IMPORTANCE OF AN EFFECTIVE

Liz McKeon, Business Expert and Founder of the International Salon Business School, UK, writes about the importance of creating an effective business plan for your salon for accountability of your long-term vision and strategy

A well-written business plan is an important tool because it gives the business owner the ability to lay out their goals and track their progress as the business continues to grow. Formulating a business plan should be the first thing done when starting a new business and is always necessary for attracting investors.

The primary importance of a business plan is to help the business owner make better decisions, as it can determine the answer to some of the most critical business decisions ahead of time.

The practice of writing the business plan annually helps the salon owner to articulate their vision in realistic terms and better determine if there are any gaps in the strategy for business growth.

Be steady and secure

The discipline of writing and updating your salon business plan is also to avoid making big and costly mistakes, as every section of a business plan can help spot some of those potentially critical mistakes before they arise.

Many salon businesses are created out of passion and while passion can be a great motivator, it is not a guarantee of long-term success. Planning how to turn that vision into a successful salon business is an important step between concept and reality. Your business plan can help to confirm that your idea also makes business sense.

Your business plan can help to keep you accountable to your long-term vision and strategy. Sharing your vision also helps to ensure that all staff members are aligned with what you are doing and share the same understanding of your salon objectives.

Having a business plan in place allows you to easily share relevant sections with those you rely on to support the salon, such as external professionals like your accountant, marketing, freelancers and mentors.

If you need to secure outside financing, such as from a bank, or are ever considering selling your salon in the future, you have to be able to prove that your business is viable in the long-run: your business plan is the most effective way of demonstrating this.

Writing a business plan can go a long way in helping you better understand your competition and the market place you are operating in, demonstrating customer trends, potential business disruptions and other insights that aren’t always plainly visible.

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Having to draw up revenue and expense projections, devising operational plans and understanding your market can all help reduce the risk factors of being a small business owner.

Business plan content

Explain in detail your proposed services and products, team requirements, outline your marketing/sales plans and seriously focus on financials.

Whether starting off or securing funding, clarifying your goals or getting your team on the same page, business plans are invaluable for providing a pathway to salon success.

Develop a plan that serves you, your business and its future growth. Keep it up-to-date and focussed on the elements vital to your success, including where you are, where you want your business to go and how you plan to get there.

Finally, a great business plan doesn’t need to be expertly written to be effective, but it should be written so you can expertly execute it.

A good business plan will follow the following format:

Executive Summary

The one universal aspect for every plan is the inclusion of an executive summary, which is your document’s introduction to the reader, so be sure it is well-constructed.

Start out with a compelling summary.

Business Overview

The second section includes the background and history of your salon. If your business has a mission statement, include it in this section.

Service and Product Information

In this section, details what your salon does, including the services you provide and the products for sale. Include details about how your salon is a benefit to clients, your unique selling proposition and what is your company’s market advantage.

Market and Sales Plan

Within your business plan, you should convey a grasp of your target demographics and how to reach them. Include key points such as, how to price your services, how to promote to clients, how you plan to keep clients and grow your market share.

Financials

The best financial plans will include the following tasks:

• Financial forecast

• Income statement

• Balance Sheet

• Cash flow statement

• Capital expense expectations

• Current monetary health of your business and what future success may look like

The more comprehensive your financial data, the better.

Salon/Organisational Team

Your team is an extension of your company bio. The goal is to clearly define your company’s hierarchy and the key players at the top.

Include details about your salon’s management style.

Company culture is a useful section in today’s business climate. Placing importance on this in your business plan will set your document apart from others.

This is also a good section to detail any personnel plans or upcoming changes.

Appendix

In creating a comprehensive plan, you may need to include supporting documentation. The appendix helps organise requested information that didn’t fit within your primary document. These may consist of the following:

• Contracts of legal documents

• References

• Permits of licences

• Product images

• Organisational charts

• Detailed financial reports

Funding Request

For start-ups or established salons, seeking investment, you will need to include a dedicated section that outlines the request. Specify the type of funding, how you will use the funds and over what timeframe.

Common mistakes to avoid when forming a business plan:

• Not making one!

• A poor executive summary

• Underestimating your finances

• Neglecting to address potential risks

• Insufficient market research

• Poor grammar, spelling and punctuation

Take your time when writing your business plan to avoid mistakes and ensure that your business plan reads well and covers all elements it needs to and spend adequate time taking part in market research to ensure you have a thorough understanding of your market.