The pace was frantic. Michelle Hill had less than two
weeks before her scheduled meeting with the loan board in Charlottetown, Prince Edward
Island, Canada on November 19, 1997. By that time she needed to have completed her
business plan, including market projections and pro forma financial statements. The task
was made more daunting by the fact that Michelle had never before prepared a business
plan. She was professionally trained as an esthetician, but that did not include any
training in business management or the use of computers. If she failed to be ready for the
meeting, then processing of her loan request would be delayed until 1998.
Michelle breathed deeply and reminded herself that
keeping her eye on the goal of becoming an entrepreneur would serve her more than panic.
She turned her attention to assembling the information she had gathered in note form. She
planned to use this material and the services of the Business Service Centre which offered
advice and access to the Internet.
Up until October, 1997, Michelle Hill was content to
work for someone else providing esthetic services to clients in the Charlottetown area.
She loved the work.
Michelle met many people who seemed drained at the
end of their day. For her working in esthetics had the opposite affect. At the end of a
day, she often felt more energized than when the day began.
A priority for Michelle was spending time with her
spouse and young family who included their three year old son and ten year old daughter.
Her three days per week employment with Cinderella's Total Body Care fit her home
situation ideally. It afforded her ample family time and the career involvement she
Michelle was 28 years old .She had worked as an
esthetician since graduating in 1991 from the Halifax Business Academys one year
program in esthetics. Michelle considered graduation to be only the beginning of her
training. She participated in several demonstrations, seminars, and workshops to keep up
with new developments in the esthetics industry.
Up until 1997, Michelle had not seen a need for her
to pursue a formal business education. Beyond the techniques of an esthetician, she
believed her greatest asset as an esthetician was her 'people skills'. Michelle was known
as a gregarious person who approached her work with energy and enthusiasm.
Cinderella's Total Body Care was located in the same
space as the Le Mirage hair salon, since the two businesses shared the same clientele for
different services. The space allocated to the esthetic services consisted of a small room
at the back of the salon and included shared reception services and a small allocation of
space for display of esthetic products.
The business was located in Ellen's Creek Plaza; a
small, somewhat upscale 'strip' mall located in the affluent suburb of West Royalty about
ten minutes from the city core. The rent for the esthetics business was $320.00 per month,
which included utilities and reception.
Michelle's employer had communicated her wish to move
to a larger location closer to downtown. The proposed move would involve a change in their
hours of operation and working arrangements. Michelle had indicated she was prepared to
consider a change in the new year, but not before.
On November 1, 1997, Michelle was surprised by the
announcement that Cinderella's would be moving to a downtown location at the end of
On the weekend of the announcement Michelle made an
immediate decision to end her employment with Cinderella's. She had not planned on going
into business so early in her career and family life, but she saw the changing situation
at Cinderellas as an opportunity. Faced with the task of starting her own business,
she immediately began the process of planning the business and making arrangements with
Michelle was paid on a commission basis; 45 percent
for services and 10 per cent on the retail sales to her clients. For this reason, she had
kept a daily record of her revenue in both services and retail sales.
After informing her employer of her decision, she
immediately obtained an agreement from the owner of Le Mirage to sublet the space being
vacated by Cinderella's under the same terms and conditions.
The decision to start her own business was not as
immediate as it might appear. At an early age, Michelle had adopted the practice of
writing down goals for herself on separate slips of paper, which she kept at home in a
private place. Michelle was not quite sure why or how she acquired the habit of writing
down her goals. The pattern she followed was quite consistent. Each goal was written on a
separate piece of paper and contained a specific outcome and date. One such goal was to
start her own business in the year 2001. On the November weekend she amended the goal by
replacing 2001 with 1997.
Unexpected events occurred and frequently goals were
realized before the time stated on the slip of paper such as the case in starting her own
business. Since beginning the practice of goal-setting, her life by no means followed the
According to Michelle all her goals were realized,
but not always at the time or in the way she had expected. Michelle was convinced that the
practice of goal-setting held a metaphysical dimension.
" I am careful what I write down as a goal,
because I know at some point it is going to happen, so I make sure it is what I want. I
write the goals down and forget about them until I decide on occasion to read them over.
Striving to accomplish goals is not the answer for me. I set the outcome I want and an
opportunity will appear if I look for it. I am amazed how my life unfolds with all kinds
of unexpected events and there in the middle of it all is a goal that I wrote. It's like I
am just going along for the ride! The decision to start my own business is a good example.
There were frustrations and even tears as I tried to pull everything together, but through
it all, I knew one way or another my goal was going to happen. The earlier then expected
move by Cinderellas was the opportunity, so I grabbed it."
Developing a business plan was only one of the
challenges. Michelle knew that her decision to start her business meant a change in her
home life. She realized that, in addition to serving clients, she would have the added
responsibilities of banking, ordering materials, scheduling, and a host of other daily
matters which did not concern her when she was an employee. All these business matters
were sure to affect the time she would have to spend with her family.
Although Michelle's family expressed support, there
was definite apprehension on everyone's part as to how the demands of establishing and
running a business could be balanced with what had been up to now a busy, but manageable
home situation. It was obvious that the decision to go into business would require a
change in lifestyle for Michelle and the members of her family. Michelle also believed
that it might be necessary to ask her husband to bear all of the household expenses for a
few months until the business was more established.
"At first it all seemed so overwhelming; doing a
plan, getting a loan, deciding on inventory and supplies, and making changes at home. It
was all so new, yet it was exciting. I guess all new businesses face the same things. For
families, I suppose it can be seen as the price to pay or a sacrifice. Another way to look
at it is to see it as simply a change - a change which in the end can be good for
everyone," explained Michelle.
" I love what I do and I believe everyone is
better off when each of us is happy with their life. My husband and I agree on this, so he
is very supportive of my decision."
Added to the practical demands was the issue of time
constraints. Michelle knew she had less than a month to get her business going. Otherwise,
the continuity with her clientele would be broken in the middle of the high-demand
Christmas period and she could lose her location at Le Mirage.
The esthetics (also spelled aesthetics) industry
included a whole range of services associated with enhancing the physical beauty of a
person. An esthetics practice included traditional services such as manicure, pedicure,
hair removal by electrolysis or waxing, skin care, and the proper use and application of
beauty aids such as makeup. Also other services such as aroma therapy, massage and various
forms of whole body treatments are includes in the bailiwick of esthetic services. A full
service esthetics business was properly described as a spa. A typical esthetics business,
if there is such a thing, included any range of the aforementioned services depending on
clientele and the resources of the business.
A central feature of any esthetics practice beyond
the equipment and facilities was the esthetician. Esthetics services was the
quintessential personal service wherein such issues as competence, confidentiality, trust,
and an ongoing relationship with clientele were critical for a successful practice. If
"only your hairdresser knows for sure," then it can be said that your
esthetician knows more than your hairdresser.
Estheticians are trained in the fundamental skills of
their practice at any number of public or private educational institutions throughout
North America. Beyond the basic training which takes about a year, estheticians were able
to take training in additional services. In larger centres, some estheticians specialized.
For example, aroma therapy which involved combining facial massage techniques against a
back-drop of customized aromas to enhance relaxation, was growing in popularity.
Consequently, new products and techniques were being offered to estheticians who combined
this information with their own creativity to better meet the needs of individual clients.
Estheticians, like health care professionals, relied
on the salespeople from supply companies to keep them up-to-date on the latest products,
equipment, and techniques. Also, national and regional trade shows served the goal of
staying current in the rapidly evolving esthetics industry.
"I find the trade shows exciting,"
"You can see the future there. On PEI, people
are only starting to demand some of the esthetic services that are commonplace in larger
A unique aspect of the esthetics industry was
revealed in some of the philosophical issues associated with personal beautification.
Understanding these issues contained practical applications for the business. It helped to
explain why some ancient practices remained popular to the present day and how an
esthetician might assess a particular client's needs.
Michelle had her own views on what beautification was
"At first glance, you might think this business
is just about physical beauty. Well, that is only part of it. Esthetics is about inner
beauty - feeling good about yourself and who you are. That is what I try to focus on.
Esthetics is just one tool in a whole picture. Frustration with my own acne problem is
what got me interested in the business in the first place. The clincher for me though was
one particular client, who I met early in my career. This person in her forties had a
professional career and family. She had a severe facial hair problem. I discovered two
years later, that she had contemplated suicide. The client had been convinced that her
facial hair problem could only get worse! Electrolysis, in her case contributed to a
completely new outlook on life. Her response to the treatment and many others since,
though not all as severe, convinced me that esthetics was what I was meant to do. I love
what I do because I get to see how good people feel after even something as simple as a
manicure. For some, just dumping the guilt associated with indulging themselves is enough
to change their attitude."
Almost all of Michelle's clientele consisted of
women, although in other markets men were becoming purchasers of selected esthetic
services such as removal of unwanted hair, hand care, skin care, and aroma therapy. The
general consensus in the industry was that men represented a potential growth opportunity
for the future. Much of the industry focus remained on the rapidly growing demand among
women (see Appendix A for PEI population statistics). There were no published statistics
specific to purchasing patterns for esthetic services. Esthetic services purchases were
included with purchases under the personal care category published by Statistics Canada
(see Appendix A).
Michelle was convinced of the growth in the industry
because of the number of new clients coming to her. In less than a year, Michelle's
clientele had grown to include over 400 people. Most of these clients were people who had
never before purchased esthetic services. Michelle described most of her clients as
fortyish and working outside the home.
She said, "They are classic baby boomer types.
They have reached a stage in life where they have more money and their children are older.
They believe it is now time to spend some money on themselves. It's okay to indulge
themselves. Of course, esthetic challenges like facial hair and skin care are more
prevalent after you hit thirty - thirty-five. One of my clients gave me the name of my
business. As she [the client] was leaving, she remarked that she felt like a caterpillar
coming out of cocoon as a butterfly. I decided back then, that would be the name for my
business - cocoon."
Fifty percent, or more, of sales are for hair
removal. Among this group, over forty percent choose waxing while the remainder select the
more expensive electrolysis method.
The next most popular service is cosmetic
application, which provided a boost to retail products (a sample list of services and
prices is presented in Appendix B). Overall, retail sales of products averaged about 10%
of total revenues. Michelle believed there was great potential to increase retail sales
with better display and promotion of the products. Average markups on these items were
about 40% (gross margin on sales).
There were approximately 30 estheticians on PEI,
according to their association which Michelle served as secretary - treasurer. In the
Charlottetown area, there were thirteen businesses offering esthetic services. In most
cases, the esthetics businesses were either located within, or otherwise associated with
the traditional hair salons in Charlottetown.
Michelle was aware that her decision to set out on
her own would add to the competition. But competition did not concern her.
"This is the kind of business where clients are
quite loyal. At least I have found it that way. A personal relationship develops between a
client and their esthetician . I am the answer to competition. I pay attention to what
each individual needs and the new things like aroma therapy give you the chance to
customize to each client. When a customer is happy with you, they tell other people,"
Michelle planned to build on the practice of
referrals by rewarding clients with discounts based on the number of new clients they sent
Michelle felt some degree of anxiety about preparing
the financial statements that would be necessary to obtain a loan. She felt that she knew
enough about the business to make a good estimate on most of her costs. The challenge
would be to put it all in the proper form of a cash flow statement and balance sheet
projected over three years.
On the Internet, she found a site which simply
required her to answer questions and the program would construct the statements. The
challenge then became learning to be comfortable using the computer resources available to
Michelle reviewed her daily sales record. The records
were complete for January to October of 1997. She felt that they were a good source for
projecting sales (this information is summarized in Appendix C).
Michelle thought that she would need to have at least
one employee on a part-time basis for days off and busy times like the Christmas season.
She agreed with her husband that she would not make a contribution to household expenses
for at least three months. This would keep her draw on revenues to a minimum, so she
estimated about $1600 per month for total wages and benefits. This figure was based on
paying $200 per week to herself and a part-time employee.
Michelle had contacted suppliers to get estimates on
the cost of getting her business started. She estimated her equipment and materials costs
to be about $10,000 with the electrolysis machine representing about one third of the
total. She estimated that she would need about $3000 in inventories. Suppliers expected to
be paid on delivery. She was told that there would be other incidental start up costs like
business registration, professional fees, and uniforms.
The guide to business plans that Michelle looked at
included a list of other items to consider such as; advertising, depreciation, vehicle
expenses, bad debts, and telephone. Michelle felt that many of these did not apply to her
plan, or at least, they would represent incidental costs.
"A few months before all this, I had spent a lot
of my savings on a trip out west for my cousin's wedding, so I only had a thousand dollars
to put into my business. I had a moment of regret about spending money for the trip, but
only a moment. The trip indirectly, contributed to my business decisions because prior to
going, I was suffering uncertainty about my life. This was before I knew about
Cinderellas moving. The trip was great for me. I cannot point to one particular
thing that happened. Most of the change was internal. I just felt more settled;
"centred" is the word everyone uses these days. Thank God! If I didn't have my
feet firmly on the ground, I doubt that I would have been able to deal with all
this." explained Michelle. .
Michelle had been told that she could qualify for
assistance under Young Entrepreneurs ConneXion Jeunes Entrepreneur program. This
program came under the Atlantic Canada Opportunities Agency (ACOA), but was delivered by
Community Business Development Corporations (CBDC). ACOA had 40 CBDC's throughout Atlantic
Canada. The CBDC along with other delivery agents form loan boards made up of active and
retired business people to assess applications.
This particular program applied to youth between the
ages of 18 and 29, and was highly flexible in terms of application, types of business, and
repayment terms (details on this program are in Appendix D).
In Michelle's discussions with ACOA, she was told
that they were limiting their loan amounts because of year-end budget limits. Instead of
getting the maximum loan, she was told that she could only get $10,000. She was advised to
contact Canadian Youth Business for additional funds, if required. Michelle estimated she
might need another three to four thousand dollars.
Canadian Youth Business is a program similar to the
CBDC in structure, but it was run as a joint initiative among the chartered banks. The
loans they approve were guaranteed by the government. This meant that no personal
guarantees were required to secure a loan. If the business failed, then the government
paid off the loan. Unlike ConneXion, they did not provide seed capital, but often
'topped up' seed capital loans when additional funds were justified. For Michelle this
meant two loan board meetings instead of one.
"Although I was a bit intimidated by the
financial stuff, I was not going to let that stop me from getting the business plan in on
time. I knew that the biggest asset in my business was me and the records I kept supported
that. I would just put it together the best way I could. I was told that the main thing
they wanted to know was where would the money come from and could I support a loan. I had
committed myself to the space and ordered my supplies, so I had to do it," concluded