Sheen Beauty Supply

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Executive Summary

Sheen Beauty Supply is a neighborhood beauty supply store in Louisiana. We sell hair care and styling products, braiding hair, extensions and wigs, cosmetics, nail and skin items and everyday accessories. Our shoppers are women, men and families who care about their hair and skin and want trusted products close to home, with advice from people who know them.

The problem is simple. Shoppers often have to drive a long way or buy online to find the right hair products and braiding hair for their hair type, and some stores carry counterfeit or old stock. We carry the products our neighbors ask for, buy only from reputable suppliers, label what we sell honestly and treat every shopper with respect.

Here is what our numbers show. We expect sales of $409,900 in Year 1, growing to $756,700 by Year 5 as we build a base of regular shoppers and stylists. We expect a loss of about $18,900 in Year 1 while we build our shopper base, then a profit from Year 2 (about $18,700), growing to about $23,900 by Year 5.

We need $160,000 in total. That covers $97,500 in startup costs (shelving and displays, a point-of-sale system, cameras, opening inventory, a small build-out, the lease deposit, insurance and a sign) and a cash cushion for the first months. I am putting in $30,000 of my own money, and I am asking for a $100,000 SBA loan plus $30,000 from an investor or partner.

I am Denise Carter, the owner. These numbers are estimates based on the assumptions listed at the end of this plan, not promises.

Company Description

Sheen Beauty Supply will be a limited liability company (LLC) in Louisiana, owned by Denise Carter. An LLC is a business type that generally keeps your home and savings separate from the business's debts and lawsuits, although a lender may still ask for a personal guarantee. A business attorney or the Small Business Development Center (SBDC) can explain how it works in our state.

What we believe. Shoppers should know what they are buying. We carry real, properly labeled products, we say so when something is not right for a hair or skin type and we never pretend a product will do what it cannot.

What we offer:
- Hair care and styling products. Shampoo, conditioner, oils, gels, edge control, treatments and styling tools.
- Hair extensions, wigs and braiding hair. Synthetic and human hair, in many colors and lengths, with honest labels.
- Cosmetics, nail, skin and accessories. Makeup, nail products, skincare, bonnets, scarves, brushes and hair accessories.
- Later, as we grow: a small stylist account program with a discount and online ordering. The numbers in this plan do not include these.

The space. In Year 1 we will lease a storefront of about 2,500 square feet with open shelving, a wall for wigs and braiding hair, a checkout and a stockroom. We budget $40,800 a year ($3,400 a month) for rent and utilities, and the plan assumes this grows about 5% a year.

Licenses and insurance. We will register the LLC with the state, get a business license, an EIN (the business tax number from the IRS, free at irs.gov) and a sales tax permit. Some states limit who can buy certain professional salon products, so I will ask the state licensing board what applies to the products we plan to carry. We will ask the city and fire department what the store needs for occupancy, signs and exits, and will keep aerosols and other flammable products stored properly. We will carry general liability, property and product liability insurance, plus workers' compensation once we hire.

Where things stand today. This plan is my starting point. Before I sign a lease or buy inventory, I will count how many people pass the location, survey at least 30 nearby shoppers and 5 stylists about what they buy and where, visit at least 5 competing stores, and get quotes from at least 3 distributors. If the numbers do not match this plan, I will change the plan before I spend money.

Problem & Opportunity

Finding the right beauty products close to home can be hard.

1. Few nearby choices. Many shoppers have to drive a long way or order online and wait for delivery.
2. Counterfeit or old products. Some stores sell fake, gray-market or expired products, which can harm hair or skin.
3. Hard to get advice. Shoppers want to ask which product suits their hair type and may not get help.
4. Wide range of needs. Hair types, textures and styles differ a great deal, and one aisle of products does not fit every shopper.
5. Stylists and braiders need supplies quickly. Waiting on an online order can cost them clients.
6. Unclear returns. Hygiene items such as wigs and cosmetics cannot always be returned, and policies are often unclear.

How we will find out if people want this before we spend money. I will count foot and car traffic, survey at least 30 nearby shoppers and 5 stylists, and compare products and prices at the nearest competing stores. Our Year 1 plan needs about 43 hair care items, 30 extension and wig items and 40 cosmetics and accessory items a day over about 300 days, so I will ask shoppers to help me build the first product list.

Products & Services

What we sell. We have three groups of products, each priced simply.

1. Hair care and styling products. The plan assumes an average price of about $11.50 per item in Year 1, rising to about $12.70 by Year 5. Buying the item costs us about $7 in Year 1, rising to about $7.60. We expect about 13,000 items sold in Year 1, growing to about 21,000 a year by Year 5.
2. Hair extensions, wigs and braiding hair. The plan assumes about $18 per item in Year 1, rising to about $20, with about $11.20 per item in cost. We expect about 9,000 items in Year 1, growing to about 15,500.
3. Cosmetics, nail, skin and accessories. The plan assumes about $8.20 per item in Year 1, rising to about $9, with about $4.90 per item in cost. We expect about 12,000 items in Year 1, growing to about 20,000.

Our prices. Every item has a clear price tag, stylists can ask about a discount for larger purchases and a few items each week are marked down. We check competitors' prices every month.

How it works for a shopper:
1. The shopper walks in and is greeted. A team member asks about hair type and what the shopper is looking for.
2. We show products, explain what is in them and suggest options at different prices.
3. At checkout, we scan each item, and the receipt lists each price.
4. We post our return policy at the register. Opened wigs and cosmetics cannot be returned for hygiene reasons unless they are defective.

Gross margin, explained. "Gross margin" is the share of each sale left after paying for the items we sell. Our plan shows about 39% in Year 1. That money pays the team, rent, theft and damage, insurance and other bills. Team pay is counted separately, under payroll. A beauty supply store makes a modest amount on each item, so we depend on steady sales and careful buying.

Market Analysis

Who will use us:
- Women, men and families who buy hair care, braiding hair, extensions and wigs.
- Stylists, braiders and barbers who buy supplies for their clients.
- Shoppers looking for makeup, nail and skin products and accessories.
- Gift buyers and people shopping for a special event.

Where we will work. Shoppers within about 10 to 15 minutes of the store. Parking, visibility and the number of nearby salons and braiders affect the store's success.

How we sized the plan. Our Year 1 plan needs about 43 hair care items, 30 extension and wig items and 40 cosmetics and accessory items a day. That is a modest number of items for a store of this size. I will check the real numbers by counting traffic and talking to shoppers and stylists before spending money.

Season. Back to school, the holidays, prom, wedding season and summer are the busiest. The numbers show a yearly average. We plan ahead by ordering braiding hair and popular colors before the busiest weeks.

We are careful on purpose. The plan assumes one store with a small team, and it keeps the first year close to break-even.

Competitive Landscape

Other choices shoppers have:
1. Other beauty supply stores. Many have a similar range, so service and stock matter.
2. Drugstores and big-box stores, which are convenient but carry fewer hair products and extensions.
3. Online retailers, which have wide choice but slow delivery and no advice.
4. Salons that sell products, which are trusted but often carry fewer brands.
5. Pop-up and market vendors.

How we will win shoppers: the right products for the neighborhood, honest labels, friendly advice, fair prices, a clean store and quick restocking. These are promises we have to keep, and any competitor could make them too, so we will measure ourselves on them every week.

Marketing & Sales Strategy

How shoppers will find us.
- A visible sign and window display, with new arrivals and weekly specials.
- A free Google business listing with photos, hours and reviews.
- Stylists and braiders. Visit local salons, braiders and barbers with a printed price list and a first-purchase discount.
- A grand opening with giveaways and a first-week coupon.
- Social media. Photos and short videos of new arrivals, styling tips and shopper requests, posted with permission.
- A simple loyalty program with a reward after a set amount of purchases.

Marketing budget. About $4,200 a year in Year 1 (about $350 a month), growing about 6% a year. The sign, banners, website and grand opening are paid for from startup costs ($6,500).

Operations Plan

How the business runs day to day.

The space and layout. A front checkout, aisles for hair care and styling products, a wall for wigs, extensions and braiding hair, a cosmetics and nail section, a stockroom and cameras covering the floor.

A normal day:
1. Open the store, count the register, check the shelves and fill gaps from the stockroom.
2. Receive deliveries, check them against the order, price them and shelve them.
3. Greet and help shoppers, answer questions and keep aisles clean and clear.
4. Close the store, count the register, make the deposit, review sales and reorder what is selling.

Buying. We buy from authorized distributors and wholesalers, keep our invoices, and do not buy from sellers who cannot show where products came from. We check packaging, seals and expiration dates, and we remove expired or damaged items.

Product safety. We keep a list of recalls from the FDA and the Consumer Product Safety Commission and pull any affected product. We follow label directions for chemical hair products, store aerosols and flammable items properly and never sell a product that appears opened or tampered with. We do not give medical advice about scalp conditions or hair loss and suggest that shoppers see a doctor or dermatologist when they ask.

Honest labels. We say whether hair is human or synthetic, and we do not make claims we cannot back up.

Theft and security. Cameras, a good floor layout, a locked wig display, a locked cash drawer and regular inventory counts keep losses low. The plan includes an allowance for theft and damage.

Equipment. About $24,000 to start: shelving, wall displays and wig stands, a point-of-sale system with scanners, cameras and an alarm, counters and mirrors. We set aside about $4,000 a year after that to replace and add equipment as we grow.

Running costs in Year 1: rent and utilities about $40,800, point-of-sale, card fees and software about $7,200, marketing about $4,200, insurance about $4,800, security and a theft and damage allowance about $6,000, and accounting, licenses and legal about $3,600. That is $66,600 in all.

Payment. Almost all sales are paid at the register, so what is owed to us is small, mostly card payments not yet in the bank. Inventory is a large part of the money, so the plan keeps an amount of cash tied up in stock.

Management & Organization

Who runs the business. Denise Carter, owner and manager. As owner I will buy the products, manage the team and schedule, handle the money and talk to shoppers and stylists every day. I plan to pay myself $38,000 a year in salary.

The team. Pay figures include payroll taxes and workers' compensation insurance.
- Sales associate (full-time): one in Years 1 and 2 and two from Year 3, at about $26,000 a year each.
- Sales associate (part-time): two in Years 1 to 4 and three in Year 5, at about $15,000 a year each (about 20 hours a week).
- Assistant manager: one starting in Year 4, at about $32,000 a year.

We hire people who are friendly, knowledgeable about hair and skin and reliable, train everyone on cash handling, product safety and customer service, check ages and work rules for any young workers, and run background checks (with the person's permission and following the law) on anyone who handles money.

People who will help us: a bookkeeper or tax preparer, an insurance agent who understands retail, a business attorney for a one-time review of the lease and vendor terms, and a free mentor from SCORE or the Small Business Development Center (SBDC).

Milestones Narrative

Our goals and when we plan to reach them.
- Before opening (5 to 7 months ahead): count traffic, survey at least 30 shoppers and 5 stylists, visit at least 5 competing stores, get quotes from at least 3 distributors, confirm the state rules on professional products, register the LLC and get an EIN, open a business bank account, get insurance and equipment quotes, find a space, have an attorney review the lease, and hire and train the opening team. Sign the lease only after the traffic counts and the distributor quotes are in hand.
- Year 1: open with the owner, one full-time and two part-time associates, with about 43 hair care items a day, $409,900 in sales and a loss of about $18,900.
- Year 2: grow sales and keep costs steady, with about 16,000 hair care items a year, $527,550 in sales and a profit of about $18,700.
- Year 3: add a second full-time associate, with about 18,000 hair care items a year, $611,000 in sales and a profit of about $21,400.
- Year 4: add an assistant manager, with about 19,500 hair care items a year, $687,350 in sales and a profit of about $17,000.
- Year 5: grow to about 21,000 hair care items a year with a team of seven, $756,700 in sales and a profit of about $23,900.
Growth depends on winning regular shoppers and stylists, buying well and keeping losses from theft and expired goods low, so treat the later years as goals, not promises.

What we check every week: sales per day, number of shoppers, average basket, gross margin, theft and damage, stock turns, stylist accounts, reviews and cash in the bank.

Funding Request

How much we need and how we will use it. Total we are raising: $160,000.

How we got that number. The Funding Need Calculator in this plan adds up three things:
- Startup costs of $97,500, listed item by item in the Startup Costs section: $10,500 for shelving, wall displays and wig stands, $7,000 for point-of-sale, scanners, cameras and alarm, $6,500 for counters, mirrors and small equipment, $48,000 for opening inventory, $6,500 for paint, flooring and lighting, $7,000 for lease deposit and first month of rent, $1,100 for business license, sales tax permit and local permits, $2,100 for legal and accounting setup, $6,500 for sign, banners, website and grand opening, and $2,300 for first insurance payment.
- A cash cushion of about $55,600: the deepest hole our cash falls into while we build our shopper base and fill the shelves (about $15,400) plus about 3 months of running costs (about $40,200). Lenders call this "working capital."
- Together that comes to about $153,100, rounded up to the nearest $500: $153,500.
We are raising $6,500 more than that, $160,000 in all, to leave extra room for loan payments in the first years and for stock ahead of back to school and the holidays.

Where the money comes from:
- My own money: $30,000.
- Amount requested as a loan: $100,000.
- From an investor or partner: $30,000.

Kind of funding we are looking for. An SBA 7(a) small loan through a local bank or community lender, plus investor or partner money. Investor or partner money is not paid back with interest, but the person gets a share of the business. A family member, a friend, a local investor or a business partner could fill this part. Put any agreement in writing.

How we will pay it back. We expect a loss of about $18,900 in Year 1 while we build our shopper base, then a profit from Year 2 (about $18,700), growing to about $23,900 by Year 5. With this funding, the business has money in the bank at the end of every year of the plan, and the lowest year-end balance is about $102,300, at the end of Year 1. The loan is planned at 12.75% interest over 10 years, so payments of about $1,478 a month (about $17,741 a year) are already included in our cash flow. We chose 12.75% as a cautious planning rate. Ask the lender for the real rate, which may be lower or higher.

What we are offering the lender: our equipment as collateral (something the lender can claim if the loan is not repaid) and my personal guarantee (my promise to repay from my own money if the business cannot).

A smaller first step, if needed. If we cannot raise the full amount right away, we can start smaller and grow into this plan:
- Phase 1: start with a smaller store of about 1,000 square feet, a booth in a market or an online and pop-up shop, carrying the 250 best-selling items. Startup can be roughly $25,000 to $40,000 for displays, opening stock, a point-of-sale system, insurance and a sign. Get your own quotes.
- Phase 2: once you know which items sell best and have a steady stream of shoppers, move into a larger store and follow this plan.
To plan the smaller start, make a copy of this plan (use Duplicate) and lower the numbers to match.

All numbers in this plan are estimates. We will update them as real results come in.

Appendix Notes

Documents to attach before you send this plan:

- Your resume (one page is fine) and any licenses or training certificates.
- A personal financial statement (a list of what you own and what you owe; lenders usually provide a form).
- Business registration papers and your EIN (your business tax number from the IRS, free at irs.gov).
- Proof of insurance, or a quote.
- Your product list with wholesale and shelf prices and your return policy.
- Distributor quotes and sample vendor terms.
- A letter or quote for the space, and the lease once you have it.
- Quotes for the shelving, point-of-sale and security equipment.
If you don't have any of this yet, no worries - let's continue.

The assumptions behind our numbers (change them in the Financials section to match your own):
- Hair Care and Styling Products: about $11.50 per item in Year 1, rising to $12.70; about $7 per item in direct costs, rising to $7.60; about 13,000 items in Year 1, growing to 21,000.
- Hair Extensions, Wigs and Braiding Hair: about $18 per item in Year 1, rising to $20; about $11.20 per item in direct costs, rising to $12.40; about 9,000 items in Year 1, growing to 15,500.
- Cosmetics, Nail, Skin and Accessories: about $8.20 per item in Year 1, rising to $9; about $4.90 per item in direct costs, rising to $5.30; about 12,000 items in Year 1, growing to 20,000.
- Pay: Owner / Manager $38,000 (1/1/1/1/1); Sales Associate (full-time) $26,000 (1/1/2/2/2); Sales Associate (part-time) $15,000 (2/2/2/2/3); Assistant Manager $32,000 (0/0/0/1/1). The numbers in parentheses are how many people we plan to have in Years 1 through 5. Pay figures are yearly and include payroll taxes and workers' compensation.
- Other yearly costs in Year 1: store rent & utilities $40,800, point-of-Sale, card fees & software $7,200, marketing $4,200, business insurance $4,800, security, theft and damage allowance $6,000, and accounting, licenses & legal $3,600. These grow between 4% and 10% a year as the business grows.
- Almost every sale is paid at the register. At the end of Year 1 about $4,099 (1% of Year 1 sales) is card payments still on the way to our bank.
- Tax rate: 21%.
- Every dollar amount is an estimate. Replace them with your own quotes and research.

Startup Costs