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Client: MPAcc Investors
University of Saskatchewan
Edwards School of Business
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Empack Consulting Co.
Elysse de la Paz
Courtney Eng
Samantha Ma
Sherry Wang
Pure Nail Bar Business Plan (Client: MPAcc Investors) 32
Contents
1.0 Executive Summary 1
3.0 Marketing Plan 3
3.1 Industry Background 3
3.2 Porter’s Five Forces 4
3.3 Product, Price, Place 5
3.4 Competitive Advantage 8
3.5 Promotion 9
3.6 Marketing Expense 11
4.0 Operations Plan 11
4.1 Legal Structure 11
4.2 Retail Location and Floor Plan 11
4.3 Capital Budget 12
4.4 Operating Expenses 13
4.5 Daily Operations – Client Experience 13
5.0 Human Resources Plan 14
5.1 Job Descriptions 15
5.2 Training Programs 17
5.3 Human Resources Strategy 17
5.4 Labour Costs 18
6.0 Financial Plan 18
6.1 Projected Financial Statements 18
6.2 Financing Budget 19
6.3 Dividend Policy 19
6.4 Management Information System 20
6.5 Investment Analysis 20
6.6 Risk Mitigation 21
7.0 Overall Summary 22
References 23
APPENDIX I - SWOT Analysis 25
APPENDIX II - PESTE Analysis of the Beauty Salon Industry 27
APPENDIX III – Place: Location of New Pure Nail Bar 28
APPENDIX IV – Promotion: Generating a Unique Environment 29
APPENDIX V – Labour Requirements 30
APPENDIX VI – Positioning Map 31
APPENDIX VII – Organizational Structure 32
APPENDIX VIII – Layout 33
APPENDIX IX - Capital Budget 35
APPENDIX X – Process Flow: Client Experience 37
APPENDIX XI – Sample Art 38
Pure Nail Bar Business Plan (Client: MPAcc Investors) 32
1.0 Executive Summary
Pure Nail Bar is a new, trendy, and unique company that will bring a twist to the concept of professional nail care services. True to its name, the company focuses on delivering quality nail care and providing pure cleanliness for hands and feet as a form of health and happiness. All these services are provided at reasonable prices; however, the key differentiating aspect of Pure Nail Bar is its focus on the client experience and the ambiance of the client’s surroundings. Pure Nail Bar will be the ideal location for women to gather and socialize, while receiving the care and attention they desire for their nails. In concert with the company’s trendy and fashionable image, Pure Nail Bar will open in the Kitsilano neighbourhood in Vancouver, and serve the City of Vancouver.
The three key success factors for relevant to Pure Nail Bar include:
· Providing a fun, trendy, and social environment for individuals to receive beauty services;
· Having friendly and knowledgeable staff deliver quality and personal beauty services that shape the ultimate “Pure” customer experience; and
· Providing fashion-conscious and quality services at reasonable prices.
Accordingly, one of the major aspects of the social and vibrant environment at Pure Nail Bar will be the employees. As they are the main points of contact for customers at Pure Nail Bar, the company will seek individuals who are friendly, fashionable, and adequately trained. Additionally, the firm will provide annual professional development courses to inform the staff of new and upcoming trends, as well as address any areas for improvement. Taken together, this will ensure that Pure Nail Bar reaches all of the critical success factors noted above.
To market the company, Pure Nail Bar will place advertisements in well-known Canadian fashion magazines such as Lou Lou and Fashion; however, the main channels of advertising will be through Facebook, fashion blogs, and Twitter. These sources of communication are highly effective and inexpensive technological forms of “word-of-mouth” advertising that will aid Pure Nail Bar in reaching its target market.
Investors of Pure Nail Bar can expect an average return on equity of 19%, and a pay-back period of approximately 5 years.
2.0 Introduction to Pure Nail Bar
Pure Nail Bar is an innovative company that focuses on providing nail care services. The company focuses on pure cleanliness for hands and feet as a step towards health and happiness. This nail bar not only offers manicures and pedicures, but also waxing and massages. Pure Nail Bar is looking to open in a location in lower mainland British Columbia.
To achieve success in the beauty industry, Pure Nail Bar concentrates on providing services in a comfortable and relaxing atmosphere at competitive prices. However, the main differentiating point for Pure Nail Bar is the environment in which the services are provided. The chic and stylish décor combined with the knowledgeable and friendly staff makes Pure Nail Bar the place to be to receive routine nail care, and to catch up with friends. The company aims to attain high popularity among its target market, as will be discussed in the following business plan, by offering an experience rather than just a service. Its target market includes women from 16 to 40 years old who are interested in a relaxing and enjoyable beauty experience.
Pure Nail Bar’s Mission Statement is:
· Pure Nail Bar aims to provide a uniquely fun, fashion-forward experience for “Pure Customers” to be pampered with quality “Pure Beauty Services” at reasonable prices in a trendy and unique social atmosphere.
Pure Nail Bar’s critical success factors:
· Providing a fun, trendy, and social environment for individuals to receive beauty services;
· Having friendly and knowledgeable staff deliver quality and personal beauty services that shape the ultimate “Pure” customer experience; and
· Providing fashion-conscious and quality services at reasonable prices.
The following business plan will discuss our intention to open a new store location in Kitsilano (West 4th Avenue) and describe how pursuing this venture will be both profitable and successful. Pure Nail Bar understands that opening a new location will require a heavy emphasis on marketing to further expand the brand’s reach and to spark interest in a new pool of potential customers. The anticipated opening date of the new location will be March 2011.
As Pure Nail Bar is being started by four individuals, each individual will invest $10,000; for a total of $40,000. An $80,000 long-term loan will be obtained from the bank, which will be payable over five years at an interest rate of 4.3%. Another $80,000 will be required in order to finance the operations of this business.
3.0 Marketing Plan
3.1 Industry Background
The beauty industry is one filled with many different types of services. For the purposes of this business plan, the industry analysis will focus on Canadian salons that provide manicures and pedicures as these are the main services provided by Pure Nail Bar. Please see Appendix I for a SWOT analysis, which looks at the opportunities and threats in the industry, as well as Appendix II, which provides an analysis of the political, economic, socio-cultural, technological, and environmental characteristics affecting the industry.
The main regulations that impact the beauty industry are health and safety rules for running a salon, specifically in regards to sanitization procedures. Overall, there are few political limitations for manicure/pedicure service providers. From an economic perspective, the beauty sector was one of the least affected industries during the recession. While the personal care area experienced a decline in performance during this time, the effects were nowhere near as drastic as in other industries (Beacham, 2010). This shows that the beauty industry is relatively resilient to market changes, and this offers great opportunities as consumers will consistently desire quality beauty services and products. Conversely, the fact that the recession caused even a small decline in the industry’s performance also shows that industry players will need to differentiate themselves from their competitors in order to garner and maintain a loyal customer base.
When looking at the socio-cultural factors affecting this industry, the primary demographic interested in the services provided are women aged 16-40. This age range includes a large group of career-driven business women who work hard and are interested in finding ways to relax (Leighton, 2009). Most women in this age group fit comfortably into the Generation Y category, which includes those born between the mid-1970s and 1990s. Generation Y women perceive themselves as trendsetters who are interested in popular culture, and especially in what is new and fresh at a particular time (Global Cosmetic Industry, 2010).
There are not many relevant technological advances that will vastly improve the salon experience. However, companies in the beauty industry can take advantage of modern day advertising techniques and electronic forecasting tools to help with administrative tasks such as planning and scheduling. Environmentally, there are limited factors that impact companies in this industry. Salons that provide manicure/pedicure services do not produce an excessive amount of environmental waste.
3.2 Porter’s Five Forces
Given the above discussion, this section will take the analysis one step further and conduct a brief Porter’s Five Forces analysis to further map out the industry.
Supplier Power – (LOW) Companies offering services in this industry will have suppliers that provide beauty products (ex. nail polish, nail files, etc.). There is not a great amount of supplier power as most of the products acquired by salons can be purchased from any regular department store supplier. Thus, because the goods are widely available, supplier bargaining power is low.
Buyer Power – (HIGH) Buyers have high bargaining power in this industry as there are a vast number of players that provide similar services. Thus, buyers can be selective and are very conscious of those companies that offer either lower prices or differentiated services. Furthermore, there are economical substitutes available – for instance, consumers can just as easily purchase a home manicure/pedicure at a lower cost. Thus, buyer bargaining power is high.
Barriers to Entry – (MODERATE) Due to the fact that there are many players currently in the industry offering similar services, there are several barriers to entry. Additionally, costs of capital can be significant as an office must be acquired at which to house the salon. However, a differentiated company would have an easier time entering the industry if they were able t o offer customers something truly unique at a reasonable cost. Thus, the barriers to entry are moderate.
Threat of Substitutes – (HIGH) There are many available substitutes available for people who are looking for beauty services. Not only are home manicure/pedicures easy to accomplish, but consumers may also choose to spend their money on fancy spa-days, masseuses, or some other form of relaxation. Thus, the threat of substitutes for undifferentiated players in this industry is high.
Rivalry – (HIGH) Switching costs for customers of beauty service providers are low. As mentioned previously, there are many players in the industry offering similar services. Furthermore, because buyers have high bargaining power and there are many available substitutes, it is difficult for players in this industry to succeed. Accordingly, these factors mean that there is a high overall risk for companies in this industry that do not have appropriate cost or differentiation strategies.
3.3 Product, Price, Place
Now that an understanding of the beauty industry has been established, the focus will be placed on the planned new Pure Nail Bar location. The following discussion examines the four P’s of marketing as they apply to Pure Nail Bar.
Product
Pure Nail Bar will offer a variety of services which can be divided into six main streams:
· Pure hands – Services offered in this stream include different types of manicures including French manicures, cuticle clearing, filing, exfoliation, etc.
· Pure nails – This consists of services that are used to maintain nails. For instance, offerings include UV nail gel and nail-fixing services.
· Pure feet – Services offered in this stream are similar to those offered in Pure Hands, but apply to pedicures.
· Pure extra – Services included in this stream consist of pure paraffin wax treatments, nail art and polish changes.
· Pure wax – Waxing including bikini waxes, arms, legs, chest, back etc.
· Pure relax – Services offered in this stream are massages.
One of the key differentiating factors of Pure Nail Bar in terms of its products is the fact that it offers a variety of services not only for its key demographic group, but for other individuals as well. Some of these special offerings include:
· Pure Princes Pedi – A pedicure for little girls under 12 years old.
· Pure Metroman-i – A manicure for men
Overall, Pure Nail Bar offers a variety of services to its customers to meet the needs of individuals looking for a quick beauty fix or customers looking for a longer relaxing experience. These services are performed by nail technicians and estheticians.
Price
Pure Nail Bar’s price strategy is to provide excellent service and a unique experience for customers at a reasonable price that is competitive with the market. While the prices offered are not the lowest in the industry, Pure Nail Bar can comfortably fit into the category of “discount nail salons” that do not provide the luxury treatments offered by spas, but instead provide quality for a reasonable price. The following summarizes the price ranges for services that are provided at Pure Nail Bar:
Service Description / Lowest Priced Offering / Highest Priced Offering / Average PriceManicures / $25 / $70 / $48
Pedicures / $35 / $50 / $43
Waxing / $10 / $40 / $25
Massages / $10 / $40 / $25
Parafin Wax / $15 / $20 / $18
Nail Art (per nail) / N/A / N/A / $5
Polish Changes / $15 / $25 / $20
Services for Girls Under 12 / $15 / $25 / $20
Services for Men / N/A / N/A / $25
UV Gel / $40 / $60 / $50
Nail Fixes / $10 / $16 / $13
These prices are very affordable for the average Vancouver woman in the target demographic. In British Columbia, according to Statistics Canada, the median salary is upwards of $65,000 (Statistics Canada, 2009).
Place
The proposed location for the new store is at 4th Avenue West in Kitsilano, Vancouver, British Columbia. Please see Appendix III for a map of the proposed location.
This particular location has a number of important attributes that will help increase the probability of success of the new Pure Nail Bar as summarized below:
Location Factors / DetailsRelative Geographic Location / · 20 minutes from the University of British Columbia
· 10 minutes from downtown
· 5 minutes from Granville Island & Vanier Park/Planetarium
· 2 minutes to Kitsilano Beach
Population / · 51% of the 25,000 people population in Kitsilano are women
· Approximately 70% of the population is between the ages of 20 and 44
· Average income levels are over $65,000
· Young, affluent adults that value a balanced lifestyle
· Small families with young or no children
Neighbourhood & Surrounding Businesses / · Surrounding side streets are residential with apartment buildings
· Complementary businesses such as restaurants (west coast cuisine, international food options), snack shops (bakeries, frozen yogurt shops, organic/health food stores, cafés, chocolate shops), shopping (athletic wear, mid to high range clothing for women and unisex, independent shops, hair salons)
· All surrounding businesses cater to a feeling of wellness and comfort for the middle to upper class. All stores and shops are made to feel trendy and fresh.
· There is a beauty bar across the street from the proposed location for Pure Nail Bar, which is more of a complementary service as it sells products (lotions, makeup, etc.) but does not provide nail care services.
Neighbourhood Competitors / · Spas (Kitsilano Spa & Solarice Spa)
Traffic / · Heavy traffic during rush hour and on the weekends when people visit the shops/restaurants/salons
· 10 am – 7 pm hours of operation is the norm for most businesses
· Spring & Summer are the best months for business as the wedding season and beach season fall within these months
Cost / · $38/sqft (TRG Realty, 2010)
Source of Kitsilano Neighbourhood Facts: (BizMap, 2009)