1. By Babu Dhandapani, Gururaja, Rajaram Vijaya, Sarvinder and Mallikarjuna
VC Investible Business Plan
Sunstone PGPM – Assignment
EVP Course

2. Problem Statement
Today, people need to wait for their turn at a hair-cutting saloon. There is no way
hair dressing can be hurried. Each customer spends their own sweet time until they
have finished their hair dressing with all the add-ons. The customer in the line needs
to wait, there is no other choice.

3. Solution
The solution to the problem is to minimize the wait time or remove the wait time by
providing access to an on-demand hair dressing experience right at the customer’s
door-step. This experience should not miss any of the elements available at a
regular saloon.

4. Business Idea – The MOBLOON
The business idea is to achieve the solution through a mobile booking app which
allows customer to book for a door-step hair dressing experience.
MOBLOON = Mobile Saloon

5. Market Size – Top Down & Public Reports
Assume that the business is being piloted in Bangalore.
http://worldpopulationreview.com/world-cities/bangalore-population/
http://www.indiaonlinepages.com/population/bangalore-population.html
http://www.census2011.co.in/census/district/242-bangalore.html
Number of individuals who would like to avail an on-demand haircut = All people in Bangalore who have hair and who trust a hair
dresser (ALL of THEM!!). And, this is true for every region in India.
Assume we concentrate on individuals who are between 3 yr – 50yr of age – only males (for simplicity sake)
Population of Bangalore in 2015 = 1.2 crores
No: of males = 52% of population = 62 lakh
No: of males below 4 = 5% of males = 3 lakhs
No: of males above 50 = 7% of males = 4 lakhs
Males between 4 and 50 years = 62 – (3+4) = 55 lakhs
Assume 30% of these are middle class people and 25% of them use a smartphone
Target Market Size = 25% of 55 = 13 lakhs
Average price per haircut = INR 100
Potential market size (per month) = 13 * 100 = 1300 lakhs = 13 crores
*** Assumption is people need a haircut once a month.

6. Market Size – Bottoms Up
Assuming that > 95% of the hair cuts are done in hair cutting saloons across the
city.
How many hair cutting saloons are there in Bangalore?
Number of PIN codes in Bangalore = 350. Assuming 5 saloons per pin code.
Total Saloons = 1750
How many hair cuts do they do per day on the average?
Assume 20 haircuts per day, each one taking 25 mins (8.3 hours)
Total hair cuts in Bangalore per day = 1750 x 20 = 35000
What is the cost per haircut?
Cost per hair cut = INR 60
Total Cost of haircuts in Bangalore per day = 35000X 60 = INR 2100000
How many of these people are willing to pay INR 160 per hair cut at their home? Assume 20% of them or 7000 hair cuts per day
Total cost of 7000 hair cuts per day = 7000 x 160 = INR 112000
Total cost of 7000 hair cuts per month = INR 3.36 crores

7. Unit Economics
How to calculate the profit margin% per sale?
Assume the following costs per haircut.
Hair dresser pack (3 scissors and 3 combs) – INR 250 (assume lifetime is for 500 haircuts). Per hair cut – 0.50 INR
Water (200 ml) – 0.40 INR (INR 40 per 20 ltr mineral water bottle)
Oil (10 ml) - INR 26 (http://www.amazon.in/Navratna-Himami-Ayurvedic-Oil/dp/B003NQEG62 )
Hairdresser charges – 60 INR
Cost of diesel and Cost of driver per day (80 KM of travel per day in a mobile van)
8 liters of diesel – 400 INR per 20 haircuts (assume). Per haircut – INR 20
Cost of driver per day – 800 INR per 20 haircuts (assume). Per haircut – INR 40
Total costs incurred per haircut = 147 INR
Proposed Cost per haircut = 160 INR
Profit margin% per sale = 8.84%

8. Unit Economics (Contd…)
How to calculate the marketing and advertising spend?
http://timesofindia.releasemyad.com/rates/business
http://www.themediaant.com/radio
http://www.mysmsmantra.com/pricing.html
20 sq cm advertisement in TOI Bangalore every day for 30 days – INR 417000
FM Radio advertisement twice a day ( 20 sec per day) for 30 days – INR 120000
1 lakh SMS’es per day for 30 days – INR 360000
Total Marketing Cost – INR 897000

9. Unit Economics (Contd…)
Unit is 1 customer
Marketing Spend = INR 897000
CAC = Customer Acquisition Cost
Total customers = 55 lakhs
CAC = 55 lakhs / 8.97 lakhs = 6.13 INR per customer
CLTV = Customer Life Time Value
= Number of years customers can go for haircuts x No: of haircuts per year x x Cost per haircut
= 25 x 12 x 160 = 48000 INR
CLTV = Expected INR volume of transactions in a Customer’s lifetime x % Margin per sale
= 48000 x (8.84% of 147) = 623750 INR

10. Go to Market Strategy
ᵒ Does the need of having a hair-cut at home exist?
• Need to do a market survey to understand if there is a market for this need
ᵒ Is the need painful enough
• We don’t know at this time.
ᵒ Large number of people with the need
• Survey results will tell
Assuming that the need does exist, how do we convert customers – wean them
from the saloon to home?
Create targeted advertisements for the targeted market segment that showcase
the value for the price paid.
Value = zero wait time, zero travel time and on-demand experience