Design a Business Plan especially for Your Own Salon

Design a Business Plan especially for

Your Own Salon

2

Disclaimer

DISCLAIMER: SALON SOLUTIONS GROUP (“SSG”) IS NOT A LAW FIRM AND DOES NOT PROVIDE LEGAL ADVICE. THE USE OF THESE MATERIALS IS NOT A SUBSTITUTE FOR LEGAL ADVICE. ONLY AN ATTORNEY CAN PROVIDE LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED FOR ALL SERIOUS LEGAL MATTERS. NO ATTORNEY-CLIENT RELATIONSHIP IS CREATED BY USE OF THESE MATERIALS.

SSG IS NOT AN ACCOUNTING FIRM. THE USE THESE MATERIALS IS NOT A SUBSTITUTE FOR ADVICE FROM A CERTIFIED PUBLIC ACCOUNTANT. A CERTIFIED PUBLIC ACCOUNTANT SHOULD BE CONSULTED FOR ALL SERIOUS ACCOUNTING MATTERS. THESE MATERIALS ARE PROVIDED “AS-IS.” SSG DOES NOT GIVE ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, SUITABILITY OR COMPLETENESS FOR ANY OF THE MATERIALS FOR YOUR PARTICULAR NEEDS. THE MATERIALS ARE USED AT YOUR OWN RISK. IN NO EVENT WILL: I) SSG, ITS AGENTS, PARTNERS, OR AFFILIATES; OR II) THE PROVIDERS, AUTHORS OR PUBLISHERS OF ITS MATERIALS, BE RESPONSIBLE OR LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATE OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER USED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT

OF THE USE OF THESE MATERIALS.

Your Business PlanContent Design Guide

3

Contents of this Design Guide:

Instructions for CompilingYour Business Plan

Financing Plan Worksheets & Instructions

Executive Summary Worksheets& Instructions

Marketing Plan Worksheets & Instructions

Business Plan Worksheets

General Information to BeginDesigning Your Salon Business Plan

4

General Information to Begin Designing Your Salon Business Plan

This kit provides the tools and guidelines for designing your salon’s business plan. One of the most important and often overlooked aspects of starting a business is preparing a business plan. It is through the preparation of a formal Business Plan than you begin the process of refining what your business will actually be and, more importantly, how you can make it successful from the start. You should use your business plan for many purposes: for your own use to continually fine-tune your actual business start-up; for gauging progress towards your goals and desired profits; for the purpose of obtaining financing, even if financing is only from family members; and for presenting your business ideas to potential business partners, employees, investors, suppliers, and anyone else with whom your profitability may be linked. This kit includes four sets of worksheets to aid you in developing your business plan. The first set addresses the salon’s overall business concept and structure. The second set addresses your plans for marketing your salon’s services and products. The third set addresses your strategy for financing your salon. Once completed, the three sets of worksheets will be the foundation for your total business plan package. The fourth set of worksheets is for preparing your Executive Summary, a concise description of your salon’s overall business design and your vision for its future. Finally, you will compile all of these components into a total Business Plan package that can set you on your platform of profitability faster.

You could open a salon without a business plan, but doing so is likely to cost you much more money and waste way more time in the long term. If you are already operating a salon, having a business plan helps take it to a new level of profit potential!

Profit by planning

Complete our “Business Plan Worksheets”

Complete our “Marketing Plan

Worksheets”

Complete our “Financing Plan

Worksheets”

Complete our“Executive Summary

Worksheets”

Follow instructions for “Compiling Your Business Plan”

General Information to Begin Designing Your Salon Business Plan

5

Relax and enjoy the process of designing a business plan that reflects your vision. Our Salon Business Plan kit is a formula for making your special style successful and profitable.

– Carla Jones, CEO, Salon Solutions Group

Begin DesigningComplete the worksheets thoughtfully and compile your information neatly. Every set of worksheets must be addressed to achieve a business plan that can attract the interests of potential clients, creditors and investors.

Give every question serious thought before moving on, particularly before deciding that a question isn’t relevant to the important business of your salon planning. Use additional paper if necessary to explain some of your strategies.

The creativity and planning you exercise now will prepare you to yield profits.

Some questions may not be relevant to your situation.

Your Salon Business Plan Worksheet

6

Complete this section after considering how you will mix your creativity and professional skills in a fashion that attracts the number of customers you want and who will pay your prices.

Primary Business Concept AnalysisIn one sentence, describe your business concept for the salon:

How long do you estimate it will take to get at least four customers coming into your salon daily?

What are the estimated costs of creating a salon environment that attracts customers?

Define your target market by profiling the people that purchase salon services and merchandise similar to those you will sell:

To determine your profit potential, assess whether the target market is large enough, and has a pattern of purchasing frequently enough, to drive profitability at your salon. Describe the buying patterns of consumers comprising this target market:

State the primary reasons you believe your salon will succeed:

What is your expected volume of sales/revenue during the first 3 years?

Year One: $___________ Year Two: $__________ Year Three: $___________

7

What is of legal entity is your salon?

Some states require corporations to have a Board of Directors. Who will serve on your board of directors if a board is required?

Whether or not your business is legally required to have officers of a Board of Directors, it may be beneficial to have a trusted small group of experienced professionals to talk with regarding critical business functions. Who would serve as the officers of a legal corporation and who might you enlist as a sounding board for your business?

What are the long-term plans for the business? (e.g. expand locations; increase service/product offerings) :

Mission Statement-- Great mission statements focus on satisfying specific consumer needs. Write your mission statement by explaining the primary consumer need that salon can fulfil.

Vision Statement– Great vision statements are aspirational. Write your vision statement to express what your salon business will have achieved 10 years after publishing this business plan.

Your Mission:

Your Vision:

Name Your Salon’s Corporate Officers

Name Your Salon’s Advisory Group

President: Marketing Mentor/Advisor:

Vice President: General Business Mentor/Advisor:

Treasurer: Experienced Salon Owner Mentor/Advisor:

Secretary: Technology Mentor/Advisor:

Limited Liability Corp. (LLC) Corporation Other

Names of potential board members:

7

8

What are the long-term plans for the your salon? (e.g. new locations; increase service/product offerings; hire additional employees; expand platform space)

State why the selected physical location of your salon makes practical sense for accessing your target market:

Professional License Requirements Business License Requirements

Date Obtained: Date Obtained:Expiration Date: Expiration Date:Re-certification Frequency: Re-certification Frequency:

Salons performing hair, nail, barber, makeup, and day spa services are included in the industry group entitled “personal care services.” Having clarity about the nature of the industry is important to planning your strategies for profiting.

Name the trade associations and/or business chambers in which you plan to participate to stay aware of trends that may impact your salon:

Describe any trends, seasonal periods, or business cycles will you take advantage of to make your salon competitive or profitable.

Industry AnalysisIn your state or the geographic area of your salon, what was the amount of annual gross sales for the salon industry recently? $ _________________________

9

What quality controls will be implemented to ensure your customers receive the level of service promised, or the uniqueness of your salon business is maintained?

Explain your plans for ensuring salon equipment is maintained in good condition and appearance, and updated periodically to keep pace in your market.

Service Analysis:Describe unique features of services you perform or the unique qualities of your salon environment that can generate customer loyalty. (e.g. price, quality, convenience):

“Me too” salons can be short lived businesses in an industry that thrives on creativity. .

Compare Your Salon to the Competition

Your Salon Competitor A Competitor B Competitor C

Strengths:

Weaknesses:

Competitive Advantages:

10

What steps will be taken to minimize potential liabilities, dangers, or risks?

What costs are associated with purchasing insurance coverages and other business tools that reduce risks? (Example: security alarm systems & monitoring)

List merchandise that you plan to sell in addition to your salon services. (Examples: nail polish/specialty soaps/shampoos/spa robes/wigs/clippers.)

What types of litigation threats might be posed as a result of business operations?

Merchandise Your Year One Cost of Inventory

Your Year One Estimated Sales

Product Supplier Name

Product:

Product:

Product:

Product:

Product:

Product:

Product:

Product:

Product:

by employees:

by customers:

by suppliers:

11

Management Analysis What is the plan for servicing customers when you are away due to sickness, vacation, trade conferences, or other events?

Employee Positions Your Year OneEstimated Wages

Your Year Two Estimated Wages

Your Year ThreeEstimated Wages

Salon Manager

Hair stylists

Nail Techs

Message Therapists

Barbers

Receptionists

Business Manager

Calculate the estimated annual costs for wages paid by your salon by addingor deleting positions from the following table. You may also use the data in the table to create an organizational chart for insertion into your business plan.

Contract Services CostYear One

CostYear Two

CostYear Three

Bookkeeping & Accountant

Lawyer

Consultants

Social Media Designer

Barbers

Website Designer

Other:

Calculate your estimated annual costs for contracted services by adding or deleting contractors from the following table.

12

What bank will service your salon’s business account? :

What systems are in place to accept credit/debit card payments from clients?

Supporting DocumentationProfessional quality photos and clear images strengthen the messages you intent to communicate in your Business Plan. Consider inserting high quality images of your. Check any boxes that you will use an images in the Appendix of your Business Plan-- this will help you create a list of documents for inclusion in the Appendix:

Equipment Salon Facilities Retail Products Signed Contracts Articles of Incorporation Business Reports Financial Statements Sample Advertising Materials References and Resumes from each principal owner or key manager Other visual images that document your current and future business

growth activities.

Before making a loan, banks and investors want to see a business plan that proves you’ve done your home work and that you are credit worthy. Include supporting documents in you salon business plan that demonstrate you’re on the right road to success.

13

Next, create a time line for the salon’s development during the coming three years.

Your Salon’s Business Development Timeline

List critical tasks for developing the salon:



First Things FirstSet your priorities. Prioritize the activities that are most critical for your salon’s business success during the coming three months:

Year One Year Two Year Three

14

Marketing Plan Worksheet

Marketing Plan Worksheet Instructions

Surprisingly, it is also one part of a business start-up that is given less than its due in terms of time and effort spent to fully investigate the possibilities. A Business Marketing Worksheet is provided below to assist you in thinking about your business in terms of who the customers may be and how to reach them. In many ways, looking honestly at who your customers may be and how to attract them may be the most crucial part of starting your business because if you are understanding of this issue is ill-defined or unclear, your business will have a difficult time succeeding. The Marketing Plan Worksheet is divided into four sections:

An integral part of the process of starting a business is preparing a Marketing Plan. Whether the business will provide a service or sell a product, it will need customers in some form. Who those customers are, how they will be identified and located, and how they will be attracted to the business are crucial to the success of any small business.

Target Market Analysis Competitive Analysis Sales and Pricing Analysis Marketing Strategy


15

Target Market Analysis

Explain why you believe your salon’s current or planned location is right for reaching theconsumers your salon is targeting.

Target Population

In what geographic area do you expect atleast 75% of your clients are living or working?

Income:Gender:Age Group:Education Level:Professional/Job Status:

Level of Health Consciousness:

Condition of Hair; Condition of Nails:

Describe the typical profileof the customers you mostwant on your list of regular clients:


16

In three sentences or less, explain whyconsumers in your target population would beenticed to buy your salon’s services.

Profit Potential

What is important to the potential client when buying.

What is the estimated number of people that live or work in your salon’s geographic area and who also belong to your target population?

Of the competitors operating in your targeted geographic area, evaluate how successful each of them has been during the past three years, and why.Competitor’s Name Level of Success Likely Causes

S WT

Strengths

Opportunities ThreatsO

Weaknesses

Marketing Plan WorksheetThe SWOT analysis is a tool that helps businesses determine the main way they will compete in the marketplace. Identify strengths, weaknesses, opportunities, and threats of both your unique salon and competitive marketplace. Write them on the SWOT diagram below. Next, build on strengths so that you can expand your customer base over time. Consider how you’ll overcome weaknesses. Assess your salon’s growth opportunities. Think about ways to reduce threats to your success.

17


18

A “tagline” or slogan can quickly communicate your salon’s unique qualities or capabilities. Create your tagline using seven words or fewer. Tagline:

Outline your plan for using the power of social media and other communications tools to market your business. Describe any seasonal pricing promotions you are planning, as well as key messages about your salon that will be consistently used to generate interest among your target populations.

Use good tools for tracking customer feedback

Marketing Budget: $________________

19

Financial Plan Worksheet

The failure of many small businesses relates directly to underestimating the amount of money needed to start and continue the business. Most business owners can, with relative ease, estimate the amount of money needed to start a business. The problem comes with arriving at a clear estimate of how much money will be necessary to keep the business operating until it is able to realistically support itself. If you can honestly determine how much is actually necessary to allow the business time to thrive before you can take out profits or pay, the next challenge is to figure out where to get that amount of money. To help you arrive at a clear picture of your business’s finances, a Business Financial Worksheet follows. This worksheet will lead you through a number of questions to help you determine the amount of money needed and where it might be obtained. Following the Worksheet are instructions on preparing both an Estimated Profit and Loss Statement and a Current Balance Sheet. Both of these financial forms will help you actually put some real numbers into your plans. When you have completed the Business Financial Worksheet and your two financial forms, you will need to prepare a written Financial Plan from your worksheet answers and the data that you have compiled on your Profit and Loss Statement and Balance Sheet.

Financial Plan Worksheet Instructions

The third crucial part of your initial Business Plan entails how your business will obtain enough money to actually survive until it is successful.


Salon Income

Estimate the cost of the inventory that your salon will consume for the purpose of performing client services during one full year. Add or delete products to the inventory list as you deem appropriate.

Inventory List

Products Your Salon Must Consume to Perform Client Services

Inventory Quantity Needed for One Year

Estimated Total One Year Cost

Chemical Relaxers

Shampoos & Conditioners

Styling Tools

Sanitizers

Barber Tools

Gloves

Calculate the cost of the merchandise that you will stock for retail to salon customers during the next 12 months.$_______________

20

Estimate your salon’s total income from the following sources for one full year. Write the total on the line “Estimated Total Annual Income.”

Estimated Total Annual Income $________________

Professional Barber Services $______________

Professional Hair Care Service $----------------------

Nail Services $--------------------- Spa Services $----------------------

Special Occasion Services $---------------------- Merchandise Sales $---------------------


21

It is impossible to maximize profits without knowing the total cost of performing your services or selling retail products. Identify your costs and account for them. An example is the amount of money you must commit to purchase styling gels that clients are willing to buy at your salon. In addition to the actual price you pay, you may also incur interest charges if you buy using credit. Both the costs of the products and any interest paid are components of your “Cost of Goods Sold.”

Review your completed worksheet on page 20. Your inventory calculations can help you begin to estimate the cost of everything needed to package your goods for sale. You will need this data to prepare Profit & Loss Statements now and in the future.

Cost of Goods Sold

22


Estimate your salon’s total expenses for one full year using the list below. Write the amount in this box. Estimated Annual Expenses $____________

Advertising expensesAuto expenses

Cleaning/Maintenance expenses

Charitable contributions

Dues/Publications

Office equipment expenses

Freight/Shipping expenses

Business insurance expensesBusiness interest expensesLegal/Accounting expensesBusiness meals/Lodging

Miscellaneous expenses

Postage expenses

Office rent/Mortgage expensesRepair expenses

Office supplies

Sales taxes

Federal unemployment taxesState unemployment taxes

Telephone/Internet expenses Utility expenses

Profit by Planning Properly

23

A Profit and Loss Statement (P&L) provides a view of business operations over a particular period of time. It gives a snapshot of the income and expenses generated during the time period. Consequently, owners, managers and other readers can make informed business decisions about future actions.

Profit and loss projections are fundamental to business planning. For this reason, Salon Solutions Group encourages you to thoroughly and thoughtfully input your specific data into the Estimated Profit and Loss Statement worksheet. The P&L worksheet is on page 24. Instructions for completing the P&L worksheet are on page 25.

Estimate the salon’s profit and loss during the next 12 months by performing a basic calculation: Income less Expenses. Your calculations may require fine tuning, however, if you estimated total annual income on page 20 and total annual expenses on page 21of this Business Plan kit, you will have important information to determine actions needed to facilitate your success in the months after completing your business plan..

Basic Calculation:

Estimated Total Annul Income(minus)

Estimated Total Annul Expenses

= Estimated Profit or Loss for the Period

If your calculations yielded a positive number, fantastic! Your salon business may be on its way to sustainable profitability. If your calculations yielded a negative number, that too is ok! It’s best to know now. You can move forward on the salon venture, equipped with an understanding of financial threats your strategies must overcome.

Estimated Profit & Loss

The Estimated P&L Statement is Fundamental

ESTIMATED INCOME

Gross Sales

( Less Cost of Goods Sold )

Net Sales Income - from product sales

Service Income – from salon services Miscellaneous Income – such as interestESTIMATED TOTAL INCOME $ESTIMATED EXPENSES Advertising & Marketing

Salon Space Rent or Mortgage expense

Utilities – electric, gas, and water

Telephone & Internet & Cable

Cleaning & Maintenance

Dues & Publications

Equipment expenses

Business Insurance

Business & Professional License Fees

Legal & Accounting

Sales Taxes

Repairs expenses

Office Supplies

Auto

Employee Wages

Federal Unemployment Taxes

State Unemployment Taxes

Miscellaneous expenses

ESTIMATED TOTAL EXPENSES $24

Your Salon’sEstimated Profit and Loss Statement

For the Period _________

E

stim

ated

Pre

-Tax

Profi

t =

Inco

me

Less

Exp

ense

s

25

Profit and Loss Calculations

Instructions to Calculate Estimated Profit and Loss Statement Step 1Determine your Estimated Gross Sales Income for the period. If your salon, spa, or barber shop is purely a service business and sells no products, write your salon’s estimated income on the line Estimated Service Income Total. If your operation also generates a portion of its revenues from the sale of beauty supplies or other products , place the appropriate figures on the correct lines. Step 2If your business will sell merchandise from inventory, calculate your Estimated Cost of Goods Sold for the same period. In order to have the necessary figures to make this computation, you will need to prepare a projection of your inventory costs and how many items you expect to sell. Fill in the Estimated Cost of Goods Sold figure on the Estimated Profit and Loss Statement. If your business sells only professional salon services, skip this line. Determine your Estimated Net Sales Income by subtracting your Estimated Cost of Goods Sold from your Estimated Gross Sales Income. Step 3Calculate your Estimated Total Income for the period by adding your Estimated Net Sales Income and your Estimated Service Income and any Estimated Miscellaneous Income (for example: interest earned on a checking account). Step 4Fill in the appropriate Estimated Expense Account categories on the Estimated Profit and Loss Statement. If you have a large number of categories, to prepare a second sheet. Based on your future projections, fill in the totals for each of your separate expense accounts. Add in any Estimated Miscellaneous Expenses.

Step 5Total all expenses and subtract your Estimated Total Expenses figure from your Estimated Total Income figure to determine your Estimated Pre-Tax Profit for the time period.

Whether you estimated a profit or a loss during the coming 12 months, use the space below to begin describing actions you will take to keep your salon doors open for business for as long as you envision. Your planned actions and strategies for financing the salon are a key component of your written Business Plan.

Be thorough, but concise, as you explain your short term strategies for securing adequate financing during the next twelve months. Use the space below and addition paper if needed. There is also a worksheet for explaining your three year, or long term strategies. Integrate your short term financing strategies into a three year plan of action.

Your Short Term Financing Strategies

26

Explain here your short term strategies for financing your salon business during the next twelve months

27

Devise a feasible financing strategy for the next three years of operation —Seriously. According to the 2013 Global Entrepreneurship Monitor report, produced by Babson College and other universities, the top reasons for discontinuing a business in the U.S. were problems obtaining financing and lack of profitability. These two problems plagued more than half of businesses that closed their doors permanently. Failure to generate money is not the only reason businesses fail. Some high revenue producing businesses suffer from poor cash flow. No matter their industry, they can find themselves in this unenviable position. For those in the salon industry poor cash flow is synomous with being unable to make payroll for your stylists. Poor cash flow can reveal itself in the salon industry as an owner/operator who can’t pay the electric bill that keeps hair dryers blowing. Why? Because there was a gaping hole between the time revenues were actually collected from a customer’s bad check and when the monthly electric bill came due. You have a cash flow problem when a plumbing pipe to your spa equipment breaks unexpectedly– and you’re two months away from the holiday season that can generate sales to cover repairs.

Approximately 37% of experienced business owners sometimes fall short of the cash they need to cover business expenses, according to a report by the Corporation for Enterprise Development., a nonprofit based in Washington, D.C. that focuses on helping low- and moderate-income households grow and hold on to their assets.

Being undercapitalized is consistently one of the top ten reasons start-ups and small businesses fail. While you’re in the middle of performing responsible business planning using the worksheets designed by Salon Solutions Group, give serious thought right now to feasible ways of getting your hands on enough cash to pay monthly expenses during the next three years. Complete the Cash Flow Statement worksheet on page 27 to assess your cash needs. A competitive pricing strategy within your target market, for example, might complement your plan of action for

securing access to cash to grow a healthy salon business.

Cash Flow Statement

Cash ReceiptsCash from merchandise salesCollections fm CR accountsLoans or other cash infusionTotal

Total Cash Available (before cash out)

Cash Paid OutMerchandise purchased to sell clientsPurchases (specify)Purchases (specify)Gross wages (exact withdrawal)Payroll expenses (taxes, etc.)Outside or Contracted ServicesSupplies Needed to Perform ServicesOffice Supplies (copy paper, tissue, coffee, etc )Repairs & maintenanceMarketing/AdvertisingCar, delivery & travelAccounting & LegalRentTelephoneUtilitiesInsuranceTaxes (real estate, etc.)Professiional & Business LicensesOther expenses (specify)Other (specify)MiscellaneousTotal

Cash Paid Out (Non P&L)Loan principal paymentCapital purchase (specify)Other startup costsReserve and/or escrowSalon Owner's withdrawalTotal

Total Cash Paid Out

Cash Position (at the month's end)

Cash on Hand (beginning of month)

Use this tool to estimate cash flowing in and out of your salon monthly. Example: Salon supplies you plan to purchase with a credit card should not be tracked using your Cash Flow Statement.

Month Month Month Month Month Month TotalsEstimates

28

29

Draft your financing strategy for the next three years of operation. Refer to your completed Profit & Loss Statement worksheet on page 24 and your completed Cash Flow Statement on page 27. Incorporate your short term strategies into a three year long-term plan that anticipates sources of cash to cover unexpected, as well as planned, salon operations. Add or delete to the following list of sources as appropriate.

Source of Cash Amount You Plan to Access

Years You plan to Tap source [years 1, 2, or 3}

Personal fundsFamily MembersFriendsConventional bank financingFinance/Credit Card companies

Other {be specific}Equipment manufacturersLeasing companiesU.S. Small Business AdministrationVenture capital:

Components of a well developed business plan build upon each other. Integrate your short term and long term strategies for accessing cash as needed to grow and thrive.

30

Draft your financing strategy for the next three years of operation.

Use this space to explain your long term strategies for financing your salon business during the next three years.

Use the blank space below if needed to continue writing financing strategies that can bridge cash flow gaps during this critical period.

31

A Balance Sheet is designed to be a look at the financial position of a company on a specific date. It shows what the business owns and owes on a fixed date. Its purpose is to depict the financial strength of a company as shown by its assets and liabilities.Essentially, a Balance Sheet shows what the company would be worth if all of the assets were sold and all of the liabilities were paid off. A value is placed on each asset and each liability. These figures are then balanced by adjusting the value of the owner’s equity figure in the equation.Your Balance Sheet will total your current and fixed assets and your current and long-term liabilities. Even if your business is very new, you will need to prepare a Balance Sheet. Use the figures that you have gathered for the above Business Financial Worksheet, and follow these instructions to prepare your Current Balance Sheet for your Business Financial Plan: Step 1: Total all of your “Current Assets” on your Current Balance Sheet.

“Current Assets” consist of the following:

Cash in Bank (from your business bank account balance) Cash on Hand Accounts Receivable (if you have any) Inventory (if there is any) Prepaid expenses (These may be rent, insurance, prepaid supplies,

or similar items that have been paid for prior to their actual use).Step 2: Total all of your Current Assets on your Current Balance Sheet

Step 3: Total your Fixed Assets (except land). Total any depreciation that you previously deducted for all of your fixed assets (except land). Enter this total depreciation figure under Depreciation and subtract this figure from the figure for Total Fixed Assets (except land).“Fixed Assets” consist of the following: Equipment Autos and Trucks Buildings

The Balance Sheet

Worksheet Instructions

32

Step 4: Enter the value for any land that your business owns. Add “Fixed Assets” amount (less Depreciation) and the value of the land. This is your total “Fixed Assets” value. Step 5: Add any “Miscellaneous Assets” not yet included. These may consist of stocks, bonds, or other business investments. Total your Current, Fixed, and Miscellaneous Assets to arrive at your “Total Assets” figure. Step 6: Current Liabilities consist of the following: Accounts Payable Miscellaneous Payable: Include here the principal due on any short-term

notes payable. Also include any interest on credit purchases, notes, or loans that has accrued but not been paid. Also list the current amounts due on any long-term liabilities. Finally, list any payroll or taxes that have accrued but not yet been paid.

Step 7: Your Fixed Liabilities consist of the principal of any long-term note, loan, or mortgage due. Any current amounts due should be listed as Current Liabilities. Step 8: Total “Current and Fixed Liabilities” to arrive at “Total Liabilities.”

Step 9: Subtract your Total Liabilities from your Total Assets to arrive at your Owner’s Equity. For a corporation, this figure represents the total of contributions by the owners or stockholders plus earnings after paying any dividends. Total Liabilities and Owner’s Equity will always equal Total Assets.


The Balance Sheet

33

Assets & Liabilities

What amounts of credit have already been used by the salon?

How much cash is available to the salon?

Are there sources of cash flowing into the salon?

List assets currently owned by the business. Include the following: CURRENT ASSETS

Inventory:

Cash in bank accounts: Account Receivables:

Fixed and depreciable:

Autos/trucks:

Buildings:

Equipment:

Amount of depreciation taken on any of above assets:

Fixed non-depreciable:

Land:

Miscellaneous:

Stocks/bonds:

List debts owed by the salon currently. Include the following: CURRENT LIABILITIES Taxes due: Accounts payable: Short-term loans/notes payable: Payroll accrued: Miscellaneous: LONG TERM LIABIITIES: Mortgage: Other loans/notes payable:


Your Salon’s Current Balance SheetAs of ____________

ASSETS

Current Assets Cash in Bank

Cash on Hand

Accounts Receivable

Inventory

Prepaid Expenses

Total Current Assets

Fixed Assets Equipment (cost)

Autos & Trucks (cost)

Buildings (cost)

Total

(Less Depreciation)

Net Total

Add Land (cost)

Total Fixed Assets

Total Miscellaneous Assets

Total Assets

LIABILITIES

Current Liabilities Accounts Payable

Miscellaneous Payable

Total Current Liabilities

Fixed Liabilities Loans Payable (long Term)

Total Fixed Liabilities

Total Liabilities

Owner’s Equity Net Worth 34

Complete the “Current Balance Sheet” by filling in all data that is relevant to your salon.

35

It is in the Executive Summary that you will need to convey your vision of the company and its potential for success. It is with this document that you will convince investors, suppliers, bankers, and others to take the risks necessary to back your dreams and help you to make them a reality. The Executive Summary component of your Business Plan should be about one to three pages long. It should be concise, straightforward, and clearly written. Don’t use terms or technical jargon that someone who doesn’t work in the salon world cannot understand. You may give more detail in the body of the Business Plan itself, but keep the Executive Summary short and to the point. This document will be a distillation of the key points in your entire Business Plan. It is in the Executive Summary that you should infuse your potential backers with your enthusiasm and commitment to success. In doing that, remain honest and forthright in the picture you paint of your business and its competition. Use the following outline as a guide to assist you in preparing your own. You will be using the information that you have included in your written Business, Marketing, and Financial Plan worksheets to prepare the Executive Summary.


36

Date

Business Plan of Your salon’s name

Executive Summary In the year , was established as a corporation in the State of Our mission is Insert your mission statement from page 7.

Our target market is Insert your target market from page 6. Our long-term goals include Insert two primary goals from page 8.

.Industry Analysis

Our salon business operates in the personal care services industry. Annual gross sales of the industry are approximately Insert from page 8 the industry’s annual gross sales and circumstances you plan to take advantage of to make the salon competitive or profitable. Service Analysis Our salon is unique because Insert from page 9 the unique services or qualities you identified. Also insert from page 17 key points of the SWOT analysis which support your projected successes.

Business Operations SectionInsert data from pages 9, 10 and 17 to briefly explain how the salon will operate in terms of delivering professional service to customers and/or acquiring merchandise to sell. Also include short explanations of strategies you will use to beat the competition.

Executive Summary Worksheet

37

Management of the Company

The salon will be managed by Insert name (s). From page 11, include a brief summary of the management structure and the qualifications of the key personnel and how their expertise will be the key to the success of the company.

Market StrategyThe target market is Insert your target market information from page 6. Next, refer to your SWOT analysis on page 17 and competitive analysis on page 9 to write a brief summary of your research. Also write a summary of your marketing plans, explaining how you will promote your competitive advantages.

. Financial Plans

Summarize the data on your Current Balance Sheet and Estimated Profit and Loss Statement. Conclude this section by describing both your annual income projections from page 20, as well as the salon’s immediate and long-term financing needs. Review your cash flow worksheet before writing about your financing needs.

Once you have completed all worksheets, you will be ready to compile your final Business Plan. To prepare your Business Plan, carefully read through the answers you prepared for the worksheets. Your task will be to carefully transfer the information from your worksheets into a narrative format. If you have taken the time to fully answer the questions, this will be an easy task. Keep your writing concise but try to convey both a broad outline of the market environment that your salon will be operating in and a clear picture of how you will compete successfully. Emphasize your salon’s uniqueness and profit potential, but include a mention of the major threats or weaknesses your salon will face. An honest appraisal of your company’s risks and potential problems will convey to investors and bankers that you have thoroughly and carefully investigated the opportunities for your company to succeed. Use the answers in all of your worksheets to write your comprehensive Business Plan. You can slightly rearrange the answers within each subsection if you feel that it will present a clearer picture to those who will be reading your Business Plan. However, do keep the components, or major parts of each section, together because they create an information flow that bankers and investors can easily follow once you compile your final document.Step 1 Using information from your worksheets, type or neatly print a narration of your business, marketing, and financial components.

Instructions for Compiling Your Business Plan

Once you have completed all worksheets, you will be ready to compile your comprehensive Business Plan. To prepare your Business Plan, carefully read through the answers you prepared for the worksheets.

38

Your completed Business Plan allows potential backers, investors, bankers, employees, and others to quickly see the reality behind your dreams. Moreover, the comprehensive plan that you’ve personally prepared can be an essential tool for understanding and managing your business towards the profitability you envision.

Instructions for Compiling Your Business Plan

Step 2Organize all of the component parts in the order that corresponds closely with the order of your worksheets.

Step 3A title page, followed by a table of contents, is necessary. The table of contents you prepare must have page numbers that match the order of the component parts. Accuracy is important. Salon Solutions Group has enclosed a sample title page and table of contents with this kit.

Step 4Have a print shop copy, collate the pages, and place your work into binders. Alternately, you may assemble all of the component parts into a neat and professional folder or notebook. Make enough copies for distribution to banks and potential investors should you seek funding.

39

Title PageBusiness Plan of: [Insert legal name of your business] Incorporated in the State of: [Insert location of business formation]Address: [Where you can be readily contacted for business purposes]Phone: [Where you can be readily contacted about this business plan.]E-mail: [Professional E-mail address where you check messages often.]Date: [ ]Prepared by: [Your name]

Sample: Title page

Your “Title Page” -- Prepare a title page that includes the following information. A photo or similar image that clearly communicates something important about your salon can be used to add perspective.

Your decision to write a business plan is a smart one. Implementing a facts -based Business Plan increases your opportunities for getting paid the full value of your creative, professional skills. Contact me for a business consultation, or participate in one of my webinars. With 25 years experience performing and teaching in the industry, my business is all about helping salon professionals profit. Meanwhile, just one more page here and you’re done. -- Carla Jones

40

Table of Contents

Executive Summary

Business Plan Business Concept and Objectives Industry Analysis Service Analysis Business Operations Management AnalysisMarketing Plan Target Market Analysis Competitive Analysis Sales and Pricing Analysis Marketing Strategy Advertising and Promotion

Financial Plan Financial Analysis Estimated Profit/Loss Statement Current Balance Sheet

Appendix Photos of Services/Facilities/Merchandise Contracts Business Incorporation Documents Bank Account Statements Personal Financial Statements of Owner(s) Proposed List of Equipment/Supplies/Inventory Proposed Time Line for Corporate Growth

Sample: Table of Contents

Your “Table of Contents” -- Prepare a table of contents using the following titles and formatting. Add page numbers to your document that will match the titles. Appendix items are optional. However, adding supporting documentation helps make your points.

41