In order to understand what it takes to successfully write a comprehensive business plan, I will be reviewing one. My chosen career industry is the salon and spa industry, and will be reviewing a business plan for Epiphany Salon. I will then decide if this company is worth me investing $5,000 into it or not.
Epiphany Salon is themed as an “urban, industrial, techno, chic” corporation, desiring to be a hip service and product center and also an educational center for cosmetology located in downtown Green Bay, Wisconsin ("Hair Salon Business Plan Business Plan - Vision/mission, Product strategy, Market analysis, Financials", 2018). Since 1997, Epiphany is considered to be in the start-up stage and has established three departments internally: Epiphany the Salon, Epiphany Male Room, and Epiphany Educational Center.
Epiphany focuses on a fill service salon, retail center, and educational center. They have acknowledged their challenges within the salon industry as recruitment, retention, and productivity. However, the president, Barbara, and vice president, Rhonda, have owned and operated successful businesses in the past and have created a vision and mission for the salon, as well as goals and objectives for success (See appendix A).
Alongside Barbara and Rhonda, they plan to incorporate company directors to help with education and retail sales. The main focus for Epiphany is to grow professional cosmetologists in order to recreate the image of cosmetology by teaching strong technical and communication skills, and strong sales. Aside from these training focuses, they strongly believe that cosmetologists need to be trained in personal financial management and estate planning to establish long-term commitment. This vision for Epiphany is important for the image and growth of cosmetologists, and will also attract great cosmetologists in the area as well.
Being a salon owner myself, I think it is important they have established multiple roles at the company. I believe their mission, vision, and commandments are very focused and appropriate, and if they are followed and enforced, they will ensure success.
Products and Services
Bettiva is the product of choice for Epiphany the Salon and Epiphany Education Center. Although this product brand is well known in Wisconsin, Epiphany sees this as an opportunity and not a threat due to them having the largest inventory amount versus other salons. This will be the only product line offered, keeping Epiphany exclusive and allow for easier inventory control.
Epiphany Salon will be a full-service salon, offering a variety of different salon services in order to attract multiple different clienteles (See appendix B for full list of services). The Education Center is also addressed, by acknowledging the required hours and training needed for proper licensing of cosmetologists, nail technicians, and estheticians.
My salon is also an exclusive salon by having only one brand behind us, Aveda. This is a great business model as it allows for client loyalty and establishes longevity with a brand. Epiphany definitely takes it to the next level by creating Epiphany Education Center for many reasons. They will not be at the mercy of having to hire service providers trained by other schools and with other brands. They will be in control of grooming new students and training them the way they would want them to be in their salon, creating a great environment and educational experience. They will also be the desired salon for students to want to work for after they become licensed.
Epiphany's marketing plan is somewhat vague due to it being in the development stages, but is focused on growing the business by 10% annually. Luckily, they have budgeted 3% of the total revenue to marketing and have created a 12-month promotional grid for direction and consistency. Right now the logo is being created and will be copied immediately, and they are beginning the designing phase for the storefront.
In order to create awareness upon opening, Epiphany will send out press releases for an open house. They have established a direct marketing plan for the new services offered and their new product menus, and will promote education recruitment quarterly. Aside from these initial promotions, they have established measurable results for marketing:
• Increased sales
• Increased market share
• Improved image
• Increased knowledge of business
• Identified competitive advantage
• Created improved climate for future sales
Although they have established their desired growth expectancy for Epiphany based on marketing, they have not recognized the exact marketing options in order to make this happen. This raises some concern as to exactly how they plan on increasing all of these areas; through social media? Printed ads? Word-of-mouth? Referral programs?
Management and Organization
The two executive officers, Barbara and Rhonda, have both established their personal responsibilities, as well as others inside the organization. As the President, Barbara will be overseeing most of the salon, retail, and male room operations:
• Retail center. Oversee the operations of the retail area. This includes inventory, stocking, and displays.
• Oversee receptionist duties and scheduling.
• Oversee the Male Room operations.
• Participate with salon managers. Managers should report to Barbara for needs.
• Handle payroll operations.
• Participate with interviewing.
• Act as salon manager until department can support a head.
• Develop color specialization.
As the Vice President, Rhonda will be overseeing the educational center:
• Educational director for Epiphany Salon Education Center.
• Marketing planner.
• Staff meetings.
• Oversee goals and evaluations.
• Co-associate program. Participate with Artistic Director.
• Develop Epiphany fashion newsletter.
• Develop epiphany.com web page and future shopping center.
• Salon technology and training.
• Participate with interviewing.
• Number cruncher.
Aside from establishing their personal responsibilities, they have also created job positions for directors of each department. There will be an Artistic Director, Receptionist, The Male Room Manager, Technicians, and Nail Technicians. They have done a very thorough job of defining not only each set of responsibilities, but also their educational and experience educations and compensation plans as well. Again, they have the advantage of grooming their technicians and nail technicians in their own educational center.
Personal Financial Statement
In order to operate at an 80% productivity rate, Epiphany has identified their personal financial statements for Epiphany the Salon, Epiphany Education Center, and Epiphany Male Room (See appendix C for financial statements). Overall, they are expecting $1,632,751 annual maximum productivity with 16 stations, combining service and revenue dollars.
The salon is expected to be open 62 hours per week and to produce $1,439,907 annually alone. This is why the education enter is a such a good idea, because they will be given the opportunity to hire many people they train in order to operate a 16 chair salon at an 80% productivity level. Their education center isn't the focus of the annual revenue (only expected to produce $180,000 annually), but will increase the productivity of the salon.
Start-up Expenses and Capitalization
Epiphany has established a great plan by addressing the start-up expenses and capitalization needed to make this business thrive. (See appendix D for full list). They have acknowledged and addressed every possible area of focus they could think of, which ensures they have given it much thought and consideration.
Overall, they have totaled $65,440.00 needed for the start up of Epiphany the Salon and Epiphany Education Center combined. They have acknowledged how they will be paying for this, and where the money will go. They have also addressed how the funds will be paid back, by stating the loan repayment plan with a 5-year return on investment, and the projected income based on the salons productivity. This is estimated on an 80% productivity level, which I believe is a stretch in the beginning. However, they feel it is realistic based on their demographics.
Epiphany Salon has organized their financial position and has concluded it will take a total of $163,880 to safely grow the business. With this amount, 20% will come from the president and vice president as a personal investment, 50% from a financial institute, with the remaining 30% from other investors. Out of the totaling $163,880, 20% will be immediately put into a savings account for security.
This financial plan has been very thought out, identifying a profit and loss projection for 12-months, an amortization schedule, start-up costs, operational productivity expectations, balance sheets, income statements, statement of cash flows, gross revenues, and cash flow analysis.
In conclusion, I would absolutely invest $5,000 into Epiphany due to the expected growth of the company and the education center. The financial statements are thought out and trusting, and the business model provide reassurance for success. Combined with the educational center, Epiphany Salon is expected to see growth and revenue immediately, with the opportunity to become a very profitable salon. I wouldn't be surprised to see this become a chain or corporation in its early years.
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