COST ESTIMATES FOR THE SETUP OF A BARBING & BEAUTY SALOON

IDEAL BARBING BEAUTY SALOON barbing beauty salon business in nigeria

PROPOSED BUSINESS NAME: “IDEAL BARBING & BEAUTY SALOON”

 

INTRODUCTION

Having conceived the business idea “IDEAL BARBING & BEAUTY SALOON” the next step is to scan through and assess both the external environment and internal factors that may pose a threat, opportunity, availability and experience objectivity, all in terms of the organizations need of the new venture to achieve her aim in the nearest future.

IDEAL BARBING & BEAUTY SALOON will be a full-service beauty salon for gents and ladies dedicated to consistently providing high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at an acceptable price/value relationship.

Mission Statement: To supply and render services that enhances our client’s physical appearance and mental relaxation. ‘Ideal Barbing & Beauty SaloonThe Home of World Class Services’

S-W-O-T (strength –weakness –opportunity –threat) analysis as part of an overall strategy was used to analyze this business concept in the light of the current market situation and its potential, We are convinced that this is a good business idea that need to be turned into a business opportunity, since the projected revenue is expected to exceed its cost, making the business profitable.

Most entrepreneurs believe that, developing a business plan is an unnecessary border, a waste of time and scarce resource. This is not true as there are so many reasons why the entrepreneur must prepare a business plan. One of the major reasons for a business is that apart from being a roadmap, it aids an entrepreneur to getting support from investors and financial institutions.

PROPOSED BUSINESS PREMISES

150, Sapele road, opposite Dumex junction, Benin City Edo State. The location is strategically situated on one of the busy streets in Benin. It is a high profile area, with easy access from all parts of the city. Thus, it will enable us gain adequate attention from the public and win much customer’s.

BUSINESS TYPE

This business is going to be run on a sole proprietorship basis.

CAPITALIZATION

A total of =N=500,000 is estimated to commence the said business. Loan is estimated at =N=300,000 while the remaining =N=200,000 is to be provided by the entrepreneur.

REGISTRATION

The business is going to be registered under the ministry of commerce and industry in compliance with the constitution of the state.

DATE OF COMMENCEMENT

The business is scheduled to officially commence operation from the 1st of December 2016.

COMPETITIVE STRATEGY

All barbing & beauty salons within the environment in the trade area that operate on a sub- standard as compared to what we got to offer, as a result, we don’t have anyone to compete with us on this scale. We intend to provide superior personal service to our customers. Our competitive edge is a combination of our unique services, outstanding location, and our interaction with our clients. By providing our clients a relaxing atmosphere and provide world class services, we will build relationships based on trust and satisfaction

BUSINESS GOALS

This business has long term and short-term goals viewing from different aspects;

Short-term goals include;

  • Providing quality and distinguished service at a moderate price.
  • To provide better and more effective service to customer’s taste and satisfaction through barbing and a touch of pleasant hairstyles.
  • To ensure customer’s satisfaction s and protection.
  • To increase sales, profit and return on investment.
  • Payment of tax and dues.

Long-term goals include:

  • To be one of the foremost choice salon and talk of the neighborhood, creating a mark in the salon service industry.
  • To have at least 500 steady customers.
  • To maximize profit and meet its diversification objectives.
  • To increase annual sales by at least fifteen percent (15%).
  • To increase in annual in annual profit by at least fifteen percent (15%).
  • To establish one annex after a year.

 

MARKETING PLAN

Our best advertising strategy: “satisfied clients are our best marketing tools”. When a client leaves our business with a new look, he or she is broadcasting our name and quality to the public.

We also intend to embark on advertising to attract new customer as well as promotional activities during the course of operation. These include;

  1. Advert: use of sign post / sign board, print media (stickers, magazines, sharing of hand bills to vendors of newspapers, sharing of hand bills to church members and passersby. Posters in strategic locations.
  2. Giving souvenirs to first time customers.
  3. Painting the salon with attractive colors
  4. Providing good barbing environment, conducive and comfortable for customers through the provision of

 

  • Noiseless Ceiling Fans,
  • Television set,
  • Sound system,
  • Video player,
  • Wall mirrors,
  • Furniture,
  • Attractive pictures,
  • Barbing charts, and

 

  • The use of effective tools and equipment.
  1. One to one marketing.
  2. Provision of discount during public holidays and festive periods to regular and new customers.

SERVICE AND OPERATIONS PLAN

Proposed service to be offered;

 

  1. Quality barbing of hair;
  2. Quality hair dressing for men;
  3. Sharpening of clipper blades;
  4. Servicing of clippers;
  5. Sales of hair creams;
  6. Sales of hair treatments;
  7. Manicure & Pedicure;
  8. Facials & massage;
  9. Home services.

 

 

In the first year, the business will require a receptionist/financial secretary who will greet customers and receive payment for services and products. The salon will also include a financial manager/facial and massage (technician) to oversee all of the expenses, bills, payroll, etc.

There will also be two barber/hair dressers, a cleaner and a part time nail, facial and massage technician until the business can build a reputation that will attract others to work there.

Training classes to help improve employee product knowledge and skills will be conducted on a regular basis. As the business grows, the company will consider offering an employee benefit package to include health and vacation benefits for everyone.

 

IMPLEMENTATION SCHEDULE

This refers to hours of operation of the said business.

POSITION WORKING DAYS WORKING TIME
OPERATION Monday-Friday

Saturday

8am-7pm

8am-2pm

Overtime

Overtime

Saturday

Sunday

2pm-8pm

1pm-8pm

 

 

 

FINANCIAL PLAN

The premier element in an entrepreneur’s financial plan is to initiate, maintain, and improve the factors that create, stabilize, and increase the entrepreneur’s cash flow, He (or she) must:

 

  • Create visibility so as to create customer flow.
  • Maintain a dependable, cheerful employee force so as to minimize turnover.
  • Create a brisk turnaround on our retail products, always maintaining viable stock levels.

 

PROPOSED SERVICE AND PRICES

Item Service Price (=N=)
1 Hair barbing:

Female

Male

 

Barbing with generator:

Female

Male

 

300

250

 

 

350

300

2 Hair treatment:

(a) Shampoo wash

Female

Male

(b) Bumps removal

250

 

300

200

3,500

3 Hair dressing

Female

Male

 

350

400

4 Stone and dye 1,500
5 Dreadlocks 1,500
6 Sporting waves 600
7 Facial treatment 3,000
9 Home services 2,000
 

11

 

Manicure and Pedicure

 

300

 

 

 

 

EMPLOYEE COST

DESIGNATION NO MONTHLY PAY (=N=) ANNUAL PAY (=N=)
Operation manager 1 15,000 180,000
Financial Secretary 1 10,000 120,000
Barber/Hair Dresser 1 10,000 120,000
Barber/Hair Dresser 1 10,000 120,000
Cleaner/Messenger     5,000   60,000
      Total 50,000 600,000

 

 

All applicants to the job must have senior school certificate examination result. The applicants for barbing must have at least 2 years working experience, while the operational manager most possess a minimum of 3 years working experience in a barbing salon.

 

STARTUP COST

  • Personal Contribution

The sum of =N= 200,000 would be provided by the entrepreneur(s)

  • Other sources: Loan capital

The entrepreneur will need to source for =N=300,000 from financial institutions. Thus resulting =N=500,000 start-up capital.

 

EQUIPMENT MACHINERY AND APPLIANCES

ITEM QUANTITY PRICE (=N=) TOTAL(=N=)
Generator 1 65,000 65,000
Television set 1 30,000 30,000
Sound system 1 30,000 30,000
Clippers 4 20,000 20,000
Furniture 80,000
Painting 15,000
Dryer (Battery powered) 1 12,000 12,000
Mirror 2 5,000 10,000
Ceiling fan 2 15,000 30,000
Electric kettle 1 5,000   5,000
Screw drivers   1,000
Face duster 3 500   1,500
Combs 4 100      400
Hair brush 4 150      600
Other accessories   1,100
Total 301,000

 

ESTIMATED ADMINISTRATIVE COST

DETAILS MONTHLY (=N=) YEARLY (=N=)
Salaries 50,000 600,000
Rent 5,000   60,000
Maintenance/repairs 2,000   24,000
Advert/promotion   25,000
Electricity payment 2,000   24,000
Fuel 3,000   36,000
Consumables 10,000 120,000
Insurance
Registration    5,000
Tax  12,000
Waste disposal 500    6,000
Utilities 3000  36,000
Stationery 150    1,800
Lunch allowance
Total 75,650 949,800

LOAN REPAYMENT PLAN FOR THE YEAR

DATE AMOUNT

(=N=)

REPAYMENT (=N=) INTEREST CHARGE (=N=)
JAN.    2017 300,000
FEB.    2017 300,00
MAR.  2017 300,000 30,000 3,000
APR.   2017 270,000 30,000 3,000
MAY. 2017 240,000 30,000 3,000
JUN.   2017 210,000 30,000 3,000
JUL.   2017 180,000 30,000 3,000
AUG. 2017 150,000 30,000 3,000
SEP.   2017 120,000 30,000 3,000
OCT.  2017 90,000 30,000 3,000
NOV.  2017 60,000 30,000 3,000
DEC.  2017 30,000 30,000 3,000
    300,000 30,000

 

The interest for the year is assumed to be on a straight-line basis i.e. 10% of the 1st year principal amount. This will be spread over eleven months of the year.

 

PROJECTED MONTHLY INCOME

 

Item

 

Service

Price (=N=) Estimate/No Of Persons/Day Estimated Daily Proceeds (=N=) Estimated Monthly Proceeds (=N=)
1 Hair barbing: Female

Male

Barbing with generator:

Female

Male

 

300

250

 

 

350

300

 

2

5

 

 

3

10

 

600

1,250

 

 

1,050

3,000

 

13,200

27,500

 

 

23,100

66,000

 
2 Hair treatment:

(a) Shampoo wash

Female

Male

(b) Bumps removal

250

 

300

200

3,500

1

 

3

2

250

 

900

600

3,500

  5,500

 

19,800

13,200

  7,000

3 Hair dressing

Female

Male

 

350

400

 

5

1

 

1,750

400

 

38,500

  8,800

4 Stone and dye 1,500 3,000 18,000
5 Dreadlocks 1,500 1,500   7,500
6 Sporting waves 600 3,600   7,200
7 Facial treatment 3,000 6,000 12,000
9 Home services 2,000   2,000
11 Manicure and Pedicure  

300

 

2

 

600

 

13,200

Total 28,000 282,200

 

ESTIMATED WORKING CAPITAL FOR FIVE YEARS

Details Year 1 Year 2 Year 3 Year 4 Year 5
Salaries 600,000 600,000 600,000 600,000 600,000
Rent 60,000 60,000 60,000 72,000 72,000
Maintenance/repairs 24,000 30,000 36,000 24,000 30,000
Advert/promotion 25,000 20,000 20,000 25,000 20,000
Electricity payment 24,000 36,000 36,000 36,000 36,000
Fuel 36,000 30,000 36,000 33,000 36,000
Consumables 120,000 120,000 120,000 120,000 120,000
Insurance
Registration 5,000
Levies 12,000 24,000 36,000 36,000 36,000
Waste disposal 6,000 6,000 6,000 6,000 6,000
Utilities 36,000 30,000 33,000 32,000 36,000
Stationery 1,800 1,200 1,200 1,800 1,200
Equipment/ Machinery 301,000        
Total 1,250,800 952,000 969,000 985,800 993,000

 

PROJECTED INCOME FOR FIVE YEARS

  Dec. 2017 Dec. 2018 Dec. 2019 Dec. 2020 Dec. 2021
 

Revenue

 

3,386,400

 

2,160,000

 

2,520,000

 

3,072,000

 

2,880,000

Administrative expenses 1,250,800    952,000    969,000    985,000    993,000
Operating profit 2,135,600 1,208,000 1,551,000 2,087,000 1,887,000
Loan repayment    300,000    –
Profit before tax 1,835,600 1,208,000 1,551,000 2,087,000 1,887,000

 

CONTIGENCY PLAN

During the business boom, certain amount of money would be set aside gradually for use as a buffer fund when there is crisis in the course of running the business in order to ensure the smooth running of the business enterprise. Such crisis may include accident cases, fire, theft and financial recession due to low patronage.

CONCLUSION

The enterprise is proposing a business on barbing with the proposed name “IDEAL BARBING & BEAUTY SALOON”. A total of Four hundred and ninety three thousand naira is estimated to commence the said business. The entrepreneur will source for a loan of =N=300,000 (three hundred thousand naira) while the remaining =N=200,000 (two hundred thousand naira) is to be provided by the entrepreneur to finance the proposed barbing salon. With an estimated administrative cost of =N=75,650 (Seventy Five thousand, Six hundred and Fifty naira) and an estimated monthly earning of =N=282,200 (two hundred and eighty two thousand, two hundred naira); the entrepreneur is rest assured that the proposed barbing business is lucrative and should be motivated to commence operation.

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