If you’re already running one successful salon, you might consider opening a second location. With multiple locations, you can try to replicate what made your first shop successful to exponentially increase revenue.
In theory, this expansion makes sense. You’ve done the hard work of building your brand. You’ve learned from your mistakes. You’ll be less likely to repeat them when opening an additional location.
There is plenty of room for growth, too. The salon market is on track to be worth $190.81 billion by 2025.
However, your new salon location will be joining a crowded marketplace. As of 2021, there were 86,000 salons in the U.S. https://salonspaconnection.com/beauty-hair-salon-industry-statistics-in-2023/
Only 50% of salons survive their first three years in business. Your experience from your first salon may skew these odds more in your favor. Even then, there will still be challenges.
You’ll have to build a new client base, even if you’ve had client overflow from your first salon. You’ll also have unique problems to deal with in your new spot. As the owner, you will be responsible for problem-solving at two places instead of one.
A multi-location salon will require careful planning and time management.
In this article, we will look at the signs that show you’re ready to handle an expansion. Then, we’ll look at both the advantages and risks of a multi-location salon business. Finally, we’ll end with tips to help you decide if you’re ready to make this move yourself.
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How To Know You’re Ready for a Second Salon
You need to consider various factors before opening a second salon.
The success of your original salon is important. It is not the only variable to weigh, though. You also need to be personally prepared for the challenge. You need to investigate potential locations and assess the scalability of your brand and business operations.
Here is a closer look at the most important factors to consider:
Stable Revenue Growth
Your current salon should be consistently profitable. In other words, it should have the cash flow to sustain your expansion.
First, you want the original salon to be self-sustaining. It should produce enough revenue to pay operating expenses and payroll. Also, you should have enough income to put some of your profits towards your expansion.
How much revenue is enough? It depends on your market and the size of your salon. The U.S. Chamber of Commerce suggests looking at annual revenue growth. If your year-on-year revenue growth is 10% or more, you might consider expanding. This percentage suggests there is enough demand for your services and brand.
Repeat Customers
Salons rely heavily on loyalty. Clients who prefer your services will return again and again. They provide consistent revenue. Since you have an ongoing relationship, you do not need to market to them.
Perhaps your loyal clients have to make appointments weeks in advance. Or, you can’t accommodate walk-ins because your stylists are fully booked by regulars.
These are signs of high demand for your services. A second location could help meet this demand.
Even with high demand, location is important for serving existing clientele. The second shop needs to be near enough to be convenient for customers. But it should also be located where it can attract new clients.
Market research and feedback from loyal customers can help you find the ideal location.
A Repeatable Business Model
You need to repeat your success in a second location. Decide if any roadblocks would keep you from applying your business model in your second location.
One common expansion problem is hiring new talent. New staff should be able to provide the same level of service as current employees. They also need to fit with your brand and reputation.
Other issues could be a difference in rent prices and economic status in the two locations. Also, consider how your business model and culture fit into the new location. Is the demographic similar, or would you need a different approach to reach new clients?
Weigh these factors. Then, decide if you can find the talent and space to apply your successful business model to your new salon space.
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Your Management Abilities
Your management duties will double if you open a second salon. You’ll have to schedule employees and do payroll for both locations. Despite your experience, you will still have to deal with some growing pains in your new location.
Your management abilities will be tested. You’ll have to solve problems quickly. You will also need to hire staff who can work independently.
Your ability to delegate tasks effectively will be essential. The salon’s success may depend on how well you assign important tasks. You’ll have to decide which jobs to hand over to another team member.
Before you open a new location, consider where your management skills stand. Are you confident in making the right decisions? Can you solve problems quickly? If the answer is “yes,” you may be ready to expand.
Your Availability
Your expansion will require more of your time. You’ll spend time at both your locations. Consider the travel time between them as well. Sometimes, you may have to fill in for ill or vacationing employees.
Yes, you can delegate and set up the business to operate without you. But ultimately, you are responsible for both locations. Decision-making, vital tasks, and problem-solving are all on you. These responsibilities will double and put more demands on your time.
With your experience, you may be able to handle these duties easily. But you will be spending more time at work. Only consider a second salon if you have that extra time to spare.
The Strength of Your Brand
A strong brand will sell itself. Maybe your salon has a reputation for quality and excellent customer service. People in the area might already know it. They’ll come to a new location based on the strength of your brand.
A strong, recognizable can limit your marketing expenses for the second location. It will also make it easier to build a new client base.
Does your salon have a good reputation in the area? Does this reputation stretch to the area where the new salon would be located?
If so, you’re primed to draw new customers without a full-scale marketing effort. That means less time and money to build your customer base.
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The Benefits of a Multi-Location Salon
A multi-location salon brings certain advantages. It’s important to understand these benefits so that you can actively pursue them. Some, like increased revenue, are more obvious. Others are less so.
For instance, you will need more supplies. But you can buy in bulk, lowering your price per unit.
Here is a look at the benefits of multiple salon locations:
More Revenue
Increased earnings can come from several factors.
You can compensate for overflow. Clients who can’t get an appointment at your first location may be able to move over to your new locale.
And, as new clients discover your salon and brand in your second location, your revenue will grow even faster.
Economies of Scale
You’ll undoubtedly be purchasing more supplies. But you can negotiate lower prices with suppliers based on the amount you’re ordering. The better prices decrease the percentage of revenue you’ll have to spend on supplies.
Centralized Management
Managing two locations will take more of your time. However, you can streamline some processes.
For instance, you can use software for scheduling and bookkeeping for both locations. With a unified solution for both locations, you’ll cut the time you spend commuting between them.
Risk Management
Two or more locations can help mitigate risks.
Maybe a new competitor takes a share of your market in one location. A construction project might suddenly make it more difficult for clients to access one of your shops.
You’re still left with one location that will continue to earn full revenue. This will negate some of the financial damage caused by the slowdown at the other place.
Talent and Knowledge Sharing
Managing more employees could be a challenge. But more workers also bring advantages.
You can move people between locations to perform specific services or cover for temporary shortages. Also, experienced employees can share knowledge with others. This allows staff to learn and develop new skills on the job.
Ability To Compete
You can offer added convenience to customers. They can choose the location that works best for them.
If you are fully booked, you can offer an appointment at your second location. Single-salon competitors can’t match this convenience. Also, it allows you to serve customers who might otherwise seek convenience at other salons.
Consider the potential for long-term growth, too. Two salons operating at full capacity will maximize revenue. Potentially, you could add more locations using the successful business model.
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What Are the Risks of Opening a Second Salon
No venture is without risks. Careful planning can mitigate some of them, but you will still need to anticipate and plan for potential problems when opening a new location.
Here are some risks to consider:
Unexpected Costs
You know to plan for payroll and rental costs. Inventory and supplies will also be a part of your budget. But unexpected expenses could complicate your plans.
For instance, your new location could have higher utility costs. Or, you might have to pay for unexpected repairs. Other budget challenges could include higher insurance premiums.
You’ll need to establish a larger reserve for emergency expenses.
A Lack of Quality Control
You need to sustain your brand and reputation across both locations. Experienced staff may be spread too thin. New staff members may not deliver the quality services customers expect from your brand.
One bad experience can usher 63% of clients right out the door for good. Poor quality control could eat away at your customer base if you aren’t careful.
Market Saturation
Clients may have too many options in your second salon’s location.
Even if you provide better services, it will take time for clients to find you among all other options. You may have to spend more on marketing to attract their attention. The long period of low revenue may strain your finances. Overall, your second salon could be financially unsustainable.
Problems Replicating Success
Your first salon’s success could be due to numerous factors. Some might not be replicable.
Location and skilled staff members could play a role. Demographics in the local area could also be partly responsible. So could factors as simple as sufficient parking and neighborhood walkability.
It might be a challenge to replicate the nuances in your new location.
Insufficient Time
New salons require a significant time commitment from owners. You’ll spend much more time ironing out details and problem-solving.
If you don’t have the time to give, you run the risk of neglecting your first salon. Your relationship with your original customers and staff could suffer as you switch focus.
You won’t be able to mitigate these risks fully. But you can be aware of them. Make plans to deal with them before they arise. Then, when they pop up, you’ll be ready for them.
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5 Tips for Salon Owners Considering a Second Location
A multi-location salon business can be profitable. This is especially true if you have a strong brand and a successful system for operating your business. But you must be prepared for the unique challenges of operating two salons.
You can start planning for a new salon location right away. The more you plan for challenges and risks, the more likely your expansion will succeed.
Here are five tips to help you get started on the process:
- Assess Your First Location.
Your current salon needs to run smoothly before considering a second. It should be making consistent revenue throughout the year. Appointment and staff scheduling should be streamlined.
Your bookkeeping and inventory processes should also be as efficient as possible. This will give you the cash flow and time to focus on your expansion.
- Look at the Market in Your Area.
Map out the salons in your area. This will help you see if the market in your desired location is oversaturated.
Your map may also reveal underserved areas that you’re unaware of. This may open up possibilities you haven’t yet considered.
- Get Customer Feedback.
Ask your current customers for their opinion on a new location. Find out which locations would be convenient for them.
Inquire about other factors that might influence their decision. For instance, some long-time clients may be loyal to specific staff members. These insights can help you plan staffing for your new location.
- Find a Financial Cushion.
Your salon expansion may work on paper. But you need to consider unexpected expenses.
Make sure you have enough savings to cover unforeseen repairs and additional marketing. Decide if you have the cushion to cover several unexpected problems without straining yourself financially.
- Find Software To Help With Management.
Salon management software can streamline time-consuming processes like inventory tracking and payroll. There are also software solutions to assist with scheduling and staff timekeeping.
These programs can also unify recordkeeping for multiple salons on one software platform. Then, ask for demos or free trials to confirm that they will provide the functions you need.
