hard copy report
TRANSCRIPT
Business ProposalAlpha Lambda Pledge Class
Table of Contents
Introduction…………………………………………2
Operations…………………………………………..2
Customer……………………………………………4
Financials…………………………………………...6
Partnerships…………………………………………7
Contracts……………………………………………9
Data…………………………………………………11
Goals………………………………………………..13
1
Introduction
When a business is established they usually aim to solve a problem and provide a solution.
This solution needs to simply cater to people and help them recognize such a problem exists.
Making people’s lives easier goes a long way. Moreover, we create opportunities for others to
excel and to provide services to others. With our business, Clean Cuts aim to do just that:
provide a solution to everyday life and to create opportunities for others.
Nowadays people have so many commitments: to jobs, to family, and to the future. Basic
essentials like a haircut become inconvenient. Yet image is important because people dress for
success, but many people disregard that aspect because it remains an inconvenience. With our
app Clean Cuts, though, we create an app that brings convenience and accessibility to customers
who are looking for barbers nearby, be it amateurs or professionals. We create a network
between barbers and the consumers they are attempting to reach, turning a haircut into a priority
again.
Operations
Initially, we plan on having testing sessions and asking people questions related to Clean
Cuts. We will create surveys so we have numbers to work and emails to update participants of
our progress. To prevent bias from those who favor the app, we plan on offering credit from our
app for random people to take our survey. Likewise, we have online surveys to counter any
possible bias from family members. Our demographic would be 18-30 years old and sample size
would be 100 people for our surveys. When we run our first operations, we will reach out to our
established base and do test runs in order to frame operations and see what works or what needs
improvement.
2
The barber will charge the consumer a their own rates, and to prevent large price fluctuation
it will be difficult to change rates right away. Also, people with certain ratings will have their
prices averaged out and suggested to them. Because ratings are not always an accurate
description of the quality of a barber, the barber has the choice to take up the suggested rate. If
they are confident that they can produce business through a higher price, they are free to do so,
or otherwise they can take the suggested option. The law of demand will determine the eventual
equilibrium price, although we will place a price floor of $5.
After the haircut the consumer will pay the barber through the app. The transaction goes
through us first, where we take a 10% cut before sending the rest of the transaction to the barber.
Additionally, we will use QR codes between both the consumer and the barber to verify the cut
was made. This ensures the service actually occurred and also can be used as a digital punch
card for rewards. Moreover, we will incorporate a tipping system, giving consumers the option
to tip their barbers. Our management team will consist of programmers who take care of the
software and updates, customer support that will be on hand to ask questions or deal with
complaints, as well as a financial department to take care of the accounting, controls, and
customer payments.
Key resources for our business are mainly coders, both for the framework and software of the
app. Additionally, artistic designers would help make the app appealing and help with our
marketing. Data analysts would take surveys around the community to help us determine which
methods work and which services consumers like more. We would need marketers and people
do background checks on prospective barbers. We would ask for social security numbers and
ensure the contracts between the barber and are company are agreed to.
3
Customer
Customers are key. In any business, the customer determines the success of a company. For
our business, we plan on starting out in Santa Barbara County, but in the future will reach out to
every college campus in the US and from there go international. Because a majority of our
efforts will be limited in Santa Barbara, if members from different states attempt to use our app,
we will send them a notice saying our app is currently unavailable in the area. However, they do
have the option of registering as a user and we will send them a notice when we expand our
business. Consequently, if we notice a large influx of sign ups in lets say the UCLA campus, we
will move operations to cater to the growing market demand.
Our target customer will be men with ages ranging from 18-30 years old living in college
communities. Surveys and research online indicate the average male gets a haircut once per
month. Other customers will include woman of the same age as well as older men and women.
However, because woman only get a haircut on average every six months, although we will keep
the service available to them, the majority of our efforts will be aimed at capturing the market
demand of men.
No matter the gender though, we provide these customers with fast and convenient ways by
accessing a network of barbers no matter where they are. We solve the problems of customers
who look for haircuts but have no idea where to go, people who want haircuts at irregular times,
looking for cheaper or new barbers, or want specific hairstyles from a different barber. Our
product gives customers options, and makes it simple, eliminating all the phone calling,
researching, or waiting that comes with traditional salons. Consumers are the most important
part of our business as not only are they our source of revenue but also incentivize the barbers to
provide their services. Ideally, we would reach out to these potential customers mainly with an
4
app, but we would have a website up for those who do not have smartphones. The app would be
our primary source of network as it is the most accessible and convenient. Anyone can use the
app as long as they have a phone.
We give value to barbers by allowing them to market themselves, placing them in an
ecosystem with many potential customers and making it easier for them to schedule meetings.
Barbers also get to showcase their work through their pictures and really market their abilities.
On the other side, consumers often are uncomfortable meeting new barbers due to the
uncertainty. To counter it, we provide review systems for existing barbers, as well as rewards
for repeat customers, such as discounts and products from our partnerships. An example
includes a major discount of 25% for every 10 haircuts scheduled through our app. We will
reimburse the barbers for this discount. At the same time, barbers can add their own discounts of
their choice. For example, if one uses the app and goes to the same barber 5 consecutive times,
the barber can make the next one free or discounted. Furthermore, we would give promotions
for specific events, such as weddings, proms, anniversaries, special occasions, Valentines, and
Christmas. If users can reference their friends and have them sign up, they also get promotions
and rewards.
We really want to make the experience so great for the consumer/barber that they want to use
the app. Thus, our relationship with both sides of our customers is important. For barbers, they
should be able to contact a customer service representative if they are unhappy with the growth
of the company, the ratings they receive, or any other issues. They will be able to submit a
question through the help section of the app, and we would get back at most within 2 days.
Professional barbers would get priority from customer support as they form the larger part of the
business and the issues they would face would be more critical to our business. On the other
5
hand, we ensure good consumer relationship by ensuring they not only get the haircut they are
satisfied with, but make it extremely convenient and painless for them. If our service satisfies
the customer, they will associate the great service to us, and not to the individual barber, because
we were the ones who set the person up. This helps prevent consumers from forming private
partnerships and not using the app. In addition, with our scheduling system and rating system,
we ensure accessibility and allow consumers to know the quality of the barber. The consumers
themselves would rate the barber on satisfaction, and our software would help filter the system to
allow barbers in the area to be ranked through price or quality to create a good fit between the
barber and consumer. The reviews would appear on the barber’s profile when potential
consumers view him. Additionally, after the first 30 haircuts of signing up with us, if a barber
has a satisfaction rate of less than 80%, he is dropped from our system. Conversely, if the user
sees a trend goes up within the 30 cut period, they will get an extended grace period to prevent
them from being dropped from the system. Also, if a person is inactive for 6 months, their
account is shut down and disappears from the interface. If they choose to come back they need
to submit a request.
Financials
Our revenue comes almost completely from the percentage we take from connecting barber’s
with their customers. Further down the line, we do plan on expanding our revenue through
partnerships with future companies. Examples of additional revenue stem from advertisement on
our app, locations of companies’ outlets, or products sold by our partnerships. By agreeing on a
percentage or a large stipend, we will allow large haircutting companies such as SuperCuts to use
our apps to increase their consumer base. Starting small in Santa Barbara County, assuming we
penetrate around 3% of the market, and assuming we get a usage of a haircut per month, we will
6
expect revenue of $71,388. By year three, we expect to access 0.5% of the Los Angeles target
consumer by reaching through college campuses such as UCLA and USC. Also, we hope to
penetrate 5% of the Santa Barbara target population by the third year. By year five we project to
expand into San Francisco, capturing 1% of our target market focusing on colleges like UC
Berkeley. In Los Angeles we project to grow to 1%, while Santa Barbara to 8%.
While we start small, we will assume a fixed cost of $10,000 to get the app started, and an
additional $6,000 per year for updates. The fixed cost would be our $10,000, and all our sales
would ideally be used to pay it off before we start making profit. In our first year, we will likely
not make profit, but in five years we hope to see an expanding market and revenue. As we
expand our revenue, or cost would increase as well. We expect to spend most of our cost in the
later years on advertisement in the LA and San Francisco area. Our management team will
simply consist of the 3 members for our startup team, while the additional 15 members would be
unpaid interns gaining experience.
Partnerships
As reiterated our goal at Clean Cuts is eventually to gain enough traction and publicity to
increase revenue through partners who would advertise on our software or provide products as
rewards for customers. Ideally we would like to form partnerships with the corporations Regis
Corporations and Proctor Gamble. Underneath their wing they hold companies such as Head
and Shoulders Shampoo, which is the most sold shampoo brand in the world, Pantene, Suavecito
Pomade, 3rd top bestseller on Amazon, SuperCuts, Apple, Android, and other app developers. It
is free to put our app on Apple’s app store, but we plan to form partnerships with them to help
publicize our brand on their interface. With famous haircutting companies like SuperCuts, the
deal would help them expand their consumer base. Individual barbers within SuperCuts could
7
schedule individually with consumers or work with the company to provide schedules to
potential customers. Although their profiles will not show up in the system, and address and
location of the store will appear on the system.
Another key partner regards payment. Clean Cuts will allow consumers to pay via Visa,
MasterCard, American Express, Wells Fargo, JP Morgan and any other banking businesses. The
fee for a credit card company is 2.9%, plus 30 cents per sale. Although this adds into our cost,
we feel it will be beneficial in the long run, and when we gain enough traction, we plan on
engaging in new terms with these companies in order to reduce our cost. Thus, we plan to
present this opportunity to banks, ideally creating a bank account specifically for our business,
linked to our existing bank accounts. Doing so will limit our cost by using their services.
Forming this key partnership may initially incur more cost, but as we continue the relationship,
we hope to mediate the cost and provide additional benefits to these companies in exchange for
their services.
The key resources we plan on acquiring from partners are primarily accessibility to hair
products, so that after a person gets a haircut, they can choose to buy products from another
company. Example of products could be shampoo, haircut materials, or non-hair related
products like t-shirts, sunglasses, or shoes. We would be independent from these products, so if
our customer chooses to buy materials they would be under different terms independent of us.
However, in order to market their product onto our interface, they would be subject to terms of
our own, and providing assets to us in exchange for our advertising service. Meanwhile, the
partners would deliver sponsorships and supply any additional resources that we may need.
8
Contracts
To ensure that we distinguish our business from other companies that also call themselves
Clean Cuts, but are not in our line of business, we will secure a trademark. In order to apply and
register for a trademark, we pay a combined fee of $4768, plus an attorney fee to file a Statement
of Use, which is roughly $250. Such costs will be included. By establishing a trademark we
ensure our brand is protected and that we establish an identity no one can steal.
Most states, especially in California require a special barbers license or cosmetology license.
However, the purpose of this license is to prevent compensation from the individual regarding
accidents or malpractice. If someone gets injured when getting their haircut, this license can
help limit liability on the barbers themselves. However, we intend on creating an independent
contract between the barber and the consumer we connect them too. By doing so, we make sure
the consumer agrees to our terms, that if any accident or misfortune should occur from the
meeting, the consumer will absolve to pursue any judicial action against both the barber and the
company. They will agree that when we provide them with a barber, and the barber conducts a
service, they agree that any problems that exist, detailed out and such are not linked to us. Thus,
every barber we hire does not need a specific barber’s license or a degree in order to cut hair.
Moreover, when a person registers for an account they have to agree to terms and conditions, one
of which is to prevent a lawsuit between individual barbers, consumers, and the company itself
under specific circumstances. This also limits our liability and prevents us from losing money
from lawsuits. Other terms will cover agreements concerning ratings, such as when a ratings
drop below 80% a person’s account will be deactivated.
Because we collect information with customers, we recognize the need to protect such
sensitive information. In order to conduct background checks, our terms and conditions require
9
information such as legal name, email and password for the account, mobile phone number, zip
code, credit card number, and social security number. We also use this information to pay the
customer and to conduct transactions through the app. Correspondingly, we will reveal explicit
information to third parties unless for the sake of connecting the barber and the consumer, unto
which both parties agree to. Conversely, the user also agrees to allow us to share such
information and distribute it to our affiliates and partners. We will be upholding specific
contracts with our partnerships to ensure such information is not misused. Likewise, with
government agencies we uphold the laws and regulations regarding information sharing with
their affiliates and will share information in accordance. If there are any issues of security
breaches, we will have members of team on hand to help deal with them and prevent information
from being stolen and used.
Additionally, we have a formal contract that will help us ensure that our business is within
the laws and regulations of Santa Barbara County as well as California. Like as not, the groups
who will directly oppose our idea are established salons and the county. To ensure they do not
file lawsuits against us regarding permits and regulations, we frame our business in a way that
we are lined with all rules and that our operations and services are all legal. We will limit
liability in any way we can to help reduce unnecessary cost and to protect or brand and
trademark.
10
Data
Clean Cut IncorporatedIncome Statement
31-Dec-16 31-Dec-18 31-Dec-20Sales
Sales Revenue 71388 223848 380589Sales Discount 2000 7984 14856Cogs 11345 37854 53214
Gross Profit 62043 178010 312519Operating Expense
Selling Expense 5000 25364 21478Adminstrative Expense 17744 45132 75486
Total Operating Expense 22744 70496 96964Income From Operations 39299 140992 193928
Other Revenues and GainsAdvertising Revenue 0 21553 39475
Other Expenses and LossesCreation Expense (includes Trademark) 56660 0 0
Income Befor Income Taxes -17363 162545 233403Income Tax (19.6%) 864 31859 45747
Net Loss -16499 130686 187656
11
Clean Cut IncorporatedBalance Sheet
31-Dec-16 31-Dec-18 31-Dec-20AssetsCurrent Liabilities
Cash 13000 17845 18498Accounts Receivable 3569 5642 7984Equipment 1654 3456 5648Research and Development 57642 45231 47534Other Current Assets 550 1564 12455
Total Current Assets 76415 73738 92119Property, Plant, and Equipment 0 18400 28620Accumulated Depreciation 0 3680 9404
Total Assets 76415 88458 111335
LiabilitiesCurrent Liabilities
Accounts Payable 7956 8974 9485Accrued Expenses 1642 3546 3465Current Maturities of Long Term Debt 17214 18142 16257
Total Current Liabilities 26812 30662 29207Long term debt
Noncurrent Debt 34428 36286 81286Stockholders Equity
Common stock 7641 8845 11133Liabilities and Stockholders Equity 68881 75793 121626
12
Goals
Our primary goal is to first start up. We plan on focusing in the Santa Barbara County,
making sure our business is profitable and sustainable, to do trial runs and analyze what works
and what doesn’t. From there, our next step is to expand to other college campuses in California,
then to the neighboring states, and eventually nationwide. Once we have established a national
base, our next objective would be to expand internationally. With our expansion we intend on
forming multiple partnerships with several corporations and key businesses, and if necessary we
will commit to an IPO to go public. Eventually, after several key successes, we plan on selling
our business to some of the software companies like Google Play Store, Apple ITunes Store, and
Microsoft.
With these goals in mind, to start off we wish to ask for $10,000 from our investors to help
us get started. We plan on giving 10% equity, and we value ourselves $92,138 within two years,
and such a number is negotiable depending on the results from our first five years of business.
For the $6,000 per year, we plan on raising some of the money for cost, as well as look towards
other angel investors and venture capitalists. In five years we will be worth $120,739.
Additionally, we will borrow small amounts from families and from our own personal funds to
cover any small costs such as marketing tools such as flyers, gas, food or living space. We plan
on using our own laptops to reduce the costs of buying company-wide computers.
13