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Business Plan_FINAL

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Vijay Vardhan Panthagani
Vijay Vardhan Panthagani

The document proposes a mobile app called MOBLOON that allows customers to book door-step hair cutting services, eliminating the need to wait at salons. It estimates the target market size in Bangalore to be 13 lakhs people based on population data and assumptions about smartphone usage. Unit economic analysis shows a potential profit margin of 8.84% per haircut after accounting for stylist, supply and transportation costs of Rs. 147 per haircut. With marketing spending of Rs. 897,000, the customer acquisition cost is estimated to be Rs. 6.13 per customer.

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By Babu Dhandapani, Gururaja, Rajaram Vijaya, Sarvinder and Mallikarjuna VC Investible Business Plan Sunstone PGPM – Assignment EVP Course
Problem Statement Today, people need to wait for their turn at a hair-cutting saloon. There is no way hair dressing can be hurried. Each customer spends their own sweet time until they have finished their hair dressing with all the add-ons. The customer in the line needs to wait, there is no other choice.
Solution The solution to the problem is to minimize the wait time or remove the wait time by providing access to an on-demand hair dressing experience right at the customer’s door-step. This experience should not miss any of the elements available at a regular saloon.
Business Idea – The MOBLOON The business idea is to achieve the solution through a mobile booking app which allows customer to book for a door-step hair dressing experience. MOBLOON = Mobile Saloon
Market Size – Top Down & Public Reports Assume that the business is being piloted in Bangalore. http://worldpopulationreview.com/world-cities/bangalore-population/ http://www.indiaonlinepages.com/population/bangalore-population.html http://www.census2011.co.in/census/district/242-bangalore.html Number of individuals who would like to avail an on-demand haircut = All people in Bangalore who have hair and who trust a hair dresser (ALL of THEM!!). And, this is true for every region in India. Assume we concentrate on individuals who are between 3 yr – 50yr of age – only males (for simplicity sake) Population of Bangalore in 2015 = 1.2 crores No: of males = 52% of population = 62 lakh No: of males below 4 = 5% of males = 3 lakhs No: of males above 50 = 7% of males = 4 lakhs Males between 4 and 50 years = 62 – (3+4) = 55 lakhs Assume 30% of these are middle class people and 25% of them use a smartphone Target Market Size = 25% of 55 = 13 lakhs Average price per haircut = INR 100 Potential market size (per month) = 13 * 100 = 1300 lakhs = 13 crores *** Assumption is people need a haircut once a month.
Market Size – Bottoms Up Assuming that > 95% of the hair cuts are done in hair cutting saloons across the city. How many hair cutting saloons are there in Bangalore? Number of PIN codes in Bangalore = 350. Assuming 5 saloons per pin code. Total Saloons = 1750 How many hair cuts do they do per day on the average? Assume 20 haircuts per day, each one taking 25 mins (8.3 hours) Total hair cuts in Bangalore per day = 1750 x 20 = 35000 What is the cost per haircut? Cost per hair cut = INR 60 Total Cost of haircuts in Bangalore per day = 35000X 60 = INR 2100000 How many of these people are willing to pay INR 160 per hair cut at their home? Assume 20% of them or 7000 hair cuts per day Total cost of 7000 hair cuts per day = 7000 x 160 = INR 112000 Total cost of 7000 hair cuts per month = INR 3.36 crores
Unit Economics How to calculate the profit margin% per sale? Assume the following costs per haircut. Hair dresser pack (3 scissors and 3 combs) – INR 250 (assume lifetime is for 500 haircuts). Per hair cut – 0.50 INR Water (200 ml) – 0.40 INR (INR 40 per 20 ltr mineral water bottle) Oil (10 ml) - INR 26 (http://www.amazon.in/Navratna-Himami-Ayurvedic-Oil/dp/B003NQEG62 ) Hairdresser charges – 60 INR Cost of diesel and Cost of driver per day (80 KM of travel per day in a mobile van) 8 liters of diesel – 400 INR per 20 haircuts (assume). Per haircut – INR 20 Cost of driver per day – 800 INR per 20 haircuts (assume). Per haircut – INR 40 Total costs incurred per haircut = 147 INR Proposed Cost per haircut = 160 INR Profit margin% per sale = 8.84%
Unit Economics (Contd…) How to calculate the marketing and advertising spend? http://timesofindia.releasemyad.com/rates/business http://www.themediaant.com/radio http://www.mysmsmantra.com/pricing.html 20 sq cm advertisement in TOI Bangalore every day for 30 days – INR 417000 FM Radio advertisement twice a day ( 20 sec per day) for 30 days – INR 120000 1 lakh SMS’es per day for 30 days – INR 360000 Total Marketing Cost – INR 897000
Unit Economics (Contd…) Unit is 1 customer Marketing Spend = INR 897000 CAC = Customer Acquisition Cost Total customers = 55 lakhs CAC = 55 lakhs / 8.97 lakhs = 6.13 INR per customer CLTV = Customer Life Time Value = Number of years customers can go for haircuts x No: of haircuts per year x x Cost per haircut = 25 x 12 x 160 = 48000 INR CLTV = Expected INR volume of transactions in a Customer’s lifetime x % Margin per sale = 48000 x (8.84% of 147) = 623750 INR
Go to Market Strategy ᵒ Does the need of having a hair-cut at home exist? • Need to do a market survey to understand if there is a market for this need ᵒ Is the need painful enough • We don’t know at this time. ᵒ Large number of people with the need • Survey results will tell Assuming that the need does exist, how do we convert customers – wean them from the saloon to home? Create targeted advertisements for the targeted market segment that showcase the value for the price paid. Value = zero wait time, zero travel time and on-demand experience

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Business Plan_FINAL

  • 1. By Babu Dhandapani, Gururaja, Rajaram Vijaya, Sarvinder and Mallikarjuna VC Investible Business Plan Sunstone PGPM – Assignment EVP Course
  • 2. Problem Statement Today, people need to wait for their turn at a hair-cutting saloon. There is no way hair dressing can be hurried. Each customer spends their own sweet time until they have finished their hair dressing with all the add-ons. The customer in the line needs to wait, there is no other choice.
  • 3. Solution The solution to the problem is to minimize the wait time or remove the wait time by providing access to an on-demand hair dressing experience right at the customer’s door-step. This experience should not miss any of the elements available at a regular saloon.
  • 4. Business Idea – The MOBLOON The business idea is to achieve the solution through a mobile booking app which allows customer to book for a door-step hair dressing experience. MOBLOON = Mobile Saloon
  • 5. Market Size – Top Down & Public Reports Assume that the business is being piloted in Bangalore. http://worldpopulationreview.com/world-cities/bangalore-population/ http://www.indiaonlinepages.com/population/bangalore-population.html http://www.census2011.co.in/census/district/242-bangalore.html Number of individuals who would like to avail an on-demand haircut = All people in Bangalore who have hair and who trust a hair dresser (ALL of THEM!!). And, this is true for every region in India. Assume we concentrate on individuals who are between 3 yr – 50yr of age – only males (for simplicity sake) Population of Bangalore in 2015 = 1.2 crores No: of males = 52% of population = 62 lakh No: of males below 4 = 5% of males = 3 lakhs No: of males above 50 = 7% of males = 4 lakhs Males between 4 and 50 years = 62 – (3+4) = 55 lakhs Assume 30% of these are middle class people and 25% of them use a smartphone Target Market Size = 25% of 55 = 13 lakhs Average price per haircut = INR 100 Potential market size (per month) = 13 * 100 = 1300 lakhs = 13 crores *** Assumption is people need a haircut once a month.
  • 6. Market Size – Bottoms Up Assuming that > 95% of the hair cuts are done in hair cutting saloons across the city. How many hair cutting saloons are there in Bangalore? Number of PIN codes in Bangalore = 350. Assuming 5 saloons per pin code. Total Saloons = 1750 How many hair cuts do they do per day on the average? Assume 20 haircuts per day, each one taking 25 mins (8.3 hours) Total hair cuts in Bangalore per day = 1750 x 20 = 35000 What is the cost per haircut? Cost per hair cut = INR 60 Total Cost of haircuts in Bangalore per day = 35000X 60 = INR 2100000 How many of these people are willing to pay INR 160 per hair cut at their home? Assume 20% of them or 7000 hair cuts per day Total cost of 7000 hair cuts per day = 7000 x 160 = INR 112000 Total cost of 7000 hair cuts per month = INR 3.36 crores
  • 7. Unit Economics How to calculate the profit margin% per sale? Assume the following costs per haircut. Hair dresser pack (3 scissors and 3 combs) – INR 250 (assume lifetime is for 500 haircuts). Per hair cut – 0.50 INR Water (200 ml) – 0.40 INR (INR 40 per 20 ltr mineral water bottle) Oil (10 ml) - INR 26 (http://www.amazon.in/Navratna-Himami-Ayurvedic-Oil/dp/B003NQEG62 ) Hairdresser charges – 60 INR Cost of diesel and Cost of driver per day (80 KM of travel per day in a mobile van) 8 liters of diesel – 400 INR per 20 haircuts (assume). Per haircut – INR 20 Cost of driver per day – 800 INR per 20 haircuts (assume). Per haircut – INR 40 Total costs incurred per haircut = 147 INR Proposed Cost per haircut = 160 INR Profit margin% per sale = 8.84%
  • 8. Unit Economics (Contd…) How to calculate the marketing and advertising spend? http://timesofindia.releasemyad.com/rates/business http://www.themediaant.com/radio http://www.mysmsmantra.com/pricing.html 20 sq cm advertisement in TOI Bangalore every day for 30 days – INR 417000 FM Radio advertisement twice a day ( 20 sec per day) for 30 days – INR 120000 1 lakh SMS’es per day for 30 days – INR 360000 Total Marketing Cost – INR 897000
  • 9. Unit Economics (Contd…) Unit is 1 customer Marketing Spend = INR 897000 CAC = Customer Acquisition Cost Total customers = 55 lakhs CAC = 55 lakhs / 8.97 lakhs = 6.13 INR per customer CLTV = Customer Life Time Value = Number of years customers can go for haircuts x No: of haircuts per year x x Cost per haircut = 25 x 12 x 160 = 48000 INR CLTV = Expected INR volume of transactions in a Customer’s lifetime x % Margin per sale = 48000 x (8.84% of 147) = 623750 INR
  • 10. Go to Market Strategy áµ’ Does the need of having a hair-cut at home exist? • Need to do a market survey to understand if there is a market for this need áµ’ Is the need painful enough • We don’t know at this time. áµ’ Large number of people with the need • Survey results will tell Assuming that the need does exist, how do we convert customers – wean them from the saloon to home? Create targeted advertisements for the targeted market segment that showcase the value for the price paid. Value = zero wait time, zero travel time and on-demand experience