Liz McKeon, an internationally renowned salon expert, bestselling author, speaker, salon coach and trainer, has provided the following column with these great tips on how to create a business plan for your salon. What a great way to kick off 2023!
The Importance of a Business Plan
Business plans are like road maps; it is possible to travel without one, but it will only increase the likelihood of getting lost along the way. Rather than putting yourself in the position where you have to stop or circle back and start over, entrepreneurs often use business plans to help guide them. This is because having a business plan will help the salon owner to see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success.
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.
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 help 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.
Approach your business plan as a living, breathing document. Ideally, create a master business plan, that is kept up to date, based on your salon’s activity. You can then tailor that plan to a specific request of need without having to recreate from scratch again.
Once you have a grasp on the “why” behind business plans, you can confidently move forward with creating your own. Here are the components your plan should include:
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/Organizational 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 licenses
• Product images
• Organizational 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.
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 salons and its future growth. Keep it up to date and focused on the elements vital to your success, including where you’ve been, 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 is should be written so you can expertly execute it.
Liz McKeon is the founder of the International Salon Business School, is an internationally renowned salon expert, a bestselling author, speaker, salon coach and trainer. Liz recently received the perpetual "All Stars Thought Leader Award in Empowering Female Entrepreneurs." Read more about her at www.lizmckeon.com.