Luxury Nail Bar’s Marketing and Expansion Strategy Essay

Luxury Nail Bar is a fashionable nail salon that is located in the central part of Boston, Massachusetts. While starting the small business, it is necessary to focus on the development of the effective financial plan that is primarily based on forecasts and on the analysis of earlier profitability of the purchased business. Luxury Nail Bar needs to be expanded and developed according to the certain guerilla marketing strategy. From this point, the aim of this paper is to outline the basic sections of the financial plan that is appropriate for this small business; to discuss the developed guerilla marketing strategy; to set the location for the second salon; and to present the outline for securing sources of debt financing.

Financial Plan for Luxury Nail Bar

The financial plan usually includes financial statements used to demonstrate the current success of the business along with the projected financial statements that demonstrate the potential for the further growth. While discussing the financial plan for Luxury Nail Bar, it is important to note that it is more relevant to include the projected financial statements for the starting business that are based on the set-up costs and the main aspects of the proposed business plan (Alexander, 2014, p. 10). Furthermore, projected financial statements are appropriate for the financial plan developed for Luxury Nail Bar as a new small business that is based on the purchased business.

Projected Financial Statements

The projected financial statements should be developed with a focus on start-up funds and on the resources that are available after purchasing the business.

1. The balance sheet forecast. The statement includes the information on the following aspects:
   1. Assets (current assets; fixed assets);
   2. Liabilities (current liabilities; long-term liabilities);
   3. Owner’s equity.
2. The profit and loss forecast. The statement includes the information on the following aspects:
   1. Net sales revenue.
   2. Operating expenses (advertising; insurance, buildings, equipment; salaries).
   3. General and other expenses (utilities; taxes).
3. The cash flow forecast. The statement includes the information on the following aspects:
   1. Incoming.
   2. Outgoing.
   3. Forecasted changes during the month.

Ratio Analysis

1. Liquidity ratios.
2. Leverage ratios.
3. Operating ratios (they are based on the previous performance of the purchased business).
4. Profitability ratios (they are based on the previous performance of the purchased business).

The Break-Even Analysis

1. The formula used to conduct the break-even analysis is the company’s fixed costs divided by variable costs per unit or by the margin percentage
2. IV. Supporting Documents. The necessary documents include the following ones:
   1. Insurance policies.
   2. Tax statements.
   3. Loan statements.

Guerrilla Marketing Strategy for Luxury Nail Bar

Guerrilla marketing strategies can be discussed as effective low-cost strategies that allow small businesses to develop actively and become profitable. The process of developing the guerrilla marketing strategy for Luxury Nail Bar depends on identifying the concrete actions for addressing the main principles and techniques that are associated with guerilla marketing (Scarborough & Zimmerer, 2012, p. 278).

It is important to start with pointing at the fact that Luxury Nail Bar is placed within the specific niche of fashionable nail salons that have the features of the female club. Thus, the nail salon is oriented to attracting the visitors as the guests in the specific bar or saloon. In order to generate publicity, the information about Luxury Nail Bar is mentioned in the news, in the local press, and in association with opening the fashionable salon with the unique design and conception. Furthermore, much attention is paid to promoting the participation of the salon’s employees in the city’s beauty events, competitions, workshops, and seminars (Scarborough & Zimmerer, 2012, p. 278).

However, the main focus is on entertaining the female customers in order to make them feel the members of the club and specific community. The activities associated with the customers’ organized leisure include discussing beauty news, listening to music, watching videos, and drinking beverages in the bar of the salon. In this context, it is important to emphasize the connections with visitors while focusing on providing them with invitations to test beauty procedures and while sending updates on beauty events. In order to retain the existing customers, the flexible system of discounts and bonuses is proposed for the members of this ‘beauty community’.

The next important point that should be discussed in this context is the focus on branding (Scarborough & Zimmerer, 2012, p. 278-279). Luxury Nail Bar is promoted not only as the nail salon but also as the place for communicating in the comfortable and fashionable atmosphere on beauty topics and latest news. Thus, the uniqueness of Luxury Nail Bar in the market is emphasized with the focus on the approach to delivering services in the setting of the luxury saloon with the elements of the bar. Much attention is provided to responding to the aspects that are the basis of the business in the market: quality, customers’ needs, convenience, innovation, and speed (Scarborough & Zimmerer, 2012, p. 279).

The final point of the guerrilla marketing strategy for Luxury Nail Bar is the focus on promotion and advertising with the help of social media. In order to attract new customers and inform the existing clients about the latest news and future events in the nail salon, for instance, seminars conducted by the beauty specialists and practices of nail art masters, it is necessary to place the information on pages in Facebook, to write the articles in the special blog on the events in the nail club, and to place videos in the YouTube channel. The main requirements to these activities include the uniqueness of the proposed information and accentuation of the specific atmosphere of Luxury Nail Bar and its features.

Location for the Second Nail Salon

While deciding on the location for the next nail salon opened as Luxury Nail Bar, it is necessary to take into account the fact of sole proprietorship and the development of a business as a small club for the regular customers. Therefore, it is important to open a new salon in the same city as the first one, Boston, Massachusetts. If the first salon is located in the central part of the city and occupies the building that was previously owned by the other nail salon owner, the second nail salon should be opened in the most fashionable street of the city that is characterized by the significant customer traffic. The address of the second nail salon is 133, Newbury Street, Boston, MA, 02116.

The trade area in this street is developed, and the location addresses the criterion of high visibility (Scarborough & Zimmerer, 2012, p. 519). Newbury Street is traditionally discussed as the place where female customers, persons interested in fashion and beauty, and tourists come to do shopping and visit restaurants and cafes. Thus, while locating the nail salon in this popular street, it is possible to attract new customers who are interested in visiting fashionable clubs, to increase the general rate of customers, and to develop Luxury Nail Bar as the destination for tourists while exaggerating its luxury, design, and specific rules typical for the saloon of the 19^th century.

A Plan for Securing Sources of Debt Financing

In order to guarantee the effective development of a business, it is necessary to borrow a certain sum of money and use it according to the proposed financial plan. It is important to note that the size of the provided loan depends on the potential profitability of the business that is reflected in the financial statements (Scarborough & Zimmerer, 2012, p. 486). Furthermore, it is important to address the issue of security and guarantee that the loan will be paid with the focus on the interest rates. In this case, for opening the second nail salon in Boston, Massachusetts, it is necessary to borrow the certain sum of money in order to purchase the additional equipment and inventory (Chaudhry, Ali, Fareed, & Fakher, 2014, p. 316).

While selecting a way of securing sources of debt financing, it is relevant to focus on the inventory and equipment financing because the discussed loan for the further expansion of small business is secured by the obtained inventory and equipment (Scarborough & Zimmerer, 2012, p. 495). If the loan is not paid by the owner of Luxury Nail Bar, the lender can receive the inventory and equipment purchased for the second nail salon (Dunn & Liang, 2011, p. 93). It is possible to propose the following plan for securing sources:

1. The agreement on acquiring the short-term loan.
   1. The provision of the balance sheet.
   2. The analysis of the inventory and equipment costs.
   3. The discussion of the interest rate.
2. The agreement on securing the loan with equipment.
   1. The agreement on securing up to 50% of the provided loan.
3. The agreement on securing the loan with inventory.
   1. The agreement on securing up to 60% of the provided loan.
4. The terms and conditions of the loan agreement.

Conclusion

The development of an efficient financial plan for the starting business can be discussed as a challenging process, and much attention should be paid to forecasting the potential costs and revenues in order to make decisions about the marketing and strategy as well as other aspects of the business plan. Small businesses have the potential to develop actively when the guerilla marketing strategy is applied to this type of business.

The reason is the cost-efficient character of the strategy and the focus on creativity related to the followed approach. Furthermore, the effective choice of the locations for other salons of the chain is important for the successful expansion of the business. The final important point that needs to be addressed directly is the development of the plan and strategy to secure the sources of debt financing in order to guarantee that the lender and the business owner are interested in developing rather beneficial relations.

References

Alexander, A. (2014). Beyond financial planning. Accounting Today, 28(3), 10-24.

Chaudhry, I., Ali, S., Fareed, G., & Fakher, A. (2014). Role of strategic planning in small business: An overview. International Journal of Management, IT and Engineering, 4(1), 316-325.

Dunn, P., & Liang, K. (2011). A comparison of entrepreneurship/small business and finance professors’ reaction to selected entrepreneurial and small business financial planning and management issue. Journal of Entrepreneurship Education, 14(1), 93-114.

Scarborough, N. M., & Zimmerer, T. W. (2012). Effective small business management: An entrepreneurial approach. Upper Saddle River, NJ: Prentice Hall/ Pearson.