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How To Start A Salon And Spa Business

Everything you ever need to know about starting a salon or spa.

Entrepreneur

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Content in this guide

  1. Starting a spa and salon business in SA
  2. The Opportunities
  3. Location
  4. Costs
  5. Salon size and layout, what to consider
  6. License
  7. How to attract clients
  8. Hiring Staff
  9. How to decide which services to offer at a spa or salon
  10. Equipment vs. profitability
  11. Offer packages
  12. What to include in a spa or beauty salon’s website?
  13. What is a typical ‘day in the life’ of a spa or salon business owner like?
  14. Training
  15. Insurance – talk to a professional
  16. Associations

 

1. Starting a spa and salon business in SA

Spa-facilities

From trendy hair salons to corner nail bars, this comprehensive guide will show you how to start the salon or day spa you’ve always dreamed of.

Since the dawn of the new millennium, the stock market has been in a freefall and the economy has been in the doldrums. But it was a good time to start a hair salon and day spa – and it still is today.

According to Les Nouvelles Esthetiques Magazine Editor and head of the South African Spa Association, Dr Nadine de Freitas, the total Spa industry revenue is R380m per annum, according to a recently completed bench mark study.

Related: Free Sample Business Plans

“In fact we only looked at the bigger Spas and spas in hotels, we didn’t take into account the small spas in South Africa, says de Freitas. How is it possible for a service sector like the beauty industry to continue to grow, given the state of the economy? No doubt because many of the services offered by salons simply cannot be duplicated at home – or at least not duplicated well. In addition, in an age where people freely shell out R300 a month for limited cellular service or hundreds of Rands to lease the latest car with the most bells and whistles, the price of a haircut probably doesn’t seem very high considering the lift it can give your spirits.”

What all this prosperity means to you is that the prospects for people who own personal care businesses are bright.

“Growth in the Spa industry, despite the recession is between 15-20%”, says de Freitas. In South Africa we also have a healthy hair salon industry. The Hairdressing industry in South Africa is actually divided in to two mainstreams.

“We have a very large Afro section and a much smaller Caucasian sector. The numbers are probably in proportion to the general demographics of our country; 85% Afro to 15% Caucasian”, says Wille J Pietersen, President, Employers Organisation for Hairdressers, Cosmetology and Beauty (EOHCB).

“Although we do not have official statistics, it is estimated that we have some 3000 Caucasian hairdressing salons in South Africa and more than 34000 Afro Salons. Statistics are not available as we have a very large Informal sector, especially in the Afro sector”, says Pietersen.

“It is estimated that the Caucasian salons could do a turnover of approximately R150 million per month on services only, we do not have the retail sales value available, although this could equate to some 10 to 30% of the services. The turnover in the Afro sector is not yet quantifiable”, explains Pietersen.

Related: Health Spa Sample Business Plan


 

2. The Opportunities

day-spa

There are three ways you can make your mark on the hair industry. You can open a franchise hair salon or spa, in which you pay money upfront for the privilege of opening that salon using someone else’s established name (which gives you an instant reputation) and its resources (like advertising campaigns).

You can buy an established salon from someone who is retiring from the business, has tired of the business, or has damaged the business and forced it into bankruptcy (all three happen every day). A third option is to establish your own salon using your own money, your own ingenuity and your own optimism that hard work and talent will win out.

To begin with, you must consider your hours of operation carefully so you can accommodate the maximum number of clients during the business day. You undoubtedly already know that the beauty business isn’t a 9-to-5 kind of industry.

Salons are now open seven days a week and on some public holidays. What has driven this demand has been the proliferation of two – income couples who manage the demands of raising a family while juggling careers and managing their own personal business.

So while it wasn’t so long ago that people wouldn’t even consider getting a haircut on Sunday, salon hours on Sunday are now a must (even if on an abbreviated schedule). Even day spas are open on Sundays, since this may be the only time during the week that a busy career mom can get away for some personal pampering.

Typically, hair salons in metropolitan areas are open from 8 a.m. to 6 p.m. Tuesday to Saturday, in busy urban areas salons are open on Sunday and some even on a Monday. By design, Sunday and holiday hours often are the same as those of local retailers like malls and department stores. Lunch hours and Saturdays tend to be the busiest times for salons. You might also need to have special hours to accommodate special needs. For example, if you do a lot of wedding work, you’ll probably have to be open earlier on Saturday mornings, say at 8 a.m., for the brides who have to get to church for a 10 a.m. service.

Related: How to Choose the Ideal Location for Your Salon


 

3. What to look for when choosing a location for your spa or salon

day-spa-location

Choosing a location for your salon is one of the most important decisions you’ll make in the early stages of establishing your new business. Obviously, you’ll want to locate it in an area that’s easily accessible by highway or main road, with plenty of traffic (both foot and the four-wheeled variety) and parking.

The surrounding area should be attractive, well-lighted and safe. There should also be other retail businesses nearby (as opposed to commercial areas like industrial parks or a regional airport) because they can generate business for you even as they attract customers through their own doors.

Typically, salons operate out of three types of establishments: Free-standing buildings, storefront properties and shopping centres like malls. Occasionally, salons are located in malls, but They’re also sometimes found on the ground floor of office buildings in large metropolitan areas where there is a significant amount of foot traffic during the business day. However, such locations may not be optimal if they’re in an urban area that doesn’t have much traffic in the evenings or on weekends.

There’s one other type of property that deserves serious consideration when you’re looking for a place to set up shop. A facility that once served as a beauty salon may be a good choice for your new location.

The good news is, a lot of the infrastructure you’ll need, including extra plumbing, special electrical outlets, and maybe even fixtures like salon stations and the reception desk, may already be onsite and available for purchase with the building.

The bad news is there might be a really good reason why the salon closed, like there’s too much competition in the area, the location is crummy, or the previous owner had a poor reputation among clients and in the community. The same goes for a salon that’s currently in business but is up for sale.


 

4. How to determine costs and pricing for Salons & Spas?

spa-pricing

Start-up costs

“Start up cost is a very variable issue as we have seen some very up market salons costing in excess of R1million and some salons put up for just a few thousand rand (at home or informally)”, explains Wille Pietersen, President, Employers Organisation for Hairdressers, Cosmetology and Beauty (EOHCB).

Pricing

Another important part of your salon development plan is the appropriate pricing of your services. Set prices too high, and you’ll limit the number of people who can afford them; set them too low and you’ll limit your profit potential and possibly put the business at risk. Of course, the price the market will bear is very much dependent on the demographics of your service area.

If you’re in an upscale area with larger homes occupied by people with more disposable income, you can price your services accordingly and even offer high-end spa services. But if the surrounding community is peopled by young working families, you’ll have to forego the spa services (or offer no more than the bare minimum) and concentrate instead on basic haircutting and color services that are affordably priced.

When setting prices, you must consider the three factors that will influence your prices: labour and supplies, overhead, and profit.

Labour costs for salons include salary and benefits costs for both your stylist/spa staff and administrative people (including your manager, receptionist and other support staff). Your own salary is included as a part of this cost.

This cost is generally expressed as a price per hour and can vary depending on the amount of time it takes your employees to cut hair or perform other services. Next, you need to consider your overhead costs, which consist of all costs required to operate the business other than labour.

This includes your lease or rent, utilities, and so on. It’s reasonable to estimate that your overhead will be from 40 to 50 % of your labor and materials cost. (This figure can be adjusted later as you accumulate financial data.) So let’s say when you tally up all your labour and materials costs for the year, you arrive at a figure of R300 000. Your estimated overhead expenses (at 45%) would be R135 000.

The last part of the pricing equation is profit. Salon owners generally can expect to have a net profit of 11 to 15 percent (although you can certainly make this profit figure higher or lower as you see fit). To arrive at the net profit you want, you have to add a markup percentage factor to your services so you’ll arrive at the approximate gross amount you’ll earn.

On the hair salon side, the most sought-after service is, of course, haircutting and styling. This includes everything from styles created with a blow dryer, curling iron or hand scrunching to tried-and-true roller/dryer sets for the “mature” clientele. Popular colour services include highlighting, tints, corrective colouring and hair and scalp treatments. Texture services include permanent waves and anti-curl treatments.

Braiding and extensions, which has made a strong comeback falls into a category of its own. Finally, special occasion hairstyling, for events like Matric dances and weddings, round out the typical hair services menu.

Although technically it’s an aesthetic service, nail and foot care is often offered in hair salons. Nail services include:

  • Manicures (both traditional and French manicures)
  • Pedicures
  • Acrylic nail application
  • Nail tipping
  • Paraffin treatments
  • Skin exfoliation and hand/foot massage are often part of the manicure and pedicure processes.

Whether you offer nail services is entirely dependent on the size of your salon and whether you can afford both the equipment and the salary of a nail technician at the outset. Today’s nail client is used to visiting shops devoted only to nail services, so she won’t be surprised if you don’t offer manicures, acrylic nails and tipping.

But you may be able to get her to leave her regular manicurist if she sees that you’re offering the same service at your cool new salon. At the very least, you should offer haircuts and styling, basic perms, straightening treatments and highlighting.

Related: How to Set Your Salon and Spa Prices


 

5. Salon size and layout, what to consider?

spa-location-advice

Size of your shop

You’ll need four separate areas in your hair salon: Reception and retail, shampoo, cutting/service, and storage. The largest of these, of course, should be your salon services area, which should take up about 50 % of the floor space. About 20 % of the space should be allotted for retail/reception, 10 % for the shampoo area, and the remaining 20% for storage and an employee break/lunch room area. The employee/client restroom and your office also should be located in this area.

Any retail products you sell should be displayed in the reception area and placed near the cash register for easy access. The shampoo area is usually located toward the back of the salon and is equipped with shampoo sinks (either free-standing or affixed to the wall) and chairs.

Each station should also have a “back bar,” or cabinet, for storing products used in the salon, like shampoos, conditioners and deep-conditioning treatments. Naturally, these should be the same products you sell in the retail area, and your stylists should be trained to discuss each product used with the client as a way to spur sales.

Layout

If you decide to include spa services as part of your salon, then the overall layout of your salon should be created by a professional designer or an architect. That’s because unlike a hair salon, which tends to be a large open area with few partitions or walls, a spa needs to be somewhat compartmentalised.

However, if you’ve worked in or visited enough spas in the course of your career, or you have good visualisation skills, you may already have a good idea of how you want your spa to look. In that case, it may be possible to work with a draftsperson to draw up plans for the spa, and then hire someone to build the space for you.

Spas are usually divided into a series of rooms that are used as changing and showering facilities, treatment rooms, consultation rooms (for discussing treatment options and post-treatment care), and so on.

The consultation room may also be used as an office when not in use by an aesthetician and a client, although we’ll assume you will have your main office in the salon area. There also should be a retail area that’s separate from the hair salon’s retail area (so customers aren’t confused or distracted by products that don’t relate to spa items).

The spa and the salon can share a reception area, however, as long as it’s centrally located and easily accessible to both sides of the business. Ideally, the reception area will be in the centre, with the salon and the spa radiating out to either side.

If possible, incorporate a supply room into your spa area. If that’s not possible, spa products can share storage space with salon products, but strive to keep them separate and organised for easy accessibility.

Separate treatment rooms are needed for wet and dry services. While good overhead lighting is needed in treatment rooms both before and after services are rendered, it should be softly diffused.

During procedures like massage and hydrotherapy, the overhead lights should be turned off and an alternate, softer light source should be turned on to create an atmosphere of relaxation and peace.

Adequate ventilation is also a must, as is hot and cold running water so aestheticians can mix dry products or dampen towels during treatment without leaving the room. Finally, the treatment room should have its own sound system, on which relaxing music or nature’s sounds should be played. No rap or heavy metal!


 

6. Is a license required to operate a beauty or cosmetic clinic in South Africa?

South-African-Association-of-Health-and-Skincare-Professionals

There are no registrations or licenses required to operate a Beauty or Cosmetic Clinic in South Africa. But there are regulatory bodies which support this industry and it would be wise to register with them in order to operate a credible business.

SAAHSP

The South African Association of Health and Skincare Professionals (SAAHSP), established in 1972, are well known as an educator in the beauty industry. SAAHSP Education represents training institutions around the country and offers the national SAAHSP examination. SAAHSP is the South African division of CIDESCO, an international non-profit organisation with headquarters in Zurich that is represented in 35 countries worldwide.

SAAHSP offers a number of benefits to members, the most important being credibility and professionalism. Members also receive updated and continual education; regional functions, seminars and workshops; professional support; pricing and costing of treatments; and salary structure advice and more.

BHSEA

The Beauty Health and Skincare Employers Association (BHSEA) it also a most useful organisation to join as they ensure that employers have access to as much business, legal, labour and other advice as will be deemed necessary to run a successful and professional business.

AHBEASA

Afro Hairdressing and Beauty Association of South Africa’s (AHBEASA) is an organisation that develops and raises the standard of the Afro hairdressing beauty salons in Southern Africa into highly respected businesses and it ensures adequate protection of the interest of black owned businesses in the hairdressing and beauty industry.

Related: Smart Marketing Ideas for a Small Budget


7. How to attract clients

spa-clients

You don’t need to spend a fortune to market your small business, but you need to work out an affordable strategy. Like any business, you should have a good, solid business plan. The business plan should be a complete and detailed description of exactly how you intend to operate your proposed business. The plan should have a detailed marketing plan so that you have a clear understanding of the operations and goals of your business.

Strategise

Strategies that you can use are varied and before undertaking anything, decide who your target market is. Canvas the area and establish what services other salons offer and see where you can add value or a service they haven’t considered.

Partner with other health and wellbeing organisations

Collaborate with a nearby hairdresser by offering a discount to their clients. You can return the favour by referring your clients to the hairdresser. You can use this principal in many different ways.

Advertise

Take a small ad in the local community newspaper. Offer a discount or a free item so that you can measure if the ad has worked for you.

Trade your products

You can trade your product so that you can get a beauty editor to write an advertorial to get your business into the public eye. This kind of advertising can be very helpful when you have a tight budget.

Use SMS’s

Send an SMS to customers telling them about the business and inform them that upon booking any of your services they can take advantage of a discount or offer a small gift.

Network

Consider joining the South African Association of Health and Skincare Professionals SAAHSP offers a number of benefits to members, the most important being credibility and professionalism. Members also receive updated and continual education; regional functions, seminars and workshops; professional support; pricing and costing of treatments; and salary structure advice and more. Attend networking events in your area as well.  If you need to find out about events, your local Chambers of Commerce will point you in the right direction.

Start a database

As a Beauty Salon owner, your database is an asset worth its weight in gold. It is always cheaper to keep an existing client happy. It costs anywhere from five to eight times more to gain a new clients as opposed to retaining clients. Happy clients will tell their friends and colleagues about you which in turn will become new business. There is no better form of advertising than “word-of-mouth”.

Promotional material

Send promotional material, thank you cards, birthday wishes and emails to clients on your database, even if the base is small. The personal touch works wonders.

Host an event

Hosting an event is a great way to gain “face time” with customers and prospects as well as to get your company name circulating and to get the information you need to build a database.

Other media options

Enclose your brochure, ad, flyer etc. in all your outgoing post. It doesn’t cost any additional postage and you’ll be surprised at who could use what you’re offering. Leave flyers at a friendly pharmacy or hairdresser and if you can, do a mail drop to homes and business in your area. You can employ students to walk through the neighbourhood to drop flyers into to post boxes.

Giveaways work well

Provide a free item to a client when she spends above a specified amount on beauty treatments or skin care products. The Gift with purchase could be anything from facial serum, a salon voucher, to a mini fragrance oil.

Staff incentives

Offer businesses in your area packages which they can offer as incentives to their staff.


8. Hiring the right staff to work in a spa or beauty salon

spa-staff

One of the more challenging aspects of being a salon owner will be hiring and retaining good employees. This can seem like a daunting task, not just because both of these responsibilities can be very time-consuming, but also because there’s so much riding on employees’ skills.

After all, your employees will be the front-line representatives of the business you have lovingly and painstakingly cobbled out of little more than some loans, some ingenuity and a lot of “shear” determination. Their ability and talent, as well as their attitudes and work ethic, will influence every aspect of the business, from client retention rate to the bottom line.

Here’s a rundown of the salon and spa employees you’re likely to need for the day-to-day functioning of your new business.

Owner/Operator

You’re an employee, too, so you’re first on the list. Your day-to-day responsibilities will include overseeing operations, making sure customer service is a top priority, making financial decisions, checking salon product and retail product inventory, handling personnel matters, hiring new staff, and assessing employee performance. All of this is in addition to providing salon services if you’re a licensed, practicing cosmetologist. (Cosmetologists are often the stylist of the salon help clients improve on or acquire a certain look with the right hairstyle and hair colouring, manicured nails and more).

Salon Manager

While it may be tempting to try to undertake all the management tasks of the new salon yourself rather than hiring a salon manager, try to resist the urge. Unless your salon is extremely small, the price you’ll pay for a manager’s salary is worth it. The manager can handle myriad tasks like paperwork, record-keeping, employee scheduling and purchasing. He or she will also oversee salon maintenance and handle facility management issues. This person should have the authority to act on your behalf in your absence long-term success.

Hairstylist/Cosmetologist

In South Africa hairstylists (cosmetologists) are at the heart of your salon staff. Check that they are properly qualified.

Shampoo/Salon Assistant

This is the person who shampoos clients’ hair while the stylist is finishing up another client. He or she may also fold towels, sweep up hair clippings and provide other general assistance around the shop. Often these assistants are newly qualified hairdresser who are looking for experience in the industry, or apprentices who haven’t yet completed enough hours to become a fully qualified stylist.

Receptionist

In addition to greeting customers as they arrive, the receptionist answers the phone, books appointments, gives directions, cashes out customers and performs various other customer service duties like making coffee or even hanging up coats for clients.

Manicurist

As previously noted, the manicurist may be part of either the hair salon or spa staff. This professional provides services like manicures, pedicures and acrylic nail application and tipping and must be a qualified beautician.

Beautician

This is one of the most skilled people on your spa staff. Beauticians must be qualified through a credible training institution so they can provide services like facials, waxing, massage and other specialty body-care treatments. Quite often this person also does makeup consultations and application, especially if there’s not room in the budget to hire a dedicated makeup artist.

Massage Therapist

Although a beautician can provide many massage services, a massage therapist has a higher level of training and additional expertise.

Electrologist

This person provides hair removal services and needs a credible qualification to practice this process.

Independent Contractors

The independent contractor is a person who is not on your payroll but provides certain services in your salon, including hairstyling and manicuring. This type of business arrangement most commonly occurs when a cosmetologist rents space from you (known as booth rental), but is responsible for everything from buying his or her own tools and supplies to paying taxes on earned income.

Related: The Key To Hiring The Best Employees


9. How to decide which services to offer at a spa or salon

spa-services

The range of services is truly dazzling, but basically, aesthetic services offered at a day spa fall into three categories: Skin and body care, hair removal and makeup. (Technically, there is a fourth category – nail services – but as we just mentioned, nail services have crossed over into the beauty mainstream and are no longer considered just a spa service, however, when offered in a spa setting, nail services tend to be higher priced than in a salon.) Skin- and body-care spa services include:

  • Facials and body exfoliation (which may involve the use of salt glows, body polish, enzyme peels, and body masks like mud or paraffin)
  • Massage (full body massage, facial and/or hand/foot massage)
  • Wraps and packs (used to combat cellulite and reduce water retention)
  • Hydrotherapy treatments (whirlpool baths etc)
  • Body tanning (self-tanners and tanning beds)
  • Hair-removal services include:
  • Electrolysis
  • Waxing (face, legs, arms, bikini, back and underarms)
  • Eyebrow arching
  • Makeup services include:
  • Cosmetics application
  • Colour analysis
  • Eyelash tinting.

10. Equipment vs. profitability

spa-equipment

When determining which of these spa services to offer, it’s important to weigh factors like equipment cost against potential profitability. For instance, you may want to offer hydrotherapy in your new day spa. But hydrotherapy services require the greatest outlay of cash for equipment and facility development. So it might be a better idea to limit your spa services initially to massage (which doesn’t require as much equipment) and/or facials.

Should a wet room be included?

Another important factor to consider when deciding which spa services you’ll offer is that many of them require a wet room. This includes the hydrotherapies mentioned above, as well as any body masks, exfoliation treatments and other body treatments that must be rinsed off after application. Even if you decide not to offer hydro services when you first open, you should at least plan to include a wet room in your initial plans or you’ll always be limited to “dry” services – unless, of course, you move to new digs or expand your existing location.


11. Offer packages

Spa-packages

Because the concept of a day spa implies a day of pampering similar to what you might enjoy on a spa holiday or a cruise ship, it’s common for spa owners to offer packages of services. Generally speaking, packages should consist of at least one or two complementary services, or in the case of hydrotherapy treatments, one hydro service and up to two “dry” services.

Spa industry insiders recommend offering half-day packages that run about three hours and full-day, five-hour packages that include 30 minutes to an hour for a light lunch.

Related: Funding And Financial Assistance For SA Women Entrepreneurs


12. What to include in a spa or beauty salon’s website?

spa-websites

Just as you’ll access other companies’ websites for information about their products and services, you’ll want both prospective and repeat clients to be able to find you in cyberspace. Your website will be crucial to your marketing efforts and can be used for everything from posting your hours and driving directions to selling salon services.

Spas come off particularly well in a cyber tour. Well-decorated private treatment rooms can communicate a feeling of soothing relaxation even on screen, while suggesting that a resort-style oasis of serene tranquillity is no more than a phone call away. Because your Website is virtual advertising that’s available on demand 24-hours a day, it’s important to spend a fair amount of time considering what it should say.

(We’re assuming that your site will be an “online brochure” with multiple pages rather than an electronic business card.) The best way to determine content is by thinking like a customer and answering the questions you think he or she would have when searching for a new salon or spa. Here are examples of the kinds of questions a prospective salon/spa customer might have:

Salon

  • Do you provide initial consultations? Is there a charge?
  • Can you give me the same hairstyle as (name of celebrity)?
  • What’s the latest look?
  • Are your stylists experienced? Where did they study/train?
  • What do your services cost?
  • Do you sell gift certificates?
  • What hair-care product lines do you carry?
  • Which credit/debit cards do you accept?
  • Where are you located?
  • What are your hours?
  • How can I reach you?

Spa

  • Are your spa employees licensed?
  • Are your masseuses male or female?
  • Are hydro treatments better than massage?
  • How do you sanitise your equipment?
  • How long will my treatment take?
  • What do you charge?

13. What is a typical ‘day in the life’ of a spa or salon business owner like?

owning-a-spa

Even though no two days tend to be alike for salon owners because the needs of their clients (not to mention their employees) vary so widely, there are certain tasks you can expect to perform on a regular basis. To begin with, you’ll probably spend a lot of time on the telephone every day, helping to book appointments, ordering supplies, talking to salespeople, arranging for in-shop or offsite training, and so on.

You’ll also have to make up work schedules (then juggle them to accommodate employees’ scheduled time off and personal needs), track receivables, monitor costs, dream up new advertising and marketing strategies, and possibly create daily or weekly specials that can be emailed to your regular customers to lure them in for additional services.

On the personnel side, you’ll hire new employees, visit beauty schools on the lookout for hot prospects, conduct performance reviews, mentor young stylists and/or aesthetics technicians with minimal experience, consult with stylists or colourists whose efforts go awry, and mediate when tempers flare between staff members.

And of course, if you’re also a licensed practicing cosmetologist, you’ll be styling hair, applying colour and rolling perms.

Sounds like a lot for one person to do, doesn’t it? Well, it is–and that’s why many salon owners (even those whose salons are quite small) often hire a salon manager to take over some of the administrative duties.

This is a particularly good idea if you intend to continue to work behind the chair, since hairstyling chores alone can take up a lot of your time every day. And while it’s possible to slip in some administrative work while you’re waiting for someone’s perm to process or a late client to arrive, it can be difficult to switch gears and give administrative tasks like balancing the books the full concentration they need. The main thing that will influence business in your salon will be economics.

After all, when the economy is riding high, people are willing and able to spend money on more expensive salon services, services that can easily be done at home, and luxury spa services like full-body massage and body wraps. But when the economy is slumping, those services may be considered a luxury rather than a necessity.

As a result, customers may cut back on the frequency of their salon visits, or they may opt only for the basic services provided by one of the budget-conscious national chains.

One way to avoid being caught up a creek without a paddle is to research your target market’s economic base carefully. If you’ve done your market research well so far, you already have some idea of the average income levels in your neighborhood.

Now you need to look at data like the percentage of people who are employed full time and the types of jobs they hold. If the local market is driven by a lot of blue-collar, heavy industry jobs, a downturn in the economy could make cash tight and affect your ability to keep customers. Luckily, most people still use salon services, even if it’s just for a basic cut, when times are tough, but they may go longer between services.


14. Training

Spa-reception

For an industry that offers such specialised services, it’s amazing how much information there is in print and in cyberspace about both the hair salon and the day spa industries. The Internet is an especially rich source of background information, business tips and marketing know-how, much of which is posted by people who are themselves in the industry.

We’ve presented some useful resources here, but the list is by no means exhaustive. Also, please note that all contact information was current and accurate at the time of publication.

The Afro Hairdressing and Beauty Employers Association of Southern Africa (AHBEASA) offer a learnership management solution to employers seeking to enjoy the benefits of learnerships without involving internal senior staff. AHBEASA acts as both training provider and management partner to ensure that employers have a trouble-free learner ship experience.

AHBEASA provides practical training on entrepreneurship, how to be an entrepreneur and to run sustainable business through department of labour.

The training covers:

  •        Business Planning
  •         Customer care
  •         The Marketing Plan
  •         Financial Planning
  •         Costing and pricing
  •         Research
  •         Stock control
  •         Strategy plan
  •         Business performance

AHBEASA provides business coaching to its members. Its also link its members with preferred services providers mentor its members. In the Afro hair market those who join AHBEASA receive a gold membership card which allows members to enjoy a 2.5% discount sale and 5% discount on equipment from head quarters and members get 5% discounts on all products purchased from Hair World.

Regular training

The Hairdressing and Cosmetology Services Industry Education and Training Board (HCSIETB) has developed a six part modular training system, which is offered by most technical colleges, who have been accredited by the HCSIETB to provide quality training for both Afro and Caucasian hair.

Always make sure that the institution that you choose for your training has accreditation from the Board. If not, your training will not be recognised by the industry, you will not be able to do a Board Exam or Trade Test, and your money will have been wasted. You will need to study the theory and practice of hairdressing in six modules covering such subjects as salon ethics and communication, introduction to skin and hair, etc.

Trade Tests

Once apprentices have completed the six part modular training system and have the required amount of salon experience they may do a Board Exam. On passing the Board Exam, the Trade Test may be done. The Trade Test is the nationally recognised qualification for hairdressing. Once this has been passed you are a qualified hairdresser.

Related: 8 Vital Training Steps For ‘Treps, Pre-Launch


15. Insurance – talk to a professional

Spa-insurance

Insurance should be an important consideration when planning a Spa or hairdressing salon. The decision to purchase insurance can be a tough one because many new businesses are on a tight budget. The business owner must make decisions regarding what he or she can take a risk on and what to pass on to the insurance company.

At the very least you want to make sure that your personal liability is covered by some form of business insurance because you are offering a service to the public. Ignoring this may cost you everything that you have worked for and earned. Talk to a professional.

There are many conditions and exclusions that are applied to business policies. It is therefore important that you discuss your policy with your insurance adviser to ensure that it meets your needs. Get as many quotes as possible.


16. Associations

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Start-up Industry Specific

How Do I Start A Transport Or Logistics Business?

An all in one guide to starting a transport and logistics business.

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Thinking about starting a transport business?

Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.

Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.

Your Free Cheat Sheet: Transport and Logistics Business Cheat Sheet

The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.

Road transportation includes commuter transport from taxis to bus transportation.

It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.

What is covered in this guide:

  1. How to start your transport and logistics business
  2. How to get funding for your transport business
  3. What are the costs involved
  4. Finding customers and getting transport contracts
  5. Getting onto suppliers lists
  6. Buying trucks and employing drivers
  7. What are the regulations and risks
  8. Where to find guidance to start your business.

Ready to get going? Click the arrow button to learn how to start your own transport business.

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Want To Start A Property Business That Buys Property And Rents It Out?

Information on starting a property renting business.

Shawn Theunissen

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Start your property rental business using this guide

I would like to start a property business where I purchase the properties and I rent it out, I already have a paid up property that I am renting out but my taxes are too high on the rental income so I am considering starting up a business. Could you advise me on where I can get more information on the requirements to start this and provide some guidance on whether it would be wise to pursue this business?

Before starting any business, it’s important that you’re absolutely clear about why you’re doing it – and that it’s going to be something that excites you, drives you and challenges you in the long-term.

If you’re only considering starting a property investment and management company to try and reduce your taxable income, then I don’t believe this is an appropriate – or a sustainable – solution. You should rather consult a reputable financial adviser about other investment options that would better suit your personal needs.

If owning and managing properties is, however, an opportunity you would like to pursue, I would then recommend that you start off by equipping yourself with a proper understanding of what it actually means to be a landlord. This will help you to make an informed decision about whether or not you want to start this (ad)venture as an entrepreneur.

Related: How The Property Brothers Built Up A Real-Estate And Entertainment Empire One Brick At A Time

At a very basic level, here are some of the things you might want to consider to determine if this is the right business for you:

Initial cost

initial-cost-and-property

This is what you need to consider, cost wise, when you start up your business

You need to consider the initial cost that you will be incurring when setting up the business, especially since you have a property in your personal capacity.

You will need to transfer the property from your personal capacity into your business and pay transfer fees and transfer costs.

These costs will be calculated based on the current value of the property.

The work and planning

No matter whether you’re a residential or commercial landlord, property management requires a great deal of work and planning. Remember you will be responsible for all aspects of the property: From purchasing it to maintaining it on a day-to-day basis.

This involves everything from transfer to managing the monthly utility bills, all the way through to replacing the geyser when it bursts and ensuring your tenants behave appropriately in the building. You would also need to source your tenants and ensure that they pay you on time.

All by yourself

business-owner-development

Starting your business alone? You need to know this

From a start-up perspective, you would probably need to do all of this yourself in the beginning. As such, you would need to work to build up your own database of reputable suppliers: Plumbers, electricians and handymen. It’s important that you find experienced, qualified suppliers that you can trust, and who will be able to deliver on time and cost-effectively.

This can be a very time consuming process. Also consider that you would need to be on hand to facilitate all of this work: Arranging the call-out with the supplier and the tenant; overseeing the work delivered; paying the supplier etc.

Related: Handyman Joshua Cox Of Trade-Mark On Thinking Like A Tech Start-Up

Business owner development

Above and beyond that, you’re then going to need to develop yourself as a business owner. You will need to equip yourself with the skills and knowledge required to lead and manage this business in order to make it both sustainable and profitable. This will require a significant investment from you: Time, effort and money. The more you commit to this journey of personal and professional development, the better your chances of success.

If you can picture yourself doing – and enjoying – all of the above, it’s then equally important to consider if this is a viable opportunity.

The greatest barrier to entry in this sector for you as an entrepreneur is probably going to be finance. You need to be conscious of this from the outset.

  • Do you already have access to the funds you need to purchase the properties you are going to rent out?
  • If not, what are your plans to secure this funding? And what are the returns you are expecting?
  • Also consider the funding of the business itself. How will you finance this, especially during the first year?

My recommendation here is to take the time to do your homework – and the maths. While this could be a business opportunity, it might not be something that will be possible for you to do on your own.

Related: What You Need To Know To Become the Next Property Entrepreneur

If you have a feasible plan regarding the above, you then need to start working on developing a model for this business – as well as a strategy and plan. All of these will require research on your behalf: From reading Entrepreneur to accessing websites, possibly visiting walk-in centres etc.

This will include unpacking the actual opportunity itself – and determining if there really is a demand for your service offering.

Please note that the above are thinking or “trigger-points” – listed simply to give you an idea of some of the things you need to consider, as well as the mindset you will potentially need to adopt as an entrepreneur. Your response to them should give you a good sense of if this is the path you wish to walk.

Remember that entrepreneurship is a journey – and every day on this road is a learning opportunity. If it is for you, embrace it whole-heartedly, don’t be afraid of failure and be sure to seek out the assistance available to you.

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How Do I Start A Child Services Business?

The ultimate guide to starting a child care or child services business.

Entrepreneur

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Is It for You?

Does children’s laughter sound like music to your ears? Do you enjoy the idea of six kids chaotically crawling at your feet at any given moment? Then read on for your perfect business.

The number of working parents – including single-parent families and families with both parents employed is climbing, creating an ever-growing need for quality child care. That need is creating a tremendous entrepreneurial opportunity for people who love children and want to build a business caring for them.

Related: Free sample business plans here

Child-care services range from small home-based operations to large commercial centers and can be started with a small investment.

You can stay very small, essentially just creating a job for yourself, or you can grow into a substantial enterprise with potentially millions of Rands a year in revenue.

You also have a tremendous amount of flexibility when it comes to the exact services you choose to offer. You may limit your clientele to children in certain age groups or tailor your operating hours to meet the needs of a particular market segment. You may or may not want to provide transportation between your center and the children’s homes and/or schools. You may want to take the children on field trips.

As an alternative to child care, you may want to consider a business that focuses solely on providing transportation for children. Of course, the basic work you’ll be doing − caring for someone else’s children − bears a tremendous amount of responsibility and requires a serious commitment. When the children are in your custody, you are responsible for their safety and well-being.

You will also play a key role in their overall development and may well be someone they’ll remember their entire lives.

Filling an important need

day-care-research

Starting an educational business in South Africa is always beneficial

One of the biggest challenges facing South African families today is caring for their children while the parents work. According to Stats SA 39% of women head households in South Africa. A higher percent than ever of married-couple families, both husband and wife work outside the home. The labor-force participation of women in their childbearing years continues to expand. As the number of working parents rises, so will the demand for child care.

Another issue that has an impact on child-care issues is the new, 24-hour global market. Occupations with a high number of employees working nights and weekends − such as janitorial, hospitality, customer service and technical support − are experiencing substantial growth, and workers in these fields find obtaining quality child care an even greater challenge than their 9-to-5 counterparts. For many working parents, there is no single solution to their child-care needs.

More than a third use more than one option, such as day-care centres part of the time or full time or use domestic staff to provide care for children who don’t attend a daycare centre.

Related: How to Choose a Business Name that Works

Do you have what it takes?

What are the characteristics of a person who would do well operating a child-care. The person needs to be energetic, business-minded, a competent leader, have a pleasant personality, be professional, be willing to take calculated risks, be a good role model, have strong financial resources, be consistent in expectations of the staff, and be consistent in the delivery of service.

A child-care business can easily be started in your home with just a few weeks of planning and a modest amount of start-up cash. A commercially located centre takes a greater investment of time, energy and money. The size and type of business you choose will depend on your start-up resources and goals for the future.

Many child-care providers are satisfied with a one-person operation in their home that generates a comfortable income while allowing them to do work they enjoy (and possibly even care for their own children). Others may start at home and eventually move to a commercial site as the business grows. Still others begin in commercial locations and are either content with one site or have plans to expand.

The Beginning Stages

Childrens-day-care

Start-up blocks

Start-up checklist

As you complete your startup efforts, use this checklist (and tailor it to your own needs) to make sure you’ve covered all your bases before you open your doors.

  1. Type of centre: Will you operate from your home or a commercial location?
  2. Licensing: What licenses are you required to have and from which agencies? What are the requirements, costs and lead times?
  3. Training and certification: What types of training and/or certification do you need?
  4. Market: What are the child-care needs of your community?
  5. Location: Choose a site that is appropriate and affordable.
  6. Legal requirements: Check on zoning and any other legal issues. (See regulations later on in the story)
  7. Financial issues: Estimate your start-up costs and identify the source(s) of your start-up funds.
  8. Health and safety issues: Plan for accident and illness prevention, and develop emergency procedures. See regulations later on in the story)
  9. Programs: Develop an appropriate schedule of activities for the children.
  10. Equipment: What do you need to adequately equip your centre, where will you get it, and how much will it cost?
  11. Insurance: What coverage do you need to adequately protect yourself and the children in your care?
  12. Staffing: If you plan to hire people, know the required staff-to-child ratios and develop your human resources policies.
  13. Links: What community and professional resources are available to you?

Related: The Complete Guide to Starting a Business in South Africa

Conducting Market Research

Prime candidates who need full-time child care are parents with infants to 5-year-olds. Parents with children over 5 are good prospects for after-school care programs. The market segments most likely to use child-care services are dual-income families and single-parent households in most income brackets.

A number of government programs help low-income families pay for child care so the adults can stay in the work force.

Within this very broad market is the narrower group of clients you’ll serve. Use market research to figure out who these people are and how you can best attract them to your center. Lois M. says the primary market at four of her six locations is parents who are upper-income working professionals; the other two centers serve a number of middle-income families as well as those being subsidised by public funds.

Janet H. says about half her clientele consists of dual-income families, and the other half is single mothers who receive government assistance as they work through programs designed to get them off welfare. The goal of market research is to identify your market, find out where it is, and develop a strategy to communicate with prospective customers in a way that will convince them to bring their children to you.

When Lois M. opened her first centre, her demographic research revealed that there were 9,000 children from infant to 5 years old within a 5-mile radius of the site; half the pre-school children in the area were in day care of some sort because their mothers (or both parents) worked; and the number of households in the area was expected to double within a decade. Contained in that 5-km radius were six child-care centres serving approximately 800 children.

Brenda B.’s research wasn’t as sophisticated. Living in a small town, she knows just about everyone and is well aware of the lack of child-care services.

“There’s such a need for day care,” she says. “I go through periods where I’ll get as many as five calls a week from parents needing care, and I don’t have room for them. I’ve had families on my waiting list for up to two years.”

Related: How to Research the Competitors in Your Area

What licenses do you need to start a pre-school?

Department of Social Development

Department of Social Development

Early Childhood Development Centre have to be registered with the Department of Social Development (DSD). This registration can be done through your local branch of the DSD.

The DSD suggest that you follow the following steps:

  • Complete an application form for registration as a place of care. You can get the application form on the web.

In order to apply you must submit a weekly menu and daily programme and then submit the following information:

  1. A building plan/hand drawn sketches of building
  2. A copy of constitution, signed and dated (only if you also require funding)
  3. Service/Business Plan (for application for funding
  4. Financial report of the past year (for funding purposes)
  5. Contract with the owner of the building (lease – for funding purposes)

Once the documentation is approved, you will have to undergo an assessment from the Local Authority on structural and health requirements

What types of child-care services can be offered

Before you open your doors to the first child, you should decide on the services you’ll provide and the policies that will guide your operation. To simply say you’re going to “take care of children” is woefully inadequate.

  • How many children?
  • What ages?
  • What hours?
  • Will you provide food or ask their parents to?
  • What activities will you offer?
  • What sort of price and payment policies will you have?
  • And the list goes on.

Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the local division of the Health Department. They will explain to you what’s involved in providing particular services.

For example, each province has its own guidelines for the maximum number of children and maximum number in each age group in a family child-care facility. Municipalities in various regions also have guidelines regarding caregivers. There will likely be other requirements and restrictions, depending on the type of facility you run.

Decide what services to offer based on your own preferences and what your market research says your community needs. Your choices include:

  1. Full-time care during traditional weekday hours
  2. After-school care
  3. Non-traditional hours (very early mornings, evenings, overnight care, weekdays and/or weekends)
  4. Drop-in or on-demand care, either during traditional or non-traditional hours
  5. Part-time care
  6. Parents’ night out (weekend evening care)
  7. Age-based care

Location

child-education

This is how you can choose your location to start your business

How to find the right location for a child-care business?

If you’re going to open a center on a commercial site, it makes sense to locate your facility close to your target market. Some parents may prefer a center close to home; others may choose a center close to their workplace. In the latter case, parents get to enjoy more time with their children during their morning and evening commutes, as well as the opportunity to spend time with them during the course of the day, perhaps for lunch or special programs.

Some site suggestions to consider include:

  1. A facility within or adjacent to a residential neighbourhood or near a school
  2. A facility in a shopping centre where parents with children are likely to pass by
  3. Sharing a facility with other community organisations
  4. Office and planned light-industrial parks with a sizable work force.

Opening a child-care centre at home

If you’re going to open a child-care centre at home, discuss your plans with family members and neighbours before you open. Younger children may resent other children coming into your home and changing their lifestyle.

Older children − especially teenagers who will need to be told what’s expected of them and what they can expect as your business gets off the ground. Spouses may not completely understand the time commitment involved in this business, so talk about things in detail well in advance of bringing the first client in.

You may find that your extended family and friends don’t really understand what’s involved in a professional child-care business and may think that, since you’re at home during the day, you’re “not really working” or you’re “just baby-sitting.”

Talk to your neighbours about the impact your business will have on them in terms of traffic (as parents drop off and pick up their children) and noise (think about the decibel levels five or six children can generate when playing). Let them know what steps you’ll take to keep any irritation or inconvenience to a minimum, and reassure them that they should feel free to contact you with any concerns or questions.

Some family child-care centre operators have certain rooms of their homes designated for their business; others use their entire homes. Your decision will be based on your state guidelines and personal preferences.

Brenda B. has a playroom for the children, but they are not restricted to that area; she says she pretty much uses her entire house and her large, fenced backyard for her business. Sherri Ax’s house in Durban has a living room that serves as the primary child-care area.

The Funds

funding-a-business

How much cash is needed to start a child care business

So what do you need in the way of cash and available credit to open your doors? Depending on what you already own, the services you want to offer and whether you’ll be home-based or in a commercial location, that number could range from a few hundred to tens of thousands of Rands.

As you consider your own situation, don’t pull a startup number out of the air; use your business plan to calculate how much you need to start your ideal operation, and then figure out how much you have. If you have all the cash you need, you’re very fortunate. If you don’t, you need to start playing with the numbers and deciding what you can do without.

Start-up costs can be low

Many of the child-care entrepreneurs we talked with used their own personal savings and equipment they already owned to start their businesses. Because the startup costs for a family child-care business are relatively low, you’ll find traditional financing difficult to obtain − banks and other lenders would much rather lend amounts much larger than you’ll need and are likely to be able to qualify for. A commercially located centre will take a more substantial investment and would likely qualify for a bank loan.

Brenda B. estimates that she initially spent R3000 to R4000 on equipment for her family child-care centre. She shopped at second hand shops and accepted donations of used toys and other items from friends and acquaintances.

Janet H. spent considerably more – about R40 000 – to set up her family child-care centre because she remodeled her garage to serve as the primary room for her business as well as added a bathroom for the children. When she opened her first commercial location, she used a combination of personal savings and credit cards to pay the expenses. By the time she opened her second location, she was able to qualify for a commercial loan.

Lois M. took out a second bond on her home to get the R105 000 she needed to adequately equip her commercial centre when she opened. Yvette B. in Miami, put R250 000 of personal savings into her children’s transportation service. Deborah B.’s start-up costs Johannesburg, were in the range of R40 000 to R50 000, which she funded primarily with personal credit cards.

As you’re putting together your financial plan, consider these sources of startup funds:

  • Your own resources. Do a thorough inventory of your assets. People generally have more assets than they immediately realise. This could include savings accounts, equity in property, insurance policies, unit trusts, and other investments. You may opt to sell assets for cash or use them as collateral for a loan. Take a
  • Look, too, at your personal line of credit. most of the equipment you’ll need is available through retail stores that accept credit cards.
  • Friends and family. The next step after gathering your own resources is to approach friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk of investing in your business.
  • Partners. Though most family child-care centres are owned by just one person, you may want to consider using the “strength in numbers” principle and look around for someone to team up with you in your venture. You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations.

Government programmes

Take advantage of provincial and national government grants and funding programs designed to support small businesses. Women, minorities should check out niche financing possibilities designed to help these groups get into business.

Related: Need to Fund Your Business? Here’s What GPF is Looking For

Regulations, legal and licences

legal-business-documents

What are the regulations in South Africa concerning child-care businesses?

You have to register with the local municipality and apply for a health permit. Contact the Department of Health who will refer you to the correct area that you are zoned for and provide. Once you have selected a venue you have to register with the local municipality who in turn follows the regulations laid down by the Department of Social Development in accordance with the Childcare Act, 1983 ( Act No 74 of 1983).

When approving an application for registration, the Council can impose further conditions and restrictions as it sees fit. Once the application for registration has been approved, the Council will issue a Certificate which will:

  • State the name of the person to whom it is issued
  • Describe the premises in respect of which the application was approved
  • Will specify any conditions or restrictions which it may have imposed
  • Will state the period for which the premises will be registered.

Health Permit

The crèche or crèche-cum-nursery school has to comply with health by-laws to the to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit which every day centre or crèche should have. Setting up a crèche or day care centre regulations state that there should be:

Office, staff room and sick-bay

If there are more than 30 children are cared for on the premises, provision should be made for a separate office large enough to be divided into a sick bay to accommodate at least two children, as well as a staff room. These can be combined

Indoor Play Area

  • There must be an indoor play area covering a minimum floor space of 1,8m² per child to be used for play, meals and rest.
  • Cots and mattresses utilised for sleeping purposes by children must be arranged so that there shall be a minimum of 50cm space between the cots or mattresses.

Kitchen

  • The kitchen must have suitable cooking and washing facilities. Kitchen has to be separate from the play area and not be accessible to the play area or the children
  • There must be adequate natural lighting and ventilation
  • Wall surfaces should have a smooth finish and should be painted with a washable paint

Sanitary facilities

There must be one toilet and one hand washing facility for every 20 or less children under 5 years of age, irrespective of sex.

  • Or one toilet and hand washing facility for every 20 or less children above the age of 5 years, separate for each sex.
  • Separate toilet facilities must be provided for the staff as set out in the National Building Regulations.
  • There must be a supply of hot and cold running potable water at the wash-hand basins, or if no running water is available, a minimum of 25 litres of potable water, stored in a hygienically clean container.
  • If potties are used they must be emptied, cleaned and disinfected with a disinfectant immediately after being used and stored in a suitable place

Outdoor play area

If you have an outdoor play area it must provide at least 2 m² per child. The play area must have shady areas or other safe surfaces, be fenced / walled and have approved lockable or child-proof gates and should be free of excavations and dangerous steps and levels.

General

The crèche must keep a health register.

What licences are required and what legal, health and safety steps that must be taken?

A safe playground is crucial

Operating a safe playground for children to enjoy means that you have to follow the regulations as stipulated by the local council. You must also take advice from your insurer and your lawyer.

Insurance cover

It is important to buy liability insurance, including accident and equipment liability. Be sure to get a detailed list of insurer’s requirements and follow those to the letter. When purchasing play structures, make sure that they include warranties.

Comply with local council

Once the playground is built, you will have to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the playground. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business.

Health and safety bylaws apply

In terms of the playground, the business has to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the play area. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business. Contact the DoH and request the details of the local authority in your area

Getting your own licences is difficult

If the business is an independent operation, it’s harder. Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the Department of Health. Each municipal area has different by-laws, which is why it is so difficult to be specific in terms of licence requirements. The local council will explain to you which licences are required in providing particular services.

Food and liquor compliance

To serve food, a Certificate of Compliance for Food Preparation is required. If you sell any form of alcoholic beverage, you have to apply for a liquor licence.

Get legal advice

Consider consulting an attorney to ensure that you have all the correct licences. Browse through the Entrepreneur legal directory for options.

Pricing System

How to set prices and receive payments for a child care business?

The fees you charge will provide the financial base for your company and your income. They need to be competitive in your market, reasonable and affordable for the parents, and also fair to you. You need to consider a variety of issues, including your costs, the profit you want to make, the going rates in your area and what the families you’re targeting can afford. Setting your rates, explaining–and often justifying–them to parents and then collecting the money are all part of being in the child-care business.

Since you’ll be offering a carefully planned curriculum that is far more than a mere baby-sitting service, you are justified in establishing a fee structure similar in design to a private school. A one-time enrolment charge of half a week’s tuition will hardly raise an eyebrow, but it will compensate you for the cost in time, paperwork and special attention each entrant needs.

Calculating how much to charge for space in your centre will be based primarily on three variables:

  • Labour and materials (or supplies)
  • Overhead
  • Profit

 Limited intake

A fourth factor uncommon to most businesses but significant for a child-care centre the limit to the number of children you can accommodate. In most fields, if your business grows, you just keep hiring employees to serve the increasing number of customers. But in child care, municipal by-laws and practicality limit the number of children you can accept, putting a lid on the income potential of your business. To overcome this, successful child-care centre operators often open more locations in nearby areas to increase their client base and income.

Forms of Payment

You’ll receive payments by check and cash, and you may also want to set up a merchant account so you can accept credit cards or electronic transfers. Check with your bank or the different credit card companies for information on accepting credit cards. Many child-care and transportation service providers find that automatically debiting parents’ credit cards is the easiest way to obtain payment. “A debt order every month is the easiest way to get your money,” says Yvette B. “There are discount fees involved, but its well worth it.”

In most parts of South Africa, the demand for quality child care is so high that marketing your business will be relatively easy. In fact, many of the providers we talked to for this story − especially the home-based centres − do little or no marketing because they’re established, with strong reputations and waiting lists.

But every business needs a marketing plan, and yours is no exception. All your marketing materials should be professional and letter-perfect. Consider hiring a graphic designer and/or professional writer to help you with your marketing package. If they have children, you may be able to negotiate their fees in barter.

Keep these questions in mind as you form your marketing plan:

  • Who are your potential customers?
  • How many of them are there?
  • Where are they located?
  • What are they currently doing for child care?
  • Can you offer them anything they’re not getting now?
  • How can you persuade them to bring their children to you?
  • Exactly what services do you offer?
  • How do you compare with your competitors?
  • What kind of image do you want to project?

The goal of your marketing plan should be to convey your existence and the quality of your service to prospective customers, ideally using a multifaceted approach. The child-care center operators we talked with used a variety of marketing methods, from simple word-of-mouth to more sophisticated techniques.

Smart Tip

Ask new clients how they found out about you. Make a note of their answers and what kinds of businesses they represent (how many children they could potentially refer to your business). This will let you know how well your various marketing efforts are working. You can then decide to increase certain programs and eliminate those that aren’t working.

Related: How to Set the Prices for Your Child Services Business

Registration

How many children can a day-care centre accommodate before registering the business?

If there are five children or less you do not need to register the business. However, once there are six or more children you have to register.

When should a day-care centre be registered?

“You only need to register a day-care centre if there are six or more children,” says community development officer, Tinyiko Shibambu at the Department of Social Development in Johannesburg. “First you have to register the business as an NPO (Non Profit Organisation). Once you have a NPO certificate, then you can register the day-care centre with the Department of Social Development,” advises Shibambu. Contact the Department of Social Development for details.

Procedure to register an NPO

There is a specific registration process to follow in order to register an NPO

In a crèche scenario, how many caregivers should there be for the number of children in a class?

According to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class. In South African childcare centres, the staff to child ratio for 0-2-year-olds in an ideal situation is one caregiver to every five children, 1:5. For 2-3-year-olds, the ratio is 1:10. However, according to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class and you can employ more if the business can afford it. However, it is best to contact the municipal office in your area and check the regulations as each municipality has different regulations

Management

What goes into effectively managing a child-care business

The high rate of attrition in the child-care business is driven in large part by the fact that many caregivers focus almost exclusively on nurturing and caring for the children in their charge, and neglect the financial and management sides of their operations. But whether your goal is a small, family child-care centre or to build a chain of commercial locations, you must deal with administration and management issues if your business is going to survive. If you plan ahead, that won’t be hard.

Set up your financial record-keeping system

From the outset in a way that will provide you with the information you need to monitor your profitability and handle your tax payments to SARS. You may want to hire a consultant or an accountant who specializes in small businesses to help you at first; this small investment could save you a substantial amount of time and money in the long run.

Spend time marketing and doing admin

Expect to spend a significant amount of time on management, marketing and administration. If you have employees, they need to be trained and supervised. Although the demand for child care is high, parents won’t be able to find you if you don’t market your service.

And keeping up with administrative details–paying accounts, buying supplies, doing budgets and forecasts, meeting ongoing licensing requirements, facility maintenance, etc.− is a never-ending process.

Choose staff very carefully

The staff that you employ must be children-friendly. Conduct thorough background checks on all potential staff.

Ready to Take the Next Step?

You will need to create a business plan to get you going.

Here is a Free Sample Business Plan

Capital is essential to starting up your business. You can self fund, or alternatively seek outside funding to assist you in starting up your business.

Here are New Ways SMEs Can Find Funding.

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