A Business Plan for Salon Ownership. Cosmetology II

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1 A Business Plan for Salon Ownership Cosmetology II

2 Copyright Copyright Texas Education Agency, These Materials are copyrighted and trademarked as the property of the Texas Education Agency (TEA) and may not be reproduced without the express written permission of TEA, except under the following conditions: 1) Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts and schools educational use without obtaining permission from TEA. 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only, without obtaining written permission of TEA. 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way. 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts, Texas Education Service Centers, or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from TEA and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty. For information contact: Office of Copyrights, Trademarks, License Agreements, and Royalties, Texas Education Agency, 1701 N. Congress Ave., Austin, TX ; phone ; 2 Copyright Texas Education Agency, All rights reserved.

3 The Salon Business 3 Copyright Texas Education Agency, All rights reserved.

4 Rent or Manage 4 Copyright Texas Education Agency, All rights reserved.

5 Booth/Chair Rental 5 Copyright Texas Education Agency, All rights reserved.

6 Renting a booth - Advantages A cosmetologist: Becomes his or her own boss Is responsible for his or her own Accounting Clientele Record keeping Supplies Pays a weekly fee to salon owner Rents a work station in a salon from a salon owner 6 Copyright Texas Education Agency, All rights reserved.

7 Renting a Booth - Facts A cosmetologist must: Budget for advertising Carry adequate insurance Health Malpractice Collect all service fees Comply with all IRS obligations for independent contractors Create professional materials Business cards Service menu Keep records for tax purposes Pay for continuing education courses Pay taxes, including Social Security Purchase all supplies Track and maintain inventory Use personal phone for bookings 7 Copyright Texas Education Agency, All rights reserved.

8 Managing a Salon Management opportunities: Assistant manager Department head Educator General manager Inventory manager Special events manager 8 Copyright Texas Education Agency, All rights reserved.

9 Business Skills Needed Accounting Math Profit and loss statements Marketing Advertising Promotions Public relations 9 Copyright Texas Education Agency, All rights reserved.

10 Factors to Consider 10 Copyright Texas Education Agency, All rights reserved.

11 Decisions Business Name Location Easy access Good visibility Handicap access High traffic Sufficient parking Timeline Written agreements Employee and vendor contracts Lease 11 Copyright Texas Education Agency, All rights reserved.

12 Types of Ownership 12 Copyright Texas Education Agency, All rights reserved.

13 Salon Ownerships 1. Individual Sole proprietor 2. Partnership 3. Corporation 4. Franchise 13 Copyright Texas Education Agency, All rights reserved.

14 Owning a Salon Brand identity Lease or rental agreement Insurance Fire Lawsuits Theft Operations 14 Copyright Texas Education Agency, All rights reserved.

15 Business Records 15 Copyright Texas Education Agency, All rights reserved.

16 Business Plan Include: 1. Executive summary 2. Vision statement 3. Mission statement 4. Organizational plan 5. Marketing plan 6. Financial documents 7. Supporting documents 8. Salon policies 16 Copyright Texas Education Agency, All rights reserved.

17 How to Write a Business Plan (click on link) (image from video) 17 Copyright Texas Education Agency, All rights reserved.

18 Record Keeping Bookkeeping Income and expenses Business taxes 1. Local 2. State 3. Federal Inventory Service 18 Copyright Texas Education Agency, All rights reserved.

19 19 Copyright Texas Education Agency, All rights reserved.

20 1. Why study the business of salon ownership? 2. What are the advantages and disadvantages of a booth rental? 3. Does a management position interest you? 4. Why are business skills needed to operate a salon? 5. Name three decisions to consider before opening a salon. 6. Which type of salon ownership is the best one? 7. What other factors do you need to consider before you open a salon? 8. Is a business plan necessary? 20 Copyright Texas Education Agency, All rights reserved.

21 21 Copyright Texas Education Agency, All rights reserved.

22 References and Resources Images: Shutterstock images. Photos obtained with subscription. (Slides 1, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21) Textbook(s): Frangie, C. M. (2012). Milady standard cosmetology. Clifton Park, NY: Cengage Learning. Backe, J. (2016). Milady standard cosmetology. Clifton Park, NY: Cengage Learning. Websites: Texas Department of Licensing and Regulations The leader in public service, customer satisfaction, and innovation YouTube : How to Write a Business Plan Interested in starting a business plan? Developing and maintaining your business plan is like your roadmap to entrepreneurial success Copyright Texas Education Agency, All rights reserved.

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