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1. Basics to Getting Started
Starting a business can be a rewarding undertaking, but it
comes with its challenges. Before starting a beauty salon
business, it is wise to do your research. Ask yourself if
you are truly suited for entrepreneurship and understand
that significant effort may be required. You should
thoroughly enjoy the field you are getting into and you must
believe in your service; it may consume much of your time,
especially in the start-up phase. There are several issues
to consider such as regulations, financing, taxation,
managing your business, advertising and much more.
2. Industry Overview
Personal care providers, which include hair and esthetic
salons, spas and the like, accounted for about 43% of the
industry's total earnings. These establishments earned about
$3.5 billion in 2003, up from $3.2 billion in 2002 and $2.9
billion in 2001.
The Spa and Esthetics industry in Canada, for example, is
experiencing tremendous growth. According to the ISPA 2004
Spa Industry Study it was estimated that there were
approximately 2,100 individual spas in Canada. Over 40% of
Canada 's spas are located in Ontario, followed by 19% of
the spas located in British Columbia. For 2003 the average
number of spa visits was 20.2 million. In 2003, the Canadian
spa industry employed an
estimated 33,200 people; 20,442 full time, 7,075 part-time
and 5,673 contract staff.
The driving force behind the tremendous growth is raising
consumer demand. Primarily the aging "Baby Boomers",
the largest single generation in the history of mankind is
driving this growth. The Boomers are now entering there 40's
and 50's and are willing to spend whatever it takes to
preserve their youthful looks and to prevent premature
aging. As a result Esthetics is a profession that is growing
rapidly-not just in North America but also
worldwide- and skilled, reliable, well-educated Professional
Estheticians are in high demand. The importance of an
attractive personal appearance is recognized more than ever
in the world today.
Types of Operation
In establishing a beauty salon, the range of services to
offer may vary. You can choose to cut hair only, or
may choose to include other services like nail care and skin
care (facials and make-up, hair removal). Some even offer
sun tanning, sell some products or have a spa in their
beauty salon. The steps for opening a beauty salon are the
same for one service as they are for many services.
There are many different kinds of personal care service
businesses. The following are examples of such services:
Beauty Salons are establishments primarily engaged in
providing hair care services to women, providing aesthetic
services such as manicures and pedicures, makeup
applications, facials and skin treatments, hair removal or a
combination of these services.
Unisex Hair Salons are establishments primarily engaged in
cutting and styling men’s or women’s hair. Establishments
that combine hair care services for men or women and
aesthetic services.
Other Personal Care Services include establishments
primarily engaged in providing personal care services.
Colour consultants, estheticians and tanning salons are
considered part of this group.
Massage or massotherapy is the manipulation of muscle and
connective tissue to enhance function of those tissues and
promote relaxation and well-being.
Before opening your business, you will also have to decide
which type of operation you would like. You may choose to
operate your business under a franchise or as a
non-franchise.
If you choose a franchise, you have to follow directives
from the parent company and go with the options they offer
for types of services, products, etc.
Franchise
As a potential business owner, you may be considering buying
an existing or opening a new franchised business. As a
franchisee, you enjoy the benefits of "Goodwill" that the
name and reputation of the franchise already possesses. You
also have, in many cases, the support of the parent company
in issues such as location selection, management training,
free advertising and support during the start-up phase of
your operation. Also you have the advantage of capitalizing
on an already profitable concept.
However, as a franchisee, you must pay the franchisor for
the benefits provided, and these costs come off the top of
your sales revenue and may add up to more than 10%. Also
your freedom is somewhat restricted when you own a
franchise. You must adhere to the standards set by the
franchise.
Planning Your Business
What is a Business Plan?
A business plan is a recognized management tool used by
successful and/or prospective businesses of all sizes to
document business objectives and to propose how these
objectives will be attained within a specific period of
time. It is a written document, which describes who you are,
what you plan to achieve, where your business will be
located, when you expect to get under way, and how you will
overcome the risks involved and provide the returns
anticipated.
Why Do I Need One?
A business plan will provide information of your proposed
venture to lenders, investors, and suppliers to demonstrate
how you plan to use their money, and to establish a basis
for credibility of your project. This plan will serve as a
guide to the various areas that you as a manager will be
concerned with. As you work through this plan, adapt it to
your own particular needs.
3. Regulations
Licenses, Permits, and Regulations
One area of rules and regulations that all new businesses
must comply with is that of licenses, permits and
regulations. When creating a business, the entrepreneur must
contact the municipality involved, along with the
provincial/territorial and federal governments.
Each municipal government has the authority to issue its own
business licenses within its jurisdiction. You should
consult with the appropriate local officials to determine
whether your business will be affected by local regulations
and licensing requirements. Businesses (including home-based
businesses) must also meet the zoning by-laws that control
property uses in their municipalities.
Municipal Regulations
Each municipal government has the authority to issue its own
business licenses within its jurisdiction. Since there is no
uniformity regarding municipal licenses for businesses, you
should consult with the appropriate local officials to
determine whether your business will be affected by local
regulations and licensing requirements. Businesses must also
meet the zoning by-laws that control property uses in their
municipalities.
Insurance
Insurance needs for businesses vary greatly. It is best to
choose an insurance agent or broker familiar with your size
of business and, in particular, an agent familiar with your
type of operation. If you don't
have an insurance agent, consider asking other business
owners in your area to recommend one.
The following list is included to remind you not to overlook
the complex areas of business insurance. It is best,
however, to discuss your specific requirements with your
insurance agent.
Basic insurance:
• fire insurance (extended coverage on buildings and
contents);
• liability insurance;
• burglary protection (theft coverage); and
• dishonesty insurance (covers thefts by employees).
Marketing/Advertising
Word-of-mouth advertising and good public relations are
often the best ways of promoting your business. Depending on
your market and its size, also consider flyers, business
cards, brochures, newspapers (especially for holiday
promotions), radio, TV, the phone book and the Internet.
Also
bear in mind that a satisfied customer is good advertising.
Referrals are also a valuable way of making customers aware
of your products or services.
A Web site is also a good marketing tool. It should have
details to describe the location (your address, telephone
and fax numbers, and directions on how to get to your
establishment), hours of operation,
services offered, credentials and anything else you think
may be of interest to potential customers. However, once you
launch a Web site, you should update it on a regular basis.
Participating in community events is another way of
advertising your business. You may also hold events that
will promote your business. No matter how you choose to
market your business, it is wise to track how your clients
became aware of your establishment - this may help determine
your future advertising strategies.
Market Research
Successful businesses have extensive knowledge about
their customers and their competitors. Acquiring accurate
and specific information about your customers and
competitors is a critical first step in market investigation
and development of a marketing plan.
In developing a marketing plan, your primary functions are
to understand
the needs and desires of your customer select or develop a
product or
service that will meet customer needs, develop promotional
material, and
ensure that the product or service can be provided
effectively at a
profit.
Selecting Professional Services
The use of professional services is essential to the success
of a small
business. Professionals can provide knowledge and expertise
in the areas
where you may have little. They can round out your
management team to
ensure your business is operating efficiently.
Professional services often used by entrepreneurs may
include:
• lawyer:
• insurance broker;
• accountant; and
• banker
Accounting/Bookkeeping
A good record keeping system should be simple to use, easy
to understand,
reliable, accurate, consistent, and designed to provide
information on a
timely basis.
Note: All staff working with cash should be trained to
recognize
counterfeit currency.
Setting-Up a Pay System
Pay administration is a management tool that enables you to
control
personnel cost, increase employee morale, and reduce
workforce turnover.
Setting the Right Price
Setting the right price can influence what consumers will
buy, which in
turn affects total revenue and profit. In the end, the right
price for
the product/service is the price that the consumer is
willing to pay for
it. Hence, correct pricing decisions are a key to successful
management
Profit Watching
Making a profit is the most important -- some might say the
only objective
of a business. Profit measures success. It can be defined
simply:
revenues - expenses = profit. So, to increase profits, you
must raise
revenues, lower expenses, or both. To make improvements, you
must know
what's really going on financially at all times.
Staff Training
Besides attending schools and professional training courses,
much can be
learned through on-the-job training and by attending
conferences. Staff
training can be provided through seminars, styling contests
or trade
shows. It might also help to maintain a library of resource
materials such
as magazines on latest trends or products, and health
research for tanning
salons.
Offer training for your staff in: first aid, injury
prevention and sales
techniques.
Choosing Your Location
Providers of personal care services may be home-based,
practice from an
office or spa-like environment, or take their business
directly to the
client at their home or office (for example, chair massages
in the
workplace); or even a combination of these.
Public Place (e.g., salon or spa)
A commercial establishment offering a product or service.
The benefits of
owning such an establishment may include a wider scope of
advertising, the
possibility of offering numerous specialized services at one
location, the
sharing of overhead and advertising costs.
Home-Based Business
A business operated out of your home may be an approach to
try out an idea
at as minimal cost as possible to see how the idea develops.
There are
still steps to take and regulations to follow; a list of
pros and cons
should be written down and considered for each situation.
On-site (or mobile)
Some stylists, whether they work with make-up, hair, nails
or other
personal services, may enjoy the on-site environment of
working at such
places as photo studios, old-age homes/hospitals, theatres,
TV or film
sets, modelling runways or home parties.
Furnishings and Equipment
Before you open your business, you may need specialized
equipment. The
kind of service you are offering will determine the type of
equipment you
will require. For assistance in this area, you may get the
advice of a
sales representative or consult trade publications and
manufacturers' Web
sites. List that equipment and its cost to you. An important
factor to
consider when choosing equipment, is the after-sales service
and repair
and their affordability.
Used Equipment - Consider buying used equipment as a
cost-saving measure.
Sources of used equipment could be similar businesses that
are closing or
dealers in second-hand equipment. The drawback to this
approach is that,
often, there are no guarantees with the purchase.
Leasing Equipment - Another alternative is to lease
equipment to help keep
start-up costs down.
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