Tatto Parlor Business Plan

Basement Ink tattoo and laser removal, will open a small tattoo parlor in suburbs of Chicago, Tinley Park IL, where both people looking for their first tattoo or people that wish to switch to a new artist will have a chance to meet a few established, talented artists. This parlor will be the only one of its kind in a 15 mile radius, because of all of the strict laws in the town. The business will provide small to large tattoos from existing designs and basic tattoos that can be executed in one hour, and full half-day sessions with the artists are also available.

The artists can offer extended consultations and custom design work with the customers as needed. The prices of the individual artist vary, but one thing is for sure the shop will have minimum of 60 dollars for a tattoo.

One of the artists in the shop, Rick (co-founder), also does award winning portraits in black and gray form. Another service offered is laser removal, by state trained professionals with a nurse on hand during the removal.

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In the immediate future, the parlor will also open a piercing and dermal implant room, with a professional piercer (Coz). The business will also sell shop specific clothing items and posters featuring designs created by the artists at the business.

The founders, Terry and Rick (a tattoo artist and silent partner), seek a $25,000, two-year loan to launch the business. The business needs only $55,000 to launch, due to the low capital requirements of the business and the intention to use low-cost marketing techniques and direct selling to find initial customers.

This low startup cost and the high margins on tattoo work (around 85%) will lead to positive cash flow within 6 months and the ability to repay this loan easily, as well as provide impressive dividends to the owners and a generous salary to the additional freelance artist contracted by the business. Expected sales should exceed $250,000 by the third year based on the full-time work of these individuals.

Objectives

Basement Ink Tattoo will meet the following objectives over its first three years of operation: * Reach annual revenues of approximately $250,000 in a three year period * Successfully create 6000 tattoos and piercings over the next three years * Remove any unwanted tattoos that people have received

* Earn net profits for the owners, for significant total compensation to the two owners including salaries and dividends * Help bring some much needed revenue for the area, while providing superb workmanship and creativity

Mission

Basement Ink Tattoo will create tattoo art for customers in the Tinley Park IL area, through the flash hanging on the wall or custom pieces the individual brings, and other products by the shop's tattoo artists. The business wishes to create a full-time living for Terry and Rick , the owners, while sharing revenue with the additional employed artist who will help to build a business.

Company Summary

Basement Ink Tattoo, to be located in Tinely Park IL on 165th Cicero Avenue. The business will be founded and run by Rick , an experienced tattoo artist, and Terry who is the silent partner and investor. There will be five additional artiest hired to expand the options for customers and to make better use of the company's resources. Along with the artiest, the Piercer will also provide piercings of all types as well as do all the laser removals. The business will provide color tattoos both from customs designs by the artists and the flash hanging on the walls. The T-shirts sold at the shop will have the logo of the shop which the owners will create upon opening. Customers will include both those new to tattoos and those that have previous tattoo experience; ages will vary from 18 all the way to 60.

Company Ownership

The business is established as a limited liability partnership between Terry and Rick, with 50% ownership by Terry and 50% ownership by Rick.

Start-up Summary

Start-up expenses for Basement Ink Tattoo are item specific foe a Tattoo shop. Licenses and permits include a building permit for renovation on the space, business licenses, health department permit, occupancy permit, and signage permit. Business cards for the tattoo artists and flyers advertising the grand opening. Insurance will be secured from all-state insurance or another tattoo shop insurance provider. This offers liability of $250,000, property of $10,000, and additional insurance for the landlord. Rent is for one month for renovation of the location prior to opening. The location will be on 165th Cicero Avenue in Tinley Park IL, and will feature a front desk for reception, waiting are and five tattoo stations, a sterilization room, a piercing room, and a two bathrooms. The owners will seek a space requiring minimal or no renovation to achieve this layout. Computer software includes a basic inventory program, and accounting software (basic QuickBooks).

Website development is for the creation of a basic website and grand opening advertisements include small ads in local papers in the weeks preceding the opening. Tattoo supplies include chemicals (sterilizers, antiseptics, disinfectants, ointments and soap), paper products, linens, towels, gloves, and skin marking supplies (thermofax, stencil paper, pens, skin scribes, light box). Assets required include the cash needed to reach cash flow break-even. Start-up inventory includes the inks and dyes needed to stock the store for launch.

Other current assets include a security deposit for the shop location. Long-term assets include a sign for the exterior of the shop, reception area items (a reception desk, chair, computer, credit card reader, cash register, phone), tattoo station equipment (two tattoo chairs, mirrors, lights, tool box, hazard waste container, covered trash bin), waiting area furniture (loveseat, coffee table, five binders for artiest previous work), a sound system (speakers, xm radio), a digital camera, office equipment (printer/scanner/copier, phone), and sterilization room equipment (ultrasonic unit, autoclave, sterilization pouches).

Products and Services

Basement Ink Tattoo will provide the following services to customers:
* Introductory/shop-minimum tattoos
* Basic tattoos (~1 hour session)
* Full sessions (2-6 hour sessions)
* Piercing and laser removal

Introductory tattoos are for those who are new to tattoos. They are basic, small designs by the artists or Flash designs. Custom designs can also be provided as an introductory tattoo, depending on the size. These tattoos can generally be finished in 45 minutes and with a minimum amount of consultation with the client. Most customers who get a small tattoo usually never come back for another. The price for a shop minimum tattoo will be $60 at the opening. Basic tattoos offer some consultation with the customer and about an hour of work with an artist. These are not generally custom-designed tattoos, but may include some customization of existing designs. The price for this service will start at $100 at the opening. Full sessions allow the customer to come in to the shop with their own design or a design off the wall and have it fully customized the way the picture it.

The customer will have extensive meetings with the artiest before the service is rendered. The customer has to sign a release before the custom piece is put on. The price for these sessions will be $50 to $100 an hour at the opening. Piercing and laser removal will be done by one individual that has been trained in those areas. The customer can get many different piercings (ear, belly button, lip, labret, tongue, etc...).The prices for the piercing and laser removal depend on what is getting done.

Piercings will start off at $30 and laser removal depends on the area, so a consultation is required. Clients can view the binders (photos and images of designs by the artists and flash designs they can work from) while sitting on the couch in the shop's waiting area. Rick will discuss options and prices with the customers if the artists are working with customers at the moment. Basement Ink Tattoo will also sell shop specific products in the store with designs created by the shop's tattoo artists. These include t-shirts, hoodies, caps, and potentially other items. The items will be sold for an average of $20, which will vary depending on the type of item.

Market Analysis Summary

Tattoos are no longer sought out only by outcasts. A fall 2006 survey by the Pew Research Center found that 36% of Americans aged 18 to 25, and 40% of those ages 26 to 40, have at least one tattoo. In a Tinley Park IL, these numbers may be higher. The market is segmented into:

* Tattoo newbies or dabblers (those who get one tattoo)
* Tattoo collectors (those who get numerous tattoos)

Market Segmentation

The market segments in the Tinley Park IL area include residents of Tinley Park and the neighboring towns in the Chicago land area traveling too Basement Ink Tattoo. Collectors who like the work of the artists featured at Basement Ink Tattoo are especially likely to do this, making this number up to 60,000 people. Tattoo newbies: Usually come in to the shop just to say that they have one, or maybe to honor someone and many various reasons. The newbies usually only get one tattoo in their lifetime, but some do keep going back to receive more and become a collector. With more celebrities getting tattoos, many young people are flocking to get one. Tattoo collectors: These people are the ones who get large areas covered, sleeves, back pieces etc... This group will not go to any other artist except the one that started his or her big pieces of art; they will also go out and find that artiest where ever they may go. This group will seek custom designs, simple designs, and become used to the pain or discomfort involved in most areas.

Target Market Segment Strategy

Basement Ink Tattoo will seek out both newbies and collectors to keep their shop going and to keep contributing to the community. Even though tattoo collectors are a big part of the business, the tattoo shop needs both of them to stay alive. It is difficult to acquire new tattoo collectors in the town without getting the newbies in for their introductory tattoos. The business will be pursuing both sides of the tattoo market with simple and custom design by advertising their designs. The collectors will feel right at home because the atmosphere, good music and good service.

Service Business Analysis

According to an article by Inc., there are an approximately 15,000 tattoo parlors in America, making somewhere north of $2.3 billion annually, but there are no precise numbers. Tattoo shops are generally independent ventures run by tattoo artists. Some shops have only one artiest and others have five plus artiest. In general, artiest don’t want to work for the said company, but rather be an independent contractor so they can keep their own set hours.

This keeps the owners from having to pay taxes for them, so they just 1099 them at the end of the year and the contractors are responsible for their own taxes. The standard rate per hour for a tattoo artist is right around $100 an hour, with the artist keeping usually around 40% of that and the rest goes to the shop for the space. In the Tinley Park IL, area, Basement Ink Tattoo will compete with: Native Rituals: This shop is located 15 miles down the road across the street from a biker bar, the prices for the basic tattoo is $60 and that is also the shop minimum. This shop also has 3 artists.

Competition and Buying Patterns

When choosing a shop people probably consider:

* The body of work of the artist – While looking at the art of the artiest them self, if they don’t like what they see, they may reconsider even the flash on the wall and choose another artiest to get work done with. * Comfort talking to the artist - The customer needs to know that his or her thoughts are going to be put into the design so they will feel safe getting some art. * Price – Most of the newbies looking for art are often bargain hunting, but most don’t realize that that could end up really bad. The artist is also responsible to explain the procedure of how sterile the machine and instruments are. They also have an obligation to tell everyone that is about to receive a tattoo of the procedure.

Marketing Strategy

The marketing strategy of the business involves reaching out to all types of people in the Tinley Park are. These things will be used to drum up business before opening: * Print out flyers to hang up at local stores and restaurants, also to hang the flyers around the area of the shop. * Have a website created to show all of the prices of the services and art of the artiest * Running ads in the local papers about the grand opening * The artists calling their previous clients and telling them where they are and come on by * The grand opening will be at least 2 weeks with giveaways for a discounted tattoo Ongoing marketing:

* Continually handing out business cards
* Sending out flyers for get artiest and special events
* Updating the website with new art

Sales Strategy

The word of mouth is the way most of the marketing is going to take place, artist handing out cards to their friends and continually talking about the shop. The artists will also remind customers about the shop specific apparel and stickers. Some artists will also have tattoo parties to promote the shop as well while wearing the Basement Ink apparel. To keep up customer satisfaction, the shop will call the customer a week after the tattoo to see how they are healing and have any more questions.

Sales Forecast

The cost of sales for the services offered is15% for shop-minimum tattoos, 10% for basic tattoos, and 8% for full sessions; because the longer one sits the less ink is used. “Shirts and other things are around 30% costs of sales on average. Cost of sales will also include the take home care instructions handed to every customer that leaves the shop. Shirts and sticker are not expected to sell until the shop actually opens up and begins to produce tattoos. The full sessions will probably grow the fastest, because as the artiest gets known the more custom work will be done. The sales forecast shows the amount needed for five full time artists, so they can work on everything in the shop including the flash art and custom pieces.

Management Summary

Rick will be the CEO, he will be responsible for strategy, sales and contracting the five tattoo and most of the tattoos provided. He will have final say in all of the art that leaves his establishment, if he doesn’t like the art he has the right to change or deny it. Rick or a Tattoo apprentice will be operations manager. He or she will be responsible for basically everything in the shop, reception, ordering supplies etc…

Personnel Plan

Terry and Rick will both be paid for their work (Rick as shop owner and artiest) Terry as silent partner and investor. The other tattoo artist will be general contractors and will be paid accordingly, they will work at the shop but have to pay 50% at the end of the day and at the end of year they will be 1099d.

Financial Plan

The financial plan for Basement Ink is to raise $55,000 from a personal savings, a long-term loan. The business will probably achieve cash flow around the third month of being open and have a net profit by the end of the year.

Start-up Funding

The startup will primarily be from the investment of Terry, which he will contribute 30,000 dollars in startup cash. We will barrow the rest of the 25,000 from the bank in a few different forms, credit cards and business loans. That will cover the cost for everything to start the business and hit the ground running.

References
http://pewresearch.org/databank/dailynumber/?NumberID=237
http://www.msnbc.msn.com/id/39641413/ns/business-us_business/t/tattoo-business-profits-are-hardly-skin-deep/#.ULVoMIZYS3o