Starting a Business

Many therapists embark on a beauty or holistic therapy course with the intention of opening their own business at some time. However, although having the necessary practical skills is essential, there are many other important considerations to ensure business success.

• Research the market

• Assess the competition

• Write a business plan

• Raise the necessary capital

• Find business premises

• Recruit staff

• Establish client requirements

• Devise a marketing plan

Research the Market

Before investing your own hard earned money in a new business, or borrowing from another source and taking on the responsibility of paying off a large debt, you must be sure that your business will succeed.  You need to know how many people will want your services and if the numbers will be sufficient to make your business viable. The first step is to carry out some form of market research to establish:

• where your market will be
• who is your target market
• how much competition there is

You may live in a rural area where the residents have to travel a long way for the services you would like to offer. So you may consider providing a mobile service and taking your business to the clientele.

If location is not an important issue for you and you don't mind travelling or re-locating, you could search for an established business that is up for sale. Alternatively if you have the capital available and you find a successful business in the location you want, catering for your target market, then it may be worth making an offer for that business.

If you can find a ready made market that requires your services you can take your business idea to them. Many large companies now understand the importance of providing services for their staff that will help to reduce stress in the workplace or improve staff morale. They will often provide the accommodation for you to set up a practice on their premises providing services such as;

• Beauty treatments
• Reflexology
• Indian Head Massage
• Hairdressing.

There may be other businesses in the area that provide complementary services to your own. This may be an ideal market for you and it would be worth approaching the owner of the business to see if you could rent a room, explaining the benefits of providing additional services to their existing clients and hopefully attracting a new client base for them.

Where your market is may be dictated by who your target market is. You may decide to provide treatments or services for a niche market, a special area of demand for a product or service, such as; hairdressing services to the elderly in care homes, sports massage for athletes, complementary therapies for recovering addicts, laser treatment for transsexuals or specialist makeup techniques for advertising and modelling.

Assess the competition

It is important to look at your competitors and how well established they are, study their price lists, marketing literature and what services they offer. Visit their premises as a client because this will provide you with the information you need, talk to other people in the area and establish their strengths and weaknesses and if they are meeting the needs of their clients. Search the web and check the local press for editorials and advertising.

Knowing your competitors will allow you to:

• Differentiate your business and make it stand out from the crowd
• Be realistic about your success
• Develop your own image
• Help you to set competitive prices for treatments
• Decide what treatments to offer and products to sell
• Allow you to formulate a marketing plan that makes use of your competitors weaknesses.

You may be the only salon in the town but you must be aware of other businesses such as, hairdressers, hotels or leisure centres with a beauty salon and mobile beauty services that will compete for your market.

Make a list of your findings under three headings:

1. What they do better - look at their strengths and try and improve your own business through innovation rather than imitation
2. What they are not doing as well - assess their weaknesses, make clients aware through advertising and promotion the added value you provide, but don't be complacent as your competitors may adopt your strengths or even improve on them.
3. What they are doing the same - this may limit your market and may indicate it is time for a change of direction. Research new trends and provide services or products that make you stand out from the competition and give the potential market a reason to choose you.

Write a Business Plan

It is essential to have a realistic, working business plan when you're starting up a business for external or internal use. Writing a business plan is necessary to sell your business idea, service, or product, as well as yourself to an outside investor (External use). You need therefore to think about what your investor needs to know, and how you sell him/her the idea.

A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts. It has many functions, from securing external funding to measuring success within your business.

There are other benefits to creating and managing a realistic business plan even if it is for your own use (Internal use). It will:

• help you spot potential pitfalls before they happen
• help to structure the financial side of your business
• help to prioritise in your development of the business
• be a guide to measure your success

You should target the plan to your investor, who may be; a banker, a personal friend, a business angel, a grant provider, a potential partner, investor, a venture capitalist or even someone who is interested in buying your business.

They may want to invest in your business for different reasons. It will almost certainly be a combination of things such as to receive a regular dividend, a capital gain, security of investment, a job, to support you, or they may be investing just for fun.

It is also important to consider what you want from the investor? It may be an investment in exchange for some share of the business (equity), a loan, advice, expertise, or credibility through association with their company.

You should also bear in mind that a business plan is a document that will need updating and changing as your business grows. Regardless of whether you intend to use your plan internally, or as a document for external people, it should still take an objective and honest look at your business. Failing to do this could mean that you and others have unrealistic expectations of what can be achieved and when.

The business plan should include:

• An overview of the business to include all the key points, no more than two pages long as it should maintain the interest of the reader.
• A description of the business, a little bit about yourself, what you are selling, to whom and why.
• The market and existing competitors (market-research)
• Marketing and sales strategy
• Management team and other personnel
• How the business operates - location, premises, any planned improvements, production and operational issues, IT, stock control, management accounts and quality control.
• Financial forecasts - A cash-flow forecast for at least 18 months to demonstrate how the business will survive and a profit and loss forecast showing the level of profit you hope to make, the capital required, security available, how you will repay loans and other sources of income.

Raise the necessary capital

Most businesses will need to borrow money at some point. This may be during the start-up phase or to fund expansion or the purchase of new products or equipment, for example. 

Finance may be raised from different sources, you may have your own money that you wish to invest, you may have savings or an inheritance, have been lucky enough to win the lottery or have received a windfall from selling shares. Sometimes friends or family may want to invest in you or you may wish to apply for a loan from bank. A partnership with other like minded people is an option but there are many implications that need to be considered before entering into a partnership. There is also a group of people known as Business Angels, independent business investors who are always on the look out for small companies that are worth investing in.

It is possible to cut the cost of borrowing by doing it in a way that reduces your overall tax bill. Tax relief on borrowings is not always considered by some businesses therefore you must refer to a specialist for advice when doing this. Tax relief may offset the costs of some types of borrowing - though not all.

Finding business premises

Choosing the right premises is a key business decision as you will need premises that ensure you operate effectively without excessive costs. It is also important to avoid being tied to premises that might not be suitable for growth in the future.

Different options will suit the different types of business. Working from home is a good option if all you need is a small work area suited to a specialist skill e.g. reflexology or nail technology. You may wish to rent premises initially or buy a property outright. The most important consideration is to choose premises that meet your requirements, in the best location for your business. You must establish whether renting, buying, or working from home is the best option for you and then research the key legal issues in each case.