A business plan is your key to securing financing for your beauty salon. Both lenders and investors use the business plan to decide whether your salon is an acceptable financial risk. Even if you are not seeking funding, however, a business plan is a guide map for future growth, helping you develop your salon in an organized way.
What to Include in Your Business Plan
A business plan provides a snapshot of your beauty salon at this moment in time. It also defines your salon’s future for the next three to five years. Clearly stated goals, expected challenges, and the ways you will overcome those challenges to reach your goals form the backbone of your business plan. As a living document, your business plan will grow and change as your beauty salon develops over time.
The introductory section to your business plan, the executive summary is usually the last element to be written. Investors and lenders focus on the first page of the executive summary before deciding whether to read on, so lay out the most critical elements right off the bat. Describe your beauty salon in simple, concise terms. Provide a summary of your market analysis and proof that the market can support another salon. Also describe what makes your salon uniquely qualified to fulfill an identified need.
This section focuses on your beauty salon as it exists today. Describe the salon’s founding, legal status, and current business stage, as well as any accomplishments your salon has made. Expound upon the unique qualifications you mentioned in the executive summary. If you have a celebrity stylist, an existing customer base, or proprietary technology, explain those elements here.
The industry analysis looks at your relative market as a whole and how your salon can compete in the current marketplace. The relative market is the particular niche into which your salon fits, rather than the beauty industry overall. For example, a budget salon has a very different relative market than an upscale lifestyle salon. Search trade websites and industry associations to learn current trends and upcoming predictions, and address any potential obstacles with strategies to overcome them.
The customer analysis breaks down your specific targeted market into demographics and clearly explains how you will fulfill a need. Remember, your market is not “everyone who needs a haircut.” Rather, it might be upper income women between the ages of 30 and 50 in a specific part of town, or families looking for a deal in a different neighborhood. How do your target customers make their purchasing decisions? Do they shop on price, quality, premium service, or something else? How will your salon meet those specific customers’ unique needs?
Your competitors are divided into two categories. Direct competitors serve the same target market for the same need. Indirect competitors differ from you in either target market or specific need. Talk about your direct competitors individually, focusing on what makes your salon different. Group your indirect competitors together and mention them as a whole.
The marketing plan is based on the four P’s: Product, Place, Price, and Promotion. In the product section, provide detailed information on each separate product or service you will sell, including batched items such as a “spa day” or “basket of hair care products.” Price is what you will charge for each item or service, with an explanation of how you arrived at those costs. Place is your physical location as well as any online presence you have. Promotion is how you will lure customers to spend money with you. Customer retention, or how you will convince purchasers to return, is also an important part of marketing.
While the previous sections of your business plan focused on your vision, the operations plan delineates how you will reach your goals. The everyday short-term processes include every step involved in serving a customer, from scheduling appointments through washing, blow drying, cutting, and styling hair, and settling the bill at the end. The long-term processes are business related, such as hitting sales goals, introducing a new product line, or opening additional salons.
While much of your business plan talks about the specifics of running a beauty salon, the management team section highlights the skills needed to build and maintain a strong company. Provide biographies of your key management team members, focusing on the specific educational background or hands-on experiences that prove their ability to run a business. If your management team has weaknesses in these areas, a strong advisory board can help. Be sure to clearly explain what the board members will do to directly improve the company’s growth.
Potential investors and lenders spend the majority of their time analyzing the financial plan, yet many entrepreneurs have little or no idea how to write it. You must provide a breakdown of all potential revenue streams, including their relative importance and when they will be implemented, along with projections for outside funding. You must also summarize both past and projected Income Statements, Cash Flow Statements, and Balance Sheets, and the assumptions you make must be reasonable and easy to verify through a competition analysis. A solid exit strategy shows an understanding of the market and desire to capitalize on profitability.
While your financial projections are summarized in the financial plan, you must also attach them in full in the appendix. This is also the spot to describe any proprietary technology, list important existing customers, or provide any further documentation that supports your claims.
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