HAIR SALON BUSINESS PLAN NIGERIA UNISEX
HS Saloon is a contemporary unisex hair salon that will open in gwarinpa, Abuja, FCT. The idea for the business was initially generated in order to fill a void in the current market. HS Saloon will provide the young, male and female consumer with a combination of products and services that is unlike anything offered thus far. The goal of the business is to deliver a unique yet stylish collection of hair product that changes frequently, personal service, a friendly and relaxed atmosphere, and prices that won’t break the bank.
The name, HS Saloon, was chosen because it implies a sense of vitality and expression, and these are two ideas that could easily be used to describe the business’ target customer. The HS Saloon customer enjoys fashion and seeks hair that are trendy, yet still allow her to stand out a little from the crowd. She seeks an informal, unstuffy shopping environment but expects attentive associates. All of these things are what HS Saloon will provide.
Although still young, the HS Saloon owner and manager already has substantial retail experience and will apply him work and educational knowledge to effectively run the business as a sole proprietorship. The store’s location in gwarinpa will help it to capitalize on the growing heavy area foot traffic.
Using market-‐based sales forecasting, HS Saloon is expected to break even within the first year of operations. Net Income from Year 1 is estimated at around N 30,000.00 and should grow to over N 48,000.00 by the end of Year 3. Although the retail industry has been in a decline due to the economic recession, consumer confidence has recently begun to rise. This fact, along with the assertion that the store will fill a gap in the current market ensures that HS Saloon will live up to its name and continue to exhibit growth well beyond the third year.
BUSINESS DESCRIPTION AND VISION
The purpose of this business plan is to fill a noticeable void in the unisex Hair treatment. The proposed salon, HS Saloon, will combine elements of existing stores in order to meet the market’s needs in the best way possible. Up until this point, the male and female client has been forced to undergo a constant evaluation of benefits and sacrifices.
The opening of HS Saloon will introduce option five, providing the customer with the best of the best. The key elements to success will include: a unique yet stylish hair style that changes frequently, personal service, a friendly and relaxed atmosphere, and prices that won’t break the bank.
HS Saloon will be a leader in the retail sector by offering customers unique and stylish unisex hair at affordable prices. The store will provide a relaxed and easy-‐going atmosphere in which to shop, and its patrons will enjoy top-‐notch customer service and benefits.
HS Saloon will provide all the necessary products and services to outfit the young, male and female in styles that make him feel confident and unique.
HS Saloon is committed to the following values:
- Maintaining the utmost level of integrity in all customer and vendor transactions.
- Educating customers about recent fashion trends and how to properly style their
And most importantly
- Meeting customer needs and wants at all
ORGANIZATION and STRUCTURE
HS Saloon will be organized as a Sole Proprietorship due to the ease of organization and simplicity of structure.
HS Saloon will be located in gwarinpa, specifically N15b Gwarinpa by ibanga str,Abuja. This decision has been made based on economic factors of the area and on the notion that the community is well aligned with the image that HS Saloon would like to portray
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MARKET ANALYSIS AND FORECAST
HS Saloon will operate in the retail industry, and more specifically in the Unisex Saloon, which represents a business worth well over N 40 billion nationwide. The barriers to entry in the Apparel Retail Industry are relatively low; setting up a single, independent retail establishment does not require much capital. The industry is “moderately concentrated,” and there is substantial room for small start-‐ups.
TARGET MARKET IDENTIFICATION
The geographics, demographics, psychographics, and behavioral aspects of the HS Saloon customer are as follows:
- Resides in , Abuja
- 16-‐35 year-‐old male and female
- High school/ college student or young professional
- Income > or = N 50,000 Psychographics
- Finds excitement in trying new things
- Highly reliant on technology (Cell-‐phone, laptop, ) Buying Patterns
- Shopping is viewed as a past-‐time
- Spends around N 10,000/ year on clothes
- Keeps up with the latest trends, but does not wear them head-‐to-‐toe
- Seeks unique yet versatile pieces
- Closet reflects a balance of quality and quantity
The target customer for HS Saloon is a 16-‐35 year-‐old male and female. When he is not shopping, the HS Saloon customer is either a student or young professional. As a student, him income is minimal and as a young professional she has not yet worked long enough to establish a significant net worth, so in both cases she is budget conscious. That being said, the HS Saloon customer is not afraid to splurge every once in a while on a great pair of jeans or some fabulous heels. Usually, she shops around for deals, but impeccable service could be the push to convert him to a loyal customer.
MARKET-‐BASED SALES FORECAST
As of 2015, the total population that lived within ten minutes of the area in which HS Saloon will be located) was 163,809. Adjusting for an average population growth rate of 4.4% would bring that number in 2017 to 212,096. The following figures illustrate the steps taken to determine the total target market.
- Total population 10 minutes from Abuja (20017)2 212,096
- Percentage of male and female population 9%
- Total male and females 10 minutes from Abuja 110,078
- Percentage of population aged 16-‐35 8%
- Total male and females, 16-‐35 10 minutes from Abuja 38,300
- Estimated percentage falling into target market 50%
- Total target market 19,150
From the advisory of a former unisex apparel salon owner, it was determined that of the 19,150 target customers, only about half will even enter the store in the first year due to low awareness. This number is represented below as the “total captured market.” Furthermore, average retail conversion rates usually fall between 20% and 40%; it is assumed that the conversion rate for HS Saloon will be on the lower end of this spectrum due to the high amount of pedestrian traffic in Gwarinpa.
- Total target market 19,150
- Total captured market (Year 1) 9,575
- Estimated conversion rate 25%
- Total paying customers per year 2,394
- Market share (Year 1) 5%
The final group of 2,394, rounded to an even 2,400, can be broken down furthim into three groups, which are described in the chart below: infrequent clients, moderately frequent clients, and loyal clients. The average consumer makes a total of twenty-‐two shopping trips per year for apparel and spends about N 91800 annually.
HS Saloon will sell contemporary hair products for men and women. Many of the brands to be sold will be selected at Hair treatments. An effort will be made to showcase local talent as well, especially in the area of jewelry and accessories.
Products will be sourced from retail wholesalers at Hair treatments in the United
States. In order to provide a unique product assortment, Hair treatments will be chosen that are not standard for local salons. Many local salons source from the china and other foreign markets for proximity reasons, so HS Saloon hair will be sourced from places like paris and Dubai.
In 2017, the average gross margin for unisex apparel stores was 44.3%. Based
on the fact that HS Saloon is somewhat of a specialty retailer with unique products and services, the gross margin goal will be set at 50%. Therefore, products in the store will retail for double the wholesale price.
The following section will describe promotional and advertising methods that will be used to educate the target market about HS Saloon. Although many of the selected methods are free, a list of proposed costs is included at the end of the section.
The initial goal of HS Saloon promotions will simply be to create awareness.
Therefore, the business will be heavily reliant on word-‐of-‐mouth for the first year or so. Part of the job of HS Saloon associates will be to tell all of their friends and family about the store. Anothim major asset that will be used for promotion is the use of social networking sites like Facebook, MySpace, and Twitter. These free websites are all used frequently by members of the HS Saloon target market and are great ways to keep customers updated on new products, store events, etc.
Annual Marketing Costs
- Newspaper and magazine ads N 3,000.00
- In-‐store events N 1,000.00
- Display accessories N 250.00
Although just a recent college graduate, the owner of HS Saloon, Udeme effiong, already has almost six years of retail experience. Since the age of sixteen, Udeme effiong has worked for several salons. This experience has allowed Udeme effiong to gain substantial knowledge that is particularly relevant to opening him own clothing and accessories store. He has an understanding of the following areas: merchandising, loss prevention, management, shipment/replenishment, and most importantly-‐ customer service.
Some of the initial services required for the set-‐up of the business will have to be outsourced to consultants; the HS Saloon employees will not have all of the necessary skills to perform these tasks. The following consultants will be used, and their estimated costs can be found at the end of the section.
- Accounting: A licensed CPA will be hired to assist with the preparation of tax returns and financial statements, and to help manage the “books” on as-‐needed basis. The CPA’s firm will also be used to process
- Legal: An attorney will be hired initially to assist in the legal formation of the business. After the formation is complete, the attorney may help with any othim legal issues that may arise during the course of
- Interior Design: Before any merchandise ever arrives, the rented commercial space in Gwarinpa must be designed to appeal to target An interior designer will be hired to help turn this space into HS Saloon.
Estimated Consulting Costs
- Accounting (annually) N 2,500.00
- Legal (first year) N 1,000.00
- Web Design (one-‐time fee) N 1,000.00
- Interior Design (one-‐time fee) N 2,000.00
Startup expenses for HS Saloon have been estimated at N 399,930.00. Startup assets including initial cash required, startup inventory, and long-‐term assets have been estimated at N 415,000.00. This brings the total funding required to N 814,930.00. A portion of the planned investment will be covered through a 10-‐year, N 50,000 Small Business Association Loan, with interest at 8%. Total starting capital at the beginning of Year 1 will be -‐N 85,000.00.
Based on the assumption that HS Saloon will achieve the forecasted sales of
N 3,600,000.00 by the end of Year 1, Net Income will reach N 290,860.00 at that time. Growth rates of 15% in Year 2 and 5% in Year 3 will result in respective sales of N 4,140,000.000 and N 4,347,000.000 and in respective Net Incomes of N 438,300.00 and N 482,370.00.
Over the course of the first business year, cash flows will increase from -‐N 85,000 from startup costs to an ending cash balance of around N 240, 000.00. While this amount is certainly not a large sum of cash to have on hand, the ending cash balance for Year 3 is expected to grow to over N 4,900,000.00.
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