Being Great Businessman!

Free Tanning Salon Business Plan for Loans

Obtaining Business Financing

 

When obtaining a business loan for a tanning salon business, it is imperative that you have a properly structured business plan that will assist you in showcasing how you intend to operate your Tanning Salon, how the business will operate, how you intend to market the business, the anticipated financial results of your company, and how you intend to repay your debt obligations. This sample loan business plan will provide you with the framework that you need in order to acquire a business loan for starting or expanding this type of business.

 

Executive Summary

 

Introduction

 

When obtaining a business loan for a tanning salon, it is imperative that your business plan has a clear and concise executive summary that provides an outline of what are seeking to accomplish, how much capital you are seeking to raise, the management biography of the business owner, and an overview of the anticipated profit and loss statements of the business. Here is an example of how the title paragraph should be written:

 

Tanning Salon, Inc. (“the Company”) is seeking a business loan of $100,000 in order to launch the operations of a tanning salon business that will be based in San Francisco, California. The Company was founded in (Insert Year). The business was founded by Mr. John Doe.

 

Products and Services

 

In the next segment of the business loan and business planning document, you should showcase the products and services that you will be providing to the general public. For instance:

 

The Tanning Salon will provide a number of high technology tanning beds that will be used by the general public. The Company will generate revenues from the ongoing usage of these tanning beds on a daily basis and through the sale of tanning salon passes that will allow frequent patrons to pre-pay for their tanning salon needs. The business will generate extremely high gross margins from its services.

 

The third section of the business plan will further document the services provided by Tanning Salon, Inc.

 

Business Loan Terms

 

Now it is time to discuss the anticipated terms of the business plan that you are seeking. An example paragraph of how this is stated:

 

At this time, Mr. Doe is seeking a conventional business loan in the amount of $100,000. The interest rate, loan terms, and loan covenants are to be determined during negotiation. However, this business plan assumes that the business will receive a seven year business loan with a seven percent interest rate due on the outstanding principal balance.

Management Biography

 

Now that the summary of the business has been provided, it is time to provide a brief overview of the owner of the business. An example paragraph summing up the owner is as follows:

 

Mr. Doe is a highly experienced business person that has years of experience regarding the direct ownership and management of business. He will be able to effectively bring the operations of the Tanning Salon to profitability while ensuring that the business loan’s payments and its covenants are met at all times.

Financial Statements

 

The most important thing to your lender when applying for a business loan is how you intend to repay the bank. In this section of the business plan, you should provide an overview of the finance’s of the business discussing the anticipated revenues, expenses, and profits/losses. You can also discuss the applicable collateral within the business plan that will be used to secure your business financing.

 

Expansion Plans

 

One of the most important aspects of your business plan is how you intend to expand the business over a three to five year period. Banks and finance companies always want to see that the business will experience a moderate to strong level of growth. This is especially true in business lending because as your business grows the cash flow that secures your business loan will decrease proportionality against your monthly credit obligations. An example of how this is stated is as follows:

 

The Tanning Salon will continue to expand through organic means including increasing the Company’s advertising budget via the reinvestment into the after tax cash flows of the business. Additionally, if the business is highly successful then the Company may seek to establish additional Tanning Salon locations after the third year of operations.

 

 

The Financing

 

Use of Business Loan Proceeds

 

In this section of the business plan you should focus on how the proceeds of the business loan will be used. An example of this would be as follows:

 

Tanning Salon Location Establishment – $50,000
Tanning Salon Beds – $10,000
Working capital – $40,000

 

Management Equity

In this section of the business plan you should discuss the percentage ownership of the business among the owners of the business. For example:

 

Mr. Doe will own 100% of the Tanning Salon

 

Board of Directors

 

When applying for business financing, the bank will also want to know who serves as the board of directors. For small businesses, usually the owner serves as the director of the business. An example of how this is worded:

 

Mr. Doe will be the sole director of Tanning Salon, Inc.

 

Exit Strategy

 

Any bank or financing company is also going to want to know what you intend to do with the business over a set period of time. Many business owners will develop and expand a business with the intent to sell the company to a third party at a later time. When drafting this part of the business plan you should focus on what you intentions are in regards to potentially selling the business. This is often worded as:

 

Mr. Doe would most likely sell the Tanning Salon to a third party for a significant earnings multiple. Tanning Salons usually sell for approximately one to three times earnings given the financial strength of the business. In this event, the business would be sold by a business broker and the business loan sought in this plan would be repaid according to the covenants of the business loan agreement.

 

Products and Services

 

When developing a business plan that is appropriate for obtaining a business loan or other business credit facility you need to clearly showcase the services or products that you will be offering to the general public. An example of how this section is worded goes as follows:

 

As stated in the executive summary, the Tanning Salon will generate ongoing and highly predictable streams of revenues from the ongoing sale of tanning salon services to the general public. The business will charge $15 per session in one of the Company’s tanning booths. At all times, the business will follow all state and federal regulations regarding the operations of tanning salons.

 

The business will generate additional revenues from the sale of prepaid tanning salon packages for regular patrons.

 

 

Industry and Market Analysis

 

The Current State of the Economy

 

It is important to let your financial institution know that you are well apprised of the financial situation of the general economy when you are applying for a business loan. This is especially true in today’s environment where lending has become more difficult and will remain more difficult in the foreseeable future. Specifically, you should gear this section of the business plan analysis towards the industry that you are operating within. For example:

 

The current economy has remained difficult over the past few years. However, Tanning Salons tend to remain economically stable as individuals continually seek to have quality tans in regards to approving their appearance. As such, the tanning salon will be able to remain cash flow positive and profitable in any economic climate.

 

The Tanning Salon Industry

 

In addition to providing your business loan officer with an understanding of the general economy, it is important that you showcase that you have an equal understanding of the industry in which you are operating within. As such, you will need to provide you business loan institution of a brief overview of your industry and any potential changes that may affect the way that your company does business. An example of how an industry overview is as follows:

 

Tanning Salons have increased tremendously in popularity over the last ten years. More and more people are frequenting these businesses as people have less time to obtain a tan by sitting outside. Additionally, the importance of people’s outward appearance has become more important in the last decade, with more men and women trying to obtain a youthful look. With these changes in taste, the growth of the tanning salon industry has swelled. There are over 8,400 companies operating within the United States that own, operate, and manage tanning salons. Gross revenues for this industry have now exceeded $2 billion dollars, and the yearly growth rate of this business has exceed 8% for each of the last five years. On an aggregate basis, the industry employs more than 100,000 people and provides gross annual payrolls of $600 million dollars.

 

 

Target Market

 

In this section of the business loan application and business plan analysis, you should focus on the demographics of your localized market (or national market if applicable). This section should discuss how many people live in your area, the anticipated number of people that would require the use of Tanning Salons, the median household income of people living in the area, poverty line statistics, and any applicable laws that would apply to your operation of Tanning Salons.

 

Competition

 

Many people that are developing new businesses or expanding existing businesses often feel that their business does not have any competition or limited competition at best. However, this is almost never the case. Unless you have re-invented the wheel – you will have competition. When applying for a business loan, you should clearly showcase your competition in your business plan. This is especially important to your banker as they will be able to gauge your ability to be successful in your targeted market. Many business loan underwriters will aggressively confirm that competitive nature of your local market and your local industry.

 

When drafting this section of the plan you should heavily discuss the competitive advantages that you intend to have over your competition.

 

Marketing Plan

 

In addition to all of the above information that we have covered, your business loan officer is also going to want to know how you intend to market your business to the general public. Most people do not quite understand how to effectively market their business outside of prominent signage or flyer distribution. When applying for a business loan (again in this difficult lending climate), your banker is going to want to see that you have a clear methodology of how you intend to market your services or products to the general public. In this section of the business plan – we will overview how to showcase your services/products to the general public.

 

Marketing Overview Example

 

The Tanning Salon will place prominent signage on the facility to draw a significant amount of foot traffic.
The business will maintain listings in the Yellow Books.
The Tanning Salon will also maintain an internet website that showcases the Company’s operations, hours of operation, and relevant contact information.

 

Marketing Strategies Overview

Additionally, you will be required to further drill down (in your business plan) how you intend to implement your strategies when you launch or expand your business’s operations. In this section of the business loan and business plan documents, you should amplify the bullet points from the section above. For instance:

 

The Tanning Salon intends to use a number of strategies that will create instant traffic and customer flow to the Company’s location. These strategies include not only using prominent facility and road signage, but also distributing flyers to people that fall into he Company’s targeted demographics. The business will also regularly take out advertisements in localized newspapers that showcase the Company’s hours of operations, tanning salon services, and specials that are occurring within the store on a regular basis.

 

The business will also maintain a highly informative website that showcases the Tanning Salon’s services, its hours of operation, and other relevant information in regards to the Company’s services. This website will be listed on major search engines such as Google as many people now use the internet to locate local businesses such as tanning salons.

 

The Financial Plan

 

Beyond any other part of your business loan application or business plan, the financials section of these documents are what matters most when applying for a business loan or any other type of credit facility. Ultimately, this section of the business plan showcases not only what your anticipated profitability will be, but also how you intend to repay the funds that you have borrowed through your business financing facility. An example of how this section is structure is as follows:

 

Assumptions

 

Tanning Salon, Inc. will have an average annual growth rate of 10% per year.
Mr. Doe will acquire $100,000 through a business loan in order to launch the operations of the business.

 

Proforma Financials for a Business Loan

 

Now it is time to showcase how you intend to repay your loan, generate a profit, and increase the book value of your business over a three to five year period. BusinessPlansForLoan.com has developed an easy to use financial model that you can use when drafting out the financial model for your business plan and business loan application. Through your business loan application, you will be required to have the following:

 

Profit and Loss Statement for your Tanning Salon
Cash Flow Analysis for the Tanning Salon
Balance Sheet for the Tanning Salon
Business Loan Amortization Tables