Business ProposalAlpha Lambda Pledge Class

Table of Contents

Introduction…………………………………………2

Operations…………………………………………..2

Customer……………………………………………4

Financials…………………………………………...6

Partnerships…………………………………………7

Contracts……………………………………………9

Data…………………………………………………11

Goals………………………………………………..13

1

Introduction

When a business is established they usually aim to solve a problem and provide a solution.

This solution needs to simply cater to people and help them recognize such a problem exists.

Making people’s lives easier goes a long way.  Moreover, we create opportunities for others to

excel and to provide services to others.  With our business, Clean Cuts aim to do just that:

provide a solution to everyday life and to create opportunities for others.

Nowadays people have so many commitments: to jobs, to family, and to the future.  Basic

essentials like a haircut become inconvenient.  Yet image is important because people dress for

success, but many people disregard that aspect because it remains an inconvenience.  With our

app Clean Cuts, though, we create an app that brings convenience and accessibility to customers

who are looking for barbers nearby, be it amateurs or professionals.  We create a network

between barbers and the consumers they are attempting to reach, turning a haircut into a priority

again.

Operations

Initially, we plan on having testing sessions and asking people questions related to Clean

Cuts.  We will create surveys so we have numbers to work and emails to update participants of

our progress. To prevent bias from those who favor the app, we plan on offering credit from our

app for random people to take our survey. Likewise, we have online surveys to counter any

possible bias from family members. Our demographic would be 18-30 years old and sample size

would be 100 people for our surveys. When we run our first operations, we will reach out to our

established base and do test runs in order to frame operations and see what works or what needs

improvement.

2

The barber will charge the consumer a their own rates, and to prevent large price fluctuation

it will be difficult to change rates right away. Also, people with certain ratings will have their

prices averaged out and suggested to them. Because ratings are not always an accurate

description of the quality of a barber, the barber has the choice to take up the suggested rate. If

they are confident that they can produce business through a higher price, they are free to do so,

or otherwise they can take the suggested option. The law of demand will determine the eventual

equilibrium price, although we will place a price floor of $5.

After the haircut the consumer will pay the barber through the app.  The transaction goes

through us first, where we take a 10% cut before sending the rest of the transaction to the barber.

Additionally, we will use QR codes between both the consumer and the barber to verify the cut

was made.  This ensures the service actually occurred and also can be used as a digital punch

card for rewards.  Moreover, we will incorporate a tipping system, giving consumers the option

to tip their barbers. Our management team will consist of programmers who take care of the

software and updates, customer support that will be on hand to ask questions or deal with

complaints, as well as a financial department to take care of the accounting, controls, and

customer payments.

Key resources for our business are mainly coders, both for the framework and software of the

app.  Additionally, artistic designers would help make the app appealing and help with our

marketing.  Data analysts would take surveys around the community to help us determine which

methods work and which services consumers like more.  We would need marketers and people

do background checks on prospective barbers.  We would ask for social security numbers and

ensure the contracts between the barber and are company are agreed to.

3

Customer

Customers are key.  In any business, the customer determines the success of a company.  For

our business, we plan on starting out in Santa Barbara County, but in the future will reach out to

every college campus in the US and from there go international.  Because a majority of our

efforts will be limited in Santa Barbara, if members from different states attempt to use our app,

we will send them a notice saying our app is currently unavailable in the area. However, they do

have the option of registering as a user and we will send them a notice when we expand our

business. Consequently, if we notice a large influx of sign ups in lets say the UCLA campus, we

will move operations to cater to the growing market demand.

Our target customer will be men with ages ranging from 18-30 years old living in college

communities.  Surveys and research online indicate the average male gets a haircut once per

month. Other customers will include woman of the same age as well as older men and women.

However, because woman only get a haircut on average every six months, although we will keep

the service available to them, the majority of our efforts will be aimed at capturing the market

demand of men.

No matter the gender though, we provide these customers with fast and convenient ways by

accessing a network of barbers no matter where they are.  We solve the problems of customers

who look for haircuts but have no idea where to go, people who want haircuts at irregular times,

looking for cheaper or new barbers, or want specific hairstyles from a different barber.  Our

product gives customers options, and makes it simple, eliminating all the phone calling,

researching, or waiting that comes with traditional salons.  Consumers are the most important

part of our business as not only are they our source of revenue but also incentivize the barbers to

provide their services. Ideally, we would reach out to these potential customers mainly with an

4

app, but we would have a website up for those who do not have smartphones.  The app would be

our primary source of network as it is the most accessible and convenient.  Anyone can use the

app as long as they have a phone.

We give value to barbers by allowing them to market themselves, placing them in an

ecosystem with many potential customers and making it easier for them to schedule meetings.

Barbers also get to showcase their work through their pictures and really market their abilities.

On the other side, consumers often are uncomfortable meeting new barbers due to the

uncertainty.  To counter it, we provide review systems for existing barbers, as well as rewards

for repeat customers, such as discounts and products from our partnerships.  An example

includes a major discount of 25% for every 10 haircuts scheduled through our app.  We will

reimburse the barbers for this discount.  At the same time, barbers can add their own discounts of

their choice.  For example, if one uses the app and goes to the same barber 5 consecutive times,

the barber can make the next one free or discounted.  Furthermore, we would give promotions

for specific events, such as weddings, proms, anniversaries, special occasions, Valentines, and

Christmas. If users can reference their friends and have them sign up, they also get promotions

and rewards.

We really want to make the experience so great for the consumer/barber that they want to use

the app.  Thus, our relationship with both sides of our customers is important.  For barbers, they

should be able to contact a customer service representative if they are unhappy with the growth

of the company, the ratings they receive, or any other issues.  They will be able to submit a

question through the help section of the app, and we would get back at most within 2 days.

Professional barbers would get priority from customer support as they form the larger part of the

business and the issues they would face would be more critical to our business.  On the other

5

hand, we ensure good consumer relationship by ensuring they not only get the haircut they are

satisfied with, but make it extremely convenient and painless for them.  If our service satisfies

the customer, they will associate the great service to us, and not to the individual barber, because

we were the ones who set the person up. This helps prevent consumers from forming private

partnerships and not using the app. In addition, with our scheduling system and rating system,

we ensure accessibility and allow consumers to know the quality of the barber.  The consumers

themselves would rate the barber on satisfaction, and our software would help filter the system to

allow barbers in the area to be ranked through price or quality to create a good fit between the

barber and consumer.  The reviews would appear on the barber’s profile when potential

consumers view him.  Additionally, after the first 30 haircuts of signing up with us, if a barber

has a satisfaction rate of less than 80%, he is dropped from our system. Conversely, if the user

sees a trend goes up within the 30 cut period, they will get an extended grace period to prevent

them from being dropped from the system. Also, if a person is inactive for 6 months, their

account is shut down and disappears from the interface. If they choose to come back they need

to submit a request.

Financials

Our revenue comes almost completely from the percentage we take from connecting barber’s

with their customers.  Further down the line, we do plan on expanding our revenue through

partnerships with future companies.  Examples of additional revenue stem from advertisement on

our app, locations of companies’ outlets, or products sold by our partnerships.  By agreeing on a

percentage or a large stipend, we will allow large haircutting companies such as SuperCuts to use

our apps to increase their consumer base.  Starting small in Santa Barbara County, assuming we

penetrate around 3% of the market, and assuming we get a usage of a haircut per month, we will

6

expect revenue of $71,388. By year three, we expect to access 0.5% of the Los Angeles target

consumer by reaching through college campuses such as UCLA and USC. Also, we hope to

penetrate 5% of the Santa Barbara target population by the third year. By year five we project to

expand into San Francisco, capturing 1% of our target market focusing on colleges like UC

Berkeley. In Los Angeles we project to grow to 1%, while Santa Barbara to 8%.

While we start small, we will assume a fixed cost of $10,000 to get the app started, and an

additional $6,000 per year for updates.  The fixed cost would be our $10,000, and all our sales

would ideally be used to pay it off before we start making profit.  In our first year, we will likely

not make profit, but in five years we hope to see an expanding market and revenue.  As we

expand our revenue, or cost would increase as well. We expect to spend most of our cost in the

later years on advertisement in the LA and San Francisco area. Our management team will

simply consist of the 3 members for our startup team, while the additional 15 members would be

unpaid interns gaining experience.

Partnerships

As reiterated our goal at Clean Cuts is eventually to gain enough traction and publicity to

increase revenue through partners who would advertise on our software or provide products as

rewards for customers.  Ideally we would like to form partnerships with the corporations Regis

Corporations and Proctor Gamble. Underneath their wing they hold companies such as Head

and Shoulders Shampoo, which is the most sold shampoo brand in the world, Pantene, Suavecito

Pomade, 3rd top bestseller on Amazon, SuperCuts, Apple, Android, and other app developers.  It

is free to put our app on Apple’s app store, but we plan to form partnerships with them to help

publicize our brand on their interface.  With famous haircutting companies like SuperCuts, the

deal would help them expand their consumer base.  Individual barbers within SuperCuts could

7

schedule individually with consumers or work with the company to provide schedules to

potential customers. Although their profiles will not show up in the system, and address and

location of the store will appear on the system.

Another key partner regards payment.  Clean Cuts will allow consumers to pay via Visa,

MasterCard, American Express, Wells Fargo, JP Morgan and any other banking businesses.  The

fee for a credit card company is 2.9%, plus 30 cents per sale. Although this adds into our cost,

we feel it will be beneficial in the long run, and when we gain enough traction, we plan on

engaging in new terms with these companies in order to reduce our cost. Thus, we plan to

present this opportunity to banks, ideally creating a bank account specifically for our business,

linked to our existing bank accounts.  Doing so will limit our cost by using their services.

Forming this key partnership may initially incur more cost, but as we continue the relationship,

we hope to mediate the cost and provide additional benefits to these companies in exchange for

their services.

The key resources we plan on acquiring from partners are primarily accessibility to hair

products, so that after a person gets a haircut, they can choose to buy products from another

company.  Example of products could be shampoo, haircut materials, or non-hair related

products like t-shirts, sunglasses, or shoes.  We would be independent from these products, so if

our customer chooses to buy materials they would be under different terms independent of us.

However, in order to market their product onto our interface, they would be subject to terms of

our own, and providing assets to us in exchange for our advertising service.  Meanwhile, the

partners would deliver sponsorships and supply any additional resources that we may need.

       

8

Contracts

To ensure that we distinguish our business from other companies that also call themselves

Clean Cuts, but are not in our line of business, we will secure a trademark. In order to apply and

register for a trademark, we pay a combined fee of $4768, plus an attorney fee to file a Statement

of Use, which is roughly $250. Such costs will be included. By establishing a trademark we

ensure our brand is protected and that we establish an identity no one can steal.

Most states, especially in California require a special barbers license or cosmetology license.

However, the purpose of this license is to prevent compensation from the individual regarding

accidents or malpractice.  If someone gets injured when getting their haircut, this license can

help limit liability on the barbers themselves.  However, we intend on creating an independent

contract between the barber and the consumer we connect them too.  By doing so, we make sure

the consumer agrees to our terms, that if any accident or misfortune should occur from the

meeting, the consumer will absolve to pursue any judicial action against both the barber and the

company.  They will agree that when we provide them with a barber, and the barber conducts a

service, they agree that any problems that exist, detailed out and such are not linked to us.  Thus,

every barber we hire does not need a specific barber’s license or a degree in order to cut hair.

Moreover, when a person registers for an account they have to agree to terms and conditions, one

of which is to prevent a lawsuit between individual barbers, consumers, and the company itself

under specific circumstances. This also limits our liability and prevents us from losing money

from lawsuits. Other terms will cover agreements concerning ratings, such as when a ratings

drop below 80% a person’s account will be deactivated.

Because we collect information with customers, we recognize the need to protect such

sensitive information. In order to conduct background checks, our terms and conditions require

9

information such as legal name, email and password for the account, mobile phone number, zip

code, credit card number, and social security number. We also use this information to pay the

customer and to conduct transactions through the app. Correspondingly, we will reveal explicit

information to third parties unless for the sake of connecting the barber and the consumer, unto

which both parties agree to. Conversely, the user also agrees to allow us to share such

information and distribute it to our affiliates and partners. We will be upholding specific

contracts with our partnerships to ensure such information is not misused. Likewise, with

government agencies we uphold the laws and regulations regarding information sharing with

their affiliates and will share information in accordance. If there are any issues of security

breaches, we will have members of team on hand to help deal with them and prevent information

from being stolen and used.

Additionally, we have a formal contract that will help us ensure that our business is within

the laws and regulations of Santa Barbara County as well as California.  Like as not, the groups

who will directly oppose our idea are established salons and the county.  To ensure they do not

file lawsuits against us regarding permits and regulations, we frame our business in a way that

we are lined with all rules and that our operations and services are all legal.  We will limit

liability in any way we can to help reduce unnecessary cost and to protect or brand and

trademark.

10

Data

Clean Cut IncorporatedIncome Statement

31-Dec-16 31-Dec-18 31-Dec-20Sales

Sales Revenue 71388 223848 380589Sales Discount 2000 7984 14856Cogs 11345 37854 53214

Gross Profit 62043 178010 312519Operating Expense

Selling Expense 5000 25364 21478Adminstrative Expense 17744 45132 75486

Total Operating Expense 22744 70496 96964Income From Operations 39299 140992 193928

Other Revenues and GainsAdvertising Revenue 0 21553 39475

Other Expenses and LossesCreation Expense (includes Trademark) 56660 0 0

Income Befor Income Taxes -17363 162545 233403Income Tax (19.6%) 864 31859 45747

Net Loss -16499 130686 187656

11

Clean Cut IncorporatedBalance Sheet

31-Dec-16 31-Dec-18 31-Dec-20AssetsCurrent Liabilities

Cash 13000 17845 18498Accounts Receivable 3569 5642 7984Equipment 1654 3456 5648Research and Development 57642 45231 47534Other Current Assets 550 1564 12455

Total Current Assets 76415 73738 92119Property, Plant, and Equipment 0 18400 28620Accumulated Depreciation 0 3680 9404

Total Assets 76415 88458 111335

LiabilitiesCurrent Liabilities

Accounts Payable 7956 8974 9485Accrued Expenses 1642 3546 3465Current Maturities of Long Term Debt 17214 18142 16257

Total Current Liabilities 26812 30662 29207Long term debt

Noncurrent Debt 34428 36286 81286Stockholders Equity

Common stock 7641 8845 11133Liabilities and Stockholders Equity 68881 75793 121626

12

Goals

Our primary goal is to first start up.  We plan on focusing in the Santa Barbara County,

making sure our business is profitable and sustainable, to do trial runs and analyze what works

and what doesn’t.  From there, our next step is to expand to other college campuses in California,

then to the neighboring states, and eventually nationwide.  Once we have established a national

base, our next objective would be to expand internationally.  With our expansion we intend on

forming multiple partnerships with several corporations and key businesses, and if necessary we

will commit to an IPO to go public.  Eventually, after several key successes, we plan on selling

our business to some of the software companies like Google Play Store, Apple ITunes Store, and

Microsoft.

With these goals in mind, to start off we wish to ask for $10,000 from our investors to help

us get started.  We plan on giving 10% equity, and we value ourselves $92,138 within two years,

and such a number is negotiable depending on the results from our first five years of business.

For the $6,000 per year, we plan on raising some of the money for cost, as well as look towards

other angel investors and venture capitalists.  In five years we will be worth $120,739.

Additionally, we will borrow small amounts from families and from our own personal funds to

cover any small costs such as marketing tools such as flyers, gas, food or living space.  We plan

on using our own laptops to reduce the costs of buying company-wide computers.

13