1 Provide stone therapy massageSHB30215 Certificate III in Make-up SHB30315 Certificate III in Nail Technology SHB50115 Diploma of Beauty Therapy WRB20104 WRBCS201B – PROVIDE MANICURE AND PEDICURE SERVICES BSBSMB404A Undertake small business planning LEARNING MATERIAL Student name: Student ID: Date: Initial Impact P/L PO Box 301 Balnarring 3926 ABN Student name: Student ID: Date: © 2016 Initial Impact P/L Provide stone therapy massage

2 Undertake small business planningUNIT SCOPE 1. Identify elements of the business plan. 1.1 Identify purpose of the business plan 1.2 Identify and review essential components of the business plan 1.3 Identify and document business goals and objectives as a basis for measuring business performance 2. Develop a business plan. 2.1 Research resources, legal and compliance requirements, specifically in relation to occupational health and safety (OHS), in accordance with business goals and objectives 2.2 Research market needs, and market size and potential 2.3 Identify sources and costs of finance, from financial plan, to provide required liquidity and profitability for the business 2.4 Identify methods, from marketing strategies, to promote market exposure of the business 2.5 Identify methods/means of production/operation from production/operations plan to conform with business goals and objectives 2.6 Identify staffing requirements to effectively produce/deliver products/services 2.7 Identify specialist services and sources of advice, where required, and cost in accordance with available resources 3. Develop strategies for minimising risks. 3.1 Identify specific interests and objectives of relevant people and seek and confirm their support of planned business direction 3.2 Identify and develop risk management strategies according to business goals and objectives, and relevant legal requirements Undertake small business planning

3 Undertake small business planningUNIT SCOPE CONTINUED Foundation skills – 4 to 9 4. Student demonstrated foundation skills when they used reading skills to Identifies, analyses and evaluates complex workplace documentation during planning process. 5. Student demonstrated foundation skills when they used writing skills to prepare written reports and workplace documentation that communicate complex information clearly and effectively. 6. Student demonstrated foundation skills when they used oral communication skills toarticulate ideas and requirements using language appropriate to audience. 7. Student demonstrated foundation skills when they used numeracy skills to interpret numerical information to determine prospective markets, resource allocations and business profits/losses. 8. Student demonstrated foundation skills when they used navigate the world of work to appreciate implications of legal and regulatory responsibilities related to own work. 9. Student demonstrated foundation skills when they used get the work done skills to plan, organise and implement tasks required to develop a business plan plus implement actions as per plan, making slight adjustments if necessary, and addressing some unexpected issues plus make a range of critical and non-critical decisions in relatively complex situations, taking a range of constraints into account plus identify concepts, principles and features of approaches in use in other contexts, and redesign these to suit own situation plus use formal and informal processes to monitor implementation of solutions and reflect on outcomes. Undertake small business planning

4 Undertake small business planningWhat is a business plan? A business plan is like putting the pieces of a jigsaw puzzle together. With a jigsaw you have to find the pieces of the puzzle that fit into place to create the picture. With a business plan you have to research the information (finding the pieces) that you require based on your idea of what you want your business to be. You then put the pieces together to build the picture of your business. The purpose of the plan is to allow you to see if the business you wish to start is a good idea or not. Will your business be successful based on the research you have gathered? A business plan allows you to see what is involved in running a business. It will show you how much money you need to begin your business, what facilities and services you need to offer to your customers and how to promote and market your business. A business plan is required by all financial institutions in order to borrow money. A business plan also allows you to keep track of your original idea. A business plan will need to be changed as your business grows. You will add in new ideas to keep up with what your customers are wanting. All sections of the business plan are linked together. Factors that need to be considered before commencing a business are; Your education and experience. Financial support. Personality – do you like people? Can you work with others? Personal motivation – what will keep you working long hours with a positive attitude every day? A clear idea of how your business will operate everyday. This means the types of services and products you will provide to your customers. NOTE: Your business plan for this unit can cover establishing a new business, expanding an existing business you already operate or purchasing an existing business. Undertake small business planning

5 Undertake small business planningWhy plan? Business planning is important because it; Identifies business problems and searches for alternative solutions. Provides the business with a focus and a direction. Encourages owner and managers to stand aside from the day-to-day problems and to think on a systematic basis. Assists the owner to define specific objectives and the nature of the business. Identifies problems and possible new markets. Coordinates resources. Encourages the study of competitors and helps pre-empt their moves. Integrates and focuses business effort towards a single goal. Focuses owners’ attention on objectives rather than subjective “pet” projects. Improves your confidence to set up and operate your own business. Demonstrates the financial requirements and demands of the business. Provides a strong tool for financial application to show business viability and growth path. Common reasons for not planning. The most common reason is a negative attitude. Prefer to do rather than plan. Planning is too academic. Costs too much. “I don’t need to plan at this stage”. “I’m only a small business”. Undertake small business planning

6 Undertake small business planningBusiness plan layout  1.COVER PAGE. 2. BUSINESS STRUCTURE. 3. BUSINESS GOALS AND OBJECTIVES. 4. MARKETING PLAN. 5. PRODUCTION - OPERATIONS PLAN. 6. FINANCIAL PLAN. 7. RISK MANAGEMENT. Undertake small business planning

7 Undertake small business planningCreating the business plan 1. Cover page. This shows the name of the business, the address, contact details and your name. You can include images on the cover to make it look attractive. Mission statement. A mission statement outlines the intentions of the business. What business you are in and who are your customers? What added value do customers receive from your salon? What contribution does your salon make to society? What is your salon particularly good at and why is it distinctive and unique? 2. Business structure. Business structure - there are many types of business structures. You are to nominate your business structure in your business plan. Check your state business centre. Licenses and Business Registrations - search for the licenses and business registrations you require for your business. Check your state business centre. Buying a business - if you intend to purchase an existing business then you need to know those requirements. Check your state business centre. Undertake small business planning

8 Undertake small business planning3. Business goals and objectives This is where you describe what you want to achieve in two years and up to five years. This will allow you to measure the performance of the business. How to determine your business objectives. An important step in the planning process is being clear on what you want to achieve. To help you do this, visualize your business at some future date. State your vision. State the outcomes you wish to achieve in general terms – these are your goals. You can now be more specific in relation to what you wish to achieve to realise your goals. Objectives are the targets your business wishes to reach. They help focus your energy towards the results that you wish for your business. Research has proven that clear objectives lead to increased performance. You need to gather information to create the business you want. The type (nature) of the business is determined by the products and services offered, plus the market (groups of customers) that the business will serve. There are three considerations which will determine the business goals and objectives; The nature (type) of the business. What are the products or services offered? The attitudes of the decision makers. How do the decision makers react to risk? The image of the business. How does the business want to be seen by - customers - staff – suppliers- lenders? Feasibility study  A feasibility study is an assessment of the practicality of a proposed plan or method. Operational planning is the day-by-day and month by month planning for what your business is doing. Strategic planning determines the entire direction of your business. This used to be called "long-range planning". The term "strategic planning" is now used to express the analytic and comprehensive elements of this type of planning. The two forms of planning must be integrated, but must not be confused. Undertake small business planning

9 Example of business goals and objectives1. Vision 2. Goals 3. Objectives Visualise the business at some future point State the outcomes to be achieved in general terms State the targets the business wants to reach Vision example: Goal example: Objectives example: To have a group of loyal customers who visit the salon every six weeks To sell retail products to loyal customers To have increased retail products sales by 50% to loyal customers by end of year Undertake small business planning

10 Undertake small business planningSWOT analysis of your business A SWOT analysis is determining what factors will affect the performance of your business. Has the business the resources to achieve its goals and objectives? SWOT analysis – strengths, weaknesses, opportunities and threats of your business idea. Strengths and weaknesses. This is an internal analysis of your business and should cover; Products and service range. Profitability – overheads against income. Capacity to deliver services or products. Management and staff skills. Financial security. Opportunities and threats. This is an external research into factors such as; Competition - their present position, likely future, reasons for success or failure. Politics – tax, environment, wages, regulations. Economics – the state of the economy, interest rates, level of employment. Social situation – changes in social behavior, attitudes, standards of living, levels of income. Technology – changes to existing products, methods of distribution and production. Health and safety – changes in zoning regulations. Pollution standards. After completing a SWOT analysis you are in a better position to decide what steps to take and what resources you need to acquire in order to achieve your business goals. Undertake small business planning

11 Undertake small business planning4. Market research Market research is a large part of the business plan. This process may involve the following; Observing and discussing client requirements. Recording and reviewing client requests, enquiries and client personal cards. Reviewing frequency of purchases of services and products. Talking to colleagues and sales representatives. Reading industry magazines and other publications. Sourcing suppliers of products for the industry. Collecting market research data from independent sources. You can use; Telephone surveys – questionnaire over the telephone. Mail surveys – questionnaire through the mail. Interviews – personal administration of questionnaire. Marketing plan - definition of the marketing plan. The marketing plan is a written document detailing marketing and financial objectives for each product and service and recommending programs and strategies for achieving these objectives. The marketing plan sets out programs and their costs and timing to guide the marketing activities of your business. Market planning reflects short-term goals and the actual, specific details of the plan – that is the actual budgets and marketing tactics that will be employed. Marketing funds should be allocated to business promotions, consumer promotions or general salon advertising. Undertake small business planning

12 Undertake small business planningMarketing and promotions It is a job for the manager or owner of the business to think about new ideas, new products and new services for the business. The manager or owner has to decide how much to charge the customer to cover the cost of promotions, additional staff wages and new products and services so that the business makes money. This is seen in the cash flow chart. Marketing mix.  A marketing mix is using a variety of ways to attract customers. A combination of ways is the best, depending on the financial situation of the business and how much income you will receive from increased sales. Choices are; Advertising in paid media- newspapers, radio. Consumer promotions - competitions, coupons, samples, demonstrations. In-store displays. Direct marketing - letterbox drops. Public relations - unpaid media exposure. Sponsorship - donations. Undertake small business planning

13 Undertake small business planningMarketing concept A marketing concept is the overall plan that the business will implement to attract customers. The customer is the main focus. What does the customer want? What does the customer need? What is the difference between what a customer wants and what a customer needs? It is best described as; A customer want is when a product or service is not essential for that customer to have. It is not a necessity. This can be the choice between product brands or services being offered. A customer need is when the product or service is very important to the customer. They must have the product or service because it will make their life better. Customer service. Your customer service policy needs to be included as part of your marketing plan. Make sure it is relevant to your business goals and objectives. Marketing activities consist of the 4P’S.  Product – an item, service or idea that is created to fill the needs of customers. Price – the price the customer will pay for the item. Promotion – the communication and activities created to attract customers. Place – also known as the distribution of the product. How or where will the customers receive the products or services? Undertake small business planning

14 Undertake small business planningMarketing concept continued Demographics segmentation - This describes general characteristics of a population – age, gender, education, income and family lifestyle. Retailers may use social class segmentation. Family lifecycle demographic variables can be young, single to married and mature. What are the product and services that will meet different needs at different stages? Geographic segmentation - This is where buyers live – east, west, north, south plus the physical characteristics of those areas such as population size, climate, city size. Psychological segmentation - This is lifestyle activities, attitudes and opinions. Lifestyle segmentation provides better understanding of how they think and act. Behavouristic segmentation - This is how a customer acts towards particular products – user loyalty. The common behavouristic variables are; Benefits sought – different people seek different benefits in product and services. Usage rate – heavy, moderate or light. Users loyalty – is the continued commitment a customer has to a particular product brand or service. A business must identify these to serve customers better. Image of your printed material. The quality of your business card, your business brochures with prices reflect greatly on the success of your business. Your business is all about image, so your printed material must look good. Salon location.  Where are you going to open your business? Consider the travel time to your business. You will be working long hours so either you open your business close to home or you move closer to your business. This is the visual look of your salon. What will it look like, trendy, traditional, exclusive or budget style? What fixtures and fittings will you require to make the salon look attractive? What merchandising stands will you need to display your products? Your business plan should detail the image of the salon. Undertake small business planning

15 MANAGING OPERATIONAL FUNCTIONS5. Production – Operations plan The operations plan is the daily running of your business. The operations plan must include; Hours of opening – trading hours – weekly time schedule – holidays taken into consideration. Out of hours – book keeping, purchase of stock etc. Location of salon. Equipment and products required. These include products for retail sales, product used in your services and equipment needed to carry out your services. Occupational Health and Safety procedures including security of premises if this is an issue for you. Shop fit out requirements – these are fixtures and fittings. These can be lights, air-conditioning, blinds, signage, chairs, floor coverings etc. Staff job roles. How many staff are you going to employ and what are their job descriptions. Are they full time, part time, sub contractors? Staff wages, incentives and entitlements. Distribution of products. How are you going to be selling products? Management or owner’s role. What are the daily activities of this person? MANAGING OPERATIONAL FUNCTIONS Operational function Description of function Management aim Marketing Formulating a business offer to customers To maximise sales Production Making products to sell To maximise output Purchasing Acquiring physical supplies for sale To obtain the best supply terms for desired quality Personnel Employing people to be productive To maximise labour productivity Financial Measuring financial results of the operation To maximise profit and cash flow surpluses Undertake small business planning

16 Undertake small business planning6. Financial plan The financial plan is where you combine your fixed and variable costs with the business set up costs to see if you can afford to begin the business. Where are you getting the money to fund your business? Financial backers may be; yourself as owner, family and friends. There are also providers of venture capital, banks or finance companies and leasing and hire purchase financiers. There are Federal and State governments which provide various forms of technical and financial assistance including direct cash grants, subsidies, tax concessions and professional and technical advice. Specialists services. There are people and services that will help with the financial assistance for your business. They may be; Accountants. Lawyers and providers of legal advice. Government agencies. Industry and trade associations. Business brokers and business consultants. Your fixed and variable costs provide you with some of the information you need for your financial plan. Combine this with your set up cost and your marketing and promotions costs. You need to establish these costs as they reflect the business you are establishing in this business plan. Undertake small business planning

17 Undertake small business planningSET UP COSTS Items $ Lease establishment/bond Market research Travel – car Printing/artwork/stationary/office supplies/client facilities Accounting/software/management system Electricity, gas bond, phone connection Insurance premium Professional indemnity insurance Banking/credit card establishment Loan establishment cost Initial promotion/advertising Computer hardware Opening order stock – retail and professional Legal/statutory charges/ licences/registration Association fees Shop fit out - furniture/lighting/signage/flooring Tools and equipment/linen/disposable items Staff amenities TOTAL Undertake small business planning

18 Undertake small business planningFinancial management You may need to use the tools from government websites to assist with your financial plan. Find the Financial Management link on the appropriate website. Funding your business venture. Where will you get the money to commence and operate the business? Do you have enough yourself or can you borrow from family, friends, providers of venture capital, banks or finance companies or leasing and hire purchase financiers? Search for information on finding a loan. Check your state business centre. Taxation requirements. Understanding taxes and meeting taxation obligations is essential for any business. You will need to research the requirements for taxation registration, capital gains tax, fringe benefits tax, GST, income tax, payroll tax, stamp duty, tax concessions, employee superannuation, tax deductions, record keeping and other tax issues that may relate to your business. Check your state business centre. Environmental management practices. Incorporating environmental management strategies into your business plan allows you to introduce effective 'green' management activities into your daily operations. Using sustainable resources and employing proper recycling and waste reduction measures can also improve your profitability and reputation with customers. You need to know if your business activities fall under environmental legislation and licensing requirements. Certain goods or appliances may need to comply with environmental standards before they can be sold. Each standard sets out a rating and labelling system to inform consumers on how efficiently a product uses an environmental resource. Environmental reporting obligations. For most businesses, environmental reporting is voluntary but there are some mandatory industry reporting requirements that may apply to your business. You need to research if this applies to your business. Undertake small business planning

19 Undertake small business planningInsurance Beside Workcover insurance for your staff, you need to consider all other types of insurance that you may need. WHS and OHS requirements. You need to identify specific work hazards that can occur in the salon environment for safety of staff and clients. This includes procedures for managing hazards and reporting procedures for incidents that may occur. You need to research your state OH&S legal requirements. Ensure that you are compliant. Cash flow. Cash flow is determined by your total income from product sales and services minus the expenses of running your business = profit or loss. To do a cash flow chart, you have to get used to the idea that you are making guesses at how many customers you will have and what they will buy in the way of products and services. At the beginning stages of your business you will be spending a lot of money, a lot more than you will be earning. This is OK as long as it doesn’t go on for a long time. Expenses are what it costs you to commence and run your business. Make a list of your expenses and from this list you will be able to work out how much money you will need to begin your business. Undertake small business planning

20 Undertake small business planningCash flow - Profit or loss explanation On the following page there is a template for income and expenses broken down into 12 months of the first year. You are to add in the amounts for income and expenses. If you need to, change any of the items to best fit with your business. Some of the fixed and variable costs that you worked out on the previous page will need to be grouped together under the one heading. For example; council rates/water rates, telephone, gas, electricity and water usage would all go under amenities. Your trainer will assist you to group items into categories. Staff wages also includes the incentive scheme you worked out. Expenses for salon set up is a one off cost before you open the salon. Your capital investment is a one off income. This is the money you borrowed and you will have loan repayments in the expenses column. Estimate how much income you will receive from service and product sales each month. When your income increases, so does your expenses in purchasing products and materials plus advertising and printing costs. The column named ‘other’ is where you can group other expenses that do not fit in with the categories on the chart. In the totals column for income and expenses add them up each month and at the end of the year. The profit or loss is the difference in how much you earned and how much you spent. Undertake small business planning

21 Profit and loss – first yearEXAMPLE Profit and loss – first year Pre open month 1 month 2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 12 TOTAL SALON INCOME $ Capital investment Services Products TOTAL INCOME SALON EXPENSES Salon set up cost Product/service cost Wages/Petty cash Rent Amenities Loan repay/bank charges Legal/insurance/GST/ PAYG Tax Promotions/stationary Travel/Entertainment Other TOTAL EXPENSES INCOME less EXPENSES LOSS OR PROFIT Undertake small business planning

22 Undertake small business planningSpecialist services You will need an accountant to help with tax returns and a lawyer to check through a lease on the business premises. But accountants, lawyers and other business advisers can do much more for your business. A good business adviser works with you to anticipate changes and plan for survival and growth. They can also be valuable for one-off projects such as market research. It's important to have an independent view of your business situation. Securing the assistance of a qualified and diligent business adviser can be of great benefit to you and your business. Include a list of those you would use for specialist services in your business plan. Business support. Business Centres are located within your state and are based throughout the regional areas. They provide business people access to services provided by the Department of Innovation, Industry and Regional Development. Business Enterprise Centres (BECs) are independent, community-based organisations, which provide advice and assistance to existing and potential small business owners and operators. A business association can help provide essential business information and explain how changes to your industry will affect you. The association will also lobby on your behalf. Small Business Field Officers (SBFO) provide both broad-based advisory and referral services, as well as harnessing local knowledge and experience to reflect the nature of the communities they service. Translation and interpretation services. Australia, being a multicultural country, many government translation and interpretation services available in other languages. Undertake small business planning

23 Undertake small business planningSalon policies You need to develop salon policies and procedures for your business. You may need to research state, territory and local government requirements for the information on which to develop your policies. Include these in your business plan. Code of Conduct Leave/Termination Discipline Dress Code Training & Development Grievance Resolution Occupational Health & Safety Environmental issues Expenses Industrial relations Anti-discrimination/equal employment opportunities Drug, Alcohol & Smoking Undertake small business planning

24 Undertake small business planning7. Risk management Risk management strategies are designed to keep the business heading towards its business goals. Some area of risk management could include; New skills training for staff. Customer service. Improved management skills. Technology improvements. Sales turnover. Government regulation changes. Your updated SWOT analysis.  Undertake small business planning

25 Undertake small business planningContingency plan - Review business Throughout this business plan module you should have asked yourself “What measures am I going to take to ensure that my business is continually successful?” Your answer should be “Review business practices and make changes where necessary”. In today’s technically advanced world a new invention can be copied within a number of weeks. Nothing is ever really new. Often a product or service may have been around for a while but with a new design or new promotion it creates the impression that it is something new. Factors that may affect your business are; Changing trends in the marketplace. New product on the market. Changes in government regulations. Media influences – entertainment industry. Newspaper, magazine articles. New research into health and beauty care. Environmental factors – changes in weather patterns. Another hair, beauty or pharmacy business opening near you. Changes in traffic flow that will hinder customers getting to your premises. Changes in your family situation. Changes in staffing. In your business plan, these review processes should be taken into consideration during the first year of trading. It is important to create a strategy in your business plan of continually review your business situation. Include contingency strategies in your business plan. This completes the learning material for this unit. Authors copyright is claimed in all forms of media. Moral rights are claimed in all forms of media. Intellectual property rights are asserted and maintained in all forms of media. Undertake small business planning