Think of a cosmetic/beauty store as a place where womenfolk can walk in to order for various cosmetic products and receive beauty This type of business can only reasonably be carried out in urban areas since the women who have the spending power and the social exposure to demand these products.
There are more than 55 million women in Nigeria with about 22 million of them residing in the urban centers – towns and cities of Nigeria. Urban Nigerian women have a strong desire to look good, to be the center of attention especially from the male folk and be the envy of their fellow women. Looking good for many women has a direct effect on their emotional well-being which in turn affects their confidence and willingness of men to do them favours. In a nutshell, when women look good, they tend to have things going well for them hence why they won’t mind spending good money to look good. Women change their hair, nails, buy all kinds of creams, perfumes, pedicure and manicure products to name a few on a weekly or bi-weekly basis depending on their budget. This is a very lucrative business and you'll see the breakdown shortly.
The Opportunity in Cosmetic/Beauty business in Nigeria
· More than 6 million middle class women in Nigeria spend over N10,000 monthly on looking good – hairdo, cosmetics, fashion accessories etc that is a huge market amounting to over N720 billion per annum.
· Most of these women reside in major towns and cities and word travels fast among them once a great beauty store that can meet their needs opens for business.
· The competition in this business is not very strong as most beauty stores in Nigeria are poorly managed implying a well-run beauty store will make a difference in the market
· The marketing strategies are numerous, highly flexible and cost effective
The Challenges in this business
· Bad and difficult Customers who create problems for workers at the beauty shop
· Many fake cosmetic products in circulation
· Inadequate number of qualified and competent beauticians who can drive sales to your business
Steps to starting a beauty salon in Nigeria
· Register your business name and trademark, obtain license
· Raise the required startup capital
· Rent a shop in a Strategic Area
· Shop design, setup and installation of equipment
· Stock your shop with quality cosmetic products
· Employ and train staff
· Commence operations and marketing
Startup Capital requirements for Cosmetics/Beauty Store
· Salon equipment and machines – N800,000
· Electrical gadgets – N300,000
· 5.5 KVA Generating Set – N160,000
· Cosmetic Stock – N800,000
· Human Hair and other hair products – N1,200,000
· Contingency – N1,000,000
· 3 months Salaries – N600,000
· Cash at hand – N900,000
· 2 years Rent – N1,200,000
· Total – N6,960,000
Financial Projections and Analysis
· Estimated total first year sales: N14,400,000
· Gross Profit Margin: 60%
· Operating expenses: N5,760,000
· Breakeven is expected in 7th Month
· Payback period: 13th month
· NB: Projection is based on assumptions of 16 customers per day with service fee of N3,000 per customer for 300 working days. You’ll need at least 8 workers but you may start off with 4.
If your marketing and operations are good you should be able to make more than N6,000,000 profit after tax in the first year and recoup your investment within 13 months.
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