nice touch hair salon (1)

8/6/2019 Nice Touch Hair Salon (1)

1/13

National Institute of Studies

Small Business Venture

Unit Standard

1993&1994

Topic: Nice Touch Hair Salon

Submitted by: Shallini Parihar

Id: 3740


2/13


3/13

attention. Using this strategy, Nice Touch will gain significant market share and createcritical long-term relationships with its clients.

The Company

Nice Touch is a hair salon owned entirely by Shallini Parihar and it will be located inNewmarket.

The owner will be handling all hiring and training, purchasing, and retail sales. She will alsohire a receptionist to manage all of the appointments as well as the people who walk in and beresponsible for the point of sale transactions. Nice Touch will also be hiring five part-timehair stylists who will operate on $15/hr.

The owner will be using a partial commission basis to create incentives for superior customerattention. The more her stylists attend to the customer's needs, the more money they willmake off commissions. Nice Touch will invest time and money into training to ensure thatclients receive the best experience possible making it easier to turn them into long-term

customers.

Services

Nice Touch will provide hair styling for the entire family. This includes hair cuts for men andwomen, permanents and hair colouring for women, as well as hair cuts for children.Shampoos will be offered for all adult services. Service will offers on a walk-in basis or byappointment. Nice Touch will emphasize a customer-centric service where the customer'sneeds are always the priority.

Nice Touch will also sell hair care products which is forecasted to account for 15% of sales.These professional-quality supplies will include shampoos, conditioners, brushes, combs, andother styling aids.

The Market

The hair styling industry is highly fragmented with national chains. In addition, the clients of

hair styling have significant leverage due to the low switching costs they have. However,most companies have tried to pursue only one general strategy in gaining market share. NiceTouch believes that it is possible to offer a differentiated service through improved customerservice at no greater significant cost if the right employee incentives are provided.

With this strategy in mind, the company's goal is to increase the number of clients served byat least 20% per year.

Nice Touch will target three different market segments:

Men will typically make up 70-75% of the clientele. Females who cannot afford an upscale salon.

Mission


4/13

Nice Touch's mission will to provide reasonably priced, convenient hair styling for men andwomen of all ages. Our services will exceed the expectations of our customers.

Business Objectives

The objectives for the first three years of operation include:

1. To create a service-based company whose goal is to exceed customer's expectations.2. To increase the number of clients served by at least 20% per year through superior

performance and word-of-mouth referrals.3. To develop a sustainable start-up business, contributing to increased employment ofcommunity residents.

Company Summary

Nice Touch soon to be located in Newmarket, Auckland, will offer reasonably priced,

convenient hair styling. Nice Touch will accept walk-ins as well as appointments for theentire family. Nice Touch will grow its market share based on superior customer attention.

Nice Touch will be a family hair salon owned by Shallini Parihar.


5/13

Start-up Summary

Nice Touch will incur the following start-up costs:

Computer with point of sale terminal. Computer with printer for back office. Five cutting stations, each station requires a barber chair, cabinet, large mirror, blowdryer, curling iron, electric razor, several pairs of scissors, spray bottle, two sided mirror,and assorted combs and brushes. Desk for reception area. Three couches for the reception area. Display shelf for sale of retail products. Assorted plants.

Assorted toys for the children. Legal fees for business formation and generation/review of contracts.

Financials

Total funding required $105,000

Planned Investment

Shallini $60,000

Investor 2 $45,000

Total $105,000

Fixed Assets Costs $50,000

Premises Renovation $15,000

Hair Supplies $10,000

Hair Products $ 7,000


6/13

Scissors $ 3,000

Brushes $ 2,000

Furniture (couches, reception desk, chairs etc.) $18,000

Total $105,000

Different hair styles

Hair Colouring


7/13

Tools

SWOT ANALYSIS


8/13

The following SWOT analysis captures the key strengths and weaknesses within thecompany, and describes the opportunities and threats facing Nice Touch.

Strengths

Excellent retail space in a well-traveled mall. Well-trained employees with good hair cutting skills with a wide style repertoire, and

customer-focused business practices.

A wide range of services offered.

Competitive prices.

Weaknesses

As a new entrant to the market, Nice Touch lacks brand equity that many of itscompetitors have earned over years of service.

The struggle to appear continually on the edge in terms of fashion and style. Large costs associated with a start-up company.

Opportunities

A steady growing market that is traditionally unaffected by the economic

environment.

The ability to decrease marginal fixed costs as the customer base grows.

Increasing sales opportunities as more people from an individual family frequents

Nice Touch.

Threats

Competition from already established chains.

A change in traffic patterns as they relate to the mall where Nice Touch is located.

Market Analysis Summary

Nice Touch will be targeting three diverse groups of customers. Nice Touch will work hard to

distinctly appeal to each of these groups.

Market Segmentation

Nice Touch will target three different market segments:

Men will typically make up 70-75% of the clientele. Men have shorter hairrequiring a faster, simpler job.

Females who cannot afford an upscale salon. Women tend to favour a femalespecific upscale salon if they can afford it. There is not often a difference in quality ofan upscale salon relative to a family hair salon other than a upscale salon will tend to

pamper you more, only accepts appointments, and the facility is generally a bit

plusher. Someone who is fiscally responsible as opposed to someone who likesopulence will favour a family style salon.


9/13

Target Market Segment Strategy

Nice Touch will target each of the three groups separately. The males will be targeted byoffering a quick, convenient, service. Because men tend to have shorter hair, they usually

require haircuts more often. If they are getting a cut every four weeks and work normalbusiness hours, most barbers are closed when the male customers have free time.

Generally females prefer the allure of upscale salons, however, not everyone can afford thisluxury. For this reason Nice Touch will provide the same quality hair styling, without theexpensive price.

Nice Touch will also target mothers with children by offering the kids toys to play with whilethey wait and child-friendly hair stylists. Additionally, children receive a special ratereflecting the fact that children's hair grows so fast that it can be expensive to keep up withregular cuts, as well as the recognition that it generally takes a lot less time to cut a child'shair so it should be inherently less expensive.

Service Business Analysis

The "hair" service industry is fairly diverse. On one end of the spectrum you have thetraditional barber, on the other end you have the fashionable boutique salons. Somewhere in

between there are independent hair stylists, franchise barbers and stylists, and beauty salons.

Competition and Buying Patterns

Nice Touch competitors include:

Traditional barbers. They rarely serve appointments; it is generally a walk-inservice. While barbers are usually willing to provide whatever cut you are interested,they are generally providing straight forward haircuts, typically on the conservativeside. The advantage of a barber is they are inexpensive and easy to use. Theirdisadvantages is often conservative styling capacities, sometimes a long wait as the

barber may be an old timer who enjoys to chit chat. Independent salons. These shops typically focus on a specific niche and do not serve

a wide group of customers. The advantages to these could be an independent salonthat fulfils all of your needs. The disadvantage is that because they tend to be more

focused, more often than not this type of salon will not offer exactly what customersare looking for.

The buying patterns of men and women are quite different. Typically men are more price or

convenience sensitive. Men typically care less about the task of getting their hair cut. For

them whatever is easiest works best. Women on the other hand are more caught up in hair

styling and tend to bond more with their stylists. Because they bond more, they are much

more loyal to their stylist. Once a stylist has earned their trust they are more willing to blindly

put their hair in the stylists hands.

Strategy and Implementation Summary


10/13

Nice Touch will rely on three separate strategies to grow market share. The first is superiorcustomer service. Customers will be blown away with the level of service that they receive.

Nice Touch will also be leveraging its high-traffic store front location in a shopping centre todrive people into the store. They will benefit from the shopping centre association'smarketing efforts to bring more people to the centre.

Lastly, Nice Touch will use financial incentives early on to build a large, loyal customerpopulation.

Competitive Edge

Nice Touch will invest time and money into training to ensure that clients receive the bestexperience possible making it easier to turn them into long-term customers. By providing

superior customer service, Nice Touch will be able to effectively compete against and outlastlarger chains and independent stores.

Marketing Strategy

Nice Touch will be located in a shopping centre in Newmarket. While the cost of the leaseper foot is higher than in other business areas, the shopping centre provides the best exposure.Additionally, the shopping centre association is responsible for marketing the centrescommon area which will help draw a lot of traffic to the shopping centre.

Nice Touch will market themselves as a hair salon that serves everyone, men, women, andchildren. This will be done through flyers to be sent out with the local newspaper. NiceTouch will also have an in-store promotion for the first few months to lure new people in.Lastly, Nice Touch will offer a discount for a few months to people those refer newcustomers.

Sales Strategy

Nice Touch sales strategy will be based on extremely professional interactions with thecustomer. Nice Touch will also have the opportunity to increase sales of their retail hair care

products every time they have a customer in the chair. Nice Touch offers deep discounts onthe hair care products for employees to encourage usage so they can explain to the customerabout their personal experiences. Additionally, Nice Touch offers a product-basedcommission structure for the hair care products where they give away the product to theemployee for commissions for selling the items to their customers. These personaltestimonials and commission structure will allow Nice Touch to generate good sales from theretail hair care products.

Sales Forecast


11/13


12/13

Personnel Plan

Shallini will be working full time for Nice Touch. She will be handling all hiring andtraining, purchasing, and retail sales. Shallini will also hire a receptionist to manage all of the

appointments as well as the people who walk in and be responsible for the point of sale. Thereceptionist will be paid an hourly wage. Shallini will also be hiring five part-time hairstylists who will operate on a hourly basis.

Shallini will be using a partial commission basis to create incentives for superior customerattention. The more her stylists attend to the customer's needs, the more money they willmake off commissions.

Break-even Analysis

The Break-even Analysis indicates what Nice Touch must achieve in monthly revenue toreach the break-even point.

Break-even Analysis

Monthly Revenue Break-even $31,511

Assumptions:

Average Percent Variable Cost 16%

Estimated Monthly Fixed Cost $26,579


13/13

nice touch hair salon (1)

Documents