Salon Business Plan: What You Need to Know About Starting a Hair and Beauty Salon in 2020
So, you’re looking to get into the salon business.
Maybe you’re a natural at styling hair and applying makeup. Perhaps you’re passionate about the beauty industry and you love helping women feel good about themselves.
Whatever the case, if you want to get your biz off the ground, the first thing you should do is come up with a plan.
Which is exactly what we’ll discuss in this guide.
Below, you’ll learn the ins and outs of writing a salon business plan. You’ll learn what it is, why you should have one, and the steps you should take to come up with a solid business plan for your hair and beauty salon.
Specifically, we’ll tackle:
- What Is a Salon Business Plan?
- Why Should You Develop a Business Plan for Your Hair and Beauty Salon?
- What to Include in Your Salon Business Plan [with Samples]
- What to Do After You’ve Written Your Business Plan
Dive in below!
A salon business plan is a formal document that outlines your strategy for starting and running your hair and beauty salon. It usually consists of several parts and covers various aspects of the business including the company’s backstory, products and services, financials, sales, management and more.
A business plan also outlines your goals. It sheds light on how you plan to achieve those objectives and in what timeframe.
When you’re inspired to start a business, it can be tempting to just… well, start.
And while there are certain situations when quickly kicking off your business is a great idea (e.g., when you want to sell something online), it isn’t advisable to take this approach when it comes to a fully-fledged business with a physical location, like a salon.
Here are some of the reasons why you need to step back and plan before diving into your venture:
To get clear on what you need to do
Writing a business plan forces you to take a long hard look at your idea. You’ll examine it from multiple angles, conduct market research, and confront your finances. In doing so, you’ll gain more clarity on whether or not your idea is viable, and if it is, what you’re going to do to get it off the ground.
This sets you up for success because rather than going in blind, you have a solid understanding of what your market is like, how you’re going to penetrate it, and how much it’ll cost.
To secure funding
If you’re looking to obtain a loan or raise money for your salon, then a business plan is a must.
Because here’s the thing:
Banks and investors require a formal document outlining how you’re going to use their money.
Needless to say, your business plan can make or break your chances of securing capital, so make it good great.
To stay on track with your business
Starting and running a salon isn’t a piece of cake. Just like with any entrepreneurial endeavor, there are going to be ups and downs. You need to roll with those peaks and valleys to be successful.
To do that, you need discipline.
You also need grit and determination.
More importantly, you need a plan.
Having a plan for your business will enable you to anticipate issues that may come up. It also helps you stay on track as you go through the journey of starting and running your salon. If you run into a wall or unsure of what to do next, you can refer to your biz plan for insights.
Now that you have an idea of what a business plan is and why it’s important, let’s move on to the different components of the document.
Here are the chapters that every salon business plan should have:
This section gives readers a quick overview of your business. It should paint a picture of what your salon is all about and the goals you want to hit.
Typically, the Executive Summary will contain:
Kick things off with a couple of paragraphs defining your business. Let’s say you want to create a hair salon targeting millennials. Your abstract could read something like this:
SLEEK HAIR & BEAUTY is a contemporary salon geared towards millennial women. Our goal is to offer trendy, sustainable, and affordable grooming services that would help modern women look and feel their best.
We will be the first millennial-centric salon in Emerald City, and our objective is to gain a 35% market share by year 1. We want to be the go-to salon for modern women who are looking to elevate their looks.
Mission and Vision
This is the part where you talk about the core purpose of your salon as well as your big vision for the business. So our fictitious salon’s mission and vision could be:
We want SLEEK HAIR & BEAUTY to serve a destination salon for Millenials. We envision having a beautiful and inviting environment where clients can get their beauty needs taken care of by expert stylists who understand them.
The “Company Summary” chapter of your business plan is exactly what it sounds like:
It should summarize the key details of your company.
This part details things like:
- Company ownership (Who owns the company?)
- Business structure (What is the legal business structure of your business? Sole proprietor, LLC, or something else?)
You’ll also want to mention the key objectives you want to hit by the first 1, 3, or 5 years that you’re in business.
Some examples include:
- Grow our client base to 100 customers by 2021
- Capture 35% of the market by year 1
- Become cash-flow positive by the year 2022
Every business is different, so take some time to figure out your goals and timeline, and then map your objectives from there.
The next chapter of your salon business plan is all about your services and products.
As a salon, you’ll likely want to include services like:
- Hair services – shampoo, blowout, haircuts, hair styling, straightening, coloring, etc.
- Skincare and beauty – facials, hair removal, beauty consultation, makeup application, eyebrow shaping, etc.
The vast majority of salons also sell products. If you’re planning to do the same, specify the items and merchandise you’re planning to sell.
Common examples for salons and spas include:
- Haircare – shampoo, conditioner, leave-on products, etc.
- Skincare – facial wash, toner, moisturizer, serum, facial oil, etc.
If possible, discuss how you plan to source your products and how you much you’ll sell them for.
SLEEK HAIR AND BEAUTY, for example, can talk about their focus on selling sustainable products from women-owned companies. From there, they can list out potential vendors and product lines, along with pricing information.
Diving into business without doing market research is like going into battle without any idea of who you’re up against and what the battle conditions are like.
You’ll end up losing if you don’t take time to analyze what’s ahead of you.
The same thing goes for salon business planning. You need to research your target market, the state of your industry, as well as your competitors.
Then once you’ve done that, summarize all your findings in the “Market Analysis” chapter of your business plan.
Here’s an overview of what this section entails.
State of Your Industry
This section should outline the size of the market, its growth potential, and any other details that would give readers a better understanding of your industry. The more localized your data is, the better.
SLEEK HAIR & BEAUTY, for example, which is located in Emerald City, can look into the beauty and wellness industry within their location, and include data points like:
- The number of hair and beauty salons in Emerald City
- The growth rate of these businesses
- How much the businesses are worth
- How much residents spend on hair and beauty services on a given month or year
Target Client Profile
This section dives into who your target clients are. There are two main things that you should touch on in this chapter:
- Income level
- Where they live and work
- Motivators and drivers
- Beliefs and behaviors
- Likes and dislikes
- Brands or people they identify with
It’s time to do research on the other hair salons in your area.
Map out where they’re located. Visit them to see their businesses in person. Look into their products, services, and pricing.
The data and insights you gather will help you figure out the best way to position your salon, so you can set yourself apart from your competitors.
Conducting a competitive analysis will also give you ideas on how to market your salon.
Which brings us to our next point…
Your business plan should talk about how you intend to acquire customers. This chapter should shed light on:
The Marketing Channels You’ll Use
Talk about the salon marketing platforms that you’ll utilize in your business. What websites or platforms will you use to get the word out?
The answer to that depends on your target audience and market position.
A business like SLEEK, which targets millennials, would utilize channels like organic search and social media (particularly Instagram marketing), because their target audience spends a lot of time online.
Your marketing channels may be different. The key is to get to know your audience and figure out the best way to engage them.
Sales and Promotions
Another thing to touch on is your sales and promotional strategy. How are you going to hook people into your salon? What tactics will you implement? In the salon industry, some of the most common sales and promotions include:
- First-time client promotions
- Referral programs
- Loyalty programs
- Gift certificates
Have a think about which tactics would work for your salon, then add them to your plan.
This section of the plan will iron out the details of your salon’s management, operations and staffing. Typically, this chapter includes:
Detail the hierarchy of your organization. Who will oversee the company? Who reports to whom? What will be your role?
You’ll want to create an org chart to illustrate your company structure. This will make it easier for readers to understand how your business would operate.
This part answers the question of who you need to hire in your salon to get your business up and running. Be sure to list the number of people you need for each position.
You could create a list along the lines of:
- Senior Stylist (2)
- Junior Stylist (1)
- Aesthetician (1)
- Receptionist (1)
You could also include a job description for each role, to give people a clear idea of the tasks they’ll be performing at your salon.
It’s time to talk numbers.
Here are some of the things to include in the financial chapter of your business plan:
Itemize the costs that you’ll incur to start and run your salon. These would typically include:
- Location expenses (lease, utility insurance, etc.)
- Staffing costs (wages, health coverage, etc.)
- Equipment (styling chairs, shampoo lounge, etc.)
- Software (appointment scheduling software, payment processor, etc.)
- Supplies (shampoo, conditioner, brushes, etc.)
- Marketing (advertising budget, flyers, business cards, etc.)
- Inventory (haircare products, skincare products, etc.)
Business finances will vary from one company to the next, so the data in this section will be completely up to you.
Generally speaking, though, this chapter would contain your:
- Projected revenue. How much do you think you’ll earn in the first month? What about in months 2, 3, etc? How much do you plan to earn in your first year of business?
- Break-even analysis. Based on your anticipated revenues and expenses, at what point will your break-even? Six months? A year or two? Plot out the analysis for your readers.
If you’re writing a business plan to secure funding, the financial chapter will be the most closely-scrutinized section of the document. That’s why it’s critical to have your numbers in order.
When in doubt, get help from a financial pro when you’re tackling this chapter.
So, you’ve written business for your upcoming salon… what’s next?
Here are some suggestions on what you should do after completing your salon business plan.
Have Someone Else Read It
One of the first things you should do is to have a colleague, advisor, or stakeholder review the document. Ask them to go over the plan and get their feedback.
Is the business plan easy to understand? How would they improve it? If they were an investor, would they want a piece of your company?
The answers to these questions will help you fine-tune your biz plan.
Take It to the Bank
If you intend to secure capital for your business, it’s time to take your plan to the bank (or to potential investors).
Schedule meetings with the necessary parties and start talking about how to get your business off the ground.
Use It in Your Business
A business plan isn’t a document that you should just file away.
Remember, it’s a key component that can keep you on track as you start and run your business
Let your business plan serve as a reference doc that tells you how you’re doing. Are you meeting your projections? Are your sales and marketing strategies going according to plan?
The best way to answer these questions is to have your salon business plan handy.
So, have it in your place of business so you can refer to it whenever you need to.
Ready to Kick Off Your Salon Business?
Starting a salon takes work, but with the right plan, people, and tools, you can get your business up and running smoothly.
Speaking of salon tools, check out Genbook, an online scheduling software that enables your clients to book through your website, on social media, or even on Google.