Formulating a business plan

Having a business plan will help you to be organised, make important decisions and improve your overall potential for success, according to salon business expert Liz McKeon

Business plans are like road maps; it is possible to travel without one, but this will only increase the likelihood of getting lost along the way. Rather than putting themselves in the position where they have to stop or circle back and start over, entrepreneurs often use business plans to help guide them.

There are numerous benefits to having a business plan. As the owner, it can help you exercise better judgement, as it can determine the answer to some of the most critical business decisions ahead of time. It gives you the ability to lay out your goals and track their progress as the business continues to grow. A plan is also necessary for attracting investors, so formulating one should be the first thing that is done when starting a new business.

Writing a business plan annually helps you to articulate your vision in realistic terms, and determine if there are any gaps in your strategy. It can also go a long way in helping you to better understand your competition and the marketplace you are operating in. The discipline of updating it helps to avoid big and costly errors, as each section can potentially spot some of those critical mistakes before they arise. Furthermore, it can keep you accountable to your long-term vision and strategy – sharing this vision also helps to ensure that all staff members are aligned with it, and understand the salon objectives.

Having a business plan in place means relevant sections of it can be accessed by those who support the salon, including external professionals such as mentors, accountants and marketing freelancers. If you need to secure outside financing, or are ever considering selling your salon in the future, you have to be able to prove that your business has long-term viability – your plan is the most effective way of demonstrating this.

Creating your own plan

Approach your business plan as a living, breathing document, and include the following:

1 Executive summary – the one universal aspect for every plan is the inclusion of an executive summary. This is your document’s introduction to the reader, so be sure it is well-constructed and compelling.

2 Business overview – this second section includes the background and history of your salon. If your business has a mission statement, include it in here.

3 Service and product information – add details in this section about what your salon does, including all the services you provide.

4 Marketing and sales plan – 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, and how you plan to grow your market share.

5 Financials – include a financial forecast, income statement, balance sheet, cash flow statement, capital expense expectations, and current monetary health of your business and what future success may look like.

6 Team – the goal here is to clearly define your company’s hierarchy and the key players at the top. 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.

7 Appendix – you may need to include supporting documentation. The appendix helps organise requested information that didn’t fit within your primary document, such as:

• Contracts or legal documents

• References

• Permits or licences

• Product images

• Organisational charts

• Detailed financial reports

Develop a plan that serves you, your salon 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 an author, business coach, trainer and mentor, specialising in the hair, beauty and spa sector. For further information visit lizmckeon.com or call +353 86 386 1243.