Business Plan For Regis Without Chart And Map

The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

The Aquino Group Business Plan Regis Hair Salons: Super Cuts Executive Summary The Aquino Group (AG) is an Oklahoma based company with management having extensive experience in the service industry, customer service and training. AG was formed as a result of extensive research into nationally based franchise opportunities. After careful review the Regis Hair Salon’s Corporate family was determined to be the first priority for solicitation. This determination was based on several factors. First, Regis has a history of success in the industry. Regis is nearly ten times larger than its’ competitors; as a result, Regis is the market leader in the hair salon industry. Second, Regis has a successful brand image that welcomes a customer base from across the nation. Having a nationally known, accepted and trusted brand image provides AG with increased factors for success; resulting in faster start-up, smoother cash flow and ease of recruitment for staff. Third, this branding allows for quality nationally based marketing programs that cater to the local markets. This factor alone would be cost prohibitive for any small operator breaking into a local market. Staff Training is the fourth factor. Regis hosts the industry's best stylist education and training - including educational videos, nationwide seminars and experienced artistic directors. Again this would not be possible for any small start-up. And finally the product Regis delivers is high quality! The Aquino Group is in the process of identifying locations in Kansas City for as many as 5 new Super Cuts Hair Salons. The Super Cuts concept of entering the male hairstyling market and allowing a standard salon to more than double its sources of revenue is by far the most appealing feature of Super Cuts and AG sees this as an opportunity to develop further.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

Organizational Structure The proposed remote operation of multiple salons in the Kansas City area from Oklahoma City is possible today due to the use of technology as well as on-site senior management. The Managing Partner and Marketing Manager will travel to Kansas City on a regular basis. The initial set up of new salons will require weekly travel. This will be the norm until operations are up and running, staff hired and an Area-Wide Manager is trained and secure in his/her position. Aside from recruiting staff the Managing Partner in conjunction with Regis Corporate Offices will identify multiple locations for Phase I and Phase II of operations buildout. Phase I include the opening of four salons under the supervision of one General Manager and the Area Wide Manager. Phase II will begin once the initial salons are open and operating at a successful level Phase II which includes the identification of another possible four salon locations and the build-out and staffing of those salons. In each instance the direct “hands-on” participation of the Managing Partner will be readily seen. Initially staff will travel to Kansas City and stay in area hotels. Once locations are determined it may be possible for AG to either purchase or lease a condo in the area which will provide Oklahoma City staff with easy access to the salons. A major priority will be the hiring of the Area-Wide Manager. This person will be local and once trained will be directly responsible for the on-going operations of the AG Kansas City Salons. AG understand the value of personal “BUY-IN” and will develop a salary, bonus and ownership package that will be very appealing to possible candidates. The current thought is to provide profit sharing bonuses for the first three years of operation followed by ownership of 5% in year four and 7.5% in year six. This will be developed with opportunity to “buy-back” shares if the staff person decides to leave AG.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

General Industry Analysis In the US, about 80,000 hair care salons (75,000 beauty salons; 5,000 barber shops) generate combined annual sales of $16 billion. Large companies include Regis Corporation and Ratner Companies. The industry is highly fragmented: the 50 largest companies hold just 15 percent of the market. The large majority of salons are independently owned. A large salon has annual revenue of about $300,000 and 10 employees. Demand is partly driven by demographics and partly by population growth. The profitability of individual companies depends on technical expertise and marketing skills. Big companies have few advantages over small ones, which is why the industry remains fragmented. Small companies can compete successfully through technical superiority or favorable location. The industry is highly labor-intensive: average annual revenue per employee is just $35,000. Regis holds over 12,000 salons with Super Cuts holding approximately 2,000. Hair Salon Products Major products are hair cutting, hair coloring, nail care, skin care, and merchandise sales. A typical salon offers haircutting and styling, coloring, shampooing, and permanents. Some salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments, but the lower volume of demand for such specialty services often makes them uneconomical. Sales of hair care products are an important revenue source for many salons, providing from 5 to 40 percent of revenue. Gross margins are higher for hair care products than for services. The average salon occupies about 1,500 square feet and is located in a mall. Beauty salons are personal services businesses which provide cosmetic or other treatments for men and women. A significant percentage of workers work out of their homes or rent space from salons. Employee turnover in the industry can be as high as 40%.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

Favorable Demographics The large Baby Boom generation is now at the age when income is highest and hair is graying. Older women and men, who drive most of the demand for higher-end hair care services, are increasing their use of color to hide gray hair and also have the means to pay for it. Male Salon Format Men's attitudes toward grooming have been changing gradually: they now represent about a quarter of the clientèle at unisex salons. The differences between a salon and a barbershop are many: for barbers, no appointments are needed, and they're generally cheaper with fewer value-added services like styling and salon-style products. A new salon format for an upscale men-only club-style salon is taking hold in New York, complete with leather chairs, TVs, cigars, pool tables, and a bar. SuperCuts has developed a model that provides a gender neutral atmosphere that attracts male customer base as well as female. Salon Success Once firmly established with good stylists and loyal clients, many salons seem to have a better long-term survival rate than the average business. More than half of salon owners surveyed say they have owned their current business for 10 years or more. According to the Small Business Administration (SBA), more than half of all new businesses fail within four years. The industry has seen steady growth since 2000:    

Salons average about 150 weekly visits Since 2000, the # of salon workers rose 26% Since 2000, the total # of salons is up about 6% Almost 600,000 positions were filled in 2002 with experienced workers comprising 75% of new employment hires and those with less than one year’s experience comprising 25% of new hires.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

Marketing Market Definition According to the Occupational Outlook Quarterly, published by the U.S. Department of Labor, it shows cosmetology as a steadily growing occupation in the U.S. through 2005. However, the Department of Labor also shows cosmetologists as number 37 fastest growing occupations in the U.S. This is because Baby Boomers are youth oriented and will be the driving force for our industry for the next 20 years. Generation X is the target we are going after but the Baby Boomers will be paying the way. Wellness, relaxation, and nurturing the soul will supersede "beauty services." Cosmetology is as large an industry as the tobacco industry. Big businesses are recognizing the billions of dollars consumers spend each year in our industry and they are buying up the major manufacturers. Redken was bought by Cosimar, Matrix by Proctor and Gamble to use as two examples. Locally, consumers demand pampering treatments while on vacation. Today's stressrelieving treatments replace the 1980s party scene and corporate rewards are given with "Day of Beauty" packages. The overall market demands quality service at a fair price. Future Opportunities As our client base builds in the local market, targeting marketing to the tourism trade will bring new opportunities. This could be carried through with lodging businesses. Still another opportunity involves providing custom packages for special groups. "Sweet Sixteen" parties, stress-relieving treatments that travel to corporations or participate with the American Cancer Society program "Look Good, Feel Good," teaching cancer victims how to address hair loss.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

Marketing Plan The Marketing program will operate from Oklahoma City utilizing Kansas City area advertisement outlets such as radio, television and print. The Marketing Manager will work as a team member with Regis corporate staff, the Area wide Manager and General Mangers identifying opportunities to promote the Regis brand and improve overall knowledge and understanding of the products and services available through Regis Salons. AG will work closely with Regis Corporate Marketing to develop a plan to reach new clients and provide quality services. As in any venture Location Location Location is paramount. AG will research areas for development of the salons. Once developed the specific demographics of those areas will be incorporated into the Strategic Marketing Plan. Measurable results include:  increased sales  increased market share  improved image  increased knowledge of business  identified competitive advantage  created improved climate for future sales Market Environment "With high-tech there must be high touch," says John Nesbitt, Mega Trends 2000. Our society is stressed out and salons are convenient retreats. A relaxing environment, with customer service providing preventative services and products at a good price is key to salon success in the new century. Many women enjoy a relaxing facial for skin maintenance benefits, however, with an average household income of $26,949.00, it is a luxury. The development of a service connected to a purchase of $50.00 of can create an affordable value-added service that consumers in today’s economic climate are searching for. Marketing is key. Know the clients, their habits, likes, and dislikes. To do this, the salon must be automated.

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

How the Salon Industry is Responding to the Recession PBA Reports on Changing Consumer Trends and How Salons Remain as Vital Job & Revenue Sources for Communities Nationwide Phoenix, AZ (March 09, 2009) –

As a part of most cities in America, hair salons play an integral role of the economic fabric of our nation. Salons provide both employment and tax revenues and contribute substantially to the economic vitality and social well-being of a community. As the recession continues to cut deeper into everyday necessities, the salon industry, while often resilient in times of economic uncertainty, is now feeling the downward pressures of changes in the economy. “Member salons are reporting various trends developing as their clients make changes in their spending habits, however many consumers continue to view their professional hairstylist and the services they provide as a necessity that they do not want to forgo,” said Marissa Porcaro, marketing and communications manager for the Professional Beauty Association. Emerging trends salons are reporting include:  Longer periods between hair cuts and coloring appointments.  Non-core luxuries like facials and massages are seeing the greatest drop in demand.  Consumers are more open to trying a beauty school to have their hair cut. (While beauty schools are an option, a professional stylist with training, education, and multiple years of hands-on experience is something that must be considered.)  Consumers coloring their own hair, but returning to their regular professional stylist for hair cuts.  More consumers opting to do their own nails or alternating at-home and professional manicures/pedicures.  With the trust and loyalty factor, stylists with a strong client base are fortunately NOT losing their clients in large part to discount chains. To adapt to consumers’ changing spending habits, salons are adjusting to meet the needs of their clients. “PBA is seeing a greater demand for the services we offer our salon members on everything from business management and marketing assistance to mentor programs and a

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The Aquino Group: Business Plan: Regis Hair Salons Prepared by: Scott Aquino, December 2009

multitude of educational classes. These classes are designed to help salons get through this period and ideally emerge stronger in the future,” Porcaro said. Trends salons are implementing to combat the recession include:  Providing classes which teach women how to blow dry and style their own hair for special events.  Greater price promotions on products and a renewed interest in managing the salon’s retail offerings.  Working with product manufacturers and distributors to create new incentives on products.  Remaining supportive and non-judgmental if clients have tried another stylist or are visiting less frequently.  Providing directly or seeking out additional training and education so salons and their stylists remain on the forefront of trends and styles.  Re-examining marketing programs and incentives offered to clients. Businesses such as the local restaurant, market or salon that provide products and services are essential to the dayto-day lives of Americans. At approximately $56 billion in sales for 2008, the overall beauty industry in North America is a significant part of our economy. As the economy continues to waver, it is the education, training, and personal relationships of professional stylists that help ensure clients continue to return time and time again. Finance The Finance Plan is under review. It will be available once it is determined what the total financial requirement for the project.

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