Projected income?

[Saya]

Hi all,

I'm trying to get my business plan straight, but one thing eludes me..
What do I put down as projected income?
I don't know how much I'm likely to make, as this is my first business and it is unlikely that the local competition would tell me about the frequencies of their services.

My plan would be based on three beauty chairs (for facials, hair removals, manicures, pedicures, massages, facials and other treatments) and one hairdressers chair.
I will be located in London, E1 (between Docklands and the City)

Any real indications of frequencies would be blessed..x

 

[Lavender-blue]

You need to see a business advisor, or a professional who knows how to run a business.
Have you done a course in business studies? I think this would be your best bet.

Good luck with it.
Elaine:hug:

 

[Saya]

hi Elaine,

Thanks for your reply,
I know how to do a projected cashflow, it's not so much the business plan itself.
It's the not knowing how much a salon really makes thats the stuck point.
No one is willing to divulge their true turnover, (this may be due to cash in handers, tax etc, but we won't go there!)

For example, I can sit here and assume that for each chair, I can fit 4no. services, at say £15 each within 4 hours. Then thats for the full 7 hours of the day, then thats for the full 6 days in the week.
So on full week, that would be £2,520.00 for the week, right? wrong.
Because I cannot believe that this would be the case in reality.

I need more realistic frequency data, I have an Business Advisor allocated and an accountant, but they wouldn't know this kind of stuff.

So perhaps i can start a little survey here?
Can anyone please let me know the frequencies of their services for a normal week? I don't need to know your takings/ charges, just how often you serve.
If I can find enough people to contribute this info, I will be happy to present the overall findings on here for everyone else to see the trends.
Ps, do let me know where you are based, so I can factor that in.

Many thanks again : )

 

[Lavender-blue]

Hi.
I am sorry but i cant help you personally as i am mobile.

I do understand what you mean though.

Its a very hard to generalise on frequencies of service for a normal week, because it has too many factors to consider.

It really depends on the area, how many staff are productive, qualifications, reputation, skill, how many staff are productive at any one time, there are loads of factors.

I think it will be a matter of suck it and see.

xx

 

[Saya]

Thanks elaine,

I think I might have to send in a mole into the other salons and see if they can extract any information on their popularity through conversation. ; )
whilst also phishing their staff & customers, muhaha!

If I do get some trends, I'll be sure to let all the geeks know..this place isn't bad, I don't feel so alone..I think you'll see me here more often..: )..x

 

['chelle]

I recently had to supply a business plan with financial forecast, and they were happy with what I provided, so I'll tell you how I did it.

Work out what is the maximum number of treatments you can fit in your appointment book per week, then work out how much money that would generate. Then, divide that cost by the number of hours you do per week. This gives you your average hourly rate.

Then, you need to estimate how quickly you think your appointment book will fill up. For me this was slightly easier because I have already done a couple of months trading before I did the forecast. What I did was work out how fast my appointment book was filling up on a percentage basis, then project that for the next 12 months (or however many months your forecast is for)

So, for example, if you start with approx 20 hours worth of appointments in month 1, but in months 2 and 3 you are getting approx 30 hours of appointments over the month, this means you are seeing a 50% increase per quarter. you could then work out how much you would earn in the next 12 months if your appointments continue to increase by 50% per quarter. If you havent started trading yet and have no figures to go on, you can provide an estimate of how you think your business will expand, providing details of how you intend to get those figures (eg what sort of marketing will you do).

Projections only work on paper really. There are so many variables, you have no idea what sort of treatments will be more popular than others, but they are a necessary evil to supply to your business advisor!! If you put some facts and figures down on paper your business advisor will be able to tweak these for you into the format of a business plan and financial forecast.

 

[Saya]

Wow thanks Michelle,

I'll have to read that one more slowly again!

still slightly stuck, with having no existing figures to work with.
And to avoid going with my instincts (they keep double crossing me,lol) I really am going to have to plant a fly on the wall of my beloved competitors, lol!
Oh this is so much fun

 

['chelle]

Sorry I know, I read it back and it sounds much more complicated than it is. Do you have a business advisor?? If so they should be able to work with you and put a plan together

 

[loubylou]

In all honesty you just make it up as you go,
no one can predict the exact amount of turn over,
you make it look good,
we all know it could take up to 3 yrs to actually take what you have written down but the bank manager knows this as well,
he just wants to see what the business will be capable of making when you are fully established and he/she will be happy,
i made mine up as i went and got a loan on my first application and i was unemployed at the time hth

 

['chelle]

In all honesty you just make it up as you go,
no one can predict the exact amount of turn over,
you make it look good,
we all know it could take up to 3 yrs to actually take what you have written down but the bank manager knows this as well,
he just wants to see what the business will be capable of making when you are fully established and he/she will be happy,
i made mine up as i went and got a loan on my first application and i was unemployed at the time hth

You know, Lou's made a very good point. Business plans and projected incomes are only estimates,. they can and will change. I suspect that the main reason for them requesting business plans is to see how sharp you are, ie, the better you are at putting facts and figures together, the more likely it is that you will be successful at running your business.

 

[skymark]

If you're interested to know what your competitors possible turnovers are, one way to just get some guestimates (and that's really all they are) is to get a price list from each of them and see how many rooms / nail stations they have.

Then you can kind of work out from their price list and capacity (ie rooms and stations possibly in use) just what their absolute maximum turnover could be (without retail).

If you have less rooms / staff and your own estimated figure is above that then something is wrong with yours. lol.

I find that one way to boost your value to the bank is to show in spreadsheet form just how much profit could be made by retailing, by showing them, if I only sell x many of this product I could make x amount.

As long as what you are showing is reasonable and not inflated then you will be fine.

 

[lilacm]

Okay, so i have a business background and now own 2 salons but even that doesn't help me estimate turnover!! It's really only a guess although the more market research you can do the better your guess.

If you find out how many therapists are working in the salons near you and their opening hours it will help. They won't employ 5 people if only one is busy so it will give you a sense. Perhaps visit the salons yourself as a mystery shopper and see how busy they really are and what treatments people are having.

Beauty is seasonal so there will always be slow times. On a good day we make over £1k. Now ideally we would make this every day so i could estimate we will make £350K a year. I think this would be a very poor estimate and our target is actually nearer £200K.

As a general rule for start up service industries you should work out your capacity and then base your turnover on being busy 50% of the time. After yout first 3 months you can then review your budgets and alter your projections a bit.

Hope this helps a little.

 

[Saya]

Thanks Lilacam,

I've based my figure on less than half my optimistic figures and still have money to take home every month, so sounds promising, unfortunately theres now been a a development, which i'll create a new thread for.
As for this, thank you for your figures, I hope others can come forward with theirs so we can start getting a bench mark feel for where we are really at.