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Liverpool John Moores University
5053
Dr

Small Business Proposal for Hair and Beauty
Salon
Word count: 2723

ID

Friday 22nd March 2019

Executive Summary
The beauty industry is thriving, and owners of independent salons have realised the
importance of incorporating technology while focusing on customer experience
...
The hair and beauty salon market have an average annual growth
of 1
...
The hair and beauty industry is worth £7
...

Starting up a new business can be a very big task
...
This business proposal will include a
business plan that will help to clarify a business idea, spot potential problems and set
out goals (Gov UK, 2019)
...


Page 1 of 16

Contents
1

INTRODUCTION
...
3
2
...
4

2
...
1

POLITICAL FACTORS
...
1
...
4

2
...
3

SOCIAL FACTORS
...
1
...
4

2
...
5

LEGAL FACTORS
...
1
...
4

2
...
5

2
...
1

THREAT OF NEW ENTRANTS
...
2
...
5

2
...
3

COMPETITIVE RIVALRY
...
2
...
5

2
...
5

BUYER POWER
...
6

4

SECTION 3
...
9

6

CONCLUSION
...
12

8

APPENDICES
...
The salon will be located in
Liverpool city centre on Bold Street which is a convenient location with easy access
...
Services are offered either by appointment or on a walk-in
basis
...
The average
British woman spends around £70,000 on her appearance in their lifetime
(Independent, 2017)
...
3% of consumer spending is spent
on beauty treatments and 39
...

Just over half of hairdressing and beauty businesses have annual turnover of less than
£99,000; and just over 34,000 UK businesses that employ almost 153,000 people
(IBIS World, 2019)
...
1bn (IBIS World, 2019)
...
Taking into consideration of where BOLD beauty will
operate, the biggest barrier to entry will be surrounding competition, other beauty
salons on Bold Street in Liverpool have been open for a few years and will already
have their loyal customers which may make it difficult to begin operating in the area
...

Recently, the use of beauty services in salons has emerged
...
On average, the
industry has grown 2
...
2%
annually for each of the next 5 (Quickstone, 2018)
...

A PESTLE analysis will help to analyse the market and define key trends or issues
that may arise
...
1 PESTLE analysis
2
...
1

Political factors

Research suggests that SMEs might be worst affected by Brexit (BBC News, 2018), impact on
reduced capital investment weakens and undermines the ability for small to medium sized
enterprises to grow
...
1
...
Over the
past few years there has been a tremendous increase in environmental products available
...

2
...
3

Social factors

Change in taste and preferences, fashion and norms are consistently changing
...
Different people, races, gender and ages value
different hairstyles and these demands lead to new opportunities for hair salon industry
...
1
...
Using internet and social media give
opportunities for businesses to promote themselves giving easy access to salon information or
becoming easier to make an appointment
...
1
...
A premise licence will
enable the salon to be run regally
...
If you’re planning to play music in the salon you will need a license from
Phonographic Performance Limited (Start-ups, 2019)
...
1
...
With whether the UK are leaving the
European Union or not there is still uncertainty about economic growth, and it makes it
impossible to make forecasts (Financial Times, 2019)
...
According to Centre for Entrepreneurs (2017), one in seven companies in the
UK is founded or co-founded by a migrant entrepreneur and are responsible for 1
...


Page 4 of 16

The impact of Brexit continues to impact consumer confidence negatively in regard to their
financial situation, those who regularly go the salon may turn to DIY/home solutions for colour
trends (Mintel, 2017)
...
2 Porters 5 Forces
2
...
1

Threat of new entrants

Profitable markets attract new entry
...
There is a low threat of new entrants in this
market as there is high brand loyalty and brand names are well known
...
2
...
When close substitute
products exist in a market, it increases the chances of consumers switching to an alternative
...
2
...
The best way to create
a more personal connection with current and potential clients is to reach out to the community,
whether this is supporting a local business or teaching (Mintel, 2017)
...
2
...

Bargaining power of suppliers is high when substitutes are available and there are only a small
number of suppliers relative to buyers (CFI, 2019)
...
2
...
Customers can easily check different prices
for services and find the right price for them
...


Page 5 of 16

3

SECTION 2

The business model canvas for BOLD beauty helps to define and communicate the
business idea
...

By detecting elements of the business, areas that may need improving can be found
or it can help to gain understanding of goals
...
A Mintel survey
found that in 2017, 76% of those who had beauty treatments within the last 12
months agreed that it promotes there mental wellbeing (Mintel, 2017)
...
However, starting from scratch often presents
distinct disadvantages, for example it may be difficult to build a customer base,
market the new business or hire skilled employees
...
While you are still likely to need marketing, at least you are not
starting with a name that nobody has ever heard of or a service no one has ever
received (All Business, N
...

Through a partnership, a wider range of knowledge, skills and contacts are available
(Hall, N
...
Advantages of a partnership are having shared responsibility, having more
business owners means financial and operational responsibility to be shared and
workload can be reduced (Small Business, 2018)
...
As a sole
trader there are fewer financial restrictions and a greater amount of privacy, it is
easier for the business to close down when it is just the one person (Small Business,
2018)
...

To finance the start-up of BOLD Beauty there are a few options – the first are bank
loans
...
At Santander, you’re not
charged an arrangement fee on business loans
...

HSBC UK provide small business loans from £1,000 to £25,000 (7
...

There are a few Government grant funding and schemes available for if banks do not
comply, one option is Start Up Loans which government are funded loans that also
offer mentoring and support for very early-stage businesses who are unable to
attract investment from high street banks, to be eligible the business must be yet to
launch or trading for 12 months or less
...
Each loan is considered depending on the needs of the business, the
average loan is around £6000 (Sage, 2017)
...
There’s no application fee and no early repayment fee (Gov
UK, 2019)
...
They offer an enterprise
programme to help young individuals to start their own business
...
Funding needs will vary depending on the type of business and stage of
development; a grant is a better option than a bank loan due to the fact you will not
have to pay it back or pay interest on it
...
The NHF help save time, money and ensure that your business is covered
with the correct and up to date legal support for an annual rate of £274 for salon
owners (NHF, 2019)
...

A second and more suitable support option available is The Women’s Organisation a
European Regional Development Fund, funded by the EU; who help to support a
new business at whatever stage of the start-up process they are at
...
The Women’s Organisation also offer seminars and masterclasses
that help to gain or improve skills and knowledge on ow to market the business, keep
accounts and apply for funding (The Women’s Organisation, 2013)
...
The indoor environment should be relaxing, professional and convenient
where a wide range of services are offered in the one place
...


Page 8 of 16

5

SECTION 4

A survey by insurer RSA suggests a large proportion of UK start-ups fail within 3-5
years (Direct Line for Business, 2016)
...
Another reason a salon is likely to fail is due to not bothering to do
market research in the first place, a business should always research prospective
customers and competitors, find out as much as you can about the market place,
speak to other salon owners, potential clients and local businesses to get an idea of
possible clients
...
Getting
your pricing wrong by setting prices too high or low is a common mistake for start-up
businesses
...
The number one barrier as to why less consumers are using
professional hair services is the cost
...
An extremely important reason as to why there is a likelihood of failure in this
kind of business is due to the amount of other surrounding businesses, customers
are already loyal to existing salons in the area, so why would they move to a new
one?
Health and safety in the salon should be maintained at all times
...

Staff should follow the procedures given by employers (Vtct, 2016)
...
Salon owners need to set clear
expectations, so they do not lose staff or clients
...
The approach to management that BOLD Beauty will hold will be an
affiliative style, meaning a quite laid-back environment
...
D)
...
It’s
important to know where you fall in the timing when launching a business
...
Profit measures how effective the business is at generating money
before after expenses
...

In order to succeed BOLD Beauty must find accessible support and guidance so that
they can find their ground to keep stability or so they can have somewhere to fall
back on if needs be
...
1% to £8
...


Page 11 of 16

7

REFERENCES

BBC News
...
SMEs may be worst affected by Brexit, research suggests
...
bbc
...
uk/news/uk-scotland-42767534
...

Burns, P
...
) Basingstoke: Palgrave MacMillan
...
(2015)
...
Available:
https://www
...
com/key-partners-in-business-model-canvas/
...

Collis, J
...
& Hussey, R
...
) Basingstoke:
Palgrave MacMillan
...
(2019)
...
Available:
https://corporatefinanceinstitute
...
Last accessed 22nd March 2019
...
(2017)
...
Available: https://www
...
com/blog/brexit-and-startups-next-fewyears/
...

Direct line for business
...
Your guide to opening a beauty salon
...
directlineforbusiness
...
uk/small-business-insurance/knowledgecentre/getting-started/opening-a-beauty-salon
...

Douglas, L
...
Beauty boom or bust: Does the UK have too many
salons?
...
theguardian
...
Last accessed 19th
March 2019
...
(2018)
...
Available:
https://www
...
com
...

Entrepreneur Handbook
...
List of small business grants in the UK
...
co
...
Last accessed 21st March 2019
...
(Unknown)
...
Available: https://futureofworking
...
Last accessed 19th March 2019
...
UK
...
Apply for a Start Up Loan for your business
...
gov
...
Last accessed 18th March 2019
...
UK
...
Write a business plan
...
gov
...
Last accessed 20th March 2019
...
(2019)
...
Available: https://www
...
org/beauty-industrystatistics/
...

Hakutzwi, B
...
Should You Start Up or Buy Your New Business? 12 Pros and
Cons
...
allbusiness
...
html
...


Page 12 of 16

HSBC UK
...
Small Business Loan
...
business
...
uk/engb/finance-and-borrowing/credit-and-lending/small-business-loan
...

IBIS World
...
Hairdressing & Beauty Treatment - UK Market Research
Report
...
ibisworld
...
uk/industry-trends/market-researchreports/other-service-activities/hairdressing-beauty-treatment
...
Last accessed 18th
March 2019
...
(2015)
...
Available: https://www
...
com/blog/marketing-mistakes-made-bysalon-startups/
...
(2017)
...
Available:
http://academic
...
com/display/793739/
...

Mintel
...
Spa, Salon and In-Store Treatments - UK - September 2017
...
mintel
...
Last accessed 21st March 2019
...
(2019)
...
Available: https://www
...
info/benefits/nhf-salonmembership/legal-support/#Help
...

The National Hair Federation (2018)
...
Bedford: NHF
...
(2019)
...
Available: https://www
...
info/home/
...

The Women's Organisation
...
Business Start Up Support
...
thewomensorganisation
...
uk/business-advice-/business-start-up-support
...

Thomas-Bryant, K
...
Government Grants for Small Businesses
...
sage
...
Last
accessed 20th March 2019
...
(2016)
...
Available: https://uk
...
com/2016/02/10/where-to-start-when-setting-upyour-own-hair-and-beauty-salon/
...

Santander
...
Small Business Loans
...
santander
...
uk/uk/business/borrowing-finance/business-loans
...

Vtct (2016)
...
UK: Vtct
...
(2017)
...
Available:
https://www
...
com/blog/salon-helping-harming-environment/
...

Watts, J
...
Beauty Salon Legislation and Regulations
...
co
...
Last
accessed 18th March 2019
...
(2017)
...
Available: https://www
...
co
...
html
...


Page 14 of 16

8

APPENDICES

Figure 1 - SWOT Analysis for BOLD Beauty

Page 15 of 16

Figure 2 - Business Model Canvas

Page 16 of 16



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