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Income projections

salonpic5Income projections are based on the presence and execution of a specific business model.

You must first evaluate your target demographics for typically a three mile radius; this will vary from market to market. A realistic assumption based on industry performance and competing salons in the market is that a salon may draw 5% to 20% of the target demographic by year three of operation.

It is important that I point out that projections must be conservative.  Reaching projections is the goal and exceeding them is possible. The assumption of established projections is as a result of following each and every step of the specific business model they are based on.

When you have calculated the potential client number the projections are established by the number of each membership and package that will be sold based on average performance of salons using the same business model in the industry.

This is a list of specifics that will impact projections.

  • Advertising budget based on a specific percentage of gross income. Advertising Medias such as text, mobile devise email, email, Facebook, print advertising in a variety of areas.
  • Equipment Mix
  • Price structure
  • In store marketing
  • Employee Training & Hiring

Income projections are established by this means including lotion sales calculated at 18% of sales. The projections are for year three of business and also established at year two being calculated at 85% of year three and year one being calculated at 70% of year three.

Now you have accurate projections and a specific plan to reach them. Calculations can also be established for existing salons that adopt the business model using existing client base. When writing a business plan, this form of information is important in securing financing. The actual calculating chart for each package and membership is also an important visual for the business plan.