Your style - Business Plan -

- Business Plan -

Team:

CONTENTS

1. Executive summary …………………………………………

2. Business Concept …………………………………………..

2.1 Idea history ………………………………………

2.2 Description of service …………………………

2.3 Management team and summary of experience…………………………………………

3. Goals and objectives…………………………………………

3.1 Mission and vision……………………………………

3.2 Short-term and long-term goals…………………….

4. Organization and management……………………………..

4.1 Organization chart……………………………………

4.2 Legal structure………………………………………..

5. Marketing section…………………………………………….

5.1 Industry description………………………………….

5.2 Target market…………………………………………

5.3 Competitor analysis…………………………………

5.4 Promotion and advertising………………………….

6. Financial section………………………………………………

6.1 Capital requirements………………………………….

6.2 Estimations and forecasts ………………………….

6.3 Balance sheet………………………………………….

6.4 Income statement……………………………

6.5 Business Ratios…………………………………..

6.6 Payback and exit strategy……………………….

7. Conclusions……………………………………………………

1. Executive Summary

Your Style 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 an acceptable price/value relationship. We will also maintain a friendly, fair, and creative work environment, which respects diversity, ideas, and hard work.

Our Mission: To supply services and products that enhance our clients' physical appearance and mental relaxation.

Our Motto: "Because you are unique!"

We were associates in a cosmetics distribution firm, which offered us the necessary experience to start our own business. The demand from the our clients, as well as our ambitions to one day start our own salon, and the procurement of highly professional and qualified beauticians to support the salon, have made this business one of great potential. The timing is right for starting this new venture. After thorough research for the perfect location, one was finally found.

To achieve our objectives, Your Style is seeking €50,000 in additional loan financing. This loan will be paid from the cash flow from the business, and will be collateralized by the assets of the company, and backed by the character, experience, and personal guarantees of the owners.

Highlights for the up coming years
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.

2. Business Concept

Your Style 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 Your Style apart from the competition is our commitment to providing all of these services in one convenient location.

Start-up Summary  

Your Style is going to start by offering haircutting and styling, coloring, shampooing, and permanents, and nail care, and also selling hair care products. We plan on expanding our services to facial treatments, makeup, massage, tanning, and other types of spa treatments.

After spending several months searching for a salon to purchase, we decided to start a salon from the ground up. The start-up capital will be used for the design, leasehold improvements, and equipment of the salon.

Leasehold improvements will amount to approximately €32,500, and salon equipment will cost about €27,000.

Start-up

Idea history

We have been associates in a cosmetics distribution organization for six years (2000-2006). We have worked in separate departments and we each have a certain level of experience, and now we’ve decided to join forces to fulfill one of our dreams. One day, one of our most faithful clients has complained that she can’t find a quality, full-service beauty salon. Joking, she said that she would be our number one client if we were to open a salon where she could find our products. Moreover, she is convinced that we would maintain the same high quality service, all these combined in a relaxing, intimate atmosphere.

Your Style, as the name suggests, is not your ordinary salon which offers to all clients the same, “standardized” look. We believe that our customers are unique and we try to help them develop their own style, advised by our trained professionals.

Description of service

Your Style is considered an upscale full-service beauty salon. In time, we will offer a wide range of services that include:

• Hair: cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing, weaving, waving.
• Nails: manicures, pedicures, polish, sculptured nails.
• Skin Care: European facials, body waxing, massage.

Company Location

The salon will be located in a retail strip mall Piata Romana, Bucharest. The salon will utilize 200 square meters. The location is strategically situated on one of the busiest streets in Bucharest. It is a high profile area, with easy access from all parts of town.

2.4 Management team and summary of experience

Andra Maria Puscas: Owner. Andra has managed the financial department for six years. A graduate of Finance and Banking in 1997, she has quickly developed the financial skills that have led to her success. She is an organized person and she is ready to take great responsibility in dealing with large sums of money. She is a very reliable and honest member of our team.

Ana Maria Popescu: Owner. Ana Maria has managed the human resource department for six years. Having graduated from Management in 1996, she changed her jobs frequently, until she became a partner in the cosmetics distribution firm. She loves dealing with people, and has the drive, ambition, and discipline to manage the business and its employees.

Ana Puscaragiu: Owner. Ana has been chief marketing officer (CMO) also for six years, after acquiring her MBA in marketing and advertising in 1998. Her previous experience in an Italian firm gave her the idea for a business in the Romanian environment. She is very creative, she brings an inspiring and new vision to the company.

Margareta Rusu: Owner. First a consultant, Margareta then became partner at the cosmetics distribution firm. Graduating from Law, she is specialized in Business Law. She is very correct and open-minded person; she knows every aspect of the Romanian legislation. “No law could keep a good business down”, as she said, is one of the company’s beliefs.

3. Goals and objectives

3.1 Mission and vision

Our Mission: To supply services and products that enhance our clients' physical appearance and mental relaxation.

Your Style will be organized and managed in a creative and innovative fashion to generate very high levels of customer satisfaction, and to create a working climate conducive to a high degree of personal development and economic satisfaction for employees.

3.2 Short-term and long-term goals

One of our goals is to create brand awareness and to establish a number of loyal customers. We will try to cover at least half of our liabilities in our first year by speeding up the profit rate.

Training classes to help improve employee product knowledge and skills will be conducted on a regular basis, to ensure long-run efficiency. As the business grows, the company will consider offering an employee benefit package to include health and vacation benefits for everyone.

4. Organization chart

4.1 Organization chart

The personnel plan calls for a receptionist who will greet customers and receive payments for services and products. There will be five hair stylists, one barber, one nail technician, one facialist, and a massage therapist. Everyone but the receptionist will be contract workers, and will be paid a sliding commission scale based on the amount of revenue created. Future plans include the hiring of a shampoo technician as the business expands.

In the first year, assumptions are that there will only be three hair stylists, a barber, and part time nail, facial, and massage technician until the business can build a reputation that will attract others to work there.

4.2 Legal structure

Our firm’s legal structure is: limited liability partnership. We chose this kind of legal structure because in our business all of us wish to take an active role in management. In this partnership, we all share in a equal way the costs, risks and responsibilities for being in business. Each of us are self-employed and we take a part of the profits . Usually each partner participates in the decision making and personally responsible for any debts that the firm runs up.

5. Marketing section

5.1 Industry description

According to recent studies the Worldwide Salon Industry is now worth €150 Billion dollars annually and since 2003 it has been growing at a 5.5% average annual growth rate. The salon industry has skyrocketed forward.  We are now in a high-tech, high-touch world. Consumers are demanding knowledgeable, highly skilled professionals to perform their hair care, skin and body care services. Consumers’ main needs are to look professional, well-groomed and more youthful. Hair salons that diversify to offer personalized packages and spa services outperform others. Also, salons must offer styles that are easy to maintain and services at more convenient times. Between stress, aging and time constraints women are demanding more and more services and with higher disposable income, facilities to answer to these needs.

Demand is partly driven by demographics and partly by population growth. The profitability of individual companies depends on technical expertise and marketing skills. Big companies have few advantages over small ones, which is why the industry remains fragmented. Small companies can compete successfully through technical superiority or favorable location. The industry is highly labor-intensive.

Major products are hair cutting, hair coloring, nail care, skin care, and merchandise sales. A typical salon offers haircutting and styling, coloring, shampooing, and permanents. Some salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments, but the lower volume of demand for such specialty services often makes them uneconomical. Sales of hair care products are an important revenue source for many salons, providing from 5 to 40 percent of revenue.

Your Style is going to start by offering haircutting and styling, coloring, shampooing, and permanents, and nail care. By also selling hair care products, we plan to raise the necessary funds that will be reinvested in the company. We plan on expanding our services to facial treatments, makeup, massage, tanning, and other types of spa treatments.

5.2 Target market

Your Style addresses anyone who wants to express their personalities, by creating their own, unique look. Our future clients are expected to be very active, self-confident, original, that love change and are not afraid of always reinventing themselves. This is why our target market is mainly formed by teenagers and women aged 25-40.

Competitive analysis

Your Style 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, Ana 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 Your Style 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 Bucharest 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.

5.4 Promotion and advertising

Our marketing strategy is a simple one: satisfied clients are our best marketing tool. When a client leaves our business with a new look, he or she is broadcasting our name and quality to the public. Most of our clients will be referrals from existing clients.

No major advertising campaigns are anticipated. Our research has shown that word of mouth is the best advertising for this type of business. We will, however, run specials throughout the week. We will also ask clients for 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. There are plans for a lottery that will offer a free trip to, say, Poaina Brasov. A client would simply refer new clients to us, and we will place a card in a box for each client he or she brings. The more they bring, the more chances they have of winning the trip.

6. Financial Plan

Our goal is to be a profitable business beginning in the first month. The business will not have to wait long for clients to learn about it since the stylists will already have an existing client base.

6.1 Capital Requirements

6.2 Estimates and Forecasts

The assumptions we have made are the following: revenues will grow at an annual rate of 15%, increasing 20% in November and December due to a historical jump in revenues at this time of year. We anticipate this 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.

We did not use cost of goods sold in our calculations of net sales because most sales are coming from services. We included all costs, however, in the operating expenses area of the profit and loss table. Product sales are a minimal part of our market. We are not quite sure how much revenue will be derived from products so we have estimated sales of €800 a month. This figure is included under the title "Other" on the profit and loss table. Also under "Other" 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 be more cautious, we estimate revenues from these services to be only €1,500 a month for the first year.

To assure the start-up funds lender that the owners are financially stable, a personal financial statement is enclosed illustrating other sources of income that include interest and dividend income from investments (€2,840), salary income (€29,658), and commission income (€15,000).

Projected Balance Sheet

As shown in the balance sheet, we expect a healthy growth in net worth, from approximately €1,491 in year one to €43,448 by the end of year three.

6.4 Projected Profit and Loss

We expect income to hit €172,800 at the end of the first year of business. It should increase to more than €262,340 by the third year, 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.

Business Ratios  

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) Index code 7231, Beauty Shops, are shown for comparison.

Break-even Analysis

The break-even analysis shows that Your Style has a good balance of fixed costs and sufficient sales strength to remain healthy. Our break-even point is only 126 clients a month. This was derived by using an average revenue of €45 per client, and fixed costs of €5,691. Products sales were not included in this figure, but it does include an owner withdrawal of €2,000 a month.

Break-even Analysis

Exit strategy

Acquisition. Acquisition is one of the most common exit strategies: If serious problems occur, and there is no other possibility to save the company we can find another firm that wants to buy our business and sell it.

Before the acquisition, we will negotiate the price. Public markets value us relative to our industry. In an acquisition, the sky's the limit on one’s perceived value. The person making the acquisition decision is rarely the owner of the acquiring company, so they don't feel the pain of acquisition cost. We will have to convince them we're worth a lot of money, and they'll gladly break out their employer's checkbook. If we choose the right acquirer, our value can far exceed what would be reasonable based on our income. How will we select the right company? We will look for strategic fit: Which acquirer can buy us to expand into a new market, or offer a new product to their existing customers?

But acquisition has its dark side. If there will be a bad fit between the acquirer and us, our combined companies can self-destruct. We could end up locked into working for the combined company, and if things don’t go according to plan then there is the possibility for the company to self-destruct.

Because we’ve chosen acquisition as an exit strategy, we will have to make ourselves attractive to acquisition candidates, but without going as far as to cut off our other options.

Pros

 If you have strategic value to an acquirer, they may pay far more than you're worth to anyone else.

 If you get multiple acquirers involved in a bidding war, you can ratchet your price to the stratosphere.

Cons

 If you organize your company around a specific be-acquired target, that may prevent you from becoming attractive to other acquirers.

 Acquisitions are messy and often difficult when cultures and systems clash in the merged company.

 Acquisitions can come with noncompete agreements and other strings that can make you rich, but make your life unpleasant for a time.

Conclusions

We are very confident in the potential of this type of business. The market is not yet saturated with excellent quality beauty salons. This is what we believe will bring us success. The key factors we rely on are professionalism and originality. We consider every customer unique and special and want to treat him as such. This is the attitude that will set us apart. Our previous experience is another great advantage as our strong and wide network of people.

Moreover, we believe that once we become excepted members of the European Union we will be strong enough to face competition. What we are planning in fact is to turn a simple salon into a profitable chain of Your Style.