B U S I N ES S P L A N

AZURE
TABLE OF CONTENTS

I Executive Summary .............................................................................................................................. １

II Business Overview............................................................................................................................... ３

III Company Summary ............................................................................................................................ ４

IV Services............................................................................................................................................... ６

V Market Analysis ................................................................................................................................... ７

VI Marketing Strategy............................................................................................................................. ９

VII Management Summary................................................................................................................. １１

VIII Forecast ........................................................................................................................................ １３

IX Financial Plan.................................................................................................................................. １５
 BUSINESS PLAN: AZURE

I EXECUTIVE SUMMARY

Azure makes a relaxing and casual environment and also a professional help-provider in this
competitive society, offering most people who are under pressure a place to lessen the stress,
bringing fresh air into the lifestyle of townsmen and women.

Located on Chongqing Road, Azure opens up a fire-new ministrant platform which provides
considerate hypnotic services to the urban job holders. The aims of Azure are regulating the balance
between high-pressure lifestyle and veriest relaxation with professional guidance and high calibre
nap.

The business intends to obtain finance from external equity in the amount of￥500,000, for which the
application will be for commencing work on rent and renovation of the site, as well as operating cash
flow. Preliminary capital injection of￥300,000 has been planned to be secured via bank loans.

Azure will be incorporated as a limited liability company. One of the two hypnotists will be the owner
as well as the sole shareholder. His/her personal liabilities are subjected to the amount of the
respective investments.

With the financial needs being reached, as this business plan demonstrates, it will enable Azure to
achieve a successful process of start-up and a smooth operation. The unconventional professional
hypnotic service is going to give the customers a safe and unique relaxation ever. With the top-class
services and attractive features such as light hypnosis, nutritional naps and membership, it will
generate a regular customer base that will allow it to be self-maintained in a year.

1.1 OBJECTIVE

The initial objectives for the operation include:

 The creation of relieve, light-hearted, innovative atmosphere that will mark Azure a exclusive
lifestyle spotlight

 The creation of holistic-services that will bring people with different backgrounds to efficient
relaxation

 Professional and safe hypnotic services at a reasonable price

 Naps with slap-up volatile oil and relaxing music

1.2 MISSION

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 BUSINESS PLAN: AZURE

As high pressure has become the central theme of urban citizens of all backgrounds, a series of
efficient, safe, convenient relaxing service is avidly required. Azure provides a creative function to
supply a gap, which will allow the people of all backgrounds to enjoy the considerate, judgmatical and
innovative experience that Azure offers.

1.3 RISKS

The risks involved with Azure’s business are:

 The routine psychological counselling organisations (hospital, clubs, etc) in the same area which
offers the similar services

 Minimal hypnotic knowledge possibly divert potential customers away

 Local public do not hold a high acceptability towards such psychological services

 Competitors in near future

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 BUSINESS PLAN: AZURE

II BUSINESS OVERVIEW

As the growing tendency of industrialisation and urbanisation continues, life has been moving faster
steadily with higher competition for social resources. This has lead to serious concerns about the
psychological stress city dwellers may face. Therefore, the need for such psychological help and
related advisory services became much more crucial. Hypnotherapy emerged just in time to provide
scientifically effective assistance towards human beings, and it would come forth as a service industry
of huge importance.

China has a rapid-growing economy but lacked social support for many of its citizens, creating the
contemporary issue of ‘high salary with high pressure’. According to Maslow’s Theory of Need Levels,
the wealthier will be more open to professional psychotherapy assistance, therefore pushing
psycho-related services to the hot spot. Recently published data from the World Congress for
Psychotherapy reveals that in China there will be at least 190 million people who desired professional
psychotherapy courses.

Currently the situation of this field is divided between the followings: psychotherapy departments at
a limited number of local hospitals, specially trained tutors in some privileged schools, and licensed
psychotherapy clinics.

Azure aims mainly at the white collars, workaholics, and other job holders who face high pressure at
work or school. Currently in mainland China the coverage of such service is sporadic, while the
potential number of purchaser is vast. Consequently, it has become a ‘blank market’ and investments
in this field, though here at a middle-sized metropolis, would obviously lead to much market
performance.

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 BUSINESS PLAN: AZURE

III COMPANY SUMMARY

Azure will be a relaxing place for one to enjoy sleeping during the short break of work, providing a
reliable environment for hypnotherapy to take place, located on Chongqing Road CBD of Changchun.
It welcomes white collars, entrepreneurs, students and people from other walks of society who want
to escape the stress-filled life and enjoy an effective rest. The innovative, quiet and comfortable
environment will meet most people’s need. Every one here can take a sleep without worry or hurry.
Also, one can choose to meet our professional hypnotist to have the latent pressure and stress
released, thus the concept of “relaxation” in Azure is expanded.

3.1 COMPANY OWNERSHIP

Azure’s ownership is solely controlled under the investor (one hypnotist).

3.2 START-UP SUMMARY

Azure’s start-up expanses will cover legal costs, property lease, remodelling, logo design,
compute-related costs, stationery and other possible expenses in the second half of the ‘09 fiscal
year.

Start-up assets required include assets needed for day-to-day running (office equipments, signage,
uniforms, etc.) and initial cash flow to handle the first few months of operations. Further investments
include office computers, serving staff workstations and POS terminals. Fire alarm systems and
furniture come as part of the rent. Inventory for the first two weeks of operations will need to be
ordered and delivered in the week prior to opening.

Start-up Costs RMB

Legal costs 50,000

Rent 7,200

Renovation 150,000

Equipment 40,000

Insurance 7,000

Computer-related (Mac*3, Software, Printer, 36,000

Scanner)

Internet Lines 7,200

Total Start-up Costs 297,400

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 BUSINESS PLAN: AZURE

3.3 COMPANY LOCATION

The city of Changchun is a sub-provincial city in Northeast China, with a distinct tradition of heavy
industry, accommodates 3.58 million residents. With a GDP per capita of $3,695, the local
government has pledged to reach $7,500 in five years’ time. Hence the service industry has seen its
chance of rapid development.

Azure has chosen the top floor of a hotel building located on Chongqing Road as its site. This area has
been always the central business district of the city, with nearness to the vast majority white collars,
convenient public transport access, highly visible for the customers and the environment around this
district is Silicon Valley-like thus creating a relaxing atmosphere.

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 BUSINESS PLAN: AZURE

IV SERVICES

Azure offers a first-of-its-kind in the area, covering hypnosis and relaxation concept with attentive and
satisfactory services. The keyword of Azure’s services is OPTIMISED LIFESTYLE - one comes here to enjoy
the relaxing atmosphere, the friendliness of the staff, a short but deep sleep and also the talk with our
hypnotist to release the pressure and stress.

4.1 SERVICE DESCRIPTION

First of all, Azure functions as a quiet and comfortable place to sleep in for those who need to sleep
and rest. And our target customers can be roughly divided into two groups. The first group just wants
to find a place to sleep; they don’t have any serious problems causing trouble in falling asleep. The
second group may need special help from our hypnotist to deal with their sleeping difficulty. Here
comes the second function of Azure: hypnotherapy to deal with the root cause of inability to sleep.

4.2 ADVANTAGES OF AZURE

1. Nearness to the potential market needs

2. Exquisite and polished decorations, with different styles designed especially for different needs,
will significantly reduce the feel of tension.

3. Price of service based on time periods during the day, enabling customer-friendly arrange of
reservations, such as Saturday night for high school students.

4. Online service information provided.

5. Extensive psychological details of each customer will be documented to offer a more

personalised service with maximum privacy protection.

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 BUSINESS PLAN: AZURE

V MARKET ANALYSIS

In Changchun, the public are still outsiders of hypnotherapy; most of them, though heard a lot about
this from different news sources, never tried the service before. This is mainly because of two
problems: the insufficiency in public awareness; the shortage of such organisation which can provide
professional and secure hypnotherapy courses. From the data outcomes of many local-conducted
surveys, the targeted group of Azure do have the demand of such service, however the real obstacle
was that they are not willing to do so, which is just the result of insufficiency in public awareness
alongside sparse publicise of hypnotherapy. This could be tackled with some intensive marketing
campaigns. The survey also indicates younger generations are more ready to accept it, which meant a
potentially enormous volume of market.

5.1 MARKET SEGMENTATION

Azure’s customers can be roughly divided into two categories: those who is just in need of a nap falls
in the first, they are likely to have gone under strain for some reason and want to have a different
taste of life in the metropolis. The other group consist of customers who have knowledge over this
field with the desire of receiving professional hypnosis services. Azure will mainly target customers of
young and middle aged, especially those who may face high amount of tension at workplace or school.
More detailed segmentation of customers is shown in the chart below.

PIE CHART: MARKET SEGMENTATION

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 BUSINESS PLAN: AZURE

5.2 MARKET COMPETITION OVERVIEW

Azure will be the very first sleeping bar in Changchun. No other sleeping bars in the neighbourhood
and let alone one providing special help with mental state. And the first a few years it will occupy a
large market. Even if there will be some other similar places in some time, it will still enjoy the
advantages of being the pioneer in this area and maintain considerable market share.

5.2.1 ANALYSIS OF POTENTIAL COMPETITORS

 Psychotherapy departments at local hospitals

These are quite traditional destinations for psycho-related treatments. However, the unfriendly
environment provided by large hospitals, the long-existed conflict between patients and doctors in
China, and a sense of ‘I had some sort of illnesses’ while sitting among pure white uniforms all
indicated the hospitals are definitely not suitable for city dwellers who just faced some stress. Though
they are professionals in medical treatment, it is not Azure’s targeted field.

 Specially trained tutors in some privileged schools

These only cover a small number of the potential psychotherapy assistance receivers. Free in charge
as they are, still not many youngsters can make their appearance in those top schools, in addition to
fears about losing their privacy.

 Licensed psychotherapy clinics

While privacy problems also stand out, the cost of such service meant they cannot be accessed by
most students and workers. Furthermore, the current situation of China’s not-so-stable society makes
people concern more about the quality of service from private clinics.

5.2.2 WAYS OF INCREASING COMPETITIVENESS

 Using the website as a method of marketing, and make it the leading web-based information
providers in China, while presently there is no fierce competition.

 Establish core values of the enterprise

 Multi-dimensional marketing strategies

 Ensure the satisfactory overall impression of customers, hence having a good reputation among
the public

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 BUSINESS PLAN: AZURE

VI MARKETING STRATEGY

6.1 PRICING STRATEGY

In actual fact, it is difficult to determine the service charge for Azure, because it's the initiation of such
services in the whole province. As a result, prices have to be based on the market research results and
local standard of wages. Azure has pledged to maintain a reasonable price for its customers, though a
large proportion of Azure’s revenue is generated through sales.

6.2 PROMOTION STRATEGY

Azure will consistently carry out pull strategy plans in order to build consumer awareness and
demand. Initially, a budget of RMB￥80,000 is deployed for promotions, and in the future as
competition may enter the market, additional revenues must be allocated for promotion in order to
maintain market share.

Basically promotions include hoardings, advertisements placed on lifestyle magazines and relevant
promotional efforts in partnerships.

6.3 FIELDS OF PARTNERSHIP

 Bookstores

Changchun has a dozen universities located in the city, which obviously lead to the city fulfilled
with bookshops. A partnership with these book chain stores can help Azure reach more people,
and advertisements on bookmarks would draw a friendly image of Azure.

 Public transport

The public transport system of Changchun contains buses, light railway lines and trams, which
will reach about 60% of the city’s commuters according to figures published by the city council.

 Tertiary and secondary education

The colleges and universities in Changchun are among the top-level academic institutions in
northeast China. This year, the number of undergraduates and postgraduates is 382,800, plus
tens of thousands of under-18s, leading to a possible large market amongst them.

 Golf course and gymnasium

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 BUSINESS PLAN: AZURE

Often, the high-paid executives would like to have some kind of relax at these places, and while
they are the most likely to be under stress, advertisements placed there is optimised for direct
reach of potential customers.

 Community Activities

To further publicise Azure’s services, it is also possible to make advertisements during the
activities held by local communities or social clubs; these provided some chances for the
business to reach a deeper level of community residents, as well as better understanding to the
society for those who face serious strain.

6.4 MEMBERSHIP

Azure will provide its customers with different choices of membership plans, all of which hare
beneficial to the customers and help secure a regular flow of coming-back clients.

The starter plan covers priority over service booking, and higher levels of plan would mean a discount
off the service and other related vouchers. Members who recommend Azure to others, providing the
membership number as reference, would receive further discounts.

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 BUSINESS PLAN: AZURE

VII MANAGEMENT SUMMARY

The initial management team depends on the owner and other recruitments. By opening, Azure,
being small in nature, will have a relatively simple but flexible organizational structure. As we grow,
we may take on additional consulting help.

7.1 STAFF PLAN

Most importantly, Azure will have two professional hypnotists to implement the hypnotic services. In
addition, Azure will need employees to handle day-to-day business running affairs, including an
assistant for the hypnotist, serving staff, a cashier, a part-time accountant and cleanup staff to cover
the hours of operation.

The employment will be inadequate when we have finished the first-phase work of building our
customers’ awareness and demand. By then, we will have built our client base and surely more
workers will be needed.

7.2 WAGES

The following table summarizes our personnel expenditures for the first three years.

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 BUSINESS PLAN: AZURE

TABLE: WAGES

2009 2010 2011

Total People 9 9 9

RMB RMB RMB

Hypnotist 1 160,000 160,000 160,000

Hypnotist 2 80,000 80,000 80,000

Reception 9,600 9,600 9,600

Assistant 1 14,400 14,400 14,400

Assistant 2 14,400 14,400 14,400

Assistant 3 14,400 14,400 14,400

Cashier 12,000 12,000 12,000

Accountant (part-time) 6,000 6,000 6,000

Cleaner 8,400 8,400 8,400

Total 319,200 319,200 319,200

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 BUSINESS PLAN: AZURE

VIII FORECAST

8.1 SALES FORCAST

TABLE: SALES FORECAST

2009 2010 2011

Service Sales

Hypnosis 2,330 2,796 3,215

Nap 5,785 6,756 7,432

Other (Drinks, etc.) 5,558 5,836 5,719

Total Service Sales 13,673 15,388 16,363

Service Prices RMB RMB RMB

Hypnosis 300 300 300

Nap 40 40 40

Other (Drinks, etc.) 10 10 10

Sales Revenue RMB RMB RMB

Hypnosis 699,000 838,800 964,500

Nap 231,400 270,240 297,280

Other (Drinks, etc.) 55,580 58,360 57,190

Total Sales Revenue 985,980 1,167,400 1,318,970

Direct Cost of Sales RMB RMB RMB

Drinks, etc. 50,022 52,524 51,471

Subtotal Direct Cost of Sales 50,022 52,524 51,471

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 BUSINESS PLAN: AZURE

8.2 SERVICE DEVELOPMENT

8.2.1 1 ST YEAR

By publicising the benefits of hypnotherapy, why people should need this service and reducing the
unwillingness towards it, Azure will establish itself as the pioneer in the field. This advantage leads to
the approval of Azure’s brand name. Azure website will be set up to ensure further groups of
potential customers can be reached.

8.2.2 2 ND – 3 RD YEAR

Psychological courses will be opened to the public to clinch a higher level of approval of Azure and the
service, in addition to raise the public awareness to a new height. Azure will maintain its service
network to assure the customers of continuous top-quality assistance. Moreover, focus will also be on
the advisory services, which can enlarge the coverage of Azure.

8.2.3 3 RD – 5 TH YEAR

Service depth: set up a hypnotherapy club that will act as a platform of communication between
psychology lovers, at the same time supplying the more specific needs form Azure’s customers. It can
also help people improving their psychological health by organising related activities.

Service width: publish books and magazines focused solely on the psychological concerns of the public;
expand services to cover cafe or music bars.

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 BUSINESS PLAN: AZURE

IX FINANCIAL PLAN

The following sections illustrate the details of our financial plan for the next three years.

9.1 START-UP FUNDING

TABLE: START-UP FUNDING

RMB

Start-up Expenses to Fund 297,400

Start-up Assets to Fund 502,600

Total Funding Required 800,000

Assets RMB

Cash Balance 502,600

Total Assets 502,600

Liabilities RMB

Short Term Bank Loans 300,000

Funds Needed to Raise 300,000

Total Liabilities 600,000

Capital

Hypnotist 1 200,000

Total Investment 200,000

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 BUSINESS PLAN: AZURE

9.2 PROJECTED PROFIT AND LOSS

 Wages Expense

The two hypnotists, one being the shareholder of Azure and the other also plays an important
role in operations, will receive annually￥160,000 and￥80,000 respectively. According to the
staff plan, Azure intends to hire three full-time and three part-time employees in year one,
rounding the total wages up to￥319,200. Wages rises is planned to be in place after the fourth
year if the revenue allows Azure to do so.

 Rent Expense

Azure is leasing a 300 square metres top-floor of a hotel at￥120,000 per annual on a rolling
contract with prior notice to changes. The lessor indicates that Azure will be able to extend the
rent in at lease five years’ time.

 Utilities Expense

The lessor is responsible for the payment of utilities including gas, garbage disposal, and real
estate taxes. Utilities expenses that Azure must cover by itself are water, electricity, a phone line
®
for business purposes. Also, for all mainland China business that uses bank cards, a UnionPay
credit card service fee is included.

 Marketing Expense

As Azure is the initiation of its kind of service, a relative higher capital has to be placed for
marketing expenses.￥80,000 will be spent on promotions like hoardings and advertisements.
This figure will significantly rise in the future years, at 25% percent to 100,000 in 2010 and
another 50% to 150,000 in the third year.

 Insurance Expense

Azure has allocated￥31,920 for insurance for the first three years of operation. Due to the
current insurance market status in mainland China, there will be no use to increase the amount
of money paid for this.

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 BUSINESS PLAN: AZURE

TABLE: PROJECTED PROFIT AND LOSS

2009 2010 2011

RMB RMB RMB

Sales 985,980 1,167,400 1,318,970

Direct Cost of Sales 50,022 52,524 51,471

Gross Margin 935,958 1,114,876 1,267,499

Expenses

Payroll 319,200 319,200 319,200

Marketing/Promotion 80,000 100,000 115,000

Rent 120,000 120,000 120,000

Utilities 30,000 30,000 30,000

Depreciation 46,640 46,640 46,640

Start-up Cost 64,200 0 0

Insurance 31,920 31,920 31,920

Total Operating Expenses 691,960 647,760 697,760

Profit Before Interest and Tax 243,998 467,116 569,739

Interest Expense 21,000 14,000 7,000

Taxes Incurred 55,750 113,279 140,685

Net Profit 167,248 339,837 422,054

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 BUSINESS PLAN: AZURE

9.3 PROJECTED CASH FLOW

2009 2010 2011

RMB RMB RMB

Cash Received

Cash from Operations

Cash Sales 985,980 1,167,400 1,318,970

Subtotal Cash from Operations 985,980 1,167,400 1,318,970

Additional Cash Received

Capital Investment 200,000 0 0

Long-term Bank Loan 300,000 0 0

Long-term Funding 300,000 0 0

Subtotal Cash Received 1,785,980 1,167,400 1,318,970

Expenditures

Expenditures from Operations 1,005,292 780,923 850,276

Additional Cash Spent

Long-term liabilities received 200,000 200,000 200,000

Subtotal Cash Spent 1,205,292 980,923 1,050,276

Net Cash Flow 580,688 186,477 268,694

Cash Balance 580,688 767,165 1,035,859

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 BUSINESS PLAN: AZURE

9.4 PROJECTED BALANCE SHEET

2009 2010 2011

RMB RMB RMB

Assets

Fixed Assets 186,560 139,920 93,280

Current Assets

Cash 580,688 767,165 1,035,859

Total Assets 767,248 907,085 1,129,139

Liabilities

Long-term Liabilities 400,000 200,000 0

Total Liabilities 400,000 200,000 0

Net Assets 367,248 707,085 1,129,139

Shareholders’ Equity

Paid-in Capital 200,000 200,000 200,000

Retained Earnings 167,248 507,085 929,139

Net Worth 367,248 707,085 1,129,139

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