Business Plan
Amaryllis Salon
4200 Heritage crossing dr. Copley, Ohio 44321
330-567-5409
April 1, 2020
Leah Kenna, Christina Iafono
This document is confidential.
Table of Contents. 4
Executive Summary. 5
Vision/Mission Statement and Goals. 7
A. Vision Statement 7
B. Goals and Objectives. 7
C. Keys to Success. 7
Company Summary. 8
A. Company Background. 8
B. Resources, Facilities and Equipment 8
C. Marketing Methods. 8
D. Management and Organization. 8
E. Ownership Structure. 9
F. Social Responsibility……………………………………………………………….. 9
G. Internal Analysis. 9
Products and/or Services. 10
Market Assessment 11
A. External Analysis. 11
B. Customers. 11
C. Industry Analysis………………………………………………………………… 11
D. Strategic Alternatives. 11
Strategic Implementation. 12
A. Production………………………………………………………………………… 12
B. Resource Needs…………………………………………………………………… 12
C. Sourcing/Procurement Strategy…………………………………………………… 12
D. Marketing Strategy…………………………………………………………………12
E. Performance Standards…………………………………………………………… 13
Financial Plan. 14
A. Financial Projections. 14
B. Contingency Plan. 14
Our mission at Amaryllis is to encourage every person to feel comfortable in their own skin, by the exceptional service we provide, allowing you to be the best versions of yourselves.
We provide a simplistic yet effective hair care routine that suits the needs of every individual. We value education for staff and for clients and our goal is to send everyone home with the knowledge and understanding that they can create beautiful styles themselves.
Company Summary
Our business Amaryllis is a Hair Salon that provides various cosmetic services which includes hair cutting, hair coloring, hair straightening, permanent waving, waxing services, and eyebrow tinting.
The founder of Amaryllis is Leah Kenna.
Business milestones that we would like to achieve are #1 Having a profitable Business model #2 Have repeat clients #3 Having a good realistic Marketing Strategy #4 Hiring and Training a Solid team with great attitudes #5 Gaining authority in the hair industry #6 Reaching a significant number of sales
Products/Services
We are planning on selling all-natural hair care products. Our products are going to be differentiated because they will be different than the typical all-natural products. For example, Aveda is an all-natural line of hair care products, while they are great to use and make your hair feel amazing, many consumers get confused on what they should use because there are too many choices. In Aveda’s straightening line, there are 4 different styling products that make your hair straight, all being just slightly different from the next. We feel at Amaryllis that this is not necessary, so our goal is to create an all-natural product that is simple and to the point. There will be no confusion on which product is best for your hair type.
The price point will remain competitive with a company like Aveda. Customers will not feel like they must buy 3 or more products that make their hair feel good, so the price will not seem burdensome. I personally have 18 years’ experience working with all-natural products.
D. Market Assessment
The market characterization in Copley, Ohio ranges from middle class to upper middle class, with the average income of $120,000. It is an area with young families and parents in their late 30’s- mid 40’s. Many of these families are busy, for the majority, both sets of parents work full time, and on the weekend must do all their shopping plus haul kids to sports games.
Strategic Implementation
We will produce our product by using a company called Genesis private label. Our products will be all natural and easy to use. We will be competitive because clients are looking for simple products that make their hair look and feel amazing.
Using a company like Genesis will speed up making our own brand. In fact, the company slogan is "Life is really simple, but we insist on making it complicated" -Confucius, which is the exact brand we are looking for at Amaryllis salon. Genesis help with marketing by having launch strategies, and customized merchandising solutions which include shelf talkers, posters, client brochures, tent cards, new client cards, prescription pads, and gift bags.
Growth with this salon and the product line will happen with Enterprise Expansion in the form of online marketing and online commerce. Networking within the community will also be especially important.
The timeline for the product distribution would be about 3 weeks.
Expected Outcomes
Owning a hair salon business is extremely risky, there is a ton of competition, the salon success is completely contingent on client preference, and product sales have diminution because of online competition.
With that said, it is especially important to run Amaryllis Salon debt free. I have thought about this a lot and I feel the only way to have a tremendously successful salon business is to eliminate the stress of money within the company. This has been made abundantly clear to me during the Corona virus outbreak because salons have been affected, and I am grateful to work at one that is not at risk for going out of business. My salon is not perfect, and neither is the owner however, she has consistently run her business with little to no debt and has been able to get through this time successfully and been a constant source of encouragement for us. Many salons are being forced to close their doors because they were not financially stable.
Our mission at Amaryllis is to encourage every person to feel comfortable in their own skin, by the exceptional service we provide, allowing you to be the best versions of yourselves.
We provide a simplistic yet effective hair care routine that suits the needs of every individual. We value education for staff and for clients and our goal is to send everyone home with the knowledge and understanding that they can create beautiful styles themselves.
Goals- Enhance staff expertise, Increase Brand awareness, Improve customer service (Peterson)
Objectives- Have monthly training courses provided to experienced staff, and all new staff, with less than 5 years’ experience, must complete a yearlong training program before they can be on the floor doing hair. (Peterson)
To increase brand awareness, it is imperative we have a strong social media presence. Meaning that all facets must be covered including but not limited to Facebook, Instagram, LinkedIn. Customer satisfaction is at the heart of what we do. It is imperative that employees understand that exceptional service is a must. Training employees to provide every client with hand and arm, and scalp massages
Success will depend on the type of service we will provide. It will be important for employees to be trained to give exceptional service and our products will have to meet the needs of our clients. A strong social media presence will also be a necessity for us to create a strong brand.
Our business Amaryllis is a Hair Salon that provides various cosmetic services which includes hair cutting, hair coloring, hair straightening, permanent waving, waxing services, and eyebrow tinting.
The founder of Amaryllis is Leah Kenna.
Business milestones that we would like to achieve are #1 Having a profitable Business model #2 Have repeat clients #3 Having a good realistic Marketing Strategy #4 Hiring and Training a Solid team with great attitudes #5 Gaining authority in the hair industry #6 Reaching a significant number of sales
Our services will be performed by the staff we hire. Our products will be manufactured elsewhere but be provided by Amaryllis salon. Our employees that perform the services will be rewarded by competitive wages, vacation time, 401k, and commission on retail sales.
Salon chairs, mirrors, and waxing stations, wax, hair products, hair color will all be provided by the owner. Blow dryers, haircutting materials, and styling tools will be provided by employees.
Our sales volume is $245,000 per year with an average unit price of $60-$100 dollars. Returns with product will be accepted and can be used for backbar purposes to reduce waste and loss of money. Returns on all services performed in the salon will be minimal and not customary. The employees will be highly trained and expected to perform at a high level. If a client calls with complaints, we will handle it by offering to perform the service again that meets their expectations. Forward contracting could be beneficial in this business in the case of the product prices going up and down. Amaryllis salon wants to create their own product line the average cost to do this is $5500 with the average being $1000 per 500 units. Contracting will be used in the making and distribution of the products.
The CEO of Amaryllis Salon is Leah Kenna and the management team would consist of Leah Kenna, Christina Iafano, Chris Hufgard. Leah has a degree in Business management with a focus on Marketing and her responsibility will be to train the employee’s regarding hair and what is expected of them daily. It will be Christina also has a degree in Business Management and has previously owned her own successful business but decided to sell to semi-retire and wanted to work at the salon, her job is to support staff during the work week and to take on most of the marketing for the salon. Chris does not have a degree but has years of experience in call centers and customer service and her responsibility would be behind the desk. She will answer phone and handle customer complaints. Christina will be the on who I go to for advice, her knowledge of owning a successful business will benefit me greatly. Each team member will have a change for personal growth.
E. Ownership Structure
The primary stakeholder in the salon will be Leah Kenna and Amaryllis will be a corporation. To open the salon, we will need a State Cosmetology license, Salon Retail seller permit, Salon business operation license, Federal employer Identification number, Certificate of occupancy.
F. Social Responsibility
All of Amaryllis products will be vegan and 98% natural. The salon will have top of the line ventilation systems installed to ensure the space is environmentally friendly. We want our presence in the community to be massive. So, we will try to do numerous community events and be a part of the chamber of commerce.
Amaryllis will work hard to create a family like environment for everyone employed. We will practice radical candor and encourage constructive criticism. We will want our clients to enter a place they never want to leave. Each team member will receive an abundance of training that Amaryllis will provide.
Products and/or Services
We are planning on selling all-natural hair care products. Our products are going to be differentiated because they will be different than the typical all-natural products. For example, Aveda is an all-natural line of hair care products, while they are great to use and make your hair feel amazing, many consumers get confused on what they should use because there are too many choices. In Aveda’s straightening line, there are 4 different styling products that make your hair straight, all being just slightly different from the next. We feel at Amaryllis that this is not necessary, so our goal is to create an all-natural product that is simple and to the point. There will be no confusion on which product is best for your hair type.
The price point will remain competitive with a company like Aveda. Customers will not feel like they must buy 3 or more products that make their hair feel good, so the price will not seem burdensome. I personally have 18 years’ experience working with all-natural products.
Market Assessment
The market characterization in Copley, Ohio ranges from middle class to upper middle class, with the average income of $120,000. It is an area with young families and parents in their late 30’s- mid 40’s. Many of these families are busy, for the majority, both sets of parents work full time, and on the weekend must do all their shopping plus haul kids to sports games.
Growth can be obtained by making it easy for potential clients to make appointments, get services done, and buy products that are easy to understand and use. We will be competing with several other salons in the area and our point of difference will be convenience and exceptional customer service.
There will always be a threat of new entrants in our community so we will have to always stand out. Our products will be revolutionary to the industry and our area, so a threat of substitution would be minimal. The price point of the product with be competitive and thus the bargaining power will be at a minimum.
Rivalry will always exist in the salon business, in fact, it is our greatest threat of all. To overcome this threat, we need to be different than the rest, from the products we use, to the service we provide.
The trend is the hair industry is moving towards influencing, every hairstylist is expected to not only have an Instagram page but to market themselves. A driver of change in the hair industry is the economy, because when it is good, consumers want to spend money on the latest products and hair techniques. The salon will be in a newly developed strip mall in Copley, Ohio and we will have to follow the zoning, and legal requirements of that.
I would say that currently there is a divide in the way hair salons market. Some are still stuck on the traditional aspects of marketing while others are heading more towards influencing.
To stand out as different Amaryllis will have to be an influencer in our community. It will have to be the place to go to get the latest trends.
To accomplish this, we will have to have constant education, extreme marketing skills, and constantly think of way we can stand out against the competition.
Strategic Implementation
A. Production
We will produce our product by using a company called Genesis private label. Our products will be all natural and easy to use. We will be competitive because clients are looking for simple products that make their hair look and feel amazing.
Using a company like Genesis will speed up making our own brand. In fact, the company slogan is "Life is really simple, but we insist on making it complicated" -Confucius, which is the exact brand we are looking for at Amaryllis salon. Genesis help with marketing by having launch strategies, and customized merchandising solutions which include: shelf talkers, posters, client brochures, tent cards, new client cards, prescription pads, and gift bags.
Growth with this salon and the product line will happen with Enterprise Expansion in the form of online marketing and online commerce. Networking within the community will also be especially important.
The timeline for the product distribution would be about 3 weeks.
B. Resource Needed.
A. Human
We will need to hire skilled cosmetologist that have a state board license, along with cosmetologist just graduating that are willing to participate in our apprenticeship program.
B. Financial
We estimate that the cost of opening the salon will be $100,000. IF we do not have the cash to fully fund, we will need at least $50,000 to obtain a business loan for the rest.
C. Physical
At Amaryllis we are going for quality over quantity. We want the salon to have an inviting atmosphere.
C. Sourcing/Procurement Strategy
The decision to make are own products is so that we do not have to compromise on quality for it to be convenient. We will utilize the internet to find our vendors.
D. Marketing Strategy
Our sales plan will include incentive programs for employees. Employee’s will receive commission on the products they sell with an extra reward for top sellers within the salon. Advertising will be done via the social media markets, and promotions will be run quarterly for the products. We will institute a membership card for purchasing Amaryllis products and special promotions will be given to those who sign up. We will use the open market. We will want to be considered as elite as Aveda products and develop a reputation like theirs, so we will need to price comparable to them.
a) Hedging, forward pricing, options
We will use a forward contract with the company Genesis
b) Contracting
We will use production contracting to have full control over what goes into our products.
c) Insurance
We will need to obtain liability insurance for the salon.
E. Performance Standards
Our performance standards will be high for a hair salon, education and experience behind the chair will be a priority in the hiring process. A stylist must have at least 5 years’ experience and an online presence through Instagram/Facebook accounts. Leah and Christina will monitor performance quarterly by using performance reviews. We will need quality products and good service to yield good profit.
Once our goals are met, we will institute a reward system for high performing stylists. We plan to meet the goals of financial efficiency, labor productivity, energy efficiency, eco efficiency, process efficiency, operational efficiency, and return on investment. The benchmarks for our stylist to achieve will be in service per service ticket, retail per service ticket, % buying, % hair color, % booked, and % pre-booked.
Financial Plan
Owning a hair salon business is extremely risky, there is a ton of competition, the salon success is completely contingent on client preference, and product sales have diminution because of online competition.
With that said, it is especially important to run Amaryllis Salon debt free. I have thought about this a lot and I feel the only way to have a tremendously successful salon business is to eliminate the stress of money within the company. This has been made abundantly clear to me during the Corona virus outbreak because salons have been affected, and I am grateful to work at one that is not at risk for going out of business. My salon is not perfect, and neither is the owner however, she has consistently run her business with little to no debt and has been able to get through this time successfully and been a constant source of encouragement for us. Many salons are being forced to close their doors because they were not financially stable.
I estimate that it will cost anywhere from $50-$100,000 to open Amaryllis and this does not include the monthly lease or utilities. So, my desire is to save enough cash to open and to have a year’s worth of “emergency funds” available to use in case profit are not where they need to be and to manage all of the financial risks that are tied to this business. I need to assume that we will be slow the first year and plan for that financial stain. Business is dependent on clients and it takes time to build a clientele, in our industry it has been said that it takes 3-5 years to build a loyal clientele.
In the first year we will monitor closely are ROA, and the end of the year that will determine if a price increase is necessary for profits, having a cash flow already available for us at the start of opening will help.
Our industry is set up with several benchmarks to accomplish and it will be the goal of every stylist on staff to do this. For instance, one of the most desirable benchmarks to attain is a booking rate of 80%. This is the standard that says staff and salon are profitable. I would love to accomplish this for my staff members at the one-year mark however if we were there at 3 years I would still be thrilled.
Time is money in the hair industry, so our staff will need to be efficient with their time to generate higher profits and this will be taught in our training sessions.
I plan to start the business with cash and have an emergency fund available in a time of distress. I understand that things will inevitably happen beyond my control, so having a good start will help with unforeseen occurrences.
My current boss always is looking for staff whether we need it or not, because she says she has learned that it helps to always have people to call in a time of need.
I am not going to be working behind the chair at Amaryllis even though I will have the most experience and the reason for this is that it will enable me to work on all facets of the business and jump in wherever I’m needed.