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Salon & Spa icon Hair And Beauty Salon Business Plan

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Trend Setters Hair Studio

Executive Summary

Opportunity

Problem

There is a need for a full-service beauty salon dedicated to consistently providing high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at an acceptable price/value relationship.

Solution

We plan to supply services and products that enhance our clients’ physical appearance and mental relaxation.

Market

We will be targeting male and female clients who are fashion conscious and have disposable income.  Our clients are mostly women, but we will make sure to include men who fit the criteria as well

Competition

There are a number of salons like ours, but they are mainly in the very high income parts of MyTown and surrounding areas. We do not intend to compete with these so called “Day Spas.” We wish to offer a middle ground for those clients who can’t quite afford those high-end luxury salons.

Why Us?

Trend Setters will, upon commencement of operations, sell a wide range of beauty services and products. We will provide quality hair, nail, and skin services, along with top lines of beauty products. What will set Trend Setters apart from the competition is our commitment to providing all of these services in one convenient location.

Expectations

Forecast

The forecast shows small profits leveling out in the third year. We believe this is realistic, even conservative. Of course we will be watching actual results on a monthly basis, and revising the forecast as necessary.

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year

Financing Needed

We plan on needing $60K owner’s investment and getting a $50K vendor financing to purchase equipment.

Starting costs include $50K cash cushion, $9K starting expenses before launch, and $53K tangible assets at launch.

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Opportunity

Problem & Solution

Problem Worth Solving

There is a demand for high fashion haircuts, manicures, and pedicures at reasonable prices. Men and women should not need to sacrifice their essentials to get a treatment that makes them feel good about themselves. 

Our Solution

Trend Setters is a full-service beauty salon dedicated to consistently providing high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at a reasonable price/value relationship. We will also maintain a friendly, fair, and creative work environment, which respects diversity, ideas, and hard work.

Target Market

Market Size & Segments

The market is our town, middle class, mostly women, so largely moms, working moms, and singles. 

We’re not doing formal market research because we know this market pretty well and we’re comfortable with market prospects in our town. We’ve been in this business for decades now. If we execute right, our customers will come in as we bring in our beauticians and barbers.

 

Competition

Current Alternatives

We’re well aware of a lot of competition, existing salons, all over town. We are not going to try to compete with the expensive spa salons around, with visibly fancy locations; and we are going to look nicer and price above the less fashionable strip mall and in-home options. 

We’re not pretending to be unique. We intend to bring in loyal customers because we are good people, easy to work with, good at what we do, friendly, and helpful. 

Our Advantages

Trend Setters wants to set itself apart from other beauty salons that may offer only one or two types of services. Having come from such a salon, Curley has realized, from talking with her clients, that they desire all of the services that we are proposing, but they remain frustrated because they must get their hair done at one place, and nails done at another. Although the focus of Trend Setters is hair services, we do wish to offer our clients the convenience of these other services in one location.

There are a number of salons like ours, but they are mainly in the very high-income parts of MyTown and surrounding areas. We do not intend to compete with these so-called "Day Spas." We wish to offer a middle ground for those clients who can’t quite afford those high-end luxury salons.

Our business atmosphere will be a relaxing one where clients can kick back and be pampered. Soft drinks will be offered to clients as they enter for service. Televisions will be located in the waiting and hair-drying area.

Keys to Success

Keys to Success

The keys to success in our business are:

  • Location: providing an easily accessible location for customers.
  • Environment: providing an environment conducive to giving relaxing and professional service.
  • Convenience: offering clients a wide range of services in one setting, and extended business hours.
  • Reputation: reputation of the owner and other "beauticians" as providing superior personal service.
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Execution

Marketing & Sales

Marketing Plan

We anticipate regular steady social media presence, in Facebook and Twitter. Our experience has shown that social media is the best advertising for this type of business. We will, however, run specials occasionally. We will also ask clients for social media referrals, and reward them with discounted or free services depending on the number of clients they bring. We will also offer discounts to the new clients who have been referred. 

Sales Plan

We expect income to increase steadily over the next three years, as the reputation of the salon, its stylists and services become apparent to the general public. Second year revenues also anticipate the addition of one new stylist.

Operations

Locations & Facilities

The salon will be located in a retail strip mall at 1234 Stylish Road, MyTown. The salon will utilize 1,540 square feet. The location is strategically situated on one of the busiest streets in MyTown. It is a high profile area, with easy access from all parts of town.

Milestones & Metrics

Milestones Table

Milestone Due Date
Aquire Financing
Sept 14, 2018
Hire Employees
Sept 24, 2018
Marketing Program Starts
Oct 01, 2018
Grande Opening
Nov 12, 2018
Plan vs. Actual Review
Nov 30, 2018

Key Metrics

The key metrics that will make this business a success is: 

  • Average revenue per client per month.
  • Average breakdown revenue from previous clients vs. revenue from new clients. We’ll develop specific standards as we go, so first we track. This will show us repeat business and new leads from word of mouth. 
  • New clients from word of mouth. We’re going to have the discipline to ask new clients how they heard about us. As we develop the business we’ll track this metric and see how the different people compare. 
  • Facebook likes and Twitter follows. We’ll develop standards as we develop the business. We need experience to see how this works. 
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Company

Overview

Ownership & Structure

Curley Comb, co-owner with Roller Comb, Jr., co founded and co own this llc 

Team

Management Team

Curley Comb, co-owner with Roller Comb, Jr., her husband, has worked in a prestigious, upscale salon in MyTown, Texas for the past two years. Curley has created a large client following through hard work and dedication. Curley, and her talented team of beauticians, has what it takes to make this venture an extremely successful one. We expect our growing reputation to lead to new clients and beauticians to support our anticipated growth.

Personnel Table

FY2019 FY2020 FY2021
Stylist 1 $52,242 $54,000 $54,000
Barber $49,440 $54,000 $54,000
Stylist 2 (0.78) $19,200 $60,000 $60,000
Owner $60,000 $75,000 $93,750
Receptionist $30,000 $31,500 $33,075
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Financial Plan

Forecast

Key Assumptions

The financials that are enclosed have a number of assumptions:

  1. We’ll be using a full commission model with stylists and barber getting 60% commission on revenue. Industry average runs 45-65%. We’re on the high end because we are not offering a guaranteed base. This is what we’re used to. The owner will take a straight salary plus dividends on profits. 
  2. We’ve looked at the booth rental model but we’re used to commission and that creates a more orderly process for payments too, with all stylists able to use our credit card account.
  3. There can occasionally be issues with commission base related to reporting revenue, but we are a small salon with the owner mostly present.  
  4. We project revenues lower than average over the first few months, and then stable. We anticipate annual increase to stay steady throughout the following year to account for the normal flow of new clients coming into the salon. Estimates for sales revenue and growth are intentionally low, while anticipated expenses are exaggerated to the high side to illustrate a worst-case scenario.
  5. Our direct costs are mainly stylist and barber commissions plus direct costs of the products we intend to sell, plus an estimate for the ongoing cost of products, supplies, etc. 
  6. Product sales are a minimal part of our market. We are not quite sure how much revenue will be derived from products, so we took a low-ball approach and estimated sales of $800 a month.  Also in the sales projections table are services such as nails and massages. We are not quite sure how much revenue these two services will generate. We are certain that in time these services will be a large part of our revenue, but to err on the conservative side, we estimate revenues from these services to be only $1,500 a month for the first year.

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

We estimate initial purchase of $50,000 in equipment plus $1,000 for starting inventory and $2,000 for other current assets (supplies mostly) and $9,000 in initial loss for expenses incurred before launch. These include legal, location fix-up, early marketing expenses, branding, logo, and social media. 

We also estimate needing $50,000 cash cushion when we start. 

Total starting costs, therefore, are $9K in expenses plus $103,000 in assets including $53,000 tangible assets and $50,000 cash in the bank. 

Sources of Funds

We anticipate $60,000 in owner investment from owner savings, which shows up as paid-in capital in the initial balance; plus a 5-year $50,000 vendor/manufacturer loan to finance initial equipment. 

Statements

Projected Profit & Loss

FY2019 FY2020 FY2021
Gross Margin $190,356 $227,200 $237,200
Operating Expenses
Salaries & Wages $90,000 $106,500 $126,825
Employee Related Expenses $13,500 $15,975 $19,024
Rent $18,000 $30,000 $33,000
Marketing $6,731 $8,552 $8,752
Amortization of Other Current Assets $0 $0 $0
Interest Incurred $1,832 $1,457 $1,065
Depreciation and Amortization $10,000 $10,000 $10,000
Gain or Loss from Sale of Assets
Income Taxes $5,029 $5,472 $3,853
Total Expenses $291,307 $378,355 $402,920
Net Profit $45,263 $49,245 $34,680

Projected Balance Sheet

Starting Balances FY2019 FY2020 FY2021
Cash $50,000 $87,971 $107,163 $91,584
Accounts Receivable $0 $0 $0
Inventory $1,000 $1,000 $1,000 $1,000
Other Current Assets $2,000 $2,000 $2,000 $2,000
Total Current Assets $53,000 $90,971 $110,163 $94,584
Long-Term Assets $50,000 $50,000 $50,000 $50,000
Accumulated Depreciation ($10,000) ($20,000) ($30,000)
Total Long-Term Assets $50,000 $40,000 $30,000 $20,000
Accounts Payable $2,000 $1,395 $1,906 $2,040
Income Taxes Payable $2,341 $1,372 $966
Sales Taxes Payable $192 $192 $192
Short-Term Debt $9,220 $9,595 $9,986 $10,393
Prepaid Revenue
Total Current Liabilities $11,220 $13,523 $13,457 $13,591
Long-Term Debt $40,780 $31,185 $21,198 $10,805
Long-Term Liabilities $40,780 $31,185 $21,198 $10,805
Paid-In Capital $60,000 $60,000 $60,000 $60,000
Retained Earnings ($9,000) ($19,000) ($3,737) ($4,492)
Earnings $45,263 $49,244 $34,681

Projected Cash Flow Statement

FY2019 FY2020 FY2021
Net Cash Flow from Operations
Net Profit $45,263 $49,245 $34,680
Depreciation & Amortization $10,000 $10,000 $10,000
Change in Accounts Receivable $0 $0 $0
Change in Inventory $0 $0 $0
Change in Accounts Payable ($605) $511 $133
Change in Income Tax Payable $2,341 ($969) ($406)
Change in Sales Tax Payable $192 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions ($10,000) ($30,000) ($50,000)
Change in Short-Term Debt $376 $391 $407
Change in Long-Term Debt ($9,595) ($9,986) ($10,393)
Cash at Beginning of Period $50,000 $87,971 $107,163
Net Change in Cash $37,971 $19,191 ($15,578)
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