Young Hair Studio - Research Paper Example

Young Hair Studio “Do not fear to talk with your stylist” Business plan Feasibility and Marketing plan Feasibility Location The business will be located at Adelaide Street, London, Ontario. This is a four-minute drive from Canadian Linen and Uniform Service Co in Middlesex County. According to 2013 statistics, Middlesex County has a population of 474,786 people (Statistics Canada, 2014), and attracts people of different ethnic and racial backgrounds. The population of London is growing fast and this provides a good market for starting a business. The population of London is 366,151, which provides an attractive number of potential customers for the business (Employment, Population, Housing and Non‐Residential Construction Projections, City of London, Ontario, 2011 Update, 2012). The location on Adelaide Street is ideal since there are few salons in the surrounding area. The street connects to other major streets in London, which makes the transportation of inventory and other commodities easy. Site The business site on Adelaide Street is a visible place just off the road with shopping malls on its opposite side. The malls increase traffic on the street, providing a better opportunity to reach out to more potential customers. The site for the business is 200 square feet, which is ideal for the various services that the business will offer. An additional 50 square feet is available as office space, enough to accommodate the managerial staff and business records. There is ample parking space of 280 square feet at the basement of the building. Site expenses Considering the business viability of the area, this is a prime site. The business will incur site expenses at the rate of $9.50 per square foot (For Lease: Office / Medical / Clinic, 2014). For the total of 250 square feet, the business expects to spend a total of ($9.50) (250 square feet) = $2375. This cost is inclusive of building insurance and maintenance costs. Market potential The average annual expenditure on hairdressing and related personal care is $829 per household (Affairs, 2011). This expenditure forms 1.4% of the total expenditure of the potential customers (Affairs, 2011). These figures indicate a good market potential for salon services, which indicates that the salon business is an attractive opportunity in this area. Competition The following are hair salons in the surrounding area, one-minute drive from the proposed business site (Yelp.com, 2014): Soul Mind and Body Spa located 1.1 miles away at 440 Albert Street Strathroy Sheer Elegance Salon and Spa located at Adelaide Street, London Magicuts located 0.5 miles away at 70 Carroll St E Unit A9 Strathroy Studio 83 located at 83 Frank Street Strathroy Skin Care Nails and Spa located at 891 Adelaide Street London First Choice Hair Cutters located at 10 Metcalfe St W Unit 1B Strathroy The major direct competitors are Skin Care Nails and Spa, and Sheer Elegance Saloon and Spa. Skin Care Nails and Spa is a threat because of celebrity status and adequate resources at its disposal. Sheer Elegance Saloon and Spa has a wide variety of services and offers them at lower prices. The indirect competitors include Studio 83, which is 0.6 miles away, and First Choice Hair Cutters, which is 0.4 miles away (Yelp.com, 2014). These indirect competitors have good publicity in the area. Young Hair Studio will provide customized hair solutions and home hair care in order to meet different customer needs. The salon will provide its services at relatively affordable prices in comparison to its competitors through increasing efficiency of operations, and minimizing costs without a compromise on quality. The site of Young Hair Studio is also advantageous to the business since the business is visible on the street and has the potential to attract many customers who also visit the surrounding shopping malls. The salon will offer unique cuts and hair-dos of different cultures and races in order to ensure that everyone’s taste is readily available. These unique services will give Young Hair Studio a command of the market since most people hardly find hair services that are in line with their culture. Sales forecast The sales forecast based on market share projections for the first three years is as follows (Plan Projections, 2013): Service Sales in $ ‘000 Year 1 Year 2 Year 3 Haircut 14 18.008 25.004 Perm 20.498 50.08 90.08 Hair design 50 150.5 300.5 Total 84.498 218.588 415.584 The sales forecast based on the business growth curve is as follows (Plan Projections, 2013): Service Sales in $ ‘000 Year 1 Year 2 Year 3 Haircut 20 70 120 Perm 20 50 100 Hair design 54.498 100 200 Total 94.498 220 420 Since the business expects to operate in a competitive environment, the sales forecast based on the market share will be appropriate. Young Hair Studio will be able to meet these sales estimates, although there is an allowance that slightly exceeds or is lower than the estimates. Protection of business Young Hair studio will purchase a business insurance policy to cover its operations and equipment. The premiums will amount to $800 per month, payable annually (Plan Projections, 2013). The business will outsource security services and use biometric systems for safety purposes. The business will offer its services on cash basis, there will not be any services on credit. Marketing Brand The business will position itself as a provider of diverse hair-related services with emphasis on professionalism and quality. This will enhance the organization’s unique services that cut across all the cultures that form part of Young Hair Studio potential clients. T-shirts and hair bands will provide a good platform for the selling of the brand. Business name Young Hair Studio is an attractive name based on the beautiful nature of hair in its youthful stage. The business name captures the attention of any potential customer as a service provider keen on the restoration and enhancement of good looks. Service mix Young Hair Studio will offer its services separately, although a shampoo wash will accompany all the services where appropriate. The following are the services the business will offer: Women’s Haircut, bang trim, child under 12, formal styling, highlights (w/cap), perm, relaxer, men’s haircut spiral perm, color, camo color (for men), shampoo and style, chemistry system treatment, and foil highlights/lowlights. The provision of these services will relate to the cultural and personal preferences of the client. This is advantageous since most of the competitors only provide these services with an urban perspective and have no consideration of other cultural preferences in the world. Pricing The business will use the marginal cost pricing method. This helps in ensuring that the business achieves its goal of providing quality and affordable services. The following is the pricelist for the services (Thomas Scott, 2014): Woman’s Haircut $38 – $56+ Color $56 – $73+ Bang Trim $12 – $16+ Shampoo & Style $27 – $31+ Relaxer (Does not include haircut) $75 – $105+ Men’s Haircut $29 – $40+ Spot Foil (part line only) $56 – $73+ Child Under 12 $22 – $31+ Spiral Perm (Does not include haircut) $118 – $140+ Formal Styling $68 – $83+ Camo Color (for men) $29 – $37+ Highlights (w/cap) $78 – $96+ Foil Highlights/Lolights $136 – $151+ Perm (Does not include haircut) $83 – $104+ Chemistry System Treatment $17- $17+ Distribution The business will offer its services within its premises although clients who wish to get the services at the comfort of their homes will receive them at an extra cost. A van with all the necessary tools for offering the services will be available at a given place upon the request of the client. Promotion The business will use various media for advertising its services. The media and the associated annual costs (Plan Projections, 2013) are: Media Cost in $ Bill boards 1200 Television advertisements 850 Website 150 Total 2200 The business will organize annual sales offers where clients will receive services at incredible discounts, and get gift hampers. These sales offers will give the business good publicity. The managers of the business will engage in personal selling during these events. Promotion evaluation The number of repeat sales and changes in the total sales volume are the manner in which the business will assess the effectiveness of its promotional tactics. A rise in the volume of repeat sales and total sales volume will indicate that the promotional strategies are effective. In case of ineffectiveness in the promotional strategies, the business will start venturing into print media like newspapers and magazines to promote its services. References Affairs, O. (2011). Consumer Trends Report – Chapter 9: Consumer Spending - Office of Consumer Affairs (OCA). Ic.gc.ca. Retrieved 12 October 2014, from https://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02117.html Employment, Population, Housing and Non‐Residential Construction Projections, City of London, Ontario, 2011 Update. (2012) (1st ed.). Retrieved from http://rethinklondon.ca/sites/default/files/documents/P4648CityofLondonEmploymentPopulationandHousingForecastDraftReportJune7.pdf For Lease: Office / Medical / Clinic. (2014) (1st ed.). Retrieved from http://www.dtzbarnicke.com/Client/JJB/JJBNA%20Web%20Listing%20db.nsf/5b1d91a237abc91f852570d800775fbc/59a869448afc1c6d85257cba00716156/$FILE/Adelaide%20St.%20N.%201121%20-%20LEASE.pdf Plan Projections,. (2013). Salon Business Plan Revenue Projection « Plan Projections. Retrieved 11 October 2014, from http://www.planprojections.com/industry-templates/salon-business-plan-revenue-projection/ Statistics Canada,. (2014). Focus on Geography Series, 2011 Census - Census metropolitan area of London, Ontario. Retrieved 12 October 2014, from http://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogs-spg/Facts-cma-eng.cfm?LANG=Eng&GK=CMA&GC=555 Thomas Scott,. (2014). Hair Salon Price List - Frederick, MD. Retrieved 11 October 2014, from http://www.thomasscottsalon.com/salon/salon-price-list/ Yelp.com,. (2014). Hair Salons Adelaide Street, Strathroy, ON, Canada. Retrieved 12 October 2014, from http://www.yelp.com/search?find_desc=hair+salons&find_loc=Spitalfields,+London#find_loc=Adelaide+Street,+Strathroy,+ON,+Canada APPENDIX Price List Read More