Luxe Legion: Small Business Case Study

Their Story…

Every entrepreneur understands the frustration of hitting a roadblock and needing urgent professional assistance. Rita, a devoted nail salon owner, faced the challenge of securing funding to fulfill her lifelong dream of expanding her business. Referred to AEMC by a friend, she took proactive steps to obtain CPA support for the bank’s request of a Pro Forma Financial Report. This detailed report forecasts profitability and cash flow analysis for the upcoming years, a critical requirement often demanded by banks for business loan applications. For Rita, this report was make or break, and with the deadline already passed, she was in a race against time to propel her business towards growth and success.

Their Challenge…

Rita was determined to take her nail salon to new heights and was on the verge of securing a business loan when she realized the importance of providing a detailed pro forma report covering the next three years.

Expansion was not just a desire but a necessity for Rita – “I understood that without growth, I would be leaving a significant amount of potential revenue on the table”. Despite her skills and passion for success, Rita needed guidance on how to kickstart her expansion plans.

Her main obstacle was the urgent timeline to secure the loan for her business’s growth. To meet this deadline, Rita knew she needed a clear and precise plan outlining how she would utilize the loan funds effectively.

Why Choose AEMC

Rita came to the realization that her business needed expertise beyond her own capabilities. Having entrusted AEMC with her taxes for years and seeing the positive feedback from satisfied customers on Google, she knew she could rely on them to provide exceptional service. AEMC’s website offers a range of consulting services tailored for small businesses, and when asked about her needs, Rita expressed, “I require a detailed plan outlining how I will utilize the loan proceeds to alleviate any concerns.” Her primary goal was to obtain a comprehensive financial report that would bolster her business plan and increase its chances of securing a loan. To achieve this objective, she decided to request a complete pro forma report of her company from AEMC.

AEMC’s Response

The team at AEMC conducted a detailed analysis of Luxe Legion and the overall nail salon industry. Research was also performed on the local area the salon was seeking to lay down roots in to determine if the area would financially support her business.

This pro forma report included an in-depth study on the hair and nail industry, an analysis of her specific business’ projected financials, and tangible steps she would need to take to expand. Generally, pro forma reports would not include industry analysis, but AEMC wanted to make sure the loan officer and underwriters would have background information on the nail salon industry to properly assess the reasonableness of the financial reports.

The industry study gave Rita insight into different industry averages and entry barriers to be wary of. It also listed out the demographics that are usually targeted for each service and how to maximize revenue based off of key components that have been found to drive sales. We listed out cost structures of different operators in the industry and compared these benchmarks to Rita’s business, providing her with an overview of her strong and weak points. Included in the Proforma report was also an analysis of the location of Rita’s business, including the demographics of the population, and the market prices of available rental units in her area.

Pooling all our knowledge from our industry analysis, as well as the information provided by Rita, we then constructed Pro Forma Financial Statements for Rita. We developed a list of tangible steps she could take in her business, and then constructed financial reports to show the result of taking these steps. We provided her with an analysis of her business needs, steps she would need to take to reach her goals, and how these steps would directly affect her business finances in the future.

Rita could not believe all of the information provided in these reports, exclaiming that the details provided went above and beyond her expectations. “It accounts for errors and issues, which is something that happens everyday. It gives me a solid foundation to know certain goal points throughout the year that I need to hit, because this is something that my mind is absent in”.

The Outcome…

Rita excels in her nail salon business, showcasing her expertise in nails and exceptional customer service. However, she struggled with managing the financial aspects of her business, hindering her ability to communicate effectively with her loan officer.

To address this challenge, a pro forma report was developed to outline the budget for renovating her new location, anticipated operational expenses, and the revenue needed to cover these costs along with loan repayment. This report allowed Rita to focus on her strengths while ensuring the financial details were taken care of.

“I can’t stress enough how valuable this report is. It takes the guesswork out of achieving my goals, giving me more time to focus on making money. The thorough planning and calculations provided by the pro forma report have been a game-changer for me.”

With a clear plan in hand, Rita not only presented a comprehensive strategy to lenders but also gained a newfound sense of direction for her business. It’s no surprise that she successfully secured the loan and is now expanding her nail salon suites.

If you find yourself in a similar situation as Rita, seeking guidance to achieve your business objectives, we are here to support you every step of the way.

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