Are you thinking about opening your own hair salon? Or maybe you already have a salon and are thinking about opening another location?
Well, when it comes to opening a new salon business, knowing how to write a hair salon business plan can make or break your success. The good news is—we’re here to help.
In this article, we’ll go over the ins and outs of creating a hair salon business plan. This includes everything from market analysis and financial projections to your goals for the future. Having a plan will help you obtain funding and stay on track as you grow.
Let’s get started.
Do I Really Need to Write a Business Plan for a Hair Salon?
You wouldn’t drive from San Francisco to Boston without either a GPS or a map, right? So, you shouldn’t run a business without a plan either.
A hair salon business plan is a roadmap for your beauty business. Whether you have two chairs or 200, it’s essential for your ongoing success.
In fact, opening or expanding a business has a lot more at stake than a drive across the country. You may have saved or taken out a loan to start your salon. And you likely have employees or contractors who are dependent on your business sense, too.
A business plan gets you organized when you’re first starting out or opening a new location. Plus, it keeps you on track as you grow. You can reach or exceed your goals, but you must know what they are first. And you need to have a detailed set of strategies to use along the way.
Let’s go back to our road trip metaphor.
Suppose you want to get from California to Massachusetts. First, you figure out how many miles or hours the journey will take. Then, you divide that by how many miles or hours you can comfortably drive in a day. That’s how many days it will take. Finally, you plan overnight stops along the way for each of those days to make the drive doable.
A salon business plan isn’t much different. You probably have goals for things like:
- How much gross income you want to bring in
- How much profit you want after overhead and labor
- Ideal business model structure (e.g., booth rent vs. commission)
- Services you would like to offer clients
- Places where you’d like to open additional salons
Without a specific business plan for how to make them happen, those are just pie-in-the-sky dreams. You need a more granular approach to turn them into a reality.
For instance, how much money do you need to make each month to reach your desired net profits? If that’s how much you need to make each month, what do you need to make daily, assuming you’re open five days per week? How many chairs do you need to have? At what capacity do you need to operate?
Not to mention, you’ll almost certainly need a formal business plan if you want to get financing for your salon. Salon equipment and real estate can be quite expensive. A bank may loan you money to get set up, but only if they see you have done your homework first.
Lenders don’t want to back a business that is more likely to fail than to succeed. And new hair salons have an average success rate of 50% in the first three years of operation.
That means half of those businesses will fail. Most fail not because of a lack of talent or ambition but because the owner doesn’t know how to properly run a business. You can be the best hairstylist in the world. But if you consider things like business accounting and marketing, you will likely lose more money than you are bringing in every month.
Do you want to be in the 50% of new salons that thrive? Keep reading to learn the step-by-step method of developing a business plan for your salon.
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How to Write a Hair Salon Business Plan: Step by Step
Below you’ll find information on each section commonly included in a business plan. But first, here’s a tip to help you make the most of these categories.
Use the SMART method for setting goals. What are SMART goals? They are:
- Specific – highly detailed, not vague
- Measurable – able to be quantified with hard numbers and actionable items mapped out to achieve the goal you’ve set
- Achievable – doable within the framework of your business model
- Relevant – related to your salon today, not somewhere else or too far in the future
- Time-bound – tied to specific dates for end goals and milestones
Any time you set a long-term or short-term goal, ask, “Is it SMART?” If not, dig deeper to get the details you need to make it work.
Executive Summary
Think of the executive summary as the introduction to your salon business plan. It gives brief information about:
- The purpose of your salon and who it will serve
- Your business objectives (offer something novel, expansion, etc.)
- How your salon will be different from your competitors
- Why you think the business will perform well
For instance, you could talk about how you plan to open a salon in a busy urban area to cater to downtown employees. Your client demographic is primarily white-collar workers aged 25 to 45.
Your unique selling proposition, or USP, is what makes the salon special. Say it’s that it will offer 20 and 50-minute appointments to fit into standard lunch breaks. Additionally, you’ll have 10-minute appointments for fast services during coffee breaks.
Customers can get a quick trim on their fringe or ends. Beard and mustache trims are another rapid service you will offer. Everything can be booked and paid for online to streamline the process and get customers in and out in a jiffy.
Maybe after work hours, your salon will be open for more traditional appointments. And you’ll have more quickie services available for businesspeople going out at night. They can get an updo, blowout, or style refresh before a date. On Fridays, you’ll offer manicure services too.
In your business plan, you’d want to outline howyour USP will help your salon be successful. For our example, you might say you believe the salon will do well financially because of three factors:
- The area is currently underserved by hair salons.
- You are catering to the needs of businesspeople in your locale.
- You hired an experienced stylist who’s bringing their clients with them.
You don’t have to get into a ton of detail yet. This is a proverbial bird’s eye view of your business proposition. You could, however, outline a rough roadmap of how you envision your business will start and where you see it going in one year and five years.
For instance, perhaps you plan to start with one location and 10 chairs. Five years from now, you want to open two additional locations. At that time, you will add new services like brow waxing and makeup consultations.
You can mention market analysis in this section, too. Market analysis looks at competition and consumer needs in your niche. However, there will be a place later in your business plan to address this in more detail.
Remember, your executive summary is an investor or lender’s first impression of your salon business. Therefore, you want to make it shine.
Company Description
This section goes into detail about the structure of your company. How long have you been in business? Who are the owners and managers?
You’ll also want to review how many employees or contractors you plan to have. Will they be employed under W2 status, or will they contract as 1099 workers?
Will hair stylists pay you a fee for the use of a chair? Will your salon take a cut of their fees? How will tipping be structured?
For example:
- Our salon is a startup organization that is not yet in business.
- It is co-owned by two stylists who participate 50-50 in leadership.
- There will be 10 chairs in total in the salon.
- Eight contract stylists will be working as 1099 independent contractors.
- Contract stylists will pay a monthly chair rental fee and a percentage of their billables to the owners.
- All tips will go to the employed stylists, with a percentage going to a shampoo assistant.
- Contract stylists make a commission on products sold in the salon.
- You will also have two paid receptionists who will be W2 employees.
You will go into more detail about financials in the Services and Pricing section. But this section should give readers an understanding of the basics of your planned salon operations.
You can also include funding or investing requests in this section. Again, you will have further opportunity to dive into financials later. But touching on what you need to open or expand gets readers primed as they go through the next four sections.
Market Analysis
The market analysis section of your business plan is another area where you can wow readers and make your salon stand out. It answers the question, “Why you, and why now?”
Remember, you don’t want to fit in with all the other salons in the area. Instead, you want yours to be unique.
Your hair salon might be unique because of its business model, like the hypothetical one described in the executive summary. Or it could be you have a string of well-known stylists.
Perhaps you offer extra luxury services and product lines. Maybe you offer great prices. It could be the whole vibe of your salon that’s one of a kind. Maybe it’s a retro nod to the ‘70s or a high-tech glimpse into the future.
You don’t want to pitch your salon with a kitchen sink-style of features. After all, when you appeal to everyone, you really appeal to no one. But you can list several unique attributes that will give you a competitive market edge.
In this section, you’ll show what the current market is like in your location. How many other salons are within a mile or two? Who do they cater to? Is there a gap you can fill to capture more market share?
Be realistic. If everyone who comes through your door is on a tight budget, you can’t offer $300 color jobs. You need to match your services to your demographics.
If you’ve ever sold a real estate property, you’ve done something similar to a business market analysis. You or your agent prepare “comps” or comparables. The comps show how your property is special, while reviewing what the rest of the area has to offer.
Whether your salon is brand new or you’re opening a new location for your existing salon business, you may need to conduct market research. You can do this on your own or hire a consultant to do it for you.
The more populated the area in which you operate, the more complicated market research is likely to be. If you’re in a suburb or rural community, there may only be a few hair salons to compete with.
Don’t forget to include how your USP and ability to fill a need relates to industry trends. Let’s use the example above. There is a current national trend towards more online conveniences for salon customers. So, offering online payments and booking is going to help you stay at the front of the curve.
Also, employees are feeling busier than ever these days. They struggle with work-life balance. And many are returning to the office after working remotely for several years.
Your salon leverages this trend as well by providing stress-free quick appointments that fit into work breaks. Workers can get their hair done over their lunch hour and make better use of their personal time after work.
If you have an existing business that you’re expanding, you can survey your clientele. Maybe you’re going to a second location because it’s underserved. Or perhaps you’re adding more services because that’s what clients want.
It’s great to be able to give objective data that says there’s a need for your services.
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Marketing Strategy
How do you plan to promote your new salon or additional location? That’s the focus of this section of the plan.
Some common salon marketing methods include:
- SEO website
- Social media accounts
- Paid advertising
- Loyalty programs
- Cross-promotion with other businesses
- Flyers in area office buildings
- Bulk mailings with coupons
- Free makeovers
- Local news editorial coverage
- Online review platforms
An SEO (search engine optimized) website is a great place to start promoting your business. You can add other components later. An optimized website is set up to rank higher on search engines like Google and Bing.
How do you improve a website’s SEO?
- Use keywords related to your exact services that clients would search for when looking for a hair salon.
- Be sure to mention your location multiple times on the website, including your state and local landmarks.
- Add a blog for value-added content with links to authoritative sources.
- Get your salon mentioned on other websites and in social media mentions.
This section overlaps with your market analysis. You’ll be using your unique selling proposition to focus marketing campaigns. Every marketing effort is an opportunity to promote what makes your salon stand out.
Talk about how you plan to cement the two cornerstones of a healthy salon business:
- Repeat customers who book appointments regularly
- New customers who keep things fresh and balance natural attrition
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Management and Organization
Here’s where you can go into more detail about your salon’s company structure and staff payment plan. You can include elements like credentials here, particularly if you or a manager have a business background or education.
Don’t simply list how you plan to pay workers. Explain why this is best for your salon business’s long-term financial health.
Are you and any other owners taking a salary? What corporate structure are you using (LLC, S corp, etc.)? Your state may determine how you want to set this up.
Speaking with an accountant can clarify questions for you, especially about taxes.
Services and Pricing
This section of your hair salon business plan outlines the meat and potatoes of what your salon will offer. It is essentially a menu of all the services and treatments you provide. It also includes prices for each.
You can mention why you chose the pricing model you did. For example, if you’re serving affluent clients in a resort area, you can justify charging a little more. Or you might do group pricing because you serve a lot of bridal parties.
Don’t forget to add any products you plan to sell. Why is carrying these items beneficial to your business?
Financial Projections
Financial projections are the nuts and bolts that lenders want to see. They’ll also keep you on the right path as you grow your salon.
You’ve already outlined your services and pricing. Now, it’s time to do the math and calculate what that means in terms of income.
Answer these questions first:
- What do you expect your salon to gross (total income) in a year?
- What are your overhead expenses (rent/mortgage, staff, utilities, wholesale supplies, etc.)?
- What portion of your expenses are due to payroll?
- Do you have to make capital purchases for equipment? Will these be paid with a lump sum, financing, or rental payments?
- What is the net profit you expect (gross income minus overhead and expenses)?
- Where do you predict expenses or income will change over the next few years?
You want to make your business plan financial projections look truly professional. So, break them down into these categories:
- Sales forecast – total sales expected over the next several years
- Expenses budget – all the costs you need to operate
- Profit and loss (P&L) statement – a 12-month summary of revenue versus expenses
- Cash flow statement – how cash moves in and out of your business, including monthly payments
- Projected balance sheet – items that aren’t in your P&L, like interest debt, equity, and other factors that affect the net worth of your business
- Break-even analysis – what you need to earn (at least) to make your expenses and start turning a profit
A certified public accountant (CPA) can help you put together this part of your business plan for a reasonable fee. It’s well worth it if it helps you obtain investors or bank funding.
How You Can Start Writing a Hair Salon Business Plan Right Now
Ready to get started on your hair salon business plan today? Use these tips right away to make it both convincing to lenders and helpful as an internal roadmap:
- Write a mission statement. To write a solid executive summary, it’s helpful to first compose a mission statement. This delves into why you want to open your business in the first place. Some people include this in their executive summary. Others keep it private and use it as an inspirational jumping-off point.
- Include milestones in your financial projections. These are points where you will examine progress and see if you’re on target. Be ready to course correct if you’re not hitting your goals.
- Compile an appendix. It’s a good idea to include an appendix in your business plan with copies of extra materials. This is an ideal place to include photos of your salon, certifications, licenses, and financial documents. It will keep everything organized for you and make you look more professional to lenders.
- Enlist help. If you have questions about certain sections of your salon business plan, consider consulting with the appropriate professionals. Paying a one-time fee to an attorney or CPA can save you money and headaches down the line. You could even consider hiring a business manager to deal with office and financial issues.
- Research your competition. If you’re not sure what services to offer or how you stand out, do some in-person recon. Visit competitor salons and check out influencers on social media. How can you align with service gaps and trends to make the most of your business?
- Explore salon management software. Salon management software can save you a lot of time and make your job a lot easier. For instance, you can use it to quickly and easily generate reports to keep a pulse on your performance. It’ll also help you with other tasks related to your financial success. The best salon management software can automate appointments, keep track of inventory, and assist with marketing.
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