Haircare Accents

Three-Year Business Plan 2004-2006

Table of Contents:
Executive Summary________________________________________ Pg 2 Pur!"se Statement_________________________________________ Pg # $"m!any %"als____________________________________________ Pg # Business &escri!ti"n _______________________________________ Pg 4 Business Hist"ry___________________________________________ Pg ' Services__________________________________________________ Pg ( Fashion Products______________________________________ Pg. 7 Display Systems_______________________________________ Pg. 7 Educational Ser ices____________________________________Pg. 7 )n*ustry Analysis___________________________________________ Pg + Salon !etailing and Ser ices on the !ise____________________ Pg. " Competiti e En ironment________________________________ Pg. ## $arriers to Entry_______________________________________ Pg. ## %ong Term &pportunities_______________________________ Pg. #' ,ar-eting Plan______________________________________________Pg .4 Customer (eeds_______________________________________ Pg. #) Culture of Education____________________________________ Pg. #* +air Trade Sho,s ______________________________________Pg. #* &nline Catalog_________________________________________Pg. #* Seattle Sho,room ______________________________________Pg. #.n/Salon 0isits_________________________________________ Pg. #7 Direct 1ailing__________________________________________Pg. #" $randing_____________________________________________ Pg. #" Position in !egion______________________________________ Pg. #" 1ar2eting Description ___________________________________Pg. 34 Target Customer_______________________________________ Pg. 34 1ar2et !eadiness______________________________________ Pg. 33 Competition___________________________________________ Pg. 33 /!erati"ns_________________________________________________ Pg 2' 5arehouse &perations__________________________________ Pg. 3* Seattle Sho,room &perations____________________________ Pg. 3* 1erchandise &perations_________________________________ Pg. 3Display System &perations_______________________________ Pg. 37 Educational Ser ices &perations___________________________Pg. 37 Problems 6ddressed____________________________________ Pg. 37 ,anagement Structure_______________________________________ Pg 2+ 8ey Employees________________________________________ Pg. 3" 6ssociates____________________________________________ Pg. '# Consultants___________________________________________ Pg. '3 6d isory $oard________________________________________ Pg. '3 $"mmunity )nv"lvement_____________________________________ Pg #2 &evel"!ment an* ,ilest"nes_________________________________ Pg #2 %ong Term 9oals and Strategy for 6chie ing them____________ Pg. '3 0inancials__________________________________________________Pg #4 $"nclusi"n_________________________________________________Pg #6 A!!en*ix___________________________________________________ 1111

Executive Summary "2 Haircare Accents

Haircare Accents3 $eauty Salons can increase re enue by o er #44: simply by retailing products in their salon; yet only #4: of salons retail fashion <e,elry and accessories. 5ouldn=t it be great if salons could go to one company to get the products; display systems; and educational courses needed to become an effecti e retailer of fashion <e,elry and accessories> +aircare 6ccents ma2es this idea a reality. 5e ,holesale fashion <e,elry and accessories to beauty salons; as ,ell as pro ide them ,ith the display systems and educational ser ices needed to transform their salon into a full ser ice fashion entity. 1ost hairdressers see themsel es as simply hair cutters; ,hile their clients ie, them as the style e?perts. $y educating stylists on their role as a style ad isor; hairdressers can easily add fashion <e,elry and accessory retailing to their salon ser ices; and as a result increase monthly re enue by astounding amounts. Pur!"se Statement: @+aircare 6ccents is a hip; fresh ,holesaler of affordable fashion <e,elry and accessories to beauty salons. $ecause ,e are in tune ,ith the pulse of the fashion industry; ,e pro ide our accounts ,ith the latest and most popular merchandise. 5e aim to be the regional leader by pro iding great products at the right prices. &ur goal is moderate gro,th and annual profitability; by bring beautiful accessories to the Pacific (orth,est.A Pr"*ucts an* Services3

+aircare 6ccents is the only ,holesaler of fashion <e,elry and accessories that ser ice salons ,ith a three/pronged system of pro iding the products; display systems and educational courses needed to be an effecti e retailer. 5e also pro ide that latest and most up to date fashion accessories at ery affordable prices. ,ar-eting an* Sales Strategy3 +aircare 6ccents differentiates itself from other ,holesalers by focuses on ,holesaling to beauty salons and catering to their specific needs. 5e offer multi/channel ser ice by ,ay of trade sho,s; a ,ebsite; in/salon sho,ings; a Seattle sho,room; and phone ordering. BSee 1ar2eting SectionC $"m!etiti"n3 There are many ,holesalers of fashion <e,elry and accessories in Dnited States; but there are only a handful that choose to target +air Salons. 5e are the second largest ,holesaler of fashion <e,elry and accessories to Salons in the Pacific (orth,est; and the only that focuses specifically on beauty salons Bthe beauty salon industry is a E*4 billion a year industryC. BSee Competition SectionC 0inancials3 +aircare 6ccents has been increasing re enue by o er '4: for in each of the past four years ,ithout e en adding more sales associates. $y adding sales associates to better ser e ne, and e?isting clients; +aircare 6ccents e?pects to increase Sales !e enue to E)--;3#4 in 344); E#;*4);**4 in 344*; and E';-)*;*44 in 344- ,ith net profits rising to E37;7)7 in 344); E3"#;377 in 344*; and E"'4;'-3 in 344-. BSee 6ppendi?C

Pur!"se Statement
@+aircare 6ccents is a hip; fresh ,holesaler of affordable fashion <e,elry and accessories to beauty salons. $ecause ,e are in tune ,ith the pulse of the fashion industry; ,e pro ide our accounts ,ith the latest and most popular merchandise. 5e aim to be the regional leader by pro iding great products at the right prices. &ur goal is moderate gro,th and annual profitability; by bring beautiful accessories to the Pacific (orth,est.A

%"als
The goals of +aircare 6ccents: /To become the regional leader of fashion <e,elry and accessories. /To e?pand our client base throughout the 5estern Dnited States. /To pro ide e?cellent customer ser ice. /To differentiate +aircare 6ccents through our three/pronged deli ery system of merchandise; display systems; and educational ser ices to salons.

Business &escri!ti"n
+aircare 6ccents is a 5ashington based company that pro ides Salons ,ith fashion <e,elry and accessories; display systems; and educational ser ices throughout the 5estern Dnited States. +aircare 6ccents is the only Pacific (orth,est 5holesaler that focuses on pro iding salons ,ith the merchandise; display systems; and educational ser ices needed to increase their profits; add customer ser ice; and add beauty to their salon through fashion accessory retailing. 5e do this by offering a ,ide ariety of the latest fashion <e,elry; hair accessories; purses; sunglasses and more to be sold in 5

salons. 5e also offer a full line of rac2s; displays; and supplies needed to display and sell the products. 6dditionally; ,e pro ide salons ,ith educational classes on a ariety of topics including: ho, to use hair accessories in up/do=s; ho, to effecti ely display merchandise; and the art of successful retailing. This three/pronged system is ,hat ma2es +aircare 6ccents so effecti e. Salons come to us to buy accessoriesF they stay ,ith us because ,e help them increase their sales of the accessories by offering display systems and educational ser ices.

Business Hist"ry
+aircare 6ccents ,as started in #"73 by 6rthur and 6lice 6ndre,s in %aramie; 5yoming. 6s o,ners of +air 1echanics 5arehouse; a beauty and barber supply distributorship; they sa, a tremendous need for a fashion accessory ,holesaler to cater to beauty salons. Dp until that point; most salons only retailed shampoo; conditioner; and related hair products. They too2 this opportunity to open +aircare 6ccents; a ,holesaler of fashion <e,elry and hair accessories. DtiliGing the connections they had from their beauty supply distributorship; 6lice began to call on hundreds of accounts throughout 5yoming ,here the accessories became ery popular. .n #""-; after selling their beauty supply distributorship; the 6ndre,s=s mo ed to Eastern 5ashington State. 6lice 6ndre,s began pursuing +aircare 6ccents full time. The company e?panded to the three/state territory of Eastern 5ashington; .daho; and 5yoming; as the popularity and reputation of +aircare 6ccents gre,. .n #"""; +aircare 6ccents teamed up ,ith Pacific $eauty Bthe largest $eauty Supply Distributorship in the 5estern D.S.C to e?hibit at their Seattle and Portland sho,s. These sho,s opened many doors for +aircare 6ccents and started a period of rapid gro,th. 5ith attendance at the Seattle sho, reaching o er ";444 hairdressers and the Portland Sho, o er -;444 hairdressers; +aircare ,as e?posed to thousands of ne, clients. .n 3444; 6rthur 6ndre,s also began to ,or2 full time for +aircare 6ccents. +aircare 6ccents no, has thousands of accounts in a t,el e state area ser iced by four full time and one part time employee. They ha e sho, contracts ,ith Pacific $eauty; .nternational Salon E?pos; +air 1echanics 5arehouse; 5ashington 6ssociation of Cosmetology; &regon 6ssociation of Cosmetology; %as 0egan +air and (ail E?po; 7

and more. They attend o er fifteen beauty salon trade sho,s a year; ,ith gross sales a eraging around E7;444 per sho,. 5e hold our o,n educationalHbuying sho,s in Spo2ane; 56 and 5yoming annually and ,ill hold the first Seattle Sho, this fall. &ur accounts are also ser iced through salon isits and phone orders. .n 344); +aircare

6ccents 2ic2ed off the ne, year by opening their first Seattle Sho,room and ,ebsite ,ith an online catalog ,,,.+aircare.ibuilder.com. The employees of +aircare 6ccents ha e a combined fifty/one years e?perience in the hairdressing industry; yet ,e are constantly learning and gro,ing to fit the needs of our salons. 5e are ,ell positioned to ta2e ad antage of the many opportunities in this E*4 billion plus annual D.S. industry.

Services
0ashi"n Pr"*ucts3 +aircare 6ccents ser es salons through a three/pronged system. 5e pro ide our clients ,ith fashion <e,elry and hair accessories that are both retailed in the salons as ,ell as used in hair styling. .n order to pro ide our clients ,ith the latest fashion <e,elry and accessories; ,e dedicate much of our time to studying national and international fashion trends. $y attending fashion sho,s in %os 6ngeles and %as 0egas each year; ,e can 2no, ahead of time ,hat ,ill be the popular colors and styles to come. 5e also ha e ,onderful relationships ,ith our endors; so that they can ad ise us on ,hat ,ill be popular for the upcoming seasons.

&is!lay Systems3 & er the years; ,eI e learned that salon ,ith stylish displays sell far more accessories than those ,ho do not. That is ,hy ,e ,ant all of our salons to use displays for their accessory retailing. .n order to pro ide our salons ,ith ine?pensi e; yet stylish rac2s and displays; ,e buy them in bul2 from a manufacturer; and sell them at a lo, margin. This allo,s clients to increase the Juality of their display at an affordable price. 6s a result; our clients sell more accessories; and re/order more. .t creates a ,in/ ,in relationship. E*ucati"nal Services3 Throughout the years; ,e ha e also learned that hairdressers lo e to learn. +air styling; <ust li2e the fashion industry; is an e er/changing ,orld; and in order to 2eep up ,ith it; one must learn the ne,est trends. .n the past; ,e used to <ust ha e cash and carry merchandise sho,s. 5hile admission ,as free; attendance at these sho,s ,as ery lo,. 5e added educational courses to our sho,s; teaching hairdressers about the up/coming fashion trends as ,ell as ho, to use our hair accessories to create ne, styles on their clients. E en though ,e charged admission for the educational sho,; our attendance ,as by far greater due to the percei ed alue of the ne, sho,s. They lo ed to learn ho, to use our products and about the hottest ne, trends. (o, ,e do educational sho,s annually in Spo2ane; 56 and 5yoming; and ,ill 2ic2 off our first Seattle sho, this fall. 5e ha e also e?panded our courses to include areas on ho, to become successful retailers by teaching business tips and s2ills. .n 344*; ,e ,ill pro ide in/salon courses; ,here ,e ,ill teach salon o,ners as ,ell as their employees ho, to use; sell; and display our merchandise in their salons. 5e are dedicated to 9

helping our clients become educated on ho, to be better hairdressers and better business people.

)n*ustry Analysis
Sal"n 4etailing an* Services "n the 4ise3 .n #""-; the D.S. beauty salon industry had gross retail and ser ice sales of o er E)4 billion dollars. .t is e?pected that this amount ,ill be o er E*4 billion by the end of this year. This is an industry ,ith enormous gro,th; yet there are only a handful of ,holesalers of fashion <e,elry and accessories that cater specifically to beauty salons. 5here the true gro,th lies in our industry is in the retail aspect. The ma<ority of salons B7* to "4 percentC only retail shampoo and related products BE?amples: Conditioner; +air Spray; (ail Polish; Cosmetics; etcC. 1any ha enIt e en thought of retailing fashion accessories or do not 2no, ho, to go about it. Ket the ma<ority of our ne, clients ,ho introduce fashion accessories in their salons ha e outstanding success. The 2ey for us to gro, in this industry is to get our name and products out there to the hairdressers. 5e do this by attending numerous true sho,s each year. $"m!etitive Envir"nment3 There are many ,holesalers of fashion <e,elry and accessories in Dnited States; but there are only a handful that choose to target +air Salons. .nstead most target clothing and <e,elry stores ,ho buy in larger Juantities. Since most of these ,holesalers reJuire minimum orders and bul2 buying; salons are unable to purchase in small Juantities; and therefore they donIt buy fashion accessories for resale. $y ,or2ing in the $eauty Salon industry for many years; ,e ha e become to understand our 10

clientele. +airdressers li2e to be able to buy smaller Juantities of each style; instead of a doGen of each style. 5here many ,holesalers see this as a hassle; ,e sa, it as an opportunity. 5e brea2 bul2 for our clients; and in return they buy a large assortment of merchandise. $y focusing on their needs and ,ants; ,e ha e disco ered an industry ,ith enormous potential. .n fact; ,e ha e become the second largest ,holesaler of fashion accessories to salons in the Pacific (orth,est; and the only ,holesaler that pro ides educational ser ices. 5e ha e also e?panded to sell in Dtah; (e ada; 6riGona; California; and Te?as. 5e also plan to attend the largest trade sho, in the industry in Chicago ne?t year. BFor more information on our competition; please see the competition section.C Barriers t" Entry3 The costs related to entry into our industry are actually relati ely lo,; <ust in estment into the in entory; but there are numerous other barriers. The main barrier is being able to find clients. +air dressers typically do not li2e to be approached ,hile ,or2ing; but instead prefer to conduct buying business on their off time. This ,ould ma2e it difficult for someone ,ho does not already ha e connections to the industry to find ne, clients. The best ,ay to meet ne, clients is by attending hairdresser trade sho,s. 6t these sho,s; ,e can meet thousands of hairdressers in <ust a fe, days. .n fact the %as 0egas +air and (ail E?po dra,s o er '4;444 hairdressers. 5e ha e special contracts to do these trade sho,s; because ,e ha e relationships ,ith the distributors and they ga e us contracts to do their sho,s. .t ,ould be ery difficult for someone outside the industry to gain these contracts.

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6nother barrier to entry is being able to understand the hair dressing industry. .t has ta2en us many years to get an understanding of the ,ay the salons operate. For e?ample; some salons are leased stations salons; ,here each stylist has their o,n space in the salon; as ,ell as their o,n retailing rac2s; ,here as in a commission salon; the o,ner o,ns all of the retail merchandise and the stylists are paid commissions on ,hat they sell. Selling to these different types of salons are completely different; and this is something an outsider ,ould not readily understand. .t has also ta2en us years to understand ho, to buy for salons. There are three main styles of salons: +ip and Trendy BFashion For,ard Salons; usually younger clienteleC; Family BParents and 8idsC; and 9olden &ldie Salons BSeniors ,ho ma2e ,ee2ly trips to get a shampoo setCBsee salon category table on pageLLLC. Each style caters to a different mar2et; and retails different merchandise. 6nother barrier is finding good endors and merchandise. & er the years ,e ha e learned ,hat type of merchandise ,or2s best for each style. (o, our clients trust our ad ice on ,hat ,ould ,or2 best in their salon. This is no, something that can be Juic2ly learned by outsiders. 5e ha e also found endors that ,e can trust and rely on; something that too2 us many years to establish. 5"ng Term /!!"rtunities3 The long/term outloo2 for our industry is ery good. 5hile specific fashions and trends may go out of style; the fashion industry is here to stay. 6dditionally; there is a beauty salon in e ery small to,n in the entire Dnited States. 0irtually e eryone has hair; and needs to get it cut; so hairdressers ,ill al,ays be in business.

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The top 34 percent most successful and profitable salons in the D.S. generate '*/ *4 percent of their re enue from retailing; ,hile the a erage salon generates only -/#3: from retailing. This is another reason ,hy our long/term outloo2 is so good. The ma<ority of the salons out there do not currently retail fashion accessories. This means there is massi e e?pansion potential into the salons that do not retail these products. 5e can help them become far more profitable and successful by adding more retail to their salon.

,ar-eting Plan3
+aircare 6ccents distinguishes itself from its competitors by focusing on pro iding salons a ,ay to increase their profits; add beauty to their salon; and become better hairdressers as ,ell as business people. 5e ha e many years e?perience in the $eauty Salon .ndustry and understand the needs of hairstylists. Haircare Accents ,eets $ust"mer 6ee*s : 5e understand that hairdressers are different than store retailers. 6s Mhair artistsM; stylists li2e to finds ne, ,ays to incorporate hair accessories into their styles. They donIt <ust sell trin2ets; they are style and fashion ad isers to their clients; and deser e to be treated as such. This is ,hy ,e donIt <ust sell merchandise. 5e offer a three/pronged system of ser ice that pro ides hairdressers ,ith all the merchandise; materials; and s2ills needed to become the ultimate hairstylistHfashion ad isor. +airdressers ,ant to deal ,ith a ,holesaler that not only understands the fashion industry; but the beauty salon industry as ,ell. This is ,hat +aircare 6ccents pro ides.

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$ulture "2 E*ucati"n3 +aircare 6ccents has a culture focused on education. 5e understand that hairdressers are the e?perts in the beauty industry. They ad ise their clients on ,hat hair stylesHcolors are flattering on them; and deli er these loo2s. This de elops a relationship of trust bet,een the stylist and their clients. 5e educate hairstylists on ho, to ta2e this relationship to the ne?t le el. 5e teach them ho, to not only style a personIs hair; but their entire loo2. This means ,hat fashion <e,elry and accessories are flattering as ,ell. They can help their o,n clients find the hottest and freshest merchandise. $y offering this full beautyHfashion ser ice; the hairdresser ,ill be pro iding more customer ser ice in their salon as ,ell as by earning more profits. This system is deli ered through educational classes and ad ising pro ided by +aircare 6ccents. 5e teach hair stylists ho, to use our products; but also ,hat the stylish trends are; ho, to display and sell the merchandise; and ho, to be effecti e ad isors to their clients. 1any ,holesalers a oid selling to hairstylists claiming their artistic nature ma2es them MbadM business people. 5e choose to see that as artists; hairstylists ha e client ,ho trust their ad ice; and that puts them in a ,onderful business position; they <ust need a ,holesaler ,ho pro ides the educational ser ices to steer them in the right direction. 5e help hairdressers become better business people.

Hair7Tra*e Sh"8s3 +airHTrade sho,s are 2ey to +aircare 6ccents mar2eting plan. .t is the fastest; easiest; and least e?pensi e ,ay to meet ne, clients. 5e ha e sho, contracts ,ith 14

Pacific $eauty; .nternational Salon E?pos; +air 1echanics ,arehouse; 5ashington 6ssociation of Cosmetology; &regon 6ssociation of Cosmetology; %as 0egan +air and (ail E?po; and more. 5e attend o er fifteen hair trade sho,s a year; ,ith gross sales a eraging around EN;444 per sho,. &ne sho, in specific; the San Oose 5est Coast Sho,; has an attendance of o er 34;444 hairdressers. .n 344'; ,e grossed o er EN;444 in one day at this sho,; and e?pect more sales this year. 5e ha e our o,n educationalHbuying sho,s in Spo2ane; 56 and 5yoming annually. 5e also plan to 2ic2/ off our first Seattle sho, this fall. 5e ha e a part/time employee ,ho ,or2s many of our trade sho,s on a commission basis. 5e plan to hire more sales associates this year; so that ,e can attend more sho,s throughout the nation. They ,ill ha e their tra el e?penses paid for and ,ill ,or2 on a commission B,hich is the industry standardC. /nline $atal"g3 &ur online catalog ,,,.+aircare.ibuilder.com; is a ,holesale only ,ebsite that offers pictures of our merchandise for our accounts to order. .t is our best ,ay to ser e our clients that ,e cannot regularly meet in person ,ith. They can loo2 at all of our merchandise and order off the ,ebsite or they can ma2e the order by phone. Seattle Sh"8r""m3 .n Oanuary 344); +aircare 6ccents open a Seattle Cash and Carry sho,room in the (orthern Passage $uilding in Seattle. .t is a place ,here our Pacific (orth,est clients can come to in person to see our merchandise and get ad ice. .n the sho,room; they get one on one attention to learn about our products and ho, to useHsell them. This has been ery ,ell recei ed; and more and more clients begin to use the sho,room. Stacey 5illiams; our head of 1ar2eting; runs the Seattle Sho,room. She has one other 15

full time employee; Oosanna +erman. 5e plan to e?pand our sho,room operations this year by hiring an administrati e assistant and t,o employees to process and pac2 orders for shipping. )n-Sal"n 9isits3 1any salons prefer that ,e isit them in salon by appointment. 6rthur and 6lice 6ndre,s tra el around 5yoming; .daho; &regon; and Eastern 5ashington calling on our biggest accounts in person. 5e bring the merchandise to them in their salon. This ,ay they can ie, the products in person and get ad ice from 6rthur and 6lice. 5e plan to e?pand our sales staff this year; in order to ha e more sales associates out in the field selling to salons. They ,ill ,or2 on a #4: commission basis. &irect ,ailing3 5e also direct mail small flyers to salons in the Pacific (orth,est sho,ing our merchandise and ser ices. .t lists our ,ebsite and sho,room directions. 5e ha e had some success recruiting ne, clients this ,ay. Bran*ing3 +aircare 6ccents is in the process of creating a pri ate/label brand called Floralities for our merchandise. The name Floralities is a play on 0ictorian charm as ,ell as the essence of a blooming flo,er. .t is fresh and hip; yet ,ith classic beauty. The Floralities brand is in the process of being trademar2ed. .t ,ill be found both on our merchandise and the display systems. Floralities accessories ,ill only be sold in salons. This ,ill create brand recognition for our products that ,ill dra, people into the salons. This ,ill be another ad antage +aircare 6ccents gi es its clients. Sun river:s P"siti"n in The 4egi"n3 16

5e only mo ed into the SeattleHPortland mar2et about four years ago; and already ,e are the number t,o ,holesaler of fashion <e,elry and accessories to salons in the Pacific (orth,est. 5e are number one in 5yoming; .daho; and Eastern 5ashington. 5e ha e had steady gro,th o er the years; and ,ith our ne, e?pansions of a Seattle sho,room as ,ell as an online catalog; ,e can only e?pect to 2eep gro,ing all o er the 5est Coast and more. ,ar-et &escri!ti"n +aircare 6ccents operates in the 5estern Dnited States. 5hile the ma<ority of our clientele is in 5ashington; &regon; .daho; and 5yoming; ,e also ha e clients in California; 5yoming; (e ada; Dtah; 6riGona; 6las2a and Te?as. 5e ha e o er one thousand accounts in these states that ,e ser ice though trade sho,s; in salon appointments; phone orders; a Seattle Sho,room; and an online catalog. Target cust"mers3 5hile ,e do ha e some boutiJues and shops that ,e sell to; the ma<ority and focus of our clientele is beauty salons.

$eauty Salons can be bro2en into the follo,ing outline: .. The Salon .ndustry 6. $arber Shops $. $eauty Salons Bfocus on hair styling; retail on the sideC 17

#. %eased Station Salons a. ,here stylists rent their station and may retail in their o,n station b. They are typically the lo,est olume retailers. 3. Commission Salons a. Stylists are paid a commission salary for their ser ices. They may or may not be paid commissions for retail products. !etail product bought by o,ner.C

b. They are typically the highest olume retailers in a salon format. '. Chain Salons a. ,here stylists are paid an hourly ,age. They may or may not be paid commissions for retail products sold. B!etail products by o,ner.C b. They are typically medium olume retailers. C. $eauty SupplyHSalon Bfocus on retail; hair styling on the side.C a. commission or ,age paid sales associates. b. They are the highest olume retailers in the industry. D. (ail Salons a. Come in the same format as beauty salons. b. Typically lo,er olume retailers than beauty salons. E. Tanning Salons a. Dsually ,ith hourly ,age paid employees. b. 9ood retailers of sunglasses; toe rings; and an2lets. F. Spas 18 bought

a. Dsually hourly ,age paid employees b. Strong retailers of higher end <e,elry.

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The Style of the Salons .. $eauty Salons 6. Fashion For,ard Salons #. Typically in urban areas and college to,ns. 3. Target Customers are #7/)* years old ,omen. '. 6 erage +air cut E'4.44 and up ). Salons Products of choice: $ed +ead; 6 eda; and Sebastian $. Family Salon #. .n small to,ns and suburban areas 3. Target Customers are families '. 6 erage 6dult hair cut E#*.44 and up ). Salon Product of choice: Paul 1itchell and 1atri? C. 9olden &ldie Salon #. Small to,ns; Suburban areas; and !etirement Communities 3. Target Customers: ** and older ,omen ,ho get shampoo sets. '. 6 erage +air cut: E#*.44 and up ). Salon Product of Choice: 6pple Pectin and %amaur ,ar-et 4ea*iness3 5e conducted a sur ey of '7- hairdressers at a recent Portland +air Sho,. This sur ey sho,ed the follo,ing: "#: of our clients still retail our merchandise77: ,ill loo2 at our ne, ,ebsite

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3#: plan to isit our ne, sho,room Bthis is lo, because the sho,room is ' hrs from PortlandC -): of people ,ho had not e er met us ,ill no, be selling our merchandise *3: of our ne, clients did not 2no, about or ho, to find fashion accessories to sell in their salons. #44: of hairdressers sur eyed ,ould be interested in ,ays of impro ing their salon profits. Strategic /!!"rtunities3 Since there are thousands of salons in the 5estern Dnited States that do not 2no, about or ho, to find fashion accessories to sell in their salon; and irtually all hairdressers are interested in ho, to increase profits in their salon; sho,s that there is huge mar2et potential to increase our number of clients. Currently ,e attract ne, customers through trade sho,s; our ,ebsite; and ,ord of mouth; but ,e plan to start ad ertising in hairdressing trade magaGines as ,ell. $"m!etiti"n3 .ndirect Competitors of +aircare 6ccents can be seen as any entity that sells fashion <e,elry and accessories. This could be Claires; .cings; and e en (ordstrom. This is ,hy ,e ma2e sure to 2eep our prices lo, enough that our salons can retail our merchandise at prices competiti e and many times lo,er than these retailers.

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,ain $"m!etiti"n3 Direct Competitors for us are fashion <e,elry ,holesalers that cater to salons. .n the 5estern Dnited States; our ma<or competitor is (oble and 5ulf. They ha e been ,holesaling fashion <e,elry out of Seattle for many years. They are the number one ,holesaler of fashion <e,elry and accessories to salons in the Pacific (orth,est. Ket they do not focus specifically to salons. The ma<ority of their business is to retail stores. 6nother competition in the 5estern D.S. is Chars of %aguna. CharIs sells high end 6ustrian Crystal <e,elry to stores and $eauty Salons mainly in California; but also has a presence in the (orth,est. A*vantages /ver $"m!etiti"n3 / $eauty salons are our focus; ,ere our competitors caters first and foremost to stores; and secondly to salons. /&ur staff is ery e?perienced ,ith a combined fifty/one years e?perience in the $eauty Salon .ndustry bet,een our fi e employees. /5e carry the latest and most up to date trends. /!ac2s and displays are pro ided for our clients. / Educational ser ices are pro ided to our clients about the latest trends; ho, to use our products in hair styling; and ho, to be a successful retailer. /5e are a multi/channel ,holesaler offering trade sho,s; phone ordering; in/ salon sho,ings; an online catalog; and a Seattle Sho,room.

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$"m!etiti"n $"m!aris"n "2 Services3

+aircare 6ccents Sells to Salons: Focus on Salons: Sells +air Clips: Sells Displays: Seattle Sho,room: 5ebsite: Pro ides Educational Sho,s: Does in/Salon Sho,ings: $randed %ine

(oble and 5ulf

Chars of %aguna

Kes Kes Kes Kes Kes Kes Kes Soon

(o Kes (o Kes Kes (o (o (o

(o (o (o (o (o (o (o Kes

/!erati"ns
The core of +aircare 6ccents operations is our three/pronged system of ser ice. To fully employ the system; ,e use multi/channels of ser ice to ser e our clients. Trade sho,s; in/salon isits; a ,ebsite; a Seattle Sho,room; and phone ordering ma2e up the channels of operations. .n order to ser ice these channels; +aircare 6ccents has a ,arehouse in Eastern 5ashington State; ,here land is ine?pensi e. 5e also ha e a leased facility in Seattle that ser es as a sho,room and shipping headJuarters. Haircare ;areh"use3

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&ur ,arehouse is located in 1iddleton; 5ashington. $eing centrally located to our core cities of clients; 1iddleton is a strategic location for our headJuarters. .t is three hours from Seattle; four hours from Portland; an hour from Spo2ane; and si? hours from $oise. This ma2es is easy for 6rthur and 6lice 6ndre,s to commute to sho,s and in/Salon isits in these cities. 6dditionally; 1iddleton has ery lo, real estate prices; ,hich allo,ed +aircare to acJuire the property at a ery lo, price. $eing the headJuarters of +aircare 6ccents; the ma<ority of in entory is stored here. employees ,or2s out of 1iddleton. Seattle Sh"8r""m3 .n Oanuary 344); +aircare 6ccents opened their Seattle Sho,room in a reconditioned building located bet,een do,nto,n and the D/District. 5e chose this location because it ,as centrally located for clients coming from both (orthern and Southern Seattle and the rent is Juite reasonable. Currently ,e ha e a lease through 6ugust 344). The sho,room ser es as a place for our Seattle clients to come and ie,Hpurchase merchandise and displays in person. .t is also ,here all of our ,ebsite and phone orders are shipped from. Currently there are t,o full time employees ,or2ing in the sho,room. The sho,room has opened ,ith ery good success. 1any clients ha e begun to shop the store freJuently; and it ser es ,ell as the shipping center of our organiGation. ,erchan*ise /!erati"ns3 Currently; +aircare 6ccents turns o er its in entory t,el e times a year. The high le el of turno er is crucial; because it is the fashion industry. Fashions Currently t,o full time and one part time

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ha e a relati ely short lifetime; and that is ,hy ,e must stay on top of trends. $ecause of this; ,e ha e to ha e e?tremely good endor relations. 5e ha e spent years finding our suppliers. 5e ha e established strong relationships ,ith our current suppliers that gi e us fle?ibility and reliability; ,hich allo,s us to reorder Juic2ly on the hottest merchandise. The relationships ha e also gi en us some e?clusi e distribution rights. Ket to find e en better suppliers; are also loo2ing into sourcing from suppliers abroad. 5e ha e plans to attend buying sho,s in 8orea and 1e?ico later this year. Since our company is ,holesale and has had a limited staff; ,e ha e ne er implemented a comple? in entory control system. Ket ,ith the rapid gro,th our company is e?periencing; ,e are in the processing of purchasing a bar code scanning system that ,ill allo, us to trac2 all of the in entory that goes through the company. This system ,ill also help is to trac2 sales trends and information. &is!lay System /!erati"ns3 & er the years; ,e ha e learned that Salons ,ith effecti e display systems sell far more accessories; than salons that do not; yet many of our accounts ,ould not go to fi?ture stores to buy displays. They said that the displays ,ere too e?pensi e; and it ,as too much of a hassle to find the right displays. This ,as ,hen ,e realiGed that ,e needed to start supplying our clients ,ith affordable display systems. Currently; +aircare 6ccents pro ides our clients ,ith the opportunity to buy a ,ide assortment of displays for their salon. 5e buy them in bul2 from a manufacturer that designs them specifically for our

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merchandise. This relationship allo,s us to buy personaliGed displays at a ery lo, cost; ,hich ,e sell to our accounts at a lo, profit margin. 5e are not trying to ma2e a huge profit on the displaysF ,e are trying to ma2e sure all of our accounts use them. .f they are too e?pensi e; they ,on=t buy them. $y ma2ing them affordable; ,e are insuring that most of our accounts ,ill buy them; and as a result; they ,ill sell more accessories. E*ucati"nal Services /!erati"ns3 5e realiGed early on that hairdressers desire educational sho,s. &ur first sho,s focused on the artistic use of our accessories. 5e contracted ,ith a professional platform artist Bprofessional hairstylistC to teach the course. The success ,as great. (ot only ,as our attendance higher than our pre ious non/ educational sho,s; but people also bought more merchandise after seeing the creati e ,ays to use the accessories. (o, our educational sho,s offer artistic information; fashion information and business tips. 5e find that this pac2age of educational ser ices helps to transform our clients from someone ,ho <ust cuts hair; to a fashion and style e?pert. They gain confidence through these educational sho,s; and become more effecti e stylists and business people. 5e currently hold sho,s annually in 5yoming and Spo2ane; and ,ill ha e our first Seattle sho, this fall. Since ,e contract ,ith platform artists; they pro ide the necessary eJuipment needed to teach the sho,s. &ur employees teach the fashion and business portion. .n 344*; +aircare 6ccents also plan to begin .n/Salon educational sho,s. These sho,s ,ill be taught by our sales staff; and they ,ill help educate the

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salon o,ners and their employees ho, to use our products; follo, the latest fashion trends; and be a more effecti e retailer. Pr"<lems A**resse*3 The main problem ,ith +aircare 6ccents= operations is our cash flo,. 5e ha e al,ays been internally financed. Due to this; ,e ha e had to be more conser ati e ,ith our funds. This has caused us to 2eep a smaller in entory and limited amount of staff. Currently our amount of clients has outgro,n our small staff=s capacity to ser e them. Plus ,e ha e been in ited to e?hibit at more trade sho,s than ,e currently ha e the staff for. Due to our connections and gro,ing client base; +aircare 6ccents plans to hire more sales people as ,ell as administrati e assistant and shipping specialists. 5e feel that once these ne, employees <oin our team; ,e ,ill be able to attend more trade sho,s; due more in salon sho,ings; attract business to our ,ebsite and as a result; gro, at a much higher rate. .n order to achie e this e?pansion plan; +aircare plans to see2 enture capital to help finance these efforts.

,anagement
=ey Em!l"yees3 6lice 6ndre,s; President. 6lice 6ndre,s has ,or2ed in the $eauty Salon industry since the mid/#"-4Is ,hen her parents opened $eauty and $arber Supply. .n the late #"74Is; she and her husband opened +air 1echanics 5arehouse in %aramie; 5yoming. She ,or2ed for +air 1echanics full/time for fi e years before founding +aircare 6ccents in #"73. .n the mid/#"74Is; the 6ndre,s=s sold +air 1echanics 5arehouse. 6lice continued to run +aircare

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6ccents part/time as she ,ent to ,or2 for $ig 1ountain Salon Consultants as a sales associate. 6lice ,or2ed for $ig 1ountain Salon Consultants for ele en years; earning recognition as the top sales associate e ery year. 6fter mo ing to Eastern 5ashington; 6lice started ,or2ing for +aircare 6ccents full time as President. +er sales e?perience and industry 2no,ledge ma2e her a po,erhouse as President. 6rthur 6ndre,s; 0ice/President of &perations. 6rthur 6ndre,s began ,or2ing in the $eauty Salon .ndustry in the late #"74Is ,hen he and 6lice 6ndre,s opened +air 1echanics 5arehouse. 6fter o,ning the distributorship for eight years he and 6lice 6ndre,s sold +air 1echanics 5arehouse in the mid/ #"74Is. +e stayed on as a sales associate and 0ice/president of Sales. .n his ele en years as 0ice/President of Sales; 6rthur ,as al,ays the top/grossing sales associate at +air 1echanics 5arehouse. +e also ,on numerous manufacturer a,ards from companies such as: Scruples; (ucleic 6; and SunglitG. 6rthur came to ,or2 for +aircare 6ccents in 3444; and sales ha e risen astonishingly since his arri al. +is e?perience in Sales and Distributorship operations ma2es him an e?cellent 0ice/president of &perations. Stacey 5illiams; 0ice/President of 1ar2eting Stacey has been around the $eauty Salon .ndustry since birth. She began ,or2ing trade sho,s for +aircare 6ccents at age #'. She is currently a Senior +onors Student at the Dni ersity of 5ashington $usiness School ,ith a focus in mar2eting. Stacey began ,or2ing for +aircare 6ccents full time in fall 344#. She runs the Seattle Sho,room and company ,ebsite. Stacey adds a

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fresh; young perspecti e to the business. Plus her education in 1ar2eting at the Dni ersity of 5ashington ma2es her an e?cellent 0ice/President of 1ar2eting. 0ice/President of Finance; To $e Selected: .n Fall 344); +aircare 6ccents plans to add a third 2ey management position of 0ice/President of Finance. This person ,ill be selected based on their education and e?perience in finance and accounting. Ass"ciates3 .n addition to the abo e employees; +aircare 6ccents has one full/time sales associate and a part/time sales associate. Ket ,ith the rapid gro,th of +aircare 6ccents; ,e plan to hire more sales associates; an administrati e assistant; and pac2ing specialists this year. The company also uses a ,ide ariety of consultants for legal; accounting; fashion and design. A*vis"ry B"ar*3 +aircare 6ccents is in the process of forming our ad isory board. 5e ha e already secured t,o hairdressers and an 6d ertising Creati e Director to ser e on our 6d isory $oard. ,anagement Structure3 President 6lice 6ndre,s is in ol ed in all aspects of the day/to/day operations of +aircare 6ccents. She ,or2s closely ,ith the 0ice/Presidents to support acti ities o er ,hich they ha e specific responsibility. Each 0ice/ President is gi en a ,ide degree of decision/ma2ing authority in their area of the company.

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$ecause the company has a strong emphasis on customer ser ice; ,e 2no, that our staff must be highly moti ated to deli er this high le el of customer ser ice. Therefore +aircare 6ccents has instituted a profit sharing plan. Each sales associate ,ill share in 4.*: of the profits o er the annual goal each year. This aligns the interests of our employees ,ith the interests of the company.

$"mmunity )nv"lvement
+aircare 6ccents ie, its community as the $eauty Salon community in general. That is ,hy +aircare 6ccents supports the $eauty Salon industry ,ith donations to the 5ashington State Cosmetology 6ssociation and &regon State Cosmetology 6ssociation. These t,o organiGations promote furthering education of hairstylists as ,ell as pro iding competiti e contests for hairdressing students. These Cosmetology associations promote e?cellence in hairdressing; and that is ,hy ,e choose to support these non/profit organiGations.

&evel"!ment> ,ilest"nes> an* Ex!ansi"n

5"ng-Term %"als3 +aircare 6ccents plans to gro, steadily o er the ne?t fi e years; becoming the largest ,holesaler of fashion <e,elry and accessories to salons in the 5estern Dnited States. 5e ,ant to pro ide a ery high le el of customer ser ice to our clients through our triple pronged system of ser ice. 6nother goal is for our brand Floralities to gain strong brand recognition as a line of hip; fresh fashion accessories. Strategy 2"r Achieving %"als3

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To accomplish this; +aircare 6ccents plans to increase our staff to include sales associates in all of our region=s ma<or cities including: Seattle; Portland; Spo2ane; $oise; 1issoula; Salt %a2e City; %as 0egas; Phoeni?; San Francisco; and San Oose. This ,ill not be a ris2y e?pansion; as the sales associates ,ill be paid on commission. 5e also plan to achie e our e?pansion goal by using our ne, sales force to attend more trade sho,s each year. This ,ill result in an increase in ,ebsite and phone order sales. .n order to ser e the ,ebsite and phone orders; +aircare plans to hire an administrati e assistant and order pac2ing specialists. .n order to 2eep our customer ser ice le els high; ,e ,ill administer in/ depth training to all of our ne, sales associates. .n addition; +aircare 6ccents= profit sharing plan 2eeps sales associates more moti ated to pro ide e?cellent customer ser ice. 5e also plan to 2eep our cultural base of education ali e in our company. This means that ,e ,ill only hire ery talented platform artists for our educational sho,s. 5e ,ill also 2eep up to date on the latest fashion information and trends by attending fashion sho,s. .n order to achie e strong brand recognition for our accessory line Floralities; ,e plan to use creati e pac2aging and displays. 5e also plan to 2eep on top of the latest fashion trends; using only the most stylish accessories for our Floralities line. %astly ,e plan to implement an ad ertising plan to get the Floralities name out there to the public.

0inancials
+aircare 6ccents has been increasing re enue by o er '4: for in each of

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the past four years ,ithout e en adding more sales associates. 5e plan to e?pand our staff to include more sales associates and staff employees this year. .n order to pro<ect sales for the ne?t three years ,ith the e?panded staff; ,e used historical financials and applied them to a larger staff. For e?ample; ,ith more sales associates; ,e can increase the number of trade sho,s ,e attend; number of salons ,e isit; etc. This can all be seen in the Sales Pro<ections section of the appendi?. The chart belo, illustrates the pro<ected sales re enues ,ith an e?panded staff; for the ne?t three years. .t is di ided up by Juarter.

5e also used historical data to pro<ect ,hat the e?penses ,ould be ,ith an e?panded staff. These e?penses are based on sales associates ,or2ing on commissions; and using many of our e?isting facilities. $elo, are charts illustrating our pro<ected gross profit and net profit after ta?es:

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To see more detailed financials please see the appendi?.

$"nclusi"n
The ma<or problem hindering +aircare 6ccents= gro,th is sufficient capital to hire more employees; increase in entory; and attend more trade sho,s. +aircare already has thousands of clients in a t,el e state area. They already ha e loyal suppliers. They ha e a staff ,ith a combined fifty/one years industry e?perience. They already ha e a three/pronged system of ser ice in place that is distributed through multi/channels. They ha e all of the tough problems sol ed and can put the ne, capital to immediate; producti e use.

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6ppendi?:
Financials:

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