1:Type of Business

Kishan's Hairdressers















Business type

The business type I will be choosing for my hairdressing business will be sole trader. This is because I have got good business knowledge and can run the business independently. There are several advantages of choosing this type which will benefit me. Those are:

1. All the profit is mine
2. Can make my own decisions
3. Open and close at my own time

There are also some few drawbacks which could make it hard for me, which are:

1. Can be tiring
2. Carry a large amount of responsibility
3. Unlimited liability

Aims and Objectives

Aim: I want to become the number one hairdresser in my location
Objectives:

1. To make a turnover of £12000 each month.
2. I need to receive 1715 customers in a month

Unique selling point

A unique selling point of my business would be that I provide an efficient service for a reasonable price. This is because customers will be happy to pay a low price and receive a quality service they are satisfied with. Even if my service is good but my price is high, that will put customers off one day. The high price will make them keep an eye out for other barbers who provide the same service as me or better.

Potential demand

In order to do good business it’s vital for me to find out potential demands. I need to indentify the methods to find the target market for my business. I can find out my target market by doing: market research, sales forecast, customer behaviour analysis, competitor analysis etc.

Balance between personal and business needs
It is vital for me to keep a balance between personal and business needs. Loads of people suffer from stress which leads to insufficient results in the business. Therefore I need to be careful and keep the balance. There are various types of personal needs which will affect my business life sooner or later, such as kids, elderly people etc. Therefore having an idea how to balance and tackle needs will help me in the long run.

Potential (estimated) Profitability

Gross profit = (TSR) Total Sales Revenue – cost of sales

Assume: Total Sales Revenue = £84,000 per year
Cost of sales = 50% of Sales Revenue
Number of customers = TSR / Revenue per sale

Therefore: Gross profit = £84,000 - £42,000 = £42,000

Net profit = Gross profit – Expenses

Assume: Expenses = 50% of Gross profit

Therefore: Net profit = £42,000 - £22,000 = £22,000

Business trends

I need to be up to date with my business trends. In simple words “new fashion”. So for my business I need to know all the new hair styles. If I don’t know it then I won’t be able to fulfil customer’s needs. Therefore this will affect my turnover.

PEST

I will be linking political, ethical, social and technological analysis to my business.
P- Political factor can increase my business. i.e. Headscarf banned in France. Therefore Muslim women need to maintain their hair.
E- Due to economic crises and cuts people may not visit their local barbers that regularly.
S- Cultural influences could affect styles. i.e. Sikhs
T- I may need to come out with new technology to improve my service. E.g. nose trimmers


Caroline Marsh

As a mentor I would choose Caroline. This is because I think that’s she’s an excellent advisor with loads of experience which will help me. She is apart of the worlds first property investment market. I think she has got interesting background journey and she knows the seven steps how to start a business. Therefore I think her advice and ideas will motivate me and this will lead to better outcome.

Business planning

I think a well structured business plan will help me to gain more from my new business. A business plan will make me consider things that I will need in my business. E.g. a loan
Without having a stable and genuine business plan will make it really hard for me to obtain funds. Due to loads of frauds and crises banks are pretty tough with giving out money. So, in my plan I need to show how much I need in total a why I need that amount. There are special stages which would make your business plan more effective:

1. Type of business
2. Target market
3. Human Resources
4. Legal & Physical resource
5. Financial Resources
6. Growth and development
7. Financial contingency

2: Target Market

Market Research:
In order to do the marketing process efficiently, the information should be collected systematically, objectively, well analysed and evaluated. The market research could be classified in two different ways which are:

• Primary and Secondary research
• Quantitative and Qualitative

Primary research- This is the information that is collected by me in various methods.
Secondary research- This is information will already collected by someone else. Therefore it’s called secondary research because it already exists.
Quantitative method- Information collated in number method.
Qualitative method - Information collected in words.

For my business I will be choosing primary and secondary research. In order to do my primary research well I will be using Survey Monkey to produce a questionnaire to give out to people. In my questionnaire I will have specific questions, which will help me to carry out my research effectively. The method I would prefer when questions are being answered would be in a quantitative method.

E.g.
• How much would you spend on an efficient haircut? -£ 7, -£10, -£15
• What time of the day would you go for a haircut? –morning, -afternoon, -evening
• How many times in a month would you go for a haircut? 0-1, 2-3, 4-5

This will give me an insight of what people will be looking for in my business. I will use secondary research to obtain additional information, such as competitor’s service rates.

Sales forecast
In order to predict sales, statistical methods would be useful to use. This can usually identified through using past figures and trends. Relating this to my business predicted sales revenue will be £140000. High sales revenue with reasonable costs would give me a good amount of profits. This will enhance my business prospects; because I would be able to re- invest the profit earned in the first year into the second year.

Customer behaviour analysis
Customer behaviour and analysis is important to know. By knowing their behaviour would give me an idea what they prefer and their next steps. This will make me realise what I need to improve on and what types of customers I get. There are various types of customers I could be getting, shown underneath in a table format:

Category Group Type
Wealthy Achievers Flourishing families 09- 12
Urban Prosperity Educated Urbanities 15-19
Comfortably off Starting out 24-28
Secure Families 29-31
Settled Suburbia 32-34
Moderate Means Asian Communities 37-38

The table shows that I could be receiving customers from five different categories, six different groups and seventeen different types. This means that there is a big range of customers, therefore I need to provide an excellent service at all times in order to satisfy all my customers.

Competitor analysis
Hairdressing is a competitive field which involves loads of competition. Therefore, it could be really hard for businesses, especially for new start- ups. In order to keep ahead of my rivals there are three things which are vital to know those are:

• Who are my customers
• What are market segments
• Identify my market segments

This would help me to identify my customers and also their needs. Due to this there would be great customer satisfaction from customers. As a result, I would be ahead of my competitors by getting more customers than my rivals.
Strengths and weaknesses
All businesses do carry strengths and weaknesses. Below I will be stating my strengths and weaknesses:

Strengths

• Price- My price is cheaper compare to all my other competitors.
• Potential demand- I know who my target market are, this will enable me to promote my business to the right customers.
• Financial reserves- I have got enough financial support in order to survive.
• Location- I’m at the right spot where I have always got a passing trade.


Weaknesses

• Young- I’m young compare to my rivals, which could be a drawback for me.
• Lack of support- I’m the only workers, so there is a lack in man power.
• Customer awareness- I’m pretty new in the market, so people aren’t that aware about my business.

Market trend
A market trend would be to provide more services than before. E.g. 10 years back just a haircut and a shave was provided. Whereas now customers ask for more, such as message, treading, wax etc.

The economic outlook
PEST could affect me because as the time goes things change. Below some examples have been given how PEST can set an impact on my business.

Political factor- The government may decide to recycle more, come out with legislation, such as blades are illegal to use, a barber is not allowed to have more than 200 customers in a week.
Economical factors- Corporation tax may rise, inflation may increase, wages may cut etc.

Social factors- There may be change in trends, lifestyle, Religious rules and regulations etc.

Technological factors- I need to buy equipment to provide better services and to fulfil needs.

The green agenda
I will need to make sure products I buy to use in my services are environmental friendly, in order not to offend them. E.g. Hair gel which is not tested on animals before it’s launched in the market.

3: Human Resources

Skills required for my business:

1. Financial Skills- It is essential that this skill is in the business. Not having any financial skills can be harmful for the business. A basic or intermediate level of this skill can be helpful. Financial skills include managing budgets, costs, cash flow, break even charts etc. Having this skill will give me an understanding how to work with my finances and to apply it to the business. These skills are usually needed at an advance level through using a qualified accountant.

2. Human Resources Skills- It is vital that this skill is in the business. This is because I won’t be able to stay in the business due to circumstances. E.g. Illness or appointments to attend. Therefore, recruiting the right person is critical, which would benefit me in the end. Having this skill will also give me knowledge to choose the exact candidate.

3. Conceptual Skills- This skill would enable me to make the right decision at the correct time. Recognise new ideas and opportunities are important because this would help me to contribute well.

4. Social networking skills- To communicate with a
local community is a vital aspect. Networking socially with my local people can show that I’m conscious towards the local business and not just business focused. Networking socially can be to associate with different groups, such as charities or the community of hairdressing. This will benefit me because I will gain new ideas which I can apply to my business. Therefore, having this skill will be very useful.

5. Hairdressing Skills- Having this skill is the most important aspect because my business is depending on this skill. A qualification is not always required; however having one would have been beneficial.

6. Recording and checking performance of business- This will make the business more powerful and will direct it towards the right path. I will be setting SMART targets which will enable me to focus more on my business. In addition I will be looking back on my performance frequently in order to see if I am heading towards the right direction. Studying my performance means looking at the number of customers I received, how many were repeating customers, what service is the most popular one, looking at my costs, prices of materials etc. This will make me more fascinated about my business.
Skills Audit

This is a skills audit of some of the skills I currently have and at what level. This will give me an insight as a person if I am enriched person with loads of skills or not.

Skills Level

Communication- Advance
Team working - Intermediate
Customer service - Intermediate
Multilingual - Intermediate
Creativity - Basic
Negotiation - Intermediate
IT - Basic
Human resource skill - Basic

Skills gap and development

I will be looking at skills I haven’t got and how I can improve my existing skills. Identifying these gaps will enable to contribute better towards my business. Therefore, it’s important that I find the correct solution to enhance my existing skills. In order to be specific I will classify them in short and long term.

Short term

The skills mentioned in this are very vital to me and need to be obtained as soon possible. They are well demanded and need to be gained in the right way. Skills needed and improved will be listed underneath:

• Marketing skills- I haven’t got good marketing skill and not sure what is the most suitable method for me to promote my business except for leaflets. Therefore, I will be hiring a marketing agency which wills advice me the best way to promote my business effectively. A positive aspect would be that someone else would be doing it for me. Therefore, I can keep my focus on the business. Another positive aspect is that I will be targeting the correct people and attract a larger market. A drawback of hiring a marketing agency is that they can be very expensive. They will be charging me three times as much, which would raise my costs. It is important that I promote myself well in the first two years. This is because I would be able to obtain a place in the market and will also be recognised by people easily.

• IT skills- This is well needed to record details on excel and to provide a good service through music etc. I will have to advance this skill as soon as possible. This is because important data need to be collated; therefore this skill is vital for me. In order to advance this skill I can attend weekly computer classes which is a form of training. Attending frequent computer classes will enable me to enhance my IT skills and imply them into my business. A negative aspect is that it is time consuming. In addition, I may have to close early or rely on someone else to run the business. The prices are fairly cheap to attend a class and it would be useful in the future as well.

Long term

These are skills that I will really need in long term. They are listed bellow:

• Creativity skills- This is skill will enable me to satisfy my consumer well, which I need to improve. I need to be creative in order to fulfil all my customers’ needs and wants. I am sure that I will be getting all types of customers; therefore it is important that I’m creative and can adapt new styles well. I can do this also through a course at Hayes Community Campus. It’s a 10 weeks course and I can choose my own subject. This would benefit me and give me knowledge about the new styles. Additionally, the classes will prepare me to fulfil the needs of my consumers. However, a disadvantage of taking classes is that there are limited classes provided and there are other classes you need to attend if you want to carry on. This can be very expensive. I can also get a daily hairdressing magazine which would help me to recognise new styles in the market.

• Human resources skill- I will need to advance this skill. This is because I will need to know how to recruit the right person for the job. Employing the wrong person would affect me and my business in the long term. Therefore hiring the right person would help me when I’m ill or can’t make it to work. The right person is a person whose honest, reliable, good skills, treats consumers well and delivers a good service at all time even in not my presence. Not selecting the right candidate can’t affect my business tremendously; as a result I need to be cautious when choosing. I can identify the right person through using Belbin’s team role. I will hire a Co-ordinator who is mature, confident, delegates well, clarifies goal and is a chairperson. This would benefit me because then I have got someone to rely on under my absence. In addition, I know that this person would bring a positive outcome when his running my shop when I’m not there. A disadvantage could be that he can be very controlling and forget that I am the owner. He may start treating loyal staff however he wants and they may leave. Therefore, there is also a bad side to this as well, which can set an impact on me.

4: Legal and Physical Resources

Legal aspects

Legal status

The legal status for my hairdressing business is a sole trader. I have chosen this status because it will enable me to make my own decision and be an independent person when running my business.

Legal liability

My business will be having a unlimited liability. This is because I am a sole trader; therefore I need to be careful that I don’t go into debt. Unlimited liability means that if a business goes in bankruptcy than the owners personal goods are taken away in order to pay the debt off. This means that if my business goes into bankruptcy, my personal belongings will be taken away such as TV, house and car.

Terms and conditions

For my business there aren’t really any terms and conditions, except when a consumer gets his haircut he is cutting on his own risk. Terms and conditions needs to be considered by me clearly when buying goods for my business. This is important because sometimes suppliers don’t take back goods after purchased.

Trading standards

It is important that when I buy goods from suppliers that the products bought do meet legal safety requirements. This is because I will be using these products on someone else. Therefore, it’s important that they meet requirements; otherwise I can be punished by the law.

License

To run a hair salon a license is required; this is because of safety reasons. Therefore, a license is a critical tool to have.

Record Keeping

I will be recording my income and outcome through the use of a cashbook and a sales ledger. It is important that these are kept, which will help me to monitor my performance and for legal aspects. However, the main recording keeping will be done by my accountant which will give me a better overview of money going in and out.

Resolving problems

There will be sufficient standards of communication between me and my staff. This is because it will provide effective business results and a safe working environment. A grievance procedure will be applied into my business. This is because my workers should have also equal opportunities if any unfair treatment has taken place. Furthermore, frequent meetings will be held in order to resolve any issues or improve staff dissatisfaction. There will also be disciplinary procedures which will make staff aware that inappropriate actions are not acceptable. E.g. Low punctuality or attendance to work.

National and local law

Insurance is a vital tool to have in the business. It supports the business and can safe the business from going in debt. E.g. If my premises gets burnt down or a consumer gets injured. There are various types of insurances required and the one needed for my business are:

1. Employers liability insurance- If a employee gets injured then this protects me from any legal damages.

2. Buildings insurance- If my premises gets damaged then the insurance will reconstruct it for me.

3. Contents insurance- Any tools are equipment gets stolen than insurance covers that.

4. Owners liability insurance- If a consumer enters my premises and gets injured than my insurance will cover me for that.

5. Public liability insurance- If a member of my staff injures a consumer than my insurance will help me to cover the damages.

Contract of employment

I will need to sign a contract with my employees. A contract is a legal agreement between two parties and is very vital. This is because it mainly covers rights and responsibilities of an employee. I will also need to register for VAT because I earn £140000 a year. The rule is if you earn more than £61000 than VAT needs to be paid.

Health and Safety
All businesses are responsible for employees and consumers who visit my shop. The management of health and safety at work regulations require employers to take on a risk assessment checks about how to make their premises safe. After this procedure the shop should have a written health and safety policy, for consumers and other people to see.

Regulations

There are certain regulations organisations need to consider which are:

1. COSH- The Control of Substances Hazardous to Health regulations set rules about how to handle chemicals and other substances. The owner needs to monitor this frequently and needs to inform employees about this as well.

2. Fire regulations- Fire risk assessment should be done regularly to be fully confident under a hazard. Fire routes and equipment should be obtained for safety reasons. Moreover, this will make staff aware about the whole procedure.

3. Planning permission and building regulations- Firms wanting to extend their premises or change the use of the building need to seek permission from the local authority.

Regulations body

In the UK the government has set up standards an organisation needs to meet in order to be environmental friendly etc. These are the standards they need to meet:

• OFT- Office of Fair Trading- Monitors business activity and protects them from unfair trade or treatment.

Source of advice

When a business is not going well external support can be helpful in order to do better. Therefore it is vital to create good network with people through organisations such British Chamber of Commerce. DTI (Department for trade and industry) is an organisation whom helps businesses in several ways such as advice and other support. Local enterprise agency is an organisation who are contracted through Business Link. They provide training and consultancy services to local businesses as well as start up assistance.

Physical aspects

My barber shop is located on the Hayes Broadway. In my premises I’m renting I got a toilet and a small kitchen. I have just got one toilet; therefore staff and consumers need to share toilets. Currently, I have got to chairs and three sinks. I was thinking about another chair, but I will wait and see how sale goes. I have got radiators in order to dry the towels I use for my services. I have also got a little table for my daily newspapers and magazines. In order to carry out my services I will need machines and scissors. I will be having approximately 6 machines and 10 scissors, as there are different ones for different services. Underneath I have produced a little plan of my shop. As I have got some much space I might half it and rent it out in the future. It depends on my business performance; this area could be used for more chairs. The area which is called “another service” I am thinking of making that for women. This is because some women can’t carry out services in front of men due to religious purposes. However, I will do this after sometime, when I know that I will get female consumers. There is no point getting it done and then its not in use.

5: Financial Resources

6: Growth & Development

The best way to develop is to expand my operations and this is because I am allowing myself to earn from more sources. In the next five years I’ hoping to have three shops in total. I will do this by retraining the profit I’m making and will be also taking money out (drawings) in order to have the money ready to expand. However, it is not always easy to expand and it may not work afterwards. Therefore, it’s important that I monitor my current and past business performance. This is to see if I am making enough growth to start something new and to maintain my place in the market. Another vital point is that I reflect on the economic market before I expand. This is because if consumers have started getting their haircuts by their family members and at home then it will be difficult for me to perform well. As a result, I will need to reflect on the market and think about other aspects before reaching my aim. If I identify that the prospects of expanding is difficult then a good way to develop is through aligning with another company in the same industry. Furthermore, in order to develop well, I can get to know my target market better. I can promote my business in areas where they are. i.e. colleges. I can also provide discounts in order to attract a larger market.

7: Financial contingency

I will be having internal and external finance sources for my business. The internal and external source I will be having for my business is going to be:

Internal
1. Loan from family
2. Personal savings


External
1. Bank loan
2. Grants

These financial sources will help me to run my business. The government may provide me a grant in order to run my business. This may be because I’m supporting my local people by providing jobs and also an effective service. Furthermore, I will also be having an emergency plan for my business which will be selling my assets. Therefore, it’s important that I have enough and valid assets in my organisation.