Bus 210 Week 4 Swot Analysis
Week 4 Day 7 Assignment; SWOT Analysis BUS 210 Student: Nielsen, Julie, A.
Due Date; March 17 2013 Instructor, Aaron Carter SWOT ANALYSIS: Salon Business Plan Venture http://www. bplans. com/tanning_salon_business_plan/executive_summary_fc. php#1. 3_Keys_to_Success INTRODUCTION- The analysis of the Tanning Salon Business is entrepreneurial start- up implementation venture in the personal Care industry. The business model Ownership of Property is a Sole –Proprietorship venture.
The initial roles of management for, leadership, organization, and control are the senior management Team of, experienced business Owners, (Shelly, and Keith Harwood) with plans for, adding an outsourcing of part-time Team of Multi-Level employee labor source. Labor and personnel plans are to include the organizational group of part-time cross-functional Team of employees under control of the hierarchical structure of; Senior and Multi-level outsource management during the busy season.
The financial plan for implementation is the initial owner financing investment of $65k. The projected gross net profit after one year is dependant on research studies from competition in the vicinity. Start up Business plan with projected Owner financed, start-up costs of, $65k.
The return on the initial investment expectations is to return in profits within a 12-36 month time span. Although the business plan venture appears sound and worthy, it is necessary to base the analysis on the strengths, weakness, and projected assumptions and research.
As a previous owner of a tanning salon, there are indications where several areas of the project plan require some additional research for re- analysis that provide opportunities and input of some constructive criticism and students ideas for profitability and research to avoid risk and weakness for sustainability in this industry…
Internal Strengths and Weakness The intentions and strategy to dominate the competition with a more luxurious and personalized approach to individualizing customer service by building consumer confidence with one-on-one rapport are worthy and positive goals for the business owners.
These entrepreneurs are already experienced in the operations and common ownership experiences for15 years of background strategies for business planning. Such as, appealing to customer satisfaction with previous knowledge and experience from Start-up Implementation to, buying and selling former business. However, there is a question of experience in this particular Industry. They lack background experience and knowledge in the Personal Care Services Industry. The research should be more robust.
The research criteria focus is currently focused on profit and weakness of competitors. The research does not address any Public Health and safety issues caused from the use of tanning equipment known for causing some types of skin cancer and other skin disorders. The business could be at risk of liability or civil suits for damages. All risk scenarios need to be fully researched and to accurately access determine the current projections and sustainability are sound. There are strengths in the planning of this business.
The proposed location and populas of the vicinity identifies the possibilities for the customer base size. The location with a nearby gym ensures a lot of foot traffic and exposure for new business. One drawback of the location is that most gyms have tanning beds as part of the membership. The Tropical Tan business owners have strategized some creative specialties into their planning for the competitive advantage. such as, value pricing monthly session bundles paid for in advance increasing cash flow.
The competitive edge strategies include the bundling of services and sale of newer most- popular retail products. This internal sales tool not utilized by the competition . The customer price-to-value-Price works well for increasing cash flow for profitability and leaves cash available for growth and expansion. It allows customers a discounted monthly to annual membership session price when buying a series of prepaid series of sessions rather than paying full price for individual sessions. The business is committed to fulfill the obligation that increases the cash flow and profitability.
Our tanning business benefited by selling more retail products on their multiple return visits. Another positive creative strategy is the annual Swimwear Fashion Show where contestants, and customers, as models compete for prizes and awards. The fun idea increases exposure of the business and development of a line of swimwear selling at the business. Weakness- Unrealistic Projections The research generated for Tropical Tan relies heavily on the supply and demand for profit comparisons of similar studios with unhappy customers complaining of bad service.
To contrast and surpass the competition, the goal of Tropical is to base their services on unique need of each customer with personalized luxuries and furnishings according to likes, dislikes such as, favorite music, beverages like the trendy Avian Water, and such in their booth.
The capacity to meet these individual needs is not possible with the size of the expected cliental. Secondly, each tanning session is timer activated with additional time for undressing and redressing. 1900 clients a month is forecast to generate profit and meet operating expenses.
That amounts to, 63 clients per day at, 3o minutes minimum a session. The investment and labor required to meet this demand is not feasible because it increases start up, operations, equipment expenses, and labor force. These details cannot meet the goals set by the entrepreneurs: •Projected-1900 sessions per month •=63.
3 clients per day, •Sessions and dressing room times of, at least 30 minutes 63 clients, • Require staffing for 18+ hours per day. In order to generate the cash flow and projected profits, the Tropical must generate 1900 paid sessions monthly.
This is an unrealistic assumption due to the fact that, Tropical has only six tanning beds and is calculating the sales of 200 clients per day at $10. 00 per session against nonexistent equipment, capacity, and labor force of a scant, 3-5 people. The ratio for supply and demand cannot satisfy those projections. In order to meet such a demand, the quality of service and unique individualized customer service goals intended by the Owners would deteriorate to the level of their overwhelmed competitors whose customers are already dissatisfied and complaining of poor service.
*Tanning equipment vs. customer sessions ratio, (6-7 beds, booths for 1900 paid sessions? [” This projection is based on six quick tan tanning beds, $10. 00 per tanning session, and approximately 200 clients per day”] Read more: http://www. bplans. com/tanning_salon_business_plan/strategy_and_implementation_summary_fc.
php#ixzz2Nk8J0g76 Break-even analysis According to the Bplan website the Break-even analysis demands, break-even analysis. [With fixed costs of $10,332 per month at the outset (a bare minimum), we need to sell 1,041 monthly tanning sessions at $10. 0 to break even to cover our costs]. Once again, the capacity, equipment and labor force would be unable to meet this service demand of this scale efficiently and continue to serve individualized specific customer service expectations. The results would increase operating expenses in opposition to the goals, the owner’s vision’s.
My own calculations and forecast of the break-even analysis reveals the unfavorable facts of, 1041 sessions at $10. 00 each=104 sessions per month, divided by 30 days= appx. 4 sessions per day, at 30+ minutes each =1020 minutes of tanning time divided by 60 minutes (1 hour) requires 17 hour a day or necessary increase in labor. This will increase the need for more equipment and labor hours increasing operating costs that threaten and reduce quality and profit. : http://www. bplans.
com/tanning_salon_business_plan/financial_plan_fc. php#ixzz2NlVXfkwy Assumptions based on research: External Threats Public Safety Liability- According to the Melanoma Foundation of New England the dangers of skin cancer from the use of tanning beds is more dangerous than the sun.
At the time, I owned my tanning studio the threats and warnings are not taken seriously by some younger tanners. Therefore, we insisted tanning customers read, understand, and sign a warning disclosure and limited liability waiver with the Public health and safety information on, appropriate warnings and documentation. This consent was required to use our services for protection. Even though the statistics were in their infancy at that time, the force to enhance one’s appearance through vanity compels some to ignore warnings.
The proposed Tropical boasts the Wolf UVB bulbs, because they are stronger and quicker. UVB is short for radiation of Ultra Violet, The radiation that burns and thickens the epidermis. Products like sunscreens and tanning accelerators are wise and popular products to retail at tanning studios to guard against skin cancers. Tropical Tan did not address or, research this area of risk. Seasonal –Options A tanning studio commonly experiences more business during the summer months, (June-August). The reason is that people planning family vacations during school breaks to tropical and beach destinations.
Vacationers like to have a pre-tan before going on beaches avoiding severe sunburn where fair suntanned skin burns quickly in the tropical sun, resulting in painful sunburn that spoils the vacation. Tropical wants to outsource part time employees and managerial teams during the “busy season”. This may not be the best time to allow outside parties to control issues in the Peak Season. I learned from experience from pregnancy leave, “While the Cat’s away, the mice will play” and the quality of the business diminishes, without proper Leadership controls in place.
Opportunity-Try something new They may want to consider exploring and implementing the newer technology to enhance the business plan and efficiency. Possibly a Self serve automated code key access card for check in and purchase transactions like hotels and gas stations use for guests entering and exiting their rooms and sales transactions at gas pumps.
If Tropical wants to supply more personalized extras. Like favorite drinks and products. They may want to consider a card operated, mini-bar in the booths.
As customers check in and out, they can purchase products and sessions on a customer card without the need for a full staff for those types of sales transactions. Using more ecommerce would speed up sales and create more efficiency for tracking sessions.
There was no indication of plans for implementation of todays modern IT such as ecommerce and a website Storefront in this business plan. A Consumer website using advertising sponsors and company intranet would provide more accessibility and connection to members and prospective consumers enhancing product sales, services, and organization.
Today’s modern consumer expects and demands the availability and accessibility using current technology resources. Team in-place? -Risky Although Tropical wants to outsource some of their business components, the quality and network of the proposed teams is not included in the business plan in detail. Going under the assumption necessary departments such as, accounting, legal, distribution, and payroll are necessary and vital to the infrastructure of a successful business plan.
These future teams and managers should be already pre-defined as to their qualifications and background expertise. It appears as if, Shelly and Keith have not made definite plans for the specific individuals in the outsource area of this business plan. This is a weakness that could jeopardize operations and Senior management goals, putting the business at risk. Code/regulations? Recommendations for Expansion-Free Space potential Every square foot of a business costs money to maintain and control. The recommendation for expansion is to broaden the services and products offered by renting free space to hairdressers, manicurists or, Day Spa Massage sessions.
This would also generate advertising and exposure. Increased retail product sales increase profitability from hair, nail, and beauty supplies used to invest in improved products and growth. Ultimately, expansion increases the client-base potential for the tanning and swimwear portion of the business. The expansion increases profits and operating capital-subleasing space. It may also widen the choice of dependable employees decreasing the need for outsourcing risks.
Benefits of adding subcontractor rental for unused free-space is that they arrive with, a pre-established cliental, and equipment with experience and State Board Certification licensing for Cosmetology, manicuring and masseurs that do not require additional training for their skill. Nearby Gym, Competition, Or, Asset? Since the gym is in close proximity, it may generate business through high foot traffic, however, it may present issues when it comes to parking space, traffic and any services offered within its business should still be considered competition in the thorough research analysis and SWOT .
Parking and local competition can pose external threats and conflict. External concerns/threats Where are your customers going to park? Will the parking be adequate or, infringe on nearby business or neighborhoods? These are just some examples faced by business Ownership. Our business location was in front of an underage nightclub where drinking and vandalizing of customer parking areas discouraged evening appointments. Planning for security issues must always be addressed as part of protecting your business investment.
Is the area appealing to your target cliental?
Some areas may be high crime areas that do not generate foot traffic due to public safety concerns and crime. The rent is usually cheaper for a reason. Opportunities The opportunity in this business could come from the entrepreneurial experience in the retail clothing industry. The development of a swimwear line presenting a commercial opportunity for low cost overseas clothing factories and trade. The second opportunity stems from the First Mover Advantage for the innovation of a card operated tanning session’s process.
This opportunity could give Tropical Tan a competitive edge over its competitors.
Collaboration to produce the innovation offers opportunities for patents and the many advantages of existing tanning bed manufacturers and suppliers with the formation of a Joint-Stock Company. Conclusion Finally, although this paper has a lot to say about weakness in the proposed business plan, there needs to be more research in the area of feasibility if the current research is accurate. Less focus on a Short Term profit and customer service competition should be replaced by Long-term goals for expansion through innovation advantages, growth, profitability, and global opportunity in the Industry.
The smaller initial investment of $65K should be reevaluated and increased to build towards the Long Term goals with a significant standing in the stock market. I think more thorough research and technology analysis is needed for creating solid possibilities for expansion! There was no mention of franchising and sale in this plan as a result, those possibilities are not addressed but are most certainly possibilities and opportunities.
Thank you for reading my SWOT Analysis for, Tropical Tan. Julie A. Nielsen 3/17/2013 9:45:54 PM
Axia College of University of Phoenix AAIT W/D student (2009-2013) Reference and Citation: Source: According to Axia College of University of Phoenix BUS 210 Week four Reading materials, Jones (2007), (Introduction to Business: How Companies Create Value for People I. , the Environment of Business 3. Entrepreneurs ,Managers, and Employees)© The McGraw? Hill Companies, 2007 Websites, Bplans.
com (2013), (Tanning Salon business). Retrieved from website March 16 2013, URL: http://www. bplans. com/tanning_salon_business_plan/executive_summary_fc. php#1.
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