Do you want to start tattoo shop business?

Do you want to open tattoo shop ? Well, according to a report by Pew Research Center, 36 percent of Americans aged 18-25 have at least one tattoo. In other words, we can say that more than one-third of America’s young adults have tattoos! So, it will be safe to say that you’ll never run out of customers by starting a tattoo shop business provided that you plan and market it successfully.

Although this business yields immense profit yet its startup isn’t easy. Obtaining a license for it is very difficult and secondly, a lot of machinery and medical equipment is needed along with experienced tattoo artists. That’s why, before you move on to starting this business, you will have to prepare a comprehensive business plan which will not only help you acquire a license for it but will also serve as the basis of your company’s future operations. In case you don’t know how to write a business plan, you can take help from this sample business plan of a tattoo shop business startup named ‘Jerry’s Tattoo Studio’.

Executive Summary

2.1 The Business

Jerry’s Tattoo Studio will be a licensed and registered tattoo studio which will provide customized tattooing, body piercing and tattoo maintenance and removal services. The business will be based in downtown Chicago which is an ideal location for starting a tattoo shop.

2.2 Management

Jerry’s Tattoo Studio is a sole proprietorship owned by Jerry Tim. Jerry is a passionate tattoo designer who has been in this industry for more than 10 years. The company’s main management framework comprises of sales executives and tattoo artists.

2.3 Customers

Our customers include the young adults, adults, and celebrities based in Chicago. We will offer them a variety of tattoo designs as per their requirements.

2.4 Business Target

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

Tattoo Business Plan - 3 Years Profit Forecsat

Company Summary

3.1 Company Owner

Jerry’s Tattoo Studio is a sole proprietorship owned by Jerry Tim. Jerry is a passionate tattoo designer who has been associated with tattoo industry for more than 10 years. Jerry is well aware of all health regulations related to this precarious work and has also taken a course on ‘Bloodborne Pathogens and Cross-Contamination Prevention’ from the Toronto Tattoo School.

3.2 Why the Business is being started

Jerry is passionate about tattoo designing and is known for creating exceptionally realistic tattoos. Tattooing is what he is made for and, being experienced in this industry, he knows how to open a tattoo shop. In addition to that, he aims to make profits in this industry by providing unparalleled tattooing services.

3.3 How the Business will be started

Jerry’s Tattoo Studio will be started in downtown Chicago in a leased location which was previously used by an IT agency. The facility features an open reception space, a small office space, a waiting room, a sterilization space, three tattoo stations and a bathroom. In addition to the usual inventory, the company will procure tattoo station equipment (2 tattoo chairs, lights, mirrors, tool box, trash bins, sharps container), sterilization room equipment (autoclave,  ultrasonic unit, sterilization pouches), waiting area furniture (sofa seats, coffee table, 2 flash art binders), reception area items (a reception desk, cash register, laptop, credit card reader, phones), office equipment (phone, printer, scanner, photocopier), a digital camera, a sound system as well as tattooing supplies (sterilizers, disinfectants, antiseptics, ointments, paper products, towels, gloves, linens, thermofax, skin scribes and stencil paper). The financial experts have forecasted following costs for opening a tattoo shop:

Tattoo Business Plan - Startup Cost

The detailed start-up requirements are given below:

Start-up Expenses 
Legal$55,300
Consultants$0
Insurance$32,750
Rent$32,500
Research and Development$32,750
Expensed Equipment$32,750
Signs$1,250
TOTAL START-UP EXPENSES$187,300
Start-up Assets$220,875
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
TOTAL ASSETS$121,875
Total Requirements$245,000
START-UP FUNDING
START-UP FUNDING$273,125
Start-up Expenses to Fund$151,875
Start-up Assets to Fund$123,000
TOTAL FUNDING REQUIRED$0
Assets$23,125
Non-cash Assets from Start-up$18,750
Cash Requirements from Start-up$0
Additional Cash Raised$18,750
Cash Balance on Starting Date$21,875
TOTAL ASSETS$373,125
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$620,125
Planned Investment$620,125
Investor 1$0
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$620,125
Loss at Start-up (Start-up Expenses)$313,125
TOTAL CAPITAL$251,875
TOTAL CAPITAL AND LIABILITIES$251,875
Total Funding$255,000

Services for customers

Before starting a tattoo shop business , you must decide what kinds of services will you offer to your customers. There are more than 35,000 tattoo parlors open  in the United States and for surviving in such competitive environment, you need to offer all those services which are offered by them. If you are offering more services than it will be a big competitive advantage for you. But, in any case, you need to decide your services before you plan to open a tattoo shop .

Jerry’s Tattoo Studio will be a licensed and registered tattoo studio which will provide following services to its customers:

  1. Customized Tattoos: Our primary service includes designing of customized tattoos. Customers can either provide a picture of what they want or can just communicate their requirements. They can also choose a design from the set of our tattoo designs comprising of traditional, neo-traditional, realistic, watercolor, Japanese, tribal and blackwork tattoos.
  2. Body Piercings: A body piercing is a piercing or puncture made in the body by a needle for the purpose of inserting a piece of jewelry in the hole. Commonly pierced body parts are the ears, nose, and the belly button while there are also oral piercings which include the piercing of lip, cheek, and tongue. We will offer high-quality piercing services following all safety regulations.
  3. Tattoo Aftercare: We will provide tattoo aftercare and tattoo maintenance services and will also provide consultation and advice on how to take care of tattoos.
  4. Laser Tattoo Removal: We will also provide laser tattoo removal services for removing the permanent tattoos from the bodies of our customers.

Our customers can make a reservation with us by visiting our shop or through our official website. They can also choose a design from the set of tattoos displayed on our website.

Marketing Analysis of tattoo shop business

The most important component of an effective tattoo shop business plan is its accurate marketing analysis and a good tattoo business plan  can only be developed after this stage. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this tattoo shop business plan template or any other tattoo shop business plan free  available online. If you are starting on a larger scale, it is always best to seek the counsel of marketing experts for developing a good tattoo parlor business plan .

The success or failure of a business totally depends upon its marketing strategy which can only be developed on the basis of accurate marketing analysis. Therefore, it must be considered before you think about   how to start a tattoo business .

5.1 Market Trends

The tattoo industry adds $722 million every year in revenue to the United States and the industry is currently growing at the rate of 9.8 percent. There are more than 35,000 registered open tattoo shops  which employ more than 54,000 people. However, a unique thing about this industry is that there is no tattoo studio which possesses a lion share in the market. The tattoo industry is the sixth fastest-growing retail business in the United States and more than one-third of America’s young adults (aged 18-25) have tattoos. In short, tattoo industry has a lot of potential and can be immensely profitable provided that you plan your business successfully.

5.2 Marketing Segmentation

Our target market is the residential community based in Chicago. The community consists of people from varying backgrounds, most of which are financially stable. As per the population distribution, 40.4% of population live singly, 18.9% are females with no husband, 35.1% are married couples who are living together and 28.8% population has children under the age of 18 living with them. The median for a household income in the city was $38,625 in 2000, and the median family income was $46,748.

It is very important to analyze the market segmentation of your future customers before starting a tattoo business  because a successful and efficient marketing strategy can only be developed after we completely know our potential customers. Our experts have identified the following type of target audience which can become our future consumers:

Tattoo Business Plan - Marketing Segmentation

The detailed marketing segmentation of our target audience is as follows:

5.2.1 Young Adults: Our first target group will be the young adults between 18 and 25 years of age. According to a report by Pew Research Center, 36 percent of Americans aged 18-25 have at least one tattoo. This target group will have the biggest contribution to our revenue so our marketing strategy will be specially built to attract the young adults in Chicago.

5.2.2 Adults: Our second target group comprises of adults aged above 25 years. These adults also have tattoos but their number is comparatively less than the young adults.

5.2.3 Celebrities: The third target group comprises of celebrities such as actors, public figures, and sportsmen and women. This target group contains all important customers so it will be directly dealt by Jerry himself.

The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Celebrities25%11,43313,34416,55318,74520,54513.43%
Young Adults45%22,33432,34443,66552,54466,43210.00%
Adults30%12,86714,43315,99917,56519,13115.32%
Total100%46,63460,12176,21788,854106,1089.54%

5.3 Business Target

Our main business targets to be achieved as milestones over the course of next three years are as follows:

  • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
  • To balance the initial cost of the startup with earned profits by the end of the first year

5.4 Product Pricing

After considering the market demands and the competitive environment, we have priced our tattooing services 5 percent cheaper than that of our competitors. There is no fixed price for tattooing and the prices depend on the type of tattoo and the number of hours required to work on that. The base price will start from $75 and the hourly rate of the session will depend on the tattoo type.

Strategy

After identifying the market trends, market demand, and the potential customers of the startup, the next step is to define an effective strategy to attract the potential customers. Like marketing analysis, sales strategy is also an important component and must be properly developed before thinking about how to open a tattoo shop .

6.1 Competitive Analysis

Our biggest competitive advantage will be the quality of our tattoos which will also be attractive and eye-catching. In addition to that, our second biggest competitive advantage will be our exceptional customer service. We will make sure that our customers get the best tattoo which suits their personalities. We will work with customers to search for designs that will look perfect on them. Our location is also one of our biggest competitive advantages since we will be based in downtown which is considered an ideal location to start a tattoo business .

6.2 Sales Strategy

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

  • We will emphasize on our search engine marketing efforts to ensure a strong web presence.
  • We will get featured in the local news or on a certain website by a popular blogger to increase our popularity.
  • We will advertise our tattoo shop in magazines, newspapers, TV stations, and social media.
  • We will offer a 5% discount on our services for the first month of our launch.

6.3 Sales Monthly

Tattoo Business Plan - Sales Monthly

6.4 Sales Yearly

Tattoo Business Plan - Sales Yearly

6.5 Sales Forecast

Tattoo Business Plan - Unit Sales

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Customized tattoos1,887,0302,680,3202,588,240
Body piercings802,370815,430823,540
Tattoo aftercare539,3207702301,002,310
Laser tattoo removal265,450322,390393,320
TOTAL UNIT SALES3,494,1704,588,3704,807,410
Unit PricesYear 1Year 2Year 3
Customized tattoos$140.00$150.00$160.00
Body piercings$600.00$800.00$1,000.00
Tattoo aftercare$700.00$800.00$900.00
Laser tattoo removal$650.00$750.00$850.00
Sales
Customized tattoos$2,149,800$2,784,000$3,383,200
Body piercings$120,050$194,500$268,500
Tattoo aftercare$50,110$71,600$93,000
Laser tattoo removal$139,350$194,600$249,850
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Customized tattoos$0.70$0.80$0.90
Body piercings$0.40$0.45$0.50
Tattoo aftercare$0.30$0.35$0.40
Laser tattoo removal$3.00$3.50$4.00
Direct Cost of Sales
Customized tattoos$989,300$1,839,000$2,679,700
Body piercings$66,600$119,900$173,200
Tattoo aftercare$17,900$35,000$52,100
Laser tattoo removal$19,400$67,600$115,800
Subtotal Direct Cost of Sales$1,294,100$1,699,400$2,104,700

Personnel plan

Personnel plan is also an important component of a good business plan for a tattoo shop  so make sure to duly consider it before thinking about how to start a tattoo shop. The personnel plan of our company is as follows.

7.1 Company Staff

Jerry will act as the General Manager of the company and will initially hire following people:

  • 1 Accountant for maintaining financial and other records
  • 2 Sales Executives responsible for marketing and discovering new ventures
  • 3 Tattoo Artists for tattooing the customers
  • 3 Assistants for helping with day-to-day operations
  • 1 Technical Assistant for managing the company’s official website and social media pages
  • 2 Customer Representatives 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.

7.2 Average Salary of Employees

The following table shows the forecasted data about the salaries of the employees for the next three years. These salaries are just an estimate and are also expected to deviate but the overall expenses will be more or less the same.

 Personnel Plan   
Year 1Year 2Year 3
Accountant$85,000$95,000$105,000
Sales Executives$45,000$50,000$55,000
Tattoo Artists$410,000$440,000$480,000
Assistants$152,000$159,000$166,000
Technical Assistant$87,000$94,000$101,000
Customer Representatives$220,000$250,000$280,000
Total Salaries$562,000$599,000$646,000

Financial Plan

The financial plan covers all the expenses needed for the startup so you must develop it before you think about how to open tattoo shop . The financial plan should craft a detailed map about the cost of inventory, payroll, equipment, rent, and utilities needed for the startup and how these costs will be covered by the earned profits. It is recommended that you hire a financial expert for guiding you through all financial aspects needed to start a tattoo business.

8.1 Important Assumptions

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

 

8.2 Brake-even Analysis

Tattoo Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even5530
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

 

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss   
Year 1Year 2Year 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/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Tattoo Business Plan - Profit Monthly

8.3.2 Profit Yearly

Tattoo Business Plan - Profit Yearly

8.3.3 Gross Margin Monthly

Tattoo Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Tattoo Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Tattoo Business Plan - Projected Cash Flow

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 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
ExpendituresYear 1Year 2Year 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

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 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 CapitalYear 1Year 2Year 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

 

8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.