As a new business owner — or a business owner launching a new business — you must understand the rationale, process and pitfalls of business planning.
Hence, the reason it is crucial to be the one (or a significant contributor) in the writing process.
The process of writing a business plan for your massage business should follow a predefined format. This format allows you to explore the financial risks, benefits and alternatives that are present and projected as you plan your new business.
I have found in my years of financially guiding massage business owners that the ones who play an active part in the development of their business plan become knowledgeable in the financial aspect of operating their business. These new massage business owners are often not hit with the element of surprise when unexpected expenditures take place.
Here’s Why You Need a Business Plan
Writing a business plan will help you, the owner, gain clarity, maintain focus and justify your resources. A business plan that is well thought out will allow you to convey a concise, coherent story about your company, giving a roadmap of how you will succeed in the often-uncertain future of your new business.
If you execute the writing of your business plan well, you will have a competitive advantage as you will be able to do the following:
Formally analyze risks and alternatives; estimate potential revenue and expenses; and identify resources and tasks necessary to implement a new service that you might want to offer in your massage business.
Your business plan should include the following parts:
• The executive summary
• The business concepts
• The market analysis
• The competitive analysis
• The business strategy
• The financial plan
• The operating plan and
• The implementation plans
The Executive Summary
The executive summary is a one-page concise document at the beginning of your business plan, whose job it is to create a positive first impression of your business. It is akin to an elevator pitch, a brief pitch for your business aimed at potential investors, or anyone who you may be seeking to get funding from.
The elements of the executive summary are taken from the business plan itself and will often include snippets from the list mentioned above. While the executive summary is at the front of the business plan, it is often written last once you have completed the business plan itself.
One should try and have the following things in their executive summary:
• Business concept: Types of services. In this case, a massage therapy service. One can also include any unmet needs the business is hoping to fill. For example, cupping massages or prenatal massages in the greater area of your town.
• Brief market analysis: Answering the question of how many massage spas are in your potential area. This will include doing some market research.
• Competitive analysis and what your business strategy will be to attract new clients.
• Financial requirements and what will be needed for operations. This will include how much investment and working capital is necessary.
• Summary of the qualifications or accomplishments of the business owner.
The Business Concept
This section will look at what service you are providing and how you are trying to fulfill an unmet need. This may be to better create a roadmap for your business or help you justify getting funding.
This section of your business plan will aim at answering the following three questions: what value is created or provided, how this value is created or provided, and to whom the value is provided.
The Market Analysis
This section should usually begin with an industry overview. It aims to convey the following:
• A general state of the economy of the place you hope to do business in. It is best to address economic trends and forecasts that may impact your business. The question to ask oneself is: Will residents of the neighborhood or surrounding areas support my business?
• An estimate of the size of the market you hope to target with the proposed services you wish to provide.
• The estimated growth rate of your target market, if such data can be obtained. This portion is essential, especially if one is seeking funding from both traditional and nontraditional sources.
While it is imperative to be part of the business plan process, this portion tends to be the most challenging, and one may often need to collaborate with other individuals to help get this done.
In a world of limited resources, competitive analysis is a critical part of the business plan. This helps one better narrow the focus of their business to help achieve maximum output by evaluating who you will be competing against, and what price points your competitors are at. The competition may be other businesses or even other competing technologies.
Think of competitive analysis as comparing your competitor’s strengths and weaknesses against your brand’s strengths and weaknesses. Do you offer sports massages and your competitors do not? Are your competitors open for more hours than you? Are your prices much higher than those of your competitors?
This portion of the business plan will look at how your business will position itself from an organization’s perspective and what services you will be offering.
The business strategy works well once one has done a competitive analysis, as the competitive analysis will usually place you and your peers into one of the following categories: a low-cost, high-volume massage therapist or a higher-priced, more differentiated massage therapist. The source of differentiation reflects the perception of unique services, higher quality and improved service delivery.
Your business strategy should be able to answer the following:
• Range of services provided.
• Benefits of these services to the local community.
• The volume of services required to break even financially.
• Target market or audience. You may also want to answer how you will target your market.
• Print vs. non-print advertising.
A financial plan will entail listing all the sources of revenue your new business will have, and the strategies to get that revenue. The income a new service can be expected to generate is the difference between the revenue received and the expenses caused by that revenue-generating activity. Typical expenses include salaries, benefits, rent, utilities, taxes, furniture, supplies, equipment, depreciation and debt repayment.
It is often a good idea to come up with estimated projections of income and expenses over a three- to five-year period. This is harder for newer businesses, but established companies would use prior performance while looking at market performance and future trends to come up with the projections.
The estimates can quickly be done on a spreadsheet. These projections would help your business estimate how much money might be needed in the venture, if you are a new massage business; or invest in a new service or obtain a return on the expansion of business if you are already up and running.
Operation & Implementation
The operation plan will look at the day-to-day running of the business. The operation plan will consider the personnel, space and equipment needed to smoothly run your business, and how each of these components interacts with the others.
Concerning equipment choice, one should try and offer a justification for one brand vs. another, especially when there is a cost differential between the two. The implementation plan goes hand-in-hand with the operation plan, as it will highlight how one plans to deliver the services highlighted in the other sections, using the personnel, space and equipment highlighted in the operations plan.
A final note to consider: The act of writing a business plan is a dynamic one. It is a journey and not a destination. Your business plan will ideally go through several updates and revisions as you get more information and get closer to your start date.
The one thing that will be important in this journey of writing your business plan, however, will be having the clarity and focus of what you want your massage business to look like — and the work you are willing to do to achieve it.
About the Author:
Lozelle Mathai, MBA, CFEI, is an accountant with more than 18 years of experience in the field of financial management and accounting. She is the owner of Closing Your Books LLC, as well as The Body of Accounting, a virtual educational accounting consultancy firm that teaches massage and bodywork business owners how to manage, maintain and understand their business finances. Her articles for MASSAGE Magazine include “4 Steps to Financial Power: Create a Massage Business Budget” and “Your Financial Techniques are as Important as Your Touch.”