Do you want to start men’s salon business?

Do you want to start a tanning salon? Well, about one-third American population go to salons for tanning their skin so you will not be at loss after starting this business. Tanning business yields an immense profit but it requires proper planning as well as a lot of effort for its startup. Besides obtaining a license, you will have to buy medical equipment and machinery along with hiring experienced tanning experts.

However, the first thing you must do before starting this business is to create a detailed and effective business plan. In case you don’t know how to write a business plan, you can take help from the sample tanning salons business plan  available online or this sample plan of a tanning salon startup ‘Suntan Salon’.

Executive Summary

2.1 The Business

Suntan Salon will be a licensed and registered tanning salon which will provide high-quality tanning service. The business will be started in a leased building in Manhattan, New York.

2.2 Management

Suntan Salon will be owned by Jack Andrew, who currently runs a pharma products business. Being associated with the pharma industry, Andrew knows how to start a tanning salon and operate it efficiently.

2.3 Customers

Our customers will initially be the residential community-based in Manhattan. We will offer different packages with different exposure times as per their choice.

2.4 Business Target

Our business targets to be achieved within the next three years are as follows:

Tanning Salon Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Suntan Salon will be owned by Jack Andrew who is a wealthy businessman famous for his pharma products companies. Being associated with the pharma industry, Andrew is well aware of all health regulations related to this precarious work and has also hired medical experts for his venture.

3.2 Why the Business is being started

Andrew has been interested in healthcare-related businesses since the start of his career and due to his vast field experience, he knows how to start a tanning salon business. In addition to that, he aims to make a profit in this domain by providing unparalleled tanning services.

3.3 How the Business will be started

Suntan Salon will be started in Manhattan in a leased building featuring spacious air-conditioned rooms, wide reception space, a conservatory, a waiting room and four bathrooms. In addition to the usual inventory, the company will purchase air conditioned climatronic controlled aromatherapic tanning beds installed with high powered tanning lamps and music system. The startup costs are as follows:

Tanning Salon Business Plan - Startup Cost

The detailed startup requirements are given below:

Start-up Expenses  
Legal $75,500
Consultants $0
Insurance $62,750
Rent $22,500
Research and Development $42,750
Expensed Equipment $42,750
Signs $1,250
TOTAL START-UP EXPENSES $247,500
Start-up Assets $0
Cash Required $322,500
Start-up Inventory $52,625
Other Current Assets $222,500
Long-term Assets $125,000
TOTAL ASSETS $121,875
Total Requirements $245,000
START-UP FUNDING $0
START-UP FUNDING $273,125
Start-up Expenses to Fund $121,875
Start-up Assets to Fund $195,000
TOTAL FUNDING REQUIRED $0
Assets $203,125
Non-cash Assets from Start-up $118,750
Cash Requirements from Start-up $0
Additional Cash Raised $118,750
Cash Balance on Starting Date $121,875
TOTAL ASSETS $0
Liabilities and Capital $0
Liabilities $0
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $0
Capital $0
Planned Investment $0
Investor 1 $312,500
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $695,000
Loss at Start-up (Start-up Expenses) $313,125
TOTAL CAPITAL $221,875
TOTAL CAPITAL AND LIABILITIES $221,875
Total Funding $265,000

Products and Services

Your tanning salon business plan must include the services you are going to provide to your customers. You should devise your services’ plan keeping in mind that you have to survive in a competitive environment where there are many similar businesses in the market. After you have decided what services will you provide, you can train your staff accordingly such as training them on how to operate the tanning machines or how to start a tanning bed.

Suntan Salon will provide the following services to its customers:

  • 10 Minutes Tan: We will provide a 10 minutes tan service for the who don’t want to get exposed to Ultraviolet rays for long. This tan will last for a fortnight or a month and is fairly lighter as compared to the other package.
  • 25 Minutes Tan: We will provide a 25 minutes tan service people who want to get a strong shade and are strong enough to endure slightly long-term exposure to rays. This tan will last for more than 2 months and will give them a darker look.
  • Tanning Lotion: We will also sell tanning lotion needed after a person gets tanning service. This is to facilitate our customers so that they don’t have to go and buy tanning lotion for themselves.

Our customers can make a reservation with us by visiting our salon or through our official website.

Strategy and Implementation Summary

When you know how to open a tanning salon business, the next step is to define an effective strategy to attract and gain more customers.

5.1 Competitive Analysis

Our biggest competitive advantage will be the friendly-environment and comfort that we will provide to our customers. Furthermore, we will make sure to keep our salon and tanning beds in a clean, spotless state.

Our second biggest competitive advantage will be our exceptional customer healthcare service. We will make sure that our customers get only that tan exposure which will suit their skin and doesn’t affect their health. Besides, we’ll use the latest and best-in-class machines for our services.

5.2 Sales Strategy

After carrying out a detailed analysis, we came up with the following ideas to advertise and sell ourselves.

  • We will advertise our tanning salon through social and mass media.
  • We will provide discount on customer referrals.
  • We will offer a 15% discount on our services for the first month of our launch.

5.3 Sales Forecast

Tanning Salon Business Plan - Unit Sales

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
10 Minutes Tan 1,887,030 2,680,320 2,588,240
25 Minutes Tan 802,370 815,430 823,540
Tanning Lotion 539,320 770230 1,002,310
TOTAL UNIT SALES 3,228,720 4,265,980 4,414,090
Unit Prices Year 1 Year 2 Year 3
10 Minutes Tan $140.00 $150.00 $160.00
25 Minutes Tan $600.00 $800.00 $1,000.00
Tanning Lotion $700.00 $800.00 $900.00
Sales
10 Minutes Tan $2,149,800 $2,784,000 $3,383,200
25 Minutes Tan $120,050 $194,500 $268,500
Tanning Lotion $50,110 $71,600 $93,000
TOTAL SALES
Direct Unit Costs Year 1 Year 2 Year 3
10 Minutes Tan $0.70 $0.80 $0.90
25 Minutes Tan $0.40 $0.45 $0.50
Tanning Lotion $0.30 $0.35 $0.40
Direct Cost of Sales
10 Minutes Tan $989,300 $1,839,000 $2,679,700
25 Minutes Tan $66,600 $119,900 $173,200
Tanning Lotion $17,900 $35,000 $52,100
Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

Personnel plan

The personnel plan of our tanning salon business is as follows.

6.1 Company Staff

We will initially hire the following people:

  • 1 Manager for managing all operations in the salon
  • 1 Accountant for maintaining financial and other records
  • 3 Tanning experts for attending the customers
  • 3 Assistants for helping the experts
  • 1 Technician for maintaining our machines
  • 1 Receptionists for interacting with customers and recording their orders

All the employees will be hired by following strict testing procedures and will also be trained before onboarding.

6.2 Average Salary of Employees

The following table shows the forecasted data about the salaries of the employees for the first year.

 Personnel Plan      
Year 1 Year 2 Year 3
Manager $85,000 $95,000 $105,000
Accountant $45,000 $50,000 $55,000
Tanning Experts $550,000 $650,000 $750,000
Assistants $145,000 $152,000 $159,000
Technician $50,000 $55,000 $60,000
Receptionist $87,000 $94,000 $101,000
Total Salaries $962,000 $1,096,000 $1,230,000

Financial Plan

The financial plan covers all the expenses needed for the startup of a business so you must develop it before laying the base for a new business. To maximize your tanning salon profit, you must formulate a thorough financial plan covering all the costs of inventory, equipment, tanning machinery, payroll, rent, etc. You can take help from this sample business plan for a general idea but it is recommended to take guidance from a financial expert if you need accurate figures.

7.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 11.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 26.42% 27.76% 28.12%
Other 0 0 0

 

7.2 Brake-even Analysis

Tanning Salon Business Plan - Brake-even Analysis

 Brake-Even Analysis  
Monthly Units Break-even 5530
Monthly Revenue Break-even $159,740
Assumptions:
Average Per-Unit Revenue $260.87
Average Per-Unit Variable Cost $0.89
Estimated Monthly Fixed Cost $196,410

7.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $309,069 $385,934 $462,799
Direct Cost of Sales $15,100 $19,153 $23,206
Other $0 $0 $0
TOTAL COST OF SALES $15,100 $19,153 $23,206
Gross Margin $293,969 $366,781 $439,593
Gross Margin % 94.98% 94.72% 94.46%
Expenses
Payroll $138,036 $162,898 $187,760
Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
Depreciation $2,070 $2,070 $2,070
Leased Equipment $0 $0 $0
Utilities $4,000 $4,250 $4,500
Insurance $1,800 $1,800 $1,800
Rent $6,500 $7,000 $7,500
Payroll Taxes $34,510 $40,726 $46,942
Other $0 $0 $0
Total Operating Expenses $188,766 $220,744 $252,722
Profit Before Interest and Taxes $105,205 $146,040 $186,875
EBITDA $107,275 $148,110 $188,945
Interest Expense $0 $0 $0
Taxes Incurred $26,838 $37,315 $47,792
Net Profit $78,367 $108,725 $139,083
Net Profit/Sales 30.00% 39.32% 48.64%

7.3.1 Profit Monthly

Tanning Salon Business Plan - Profit Monthly

7.3.2 Profit Yearly

Tanning Salon Business Plan - Profit Monthly

7.3.3 Gross Margin Monthly

Tanning Salon Business Plan - Gross Margin Monthly

7.3.4 Gross Margin Yearly

Tanning Salon Business Plan - Gross Margin Yearly

7.4 Projected Cash Flow

Tanning Salon Business Plan - Projected Cash Flow

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $40,124 $45,046 $50,068
Cash from Receivables $7,023 $8,610 $9,297
SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $21,647 $24,204 $26,951
Bill Payments $13,539 $15,385 $170,631
SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
Net Cash Flow $11,551 $13,167 $15,683
Cash Balance $21,823 $22,381 $28,239

7.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $184,666 $218,525 $252,384
Accounts Receivable $12,613 $14,493 $16,373
Inventory $2,980 $3,450 $3,920
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $12,420 $14,490 $16,560
TOTAL LONG-TERM ASSETS $980 $610 $240
TOTAL ASSETS $198,839 $232,978 $267,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,482 $10,792 $12,102
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $9,482 $10,792 $12,102
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $48,651 $72,636 $96,621
Earnings $100,709 $119,555 $138,401
TOTAL CAPITAL $189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
Net Worth $182,060 $226,240 $270,420

7.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 4.35% 30.82% 63.29% 4.00%
Percent of Total Assets
Accounts Receivable 5.61% 4.71% 3.81% 9.70%
Inventory 1.85% 1.82% 1.79% 9.80%
Other Current Assets 1.75% 2.02% 2.29% 27.40%
Total Current Assets 138.53% 150.99% 163.45% 54.60%
Long-term Assets -9.47% -21.01% -32.55% 58.40%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.68% 3.04% 2.76% 27.30%
Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
Total Liabilities 4.68% 3.04% 2.76% 54.10%
NET WORTH 99.32% 101.04% 102.76% 44.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.18% 93.85% 93.52% 0.00%
Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
Advertising Expenses 2.06% 1.11% 0.28% 1.40%
Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
Main Ratios
Current 25.86 29.39 32.92 1.63
Quick 25.4 28.88 32.36 0.84
Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 19.20% 21.16% 23.12% N.A.
Return on Equity 47.79% 50.53% 53.27% N.A.
Activity Ratios
Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
Collection Days 92 99 106 N.A.
Inventory Turnover 19.7 22.55 25.4 N.A.
Accounts Payable Turnover 14.17 14.67 15.17 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 1.84 1.55 1.26 N.A.
Debt Ratios
Debt to Net Worth 0 -0.02 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $120,943 $140,664 $160,385 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.45 0.48 0.51 N.A.
Current Debt/Total Assets 4% 3% 2% N.A.
Acid Test 23.66 27.01 30.36 N.A.
Sales/Net Worth 1.68 1.29 0.9 N.A.
Dividend Payout 0 0 0 N.A.

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