Salon Business Plan Analysis

This assignment requires you to thoroughly analyze a presented business plan for a salon. Pay close attention to the financial aspects outlined in the document, including cash outflow projections, loan repayment schedules, and the calculated closing balances across various periods. Your analysis should clearly demonstrate an understanding of the salon's financial health and future prospects based on the provided data.

Business Plan

Table of Contents
a. Executive Summary.................................................................................................................3
b. Situational analysis..................................................................................................................4
c. Strategic planning component..................................................................................................5
d. Marketing plan.........................................................................................................................8
e. Operations planning...............................................................................................................12
f.Cash flow projections..............................................................................................................12
REFERENCES..............................................................................................................................16

a. Executive Summary
In the recent times, preferences of people towards spa and beauty services have been
increased drastically. Moreover, now disposable income of UK people is significantly inclined as
compared to previous times. This in turn may result into rise in disposable income of the
individual and thereby purchasing power. Usually, customers spend high on luxurious aspect
when they have high disposable income. Along with this, people also have desire to look
beautiful and attractive. It is the main reason due to which individuals prefer to go to the beauty
clinic and spa center. From the secondary data investigation, it has been assessed that Britain’s
customer spending on spa services and beauty treatments account for £5.2 billion.
Hence, by considering such trend, business entity has taken decision in relation to opening of spa
centre named as ‘The Virtual Medispa’. Cited case situation clearly presents that in 2009
services and offering of the firm was neglected by the customers. With the motive to improve
such situation, owners of Virtual Group took decision in relation to offering of dermal services.
However, in 2012 a patient was burned due to the treatment provided by the inexperienced
personnel. The reason behind this high level of care and caution is required whenever chemical
peels are applied. Such incident has negatively affected the brand image of beauty or spa centre.
The rationale behind this, injured patient had revealed such story via press. Hence, being a
manager assigned with the responsibility to rebrand and re-launch the salon. Moreover, earlier
brand name was negatively affected due to the reviews provided by customers.
Thus, business entity will open salon with the new brand name such as ‘New Look’.
Owner ofsuch salon will commence or re-launch the business of salonand thereby offervariety of
services to the customers such as IPL hair reduction treatments and photo-
rejuvenation.Moreover, now people are facing issues in relation to hair fall etc, which in turn has
direct impact on their beauty aspect. For this purpose,owner of the business will purchase several
equipments which in turn help it in offering better services to thecustomers. Besides
this,entrepreneur will also appoint highly skilled nursing staffs who have ability to deliver better
services to thecustomers. Along with this, which will be offered by New Look is skin treatment
through lasers, intense pulsed light etc. which in turn helps in wrinkles, spots and textures.
Further, it can be summarized from the reportthat by placing emphasis in marketing campaign

New Look can persuade large number of customers and thereby enhance both customerbase as
well as profitability.
b. Situational analysis
In order to get information about the current situationmicro and macro factors will be
analyzed by business entity. Moreover, owners of the firm can build competent strategic and
policy framework only when they have information about internal and external environmental
aspects (Situational analysis, 2016). Hence, micro and macro analysis of New Look is
enumerated below:
Micro analysis
 Customers:By considering the current situation or market scenario it can be stated
customers preference towards the spa services are increased with thevery high pace.
However, current scenario entails thatin past customer satisfaction affected due to the
lack of quality services offered by personnel (Nelson, 2016). Hence, it has been assessed
that now customers prefer to visit spa which focuses of using and offering quality
products as well as services.
 Competitors: Now, there are several competitorsare available whooffer high quality spa
and beauty treatment services to then customers. Along with this, nowthere are several
hotels in London which offer spa services to the customers. It shows that high level of
competition takes place in the spa sector ofUK. Thus, for achieving success in the
strategic business environment owners of New Look is required to place emphasis on
innovative aspects.
Macro: Pest analysis
 Political factors:Tax policies as well as rules and regulations are the main political
aspects which have high level of impact on theprofit margin and overall strategies of
firm. UK taxation policy is favorable which in turn offers high monetary benefits to the
firm.
 Economic factors: Inflation and deflation are the major two conditions which have high
level of impact on the purchasingpower or capability of individual. Moreover, during the
period of deflation customers do not have enough money for spending on luxury aspect.

From evaluation, it has been analyzed that now economic condition of UK is good.
Hence, people prefer to spend more on spa which is positive indicator for the owner of
New Look.
 Social factors:Culture, income, age and educationetc are the main social factors thathave
high level of impact on the success of business operations as well as functions. Hence,
customers make evaluation of the ingredientsand quality of products which is used by spa
centre. Further, lifestyle is another major factor that closely influences the decision
making aspect of customers. Moreover, individualswho followhigh life style prefer to go
spa centre and takes services from it.
 Technologicalfactors: Now, technological advancement takes place in each and every
sector with the very high pace. Hence, there are several advanced equipments and
machines are available to New Look which can be used by it for offering high quality
services to the customers. Along with this, now majority of the companies place
emphasis on using social media to widen their reach (Basalirwa, Gough and Balunywa,
2016). In this, if business entity fails to with such technological advancement it may
result into loss of productivity and profitability.
c. Strategic planning component
 Mission: Such statement of Virtual media places emphasis on offering high quality spa
services to the customer at affordable prices. Hence, by following such aspects Virgin
media can maximize customer base and thereby would become able to gain competitive
edge over others.
 Vision: To become a leading medi spa in the category of small sized business
organizations. Values statement: Staff of Spa centre will offer standardized and quality services and
thereby providing customers with value of money. In this way, by offering similar kind of
services to all customers staff can develop satisfaction among the customers.
 Goals: A main objective of Virtual medi spa center is to provide customers with high
quality spa services or the beauty treatment. Moreover, customers focus on quality aspect
while taking decision about the spa centre. Hence, by maintaining the high quality of
services, Virtual media can build or sustain competitive edge over others.

SWOT analysis
It is one of the most effectual tools which in turn provide deeper insight to business about
strengths, weaknesses, opportunities and threats. Hence, by evaluating all such aspects owner of
New Look can frame competent strategy for converting weaknesses into strengths (Snyder,
2017). Besides this, such analysis also enables the firm to reduce level of threats by capitalizing
the opportunities.
Strengths
 Using advance technology
 Appropriate Location
 Highly skilled personnel
 Offering both traditional and non-
traditional spa services
 Using high quality beauty products
Weaknesses
 Lack of online presence
 Issues in managing finance
 Limited timing hours
 No services on weekends
 Lack of training sessions
Opportunities
 Enhancement of customer base and
satisfaction by delivering quality
services
 Stretching timing hours
 Organizing training session for
enhancing proficiency level of
personnel.
 Virtual medi spa center can offer
services to more customers by building
online presence.
Threats
 Changing customers taste and
preferences
 Quick changes in government
regulations
 High threat from the competitors

Gap analysis:Most of the business firms are giving services like spa and hair treatment to
clients and very few of them are giving dermal therapy to mentioned entity. Thus, this was the
gap and opportunity in the service and in this business plan an attempt is made to fill this gap.
This is done by adding dermal therapy to the traditional service. This make firm business unique
in nature.
Figure 1Gap analysis
CSF analysis: CSF refers to the critical success factors that are related to the specific
project. Every business have its own USP and it acts as important factor in making business
successful. Currently, relevant firm is providing varied services out of which one in unique in
nature. Currently, apart from hair treatment other services are not provided by the competitors.
Thus, by providing extra and unique services business firm may give tough completion to the
competitors and it is its critical success factor.
Factors that are critical to the success of the business are
 Training and development:Training and development play a very important role in
making any business successful. This is because by giving training to the employees their
skill level is enhanced which ultimately lead to strong business growth in terms of
elevation in productivity and efficiency of the business.

 Attract and satisfy new customers: Firm capability to attract new customers in the
business is the one of the factor that is CSF of the business firm. It must be noted that
business firm will provide dermal therapy to the customers. This service is not provided
by the other business firms. Thus, it will be factor that will be used by the business firms
to attract new customers and satisfy them.
d. Marketing plan
Target market, segmentation and positioning
 Segmentation:Owner of New Look will segment its customer base on the basis of age,
income and lifestyle. All three are the main parameters which will be undertaken by the
owner of medi spa to attain success in the highly strategic business environment (Finch,
2016).Hence, entrepreneur of New Look will target young and old people. Moreover, in
UK highly ageing population takes placeand such people are also highly concerned in
relation to their beauty aspect.Along with this, business entity will also target high
income group having luxurious lifestyle. Hence, by segmenting customers on such
basisowner of New Look would become ableto prepare highly competent framework for
near future.
 Targeting strategies:Business entitywill undertake differentiated targeting strategy
formaking contributionin attainment of goals and objectives. Moreover, factors which are
considered for taking decision about spa services are highly differ from young to old
generation. In this, by framing distinct marketing mix sole trader can satisfy the needs,
wants and expectations of customers. For instance: Decisionmaking and awarenessof old
people are highly influenced from traditionaladvertisementmodes such as newspaper and
television. In thisway,by including suitableservices, price and promotional strategies in
marketing mix business would become able to attract bothyoung and old age people. Positioning: Sole trader of New Look will position its services on the basis of priceand
quality aspect. The reasons behind this, both these are the major factors that have great
impact on the decision making aspect of customers. Hence, focusing on both such

elements in advertisement business entity can build distinct image in the mind of
customers. Moreover, customers select spa centre after making comparison of price with
competitors offering. In this, by placing emphasis on price in advertisement business
entity can attract large number of customer and thereby influence decision
making.Further, quality and care is highly required while offering services to the
customers such as photo-rejuvenation (Fulker and et.al., 2016).Hence, customerstake
decision in relation to beauty treatment after making evaluation of quality, price and most
important thing such as having team of highly skilled personnel. Thus, by considering all
such aspects business entity would become able to influence the decision making of large
number of customers.
Marketing objectives
Aim of New Look is to enhance customer base and thereby profitability aspect by
15%.Moreover, success of the firm is highly based on the customer base it maintained.
Marketing mix
 Product: Virtual medi spa center will offer wide range of services to the customers such
as microdermabrasion, chemical peels, skin needling, intense pulse light, photo
rejuvenation and epilation. All such services are main parts of dermal therapies. Along
with this, it also offers different types of traditional beauty or spa therapies and hair
treatment to their customers. Further, cosmetic medicines such as dermal fillers, botoxetc
will also be provided by spa centre to the customers.
 Price:Penetration pricing strategy will be employed by the owner of Virtual medi-
spa.Moreover, customers are highly price conscious in nature and prefer to go to medi
spa centre which offers services at the affordable prices.Moreover, according to the cited
case situation, in the recent past medi spa services have been neglected by several
business entities due to lackof experienced staff and higher prices. Hence, by
followingpenetration pricing businessentity can influence the decision making of others.
 Place:Virtual medi spa can attain success byofferingservices to the customers through the
opening of centre inNewhall Streetof Birmingham. Moreover, Birminghamis the most
famous area of London which in turn offers convenience to both inbound customers.

Further, it will also enable firm to generate high profit margin by offering services to
outbound customers as well.
 Promotion: In order to promote the beauty therapy services, Virtual medi-spa needs to
place emphasis on undertaking both traditional and modern means. On the basis of this
aspect, by placing advertisement on social networking sites, owner of spa or beauty clinic
can develop awareness among large number of customers about dermal therapies, spa
therapies and cosmetic medicines. The main reasons behind selection of social media
sites are their popularity. Now, customers spend their lot of time on social sites rather
than others. Thus, such medium will help the business entity in getting desired level of
outcome or success. Along with this, owner of the firm will also give advertisement on
newspaper and television. This in turn helps the business entity in developing awareness
among customers about the services and discounting offers etc. Hence, by using both
traditional and modern means of communication business entity would become able to
entice decision making aspect of customers and thereby profitability aspect.
 People: Skills and experience level of therapists are one of the main factors which have
high level of impact on customer satisfaction. Moreover, people are highly concerned in
relation to their skin or beauty aspects. It is one of the main factors that have impact on
the customer’s decision making. Thus, by keeping such aspect in mind, business unit will
recruit highly experienced nursing personnel who have ability to offer quality dermal and
sap therapies to the customers.
 Process:Specific process will be followed by the nursing studentsand operational staff of
New Look. Moreover, by following dermal therapies and hair treatment processsole
trader can deliver high quality services.
 Physical evidence: In the present era, customer’sdecision making is highly influenced
from the interior and exterior aspect. Hence, sole trader will attract large number of
customers by building highly attractive sap centre.
Advertisement schedule:
Promotional
Medium
Amount (in £)
Newspaper 2000

Television 4000
Social media 3000
The above mentioned table shows that business entity will spend high money on
traditional modes of promotion such as newspaper and television. Both such means account for
£6000. On the other side, owner of New Look will spend £3000 on social media
marketing.Moreover, on the initial level for the creation ofadvertisementblog business entity has
to spend more money.
Competitor’s analysis
Such analysis has been conducted by the business entity of New Look with the aim to
assess its position in against to the competitors. By getting information about competitors
business entity can develop suitable policies forthe near future. Moreover, availability and
offering of competitors have high level of impact on the productivity and profit margin of firm
(Simón-Moya and Revuelto-Taboada, 2016). Along with this, such evaluation also provides
deeper insight to the firm about the kind of innovative practices can be performed by New Look.
Basis of difference New look Angels Errol Douglas
Services Dermal and spa
therapies, IPL hair
reduction treatments and
photo-rejuvenation
Specialists in offering
services regarding
haircutting or dressing
Focuses only on hair
styles
Location Good Excellent Good
Services offered (in
days)
6 days 5 days in a week 5 days in a week
Prices New Look will offer
spa, dermal therapy and
hair treatment services
to the customers at
affordable prices as
compared to others.
It charges higher prices
from the customers for
the services offeredby it.
Prices are comparatively
higher.
Offering high value for
money to the customers
Offers high value for
money to the customers
by placing emphasis on
Company offers quality
services but it charges
extremely higher prices
Low value for money

both price and quality
aspect.
on the basis of its
goodwill or image.
Highly trained staff Excellent and
experienced
Good Good
e. Operations planning
Key business activities of the firm are Dermal and spa therapies, IPL hair reduction
treatments and photo-rejuvenation. Separate operational plans, policies and procedures are
prepared for these product lines. It was important to do so because policies is a statement which
help business firms in making business decisions in specific situations. Procedure refers to the
steps that are followed to deliver services to the customers in the premises. Thus, it is very
important for the business firm to prepare policies and procedures in right way. This is because
when policies and procedures will be perfect right decisions will be made by the firm managers
and service will be delivered in right way. There will be a common policy for all product lines
under which there will be a system of appointment.
One will need to take appointment from the manager and accordingly will get a time to
get a service in the firm premises. By doing so it will be ensured that there is no unnecessary
people in the premises. Environment of premises will remain congenial and customers will be
treated in systematic way. Steps for delivering a service will be already determined and same
will be followed for giving service to the client. There will be 7 employees in the business firm
out of which two will be full time employees of the business firm and two will be part time
employees. There will be one dermal therapist, three spa therapist, one cosmetic physician, one
receptionist and one manager. Time to time training will be given to the dermal therapist, spa
therapist and cosmetic physician. By doing so employees will be updated with the latest
technology and their skill development will be done. The overall result of all these things will be
that customers will get treatment in better way. Operations will be monitored by observing
movement of employees and way in which they are working while giving service to the
customers. On time steps will be taken against employees it is identified on the observation that
they are making mistakes in delivering service to clients.

f.Cash flow projections
Cash flow statement is one of the main parts of final accounts which in turn help in
gettinginformation about inflow and outflow position or aspects. By preparing this,business
entity would become able to assess the cash which will be generated by it over the level of
expenses. The rationale behind this, it clearly entails the expenses which will be incurred by the
firm in the initial year and upcoming three years. Usually, in the initial year sole trader hasto
incur high expenses such as registration, legal and promotional etc. All these aspects have high
level of impact on the closing cash balance or position aspect of the firm. On the basis of the
below mentioned budget owner of New Look will take monetary assistance from bank loan, and
angel investors.Along with this, owner will also make use of owns saving to re-launch the brand
and salon.Hence, from financial evaluation and analysis it has been assessed thatsole proprietorof
New Look will get positive and higher return from the venture.
Assumptions: Below mentioned cash flow is based on following assumptions are:
 Business entity will take loan of £45000 from Barclays bank @ 2%. Further, amount will
be repaid by the owner of New Look in the fixed periodical and equal installments.
 Sales revenue of the firm will also increase by 12% each year. Hence, by considering the
present trendit can be stated that such growth rate is neither too high nor too lower.
 Promotional expenses will be increased by 15% per annum. Moreover, without placing
high level of emphasis on promotional aspects it would not be possible for the firm to
generate high sales revenue or return.
 8% depreciation will be charged on fixed assets.
 Miscellaneous expenseswillbe increased by 10% per annum.
Cash flow statement for the period of 3 years is as follows:
Particulars
Jan
uar
y
Febr
uary
Ma
rch
Apr
il
Ma
y
Jun
e
Jul
y
Au
gus
t
Sept
embe
r
Oct
obe
r
Nov
emb
er
Dece
mber
Opening
Balance
150
0
227
5.83
301
2.8
8
371
3.0
6
472
0.2
4
602
5.9
1
762
2.1
948
4.1
7
1160
5.7
164
35.
2
2426
1.7
3542
3.5
Cash Sales
180
00
180
00
180
00
183
60
187
27.
2
191
01.
7
194
83.
8
198
73.
5
2285
4.5
262
82.
6
3022
5
3475
8.8

Total Cash
Inflow
195
00
202
75.8
210
12.
9
220
73.
1
234
47.
4
251
27.
6
271
05.
9
293
57.
6
3446
0.2
427
17.
9
5448
6.8
7018
2.3
Cash Outflow
Utilities
(Electricity/w
ater/telephone
) 975
101
3.79
105
0.6
4
110
3.6
5
117
2.3
7
125
6.3
8
135
5.2
9
146
7.8
8
1723
.01
213
5.8
9
2724
.34
3509
.11
Service fee 500 500 500 500 500 500 500 500 500 500 500 500
Promotion
and
advertisement
862
.5
862.
5
862
.5
862
.5
862
.5
862
.5
879
.75
897
.35
915.
29
933
.59
952.
27
971.
31
Rent 750 750 750 750 750 750 750 750 750 750 750 750
Interest 75 75 75 75 75 75 75 75 75 75 75 75
Depreciation 120 120 120 120 120 120 120 120 120 120 120 120
Insurance
291
.7
291.
7
291
.7
291
.7
291
.7
291
.7
291
.7
291
.7
291.
7
291
.7
291.
7
291.
7
Tax
66.
67
66.6
7
66.
67
66.
67
66.
67
66.
67
66.
67
66.
67
66.6
7
66.
67
66.6
7
66.6
7
Salary
116
67
116
67
116
67
116
67
116
67
116
67
116
67
116
67
1166
7
116
67
1166
7
1166
7
Miscellaneous
Expenses 667 667 667 667 667 667 667 667 667 667 667 667
Loan
Repayment
125
0
125
0
125
0
125
0
125
0
125
0
125
0
125
0 1250
125
0 1250 1250
Total Cash
Outflow
172
24.
2
172
63
172
99.
8
173
52.
8
174
21.
5
175
05.
5
176
21.
7
177
51.
9
1802
5
184
56.
2
1906
3.3
1986
7.1
Closing
Balance
227
5.8
3
301
2.88
371
3.0
6
472
0.2
4
602
5.9
1
762
2.1
948
4.1
7
116
05.
7
1643
5.2
242
61.
7
3542
3.5
5031
5.2

REFERENCES
Books and Journals
Basalirwa, E. M., Gough, K. V. and Balunywa, W., 2016. Impact on graduate intentions to set up
a business. Young Entrepreneurs in Sub-Saharan Africa. p.168.
Finch, B., 2016. How to write a business plan. Kogan Page Publishers.
Fulker, D. and et.al., 2016. A Case Study of the Grey Oaks Community and Club: Creation of a
High-Performance Culture Through the Innovative Use of a Data-Driven Business
Plan. International Journal of Hospitality & Tourism Administration. 17(1). pp.72-99.
Nelson, C., 2016. Is your salon still in spa fairyland?. Professional Beauty. p.142.
Simón-Moya, V. and Revuelto-Taboada, L., 2016. Revising the predictive capability of business
plan quality for new firm survival using qualitative comparative analysis. Journal of Business
Research. 69(4). pp.1351-1356.
Snyder, B., 2017. The House of Truth: A Washington Political Salon and the Foundations of
American Liberalism. Oxford University Press.
Online
Situational analysis. 2016. Online. Available through: < http://www.marketing91.com/situation-
analysis/> [Accessed on 2nd March 2017].