Free Barber Shop Business Plan

Free Barber Shop Business Plan for LoansThe Current State of the Economy
Obtaining Business Financing 
 It is important to let your financial institution know
When obtaining a business loan for a barber shopthat you are well apprised of the financial situation
business, it is imperative that you have a properlyof the general economy when you are applying
structured business plan that will assist you infor a business loan. This is especially true in
showcasing how you intend to operate yourtoday's environment where lending has become
Barber Shop, how the business will operate, howmore difficult and will remain more difficult in the
you intend to market the business, the anticipatedforeseeable future. Specifically, you should gear
financial results of your company, and how youthis section of the business plan analysis towards
intend to repay your debt obligations. This samplethe industry that you are operating within. For
loan business plan will provide you with theexample:
framework that you need in order to acquire a 
business loan for starting or expanding this typeThe current economy has remained difficult over
of business.the past few years. However, Barber Shops
 typically operate with a strong state of economy
Executive Summarystability as no one has the ability to give
 themselves a haircut. This, coupled with the low
Introductionpricing point of the Company's services, will
 ensure the continued positive cash flow of the
When obtaining a business loan for a barber shop,business. As such, the business should be able to
it is imperative that your business plan has a clearremain profitable and cash flow positive in any
and concise executive summary that provides aneconomic environment.
outline of what are seeking to accomplish, how 
much capital you are seeking to raise, theThe Barber Shop Industry
management biography of the business owner, 
and an overview of the anticipated profit and lossIn addition to providing your business loan officer
statements of the business. Here is an examplewith an understanding of the general economy, it
of how the title paragraph should be written:is important that you showcase that you have an
 equal understanding of the industry in which you
Barber Shop, Inc. ("the Company") is seeking aare operating within. As such, you will need to
business loan of $100,000 in order to launch theprovide you business loan institution of a brief
operations of a barber shop that will be based inoverview of your industry and any potential
San Francisco, California. The Company waschanges that may affect the way that your
founded in (Insert Year). The business wascompany does business. An example of how an
founded by Mr. John Doe.industry overview is as follows:
  
Products and ServicesThe cosmetology industry has a very interesting
 model of economics and profitability. Prices for
In the next segment of the business loan andhaircuts can range from six dollars to six hundred
business planning document, you should showcasedollars. Haircutters have the ability to enjoy
the products and services that you will beprestige within their profession, and therefore the
providing to the general public. For instance:pricing and branding models can be structured so
 that two service providers can provide equivocal
The Barber Shop will provide its customers with aservice and charge vastly different prices. This
broad range of barber shop services includinghas caused the industry to have many different
traditional hair cuts for men, clean shave services,pricing models that vary among different target
and sales of hair care products to the generalmarkets.
public. The business will employ licensed barbers 
(as well as licensed independent contractors) thatThe prices for haircuts have an inelastic pricing
will render these service at the Company'smodel, and haircutters have enjoyed stable job
facilities.growth and prosperity over the years. The prices
 of haircuts tend to grow at a faster pace than
Business Loan Termsthat of inflation. In 2002 Economic Census report
 issued by the U.S. Government it was found that
Now it is time to discuss the anticipated terms offrom 1992-1997 the barbering and cosmetology
the business plan that you are seeking. Anindustry grew from a ten billion dollar industry to a
example paragraph of how this is stated:thirteen billion dollar industry in five years. This
 corresponds to a 5.3% average growth rate per
At this time, Mr. Doe is seeking a conventionalyear.
business loan in the amount of $100,000. The 
interest rate, loan terms, and loan covenants areThe profitability of barber shops is very good. As
to be determined during negotiation. However, thisit is a service oriented industry, the highest
business plan assumes that the business willexpense is the cost of labor. A study conducted
receive a seven year business loan with a sevenby the management showed that the
percent interest rate due on the outstandingapproximate before tax profit margin of the
principal balance.average barber shop is 35%.
Management BiographyTarget Market
  
Now that the summary of the business has beenIn this section of the business loan application and
provided, it is time to provide a brief overview ofbusiness plan analysis, you should focus on the
the owner of the business. An example paragraphdemographics of your localized market (or national
summing up the owner is as follows:market if applicable). This section should discuss
 how many people live in your area, the anticipated
Mr. Doe is a highly experienced business personnumber of people that would require the use of
that has years of experience regarding the directBarber Shops, the median household income of
ownership and management of business. He will bepeople living in the area, poverty line statistics, and
able to effectively bring the operations of theany applicable laws that would apply to your
Barber Shop to profitability while ensuring that theoperation of Barber Shops.
business loan's payments and its covenants are 
met at all times.Competition
Financial Statements 
 Many people that are developing new businesses
The most important thing to your lender whenor expanding existing businesses often feel that
applying for a business loan is how you intend totheir business does not have any competition or
repay the bank. In this section of the businesslimited competition at best. However, this is
plan, you should provide an overview of thealmost never the case. Unless you have
finance's of the business discussing the anticipatedre-invented the wheel – you will have
revenues, expenses, and profits/losses. You cancompetition. When applying for a business loan,
also discuss the applicable collateral within theyou should clearly showcase your competition in
business plan that will be used to secure youryour business plan. This is especially important to
business financing.your banker as they will be able to gauge your
 ability to be successful in your targeted market.
Expansion PlansMany business loan underwriters will aggressively
 confirm that competitive nature of your local
One of the most important aspects of yourmarket and your local industry.
business plan is how you intend to expand the 
business over a three to five year period. BanksWhen drafting this section of the plan you should
and finance companies always want to see thatheavily discuss the competitive advantages that
the business will experience a moderate to strongyou intend to have over your competition.
level of growth. This is especially true in business 
lending because as your business grows the cashMarketing Plan
flow that secures your business loan will decrease 
proportionality against your monthly creditIn addition to all of the above information that we
obligations. An example of how this is stated is ashave covered, your business loan officer is also
follows:going to want to know how you intend to market
 your business to the general public. Most people
The Barber Shop will continue to expand throughdo not quite understand how to effectively
organic means including increasing the Company'smarket their business outside of prominent
advertising budget via the reinvestment into thesignage or flyer distribution. When applying for a
after tax cash flows of the business. Additionally,business loan (again in this difficult lending climate),
if the business is highly successful then theyour banker is going to want to see that you
Company may seek to establish additional Barberhave a clear methodology of how you intend to
Shop locations after the third year of operations.market your services or products to the general
 public. In this section of the business plan – we
 will overview how to showcase your services
The Financingproducts to the general public.
  
Use of Business Loan ProceedsMarketing Overview Example
  
In this section of the business plan you should- The Barber Shop will place prominent signage on
focus on how the proceeds of the business loanthe facility to draw a significant amount of foot
will be used. An example of this would be astraffic.
follows:- The business will maintain listings in the Yellow
 Books.
- Barber Shop Establishment - $50,000- The Barber Shop will also maintain an internet
- FF&E - $10,000website that showcases the Company's
- Working capital - $40,000operations, hours of operation, and relevant
 contact information.
Management Equity 
In this section of the business plan you shouldMarketing Strategies Overview
discuss the percentage ownership of the businessAdditionally, you will be required to further drill
among the owners of the business. For example:down (in your business plan) how you intend to
 implement your strategies when you launch or
Mr. Doe will own 100% of the Barber Shop.expand your business's operations. In this section
 of the business loan and business plan documents,
Board of Directorsyou should amplify the bullet points from the
 section above. For instance:
When applying for business financing, the bank will 
also want to know who serves as the board ofThe Barber Shop intends to use a number of
directors. For small businesses, usually the ownerstrategies that will create instant traffic and
serves as the director of the business. Ancustomer flow to the Company's location. These
example of how this is worded:strategies include not only using prominent facility
 and road signage, but also distributing flyers to
Mr. Doe will be the sole director of Barber Shop,people that fall into he Company's targeted
Inc.demographics. The business will also regularly take
 out advertisements in localized newspapers that
Exit Strategyshowcase the Company's hours of operations,
 barber shop services, and specials that are
Any bank or financing company is also going tooccurring within the barber shop on a regular basis.
want to know what you intend to do with the 
business over a set period of time. Many businessThe business will also maintain a highly informative
owners will develop and expand a business withwebsite that showcases the Barber Shop's
the intent to sell the company to a third party atservices, its hours of operation,  licensure
a later time. When drafting this part of theinformation, and other relevant information in
business plan you should focus on what youregards to the Company's services. This website
intentions are in regards to potentially selling thewill be listed on major search engines such as
business. This is often worded as:Google as many people now use the internet to
 locate local businesses.
Mr. Doe would most likely sell the Barber Shop to 
a third party for a significant earnings multiple.The Financial Plan
Barber Shops usually sell for approximately one to 
three times earnings given the financial strengthBeyond any other part of your business loan
of the business. In this event, the business wouldapplication or business plan, the financials section
be sold by a business broker and the businessof these documents are what matters most
loan sought in this plan would be repaid accordingwhen applying for a business loan or any other
to the covenants of the business loan agreement.type of credit facility. Ultimately, this section of
 the business plan showcases not only what your
Products and Servicesanticipated profitability will be, but also how you
 intend to repay the funds that you have
When developing a business plan that isborrowed through your business financing facility.
appropriate for obtaining a business loan or otherAn example of how this section is structure is as
business credit facility you need to clearlyfollows:
showcase the services or products that you will 
be offering to the general public. An example ofAssumptions
how this section is worded goes as follows: 
 - Barber Shop, Inc. will have an average annual
As stated in the executive summary, the Barbergrowth rate of 10% per year.
Shop will specialize in providing a number of- Mr. Doe will acquire $100,000 through a business
services that are commonly found amongloan in order to launch the operations of the
traditional barber shops. These services includebusiness.
hair cutting, styling, color treatments, shaves, and 
other services that are frequently rendered byProforma Financials for a Business Loan
barbers. 
 Now it is time to showcase how you intend to
The business will also generate secondaryrepay your loan, generate a profit, and increase
revenues from the sale of hair care products.the book value of your business over a three to
 five year period. has developed an easy to use
 financial model that you can use when drafting out
Industry and Market Analysisthe financial model for your business plan and
 business loan application.