The  organic  opportunity  right  in  front  of  your  eyes  

Sco3  Mitchell  CEO,  Organic  Salon  Systems  

Introduc=on  

•  Serial  entrepreneur  –  founder  of  several  public  companies  traded  on  the  NASDAQ  and  NYSE  

•  Exper=se  in  sales,  marke=ng,  Internet  technologies,  and  organiza=onal  development  

•  Founder  &  Principal  of  Mitchell  Capital  Partners  •  Two  Bachelor  Degrees:  Economics  &  Psychology  •  Three  Master  Degrees:  Business  Administra=on,  

Computer  Science,  Organiza=onal  Development  •  Former  Graduate  Business  Professor  •  Dedicated  to  the  pursuit  of  several  philanthropic  

endeavors  and  causes  

Building  Blocks  of  a  Successful  Salon  

Focused  Niche  +  Marke1ng  +  Passion  =  Profit  &  Growth  

“Most  businesses  fail  because  they  lack  a  true  differen6a6ng  factor.    Many  of  today’s  small  businesses  largely  compete  in  a  “service  commodity”  industry,  where  most  professionals  are  trained  the  same  way,  have  similar  skills,  and  offer  similar  services.  The  only  way  to  compete  in  that  type  of  marketplace  is  by  refusing  to  allow  yourself  to  be  compared  to  your  compe66on  by  differen6a6ng  your  service  in  such  an  extreme  way  that  comparison  is  simply  impossible.”  

Sir  Richard  Branson  Founder  –  Virgin  Group  

Why  Organic  Ma3ers  –  Focused  Niche  

•  The  organic  salon  segment  has  been  growing  at  16.7%  year-­‐over-­‐year  for  the  last  three  years  while  the  broader  salon  sector  has  been  contrac=ng  by  2%1  

•  The  organic  beauty  industry  has  been  growing  at  a  shocking  average  rate  of  15%  for  the  last  15  years2  

•  Although  78%  of  U.S.  adults  said  they  would  prefer,  and  pay  a  reasonable  premium  for,  organic  or  natural  beauty  products3;  only  15%  of  the  market  caters  to  this  niche2  

“Local,  socially  responsible,  environmentally  friendly  businesses  will  always  compete  beJer  than  big  global  conglomerates  in  the  natural  and  organic  markets”  –  John  Mackey,  CEO  of  Whole  Foods  

1.  J.P.  Morgan  2010  Analyst  Report  on  Emerging  Trends  in  the  Health  and  Beauty  Industry  2.  Nutri=onal  Business  Journal  on  Natural/Organic  Trends  in  Beauty  Report,  2010  3.  A.C.  Nielson  and  Greenfield  online  

Why  Organic  Ma3ers  -­‐  Marke=ng  

•  Loyal  to  their  Salons  -­‐  du=fully  devoted  to  salons  that  they  share  common  values,  beliefs,  and  a  shared  “ethos”  with  

•  Less  Price  Sensi=ve  –  understand  and  accept  that  organic  products  and  services  come  at  a  premium  and  appreciate  the  value  of  them  

•  More  Focused  on  Salon  Experience  –  they  want  to  feel  good  about  looking  great  

•  Exceedingly  Product  Focused  –  ingredients  ma3er  •  Easily  Addressed  –  gravitate  towards  community  ac=vism  •  Ac=ve  Client  Referrers  –  Fiercely  commi3ed  to  helping  and  

enlightening  others  through  referrals  to  healthier  alterna=ves  •  Tend  to  be  significantly  more  educated,  influen=al,  and  affluent  than  

the  general  popula=on  •  Extremely  socially  conscious  and  environmentally  responsible  •  Prefer  small  local  salons  over  na=onal  chains  or  conglomerates      

Why  Organic  Ma3ers  -­‐  Passion  

•  76%  of  U.S.  employees  ranked  “feeling  good  about  the  company  they  worked  for”  as  “extremely  important”  up  12%  from  just  three  years  ago    

•  In  2010  Hewi3  Associates  reported  that  the  “truly  talented”  and  “truly  crea=ve”  would  prefer  to  make  less  but  work  for  a  socially  conscious  company  

•  A  2009  Covey  Ins=tute  research  report  demonstrated  that  consumers  can  sense  when  employees  are  happy  with  the  companies  they  work  for  and  sa=sfied  with  their  jobs  

•  A  2010  survey  of  recent  Harvard  Business  School  graduates  indicated  that  “personal  convic=on,  growth,  and  purpose”  was  the  number  one  factor  they  will  forgo  compensa=on  for      

Why  Organic  Ma3ers  -­‐  Profits  •  On  average,  salons  charge  between  12%  and  16%  more  for  

organic  services  than  tradi=onal  services  •  On  average,  product  costs  represent  less  than  10%  of  overall  

service  fees  •  Organic  treatments  typically  enable  clients  to  get  treated  

more  frequently  (e.g.  grey  re-­‐growth)  •  Adver=sing  spend  is  reduced  significantly  by  the  stronger  

tendency  for  clients  to  refer  others  and  the  ease  of  addressing  a  targeted  audience  rather  than  the  broader  public  

•  Clients  are  much  more  eager  to  visit  the  salon  more  omen  if  scalp  irrita=on,  toxic  fumes,  and  other  un-­‐pleasantries  are  avoided  

•  Although  slightly  more  costly  to  produce,  organic  products  produce  a  healthier,  superior  result  without  damaging  the  cu=cle  or  sacrificing  the  integrity  of  the  hair’s  structure    

Building  Blocks  of  a  Successful  Salon  

Focused  Niche  +  Marke=ng  +  Passion  =  Profit  &  Growth  

Focused  Niche  –  Fasted  growing  segment  in  an  otherwise  contrac=ng  industry  

Marke=ng  –  Vacuum  of  demand  exists  in  a  growing  market  of  exceeding  desirable  demographics  that  is  easy  to  access  and  has  the  financial  means  to  drive  your  salon’s  prosperity  and  growth  

Passion  –  Making  a  difference  in  the  world  in  a  meaningful  way  by  enabling  people  to  feel  good  by  you  making  them  look  and  feel  beau=ful  

Profit  &  Growth  –Servicing  a  market  that  welcomes  higher  price  points  while  u=lizing  compe==vely  priced  products  which  enable  you  to  service  your  clients  as  omen  as  they  would  like  rather  than  as  omen  as  their  damaged  hair  will  allow!    

Organic  Salon  Conversion  Example  

Business  Case  –  Corner  Salon  (A  Good  Salon  Business)  •  5  Stylist,  1  Owner/Manager/Stylist  •  Each  see  6  (36  total)  clients  per  day  •  Salon  is  open  5  days  per  week  •  Average  =cket  per  client  is  $55  with  average  15%  in  =p  •  Cost  structure  includes  (as  a  %  of  revenue)    – 10%  for  product  – 15%  for  adver=sing  – 40%  for  payroll  – 25%  for  overhead  

•  Salon  client  base  is  growing  at  5%  year  over  year  

Organic  Salon  Conversion  Example  Improvement  Assump1ons  –  5  Year  Organic  Plan  •  Because  some  stylist  are  interested  in  working  in  an  organic  salon  for  

health  reasons,  the  salon  is  able  to  add  1  stylist  in  2012  and  1  in  2014  •  Instead  of  a  5%  client  growth  (actual  industry  metric  for  non-­‐organic  

salons  is  -­‐2%),  the  salon  begins  to  realize  a  15%  client  growth  rate  (actual  organic  metric  is  16.7%)  

•  Instead  of  averaging  15%  in  =ps,  the  =ps  begin  to  average  20%  because  the  demographic  is  more  affluent  and  be3er  connected  to  the  salon  

•  The  salon’s  service  prices  increase  by  12%  over  =me  to  account  for  the  organic  treatments  (average  increase  ranges  between  12%  and  16%)    

•  Cost  structure  remains  the  same  except  adver=sing  spend  decreases  slightly  (from  15%  to  10%)  because  of  an  increase  in  client  loyalty  and  a  reliance  on  the  stronger  referral  network  

Net  Profit  Compara=ve  Analysis  

Conclusion:  The  owners  of  Corner  Salon  could  make  almost  $900,000  more  net  profit  over  the  next  5  years  by  conver=ng  to  Corner  Organic  Salon.  

In  this  real  estate  market,  you  can  buy  quite  a  vaca=on  home  with  that  money!      

Don’t  Spend  That  Money  Too  Soon  

 These  are  lomy  assump=ons!   But  what  if……   We  were  able  to  help  realize  even  some  of  them?  

 That  would  make  a  BIG  difference!  

 If  you  don’t….  Then  what’s  your  plan?   If  you  don’t….  How  long  will  it  take  for  your  compe==on  to  make  the  change?  

We’re  Here  to  Help!  

•  In  Salon  Promo=on  Program  –  gim  cer=ficates,  prescrip=on  pads,  referral  cards,  client  loyalty  program,  pre-­‐booking  cards,  window  clings,  shelf  talkers,  aprons,  caps,  pins,  t-­‐shirts,  cloth  retail  bags,  posters,  etc.  

•  Coopera=ve  Adver=sing  •  Proprietary  Organic  “Salon  Liaison”  program  •  Online  Salon  Presence  and  Search  Engine  Op=miza=on  Program  

•  Salon  Marke=ng  Educa=on  and  Consulta=on      

We  Want  to  be  on  Your  Team!  

I’d  love  to  introduce  you  to  our  company,  our  products,  and  our  team!  

Let’s  get  started….  

Organic  Salon  Systems  Mission  

To  provide  professional  hairdressers  with  high  performance  hair  products  which  maximize  the  use  of  gentle,  nourishing  and  natural  ingredients  while  minimizing  the  necessity  for  harsh  or  damaging  chemicals.  With  these  healthier  products  and  be3er  informa=on,  we  hope  to  bring  about  superior  results,  increased  competence  and  a  safer  salon  environment  for  all  concerned.  To  accomplish  our  mission,  we  vigorously  embrace  our  company  ethos.  

Organic  Salon  Systems  Ethos  

•  To  only  distribute  the  highest  performance,  healthiest,  most  natural,  and  gentlest  products  available;  and  

•  To  con=nually  recognize  that  the  best  way  to  grow  our  business  is  by  helping  our  clients  grow  theirs;  and  

•  To  fully  disclose  all  product  ingredients  and  act  with  transparency,  honesty,  and  integrity;  and  

•  To  never  divert  our  product  lines  or  allow  them  to  be  sold  to  non-­‐professionals;  and  

•  To  maintain  an  ethical  environmental  policy;  and  •  To  not  tolerate  any  products  ever  tested  on  animals;  and  •  To  train,  educate,  and  provide  informa=on  which  will  enable  the  industry  

and  our  clients  to  become  healthier  while  improving  their  service  quality;  and  

•  To  provide  world-­‐class  service  to  our  clients  and  always  strive  to  become  the  best  at  what  we  do  in  every  regard.  

Our  Stance  Against  Diversion  

•  Diversion  enables  companies  to  charge  a  high  premium  to  salon  professionals  for  the  “privilege”  of  being  robbed  of  any  equitable  value  in  their  business  by  those  very  companies  

•  Any  manufacturer  denying  direct  responsibility  and  knowledge  of  diverted  product  is  simply  incredulous  

•  “Big  Beauty”  companies  prey  on  the  trus=ng  salon  professional  to  build  their  brands  up,  while  making  a  hemy  profit,  only  to  inten=onally  divert  their  products  to  the  consumer  market  thereby  jeopardizing  the  clients  of  the  salon  professional  and  causing  the  long-­‐term  value  of  their  business  to  quickly  deteriorate  

Organic  Salon  Systems  Products  

•  Free  from  ammonia,  parabens,  formaldehyde,  resorcinol,  and  thioglycolates.  

•  Contain  Cer=fied  Organic  Ingredients  (cer=fied  by  the  United  Kingdom  Soil  Associa=on)  

•  Exceeding  all  European  Union  standards  regula=ng  cosme=cs  and  beauty  products  

•  PETA  cer=fied  as  being  100%  cruelty-­‐free  and  vegan  

•  Fair-­‐Trade  accredited  and  cer=fied  

Organic  Color  Systems  (Color)  

•  65  intermixable  colors  •  Superior  grey  coverage,  cleaner  blondes,  &  beau=ful  reds  that  fade  on  tone  

•  No  damage  to  the  hair  cu=cle  allowing  for  a  far  healthier  and  lavish  result  

•  Up  to  3  levels  of  lim  with  color  &  7  levels  of  lim  with  lightener  

•  True  to  color  chart  results  •  Semi,  demi  or  permanent  results  •  Longer  las=ng  tonal  values  

Organic  Curl  Systems  

Organic  Curl  Systems  is  an  innova=ve  perm,  straightener,  and  relaxer  that  is  both  ammonia  and  thioglycolate  free,  while  containing  cer=fied  organic  extracts.    It  produces  a  bounce  and  curl  forma=on  that  is  healthy  and  looks  natural.  

Organic  Care  Systems  Organic  Care  Systems  not  only  is  the  perfect  back  bar  for  the  color  line  but,  your  clients  will  also  love  to  take  them  home  to  maintain  their  hair  between  visits.    These  products  contain  no  animal  products,  parabens  or  SLS.    They  are  never  tested  on  animals  and  are  made  with  cer=fied  organic  ingredients.  

The  Organic  Control  and  Connect  lines  give  all  the  styling  hold  and  manipula=on  you  have  come  to  expect  without  the  use  of  heavy  chemicals  or  plas=cs.  They  give  great  shine  and  a  natural  feel,  never  drying  bri3le  or  hard.  

KeraGreen  

KeraGreen  is  a  revolu=onary  new  formaldehyde-­‐free  organic  kera=n  system.    It  includes  a  full  line  of  treatments,  shampoos,  condi=oners,  and  serums  providing  a  more  natural,  organic,  healthier  and  be3er-­‐performing  alterna=ve  to  formaldehyde-­‐based  Brazilian  Kera=n  Treatments.  

Hairmonics  

Hairmonics  Turbo  Ac=vators  from  Organic  Salon  Systems  offer  superior  color  load  and  cu=cle  penetra=on.  They  help  to  achieve  longer  las=ng  color  with  improved  tonal  value  and  color  reten=on.  This  product  is  great  for  gray  hair  and  also  allows  you  to  process  normal  color  in  about  half  the  =me.  

Available  in  5,  10,  20,  30  and  40  volume.  

Malibu  Wellness  

Malibu  Wellness  products  use  a  patented,  fresh  dried  vitamin  complex  that  is  water  ac=vated  to  normalize  the  ph  of  the  hair  and  scalp  and  remove  minerals  and  oxidizers  to  ensure  consistent  and  superior  salon  services.    Great  for  areas  and  salons  with  hard  water  condi=ons.  

What  Makes  Us  Different  

•  Centralized  Business  Model  •  Unprecedented  educa=on  program  •  Truly  Non-­‐Diverted  •  Aligned  Interest  “Partnership”    –  truly  want  to  grow  and  build  embedded  value  in  your  salon  business  

•  Relentlessly  Innova=ve  •  Excep=onally  Strong  Company  Ethos  •  High  Performance  Bou=que  Niche  in  Fastest  Growing  Salon  Segment  

•  Excep=onal  leadership  

Get  Started  Now  

•  Starter  Packages  –  Risk  Free  with  a  30-­‐Day  Money  Back  Guarantee  – Try  our  full  color  line  including  retail  sizes  of  our  care  and  control  lines  or  our  complete  KeraGreen  package  

– Call  and  place  your  order  today  and  get  40%  off  on  packages  and  try  it  for  30  days.  If  you  don’t  LOVE  it  for  any  reason,  send  it  back  and  I  will  send  you  a  full  refund  regardless  of  what  you  used  

Organic  Salon  Systems  Online:    h3p://www.OrganicSalonSystems.com  Toll  Free:    (888)  312-­‐4744    ext  903  Fax:    (727)  585-­‐2300  Support:    h3p://www.OrganicColorSystems.com