Haircare Accents

Three-Year Business Plan
2004-2006
Table of Contents:

Executive Summary________________________________________ Pg. 2
Purpose Statement_________________________________________ Pg. 3
Company Goals____________________________________________ Pg. 3
Business Description _______________________________________ Pg. 4
Business History___________________________________________ Pg. 5
Services__________________________________________________ Pg. 7 Fashion Products______________________________________ Pg. 7 Display Systems_______________________________________ Pg. 7 Educational Services____________________________________ Pg. 7
Industry Analysis___________________________________________ Pg. 9 Salon Retailing and Services on the Rise____________________ Pg. 9 Competitive Environment________________________________ Pg. 11 Barriers to Entry_______________________________________ Pg. 11 Long Term Opportunities_______________________________ Pg. 13
Marketing Plan______________________________________________ Pg. 14 Customer Needs_______________________________________ Pg. 14 Culture of Education____________________________________ Pg. 15 Hair Trade Shows ______________________________________ Pg. 15 Online Catalog_________________________________________ Pg. 15 Seattle Showroom ______________________________________Pg. 16 In-Salon Visits_________________________________________ Pg. 17 Direct Mailing__________________________________________ Pg. 19 Branding_____________________________________________ Pg. 19 Position in Region______________________________________ Pg. 19 Marketing Description ___________________________________ Pg. 20 Target Customer_______________________________________ Pg. 20 Market Readiness______________________________________ Pg. 22 Competition___________________________________________ Pg. 22
Operations_________________________________________________ Pg. 25 Warehouse Operations__________________________________ Pg. 25 Seattle Showroom Operations____________________________ Pg. 25 Merchandise Operations_________________________________ Pg. 26 Display System Operations_______________________________ Pg. 27 Educational Services Operations___________________________Pg. 27 Problems Addressed____________________________________ Pg. 28
Management Structure_______________________________________ Pg. 29 Key Employees________________________________________ Pg. 29 Associates____________________________________________ Pg. 31 Consultants___________________________________________ Pg. 32 Advisory Board________________________________________ Pg. 32
Community Involvement_____________________________________ Pg. 32
Development and Milestones_________________________________ Pg. 32 Long Term Goals and Strategy for Achieving them____________ Pg. 32
Financials__________________________________________________ Pg. 34
Conclusion_________________________________________________ Pg. 36
Appendix___________________________________________________ XXXX

Executive Summary of Haircare Accents
Haircare Accents: Beauty Salons can increase revenue by over 100% simply by retailing products in their salon, yet only 10% of salons retail fashion jewelry and accessories. Wouldn’t it be great if salons could go to one company to get the products, display systems, and educational courses needed to become an effective retailer of fashion jewelry and accessories? Haircare Accents makes this idea a reality. We wholesale fashion jewelry and accessories to beauty salons, as well as provide them with the display systems and educational services needed to transform their salon into a full service fashion entity. Most hairdressers see themselves as simply hair cutters, while their clients view them as the style experts. By educating stylists on their role as a style advisor, hairdressers can easily add fashion jewelry and accessory retailing to their salon services, and as a result increase monthly revenue by astounding amounts.
Purpose Statement: “Haircare Accents is a hip, fresh wholesaler of affordable fashion jewelry and accessories to beauty salons. Because we are in tune with the pulse of the fashion industry, we provide our accounts with the latest and most popular merchandise. We aim to be the regional leader by providing great products at the right prices. Our goal is moderate growth and annual profitability, by bring beautiful accessories to the Pacific Northwest.”
Products and Services:

Haircare Accents is the only wholesaler of fashion jewelry and accessories that service salons with a three-pronged system of providing the products, display systems and educational courses needed to be an effective retailer. We also provide that latest and most up to date fashion accessories at very affordable prices.
Marketing and Sales Strategy: Haircare Accents differentiates itself from other wholesalers by focuses on wholesaling to beauty salons and catering to their specific needs. We offer multi-channel service by way of trade shows, a website, in-salon showings, a Seattle showroom, and phone ordering. (See Marketing Section)
Competition:
There are many wholesalers of fashion jewelry and accessories in United States, but there are only a handful that choose to target Hair Salons. We are the second largest wholesaler of fashion jewelry and accessories to Salons in the Pacific Northwest, and the only that focuses specifically on beauty salons (the beauty salon industry is a $50 billion a year industry). (See Competition Section)
Financials:
Haircare Accents has been increasing revenue by over 30% for in each of the past four years without even adding more sales associates. By adding sales associates to better serve new and existing clients, Haircare Accents expects to increase Sales Revenue to $466,210 in 2004, $1,504,550 in 2005, and $3,645,500 in 2006 with net profits rising to $27,848 in 2004, $291,277 in 2005, and $930,362 in 2006. (See Appendix)

Purpose Statement “Haircare Accents is a hip, fresh wholesaler of affordable fashion jewelry and accessories to beauty salons. Because we are in tune with the pulse of the fashion industry, we provide our accounts with the latest and most popular merchandise. We aim to be the regional leader by providing great products at the right prices. Our goal is moderate growth and annual profitability, by bring beautiful accessories to the Pacific Northwest.”
Goals
The goals of Haircare Accents:
-To become the regional leader of fashion jewelry and accessories.
-To expand our client base throughout the Western United States.
-To provide excellent customer service.
-To differentiate Haircare Accents through our three-pronged delivery system of merchandise, display systems, and educational services to salons.
Business Description Haircare Accents is a Washington based company that provides Salons with fashion jewelry and accessories, display systems, and educational services throughout the Western United States. Haircare Accents is the only Pacific Northwest Wholesaler that focuses on providing salons with the merchandise, display systems, and educational services needed to increase their profits, add customer service, and add beauty to their salon through fashion accessory retailing. We do this by offering a wide variety of the latest fashion jewelry, hair accessories, purses, sunglasses and more to be sold in salons. We also offer a full line of racks, displays, and supplies needed to display and sell the products. Additionally, we provide salons with educational classes on a variety of topics including: how to use hair accessories in up-do’s, how to effectively display merchandise, and the art of successful retailing. This three-pronged system is what makes Haircare Accents so effective. Salons come to us to buy accessories; they stay with us because we help them increase their sales of the accessories by offering display systems and educational services.
Business History Haircare Accents was started in 1982 by Arthur and Alice Andrews in Laramie, Wyoming. As owners of Hair Mechanics Warehouse, a beauty and barber supply distributorship, they saw a tremendous need for a fashion accessory wholesaler to cater to beauty salons. Up until that point, most salons only retailed shampoo, conditioner, and related hair products. They took this opportunity to open Haircare Accents, a wholesaler of fashion jewelry and hair accessories. Utilizing the connections they had from their beauty supply distributorship, Alice began to call on hundreds of accounts throughout Wyoming where the accessories became very popular. In 1996, after selling their beauty supply distributorship, the Andrews’s moved to Eastern Washington State. Alice Andrews began pursuing Haircare Accents full time. The company expanded to the three-state territory of Eastern Washington, Idaho, and Wyoming, as the popularity and reputation of Haircare Accents grew. In 1999, Haircare Accents teamed up with Pacific Beauty (the largest Beauty Supply Distributorship in the Western U.S.) to exhibit at their Seattle and Portland shows. These shows opened many doors for Haircare Accents and started a period of rapid growth. With attendance at the Seattle show reaching over 9,000 hairdressers and the Portland Show over 6,000 hairdressers, Haircare was exposed to thousands of new clients. In 2000, Arthur Andrews also began to work full time for Haircare Accents. Haircare Accents now has thousands of accounts in a twelve state area serviced by four full time and one part time employee. They have show contracts with Pacific Beauty, International Salon Expos, Hair Mechanics Warehouse, Washington Association of Cosmetology, Oregon Association of Cosmetology, Las Vegan Hair and Nail Expo, and more. They attend over fifteen beauty salon trade shows a year, with gross sales averaging around $8,000 per show. We hold our own educational/buying shows in Spokane, WA and Wyoming annually and will hold the first Seattle Show this fall. Our accounts are also serviced through salon visits and phone orders. In 2004, Haircare Accents kicked off the new year by opening their first Seattle Showroom and website with an online catalog www.Haircare.ibuilder.com. The employees of Haircare Accents have a combined fifty-one years experience in the hairdressing industry, yet we are constantly learning and growing to fit the needs of our salons. We are well positioned to take advantage of the many opportunities in this $50 billion plus annual U.S. industry.
Services
Fashion Products: Haircare Accents serves salons through a three-pronged system. We provide our clients with fashion jewelry and hair accessories that are both retailed in the salons as well as used in hair styling. In order to provide our clients with the latest fashion jewelry and accessories, we dedicate much of our time to studying national and international fashion trends. By attending fashion shows in Los Angeles and Las Vegas each year, we can know ahead of time what will be the popular colors and styles to come. We also have wonderful relationships with our vendors, so that they can advise us on what will be popular for the upcoming seasons.

Display Systems: Over the years, we've learned that salon with stylish displays sell far more accessories than those who do not. That is why we want all of our salons to use displays for their accessory retailing. In order to provide our salons with inexpensive, yet stylish racks and displays, we buy them in bulk from a manufacturer, and sell them at a low margin. This allows clients to increase the quality of their display at an affordable price. As a result, our clients sell more accessories, and re-order more. It creates a win-win relationship.
Educational Services: Throughout the years, we have also learned that hairdressers love to learn. Hair styling, just like the fashion industry, is an ever-changing world, and in order to keep up with it, one must learn the newest trends. In the past, we used to just have cash and carry merchandise shows. While admission was free, attendance at these shows was very low. We added educational courses to our shows, teaching hairdressers about the up-coming fashion trends as well as how to use our hair accessories to create new styles on their clients. Even though we charged admission for the educational show, our attendance was by far greater due to the perceived value of the new shows. They loved to learn how to use our products and about the hottest new trends. Now we do educational shows annually in Spokane, WA and Wyoming, and will kick off our first Seattle show this fall. We have also expanded our courses to include areas on how to become successful retailers by teaching business tips and skills. In 2005, we will provide in-salon courses, where we will teach salon owners as well as their employees how to use, sell, and display our merchandise in their salons. We are dedicated to helping our clients become educated on how to be better hairdressers and better business people.

Industry Analysis
Salon Retailing and Services on the Rise: In 1996, the U.S. beauty salon industry had gross retail and service sales of over $40 billion dollars. It is expected that this amount will be over $50 billion by the end of this year. This is an industry with enormous growth, yet there are only a handful of wholesalers of fashion jewelry and accessories that cater specifically to beauty salons. Where the true growth lies in our industry is in the retail aspect. The majority of salons (85 to 90 percent) only retail shampoo and related products (Examples: Conditioner, Hair Spray, Nail Polish, Cosmetics, etc). Many haven't even thought of retailing fashion accessories or do not know how to go about it. Yet the majority of our new clients who introduce fashion accessories in their salons have outstanding success. The key for us to grow in this industry is to get our name and products out there to the hairdressers. We do this by attending numerous true shows each year.
Competitive Environment: There are many wholesalers of fashion jewelry and accessories in United States, but there are only a handful that choose to target Hair Salons. Instead most target clothing and jewelry stores who buy in larger quantities. Since most of these wholesalers require minimum orders and bulk buying, salons are unable to purchase in small quantities, and therefore they don't buy fashion accessories for resale. By working in the Beauty Salon industry for many years, we have become to understand our clientele. Hairdressers like to be able to buy smaller quantities of each style, instead of a dozen of each style. Where many wholesalers see this as a hassle, we saw it as an opportunity. We break bulk for our clients, and in return they buy a large assortment of merchandise. By focusing on their needs and wants, we have discovered an industry with enormous potential. In fact, we have become the second largest wholesaler of fashion accessories to salons in the Pacific Northwest, and the only wholesaler that provides educational services. We have also expanded to sell in Utah, Nevada, Arizona, California, and Texas. We also plan to attend the largest trade show in the industry in Chicago next year. (For more information on our competition, please see the competition section.)
Barriers to Entry: The costs related to entry into our industry are actually relatively low, just investment into the inventory, but there are numerous other barriers. The main barrier is being able to find clients. Hair dressers typically do not like to be approached while working, but instead prefer to conduct buying business on their off time. This would make it difficult for someone who does not already have connections to the industry to find new clients. The best way to meet new clients is by attending hairdresser trade shows. At these shows, we can meet thousands of hairdressers in just a few days. In fact the Las Vegas Hair and Nail Expo draws over 30,000 hairdressers. We have special contracts to do these trade shows, because we have relationships with the distributors and they gave us contracts to do their shows. It would be very difficult for someone outside the industry to gain these contracts. Another barrier to entry is being able to understand the hair dressing industry. It has taken us many years to get an understanding of the way the salons operate. For example, some salons are leased stations salons, where each stylist has their own space in the salon, as well as their own retailing racks, where as in a commission salon, the owner owns all of the retail merchandise and the stylists are paid commissions on what they sell. Selling to these different types of salons are completely different, and this is something an outsider would not readily understand. It has also taken us years to understand how to buy for salons. There are three main styles of salons: Hip and Trendy (Fashion Forward Salons, usually younger clientele), Family (Parents and Kids), and Golden Oldie Salons (Seniors who make weekly trips to get a shampoo set)(see salon category table on page***). Each style caters to a different market, and retails different merchandise. Another barrier is finding good vendors and merchandise. Over the years we have learned what type of merchandise works best for each style. Now our clients trust our advice on what would work best in their salon. This is now something that can be quickly learned by outsiders. We have also found vendors that we can trust and rely on, something that took us many years to establish.
Long Term Opportunities: The long-term outlook for our industry is very good. While specific fashions and trends may go out of style, the fashion industry is here to stay. Additionally, there is a beauty salon in every small town in the entire United States. Virtually everyone has hair, and needs to get it cut, so hairdressers will always be in business. The top 20 percent most successful and profitable salons in the U.S. generate 35-50 percent of their revenue from retailing, while the average salon generates only 6-12% from retailing. This is another reason why our long-term outlook is so good. The majority of the salons out there do not currently retail fashion accessories. This means there is massive expansion potential into the salons that do not retail these products. We can help them become far more profitable and successful by adding more retail to their salon.
Marketing Plan: Haircare Accents distinguishes itself from its competitors by focusing on providing salons a way to increase their profits, add beauty to their salon, and become better hairdressers as well as business people. We have many years experience in the Beauty Salon Industry and understand the needs of hairstylists.
Haircare Accents Meets Customer Needs: We understand that hairdressers are different than store retailers. As "hair artists", stylists like to finds new ways to incorporate hair accessories into their styles. They don't just sell trinkets, they are style and fashion advisers to their clients, and deserve to be treated as such. This is why we don't just sell merchandise. We offer a three-pronged system of service that provides hairdressers with all the merchandise, materials, and skills needed to become the ultimate hairstylist/fashion advisor. Hairdressers want to deal with a wholesaler that not only understands the fashion industry, but the beauty salon industry as well. This is what Haircare Accents provides.

Culture of Education: Haircare Accents has a culture focused on education. We understand that hairdressers are the experts in the beauty industry. They advise their clients on what hair styles/colors are flattering on them, and deliver these looks. This develops a relationship of trust between the stylist and their clients. We educate hairstylists on how to take this relationship to the next level. We teach them how to not only style a person's hair, but their entire look. This means what fashion jewelry and accessories are flattering as well. They can help their own clients find the hottest and freshest merchandise. By offering this full beauty/fashion service, the hairdresser will be providing more customer service in their salon as well as by earning more profits. This system is delivered through educational classes and advising provided by Haircare Accents. We teach hair stylists how to use our products, but also what the stylish trends are, how to display and sell the merchandise, and how to be effective advisors to their clients. Many wholesalers avoid selling to hairstylists claiming their artistic nature makes them "bad" business people. We choose to see that as artists, hairstylists have client who trust their advice, and that puts them in a wonderful business position, they just need a wholesaler who provides the educational services to steer them in the right direction. We help hairdressers become better business people.

Hair/Trade Shows: Hair/Trade shows are key to Haircare Accents marketing plan. It is the fastest, easiest, and least expensive way to meet new clients. We have show contracts with Pacific Beauty, International Salon Expos, Hair Mechanics warehouse, Washington Association of Cosmetology, Oregon Association of Cosmetology, Las Vegan Hair and Nail Expo, and more. We attend over fifteen hair trade shows a year, with gross sales averaging around $X,000 per show. One show in specific, the San Jose West Coast Show, has an attendance of over 20,000 hairdressers. In 2003, we grossed over $X,000 in one day at this show, and expect more sales this year. We have our own educational/buying shows in Spokane, WA and Wyoming annually. We also plan to kick-off our first Seattle show this fall. We have a part-time employee who works many of our trade shows on a commission basis. We plan to hire more sales associates this year, so that we can attend more shows throughout the nation. They will have their travel expenses paid for and will work on a commission (which is the industry standard).
Online Catalog: Our online catalog www.Haircare.ibuilder.com, is a wholesale only website that offers pictures of our merchandise for our accounts to order. It is our best way to serve our clients that we cannot regularly meet in person with. They can look at all of our merchandise and order off the website or they can make the order by phone.
Seattle Showroom: In January 2004, Haircare Accents open a Seattle Cash and Carry showroom in the Northern Passage Building in Seattle. It is a place where our Pacific Northwest clients can come to in person to see our merchandise and get advice. In the showroom, they get one on one attention to learn about our products and how to use/sell them. This has been very well received, and more and more clients begin to use the showroom. Stacey Williams, our head of Marketing, runs the Seattle Showroom. She has one other full time employee, Josanna Herman. We plan to expand our showroom operations this year by hiring an administrative assistant and two employees to process and pack orders for shipping.
In-Salon Visits: Many salons prefer that we visit them in salon by appointment. Arthur and Alice Andrews travel around Wyoming, Idaho, Oregon, and Eastern Washington calling on our biggest accounts in person. We bring the merchandise to them in their salon. This way they can view the products in person and get advice from Arthur and Alice. We plan to expand our sales staff this year, in order to have more sales associates out in the field selling to salons. They will work on a 10% commission basis.
Direct Mailing: We also direct mail small flyers to salons in the Pacific Northwest showing our merchandise and services. It lists our website and showroom directions. We have had some success recruiting new clients this way.
Branding:
Haircare Accents is in the process of creating a private-label brand called Floralities for our merchandise. The name Floralities is a play on Victorian charm as well as the essence of a blooming flower. It is fresh and hip, yet with classic beauty. The Floralities brand is in the process of being trademarked. It will be found both on our merchandise and the display systems. Floralities accessories will only be sold in salons. This will create brand recognition for our products that will draw people into the salons. This will be another advantage Haircare Accents gives its clients.
Sun river’s Position in The Region: We only moved into the Seattle/Portland market about four years ago, and already we are the number two wholesaler of fashion jewelry and accessories to salons in the Pacific Northwest. We are number one in Wyoming, Idaho, and Eastern Washington. We have had steady growth over the years, and with our new expansions of a Seattle showroom as well as an online catalog, we can only expect to keep growing all over the West Coast and more.
Market Description Haircare Accents operates in the Western United States. While the majority of our clientele is in Washington, Oregon, Idaho, and Wyoming, we also have clients in California, Wyoming, Nevada, Utah, Arizona, Alaska and Texas. We have over one thousand accounts in these states that we service though trade shows, in salon appointments, phone orders, a Seattle Showroom, and an online catalog.
Target customers: While we do have some boutiques and shops that we sell to, the majority and focus of our clientele is beauty salons.

Beauty Salons can be broken into the following outline:
I. The Salon Industry A. Barber Shops B. Beauty Salons (focus on hair styling, retail on the side) 1. Leased Station Salons a. where stylists rent their station and may retail in their own station b. They are typically the lowest volume retailers. 2. Commission Salons a. Stylists are paid a commission salary for their services. They may or may not be paid commissions for retail products. Retail product bought by owner.) b. They are typically the highest volume retailers in a salon format. 3. Chain Salons a. where stylists are paid an hourly wage. They may or may not be paid commissions for retail products sold. (Retail products bought by owner.) b. They are typically medium volume retailers. C. Beauty Supply/Salon (focus on retail, hair styling on the side.) a. commission or wage paid sales associates. b. They are the highest volume retailers in the industry. D. Nail Salons a. Come in the same format as beauty salons. b. Typically lower volume retailers than beauty salons. E. Tanning Salons a. Usually with hourly wage paid employees. b. Good retailers of sunglasses, toe rings, and anklets. F. Spas a. Usually hourly wage paid employees b. Strong retailers of higher end jewelry.
The Style of the Salons
I. Beauty Salons A. Fashion Forward Salons 1. Typically in urban areas and college towns. 2. Target Customers are 18-45 years old women. 3. Average Hair cut $30.00 and up 4. Salons Products of choice: Bed Head, Aveda, and Sebastian B. Family Salon 1. In small towns and suburban areas 2. Target Customers are families 3. Average Adult hair cut $15.00 and up 4. Salon Product of choice: Paul Mitchell and Matrix C. Golden Oldie Salon 1. Small towns, Suburban areas, and Retirement Communities 2. Target Customers: 55 and older women who get shampoo sets. 3. Average Hair cut: $15.00 and up 4. Salon Product of Choice: Apple Pectin and Lamaur
Market Readiness: We conducted a survey of 376 hairdressers at a recent Portland Hair Show. This survey showed the following: 91% of our clients still retail our merchandise78% will look at our new website 21% plan to visit our new showroom (this is low because the showroom is 3 hrs from Portland) 64% of people who had not ever met us will now be selling our merchandise 52% of our new clients did not know about or how to find fashion accessories to sell in their salons. 100% of hairdressers surveyed would be interested in ways of improving their salon profits.
Strategic Opportunities: Since there are thousands of salons in the Western United States that do not know about or how to find fashion accessories to sell in their salon, and virtually all hairdressers are interested in how to increase profits in their salon, shows that there is huge market potential to increase our number of clients. Currently we attract new customers through trade shows, our website, and word of mouth, but we plan to start advertising in hairdressing trade magazines as well.
Competition:
Indirect Competitors of Haircare Accents can be seen as any entity that sells fashion jewelry and accessories. This could be Claires, Icings, and even Nordstrom. This is why we make sure to keep our prices low enough that our salons can retail our merchandise at prices competitive and many times lower than these retailers.

Main Competition: Direct Competitors for us are fashion jewelry wholesalers that cater to salons. In the Western United States, our major competitor is Noble and Wulf. They have been wholesaling fashion jewelry out of Seattle for many years. They are the number one wholesaler of fashion jewelry and accessories to salons in the Pacific Northwest. Yet they do not focus specifically to salons. The majority of their business is to retail stores.
Another competition in the Western U.S. is Chars of Laguna. Char's sells high end Austrian Crystal jewelry to stores and Beauty Salons mainly in California, but also has a presence in the Northwest. Advantages Over Competition:
- Beauty salons are our focus, were our competitors caters first and foremost to stores, and secondly to salons.
-Our staff is very experienced with a combined fifty-one years experience in the Beauty Salon Industry between our five employees.
-We carry the latest and most up to date trends.
-Racks and displays are provided for our clients.
- Educational services are provided to our clients about the latest trends, how to use our products in hair styling, and how to be a successful retailer.
-We are a multi-channel wholesaler offering trade shows, phone ordering, in-salon showings, an online catalog, and a Seattle Showroom.

Competition Comparison of Services:

Haircare Accents Noble and Wulf Chars of Laguna
Sells to Salons:
Focus on Salons: Yes No No
Sells Hair Clips: Yes Yes No
Sells Displays: Yes No No
Seattle Showroom: Yes Yes No
Website: Yes Yes No
Provides Educational Shows: Yes No No
Does in-Salon Showings: Yes No No
Branded Line Soon No Yes
Operations
The core of Haircare Accents operations is our three-pronged system of service. To fully employ the system, we use multi-channels of service to serve our clients. Trade shows, in-salon visits, a website, a Seattle Showroom, and phone ordering make up the channels of operations. In order to service these channels, Haircare Accents has a warehouse in Eastern Washington State, where land is inexpensive. We also have a leased facility in Seattle that serves as a showroom and shipping headquarters.
Haircare Warehouse: Our warehouse is located in Middleton, Washington. Being centrally located to our core cities of clients, Middleton is a strategic location for our headquarters. It is three hours from Seattle, four hours from Portland, an hour from Spokane, and six hours from Boise. This makes is easy for Arthur and Alice Andrews to commute to shows and in-Salon visits in these cities. Additionally, Middleton has very low real estate prices, which allowed Haircare to acquire the property at a very low price. Being the headquarters of Haircare Accents, the majority of inventory is stored here. Currently two full time and one part time employees works out of Middleton.
Seattle Showroom: In January 2004, Haircare Accents opened their Seattle Showroom in a reconditioned building located between downtown and the U-District. We chose this location because it was centrally located for clients coming from both Northern and Southern Seattle and the rent is quite reasonable. Currently we have a lease through August 2004. The showroom serves as a place for our Seattle clients to come and view/purchase merchandise and displays in person. It is also where all of our website and phone orders are shipped from. Currently there are two full time employees working in the showroom. The showroom has opened with very good success. Many clients have begun to shop the store frequently, and it serves well as the shipping center of our organization.
Merchandise Operations: Currently, Haircare Accents turns over its inventory twelve times a year. The high level of turnover is crucial, because it is the fashion industry. Fashions have a relatively short lifetime, and that is why we must stay on top of trends. Because of this, we have to have extremely good vendor relations. We have spent years finding our suppliers. We have established strong relationships with our current suppliers that give us flexibility and reliability, which allows us to reorder quickly on the hottest merchandise. The relationships have also given us some exclusive distribution rights. Yet to find even better suppliers, are also looking into sourcing from suppliers abroad. We have plans to attend buying shows in Korea and Mexico later this year. Since our company is wholesale and has had a limited staff, we have never implemented a complex inventory control system. Yet with the rapid growth our company is experiencing, we are in the processing of purchasing a bar code scanning system that will allow us to track all of the inventory that goes through the company. This system will also help is to track sales trends and information.
Display System Operations: Over the years, we have learned that Salons with effective display systems sell far more accessories, than salons that do not, yet many of our accounts would not go to fixture stores to buy displays. They said that the displays were too expensive, and it was too much of a hassle to find the right displays. This was when we realized that we needed to start supplying our clients with affordable display systems. Currently, Haircare Accents provides our clients with the opportunity to buy a wide assortment of displays for their salon. We buy them in bulk from a manufacturer that designs them specifically for our merchandise. This relationship allows us to buy personalized displays at a very low cost, which we sell to our accounts at a low profit margin. We are not trying to make a huge profit on the displays; we are trying to make sure all of our accounts use them. If they are too expensive, they won’t buy them. By making them affordable, we are insuring that most of our accounts will buy them, and as a result, they will sell more accessories.
Educational Services Operations: We realized early on that hairdressers desire educational shows. Our first shows focused on the artistic use of our accessories. We contracted with a professional platform artist (professional hairstylist) to teach the course. The success was great. Not only was our attendance higher than our previous non-educational shows, but people also bought more merchandise after seeing the creative ways to use the accessories. Now our educational shows offer artistic information, fashion information and business tips. We find that this package of educational services helps to transform our clients from someone who just cuts hair, to a fashion and style expert. They gain confidence through these educational shows, and become more effective stylists and business people. We currently hold shows annually in Wyoming and Spokane, and will have our first Seattle show this fall. Since we contract with platform artists, they provide the necessary equipment needed to teach the shows. Our employees teach the fashion and business portion. In 2005, Haircare Accents also plan to begin In-Salon educational shows. These shows will be taught by our sales staff, and they will help educate the salon owners and their employees how to use our products, follow the latest fashion trends, and be a more effective retailer.
Problems Addressed: The main problem with Haircare Accents’ operations is our cash flow. We have always been internally financed. Due to this, we have had to be more conservative with our funds. This has caused us to keep a smaller inventory and limited amount of staff. Currently our amount of clients has outgrown our small staff’s capacity to serve them. Plus we have been invited to exhibit at more trade shows than we currently have the staff for. Due to our connections and growing client base, Haircare Accents plans to hire more sales people as well as administrative assistant and shipping specialists. We feel that once these new employees join our team, we will be able to attend more trade shows, due more in salon showings, attract business to our website and as a result, grow at a much higher rate. In order to achieve this expansion plan, Haircare plans to seek venture capital to help finance these efforts.
Management
Key Employees: Alice Andrews, President. Alice Andrews has worked in the Beauty Salon industry since the mid-1960's when her parents opened Beauty and Barber Supply. In the late 1970's, she and her husband opened Hair Mechanics Warehouse in Laramie, Wyoming. She worked for Hair Mechanics full-time for five years before founding Haircare Accents in 1982. In the mid-1980's, the Andrews’s sold Hair Mechanics Warehouse. Alice continued to run Haircare Accents part-time as she went to work for Big Mountain Salon Consultants as a sales associate. Alice worked for Big Mountain Salon Consultants for eleven years, earning recognition as the top sales associate every year. After moving to Eastern Washington, Alice started working for Haircare Accents full time as President. Her sales experience and industry knowledge make her a powerhouse as President. Arthur Andrews, Vice-President of Operations. Arthur Andrews began working in the Beauty Salon Industry in the late 1970's when he and Alice Andrews opened Hair Mechanics Warehouse. After owning the distributorship for eight years he and Alice Andrews sold Hair Mechanics Warehouse in the mid-1980's. He stayed on as a sales associate and Vice-president of Sales. In his eleven years as Vice-President of Sales, Arthur was always the top-grossing sales associate at Hair Mechanics Warehouse. He also won numerous manufacturer awards from companies such as: Scruples, Nucleic A, and Sunglitz. Arthur came to work for Haircare Accents in 2000, and sales have risen astonishingly since his arrival. His experience in Sales and Distributorship operations makes him an excellent Vice-president of Operations. Stacey Williams, Vice-President of Marketing Stacey has been around the Beauty Salon Industry since birth. She began working trade shows for Haircare Accents at age 13. She is currently a Senior Honors Student at the University of Washington Business School with a focus in marketing. Stacey began working for Haircare Accents full time in fall 2001. She runs the Seattle Showroom and company website. Stacey adds a fresh, young perspective to the business. Plus her education in Marketing at the University of Washington makes her an excellent Vice-President of Marketing. Vice-President of Finance, To Be Selected: In Fall 2004, Haircare Accents plans to add a third key management position of Vice-President of Finance. This person will be selected based on their education and experience in finance and accounting.
Associates:
In addition to the above employees, Haircare Accents has one full-time sales associate and a part-time sales associate. Yet with the rapid growth of Haircare Accents, we plan to hire more sales associates, an administrative assistant, and packing specialists this year. The company also uses a wide variety of consultants for legal, accounting, fashion and design.
Advisory Board: Haircare Accents is in the process of forming our advisory board. We have already secured two hairdressers and an Advertising Creative Director to serve on our Advisory Board.
Management Structure: President Alice Andrews is involved in all aspects of the day-to-day operations of Haircare Accents. She works closely with the Vice-Presidents to support activities over which they have specific responsibility. Each Vice-President is given a wide degree of decision-making authority in their area of the company.

Because the company has a strong emphasis on customer service, we know that our staff must be highly motivated to deliver this high level of customer service. Therefore Haircare Accents has instituted a profit sharing plan. Each sales associate will share in 0.5% of the profits over the annual goal each year. This aligns the interests of our employees with the interests of the company.
Community Involvement Haircare Accents view its community as the Beauty Salon community in general. That is why Haircare Accents supports the Beauty Salon industry with donations to the Washington State Cosmetology Association and Oregon State Cosmetology Association. These two organizations promote furthering education of hairstylists as well as providing competitive contests for hairdressing students. These Cosmetology associations promote excellence in hairdressing, and that is why we choose to support these non-profit organizations.

Development, Milestones, and Expansion
Long-Term Goals: Haircare Accents plans to grow steadily over the next five years, becoming the largest wholesaler of fashion jewelry and accessories to salons in the Western United States. We want to provide a very high level of customer service to our clients through our triple pronged system of service. Another goal is for our brand Floralities to gain strong brand recognition as a line of hip, fresh fashion accessories.
Strategy for Achieving Goals: To accomplish this, Haircare Accents plans to increase our staff to include sales associates in all of our region’s major cities including: Seattle, Portland, Spokane, Boise, Missoula, Salt Lake City, Las Vegas, Phoenix, San Francisco, and San Jose. This will not be a risky expansion, as the sales associates will be paid on commission. We also plan to achieve our expansion goal by using our new sales force to attend more trade shows each year. This will result in an increase in website and phone order sales. In order to serve the website and phone orders, Haircare plans to hire an administrative assistant and order packing specialists. In order to keep our customer service levels high, we will administer in-depth training to all of our new sales associates. In addition, Haircare Accents’ profit sharing plan keeps sales associates more motivated to provide excellent customer service. We also plan to keep our cultural base of education alive in our company. This means that we will only hire very talented platform artists for our educational shows. We will also keep up to date on the latest fashion information and trends by attending fashion shows. In order to achieve strong brand recognition for our accessory line Floralities, we plan to use creative packaging and displays. We also plan to keep on top of the latest fashion trends, using only the most stylish accessories for our Floralities line. Lastly we plan to implement an advertising plan to get the Floralities name out there to the public.
Financials
Haircare Accents has been increasing revenue by over 30% for in each of the past four years without even adding more sales associates. We plan to expand our staff to include more sales associates and staff employees this year. In order to project sales for the next three years with the expanded staff, we used historical financials and applied them to a larger staff. For example, with more sales associates, we can increase the number of trade shows we attend, number of salons we visit, etc. This can all be seen in the Sales Projections section of the appendix. The chart below illustrates the projected sales revenues with an expanded staff, for the next three years. It is divided up by quarter.

We also used historical data to project what the expenses would be with an expanded staff. These expenses are based on sales associates working on commissions, and using many of our existing facilities. Below are charts illustrating our projected gross profit and net profit after taxes:

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To see more detailed financials please see the appendix.

Conclusion The major problem hindering Haircare Accents’ growth is sufficient capital to hire more employees, increase inventory, and attend more trade shows. Haircare already has thousands of clients in a twelve state area. They already have loyal suppliers. They have a staff with a combined fifty-one years industry experience. They already have a three-pronged system of service in place that is distributed through multi-channels. They have all of the tough problems solved and can put the new capital to immediate, productive use.
Appendix:
Financials: