usage discipline and commission structure. Harder than it looks in a service business
Retail attachment 40% higher	+R270 336	The smallest lever of the six tested, despite the attention it usually receives
A second site once the format is proven	Not modelled	Where the real value is. The plan explicitly gates this on site one’s own performance

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