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Business Plans


Owning a business is considered the American dream and generally begins in one's head; maybe you've scratched some ideas on a notepad, a restaurant napkin or even shared what you believe to be savvy business ideas with friends or family members. Having an idea of where you envision your business going is a good start; but, as all successful business owners know, a pivotal part, perhaps the most important part of beginning any business venture is devising a well thought out plan. So at least momentarily, put your big ideas aside, because here is what you need to know when asking how to write a sample hair salon business plan.

Let's start with the bad news. According to the U.S. Small Business Administration industry market research, in 2009 approximately 552,600 small businesses opened their doors surely with entrepreneurs much like you, who had big dreams of success. However, that same year, 660,900 small businesses closed its doors because profits ceased to be enough to keep them afloat. It is surmised that 7 out of 10 new firms will manage to stay in business for a minimum of 2 years; however, longevity is not on small business owners' side as only 50% will remain open after 5 years and only 25% will still remain in business at the 15 year mark. These numbers are not very optimistic, which is why a solid business plan is essential.[1]

Business plans serve a multitude of purposes. First, they are a vital way to put on paper your business ideas in an objective and step by step process. A solid business plan will show in great detail a potential owner's objectives and estimated profits for at least the initial 5 years. Though some plans do project longer than that, 5 years is considered appropriate as venturing economic conditions and other variables beyond that may be futile and near impossible.

One of the main reasons potential barber shop or hair salon owners would need a business plan is because they do not have the money and capital required to fund their new business. Therefore the first place they will go to get said monies is a bank. Banks across the board require any individual or group to have a business plan in place before they will even consider loaning money. This is especially true in poor and unstable economic conditions such as what we are experiencing currently. Because banks know new businesses are more likely to fail than prosper, it is their responsibility to protect their interests.[2]

Other variants will also be taken into consideration prior to banks loaning money such as credit history and personal assets, but for all intents and purposes, let's assume you have those intact.

A solvent business plan doesn't have to be a nightmare but it does need to incorporate definitive variables and have a clear objective/projection. Here is what you should plan to include in yours:

Business Summary

This is the beginning of your business plan and many experts cite it as the most essential. A business summary contains a snapshot look of what your business is, in this case a salon or barber shop, where you see it going and the reasons you believe it will be successful. This summary should not be merely thrown together, particularly if you are seeking a loan. This is where you are given the opportunity to sell yourself and your grand ideas, while convincing others that they should loan you money or invest in your venture.

Aside from what kind of business you hope to operate, the summary should also include information such as where the business will be located, all of the people who will be involved in owning and operating the business, the approximate number of people you intend to employ, what you see as potential growth potential in the first 5 years and finally, if you are seeking financial backing, how much. For a new barber shop or hair salon this is where you will convince parties that you have done market research and why you feel you can do as well or better. In essence, the summary will be a complete and detailed mission statement.

Your business summary should be at least one page and not much longer than two pages.

Market Analysis

No business plan is complete without a market analysis portion. Not only does this show that you are business minded, it proves that you have done your homework. Even if you are a first time business owner, banks want to know you think like someone who has been in business for decades. This section will include a brief history of your particular business genre-so you will have researched local and national barber shops and hair salons, how they have prospered, what their average sizes and employee records are and records of current industry trends both past, present and future. Based on that research and those calculations, here is also where you can market yourself. What will your shop offer to consumers that others don't? How will your business serve their needs? Approximately how many consumers do you project will be potential and long standing clients? If the area you live in has a population of say, 1000 people and there are a vast amount of already established barber shops or hair salons in that area, you have a tough row to hoe. You must convince the loaner as to why there is a need for yet another shop. What will you bring to the table? This is referred to as a 'market share gain' projection. It's a projected number of how many local residents live in the area and how many you think will become clients; thus showing your gross income potential.[3]

What you sell

Your business plan should also have a section that will list the products and services you intend to sell or produce. This section will specify what type of barber shop or hair salon you are opening. Is it a full service salon? If so, how many stations do you intend to have? Will it incorporate other cosmetology components such as waxing, tanning, or nail care? If so, you want to list it here. If your vision is a barber shop, how many stations will you have? Will you offer just hair cuts or other services such as waxing and shoe polishing? The more services you provide, the better your business plan will look.

Marketing Plan

Finally it is essential to equip your business plan with a comprehensive marketing plan. Exactly how do you intend to market what you are selling? What ventures will you take to ensure the community knows that you are new in town? What do you estimate will be your marketing budget? A marketing budget is the amount of dollars you are setting aside that will only be used for marketing purposes-i.e. radio or television ads, banners, business cards, and newspaper ads. If you plan to design a website for the company, add those costs in as well.

Many business plans also include a well written resume. It may behoove you to hire a professional to do so as they are masters at making you sound qualified. Your resume needs to show that regardless of what jobs you have held in the past, you somehow made a contribution to that business and played a role in its success and or development.

The barber shop and hair salon industry is competitive so your goal is to show, not tell, how you plan to take it by storm in your area. The more unique your services, the better chances you have at longevity. But make sure the plan follows many successful entrepreneurs' motto. The most successful plans are SMART: Specific, Measurable, Attainable, Relevant and Time Based.[4]

Sources

[1] US Small Business Administration FAQs
[2] Preparing for a Small Business Loan
[3] Business Plan Market Analysis
[4] The 5 Steps to Setting SMART Business Goals
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