1.

Executive Summary
81,600,000 people visit day spas within the United States in a given year, each spending an average of $143 dollars per visit. Annual day spa revenues amounted to $6.8 billion dollars in 2004 and are expected to rise above $7.8 billion dollars by 2007.

81,600,000 VISITORS $6.8 BILLION

Day spas have always offered a limited number of services that are safe for expectant women. However, many of these spas have placed restrictions on what and when these women can receive these services. Massage Envy, a franchised day spa with 13 locations in and around St. Louis refuses to service women in their 1st trimester. The Face and Body Day Spa, a St. Louis based company with 3 local day spas refuses to give a foot massage to women throughout their entire pregnancy. Expectant women have found it difficult to find a spa that offers spa services that directly caters to their needs. The needs of expectant women have begun to be met in states such as New York, New Jersey, Arizona, and Ohio; and now they must be met in Missouri, specifically St. Louis. Serenity Spa LLC has the answer. Our team has created a spa that will directly cater to the needs of women who are attempting to get pregnant, are pregnant, or have recently given birth. Serenity Spa will make its services and products available to every woman, but will cater those products to those women recently mentioned. Our ability to cater specifically to these women is due to our staffs of certified massage therapists and estheticians who have completed an advanced prenatal class. Our team will create a spa that enables expectant women to feel comfortable in their ever changing bodies, while providing them with a place where they can connect with themselves along with other women who are in similar life situations. Based on our business plan, Serenity Spa expects revenues to reach just over $680K by the end of year 3. Our team has designed a variety of services that will allow expectant women to receive massages, facials, body treatments, and nail applications, all while being pregnant. In addition to our services, Serenity Spa has selected a product line that is safe, all-natural, and healthy for both our clients and their babies. Our spa will generate at least three revenue streams: 1. Spa Services (i.e. massages, facials, body treatments, and nail applications) 2. Spa Products (i.e. skin treatments, lotions, nail polish, and belly casts) 3. Health & Fitness (i.e. yoga classes, health seminars, cooking classes, etc.)

Serenity Spa LLC

 Industry statistics were derived from a 2004 industry report at www.experienceispa.com Serenity Spa plans to target expectant women through a variety of marketing outlets. We will offer or initial clients promotions that consist of up to 20% off their returning visit. Promotions such as these will help retain clients and reach new ones through the following marketing outlets. Our marketing plan consists of the following outlets: 1. 2. 3. 4. Word-of-Mouth (i.e. Business Card Distribution and networking) Print Advertisements (i.e. local magazines and journals) E-Marketing (i.e. e-mail blasts and web promotions) Covert Advertisements (i.e. hospitals, maternity classes, baby boutiques)

In order to achieve our 3rd and 4th milestone (spa construction and grand opening), Serenity Spa is seeking $450,000 in funds in exchange for 30% equity in the company. Income Statement Snapshot Financial Projection Case 3
Year One Year Two Year Three

Spa Services Health & Fitness Spa Products Total Revenue Operating Expense Income / EBITDA

$265K $33K $62K $360K $313K $47K ROI Snapshot

Year One

$375K $70K $95K $540K $357K $183K

$486K $70K $123K $679K $430K $249K

Year Two

Year Three

Net Income $47k $183K Return on Investment 0% 0% * ROI based on minimum capital contribution of $5,000 Cash Flow Statement Snapshot
Year One Year Two

$249K 6.5%

Year Three

Net Income Gross Cash Flow Accounts Receivable Cash Flow (Operations) Cash Available Cumulative Cash

$47K $55K $33K $87K $87K $190K

$183K $183K $1K $184K $184K $368K

$250K $250K $10K $260K $260K $520K

2.0 Vision & Mission

Serenity Spa LLC

2.1- Mantra Serenity, Tranquility, & Maternity 2.2- Vision Our vision is to create a serene environment that allows expectant women to connect to their mind, body, and spirit through spa services and education. 2.3- Mission Statement Our mission is to reach, inform, and educate every woman in the maternal community about the benefits of spa services during pregnancy through educational classes and community involvement. 2.4- Values

~ Trust ~ Integrity

~ ~

Education Ethics

2.5- Supporting Attributes Service: Serenity Spa will offer its clients a variety of spa services that are directly catered to expectant women. Through our staff of certified massage therapists and estheticians, Serenity Spa will be able to provide its clients with a relaxing and tranquil service that meets all their needs. Diversification: Our staff will strive to meet the needs of each client. Since a womans pregnancy can be a difficult time, Serenity Spa plans to customize its services to cater to those ever changing needs. Community: Community involvement will be essential for the completion of Serenity Spas mission. It is our goal to make Serenity Spa accessible to expectant women who can not typically afford those services. Selection: Serenity Spa will appeal to a very niche market. Therefore, it is our goal to offer a variety of services that directly cater to the needs of expectant women. Through these services, Serenity Spa will develop and maintain our clients minds, bodies, and spirits.

3.0 Service / Product Mix

Serenity Spa LLC

3.1- Service Description All of Serenity Spas massage therapists and estheticians have undergone intensive prenatal training. Due to this training, they are capable of providing a safe massage and facial through ALL stages of pregnancy, not just the 2nd and 3rd trimester like many spas who do not hire specialists. Since our clients will be at different stages of both conception and motherhood, Serenity Spa has designed a multitude of services that will meet their needs. Our services have been categorized into 3 different stages; Preconception, Pregnancy, and Motherhood. Depending on the stage of conception, clients will be able to purchase a variety of services that are safe for their given stage. The following service key will assist our clients in understanding what services are safe for their given stage. Service Key: = Preconception Massages The Preconception massages will be marketed towards those clients who are attempting to conceive a child, but are currently experiencing some difficulties. These women have most likely visited a fertility specialist and/or OBGYN for advice about their pregnancy. According to a study published in the Health and Daily News, women with high cortisol levels are three times as likely to miscarry during the first three weeks after conception. The benefits of our Preconception massages will reduce the likelihood of a miscarriage by increasing the bodys blood circulation, which will decrease the bodys cortisol levels. The benefits of the Preconception massages can aid a couple in conceiving a child. The Pregnancy massages will be marketed towards those clients who are currently pregnant. The Pregnancy massages will be our main revenue generator because the majority of our clients will be expecting. In addition, a large portion of our advertising budget is allocated to attracting these women. The expectant woman is underserved in the St. Louis market due to local spas restricting expectant mothers from receiving certain massages at certain times. The benefits of our Pregnancy massages will be reduced cortisol levels along with a decrease in lower back tensions and pains. According to an article published by the American Pregnancy Association, 50% - 70% of pregnant women experience back pains due to an increase in hormone levels, additional weight gain, changes in posture, or stress. Our Pregnancy massages will help expectant mothers enjoy more of their pregnancy and avoid a - Preconception majority of these routine discomforts. - Pregnancy - Motherhood Our Motherhood massages will be marketed towards those clients who have recently delivered a baby and/or are experienced mothers. Serenity = Pregnancy = Motherhood

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Spa classifies experienced mothers as women who have delivered a baby more than one year prior. It is important to include experienced mothers into this stage because they too deal with similar stresses that are accompanied with raising a child. The women within this stage are dealing with a variety of different stresses, such as postpartum depression, lack of sleep, and additional changes in lifestyle, such as career and social changes. New mothers can experience some form of postpartum depression. A relaxing massage can reduce the level of stress by reducing the bodys cortisol levels, which in turn can lower the womans chance of experiencing postpartum depression. During the first year, new mothers carry their infants through many daily activities, adding strain to their bodies. Our clients will be able to purchase a variety of massages, depending on the stage in which they are classified. The following massages have been identified by their given stage and may be purchased by clients who are categorized within that given stage. Pregnancy massage Swedish massage Aroma Therapy massage Deep Tissue massage.. Stone massage.. Each massage encompasses a multitude of benefits that will enhance the womans pregnancy given her various stages. All clients will be able to purchase an Infant massage which consists of a 25 minute session that educates the mother on a variety of gentle massage techniques that can be performed on their child. According to an article published by the Healthy Child, an infant massage can help regulate the infants sleeping pattern, respiratory system, and digestive system, and can increase the infants ability to gain weight. These benefits will help the mother regulate her sleeping pattern and reduce the level of stress in her life. Body Treatments All of our clients will have the opportunity to indulge in additional services that are perfectly paired with a massage. The additional services consist of a Foot & Leg rub and a Belly rub. Below is a description of the additional services along with a client stage description. A Foot & Leg Rub consists of a 25 minute treatment that involves a sea salt scrub, a peppermint balm massage, and an application of cooling gel. According to an article on alternative-healthguide.com, a leg massage has been shown to increase blood circulation in the legs, which reduces the appearance of varicose veins and minimizes the amount of swelling around the ankles.

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- Preconception - Pregnancy - Motherhood A Belly rub involves a 25 minute treatment that consists of a gentle massage of the mothers belly. The application of products such as borage seed oil has been known to reduce the appearance of stretch marks around the womans belly. Facials Facials will be available to all of our clients, no matter what their stage of conception. The use of all-natural products results in a safe application and rejuvenation of the skin. Our facials consist of a one hour treatment that is designed to reduce the look of aging and stress by removing built-up dirt within the skin. The following facials will be provided: The Glowing Mom facial includes a gentle massage of the face, neck, and shoulders. The massage is followed by a steam mask, which is designed to open the facial pores, releasing built-up dirt. This treatment will extract clogged pores and exfoliate the skin which makes the skin cleaner and healthier. A Hot Stone facial begins with a warm mud mask that removes micro particles from the skins surface. The warm mud mask is followed by a hot stone massage of the neck and shoulders. This treatment will create an even color within the skin while purifying the facial pores. Hands & Feet Manicures and Pedicures are a wonderful way to end a relaxing day at the spa. Our Hands and Feet services consist of nail treatments or a simple polish exchange. Below is a description of the following Hands and Feet services. Starting with the hands, women will be able to indulge in a relaxing manicure or a simple polish exchange. The manicure consists of a 30 minute service that includes a gentle hand massage with a variety of oils followed by a hot towel. Our clients will be able to select from a variety of nail colors that will be applied after the nails have been filed, buffed, and shined. A polish exchange consists of a 15 minute treatment that removes the existing nail polish and includes the application of a new nail polish along with a shine and buff. For the feet, clients will be able to purchase a pedicure. The pedicure consists of a 15 minute soak in a relaxing foot bath that will be followed by a 30 minute foot scrub, foot massage, and a nail polish application. Clients who prefer to pamper both their hands and feet will be able to purchase a package that includes a manicure and pedicure at a discounted rate. Fitness & Health Classes

Serenity Spa LLC

- Preconception - Pregnancy - Motherhood Serenity Spa will offer a variety of health classes throughout the year. The yoga classes will meet at various times throughout the week and will help women maintain a healthy weight during and after their pregnancy. The yoga classes will be designed to accommodate those clients who are at different stages of conception. Expectant mothers will be able to participate in a yoga class that is specifically designed to meet their needs. Expectant women are limited to certain yoga movements and stretches due to their changing body. Women who are not expecting will be able to participate in a traditional yoga class that encompasses all of the yoga movements and stretches. Health classes will be available for our clients along with their family and friends. Our health classes will encompass a variety of topics that include recent pregnancy and motherhood breakthroughs, such as Understanding your Babys Cry and Healthy Meals for You and Your Baby. These classes will provide our clients with an educational opportunity to learn about various pregnancy and motherhood topics. Understanding your Babys Cry will include a visit from Sally Kiester, who is the author of the book A Secret Language of Babies. Sally claims to have unlocked the secret language of babies. Her research has found that babies cry differently when they want to be fed, held, and burped. Her visit will help local mothers unlock the cries of their babies. Healthy Meals for You and Your Baby will consist of an all-inclusive hands-on cooking class with a local chef that is knowledgeable in healthy meals that nourish both the mothers body and her baby. Cooking classes will be held at local culinary schools, where clients can achieve the hands-on experience. Infant Massage Class has been designed to gather women who are looking for a mothers support group. The class will educate them on a variety of techniques used on infant massages. According to Web MD, doctors suggest that women who are experiencing postpartum depression should join a mothers group, such as an infant massage class. Packages Serenity Spa has designed a variety of packages that will meet the needs of its clients during each stage of conception. A package for each stage has been specifically designed. Clients who purchase a package will be able to indulge in our exceptional services at a 15% discount. Preconception Package consists of Swedish massage, a Hot Stone facial, and a Manicure / Pedicure. The customer will be greeted with a bouquet of fresh

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cut flowers and treated to a light lunch after she receives her massage and facial. This package is designed to reduce the maximum amount of stress, increasing the womans chance of conceiving a child.

- Preconception - Pregnancy - Motherhood

Pregnancy Package consists of a Pregnancy massage, Glowing Mom facial, and one of the following services; Manicure, Pedicure, or Belly rub. The client will be greeted with a bouquet of fresh cut flowers and treated to a light lunch after she receives her massage and facial. In addition, clients who purchase Pregnancy Packages will receive a baby gift upon the delivery of their child and a coupon for 10% off their next visit to Serenity Spa. Motherhood Package consists of a Swedish massage or a Deep Tissue massage, a Glowing Mom facial, and a Manicure / Pedicure. The client will be greeted with a bouquet of fresh cut flowers and treated to a light lunch after she receives her massage and facial. This package is designed to reduce the tension of the arms and shoulders along with the lower back while refreshing the new moms appearance. 3.2- Product Description Spa Products Serenity Spa plans to offer a variety of products that caters directly to its clients. According to Dot Gieseler, the vice president of Pure Harmony Day Spa, spa products can contribute anywhere from 10% to 30% of total revenues. Serenity Spa has developed a plan to ensure that our products will contribute an average of 20% of our total revenues. Our plan consists of recognizable products and extensive employee sales efforts. Offering recognizable products consists of a two-fold approach. First, offering well-known, name brand products such as Erbabiva, Bella Mama, Belli, and Mustela will ensure that our clients have the safest products for their bodies. Second, Serenity Spa plans to offer its clients exactly the same products that it uses in its services. This means that if the client purchases a massage, they should be able to purchase exactly the same oils that were used by the massage therapist. The products that will be sold in our spa are 100% safe because they consist of all-natural ingredients. There sometimes is a misconception

Serenity Spa LLC

about exactly how safe a product is, but in fact, products are completely safe as long as they never enter the blood stream. In order for products to enter the blood stream, abrasive services such as chemical peels must be performed. Serenity Spa does not offer any abrasive services that could potentially - Preconception harm its clients. Serenity Spa also plans to offer a variety of maternity - Pregnancy products such as popular books and videos. In addition, accomplishing - Motherhood our goal will directly come from our employees extensive sales effort. Every massage therapist, esthetician, and nail technician will receive a bonus that consists of 5% of the products that are sold by them. Rewarding our staff for extensive sales efforts will continually motivate them to go above and beyond. In addition to our product line, Serenity Spa plans to offer other unique products to its clients. Belly Casts are an artistic way that a mother can capture the shape of her belly. The cast consists of multiple layers of paper Mache followed by a thin coat of plaster. The mother will be able to decorate her belly cast or opt to keep it white. The progression picture consists of three photographs; the first term, the second term, and the third term. Serenity Spa will capture each term by taking a silhouette of the mothers body. The photographs are then placed in a frame and given to the mother. 3.3- Pricing Accurate pricing is essential to the success of any business. For Serenity Spa, it is no different. We expect our clients to perceive our spa and services to be nothing but exceptional and feel that our prices are equal to that of the local industry average. Our pricing was directly derived from spas located in St. Louis who offer similar services in regards to the length of time and difficulty. The following key will aid you in the comparison of different prices. For a complete pricing analysis, please refer to appendix A1. * Services offered between spas vary, causing vacancies within the price comparison. Out-of-Town Spas Local Spas

Services Pregnancy massage Swedish massage Deep Tissue massage Infant massage

Time 1 hr 1 hr 1 hr 25min

Serenity Spa

Face & Body

Spa & Body

Edamame
(New Jersey)

Becoming Mom

$78 $78 $78 $40

$78 $73 $78 -

$70 $60 $65 -

$98 $86 -

$75 $75 $75 50/min

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Glowing Mom facial Eyebrow Lift Facial & Lip Wax Spa manicure Spa pedicure Body Cast 3.4- Partners

1 hr 10Min 10Min 30min 45min -

$80 $15 $15 $30 $45 $110

$80 $22 $20 $28 $55 -

$60 $15 $13 $28 $35 -

$98 $17 $12 -

$75 $15 $15 $40 $60 $45 per kit

Serenity Spa hopes to partner with many local businesses that cater to similar clients. Alternative industries that will help establish our business along with its service benefits are local area hospitals and childrens retail stores. Serenity Spa plans to partner with Lamaze classes and OBGYN offices that are located in hospitals such as St. Lukes, St. Johns Mercy Health Care, Barnes Jewish, and other local facilities. The link between these local hospitals and our clients is their repetitive visits throughout their pregnancy. Expectant women visit their OBGYN on an average of one visit per month, occasionally visiting them multiple times in a month if they are experiencing complications with their pregnancy. Lamaze classes are also held at local hospitals, which are typically operated by certified midwives and registered nurses. Classes vary in length and typically run for an average of four to six weeks. In an attempt to give back to these local hospitals, Serenity Spa plans to donate an average of five hours of spa services per month to each hospital partner. These hospitals will then allocate these services to unfortunate expectant women who cannot typically afford our services. These partnerships will increase our service awareness to much of our target market. According to the St. Johns Mercy website, they alone deliver over 8,000 babies per year. These partnerships will help fuel our word-of-mouth advertisements by establishing references with the midwives and registered nurses who run the Lamaze classes. If a client attends a local partnered Lamaze class, Serenity Spa will discount their total purchase by up to 5% and then donate the discount value to the Lamaze class. Along with the previous medical partnerships, the following retail businesses will also help establish our business to those clients within our demographics. We hope to establish connections with Gymboree, Childrens Place, Pottery Barn Kids, Jilly Bean Boutique, Chocolate Soup, Queen Bee,

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Kangaroo Kids, and Sassy Pants. Clients who shop at these retail stores tends to possess a higher than average level of income and would be more likely to afford our services. It is our goal to create partnerships with these local businesses in order to reach a larger portion of our potential market. Our plan to partner with these retail stores consists of client discounts and cash kickbacks to the retail stores. If our clients display a receipt from one of our partnered stores for a purchase within the last 30 days that was greater than $100, Serenity Spa will give that client a 10% discount and a cash kickback of 5% will be given to the retail store. For instance, if a client brings a Gymboree receipt for a purchase of $100 and decides to purchase an $80 facial along with $20 worth of products, their purchase will cost $90 and Gymboree will receive $5. In addition, it is expected that these partnerships will set up similar donations to our spa for referenced customers.

4.0 The Market Place

The concept is uncommon, and therefore promising, industry observers said. A pregnancy spa, one that offers service for before, during and after delivery, could appeal to doctors as well as entrepreneurs. Lisa Fasig, Cincinnati Business Courier 4.1- Day Spa Industry The day spa industry has recently seen an emergence of maternity spas. Maternity spas have sprung up in the Northeastern states in the late 1990s. This emergence can be linked to several recent trends such as women bearing children later in life, which increases their likelihood of having the disposable income to visit spas. Based on statistics from the most recent North American Spa Industry report (2003), the United States spa industry has reached revenues of $11.2 billion dollars. Day spas, such as Serenity Spa, account for $6.8 of the $11.2 billion. Also, the NASI estimates that there are over 12,100 spas throughout the United States, day spas accounting for 60% of that estimate. The industry has seen an immense amount of growth in recent years. The NASI projects the day spa industry to grow at a rate of 18% per year, which is evident in the growth of our competitor, Massage Envy. The largest category of spas in the United States is comprised of day spas. According to Mintel, the day spa industry has five main revenue segments that account for a majority of a day spas total revenue. These segments consist of massages, facials, body
D ay S pa P u rchase s
4+ 5% 11% 27% 54% 0% 10% 20% 30% 40% 50% 60%

Services Purchased

3 2 1

% o f C u s to m e r s W h o P u r c h a s e d S e r v ic e s

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treatments, nail services, and retail products. Mintel also states that 50% of women who visit a day spa purchase massages while 28% of women purchase a facial or a body treatment. Also, 50% of women requested either a manicure or pedicure when they visited a spa. The Nail Fact Book states that day spas and other nail service locations have seen an increase in the desire for manicures and pedicures in recent years. Mintel also states that 12% of a spas revenue comes from the sale of retail products. Once again, retail products have the potential to generate up to 30% of a spas revenue. Day spas account for 60% of the spa industrys total revenues. One of the main reasons for this is because 81% of women who have experienced day spas will return multiple times within a given year. Out of the total number of day spa clients, 39% of those women are first time users. Day spa clients vary in their services purchased. In fact, 54% of clients purchase one treatment, 27% purchase two treatments, 11% purchase three treatments, while 5% of clients will purchase four or more treatments. Serenity Spas Potential Serenity Spa is specifically targeting women who are seeking to become pregnant or are pregnant. This market niche within the day spa industry is likely to grow in upcoming years. To support this expectation, research performed by the Department of Health and Senior Services shows that the Missouri birthrate has increased by 2.4 percent from 2002 to 2003. In 2006, the CDC reported that women in their late twenties (25-29) delivered the highest number of babies. In fact, women in their late twenties accounted for 115 births per 1,000 births. The CDC also notes that the number of births by older women is continuing to increase. The percentage of pregnant women in their late thirties (35-39) is up by four percent. They are now having 44.5 babies per 1,000 births. Also women between the ages of 40-44 have increased their percentage by 3%, having 9 babies per 1,000 births. The three age groups received the largest increases in their percentage change in birth rates. These statistics lead us to believe that older expectant women will have a higher level of disposable income, therefore having a greater ability to purchase our services.

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4.2- The Competition The competition for Serenity Spa consists of out-of-town maternity spas and local day spas that offer some form of pre and postnatal massages. Out-of-town maternity spas are a direct threat to our future success if they pursue the St. Louis market. Serenity Spa has extensively researched each out-of-town maternity spa and has ranked them by there potential threat. Also, extensive research of local day spas has been performed and will follow the analysis of our out-of-town competitors.

Direct Competitors 1.
Edamame, a maternity spa that has five locations throughout the Northeastern states, is Serenity Spas largest direct competitor. Currently, Edamame has two spas located in New York City and one spa located in each of the following states, New Jersey, Massachusetts, and North Carolina. The company was started by Rebecca Matthias, the founder and president of A Pea in the Pod, Mimi Maternity, and Motherhood Maternity. These companies are three very successful maternity clothing retailers that have partnered with the five Edamame spas. Edamame has been ranked as our largest direct competitor because they have successfully expanded there business throughout the Northeast. The spas growth and success is directly correlated to the knowledge and expertise of Rebecca Matthias. She has designed a variety of services, such as her Mom-toBe New Life Massage and her Absolute Pearl Facial that are beloved by her clients. It is obvious that their maternity concept has exploded in popularity, which is why Edamame posses the greatest threat to Serenity Spa. Their success is the reason why they have enormous potential to expand operations in the Midwest. If Edamame recognizes the market potential in St. Louis, they have the expertise and capital needed to expand. Management at Edamame could decide to expand; they are currently not interested in franchising their business, which minimizes their likelihood for rapid growth. This important information was received by Serenity Spas in an e-mail from Kathleen Bozdemir, a customer service supervisor at Edamame. 2. Bei Bella, a maternity spa that has one location in Scottsdale Arizona, is our second largest competitor. Bei Bella was started by two sisters Danielle PriceCatalfio and Jamie Tenney. The two sisters noticed a void in the industry and opened their first spa in October of 2005. Their 2,300 square foot facility caters to the needs of expectant mothers throughout Scottsdale. They have partnered with the Desert Jewel Obstetrics and Gynecology Center, Pre-natal Peek of Maricopa, which has sent numerous referrals their way. Bei Bella is currently accepting franchise opportunities and is

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looking to expand, but have currently not expanded beyond their one location. In addition to their success, they have developed a mentoring program for girls between the ages of 11-17 who are pregnant and need community support. 3. Barefoot & Pregnant, a maternity spa that has one location in the Casa Madrona Hotel and Spa. The Casa Madrona Hotel and Spa is located in Sausalito California, which is a city within the San Francisco Bay area. Since its launch in 2003, Barefoot & Pregnant has been featured in countless media outlets. One of their most prized media outlets was their feature on Access Hollywood, which granted them nationwide coverage. They currently have only one location, but they could potentially expand their business to other luxurious hotels. Barefoot & Pregnant is not interested in franchising their business but they could become a potential partner with local luxurious hotels such as the Ritz-Carlton and the Chase Park Plaza. 4. Becoming Mom Spa; located in Mason, Ohio; has one location that offers a variety of typical spa services Becoming Mom accompanied with high tech pre natal innovations. Dawn Spa & Imaging Center Bierschwal, the founder of Becoming Mom Spa, has created an innovative spa that incorporates the use of 4d ultrasound images. Becoming Mom Spa allows the customer to view the video from their 4d ultrasound via the company website. They are currently looking for franchises and are attempting to grow their business outside of Ohio. Their mix of high quality spa services with high tech innovations makes them a major competitor for Serenity Spa. Serenity Spa is interested in partnering with local imaging centers and hospitals that offer 4d ultrasounds. The 4d ultrasound technology would cost anywhere from $50,000 $70,000 to acquire and would require a specially trained nurse to operate. Serenity Spa would prefer to leave this to the experts at local hospitals. 5. Zenana Spa and Wellness Center is a revolutionary spa that is located in Portland, Oregon. It was founded by Zenana-Renee Rose along with 6 other mothers/partners in 2004. Zenana Spa and Wellness Center has incorporated a variety of Wellness services such as hypnotherapy, counseling, and acupuncture. These additions have led to their success and have increased their sales. They are currently not looking to expand and do not offer franchises. Their lack of expansion opportunities is the main reason why Zenana Spa and Wellness Center is ranked lowest on our scale. In addition to the out-of-town maternity spas just discussed, Mama Spa is a mobile spa based out of New York City, which has taken a different approach to meeting the needs of expectant mothers. Mama Spa is owned and operated by two women who were the founders of the first mobile spa called Spa Chicks On-The-Go, which was

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created over eighteen years ago. They have recently left that business to directly cater to expectant women who are bedridden and or desire in-home spa services. Mama Spa is capable of delivering spa services, which are similar to a luxurious spa, directly to the doorsteps of their clients. The added convenience of delivering spa services allows Mama Spa to charge considerably higher than average prices. For example, a one hour massage costs an average of $225, while Edamame another New York based spa charges $110. Expectant mothers can also choose from an array of spa services, such as prenatal massages, postnatal massages, prenatal reflexology treatments, manicures, and pedicures. Serenity Spa recognizes the importance of catering to every expectant woman and will offer our customers similar On-the-Go services at an additional rate of $80 per visit.

Indirect Competitors
Indirect competition will come from local day spas throughout St. Louis County. According to listings in the Yellow Pages, there are currently 47day spas that are located in St. Louis County, which a majority offer some form of a pre or post natal massage. The local day spas in St. Louis County will be the largest indirect competitor for Serenity Spa. A further analysis of the major day spas has been performed, along with a competitive ranking of each company.

1. Our largest local day spa competitor will be the Face &
Body Day Spa, which has three locations with St. Louis County. The three day spas are located in Chesterfield MO, Brentwood MO, and OFallon MO. The company was founded by Peggy Mitchusson, a local industry leader. The Face and Body Day Spa does not directly cater to pregnant women, however they do offer one service for expectant women, a pregnancy massage for $78 per hour. The Face & Body Day Spa does not offer franchising, but they have shown recent growth movements throughout St. Louis. Since their signature store in Chesterfield, MO, they have shown recent expansion with the opening of two new day spas in OFallon and Brentwood within the past few years. The company does have the financial capabilities and expertise to enter the maternity sector.

2. Massage Envy, which is a nationwide franchise, has 197

operating spas. There are currently 81 spas in the process of opening. There are 13 Massage Envy franchises located in St. Louis with 1 in the process of opening. Their force has made a lasting impact on the day spa industry due to their ability to offer lower prices. Their ability to offer lower prices for spa services is the result of their membership program. A customer can purchase a monthly membership for $39.99 a month, which entitles them to one massage that can be used within that given month along with other special discounts that are available specifically to members. In addition to the membership, Massage Envy has reduced the luxuriousness of their spas to minimize cost. The combination of low cost and consistent revenue streams

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have resulted in their nationwide success. Massage Envy does offer a massage for expectant women, but only during the 2nd and 3rd trimester. The reason why they do not offer a massage to expectant women during their 1st trimester is due to the medical concern that the massage could hinder the critical developmental of the baby. In fact, Dot Gieseler states that 1st term massages are safe, as long as they are performed by massage therapists who have received additional training in prenatal massage techniques. This is an added cost that Massage Envy is not willing to undertake. 3. Ginger Bay, a day spa located in Kirkwood MO, has been successfully operating since 1991. The spa was founded by Jennifer Vaughn, another industry leader who is locally known for her philanthropic contributions. Her generosity is visible in her annual contributions to local charities that concentrate on social issues such as abused and neglected children. Ginger Bay does offer a pregnancy massage, in which a Ginger Bay robe and slippers is given to the mother. Ginger Bays clientele devotion will definitely be a barrier to Serenity Spas emergence into the overall day spa industry. 4. Scandals Day Spa started in 1995 as a small nail salon and has grown in recent years to an upscale day spa. They are currently located in South County and are becoming a major force in the St. Louis market. They have a simple goal that is dedicated to pampering, relaxing, and rejuvenating their clients. They too offer a one hour pregnancy massage that is performed by candlelight and is followed by a warm sage soaked towel. However, they too fail to satisfy the needs of expectant women who desire more than just one type of massage. They are currently not offering franchises and have yet to grow beyond their one location, which minimizes there threat to expand or enter the maternity sector.

Scanda ls Day Spa

5. Spa and Body Options Co. was started in 1997. Since

their opening, they have managed to make an impression on the St. Louis market by offering high quality massages at lower than average prices. For instance, their prices tend to be an average of $10 - $15 dollars lower than the local competitors prices. One of the main reasons why they offer lower prices is because of their location in Hazelwood, MO, which has a lower average income. They do offer a pre and post natal massage for $70 dollars, which is $8 dollars lower than Serenity Spa. They are currently not offering franchise opportunities and their growth appears to be minimal. The reason why Spa and Body Options Co. is listed as our 5th local competitor is because of their ability to offer lower prices. Some clients may value lower prices over more luxurious facilities that offer services directly catered to expectant women.

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4.3- Competitive Advantage Serenity Spa is determined to provide high quality spa services that create a serene environment for our clients. Once opened, Serenity Spa will be the only maternity spa in Missouri. Being early arrivers to the market allows us to reach a much larger number of clients. Serenity Spa recognizes the possibility that other maternity spas could enter the St. Louis market. A few of our direct competitors are offering a franchise opportunity, which means that there is always a possibility for their entrance into the local market. Furthermore, Serenity Spa has decided not to purchase an existing franchise from our direct competitors because they lack local name recognition. Our certified staff, managers, and future advisors will be able to guide Serenity Spa through the start-up phase by following this business plan. In addition to our direct competitors, local day spas could expand their services if they recognize the market potential for expectant women. Our competitive advantages will be clearly visible in the way that we conduct our spa. Our staff will consist of certified massage therapists, estheticians, and nail technicians. Our staff will have the knowledge to meet our clients needs during their pregnancies. Employing a staff that is well trained in the requirements of expectant women is essential for helping them to truly enjoy their pregnancy. In addition, our classes will provide our clients with the knowledge necessary to ensure that their pregnancy goes as smoothly as possible. Serenity Spa will also offer an intangible benefit to our clients that no other day spa can currently offer. By providing a place where expectant woman can gather, our internal community will promote the sharing of personal experiences and maternity knowledge. Our internal community cannot be matched by day spas that merely offer a prenatal massage or facial. Women that enter our maternity spa will not just be entering a typical day spa, but will be entering a community that can offer experiences, knowledge, and education. Our clients will perceive our spa as a relatively inexpensive way to obtain education that can enhance their pregnancy

5.0 Company Overview

5.1- Business Model / Revenue Streams Serenity Spa is dependent upon the desire of expectant women and mothers to nurture and maintain their bodies during and after their pregnancy. The largest component of our revenue stream will be sales from our spa services. This broad revenue stream consists of massages, facials, body treatments, and nail services. Massages comprise 41% of our total revenue. A Mintel report suggests that the average day spa can expect 50% of its revenues to come directly from massages. The reason why Serenity Spa is 9% below the Mintel report average is because of our additional revenues from classes and unique products that typical day spas do not offer. All of the other spa services such as facials and nail services comprise

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30% of our total revenue. It is clear that the success of Serenity Spa relies on our spa services, given that it consists of 71% of our total revenues. Alternative revenue streams will consist of various spa products, yoga classes, and health classes. These revenue streams comprise 29% of our total revenues. Products alone will account for 18% of our total revenue, which is just under the industry average. 5.2- SWOT Analysis Strengths

~ Serenity Spa specializes in serving the needs of a market niche.

~ Allows Serenity Spa to focus on a specific client, granting the ability to customize services that meet the clients needs.

Ability to create a spa that allows clients to feel comfortable in their changing bodies. Results in a higher client return rate because of the feeling rendered. Certified staff of massage therapists and estheticians. Allows the staff to service every expecting client, no matter what stage of conception.

Weaknesses ~ Lack of industry experience and knowledge. Minimizes the management teams ability to rapidly expand operations. Grants valuable time for upcoming competition. Lack of maternity knowledge. Could potentially prevent Serenity Spa from meeting the needs of every client.

Opportunities ~ Partnerships with local hospital and businesses. Enables Serenity Spa and its management team the opportunity to build long-lasting relationships with the local community and business leaders. Community Involvement and education Grants an opportunity to give back to the community by educating the entire community about the benefits of healthy pregnancies.

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Threats ~ Clients ability to differentiate our services from local day spas. If clients are not able to differentiate our maternity concept from local day spas, Serenity Spa could lose business. In order to overcome this threat, Serenity Spa will actively explain the maternity concept in all media outlets. Increased competition from local day spas. Indirect competitors could potentially offer more services to expectant women. This would minimize our market share along with decreasing our level of differentiation. Emergence of maternity spas in the local market. The emergence of maternity spas in the local market will decrease our market share. Serenity Spa does expect direct competition to arise within the St. Louis market and will work effortlessly to capture as much of the market as possible.

5.3- Milestones Fall 2004 Brittany Crittenden, Serenity Spas founder and President, became intrigued by the maternal aspect of the spa industry. As she looked towards other areas of the United States, she noticed that maternity spas were successfully addressing a niche that could reap great benefits. Additionally she also noted that the Midwest market, most notably Missouri, was lacking a spa that exclusively catered to the maternal needs of women. It was here that the idea for Serenity Spa was sparked. Brittany began her study to determine the feasibility of a Midwest maternity spa. Spring 2007 After preparing extensive market research, the management team will have decided on the site of the first Serenity Spa location in the Midwest and will be searching for funds to begin construction. As we will highlight throughout our plan, our location will be based on various criteria that will optimize our business and marketing procedures. Summer-Fall 2007 Construction and design of the first Serenity Spa will take place. At this time the management team will begin ordering massage tables, pedicure chairs, manicure stations, and other spa furniture. It will be at this point that the idea comes to life and takes on physical characteristics. Winter 2008

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Grand Opening! Serenity Spa will open its doors to serve the expectant women of St. Louis. At this point, the management team expects to begin generating cash flows that will arise from spa services, such as massages, pedicures/manicures, and facials. April 2008 Serenity Spa will begin to utilize all of its specialized services. More specifically, the management team expects that the regular spa services will generate enough interest to initiate our health and yoga classes. It will truly be at this point that Serenity Spa can begin to further educate the community about the benefits of its services to expectant women. 5.4- Management Team President ~ Brittany Crittenden Brittany Crittenden has over three years of experience with managing a family owned small business. Her previous experience has required her to perform a multitude of duties. Some of these duties consist of customer relations and sales performance follow through. She is expected to graduate from Saint Louis University John Cook School of Business with a Bachelor of Science in Business Administration with a concentration in Entrepreneurship in the fall of 2007. VP of Business Operations ~ Gary Hartmann Gary Hartmann has over six years of experience in managing various business operations for Personality Portraits, a small business located in Pacific, Missouri. Personality Portraits employees over 200 seasonal employees and operates in 7 states across the United States. Garys previous management experience consists of inventory control and planning, scheduling, and financial management. Job duties were comprised of weekly inventory recording, ordering and stocking, creation of schedules for over 100 employees, and daily sales recording that consisted of over/short analysis and previous sales analysis. He is expected to graduate from the Saint Louis University John Cook School of Business with a Bachelor of Science in Business Administration with a concentration in Entrepreneurship in the fall of 2007. VP of Marketing ~ Michael Zimmer Michael Zimmer has been involved in marketing for three years. In working within the marketing department for Zimmer radio group, he was responsible for advertising placements and negotiations. In addition, Michael was responsible for the development of various advertisements for organizational functions. His understanding of marketing in relation to the success of a business will allow Serenity Spa to flourish. He is expected to graduate from the Saint Louis University John Cook School of Business with a concentration in Entrepreneurship in the spring of 2007.

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5.5- Advisors Serenity Spa is currently trying to connect with individuals who have experience and expertise in the following areas by the fall of 2007:

~ The day spa industry (massage therapists / experienced spa managers) ~ The health care industry (registered nurses / midwives) ~ Business start-ups 6.0
6.1- Client Description Our client base will consist of women who are planning to get pregnant, are pregnant, or have recently given birth. Our typical client will have a moderately high disposable income and will understand the importance of rest and relaxation in motherhood. Furthermore, we expect that our clients will have experienced other day spas and will understand the benefits of those services. 6.2- Demographics & Income Analysis Serenity Spa is expecting the majority of its services to be rendered to females within the following age groups: 20-24 years, 25-34 years, 352,307 Potential Clients and 35-44 years. The management team expects that these age groups will be comprised of women who are most likely to bear children. According to the U.S. Census Bureau, there are 352,307 women living in St. Louis County who are between the ages of 20-44 years. Furthermore the U.S. Census Bureau segments St. Louis County into the ages and figures in the graph below.
Age Segme nts of St. Louis County
20 - 24 57,773 35 - 44 166,048 25 - 34 128,486

Our Focus

Since the management team is expecting its clients to possess a higher level of income, it should be noted that the U.S. Census states that 38.4 % of households within St. Louis County make a yearly income above $75,000. As previously mentioned, our services are competitively priced with local luxurious spas. As a result, the

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management team believes that a yearly income above $75,000 will allow the majority of its market to purchase its services.

7.0 Marketing Strategy

Women, especially mothers and expecting mothers, have very little time to take care of themselves. They spend much of their days caring for their children. There seems to be an overwhelming notion in our society that mothers should do it all. This unfortunate mode of thinking leaves many women feeling guilty for merely thinking about taking time to pamper themselves. Serenity Spa believes that it is essential for women to have the time and location to nurture and care for themselves. Its goal is to transport its clients to a tranquil environment for a few hours of much needed rest and rejuvenation. Serenity Spa will employ numerous tactics to gain access to a market that undoubtedly exists. 7.1- Location There are currently no maternity spas operating in the Midwest other than the Becoming Mom Spa, which is located in Mason, Ohio. Major metropolitan areas that are lacking a maternity spa consist of St. Louis, Chicago, Dallas, Atlanta, Minneapolis, and Denver. Serenity Spa has decided to open its first location in St. Louis because of several different factors. These factors consist of networking potential, nationally ranked hospitals, and increasing birthrates. The management team of Serenity Spa currently resides in St. Louis, which opens numerous doors for networking and word-of-mouth advertisements. Second, St. Louis area hospitals such as St. Johns Mercy and Childrens Hospital are nationally ranked for their neonatal intensive care units, bringing a national light to their childbirth services. Finally, the St. Louis area currently holds 36% of Missouris total population, just over 2.7 million people . In addition, St. Louis delivers over 28,000 babies per year, which makes for a relatively large clientele base. With all of this accounted for, the management team is aware of potentially larger markets other than St. Louis, but believes that the St. Louis market can supply the spa with enough clients for the spa to reach 100% capacity. While Serenity Spa hopes to expand to meet the needs of these markets, it is believed that the St. Louis market is incredibly conducive to the opening of a maternity spa. Furthermore, the St. Louis market is completely capable of sustaining the business operations. For example, at 100% capacity, Serenity Spa will have a total of three massage therapists. Through research of the industry, the management team has determined that a massage therapist is capable of performing five one-hour massages during a given workday. This translates into 4,500 massages performed by three massage therapists during a given year. The United States Census Bureau estimates that roughly 28,000 women will give birth during 2008 in St. Louis County. As previously stated, at 100% capacity, Serenity Spa will only be able to serve 4,500 clients, a mere 16% of the women who would potentially purchase its services.

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 Statistics derived from the U.S. Census bureau website. To ensure the success of Serenity Spa % o f C o u n ty w i th a F a m i l y I n c o m e a b o v e $ 7 5 , 0 0 0 within the St. Louis market, the management team has developed 100 criterion for the selection of the location 80 for the first Serenity Spa in St. Louis.

~ The majority of the area possesses a ~ ~

family income above $75k The location is mutually accessible from all areas of St. Louis county Proximity to major hospitals

60 40 20 0 T o w n & L a d u e D e s P e r e sC la y to n K ir k w o o B r e n t w o o d d C o u n tr y

In addition to providing the highest percentage of family income above 75K, Town & Country is easily accessible from highways 270, 40, and 44. It is also close to St. Johns Mercy hospital, Missouri Baptist hospital, and St. Lukes hospital. The management team is currently research available real estate in Town & Country. 7.2- Potential Growth As previously mentioned, the concept of providing spa services that are exclusively oriented towards expectant woman is a relatively new idea. The absence of maternity spas in the Midwest provides Serenity Spa with a blank canvas, in which it can leave its permanent mark. Serenity Spa has analyzed the following cities for its potential growth: Chicago, Dallas, Atlanta, Minneapolis, and Denver. In order to adequately determine which cities would be ideal for additional maternity spas, a criterion for their selection has been established and is listed below.

~ ~ ~ ~ ~

No maternity spas already operating within the metropolitan area Median income Multiple hospitals that would offer potential partnership opportunities Large population that can supply our spa with clientele High number of births. Dallas 37K 8 5.2M 42K 111 2nd Atlanta 34K 7 4M 30K 94 3rd Denver 40K 7 2M 11K 76 5th Minneapolis 38K 6 3M 17K 83 4th

Chicago Local Maternity Spas Median Income 38K # of Hospitals 9 Total Population 9.2M # of Births 47K Score 136 Rank of Market Entrance: 1st

Potential growth statistics were derived form U.S. Census Bureau and City-Data.com

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7.3- Positioning Strategy Revolutionizing Pregnancy It is important that Serenity Spa embraces its position as the first maternity day spa entrant into the St. Louis market. With its first-mover advantage, the management team will be able to develop a core client base by positioning its spa services as a needed amenity for women during their pregnancies. In order to successfully orient itself in this manner, Serenity Spa will pursue a two-fold marketing strategy, emphasizing its market development and education. Initial market development will take on a proactive approach, meaning that its potential clients will be inundated with Serenity Spa information before its doors even open. There are many benefits to women receiving massages during their pregnancies such as: stress reduction and improved blood flow. The management team will flood the market with information highlighting the benefits of its prenatal services. Once women fully understand that the services are helpful in reducing the complications and stresses of pregnancy, it will be much easier to position itself as an essential aspect of a successful and enjoyable pregnancy. A major component of the success of Serenity Spa is dependent upon its ability to successfully educate women to the benefits of spa services so that they will view Serenity Spa as paramount to making their pregnancy more enjoyable.

7.4- Marketing & Advertising Methods The context for all of the marketing and advertising methods will be to educate women on the benefits of using a maternity spa. The management team will strive to develop its client base by initiating the following strategies: 1. Word-of-Mouth Serenity Spa will use many of its marketing strategies to generate referrals from expectant mothers and new mothers in the St. Louis area. To promote the benefits of its services, Serenity Spa plans to create a referral form that will be sent to its clients with a brochure of the spa services offered. Furthermore, since word-of-mouth marketing is one of the most important aspects of its marketing scheme, Serenity Spa will offer its clients a 5% discount on their next visit to Serenity Spa if they recommend a new client. Another way Serenity Spa plans to enhance its word-of-mouth marketing efforts will be through the local community. Serenity Spa will provide its staff with business cards and will encourage their distribution. In addition, Serenity Spa expects a large amount of its word-of-mouth marketing to also come from its

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local partnerships with hospitals and retail stores. Serenity Spas management team and staff understand the level of trust that is required for successful, longterm partnerships. In order to assure that its partnerships are referring the spa to their customers, Serenity Spas staff must continually promote the partnership businesses to attract new clients. 2. Print Advertisements Serenity Spa will use multiple local magazines and papers to advertise its business and educate its potential clients about the benefits of its spa services. Serenity Spa will use the following publications to advertise; Ladue News, Alive Magazine, Suburban Journal, and St. Louis Magazine. The Ladue News is a local magazine that is distributed in Frontenac, Brentwood, Clayton, Ladue, Kirkwood, and Town & Country. The Ladue News often reports on local charity events that draw much attention to its magazine. Readers continually glance through the magazine to see if they recognize a friend or family member featured in the charitable section. In addition to the Ladue News, Alive Magazine is another upscale magazine, whose predominant reader is a 34 year old female. According to Dot Gieseler, who has used Alive Magazine for many of her advertisements, the minimum monthly cost for a page colored add is $600 dollars. Serenity Spa has allocated $1,500 dollars per month to fund various print placements. Anywhere from a to a of our monthly advertising budget will be used to fund these advertisements. The rest of the monthly advertising budget will be used to print business cards and other items mentioned in the upcoming descriptions. 3. E-Marketing According to experienceispa.com, 46% of day spa clients are repeat clientele. In order to maximize the number of times its clients return, Serenity Spa will develop a clientele database that contains the following information; e-mail address, home address, business address, phone numbers, and purchase history. Serenity Spa will then use this information to send out e-mail blast, which consists of updates about Serenity Spa. These updates can vary from the hiring of a new massage therapist, special promotions, new product lines, and upcoming classes. E-mail blasts will offer clients a more intimate relationship with the spa and its staff. In addition, it will enable the management team to maintain consistent contact with its clients, enhancing the possibility of having a returning client. 4. Covert Advertising Serenity Spas covert advertising efforts will consist of brochure placements and specific logo placements. Brochures will be placed in the waiting rooms of local hospitals and OBGYN offices. Unfortunately, doctors can not refer a patient to Serenity Spa for liability reasons pertinent to the doctors malpractice insurance agreements. In addition, hospitals can not release nor can they distribute the

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names of expectant patients due to recent infant abductions. Brochures will also be distributed to partnered Lamaze classes, where the brochures will then be placed in an informational packet that is given to class attendees. Serenity Spa will also distribute a well-designed t-shirt that conforms to the mothers belly. The t-shirt will have the Serenity Spa logo printed on it, resulting in an increase of word-of-mouth advertising. 7.5- Market Segmentation Challenge: To create a desire for the use of spa services which are specifically designed for expectant women. In order to meet the challenge described above, Serenity Spa must penetrate the following market segments. 1. Experienced Mothers These clients are not first-time mothers. They have experienced the strains of pregnancy at least one time prior to their recent pregnancy. These clients have dealt with the back pains, the nausea, and the discomfort of pregnancy without the use of spa services. Serenity Spa believes that these clients will be difficult to reach because they will have a preexisting notion that they can have a successful and enjoyable pregnancy without spa services. As a result, these clients will be the most difficult market segment to penetrate. The management team believes that Experienced Mothers will be reached through Alive Magazine prints. Serenity Spa will be able to show the mother how spa services can make a pregnancy even more enjoyable. 2. Health Enthusiast These clients are primarily concerned with preserving the connection between their minds and body. This preservation is essential for the health of their baby. Along with our spa services, these clients will participate in additional services such as yoga and health classes. Serenity Spa believes that this market segment will contribute a large number of returning clients. In order to attract these clients, Serenity Spa will use its e-mail blast to inform them about new classes and recent articles that can provide them with up-to-date information.

Information received from John Dubis, President and CEO of Cardinal

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Glennon Childrens Hospital 3. New Mothers . This market segment will primarily consist of clients who have not previously experienced a pregnancy and are beginning to experience its discomforts. Serenity Spas services will primarily be used by these clients as a method of relaxation and rejuvenation. It is expected that these clients will use Serenity Spa primarily as a day spa, possibly multiple times throughout their pregnancy. The management team predicts that these clients will most likely be referrals from our extensive word-of-mouth marketing. 4. Friends & Family This market segmentation will consist of friends and family members of expectant women. This segment may or may not be beyond the child bearing years, but may have a friend, daughter, niece, or granddaughter who is in the child bearing years. These women will have seen our advertisements in magazines and will recommend our services to their relatives and friends or may purchase gift certificates for spa services as a shower or new mother gift.

8.0
8.1-The Deal

Capital Required

Serenity Spa LLC (Company) is offering limited liability company interests (Interests). The company is seeking a capital contribution of four hundred and fifty thousand dollars ($450,000). The minimum Capital Commitment per Member is five thousand dollars ($5,000) representing one and a one eleventh percent (1.11%) of the Capital Commitment at the time of initial funding. Members Capital Commitment must be paid into a business account designated by the Manager at the time of execution and the balance is paid in full to fund the Company investments and to pay company expenses. The Manager may, in its sole discretion, reject an investment for any reason, in which case the investors investment deposited will be returned to the investor. Members will have limited rights concerning company decisions through certain majority and supermajority approval procedures. Otherwise Manager makes all decisions. 8.2-Exit Strategy The exit strategy for the management team of Serenity Spa LLC is to continue operations after the life designated within this business plan. After the 3rd year, the management team plans to expand the business. At that time, the business will have enough positive cash flows that will allow the management team to seek additional capital through various business loans. Additional capital will be used to

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expand the business through the outline in section 7.2.

9.0

Financial Assumptions

Serenity Spa has based the financial projections for 2008, 2009, and 2010 on the following assumptions. 9.1- Overall ~ Serenity Spa expects spa traffic to increase from March to September and decrease from October to February.

9.2- Revenues

~ Revenues will be generated through the purchase of spa services and

products

~ Revenues were derived from a percentage of our total market. ~ Our total market was derived from the following equations:
(MO Population / STL County Population) x 100 = % of MO population living in STL County % of MO population living in STL County x Number of Births in MO = Total Market

~ ~ ~ ~ ~ ~

75% of massage purchases will be Pregnancy Massages. 5% of massage purchases will be Aroma Therapy Massages. 5% of massage purchases will be Stone Massages. 10% of customers will purchase Infant Massages. 25% of customers will purchase add-ons. 30% of customers will purchase facials. 50% of customers will purchase manicure/pedicure during the 2nd and 3rd quarter. 50% of customers will purchase a manicure during 1st and 4th quarter while 30% of customers will purchase a pedicure. 1 yoga class will be held twice a week after the 1st quarter and increasing to 2 yoga classes after the 3rd quarter 3 yoga classes will be held twice a week after the 1st year. Health & Fitness classes will be held once a month and will consist of 50% enrollment the first year and will increase to 75% enrollment in the second and third year. 20% of customers will purchase spa products 20% of customers will purchase a Belly Cast 15% of customers will purchase a Progression picture (5% will choose to purchase the pictures without a frame) Accounts Receivable will collect 75% of those months sales in the following month while it expects to collect the other 25% two months after the sale.

~ 15% of massage purchases will be Swedish Massages.

~ ~ ~ ~
~

~ ~
~ ~

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9.3- Expenses

~ Advertising budget is projected to be a minimum of $1,500 per month; ~ ~ ~ ~ ~ ~ ~

~ although the budget increases each year by the inflation rate (3%). Administrative supplies are expected to be $300 a month for the first year and are expected to increase by the 3% inflation rate. Administrative supplies include paper, pens, etc. Insurance was estimated and approved to amount to $2000 dollars per month by Dot Gieseler. Inventory was estimated and approved to be $300 dollars a month by Dot Gieseler. Inventory will increase each year by the inflation rate. Rent was estimated to be $18 per square foot on a building of 3,200 square feet. The rent increases each year by the inflation rate. Utilities were estimated and approved to be $500 dollars per month. Utilities include internet, water, and electricity. Wages were based on an industry averages from www.salaries.com Wages increase each year by the inflation rate of 3% 2 massage therapist, 1 esthetician, 1 nail technician, and 2 store manager begin in 2008 A 2nd nail technician is hired at the beginning of 2009 A 2nd esthetician is hired at the beginning of 2010 A 3rd massage therapist is hired in at the beginning of the 2nd quarter in 2010 Part-time wages will include wages for part-time labor that will work in the spa on weekends, full-time vacation, or sick leave.

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