Beverly Hills Co. Ltd Business Plan
Beverly Hills Co. Ltd Business Plan
CHAPTER ONE
EXECUTIVE SUMMARY
1.0 Business Description
The proposed business will be registered under the name Beverly Hills Co. Ltd. The business will mainly sell a wide range of beauty services and products. It will provide quality hair, nail, and skin services, along with top lines of beauty products. The market will comprise of working class population. The initial capital to start the business will be raised through sale of shares and loan from banks.
1.1 Marketing Plan
The business targets individual clients drawn from the members of the public who will buy products and services for their personal and family use. These customers mainly comprise of upper class and middle class income earners. Beverly Hills Company will be committed to bringing in the required professionalism and competitive edge to the beauty and style sector (McKinney, Anne, 2003)[1].
1.2 Organization and Management plan
The business is a corporation type of business and will be headed by the company’s board of Directors. Beverly Hills will recruit, employ, utilize and maintain efficient and productive workforce for maximum production in order to maximize on profits and growth of the business. Recruitment and selection of employees will be done from the local labor market.
1.3 Operations and Production Plan
The business will provide services of high quality and work effectively and efficiently. It will also require purchasing of various tools, machines and equipment for its operations. The raw materials required for the business will include Weaves, Hair piece, Hair wools, Nail Polish, lipsticks, vanishing creams, hair shampoos, hair conditioners, cosmetics etc.
1.4 Financial plan
Beverly Hills Beauty Ltd. will start its operations with a total sum of $ 30,000, the amount required will be used to purchase initial stock and fixed assets required as a lot of modern equipments are required to attract customers. The business anticipates this increase to stay steady throughout the following year to account for the normal flow of new clients to the company. To achieve this target, the owner’s equity will be around $ 17,000 while the bank loan will amount to $ 13,000.
CHAPTER TWO
BUSINESS DESCRIPTION
2.0 Introduction
The proposed business will be located in the capital city to enable its penetration to other parts of the country. It will be a partnership dealing with hairdo and beauty therapy. It will later expand to international market.
2.1 Nature of Business
The name of the proposed business is Beverly Hills. The choice of the name ‘Beverly Hills’ is symbolic to ‘quality and class’ and therefore relevant to our vision which is to achieve exemplary, striking and out of the ordinary services that will satisfy the customer’s needs.
Beauty industry is a growing industry and this is evident from the fact that large percentages of the population are connected to the outside world and would not want to be left behind in terms of fashion. Fashion changes every day and the investors in the business should be up to date with the new emerging styles. This industry is expected to grow at a rate of 60% because the economy is expected to grow hence more people will be expected to have extra money for luxury. There is also the issue of beauty colleges that have sprang up, these colleges offer beauty and therapy classes to young and innovative youths hence increased competitiveness in the industry.
2.3 Form of Ownership
Beverly Hills Ltd. will be operating as a corporate body. The initial capital to start the business will be raised through issue of shares and from borrowing.
2.4 Products/Services
Beverly Hills Company limited will be offering both products and beauty services some of which include the followings;
- Hair: cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing, weaving, and waving.
- Nails: manicures, pedicures, polish, sculptured nails.
- Skin Care: European facials, body waxing, massage.
- Beauty Products: Hair sprays, Hair food, hair conditioners, hair shampoos, body lotions, body creams, nail vanish, lipsticks, eye liners, eye pencils etc.
2.5 Justification of the opportunity
Beauty is an important aspect of human nature. Nonetheless, the rise in cost of beauty products has necessitated provision of cheaper and high quality beauty products.
The primary objectives of the business enterprises will be
- To ensure a steady growth by enhancing the competitive edge
- To achieve customer base of 20% of available potential customer by the end of 2013.
- To consistently provide high customer satisfaction by rendering excellent service
- Furnishing an enjoyable atmosphere at an acceptable price/value.
- To achieve a minimum percentage of 90% in our service delivery
- Maintain a friendly, fair, and creative work environment, which respects diversity, ideas, and hard work.
2.8 Entry and Growth Strategies
The business will enter into the beauty industry with haircuts, relaxers, perms, colors, shampoo, and conditioning, curling, reconstructing, weaving, and waving. In addition the business will deal with manicures, pedicures, polish and sculptured nails.
The business’ strategies for growth entails introduction of new lines of products and services including:
- Beauty Products: Hair sprays, Hair food, hair conditioners, hair shampoos, body lotions, body creams, nail vanish, lipsticks, eye liners, eye pencils etc.
- Skin Care: European facials, body waxing, massage.
SWOT Analysis
STRENGTH
|
WEAKNESSES
|
| OPPORTUNITIES
· The business has the opportunity of introducing quality services at affordable rates and with advanced technological equipments. This is not yet realized by the prospective competitors. |
THREATS
· There may be significant restructuring of the market as businesses become decentralized and thus the prospective customers. · Competition is likely to increase.
|
MARKETING PLAN
3.0 INTRODUCTION
When people buy products or services they expect the benefits from using the products and services because they help to solve a customer’s problems. Marketing is concerned with meeting business objectives by providing customer satisfaction. The business intends to consult the customers on their needs so as to offer them the best satisfaction.
PRINCIPLE CUSTOMERS
The business targets the many passers-by who will be attracted by the well-designed posters that will put within the estates. Posters will also be put along the road and this will bring in more customers.
COMPETITION
Competition is very healthy for a business since it determines the future of the business; one should not overlook it when starting up a business. A comprehensive survey was carried out in the region to identify and analyze the competitors pointing out their strong and weak points.
Vera Beauty Products Company Limited
Strengths
- Company enjoys better brand loyalty from consumers.
- Has qualified and experienced staff.
Weakness
- Very expensive products.
- Poor advertising skills and strategies.
JOY beauty products co.ltd
Strengths
- The prices relatively cheap
- Has experience in the region
Weakness
- Limited range of products
- Employees are not customer friendly
3.3 COPING WITH COMPETITION
- Excellence of Service
The company intends to provide high quality products that offer utmost customer satisfaction.
- Pricing
The business will offer a middle ground for those clients who cannot afford the high prices of products offered in the market. The business will ask clients for referrals and reward them with discounted or free services depending on the number of clients they bring. New clients who have been referred will also be offered discounts[2].
- Training
The business will encourage and motivate workers to learn and acquire more skills to be able to counter the ever-changing technology. This will be done by organizing seminars where they will learn more on public relations, marketing and the products that are new in the market.
- Technology
The business will buy the latest equipment and technology it can afford. This will improve efficiency and save time
- Marketing Expansion
Through thorough promotions and advertising, the business will be able to expand its operations to cover a wider market i.e. the potential market yet to be tapped.
3.4 PRICING STRATEGY
The following factors were considered when establishing the prices of the services and the products:
- Profit Margin
The business will have a low profit margin for the first two months but enough to sustain the business. The intention is to have introductory relatively low prices for the products and services. This will help stimulate growth of the business and obtain a large share of the market. This is so because the market is price sensitive and relatively low prices will attract more sales while unit costs fall with increased output.
- Price Discrimination
The business intends to offer different prices to different classes of customers. This will happen to customers who are willing to pay more for the same products and services and are sensitive to pricing factor.
- Demand
Strong demand may lead to high prices and weak demand to a low price. Some brands of hair products and chemicals are demanded more than others and this will be used as a base to charge high prices.
- Government Policy
The policies that are set by the Government and this include taxation will determine the prices to be charged. If the VAT on a particular product is high, the charges for the service will be high.
- Competition
Prices will be set on the basis of what competitors are charging. However, the business will keep a close look at the competitors because they are rivals and it is important to check for their reactions towards the businesses low prices.
3.5 MARKET SHARE AND SIZE
3.5.1 Market Size
The market research revealed that the market share that the business would be able to capture would be at least 25% on entry. This is due to the fact that demand of hair and beauty services is higher than the supply. This will be achieved through motivation of staff and thus ensuring those customers’ needs and expectations are met accordingly.
3.5.2 MARKET Share
The business intends to capture 30% of the ready market and the market growth shall be based on grounds of the annual goals. The main competitor’s market share level is as follows:
- Vera Beauty products company – 40%
- Joy Beauty products company– 30%
3.6 SALES TACTICS
The business intends to have strategic marketing and promotional strategies. This will attract new customers as they are informed of the existence of the business.
- The products and services available for sale will be offered from the premises. The business intends to employ competent people who possess the required skills and knowledge to perform the services.
- Responsiveness – the employees should be able to help customers and provide prompt services. This includes offering advice on the different types of chemicals and products available for sale from the business.
3.7 PROMOTION & ADVERTISING STRATEGY
As the business grows, the business intends to employ the following promotion and advertising strategies:
3.7.1 Joining Business Associations
The business Associations in the area will create awareness to other new customers.
3.7.2 Digital Marketing
The company intends to engage in digital marketing to enhance the marketing capacity of the company.
3.7.3 Discounts
Regular customers will occasionally be given a discount. The customers who come with their children will also get free gifts like hair buds for their children.
3.8 DISTRIBUTION STRATEGY
All products and services will be available in retail centres in strategic positions. The company will also embrace technology in distribution process where customers can purchase products online.
3.9 CUSTOMER SERVICES
The digital marketing will be well designed to ensure that compliments, complaints and recommendations from clients are communicated to the management. This will help the company to provide quality services. Essential after sale services can as well be offered.
CHAPTER FOUR
MANAGEMENT AND ORGANIZATION PLAN
4.0 Introduction
The business organization will include the process of anticipating the future of the organization and the determination of future activities to be performed in order to achieve the desired goals and objectives.
4.1 Organization Structure
Beverly Hills Company limited will comprise of both key personnel and other subordinate personnel. The key personnel will include the directors and the general manager. Their title, qualifications and duties are elaborated below:
(a) Directors
The company affairs will be run by a board of directors to whom other departmental managers will be answerable. They will be responsible for the overall management of the business they will give directions and control to the operations of the business. Specifically they will:
- Ensure smooth running of the firm through proper planning, organizing, staffing, coordination, directing and controlling of the resources available for the success of the business.
- Also ensure that health, security and safety measures for the workers and customers are put in place.
(b) Managers
The company will also have several departmental managers. The organization will have different departments such as finance, marketing, HR among others. These managers must be selected on merit and qualifications.
(c) Others
The company will have other junior staffs that will enable the smooth running of the company’s activities. Merit will also be highly considered in the selection process.
4.3 Recruitment, Training and Promotion
Recruitment and selection of employees will be done from the local labor market. Initially the business will advertise for the filling of vacant posts locally through print and audio media. Employment will be on an initial renewable short term contracts.
The business will recruit qualified staff that is already trained in their areas of specification. However, upon acceptance of offer, the Directors will conduct a one-day orientation.
4.3.3 Promotions
The Directors will introduce a formal Appraisal System which will be used to identify the level of job performance, identify training and development needs and also identify good performers and reward them through promotion, bonus, pay-rise, overtime allowance, paid sick-off and job enrichment[3].
4.4 Remuneration and incentives
The employees will be remunerated as per the market rates within the city with some incentives to facilitate acquisition and retention of qualified employees. They will be remunerated by means of monthly salary. .
4.5 Legal Requirements
Beverly Hills Company limited will acquire the relevant legal requirements such as trade licenses, certificate of incorporations among others.
CHAPTER FIVE: OPERATIONAL PLAN
5.0 Introduction
Beverly Hills will adopt a procedure of designing and implementing of hair and beauty designs to its individual and co-operate customers through the salesmen. An assessment will be carried out first, that is, the nature and skin characteristic will be assessed first and any issues raised by questioning the client on his or her preferences, this will be done by the business fashion and hair designers. Then the designers will merge the customer preferences and the available designs that suit the nature of his/her hair and other fashion.
The business will also sell services/products to its customers on cash and credit terms. The area of hair makeover and fashion designing will be well furnished with modern equipments and technology to maintain and improve the business operations and public relation. The customers’ queries will be attended to in timely manner. All the business operations will be administered by the management.
5.1 Operation facilities and capacity
5.1.0 Machine, tools and equipment
To provide services of high quality and work effectively and efficiently, the business will require purchasing various tools, machines and equipment for its operations. Beverly Hills will set its depreciation policy at a rate of 25% per year on all movable fixed assets and 15% on all fixtures and fittings on cost, 20% on all electronic equipments and 5% on cost of all business tools and Equipments. Changes on these percentages will rest upon the management.
5.1.1 Raw material required for the first term
| Item | Quantity | Cost per Litre | Frequency Required | Total Costs | Source |
| Litres | US $ | US $ | |||
| Conditioner | 5 | 42 | Once a month | 47 | Bestlady |
| Disinfectant | 9 | 25 | Once a month | 34 | Bestlady |
| Hair Gel | 15 | 47 | Once a month | 62 | Bestlady |
| Hair Oil | 46 | 112 | Once a month | 158 | Bestlady |
| Hair Relaxer | 129 | 327 | Once a month | 456 | Bestlady |
| Shampoo | 22 | 21 | Once a month | 43 | Bestlady |
| Styling Spray (Cans) | 47 | 100 | Once a month | 147 | Bestlady |
| Treatment | 112 | 142 | Once a month | 254 | Bestlady |
| 1201 |
All the above mentioned raw materials are readily available in the market and therefore the business will not experience any shortages in the supply of raw materials. These materials will always be bought on monthly basis and at ago unless there is unanticipated diminution in any of the materials. This arrangement will enable the business to save carriage in costs.
5.1.2 Operating expenses for the first term
The operating expenses required for the business will include raw materials and monthly of the staff.
5.2 Production Strategy
5.2.1 Average Production Capacity
| Product/service | Estimated Capacity per annum | |
| Hair treatment | Cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing, weaving, waving | 9000 customers |
| Nails | Manicures, pedicures, polish, sculptured nails | 12000 customers |
| Skin Care | European facials, body waxing, massage | 10000 customers |
| Beauty Products | Hair sprays, Hair food, hair conditioners, hair shampoos, body lotions, body creams, nail vanish, lipsticks, eye liners, eye pencils etc | Worth $ 5,000 |
5.2.2 Average Production Cost
Cost of production equal to the inputs into that commodity or service, including interest charges.
The cost of production during the first year will be as follows:-
| EXPENSES | PRICE ( US $) |
| Salaries | 1,000 |
| Fuel | 1200 |
| Transport | 6000 |
| License | 1000 |
| Water | 4800 |
| Electricity | 6000 |
| Casual Workers | 1200 |
| Office Stationeries | 2400 |
| Miscellaneous | 6000 |
| Total | 29,600 |
.
CHAPTER 6
This chapter shows the various financial highlights that shape the business finances to attain the objectives of profitability and business growth.
Beverly Hills will require $ 30,000of which the shareholders will raise $ 17,000 through shares and $ 13,000 from loan.
SOURCE AMOUNT ( US $)
Owners’ Equity 17,000
Loan (Barclays Bank) 13,000
Total 30,000
The bank loan will be charged a yearly interest rate of 18% and it will be repayable within thirty six months.
NET FUNDING REQUIREMENT US $
Furniture & Fittings, Equipment and Tools 9,925
Pre-Operational Cost 4,391
Stock 6,792
Cash at Bank 8,892
Start-up Capital 30,000
The costs to be incurred before the business is operational are in terms of installation costs, Licenses, Deposits for water, Electricity and Telephone etc as per the table below:
Beverly Hills Pre-Operational Costs
| ITEM | COST ( US $) |
| Furniture & Fittings | 5882 |
| Tools and Equipments | 4042 |
| License and Permits | 529 |
| Advertising | 706 |
| Telephone and Water Installation | 148 |
| Rent deposit | 1059 |
| Paintings and decorations | 1059 |
| Electricity Installation | 352 |
| Registration of Business | 408 |
| Miscellaneous | 358 |
| TOTAL PRE-OPERATIONAL COSTS | 14543 |
DEPRECIATION OF THE FIXED ASSETS
The business will set its depreciation policy at a rate of:
Fixtures and fittings – 20% per annum reducing balance
Tools and equipments – 25% per annum reducing balance
6.3 Working Capital Requirement
At the start of the business, the working capital is given by:
Total Capital – Pre-operational Costs = working Capital
For next three years, the working capital of Beverly Hills shall be:
Current Assets – Current Liabilities = Working Capital
Current assets
| ITEM | Year 2012/2013 | Year 2013/2014 | Year 2014/2015 |
| Debtors | 4,650 | 7,959 | 200 |
| Cash at bank | 4,208 | 8,016 | 23,024 |
| Stock | 300 | 600 | 7,000 |
| TOTAL | 9,158 | 16,565 | 30224 |
Current Liabilities
| ITEM | Year 2012/2013 | Year 2013/2014 | Year 2014/2015 |
| Loan | 1300 | 500 | – |
| Creditors | 430 | 447,000 | 412,068 |
| TOTAL | 1,730 | 447,500 | 412,068 |
Working capital
| ITEM | Year 2012/2013 | Year 2013/2014 | Year 2014/2015 |
| Current Assets | 3,939 | 3,907 | 9,224 |
| Less current Liabilities | 1,430 | 947 | 68 |
| Working Capital | 2509 | 2960 | 9156 |
Bibliography
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[1] McKinney, Anne. Real business plans & marketing tools including samples to use in starting, growing, marketing, and selling your business. Fayetteville, NC: PREP Pub., 2003.
[2] Bangs, David H., and Mark Henricks. Business plans made easy. 3rd ed. Irvine, Calif.: Entrepreneur Press, 2005
[3] Mellalieu, Stephen D., Sheldon Hanton, and David Fletcher. A competitive anxiety review: recent directions in sport psychology research. New York: Nova Science Publishers, 2009
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