Kgupi Simons and Clement Setloane want to make a detailed plan for their hairdressing business – Kealeboga Hair. They might also try to get funding from the Department of Small Business Development (DSBD) in the future. This money does not usually need to be paid back.

If you’re going to take a loan (money you will have to pay back) from a person, a bank or an institution, you also need a clear and detailed business plan. It takes time to gather all the information, and to get all your paperwork organised, but it shows that you have thought clearly about your business idea, and it helps convince possible funders that it is worth investing in your business.

What is a business plan?

• A business plan is a written document that summarises how your business will operate and what you hope to achieve financially. It can be very simple – one page – or it can be more detailed and formal. There are lots of examples on the internet.
• It contains plans and budgets to show how you will make your business successful, and contains information about any legal requirements that you might need (such as being registered with the local council or government department).

How do you write one?

There are templates of business plans on the internet which you can follow step-by-step, but some of them may be too detailed for your needs. Kgupi and Clement are starting a micro (small) business at the taxi rank so they don’t need to make it too complicated.

It’s like a CV (curriculum vitae) for your business. You can set it out in point-form, or write paragraphs.

What is in a business plan?

Business plan: Business details
If you use an internet template, this section might be on a form. Then you just fill in the blank spaces with your information. You should include:
• Business name or trading name. (Kealeboga Hair)
• Business postal and physical address. (Diamond Avenue, Kimberley, 8301)
• Business contact phone number/s and email addresses. (082 3049801, clementsetloane@gmail.com)
• Whether you are the owner or tenant of your business premises. (Owners)
• Contact names of the business owners. (Kgupi Simons, Clement Setloane)
• If you want a loan from a financial institution, then include the name of your bank and period of time you’ve been with this bank. (Capitec, 5 years)
• Confirmation that your business has been registered with the relevant authorities (if this applies to you).

Business plan: Summary
This is often written after you’ve covered the rest of your business plan but you place it in your document after your business details. It provides a short overview of your business. Let’s look at an example:

Kealeboga Hair is a salon that allows the entire family to have their hair needs satisfied in one convenient visit. There are many “quick salons”. However, many of these salons only provide the minimum services: rushed service equals unhappy customers. The gents at Kealeboga understand that there is an unfulfilled customer need for a low-cost salon that provides many hair choices and strong customer attention. Using this strategy, Kealeboga will gain significant market share and create long-term relationships with its clients.

As you have seen above, your summary includes:
• The activities that your business will be involved in (a hair salon).
• The business background of the business owner/s or managers (It’s clear that Kgupi and Clement have hairdressing experience in other salons because they know what clients’ needs are.)
• The type of customers that you will be targeting and how your business will serve those customers (anyone – family just means old or young, male or female).
• Summary of your competitors and how you will get a share of the market (Other salons are expensive, and only provide quick, basic services, but Kealeboga Hair will charge less to do more kinds of hairdressing.)

You can also include a:
• Brief outline of your financial turnover (how you will make a profit). (Kgupi and Clement have not provided the figures, but the general plan is to charge less, and also focus on giving customers a lot of individual attention. They can add the financial details / statements and so on later, when they are applying for funding.)
• Description of your start-up financing needs. (Kgupi and Clement haven’t included this, because they will apply for funding later on.)

Business plan: Opportunity
This looks at the gaps in the market in the industry you have chosen and why you will be able to fill those gaps. Let’s look at Kgupi and Clement’s Opportunity section:

Kealeboga Hair fills a need. Other salons are expensive, don’t provide enough of a range of services, and aren’t in the right places for convenient use. Kealeboga offers a solution by being cheaper, having more services, and being in a more convenient social gathering point at the Diamond Avenue taxi rank.

Kealeboga Hair is trendsetting. We keep up with styles from both overseas and throughout the African continent by communicating with fashion designers, models and other trendsetters and influencers online. We are on social media platforms such as Tiktok, Twitter and Instagram, and Kealeboga already has a following.

Kealeboga Hair’s vision is making confident and stylish citizens, one individual at a time. We will continue to provide expert trendsetting styles and consulting to fashionistas, music producers and influencers. Our mission is to show the natural superiority of street-style cuts, and provide them to clients at competitive prices, in convenient places, and with attention to detail.

As you have seen above, your information should include:
• What you are selling and why there is a need for it. Describe the problem that your customers have, and also the solution that you are providing them.
• What the trends are in your industry and how you will meet them.
• The vision and mission statement of your business. The vision is what you want your business to be doing in the future. The mission describes how your business will achieve that.

Business plan: Market analysis summary
This shows that you understand your customers and have thought about their needs and how your business is going to meet these. Let’s look at Kgupi and Clement’s analysis:

Kealeboga Hair targets everyone in the family, male or female, young or old. People need to look groomed and feel confident, and Kealeboga Hair styles clients’ hair to make them feel good. Kealeboga Hair’s customers are commuters and our stall is set up near the Diamond Avenue taxi rank. Kealeboga Hair does not mark up the prices of hair products as much as other salons do, and we offer a wider range of services and styles. There are lots of big, expensive salons in malls. Kealeboga Hair will offer cheaper prices by using expert and charismatic hairdressers who care about their clients’ needs, and operate near a commuter gathering point.

As you have seen above, your market analysis summary should answer these questions:
• Who is your target market? What are the types of customers you are looking for?
• What are your customers’ needs?
• Where are your customers and how do you reach them?
• What are the prices of your services and/or products?
• Who are your competitors and how will you compare to them? Why is there room for you in this market?

Business plan: Execution / Logistics
This explains how you plan to get the business up and running. Let’s look at Kgupi and Clement’s marketing plan:

Kealegoa already has a strong following on social media, and this promotion will pay off as people realise they are a local salon. Clement has made posters for gathering-point signboards, as well as the main sign that is so stylish it has already featured in VISI, the design magazine.

Logistically, Kealeboga uses an app that allows customers to book both online and by text. The app sends confirmation texts to customers the day before their appointment. If business is not brisk, some walk-ins (without appointments) are accepted. Both Kgupi and Clement are also available personally on mobile if customers have particular questions.

As you have seen above, your logistics and marketing plan should address the following:
• How do you plan to attract customers? (Social media? Signage? Posters?)
• How do you plan the logistics of your business? (Will you do bookings? Will you do passing trade only?)
• What technology do you need? (A booking system? Cellphones?)
• What special equipment will you need? (Hair dryers? Braids?)

Business plan: Financial plan
This is often the most important aspect of your business plan, especially if you want help with funding. Estimate what you think the business costs will be for the next 12 months.
Let’s look at Kealeboga’s financial plan:

Kealeboga Hair has minimal costs, which are also split between two entrepreneurs, Kgupi and Clement, who can both actively work with customers’ hair. There is no rent because they are starting on the street, and they only need a few products and braids, and a permit to trade from the area organisers – Kimberley Informal Traders’ Association. The permit is monthly, and costs R300.

Kealeboga Hair does not have large overheads at the moment, because it relies on expertise and time rather than fancy premises. Clement will bring two chairs he already owns, and both hairdressers have their own specialised clippers, combs and sterile cleaning equipment, and coconut oil (which Kgupi’s aunt donates).

In the first year, we are expecting R300 profit per braiding customer – at least 5 full sessions of three hours each per session per week. Half of those clients are using only their natural hair and will not need extensions. A shave is charged between R200 and R300 per client, depending on the difficulty of the cut. Specialist services (fading and so on) are more expensive. We sell wigs of real human hair (Indian and Asian) at a mark-up of 75%. We do not expect a big difference between gross and net income. After a year, Kealeboga Hair will reassess its financial position, and probably expand. We will provide a more detailed financial plan when we apply to the Department of Small Business Development.

As you have seen above, these are some areas you should try and include:
• The cost of starting up your business.
• Sales for the first year.
• Overheads. (Big expenses you pay so you can operate: rent, salaries, the products you use.)
• Gross profit. (How much money you make after you subtract / take off the cost of goods that you have sold, for example, braids).
• Net profit. (How much money you make after you take off all your expenses and overheads).
• Cash flow. (How much money is being brought into the business versus how much is being taken out of the business.)
• How much money you will need to borrow.
• Whether you will make enough to pay that loan back.
If you are applying for funding, you will need to attach documents that the funder might ask you for, together with your business plan.

What have we learned?
Plan and write down your business’s structure in detail. This will help you to think clearly about it – and hopefully get you some funding!