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1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $300,000 for the development of a beauty and cosmetology school based in San Diego, California. Beauty School, LLC (“the Company”) was founded by Jane Rogers. This school will provide one year of full instruction so that individuals can become eligible to receive their licensure from the state.
1.1 The Services
Beauty School, LLC will provide a wide range of instruction specific for people that want to work as hair stylists, nail technicians, and estheticians. The full year course will cost $20,000. Management anticipates that 30 people will enroll with the Company within the first year of operation. By Year 3, the business will reach maximum enrollment with 45 students.
The Company will employ highly qualified instructors that will provide a wide range of instruction across numerous cosmetology disciplines. This will provide the Company with a major competitive advantage.
Chapter three of this business plan will further discuss the operations of the business.
1.2 Financing
Ms. Rogers is currently seeking $300,000 via an SBA or conventional business loan to commence operations. The anticipated terms of this loan can be founded in the seventh section of this business plan. The capital will be used for the following:
• Location development in San Diego
• General working capital
• Furniture, fixtures, equipment, and inventory
The revenues of Beauty School, LLC are highly secure. Moving forward, the business would be a strong candidate for expansion capital once the location reaches maximum capacity (45 students). However, any further capital acquisitions will not occur until after the third year of operation. The Company may also acquire funding from a private investor if it is economically prudent to do so.
1.3 Mission Statement
The Company’s mission is to provide its enrollees with a comprehensive beauty school education that allows them to become licensed and thrive in this field.
1.4 Management Team
Jane Rogers has more than 15 years of professional experience in the field of cosmetology. She will be able to effectively launch the operations of Beauty School, LLC to profitability while implementing policies that guide the ongoing growth of the business.
1.5 Sales Forecasts
1.6 Expansion Plan
As mentioned above, once the Beauty School reaches capacity the Company may establish additional locations throughout California or other states on the West Coast. The Company will continue to add new esthetic disciplines to its operations as well.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Beauty School, LLC.
2.2 Required Funds
Ms. Rogers is currently seeking $300,000 to develop and expand the operations of Beauty School, LLC over the next five years.
2.3 Investor Equity
Ms. Rogers is not seeking any equity partner at this time. However, given the economic stability of these businesses, the Company would be a strong candidate for private expansion capital if needed.
2.4 Management Equity
At this time, Jane Rogers owns 100% of Beauty School, LLC and serves as its sole member.
2.5 Exit Strategy
Beauty schools remain viable in any economic climate. As such, these businesses can command a substantial price to earnings ratio. Although Ms. Rogers has no plans to sell the business for ten years, in the event that the business needs to be sold – a valuation will be conducted. From there, a business broker will be hired.
3.0 Teaching Services
As stated in the executive summary, the Company will provide a wide range of instruction regarding hair styling, nail services, and related esthetic services that are provided by cosmetologists. The school will meet all of the accreditation standards set forth by the State of California. The Company will charge $20,000 for the full year of tuition. The Company, within its first year, will generate approximately $600,000 of revenue.
The Company will also generate revenue by providing onsite services to people that want low-cost haircuts, manicures, and pedicures. This will allow students to get hands-on training regarding the services that they will provide once they receive their licensure.
In order to further provide students with assistance during their careers, the Company will work with salons throughout San Diego that will hire recent graduates. This will further provide a strong competitive advantage for the business.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
Beauty schools are generally able to remain profitable in any economic climate. This is especially true when recessions occur and people are laid off. In many cases, people will do a career change. These businesses typically have highly controlled operating costs.
The US economy at this time is stable. Inflation rates have begun to decline rapidly, and interest rates are falling. The Federal Reserve is expected to take a measured approach to interest rate increases and decrease as inflation becomes more tame.
As stated above, Beauty School, LLC will be relatively insulated from negative changes in the economy. The business will able to enroll among government programs that provide tuition support among people looking to learn a new skill.
4.2 Industry Analysis
Nationally, there are about 1,300 companies that provide beauty and cosmetology instruction with the intent to provide licensure eligibility for enrollees. Aggregately, these entities produce $2 billion of revenue per annum.
This industry is expected to grow at a similar rate to that of the US economy. One of the newest trends within this industry is to offer virtual classes for training. However, hands-on training is always required as part of the training process. As such, technological advances in the field of e-learning will not impact the Company’s ability to generate revenue.
4.3 Customer Profile
Ms. Rogers has developed the following demographic profile among people that will become students at the Beauty School:
• Between the age of 18 to 30
• Has completed high school or a GED
• Is seeking to have a cosmetology career that will produce $50,000 to $100,000 per year of income.
• Lives within 10 miles of the Company’s location in San Diego
In this section of the analysis, you will need to determine the number of people that have expressed interest in become a hair stylist or nail technician within your respective market. This can be completed through ongoing surveys among people that live in your market area. You should also examine statistics related to population density and medium household income.
4.4 Competition
In most major cities, there are usually a number of cosmetology schools in operation. In smaller markets, you may only face one or two competitors. One of the ways that beauty and cosmetology schools can retain an extensive competitive advantage is by providing career support services once an individual graduates from the program. The Beauty School will maintain comprehensive relationships with salons in the target market. This will be one of the major selling points that will be included in the Company’s marketing campaign.
5.0 Marketing Plan
Management will implement a number of marketing strategies that will create awareness about the business among people that have recently graduated from high school, community college, or a four-year college/university. Hair stylists and nail technicians remain in demand at all times, and people are going to want to continue to pursue this career path.
5.1 Marketing Objectives
• Maintain ongoing referral relationships with career counselors that work at high schools and community colleges.
• Develop a search engine optimized website specific for the San Diego market.
• Continue to foster relationships with salons within San Diego to provide students with employment opportunities.
5.2 Marketing Strategies
The Company will employ a number of marketing strategies that will create ongoing visibility for the Beauty School throughout the life of the business. Most importantly, the Company will work with career counselors, guidance counselors, and other entities that can provide referrals among people that have expressed an interest in the cosmetology and beauty industry.
The Company’s website will provide a substantial amount of information as it relates to the comprehensive cosmetology education that can be acquired at the location. This website will undergo search engine optimization so that people searching for beauty schools in San Diego can quickly find the platform. During the development period, the Company will have a number of videos created that showcase the school so that enrollment can occur prior to the launch of full-scale operations.
Management will become a member of a number of San Diego based organizations that specific focus on the beauty industry. This will allow the Company to quickly place students at salons once their training is completed.
To further increase visibility, the business will attend job fairs and career events throughout San Diego. The business will rent booths at these events in order to distribute literature regarding the school’s operation.
5.3 Pricing
The Company will charge $20,000 for tuition. Additional fees may be charged for equipment.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
6.3 Management Biographies
As it relates to your management biography, you should focus heavily on any and all experience that you have in the cosmetology industry. If you have owned and operated a beauty school in the past, you should include this type of information in the plan. Any person that has a 20% or more ownership interest in the business should be included in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
The Company has based its proforma financial statements on the following:
• Jane Rogers will acquire $300,000 of capital to launch operations.
• The SBA or conventional business loan will have a ten year term and a 8% interest rate.
• The Company will use cash based accounting.
7.2 Sensitivity Analysis
Even in times of economic recession, the Company will be able to remain profitable while servicing its underlying debt obligations. During difficult economic times, it is expected that demand for beauty school services will remain strong as people change careers. The controllable operating costs of the business will further ensure that the Company can remain cash flow positive and economically viable.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
