The salon suites business model has grown in significant popularity over the past fifteen years, especially as the number of independent hairstylists and beauty professionals has continued to grow. These businesses provide cost-effective solutions for beauty professionals to conduct their services within their own specific space without having to commit to a long-term lease. These businesses typically charge on a per week or per month basis for usage of a salon suite. One of the best things about these businesses that they are able to produce highly recurring steams of revenue, especially if they are located in a population dense area. While these businesses do have moderately high startup costs, they are able to reach profitability quickly.
As with any well written salon suites business plan, we take a market research first approach when developing this document. Most importantly, we take a look at the number of hair stylists, nail styling technicians, and other beauty professionals that are located within the market. This allows us to understand the ongoing demand for use of a salon suite. To complement this primary market research, we also take a look at the median household income, as well as population density in order to ensure that enough traffic will come to the location to support the salon suites facility.
As with all business plans that we developed, we create an extensive assumption list when we specifically develop a salon suites financial model. This allows us to effectively create a profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and applicable business ratios for the salon suites industry. We also include a return on investment analysis as well as a DSCR analysis in order to ensure that the business will remain economically viable at all times. This is done through a specialized sensitivity analysis.
We then move onto developing the salon suites marketing plan. This is done in a two-part manner. First, we focus on conducting extensive direct outreach with beauty professionals within the target market in order to ensure that they are able to quickly find the business if they need space to conduct their operations. We also discuss marketing to the general public through a number of marketing strategies including high visibility exterior signage, use of multiple online marketing strategies, extensive use of social media, video marketing, and receiving referrals from other beauty focused enterprises. Many salon suite businesses implement collaborative marketing programs, which is also discussed within this section.
The fourth part of the process for the development of the salon suites business plan is the operations plan. Here, we discussed the ongoing management of the common areas, how rentals will be conducted, as well as the number of staff that needs to be on site in order to manage the facilities. This section also discusses whether or not the business will provide scheduling services for enrolled beauty professionals.
We then move onto the secondary chapters of the business plan, including a risk analysis overview, as well as a SWOT analysis. As it relates to the strengths of the salon suites business, these companies are able to produce highly recurring shows of revenue from their operations with very little associated cost. For weaknesses, these businesses face competition from traditional beauty salons that provide space in an open environment for stylists and technicians.
As it relates to opportunities, these businesses can easily scale through the development of additional salon suite locations, especially in population dense area areas. As with most businesses, the primary threat faced by this type of enterprise is a very severe economic recession.
We also include a secondary section that discusses the use of funds to establish the salon suites business. This includes an overview of the furniture, fixtures, and equipment, real estate development costs, as well as working capital needs of the business.
As it relates to the risk analysis, this is also done in a dual capacity by examining the issues that can occur during the development process, as well as due the life of the salon suites business. Operationally speaking, there are very few risk associated with operating these types of facilities.
Finally, we move into developing the salon suites executive summary. This provides a complete overview of the entire enterprise including the expected financial results, location information, founder information, and overview of the operations, as well as a discussion about when the business will be launched.