4.1-Ownership
There are many different types of ownership in businesses. There are Sole Traders, Partnerships, Private Ltd companies and Public Ltd companies. To each type of ownership there are advantages and disadvantages.
Advantages of being a sole trader are that it is very easy to set up the business, you get to be your own boss meaning you decide what happens to any profit. The disadvantages of being a sole trader are that you have unlimited liability which means you may have to sell everything you own if your business goes into debt, you have to do all the work and you have to work long hours.
Partnerships usually have between 2-20 partners. Advantages of being in a partnership are that there is more then one owner meaning more ideas, more people to share the work among and more owners means more capital. The disadvantages are that each partner is legally responsible for what other partners do, there is again unlimited liability and there could be many disagreements.
The other two types of ownerships are private and public limited companies and both are the most expensive to set up. Both private and public companies are owned by shareholders. The difference in the two is that in Ltds it is private all shareholders have to agree before shares are brought and sold. However in PLCs it is public so anyone can buy and sell shares.
Advantages of having an Ltd is that you have limited liability which means that you can’t lose any more then you invested. The disadvantages of being a Ltd is that they are very expensive to set up, there is a lot of paper work to do and also you have to publish your accounts every year.
Advantages of a PLC are that a lot of capital can be raised than by any other type of ownership and this helps you to expand. Disadvantages of a PLC are that they can be taken over. PLCs rarely sacrifice profit to other objectives like helping the environment.
The most suitable type of ownership for you would be being a sole trader. It is not very hard to set up the business and raising the finance won’t be very difficult because it is only a small business. By being a sole trader you won’t have to do much formal paper work whereas if you go into a partnership you should have a ‘DEED OF PATNERSHIP’ drawn up for you own safety and so that all the profit and decision making is equal. Also being a sole trader you decide what happens to any profit as you are the boss, also meaning you make all the decisions for the business.
5.1-Recruitment
You will have to recruit staff to work in the business and this can be done internally or externally. Recruiting internally means that you employ someone from inside the business itself. You can do this by putting up a notice on a notice board, have the advert in the weekly/monthly staff letter or by word of mouth. Recruiting externally means recruiting from outside the business. There are many methods that you can use for external recruitment you can advertise in the local or national newspaper, you can advertise in magazines, through word of mouth, advertise in the job centre and employment agencies.
Some advantages of advertising in the local newspaper are that it is cheap and potential employees will see the advert. Disadvantages of advertising in the local newspaper are that not everyone will see the advert. Advertising in a national newspaper is expensive but more people will see the advert, but it is not practical to advertise in this way. Advertising in a job centre or employment agencies would be useful because many people use them now-a-days and they have many potential employees. However it can be very expensive.
Since you are starting a new business you will have to recruit staff externally as you haven’t already got staff to recruit promote internally.
The most suitable method for you would be to advertise in the local newspaper such as Evening Mail, because potential employees will see the advert. You will need to employ some employees to work in the salon. I suggest that you get 2 full time workers and 1 part-time sixth form student. I don’t think that you will need a manager because you can be the manager. You can make one of the full time workers a deputy manager and part-time student can be called in when it is the busiest usually Fridays, Saturdays and Sundays. As the manager yourself you will have to do all the accounts and be in charge of what all the other staff does.
6.1 Organisational Structures
A hierarchical structure shows the position for each person working in a business. A firm can be organised by a hierarchal structure or a flat structure. Usually the larger the firm the bigger the hierarchy.
A hierarchical structure has more then 3 levels starting with the order of importance. The directors or managers are usually at the top then it goes down by order of importance. At the bottom will be the all the employees. Hierarchal structures are usually for big firms which have many employees.
Flat structures have 3 or less levels. Usually smaller firms have flat structures, firms which are smaller with fewer employees like your business. Like I suggested to you 3 employees will be enough and your business should have a flat structure. Yours could look like the following:
7.1 Training and Motivation
There are three main types of training they are induction, on-the-job and off- the-job.
Induction training introduces the new employee in their workplace. It usually happens on the first day of the new job. It also includes introducing them to their fellow workers and advises them of the company rules including health and safety rules. The employees should be given a tour of the site so they don’t get lost. It may also include initial training on how to do their new job. It should help to make the new employees feel welcome and meet Maslow’s need to belong.
On-the-job training is the most common form of training. The employee learns to do their job by being shown how to do it at the workplace, on the site. It is cost effective for you because it is free to the business and also because the new employee continues to work while learning the job. Some disadvantages about this type of training are that it is often taught by a colleague so bad working practices can be passed on and training can be interrupted.
Off-the-job training is when the employee learns how to do the job away from their workplace, not the on the site. It is called external training if it happens outside the business e.g. a college. Disadvantages about off-the-job training are that it is more expensive then on-the-job training and also sometimes it is not as practical. An advantage of off-the-job training is that work is of higher quality because it will be taught by better qualified people. It is best used when introducing new skills or training people for promotion.
Induction Programme
Training needs
Advantages and disadvantages of training staff
8.1-Rights and responsibilities
As an employer you have rights and responsibilities and the employees who work for you also have rights and responsibilities.
As the employer you have responsibilities such as to ensure the health, safety and welfare at work of all the employees. You have a responsibility to provide a contract of employment to ensure that the employees have a safe and stable job. You will have to ensure that each employee is treated equally in everything no matter of sex, race, disability and age. You have the responsibility to make sure that each employee is paid fairly and on time, provide good and safe working conditions for each employee and you have to follow all the Government Laws of recruitment. You also have rights being an employer such as expecting employees to be punctual, provide high standards of work, expect employees to do all tasks set in their contracts and you expect employees to follow any company rules.
Employees also have rights and responsibilities. They have responsibilities such as producing a high quality service or product, they have to be responsible to ensure that they do not endanger themselves or anyone who may be affected by their work and they have to be at work on time. Employees also have rights such as having good and safe working conditions, having equal treatment in everything, having the right to expect being paid on time and feeling safe at work.
It is not just employers and employees who have rights and responsibilities but customers do as well. They have many rights such as
9.1-Location
Suitable locations for your business would be somewhere were there are many shops, good transport links and good parking facilities. I found this information from the questionnaire which I did previously and from that I found out that the City Centre was picked by most of the women I asked. The Birmingham City Centre will be a good location because it has many shops, good parking facilities and also has good public transports links. If you locate in the City Centre it could mean that you have many customers because many people use the City Centre everyday whether its for work or leisure. However, if you locate in an area where there are not many shops, parking spaces or good transport links you may not have many customers.
10.1-Target Market
Potential customers for your business will be women aged 13+.Women of all ages would use the salon because it does nail and beauty fashion. From the questionnaire I found that all the women whom I asked said that they would use the salon if it opened. Also from the questionnaire I found out that many women would come to salon to get their eyebrows threaded, arms and legs waxed and I also found out that many women would by our accessories such as nail varnish/remover. Our target market would therefore be women who would like to get nail and beauty treatment. One thing that you will have to take into consideration is that you cannot have your prices to high because you will have young girls aged 16 and under who are not working and might not be able to afford visiting the salon if prices are to high.
11.1-Product/Service
Being a nail and beauty salon you will need to offer many products and services. The products you could offer are:
- Nail Varnish/Remover
- Make-up
- Face Washes/Masks
I found this information from the questionnaire; those are the products which you could sell in your salon along with providing the service of offering waxing, threading and nail treatment at the salon. You will have to buy products for the service you provide there could be:
- Different types of cream/Wax(Hot or Cold)
- Special thread for hair threading
- Nail equipment- Extensions, nail varnish/ remover, any other products which could be used to decorate nails.
- Henna- This will have to be imported from a foreign country e.g. India.
You will have to stay up-to-date with any new beauty products which are going to be sold in the market because customers may want the new beauty products.
12.1-Pricing
A firm will use a market-led pricing strategy if the price of the product helps decide whether consumers will but it (which is most of the time.) Here are a few different pricing methods which you could use:
- Price Discrimination is a good pricing strategy. It is where firms charge different prices to different consumers for the same product.
- Competition Pricing is another pricing strategy that you could use. It is where firms have to charge similar prices to other firms. It happens when there is lots of choice and not much product differentiation.
- The other strategy which you could use is Penetration Pricing. This is where a firm charges a very low price when the product or service is new, this is to get lots of people interested in it. When this low price is below cost it is called loss leading. Once the producers become established the firm will increase the price. This happens with new consumer products where existing products have brand loyalty.
The best pricing strategy for you would be price discrimination because you will have women of all ages who will use the salon, this could mean that you could charge lower prices for younger women e.g. arm waxing for 16 year olds and younger could be 25% of the original price. This will attract many younger women to use your salon. This is also the best method because the other to penetration pricing and competition pricing wouldn’t really be suitable. Penetration pricing wouldn’t be suitable because if you have prices to high from the start then customers may not use the salon because of high prices.
13.1-Advertising/Promotion
Advertising is a very important stage to do before you open the business. Firms advertise for four main reasons:
- To make consumers aware of new products or services.
- To remind consumers about existing products.
- To persuade consumers to switch from rival products or services.
- To improve the image of the business.
The ultimate aim of all four is to sell more products and services. Some advertising strategies which you could use are buy advertising in a local newspaper would be suitable because many people read the local newspaper so many people will see the advert. A suitable newspaper to advertise in would be either the Great Barr Observer or the Evening Mail. It would be good to advertise in them because many women I the questionnaire said they read those two newspapers and it would mean that many people would see the advert. Another place where you could advertise on billboards many people will see the advert and high it has high visual impact, it also stays in place for a long time and can be seen daily by lots of people. Also advertising by handing out leaflets is another method which you could use it is very cheap to produce and distribute.
You could promote the business in many ways. You could have Buy One Get One Free (BOGOF) offers. This is a very good method to use it will attract many customers because you are giving something out free. From the questionnaire I found out that many women said that they would use the questionnaire more if you gave out special offer vouchers. Special vouchers are a good method because people can try out the different treatments which you offer at the salon with the vouchers and they will come again if they liked it.
