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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.

Related: Health Spa Sample Business Plan

“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.


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.

Related: How to Choose the Ideal Location for Your Salon

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.


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.

Related: 6 Resources For Start-ups Looking For Funding

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.

Related: How to Set Your Salon and Spa Prices

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.


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.

Related: 3 Key Law Areas To Know When You Launch That Start-up

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.


Health Spa Business Plan

This sample business plan will help you  launch your own health spa. Use this Health Spa business plan to check off what you still need to ensure your new start-ups success.


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.

Related: Smart Marketing Ideas for a Small Budget

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.

Related: The Key To Hiring The Best Employees

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.


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.

Related: 8 Entrepreneurs Share Their Best Advice For When The Going Gets Tough

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.

Related: Funding And Financial Assistance For SA Women Entrepreneurs

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.


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.

Related: The Unwritten Rules: Real Start-up Advice To Launch A Game-Changing Business

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.

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

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.


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


Related: Relax Spas Founder Noli Mini Shares Her Insights On Building A Business Of Value

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Start-up Industry Specific

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.

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

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. 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.

Related: Real Estate Business Plan Sample

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.

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

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.

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.

Related: 9 Quotes Every Entrepreneur Should Live By

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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Start-up Industry Specific

How To Start A Clothing Business

The South African clothing industry is a talented one.

Entrepreneur

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Content in this guide

  1. Create a blueprint for your business
  2. Name your clothing line and company
  3. Register the business
  4. Basic design skills
  5. Production Plan
  6. Manufacturing
  7. Get the pricing right
  8. How to find a clothing manufacturer
  9. Networking is a valuable tool
  10. Market your line
  11. Online marketing
  12. Workshops and training

The South African fashion industry has the talent to develop original products with inspirational style and creative detail to compete very well with popular international brands. However, designers too often fail to deliver through lack of basic planning and business acumen,” says Amanda du Plessis.

Du Plessis launched the retail consultancy Evolution 4 years ago to help top South African brands to realise their potential. A doyenne in the industry, she started her career as a buyer at Truworths, developing in-house ladies wear and accessories ranges.

She joined Stuttafords as a brand manager where she developed three private label ranges – Define, Excursion and Oaktree – and managed six local and international brands. She left Stuttafords to head up retail development at Polo before starting her own consultancy.

Create a blueprint for your business

blueprint

Blueprint advice

There are a number of business matters that must be in place before you can start a clothing line.

  • No matter what kind of business you start, you must have a business plan.
  • In the plan, you must consider all the costs and include your goals. Once you have done this, everything else will fall into place.
  • Start small. Many business ventures begin small; then grow with time, lots of hard work and patience.

Name your clothing line and company

zara-business-name

Naming your business for success

Think of a creative and catchy name that represents you and the product. Once you have worked out a name, you must protect your label by registering the name.

Related: The Do’s And Don’ts Of Naming Your Business (Infographic)

Companies and Intellectual Property Commission (CIPC) in Pretoria is responsible for the registration of companies, trademarks and patents. Contact them to register your brand name and logo. Protect the brand name under trademark law as well, but don’t forget to do a trademark search before you register it.

Register the business

business-registration

Have you registered your business yet?

Set up a business entity by registering the business as a Close Corporation or a Private Company and get all of the necessary licenses and tax registrations that are required by the South African Revenue Services (SARS).

Related: Steps for Registering Your Clothing Business

Basic design skills

clothing-design

If you want to start a clothing line, you should have some design skills such as sketching, sewing, pattern making and textile knowledge.

The Design Process

Before you start a clothing line, you need to understand the design process as a whole. Research current trends to predict what styles, colours, and fabrics will be popular

  • Conceptualise an idea
  • Sketch preliminary designs
  • Select fabrics

“To have a successful business, you need to have items that are more accessible to a greater audience both price and style-wise. This does not mean that you need to create pieces for the mass market. Instead you need to consider a range of pieces and prices within your collections,” explains du Plessis.

Production Plan

Formulate your production plan — that’s going to do what, how much it is going to cost, what needs to be produced. You’ll need to create a sample, or have a sample created for you.

Related: Free Operational Plan Template

You can then use this sample to get orders. Take the sample to fashion shows, trade shows, retailers, craft shows, etc.

Manufacturing

hanging-suits

Clothes manufacturing and production in South Africa

Providing that you have your designs and range set out on paper, that patterns have been cut and fabrics sourced, the next step is to manufacture a range of professional samples.

“In South Africa it is difficult to find a reliable CTM (Clothing and Textile Manufacturer) willing to make a small range. You could employ seamstresses to make the clothing on your premises until you can no longer cope with demand, or better still create a group of seamstresses that work for a few designers and pay them for finished product instead of paying a daily rate.”

“This way you will know your actual cost and your labour component will be more productive. Once your units gets closer to 100/200 units you could approach a CTM to manufacture the line,” advises du Plessis. When dealing with a clothing manufacturer, prepare a list to find one that is the right fit. Find out the following:

  • How much will it cost to get what I need?
  • What are the turnaround times?
  • Do you provide samples before finalising production?
  • How soon will I receive the sample?

The textiles, clothing and footwear industry in South Africa is well established, but has been under siege for some years due to the negative impact of cheap imports. The effect of cheap exports is exacerbated by the reduction of import protection; this stems the flow of illegal imports and the effect of the discontinuation of export incentives.

Related: The Benefits Of Manufacturing Locally

“There are very few mills left in South Africa that produce apparel fabrics, and most of the fabrics are imported thru wholesalers therefore designers will not always have  exclusivity on designs, this however creates an opportunity for designers to create their own look by adding value to basic cloths by printing, embroidery or draping” says du Plessis.

Get the pricing right

Consider everything that goes into making your clothes when deciding on pricing.

  • Fashion material costs (material, cotton, buttons, zips, etc).
  • Salaries for you and any employees.
  • Advertising and marketing costs.
  • Manufacturing costs.
  • Other expenses, like utilities, supplies and equipment.

Related: Smart Marketing Ideas for Your New Business

Make sure that your target market can afford your clothing range.

How to find a clothing manufacturer

Sewing-machine

How to find a clothing manufacturer

This requires lots of legwork. Start by browsing through the internet. There is a global clothing manufacturer register on clothingregister.com that lists manufactures in South African and around the world.

“Word of mouth is a good way to find a good small manufacturer,” recommends du Plessis. Talk to other designers at fashion shows and industry events and find out who they recommend. It is a good idea when your units become bigger to include a “penalty clause” so that you are protected in the event of a late delivery by the manufacturer. , says du Plessis.

Now you are ready to launch the range

Once the samples are made, you need to contact buyers at stores where you believe your target market would shop. Not only do you show them samples, but you should also show them the different styles, colours and fabric swatches. If they decide to buy, request a written order including the delivery date and payment terms.

Networking is a valuable tool

Never hesitate to network. You never know who you could be discussing your business venture with. It could be a prospective client or even a possible partner.

Market your line

clothing-store-layout

Marketing techniques in South Africa

Spread the word by wearing your own designs and telling anyone who asks you that you made it.

  • Make use of free social networks such as YouTube, MySpace, Facebook and Twitter to raise your clothing line’s visibility.
  • Write press releases and distribute them to newspapers and fashion magazines.
  • You could open your own boutique, but you would have to prove through your business plan that the shop will be profitable. It’s a risky route
  • Sell your line to a retailer; try to set up a plan whereby you sell your clothes through other clothing retailers.
  • You can also take your samples to craft fairs, flea markets, fashion shows and trade shows.

Online marketing

Online sales can be a great addition to your sales plan. Either you can use your own professional website, or you can use online marketplaces such as FashionCircus.net, or LA Showroom on http://www.lashowroom.com/ and for news, events and forums dealing with the South African fashion industry go to ifashion.

Workshops and training

“One of the opportunities for the South African design schools is to address the business side of design and to equip the designers with the correct tools.” says du Plessis.

Many academic intuitions offer Fashion Design courses including Lisof (London International School of Fashion), The University of Pretoria and the Design School of South Africa. Evolution runs regular workshops to help and guide the industry in South Africa. Watch evolution projects for workshop announcements.

Related: Business Plan Format Guide

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Start-up Industry Specific

How Do I Start A Wholesale Fruit & Veg Business?

As a greengrocer or seller of whole foods, fruit and vegetables, you have a lot of scope when it comes to products.

Entrepreneur

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Get some direction with this Whole food Sea Market sample business plan

Besides selling fruit and vegetables, you would be able to sell other types of produce as well, such as flowers, herbs, eggs, milk, butter, cheese, and specialist foods such as olive oil, nuts and seeds, and organic produce.

Greengrocers can also offer personalised service such as a delivery service, taking orders over the phone, by email or through websites or Sms’s. They can also supply local restaurants, guesthouses, and coffee shops in the area.

The first step to take when starting any business is to prepare a business plan. This will help you understand the business process. There are various points that you must think carefully about.

Can a small wholesaler compete?

small wholesaler

Does size really matter?

To be successful you need a strong interest and a good knowledge of fresh fruit and vegetables – so that you know what is in season, the shelf life of different produce, ripening times, how to identify freshness and quality.

Related: 10 Ways Competition Can Improve Your Business

There is no doubt that one can be successful in this industry, but you will be competing with other greengrocers in your area, so you need to get to know your direct competitors very well.

One useful key to a successful greengrocer business would be to identify potential gaps in the market. These competitors will be independent operators like yourself. However, don’t forget to research other competitors such as large outlets like Fruit and Veg City and the large supermarket groups.

Their buying power makes it possible for them to keep prices low. Greengrocers can over come this by offering better quality products, personalised service and by stocking a variety of speciality fruits and vegetables that a supermarket would not stock.

Location is important – most of your customers will be people living or working locally, so you need to choose a convenient a location with lots of foot traffic.

Where to get fresh produce

fresh produce

Fresh produce in South Africa can be hard to find – unless you look in the right place

Markets

If the business is located in the Johannesburg area, the Jo’burg Market serves thousands of farmers from across South Africa who sends their fresh produce to the Market to be traded every day. Currently, about 15 000 farmers make use of this distribution channel.

Related: The Best Ways to Do Market Research for Your Business Plan

The large buyer base – averaging about 9 000 at any given time comprises of retailers, wholesalers, exporters, processors, informal traders and those buying for households. All major centres and even small towns have local fresh produce markets or co-ops where greengrocers can stock their stores.

Distributors

There are a number of national distributors who offer a reliable national supply chain. Their focus is to service identified target markets in the catering, wholesale and food service industry, with quality and affordable products.

  • Dew Crisp Farms supply fresh vegetables and fruit and aim their products at the “convenience market” where all the products are washed and cleaned, packaged and then distributed to supermarkets and greengrocers.
  • Yukon is the largest local supplier and exporter of baby vegetables in South Africa and supplies some of the most discerning retailers in the world. They also distribute products locally.
  • For farms and produce suppliers in the Overberg are of the Cape.

Niche wholesale businesses

organic-fruit-cut-up

Niche wholesale business in South Africa

Related: 5 Steps You Can Use To Find Your Niche

Interest in organic food continues to grow in South Africa, as many people are worried about the effects of pesticides and fertilisers.

  • Go-Organic.co.za is South Africa’s premier organic website, directory, and marketing company. They trade locally and internationally in bulk organic products. Go-Organic.co.za is a private, commercial organisation committed to social and economic upliftment.
  • Urban Sprout is an organic-eco directory that focuses on organic and eco-friendly products from specialist tea to organic whole foods. To access the directory go to www.urbansprout.co.za.

Equipment Requirements

The outlay could be costly, as you want your shop to look attractive. It should have the following items installed in the shop.

  • Refrigerated display units.
  • A freezer if you plan to sell frozen produce.
  • Budget for shelving at various heights, to display produce.
  • Scales to weigh products.
  • An electronic till.
  • Credit card swipe machine facilities to accept card payments. You can buy or rent these from your bankers.

Ongoing Costs

Food Lovers Market in South Africa

Food Lovers Market in South Africa

The need for a good cash flow is important, as you will have a number of ongoing costs in this kind of business.

  • A constant supply of fruits and vegetables, packaging and promotional expenses should be included in your budget
  • As your business grows you may also need a van with cold storage facilities for deliveries
  • Don’t forget insurance costs such as fire, theft and damage, employers’ liability insurance for staff, as well as motor insurance for any delivery vehicles
  • Marketing
  • Staff costs
  • Book keeping service
  • Insurance.

Related: Start-Up Costs Worksheet

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