Free Dance Studio Business Plan
Obtaining Business Financing
When obtaining a business loan
for a dance studio business, it is imperative that you have a properly
structured business plan that will assist you in showcasing how you intend to
operate your Dance Studio, how the business will operate, how you intend to
market the business, the anticipated financial results of your company, and how
you intend to repay your debt obligations. This sample loan business plan will
provide you with the framework that you need in order to acquire a business loan
for starting or expanding this type of business.
Executive Summary
Introduction
When obtaining a business loan
for a Dance Studio, it is imperative that your business plan has a clear and
concise executive summary that provides an outline of what are seeking to
accomplish, how much capital you are seeking to raise, the management biography
of the business owner, and an overview of the anticipated profit and loss
statements of the business. Here is an example of how the title paragraph should
be written:
Dance Studio, Inc. (“the
Company”) is seeking a business loan of $100,000 in order to launch the
operations of a dance studio and dance instruction business that will be based
in
San Francisco,
California. The Company was founded in (Insert Year).
The business was founded by Mr. John Doe.
Products and Services
In the next segment of the
business loan and business planning document, you should showcase the products
and services that you will be providing to the general public. For instance:
The Dance Studio will provide
customers with a broad range of classes that teach traditional dance,
experimental dance, tap, jazz dancing, ballet, and ball room dancing to its
students. The business will earn very high margin revenues from the classes
provided by the business. The Company will also earn ancillary income through
the sale of dance merchandise such as apparel and water.
The third section of the
business plan will further discuss the services and products of the business.
Business Loan Terms
Now it is time to discuss the
anticipated terms of the business plan that you are seeking. An example
paragraph of how this is stated:
At this time, Mr. Doe is
seeking a conventional business loan in the amount of $100,000. The interest
rate, loan terms, and loan covenants are to be determined during negotiation.
However, this business plan assumes that the business will receive a seven year
business loan with a seven percent interest rate due on the outstanding
principal balance.
Management Biography
Now that the summary of the
business has been provided, it is time to provide a brief overview of the owner
of the business. An example paragraph summing up the owner is as follows:
Mr. Doe is a highly experienced
business person that has years of experience regarding the direct ownership and
management of businesses. He will be able to effectively bring the operations of
the Dance Studio to profitability while ensuring that the business loan’s
payments and its covenants are met at all times.
Financial Statements
The most important thing to
your lender when applying for a business loan is how you intend to repay the
bank. In this section of the business plan, you should provide an overview of
the finance’s of the business discussing the anticipated revenues, expenses, and
profits/losses. You can also discuss the applicable collateral within the
business plan that will be used to secure your business financing.
Expansion Plans
One of the most important
aspects of your business plan is how you intend to expand the business over a
three to five year period. Banks and finance companies always want to see that
the business will experience a moderate to strong level of growth. This is
especially true in business lending because as your business grows the cash flow
that secures your business loan will decrease proportionality against your
monthly credit obligations. An example of how this is stated is as follows:
The Dance Studio will continue
to expand through organic means including increasing the Company’s advertising
budget via the reinvestment into the after tax cash flows of the business.
Additionally, if the business is highly successful then the Company may seek to
establish additional Dance Studio locations after the third year of operations.
The Financing
Use of Business Loan Proceeds
In this section of the business
plan you should focus on how the proceeds of the business loan will be used. An
example of this would be as follows:
- Dance Studio
Establishment - $50,000
- FF&E -
$10,000
- Working
capital - $40,000
Management Equity
In this section of the business
plan you should discuss the percentage ownership of the business among the
owners of the business. For example:
Mr. Doe will own 100% of the
Dance Studio.
Board of Directors
When applying for business
financing, the bank will also want to know who serves as the board of directors.
For small businesses, usually the owner serves as the director of the business.
An example of how this is worded:
Mr. Doe will be the sole
director of Dance Studio, Inc.
Exit Strategy
Any bank or financing company
is also going to want to know what you intend to do with the business over a set
period of time. Many business owners will develop and expand a business with the
intent to sell the company to a third party at a later time. When drafting this
part of the business plan you should focus on what you intentions are in regards
to potentially selling the business. This is often worded as:
Mr. Doe would most likely sell
the Dance Studio to a third party for a significant earnings multiple. Dance
Studio usually sell for approximately one to three times earnings given the
financial strength of the business. In this event, the business would be sold by
a business broker and the business loan sought in this plan would be repaid
according to the covenants of the business loan agreement.
Products and Services
When developing a business plan
that is appropriate for obtaining a business loan or other business credit
facility you need to clearly showcase the services or products that you will be
offering to the general public. An example of how this section is worded goes as
follows:
As discussed in the first
section of the business plan, the Dance Studio intends to generate revenues by
providing classes (on a daily) basis that teaches a number of different forms of
dance including:
- Tap
- Ballroom
Dancing
- Jazz
- Ballet
- Youth Classes
The business will earn modest
revenues from the sale of apparel, dance merchandise, and bottled beverage
products.
Industry and Market Analysis
The
Current
State of the Economy
It is important to let your
financial institution know that you are well apprised of the financial situation
of the general economy when you are applying for a business loan. This is
especially true in today’s environment where lending has become more difficult
and will remain more difficult in the foreseeable future. Specifically, you
should gear this section of the business plan analysis towards the industry that
you are operating within. For example:
The current economy has
remained difficult over the past few years. However, Dance Studios, with their
very high margin revenues, typically are able to remain afloat during difficult
economic climates. As such, Dance Studio, Inc. should be able to remain
profitable and cash flow positive despite the current difficulty in the current
economy.
The Dance Studio Industry
In addition to providing your
business loan officer with an understanding of the general economy, it is
important that you showcase that you have an equal understanding of the industry
in which you are operating within. As such, you will need to provide you
business loan institution of a brief overview of your industry and any potential
changes that may affect the way that your company does business. An example of
how an industry overview is as follows:
In the
US, there are 5,000 businesses that provide
dance studio services to the general public. Each year, these businesses (which
operate one or more locations) produce approximately $1.5 billion of revenues
while providing jobs for 45,000 people. Annual payments to employees over the
past five years have averaged $200 million on an annualized basis. The future
expected to remain growth rate is expected to remain strong despite the current
economic climate.
Target Market
In this section of the business
loan application and business plan analysis, you should focus on the
demographics of your localized market (or national market if applicable). This
section should discuss how many people live in your area, the anticipated number
of people that would require the use of Dance Studios, the median household
income of people living in the area, poverty line statistics, and any applicable
laws that would apply to your operation of Dance Studios.
Competition
Many people that are developing
new businesses or expanding existing businesses often feel that their business
does not have any competition or limited competition at best. However, this is
almost never the case. Unless you have re-invented the wheel – you will have
competition. When applying for a business loan, you should clearly showcase your
competition in your business plan. This is especially important to your banker
as they will be able to gauge your ability to be successful in your targeted
market. Many business loan underwriters will aggressively confirm that
competitive nature of your local market and your local industry.
When drafting this section of
the plan you should heavily discuss the competitive advantages that you intend
to have over your competition.
Marketing Plan
In addition to all of the above
information that we have covered, your business loan officer is also going to
want to know how you intend to market your business to the general public. Most
people do not quite understand how to effectively market their business outside
of prominent signage or flyer distribution. When applying for a business loan
(again in this difficult lending climate), your banker is going to want to see
that you have a clear methodology of how you intend to market your services or
products to the general public. In this section of the business plan – we will
overview how to showcase your services/products to the general public.
Marketing Overview Example
- The Dance
Studio will place prominent signage on the facility to draw a significant amount
of foot traffic.
- The business
will maintain listings in the Yellow Books.
- The Dance
Studio will also maintain an internet website that showcases the Company’s
operations, hours of operation, and relevant contact information.
Marketing Strategies Overview
Additionally, you will be
required to further drill down (in your business plan) how you intend to
implement your strategies when you launch or expand your business’s operations.
In this section of the business loan and business plan documents, you should
amplify the bullet points from the section above. For instance:
The Dance Studio intends to use a number of strategies that will
create instant traffic and customer flow to the Company’s location. These
strategies include not only using prominent facility and road signage, but also
distributing flyers to people that fall into he Company’s targeted demographics.
The business will also regularly take out advertisements in localized newspapers
that showcase the Company’s hours of operations, dance studio services, and
specials that are occurring within the store on a regular basis.
The business will also maintain
a highly informative website that showcases the Dance Studio’s services, its
hours of operation, and other relevant information in regards to the Company’s
Dance Studio services. This website will be listed on major search engines such
as Google as many people now use the internet to locate local businesses.
The Financial Plan
Beyond any other part of your
business loan application or business plan, the financials section of these
documents are what matters most when applying for a business loan or any other
type of credit facility. Ultimately, this section of the business plan showcases
not only what your anticipated profitability will be, but also how you intend to
repay the funds that you have borrowed through your business financing facility.
An example of how this section is structure is as follows:
Assumptions
- Dance Studio,
Inc. will have an average annual growth rate of 10% per year.
- Mr. Doe will
acquire $100,000 through a business loan in order to launch the operations of
the business.
Proforma Financials for a
Business Loan
Now it is time to showcase how
you intend to repay your loan, generate a profit, and increase the book value of
your business over a three to five year period. BusinessPlansForLoan.com has
developed an easy to use financial model that you can use when drafting out the
financial model for your business plan and business loan application. Through
your business loan application, you will be required to have the following:
- Profit and
Loss Statement for your Dance Studio
- Cash Flow
Analysis for the Dance Studio
- Balance Sheet
for the Dance Studio
- Business Loan
Amortization Tables
Please see images below