Business Finance for Managers: Evaluating Risk and Budgeting for a Unisex Salon

This report on business finance for managers covers evaluating risk and budgeting for a new unisex salon, including details on fixed and variable costs, budgeted profit and cash flow, break-even point and margin of safety, key performance indicators, and recommendations for improvement. The report includes market research, location analysis, and risk assessment for the salon business, as well as a budgeted profit and cash flow spreadsheet. The report concludes with recommendations for the salon to continue researching and innovating to retain customers and improve operations.

Business finance for
manager

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
1.Give details about the chosen business plan and do evaluate risk associated with business
which it might face during operation. ........................................................................................3
2. Give details about fixed cost and variable cost involved in the business. ............................5
3.Provide a budgeted profit for the operation of the salon for 1 year.........................................5
4. Provide budgeted cash flow for a year of operation ..............................................................5
5.Calculate the break-even point and margin of safety...............................................................5
6. Describe the key indicator performance for the business ......................................................6
7. recommendation for the business based on the analysis and scope for improvement in
operations....................................................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business finance, is referred as raising and management of capitals by trading entity. It is
used by an business entity to meet its shorter period aims and long term goal also production
commencing requirements (Al-Shammari, Farooq, and Masri, eds., 2020). In this report a
business plan for a new business have to be started. in which whole details about its functions,
what will its selling price, areas of investment, its situation where its facilities will be available.
What will be its potentials yield from the work it is going to be performed. Also different way
measuring the performance and risk management is discussed.
MAIN BODY
1.Give details about the chosen business plan and do evaluate risk associated with business
which it might face during operation.
A business plan is framework that provides in detail a company's plan to achieve its
objectives. An effective commercial plan guides the proprietor at each stage from every starting
till the operation continues. It is a roadmap that how a work will operate and generate income in
the market. It includes all the system about goods engineering, packing, delivering in the market
and how much return it will make. Trading setup is made futher lot investigation and
environment evaluation. It contains information about the potential buyers and policy regarding
promotions. Fresh entrants in the marketplace must be entirely mindful of the threats and
uncertainties present in the specified are where the operations going to take place.
(Bandyopadhyay, 2022).
Occupational idea- The proposal is to commence a unisex salon named “new me”. It is a whole
amenity salon for ladies and gents offering all the services such as skin, hair, makeup and body
massage. It is a self-owned entity functioned by Noah clan. The facilities the entity offers care
readily available by booking an appointment. There is app available online by downloading the
app, services can be booked and seen. Also client can walk in and enjoy the amenities
Market research- The rivalry in business surroundings is cumulating every day. There is every
day need to innovate the product and bring diversification in the business in order to beat the
market.
Location- The “new me” is situated in Bristol's famous mall Cabot circus in United Kingdom, it
is a famous mall. Have about 1000 foot record every day. There are lot residential houses and

offices near the location. It is a prime location where the salon is situated (Bratten, and Cheng,
2022)
Consumer- The customer for the services would be basically 18+ population mainly. It can be
both male or female who requires any type of salon facilities with best organic product.
Competitors- Lavish, TONI&GUY, Bonomini hair salon and Gaudi Hair these are some well-
known brand in UK.
Value scheme of the creation- The salon is one of its kind because it offers most basic to most
professional service at very effective cost and offers the best consumer experience. The salon
keeps the product which are organic and vegan for the customers who prefer such product.
Risk associated with business start-up-
In the service of salon and beauty there are lot of threats present due to competition. Basically
whole a lot off the firm has a lot effect from the client’s review likeness and gratification. Beauty
and looks are essential this glamorous world looks upon at first. Hence, the beauty salon cannot
bear any risk with the customer (Canals, 2020). In beauty care salon its location and ambience
matters a lot, high quality services and comfort attracts customers. Here is the basic list of risk
involved in operating a beauty salon such as
Poor cleanliness- Since the pandemic hit the world, cleanliness and safety has become public
priority. Hence, a salon which is unclean, unhygienic or dirty in any case would bring down a
sale to deep bottom. Since the salon is starting and the idea behind is to provide the maximum
satisfaction the entity should be fully sanitized and sterilized. Equipment once used and tools
which are used once should not use again. All the tools must be everyday washed and proper
cleanliness of them should ensure.
Hazardous Chemicals- often its seen that salon owner for earning extra normal profit user
product which are harmful for risk are often find sued by the customer. The product used should
be of high quality accordingly prices should be charged. Customer preference and warning must
be carefully analysed before doing anything on the body. Failing to keep any ensure and
protection of this concerned might lead to customer losses.
Trips & falls- Beauty salons have lot to deal with water, liquid and other slippery substances
which should be taken care of. Risk of injury is a lot in this business. Proper care and special
type of furniture must be installed inside the premises (García‐Sánchez, and García‐Meca, 2018)
.

Unprofessionalism- this business is a lot based on customer satisfaction which is works of human
talent, employees should be well trained and practised so that customer services at the best is
provided to them.
firm sponsorship: The resource of finance is chosen as owner’s deposit which is financed by the
business head, that covers 60% of the trade investment. Rest 40% is booked from bank credit at
the 7% P.a. interest rate (Longo, Nicoletti and Padovano, 2019).
2. Give details about fixed cost and variable cost involved in the business.
Business of beauty salon must have commenced with all the all the facilities it requires
hiring of professional, tools and equipment’s and other cost. The cost must have subrogated
based on in its nature.
Fixed cost: Rent paid for the premises, tools and equipment purchased for the business such as
spa machine, colouring, Accounting and bookkeeping, Debt repayment, Employee salaries,
Insurance, Loan payments, Maintenance, cleaning and repairs, Marketing, Memberships, dues,
subscriptions, Office supplies, Rent, Salon software, Telephone and internet costs, Utilities (heat,
light, water).
Variable cost- Cost involved per unit sales is Colour product orders, Commissions, Credit card
processing, Goods sold for resale (retail products), Loan and credit card interest, Meals &
Entertainment, Operational expenses (supplies like foils, colour products, etc., Supply Training/
Education, Travel (Wang, and et.al., 2020).
3.Provide a budgeted profit for the operation of the salon for 1 year
Provided in the spreadsheet attached.
4. Provide budgeted cash flow for a year of operation
Provided in the spreadsheet attached
5.Calculate the break-even point and margin of safety
Break-even point (in units) = Fixed Cost / (Selling price per unit – Variable Cost per Unit)
Fixed Cost = 60720
Contribution = 72,193.46
= 32.82

BEP UNIT = 2092
MOS = (TOTAL SALES –BEP UNIT)
= (2200-2092)
=108
6. Define the key indicator performance for the business
Key practice indicate is the costing technique which measures the real outcome with standard
limits. This helps the organisation to rectify faults and slip-ups so as to increase its income. It
helps in challenging with competitive business firms. This helps in identifying business
opportunity and gain competitive advantage.(Watson, Vaz, and Wang, 2018).
 Customers: the more the customer is satisfied more profit is generated by the business
entity. They are end user of the product therefore their review and feedback should be
properly analysed and evaluated so that the services could improvised. This will help the
business to retain the customer for longer term.
 Goods and services: This indicator describes about quality and quantity of the product.
The number of repeated clients in the organisation gives analysis about this.
Effectiveness of marketing campaigns organised by the business entity. The satisfaction
customer gets after taking services from salon. How they recommend to their friends and
family.
 Sales and Revenue: the amount of profit generated by the organisation meets its target or
not. Sales increase with more satisfied clients, and retention rate of the customer. How
many new customer comes in contact and how many of them becomes a regular
customer to salon? Sales and revenue is most important aspects of the salons success in
the market (Watts, Schoder, and Hodgson, D., 2018).
7. recommendation for the business based on the analysis and scope for improvement in
operations
The start-up business is well defined and prepared by extensive research and market
scanning. Though everything is well decided and prepared the financial plan is quiet competent

to survive in the competitive market. Regardless it is recommended to the salon that it should
continue its research and improvising the product is important to retain the customer. New offers
and discount must be provided so that new customer gets attracted toward the salon.
Modification, innovation and creativity should be continuing process for the salon (Williams,
2019).
CONCLUSION
From the above analysis it can be said that for a start-up organisation business
environment scanning, risk assessment and analysis is very much essential. Business finance
plays vital role firms stability, growth and development. The management should properly plan,
organising, direct and control its activity, there are various method as suggested in the above
report which can be used for finding out most effective method for carrying out the operations.
In the salon business customer satisfaction must be recognised and the business entity must
careful while providing the services.

REFERENCES
Books and Journals
Al-Shammari, M., Farooq, M.O. and Masri, H. eds., 2020. Islamic Business Administration:
Concepts and Strategies. Bloomsbury Publishing.
Bandyopadhyay, C., 2022. How do Social Enterprises Position their Brands to Stakeholders? An
Inductive Study from the Perspective of Founders and Top Managers (Doctoral
dissertation, Xavier Institute of Management, Bhubaneswar).
Bratten, B. and Cheng, S.Y.M., 2022. The Information Content of Managers’ Climate Risk
Disclosure. Available at SSRN.
Canals, J., 2020. The evolving role of general managers in the age of AI. In The Future of
Management in an AI World (pp. 37-64). Palgrave Macmillan, Cham.
García‐Sánchez, I.M. and García‐Meca, E., 2018. Do talented managers invest more efficiently?
The moderating role of corporate governance mechanisms. Corporate Governance: An
International Review, 26(4), pp.238-254.
Longo, F., Nicoletti, L. and Padovano, A., 2019. A system for supply chains diversification and
(re) design: supporting managers' perspective in the face of uncertainty. International
Journal of Logistics Systems and Management, 32(2), pp.168-194.
Wang, Z., and et.al., 2020. Drivers and outcomes of supply chain finance adoption: an empirical
investigation in China. International journal of production economics, 220, p.107453.
Watson, J.R., Vaz, D. and Wang, D., 2018. Incentives of Socially Responsible Fund Managers:
Remuneration Incentives or Job Loss Concerns?. Available at SSRN 4073014.
Watts, L., Schoder, M. and Hodgson, D., 2018. The experiences of human service managers in
contexts of change and uncertainty. Australian Social Work, 71(3), pp.306-318.
Williams, D.A., 2019. Finance Blunders. In International Business Blunders: Lessons for Future
Managers. Emerald Publishing Limited.