Abstract
Through financial planning, the J&J Bridal Salon may have the necessary instrument of forecasting the level of profits, micromanage its fixed and current assets, and costs related to the daily activities of running such a business. Financial planning is instrumental in facilitating the business process, pricing, and assets management at a sustainable and efficient level. In order to ensure business sustainability, it is imperative to review the available funds against the required capital and draw a risk and loss sharing balance. This will be achieved through internal sources, bank overdraft, and share capital from outside investors. The business will use guerrilla marketing strategies such as proper branding, proactive advertisement, and personal selling.
Financial Plan
Cash Flow Projections
The projections on cash flow are critical in calculating the business’ net present value as a component of the projections in the future. The formula is summarized below.
Total Revenue (P * Q) = Total Cost [Variable (C *Q) + fixed cost]
Price per unit of service (P) = 110$
Units produced (Q) = to be approximated
Total fixed cost = $34,000
Financial Projections
Before deducting expenses
J&J Bridal Salon. Balance sheet statement. As of 31 December 2015.
J&J Bridal Salon. Income statement. As of 31 December 2015.
After deducting expenses
J&J Bridal Salon. Balance sheet statement. As of 31 December 2015.
J&J Bridal Salon. Income statement. As of 31 December 2015.
J&J Bridal Salon. Statement of changes in equity. As of 31 December 2015.
Return on investment = Gains – Investment costs/Investment costs
Return on investment for the business
Gains $16,000
Investment cost $12,000
Gains – Investment costs $4,000
Thus, return on investment for this business is 4,000/12,000 = 37.5%
Guerrilla Marketing Strategy
Marketing communication strategies are important in aligning a company towards the target market in order to achieve optimal sales. The main determinants of a successful marketing communication plan lie in the proper brand alignment and research on segmentation. In the overcrowded salon industry, product positioning
Determines the magnitude of product and service performance since it determines the level of customer acceptance. As a prerequisite for achieving the primary goals of the business, proper positioning of the services offered by this business will create a distinct variance with the product of the main competitors.
Adopting a ‘First-Mover Strategy’, J&J Bridal Salon will position the beauty services as very unique of new in the local market. This positioning strategy will be achieved by creating a distinct delivery channel besides a strong social media promotion. As a result, it will be easy to roll out the aspect of quality in service delivery as a pillar supporting the primary goal of customer satisfaction. This strategy has the potential of reinforcing the status of the business as the most cost-effective salon service provider (Cheverton, 2004).
In terms of pricing as a marketing strategy, the business will base its pricing mechanism on the most preferred price that its targeted clients are comfortably able to afford. Therefore, to create an environment of own competition, the business will concentrate its marketing strategy on the male and female clients who will be captivated by the service options available, since their income cannot accommodate the expensive services provided by salon competitors through the free badges given to every customer who visits the establishment.
Through demographic differentiation, the pricing mechanism will function on the medium income of the targeted customer segments, differentiated service packages, and after-sales services to repeat customers as the best approach towards commanding a price premium. In the end, the competitive pricing will ensure that the interests of the business are not compromised by stiff competition. This will be incorporated in the budges through the use of a $20 symbol to represent the cost of each salon service (Buttress & Macke, 2008).
The different promotional and advertising strategies for the business may be successful when the funds allocated are relatively high. In fact, to guarantee a competitive advantage, the business should pump in more funds for advertising and promotion than its competitors. The promotional activities will be made as creative as possible to ensure that they rival those of the major competitors since advertisement messages have a way of cueing the mind of the customers in a positive or a negative way.
The J&J Bridal Salon business has chosen to adopt sales promotion as a strategy for attracting customers. The decision to adopt the sales promotion was informed by the need to substantially increase the customer volume within the shortest time possible. Specifically, the business will apply sales promotion strategies such as push-up sales to proactively facilitate the process of customer attraction and retention. For instance, discounted sales, service vouchers, and group packages for repeat customers will guarantee customer retention in the short and the long run (Buttress & Macke, 2008).
Irrespective of the type or magnitude of a business, advertisements are central in manipulating or creating an involuntary appeal in the mind of a customer. In fact, proper advertisement medium and message may determine the magnitude of product intake and direct perception of quality or level of satisfaction associated with a product or a service.
In the case of the J&J Bridal Salon, advertisements adopted will be skewed towards creating a positive emotional response and appealing to the memory of a client. This will be achieved by using simple but clear messages that the targeted clients can associate with.
For instance, the elements of perfection and celebrity advertisement have the potential of creating a sustainable positive response that may proactively trigger the imagination of the targeted clients to engage the involuntary positive response towards the salon services. In the end, positive acceptance, affiliation, and common feeling will guarantee acceptance of the J&J Bridal Salon’s services. The advertisement messages may be passed across through caricature posters placed in strategic places around the J&J Bridal Salon establishment (Butow, 2004).
Intentions of the company’s messages will be achieved through the constant and repeated airing of advertisements in free social media such as the Facebook page and a Twitter handle. Through repetition, the J&J Bridal Salon will be in a position to maintain familiarity in the conscious mind for its salon services. Communication activities in this business will lead to doubled sales in the next decade since the products are branded and presented in persuasive ways that easily skew the minds of potential buyers (Butow, 2004).
In the everyday business environment, customers hold certain perceptions towards a service or product. Customers use perception to interpret or proactively internalize the available literature on a service or a product. The different perceptions are held on the packaging, price, and quality of a product or a service. Therefore, the J&J Bridal Salon business should strive to affirm positive perception through introducing a logo of a lovely picture of salon services as the business image. Through the exaggerations in this logo, the target clients would be persuaded to try out the ideal salon services (Scarborough & Zimmerer, 2012).
Business Location
The second branch of the salon business will be located beside the Career Centre at 1390 Keasey Boulevard within the city of Oregon since the target market surrounds this location. Besides, this location is strategically located besides relatively having the potential for expansion.
Debt Financing Securing Plan for the Second Store
Securing Debt Financing
Business financing is critical in the successful expansion of an establishment. Specifically, business financing ensures that the expansion strategies are actualized within the set time and resources. This section of the report will review the financing options that the J&J Bridal Salon business may use to expand its second store.
Internal Sources
Among the notable internal sources of finance that the J&J Bridal Salon may use include share capital and retained profit from the sole proprietorship establishment. Since the salon has existed for more than eight months, it is in order to argue that share capital and retained profits may provide a substantial source of funds for the proposed expansion (Buttress & Macke, 2008). Since the first store was financed by the share capital, the same approach may be adopted for the second store since the dynamics are the same. Thus, through proactive share capital financing, the salon business owner will preserve complete control of the J&J Bridal Salon.
External Funding Sources
Some of the possible sources of external funding for the J&J Bridal Salon include bank loans, engaging external investors, and convincing business angels to be part of the company.
Bank loan/Overdraft
The bank loan alternative gives the J&J Bridal Salon the opportunity to obtain fixed funding over a specific period of time with an interest rate attached to it. The repayment period for the bank loan varies with the agreement and amount to be borrowed. At the same time, the J&J Bridal Salon may opt for bank overdraft financing as a backup for any cash flow oscillations when establishing the second store (Butow, 2004).
Share Capital from Outside Investors
Under share capital from external investors, the J&J Bridal Salon may use this source of financing by convincing interested investors to buy shares in the salon establishment. Besides, the business owner may use contributions from friends and family to finance the expansion of the second store (Scarborough & Zimmerer, 2012).
References
Butow, E. (2004). Starting Your Business: Costs, Structures, and Pitfalls. Intercom, 51(10), 20-23.
Buttress, S., & Macke, D. (2008). Energizing Entrepreneurs. Economic Development Journal, 7(4), 20-25.
Cheverton, P. (2004). Key Marketing skills: strategies, tools, and techniques for marketing success. London: Kogan Page.
Scarborough, N., & Zimmerer, T. (2012). Effective Small Business Management: An Entrepreneurial Approach. Upper Saddle River, NJ: Prentice Hall.