As with many new problems we encounter today, we will look to the internet to help us. Most people will download a generic business plan template and immediately get bewildered by the jargon and terminology used within it.
What do I include in the Executive Summary? How do I define my Strategic Objectives? Where are my Development Plans hiding? And how do I even begin to calculate my Financial Forecasts?
You could ask your friends and family, or maybe you’ll receive the same blank look you’re wearing right now when you ask them. And your bank manager will be not much help either at this stage, either directing you to your accountant.
You need to craft a business plan that is designed to promote your salon, not navigate through a random template for any general small business. And I can offer you my expert help every step of the way.
Ok don’t panic let’s go through it now for a better understanding.
Here is my concise guide to the main content that needs to be in your business plan, as follows:
1. Summary 3
2. Business overview
3. Business strategy
5. Team and management structure
6. Financial budgets and forecasts
The summary is the last part of the plan that you write, but should be included at the beginning of the plan. This allows busy readers to quickly see what the plan is about without reading all the details.
Use the summary to highlight the key points of your plan. If you are using your plan to raise financing, the summary needs to make the reader (ege.g. the bank manager or a potential investor) want to find out more and read the whole plan.
(Keep this section brief)
A brief history of your business (or of the idea that has prompted you to start it).
The purpose of your business: what business you’re in and why you started it. Note its location and explain if this is important (or a competitive advantage).
Describe your products and services.
What have you achieved so far?
Outline the current position of your business: where is your company in the business lifecycle (introductory phase, growth phase, mature, declining)?
Explain what industry you operate in and where it sits in the business lifecycle (emerging industry, growth industry, mature industry, declining industry).
What are the strengths and weaknesses of your competition?
Explain your competitive advantage( s)—what makes your business better than others) —and your identified the market niche(s) — who you’re aiming your salon at.
What makes you confident your business will continue to grow and endure? Why is your business model effective?
Provide a brief overview here of what will be described in more detail in the rest of the plan.
Describe the current reach of your business and explain how this business plan will change that. Give an overview of your goals and the future you plan for your business.
Outline here your business strategy for:
Describe your business objectives and goals (make sure they are specific and measurable).
Outline the gap between where you are now and where you want to be (as above).
Cover the main practical steps you must take to get your business from where it is now to where you want it to go. What extra resources will you need?
Outline the external threats or opportunities that could impact on your business during your strategic horizon:
Describe the core values that underpin your business. Explain why these core values are crucial to your long-term business success, how they will affect customers (the benefits) and how they will help to motivate both you and your staff.
Your SWOT analysis and critical success factors.
Outline briefly your marketing Strengths, Weaknesses, Opportunities and Threats (SWOT).
What are therefore the critical success factors for your business?
Explain what market research you’ve done and methods you use.
Outline how ongoing market research is built into your daily business operations.
What target market(s) has your market research (and trading experience) established.
Explain how intimately you understand these markets (how close you keep to your customers) and how this feeds back into your business (improvements, product/service changes, etc.).
Describe the current marketing reach of your business (local, national, international?) and how you reach customers (e.g. through distributors, using the Internet).
In terms of your strategy, what new markets do you plan to access:
Describe how you plan to accomplish this.
Explain what strategic alliances (any beneficial partnerships with other companies) you have in place or are planning to increase your access to markets, leverage resources (your ability to influence a system), etc.
E-commerce and technology
Explain how you’re using e-commerce and technology in your business to lower costs, speed up business, access new markets, build online sales, etc.
Tactical promotion plan
Explain how you will promote your business to customers (e.g. advertising, exhibitions, PR).
Detail your marketing budget for the year. Explain how you will monitor it to manage and improve results.
Credibility and risk reduction
Explain your tactics for increasing the credibility of your business and reducing the customer’s risk in doing business with you.
Skills, experience, training and retention
Describe the skills, business track record and experience of yourself and key members of your team.
Outline your team. Explain the key staff, their positions and key responsibilities.
Briefly describe the incentives you’ve put in place (or are planning) to retain them and keep them motivated.
Describe your staff training programme and its budget.
If there are gaps in your team, or you need extra staff to fulfil your short and longer term strategies, outline the gaps here, and who you need to fill those gaps.
Explain how new staff will be trained.
Describe your core team of advisers (lawyer, accountant, consultants, business mentor or ‘guru’ you can access for advice, etc.).
Briefly outline the management structure of your business.
Describe the business systems you have in place to manage efficiently. Do you have written operations manuals in place or house rules for staff (always wear name badges, etc.)?
What accounting software or systems do you use? How regularly can you produce financial reports and analyse key business ratios (your ability to meet your financial obligations)?
Cover compliance issues too: how you prepare for and deal with payroll and employment issues, tax and VAT obligations, health & safety, etc.
Attach financial budgets and forecasts you are including within the business plan such as:
Provide brief notes on each of these forecasts. It’s a good idea to produce Optimistic, Pessimistic and Realistic versions of the first three.
If the cash flow forecasts pinpoint future cash flow difficulties, explain how you plan to deal with these challenges.
And there we have it. Phew. You made it through the other side.
As you can see, there is a lot of information to cover, and the report must be professionally written and polished.
The lender will also be looking at your current financial position and whether you own any assets personally. Until you build up a history as a business, you will initially be assessed on your personal credit score. For example if you are a homeowner this will help protect the lender from losses and you will increase your borrowing odds.
From my experience if your business plan looks realistic and profitable even if you have no security, some banks may still lend on an unsecured basis to a maximum loan value of £30,000. To qualify for anything above this amount will require evidence of security.
If however your business plan looks unrealisticthen chances are no one is going to risk lending you their money as the set-up costs for starting a beauty salon is over £100,000.A solid beauty salon business plan is not going to guarantee your success, but when it is crafted well, it certainly boosts your odds.
To be honest, don’t do it yourself unless you are an expert in the field. I would recommend getting it done professionally as a lot of work needs to go into preparing a good business plan.
How much does it cost to prepare a solid business plan?
A detailed business plan, as prepared by an expert (such as an accountant)with all the information properly completed and structured will cost around £850 - £1,000.
Another option is approaching a professional finance company who will also help submit the business plan to chosen banks. However expect an additional 1% success fee on top of the plan preparation costs.
How much should I apply for?
The initial capital required to set a beauty salon business up is around £100,000 or over,depending on the level of luxury you want to offer. Therefore, you need at least £50,000 in liquid cash for any lender to take you seriously.
By far the first-place people go to look for someone to invest in their idea is their local high street bank.
The good news is that banks are very keen on lending money to local businesses—after all, this is how they make their profit too.
If your beauty salon business plan is well crafted and you are an experienced and creditworthy person with the necessary security for the then the chances are they will lend you the money. There maybe a few weeks’ delay because of all the paperwork involved but overall banks are keen to lend if you can provide evidence of the right financial circumstances
Once your loan is approved then the banks will set up your business accounts your online facilities necessary cheque books and any requested overdraft facilities.
The most popular banks lending to small businesses in the UK are:
Enterprise Finance Guarantee (EFG)
If you are turned down because you have no security or proven track record to offer, then it is possible to apply for the Government Enterprise Guarantee Scheme (EFG). This process is undertaken through the banks is appropriate and only if your business is eligible.
Our indebted government set up this scheme to help boost the economy by encouraging lenders to loan money to small and mediumsize businesses.
The UK government has agreed to guarantee 75% of the value of the loan with the banks. This provides enough protection for the lender to loan you the money as the government stands as your guarantor against the loan amount.
There is of course a cost to this government scheme which your bank will tell you more about in detail if you’re applicable to join.
Approach business angels
Business angels are successful wealthy business people with a lot of business experience who are prepared to lend money to start ups in return for an equity share in the company. Think dragons den!
Any credible angel will want to see a solid business plan and know who is behind the business. By all means, go to these guys if the banks refuse you or you have no security but be aware that you will be giving away part ownership of your company in return for this cash.
To find out more about business angels visit The UK Business Angels Association UKBAA.
An option to consider,if you don’t have enough money on your own, is to take on a partner. Again, though, tread carefully down this path as some partnership relationships end badly. Check out the number of books listed on Amazon for ways to deal with business partner breakdowns for further evidence.Your business partner is no different to any other relationship you have—it’s like dating and marriage,the partnership will require work and careful cultivation. Don’t assume everything will always stay hunky-dory as this is how they start to breakdown; through lack of communication, resentment, and misunderstanding.
Peer to peer lending
Since 2005 the internet has given rise to many new and trendy peer-to-peer lending companies (P2P lending) also known as crowdlending. They’ve popped up online to help business with their start-up capital.Meaning anyone who wants to can now invest money into your business to help you succeed. You no longer need to be a wealthy venture capitalist to begin investing.
Individual investors lend to borrowers through an online portal.The interest rates are set by lenders competing with others based upon on the borrower’s credit and business model (which will include your business plan).
Some of the popular UK peer to peer lending companies are Kickstarter, Zopa, Funding Circle and Lending Crowd.
Family and friends
Probably the last people you should reach out to are your family and friends for investment. We say this only because if your business suffers any failures, then they’re going to hold you accountable for their money. It can be a hazardous situation to navigate. Don’t add the pressure of being in debt to your friends and family to your fledgling salon.
This list is by no means an exhaustive guide to raising funds for a successful salon. It is though, a great starting point. With today’s technology, there are lots of creative and exciting ways to establish the money you need for your salon opening up all the time. Whichever funding direction you choose to head in though, they will all require the same core beginning. A solid beauty salon business plan.
For further information on crafting your perfect beauty salon business plan, contact me today. Don’t hesitate to email me with any queries for help and expertise in approaching banks effectively or any other aspect of building your successful salon business.
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