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.
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:
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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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:
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.
Think of the executive summary as the introduction to your salon business plan. It gives brief information about:
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:
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.
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?
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.
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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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:
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?
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:
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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.
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 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:
You want to make your business plan financial projections look truly professional. So, break them down into these categories:
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.
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:
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