How to Start a Barbershop: A Complete Guide to Get You Started
The barber industry has been growing steadily since 2013, as more men have started to realize the importance of grooming.
With the growing needs, there has also been a revolution in trends and styles. Various tools and services have emerged over the past decade, making the industry more prominent and robust.
Hence, owning a barbershop can prove to be very profitable if everything is done right. But it is easier said than done, after all, the journey to success in the barber industry is a long one, with its own set of obstacles.
In this article, we will help you understand how to start a barbershop and choose the right path to achieve your goals.
Follow these steps to find out how to start a barbershop
- Define your goals
- Understand your market
- Identify a niche in the market
- Create a budget
- Take care of your finances and taxes
- Look for an optimal place
- Decide on a legal structure
- Obtain your licenses
- Hire the right team
- Start building your client base
- Use the right tools for efficient operations
Step 1. Define your goals
The first step is to define your goals, both short-term and long-term. This is important because it will help you prioritize the things that need to be done. Having something to work towards will keep you focused and motivated.
Listed below are a few things you should keep in mind when setting a goal.
1. Set clear and quantifiable goals
Keeping measurable targets will help you know when you’ve achieved them. As an example, reaching a certain number of regular customers can be a long-term goal. Or, setting up barbershop chains over the coming years can be one.
2. They should be worth your effort
To put in a lot of time and energy, but still being far from reaching your target, can be demotivating. Instead, you should put in your best effort towards a goal that is likely to be successful.
3. Set deadlines
Once your goals are established, try to define the things you will need to do to achieve them within a realistic time frame. Goals without deadlines indicate that you are not fully committed.
4. Don’t forget to celebrate your achievements
Whenever you achieve a goal, it is good to mark the occasion and celebrate. Whether you have put a great amount of effort, or things just seemed to go your way, you should cherish that moment with your partners or employees.
Step 2. Understand your market
As a new player in the barber shop business, you need to have a general understanding of the other barbershops in your area. For instance, knowing about your competitors and their niches will help you shape your business to stand out among them.
Look at the:
- Average revenues of the various barber shops (national and local)
- Their mean profit margins
- The range of products and services they offer
- The pricing points for their services
- Lastly, also get an idea of the size of the team and the place that you will need.
To do this kind of research, you will need to put in some work. Here are a few steps to guide you through this process:
- Do some online research, to know the average revenues of barber shops The number varies within a state and across different states in the USA. Online research includes reading articles, annual industry reports, and online forums dedicated to this topic. The same method should be used to find out the average profit margins.
- To get an idea about their services and price ranges, you should take a look at their websites/ price list. You should also try booking appointments with them to get this information. If they don’t take online bookings then you should consider going in as a customer and having a look at the services and prices.
- The size of the team, and the place you require largely depend on your needs. Get an idea about your own requirements by visiting other barber shops with varied capacities and staff members.
Step 3. Identify your niche in the market
Finding a niche in the market could be the key to your barber shop’s success. Instead of trying to satisfy everyone’s needs, you can focus your efforts on a smaller section of the market which has more specific requirements.
An ideal niche market would be something that has a high demand but is relatively untouched. In technical terms – a market with a low supply/demand ratio. Apart from this, you should also keep in mind your/ your team’s personal skills and interests.
A niche can be based on any of these aspects:
- Price (luxury or economical)
- Quality of service (premium or moderate)
- Type of service
- Target demographic (based on age, neighborhood, community, etc.)
- Target psychographic (based on their attitudes, values, or interests)
This process of finding a niche will help you set a direction for everything from designing the right website for your target audience, to getting more relevant leads.
A good example to explain this is: If you are a celebrity barber, your barber shop will provide premium quality service at a lavish price. Your website and all your advertisements will also be designed in a way to show off your premium brand.
The process of finding your niche can get challenging or time-consuming, but it is worth it, especially in the long run. Moreover, it does not need to be done as soon as you open your barber shop. As your business grows, you can try different options and see which works best for you.
Step 4. Create a budget
After you are done with the market research stage, the question arises: How much does it cost to open a barber shop?
The best way to know the answer is by making a budget, to get a rough estimate of the amount you will need to start. The start up cost for a barber shop can vary a lot depending on the following list of things:
- The total fee for registering a business in the United States of America – $750
- Cost of workspace – depends on the size of the place, whether you will buy it or lease it, and its location
- Construction costs (including plumbing and electricity)
- Insurance – speak with a licensed agent to determine what policies you need
- Necessary licensing requirements – hire a local attorney to find that out and their cost
- Marketing materials like Gift Cards, Newspaper Ads, Business cards
- Shop equipment – cash register, booking software, signage
- Inventory – chairs, mirrors, waiting chairs, scissors, trimmers, razors, combs, shaving cream, aftershave, blow dryers, etc.
- Furniture and miscellaneous necessities
- Business website for your barber shop
Many of these things are subject to change over time and place, hence it is best to conduct small research for your local area and read lots of articles dedicated to this topic.
Step 5. Take care of your finances and taxes
Next, it is time to set up your bank account and get funding. Having a bank account is necessary to get funding, and also to pay taxes.
Set up your accounts
First and foremost, you will need a business bank account and a credit card to handle your finances. Using your personal account for business will put your personal assets (like your home, car, and other valuables) at risk in the event that your barber shop is sued.
Having a separate business credit card is also useful as it helps build your business credit, which can help you get better investments in the future.
Now to get funding for your barber shop. There are four options when it comes to funding:
- your savings,
- line of credit (from financial institutions, lenders, or even payment processors),
- help from relatives/friends.
Your funding could also come from a combination of these different sources. The most common choice is to get a loan.
There are different types of loans that have different terms and rates. The loan amounts depend on a lot of factors like your local area. Hence, it is best to take advice from housing and credit counselors and do appropriate research.
Once you have procured funding, it is important that you start planning all your expenses, so that you become debt-free as soon as possible. Project your annual earnings to get an idea of how long it will take to repay the loan.
Register for taxes
You will need to register for a variety of state and federal taxes before opening a barber shop. We have listed down a few registrations that you will need to do.
- Employer Identification Number (EIN)
- Electronic Filing and Tax Payment System (EFTPS) – if you have employees
- Register as a Business Entity – for all legal structures apart from a sole proprietorship
- Register with your state – for income tax, sales tax, and employment taxes
- Trademark your business name, slogan, and logo
Step 6. Look for an optimal place
It is important to choose a facility/place that meets your needs as this helps reduce modification costs. Moreover, finding the right location for building your barbershop business will boost your client base immensely.
Here are a few steps you can follow that can help you choose the right facility for your business.
1. Look for a convenient location
The most important point you need to keep in mind is that your place should be accessible and easy to find. No one wants to spend extra effort looking for a place to get their hair cut.
2. Think of your requirements from the facility
Try visualizing your dream barber shop: Its interior layout, the amount of usable space, provision for necessary features like water and electricity supply, its exterior look. Now check for these in all the facilities on your shortlist.
3. Keep in mind the community around the shop
Is the shop in the middle of the city, or the suburbs? Is it in touch with the rest of the city (by metro or even roads)? Do the people living in that area fit your target demographic? Is it a well-connected barbershop location? Answers to these questions will help you determine if the area around the facility fits your niche.
4. Look out for the number of competitors
When discovering different locations, take the time to consider the other barber shops within the area. If the number of competitors in an area increases, individual revenues will most likely go down.
5. Set up your barber shop close to other hangout spots and businesses
To retain a successful business, it’s a good idea to set up your barber shop in a busy area, where various businesses operate, as this can draw in new clients for you.
To explain this, consider this scenario: You set up your barber business close to a profitable local cafe. Then customers from the cafe will keep your shop in mind, and maybe next time they visit the cafe, they might come with plans to get their hair cut from you.
You could also discuss plans of co-marketing with them, which might boost the number of clients for both the businesses.
6. Choose between buying and renting
Once you have determined which facility and location suit your needs, an important question arises: Should you buy or rent the facility? Doing a cash flow analysis might help you answer this question.
Analyzing your cash flow will determine the amount of money you would need to set aside, to cover the costs of each alternative i.e. buying or renting. For this, you must consider federal and state tax rates, cost of capital, expected useful life of the property, lease terms, etc.
Based on your cash flow analysis, the amount of funding you have procured, and your preferences, you can choose between buying and renting.
Step 7. Decide on a legal structure
Deciding on a legal structure for your business is necessary because it determines things like which income tax return form you have to file to pay taxes. There are many legal structures, so you must choose one based on your idea of your barber shop.
If you plan on running the barbershop completely on your own, with no employees, then you should opt for a sole proprietorship. If you want it to be a separate entity from you, then you should choose a corporation.
Do you have friends or family ready to start a barber shop with you? Then a partnership is an ideal option. There are two types: general partnership, and limited partnership.
Lastly, your barber shop could be a limited liability company (LLC). It allows owners, partners, or shareholders to limit their personal liabilities while enjoying the tax and flexibility benefits of a partnership.
For a more detailed and exhaustive resource of information about this topic, check out the IRS website. We also highly recommend that you consult a lawyer, as they would consider other factors like location etc.
Step 8. Obtain your licenses
To start any business, you need a license. Barber shops are no exception. Contact your local barbers’ regulatory authority to determine the licensing requirements.
While these requirements vary in their specifics, you’ll typically have to be a legal adult with at least a high school diploma. You will also require the following licenses at a minimum:
- Business Licensing and Registration: You’ll have to register your business with the state, city, or town in which it will operate.
- Employer Identification Number: If your barber shop business is a partnership or a corporation; you’ll have to obtain an Employer Identification Number from the Internal Revenue Service.
- Resale Certificate: If you plan to sell retail products, you’ll need to get a resale certificate. You can avoid paying sales tax on your inventory by providing a copy of the certificate to your wholesalers.
- Inspections: State and local laws may require your place of business to undergo inspections by building and health departments.
A piece of advice
The licenses and other requirements can vary a lot based on your area. It is a good idea to hire a local attorney who specializes in small-business issues. You are less likely to commit mistakes with professional help.
You should be thorough with your own research too. Learn more about licensing requirements in your state by visiting the SBA’s reference to state licenses and permits.
Step 9. Hire the right team
A team of employees working in an established environment is very different from when you are just starting a barbershop business. Most importantly, employees in the early stages of a professional barber shop should be adaptable and have a variety of relevant skills. This will ensure that fewer people are required to run the barbershop business successfully.
Since you will be working too, hire employees that complement your skills. If you are going to cut hair, then hire employees that can help you manage and grow your business. If not, then you should manage the business and hire barbers to cut hair.
Choosing a good team of professionals is fundamental to achieving your business goals. Spend time in the hiring process and do it right!
Step 10. Start building your client base
For any business to be successful and self-sustaining, it needs to have enough clients. Getting those clients is not simple, especially when the business is in its starting phase.
At this stage, you should adopt marketing strategies that cost less and get as many people to know about your new barber shop as possible. Getting your first set of clients is important, but spending huge amounts on elaborate marketing plans is a waste of time and resources.
There are many simple ways to start building your client base, we have highlighted the must-dos here.
1. Create local listings
The first step for any business is to create local listings on Google My Business or other web directories to increase your visibility (where people can give reviews).
After creating a profile on Google my Business, get listed on Reserve with Google. This will give users an option to book an appointment with you, right from your business listing on Google.
It is also recommended to register your business on barbershop-specific web directories like Beauty Seeker. This will help people easily find your barber shop online.
2. Contact old clients
If you worked somewhere else before, then you could also reach out to your old client base. You could attract them to your new shop by giving them a discount in your first few months.
Put advertisement posters near your old barber shop to make sure all their customers, including your old clients, see them.
3. Go online!
Create your websites and social media handles for your business, this will help in the long run. You can also add booking CTAs like a booking widget for the website and a ‘Book Now’ button for your Facebook and Instagram handles.
4. Use local advertising methods
Consider local advertisement methods like newspapers, TV, Radio, etc. based on the location and the demographic. Even attractive posters put in the right places go a long way. Having business cards can help you add a professional touch to your business.
5. Try co-marketing with nearby businesses
If you have opened your barbershop near other types of businesses, then you can discuss ideas to collectively get more clients. This could be from anything as simple as gift cards or combo packs to a point-based joint referral plan.
For instance: your barbershop could partner up with a nearby cafe to offer discounts on their beverages, for people that have an appointment with you. To get those discount offers, their regular customers will frequent your shop too.
6. Build a network
Attend events and competitions to build a better network. You can use this network to get in touch with bloggers or influencers to try out your services and help you advertise them if they like.
7. Consider providing at-home services
Mobile hairdressers provide at-home services for customers. This way you can spread your brand across the city, instead of just having a client base localized to your area.
At-home services are especially practical during the era of COVID-19, as it allows your clients to practice social distancing from other people to get their hair cut. Mobile barbers can come prepared with PPE and other supplies to keep them both protected from the virus.
Once you have built an initial client base after following the above steps and exhausting all options, don’t stop! Continue marketing your barber shop in different, more innovative ways.
Another article that covers marketing strategies and ideas for barber shops in detail is underway! Stay tuned to our blog for more exciting tips, or drop your email below and we will directly send it to you once the article is published!
Step 11. Use the right tools for efficient operations
Keeping everything organized and making sure all processes happen in a streamlined manner can be hard. Hiring managers to do the job is a simple solution to this problem.
But in this era of tools and technology, the right choice of tools can prove to be more efficient than a manager, and at a much lower cost!
Here is a list of some tools that you should definitely use to save time and provide a great customer experience:
1. Appointment scheduling software
Using a barbershop appointment software will eliminate hassles for your customers when they book an appointment with you. Customers will be able to self-schedule, cancel and reschedule appointments on their own.
Moreover, using a tool for appointments is much more efficient and trustworthy than hiring a receptionist or a manager, mainly because it avoids human error such as double bookings, wrong booking times, etc.
2. Payment system/ gateway
Using a reliable payment gateway will streamline your checkout process so clients can pay for your services with ease. It also acts as an intermediary to make sure that customer data is encrypted and secure.
3. Client Database Management System
A client database is a very important tool from a sales perspective. Having the details of all your clients and potential clients helps in making faster decisions and allows you to deliver a more personalized experience. You can also target narrower demographics with information on potential clients.
Too many tools? We have just the right solution for you – Appointy.
Appointy is a barbershop software that provides you all the above-listed tools in a single product! And that’s not even the full extent of its benefits.
Appointy helps you manage appointments, send automated emails or SMS reminders, integrate with social media platforms and Google Calendar, accept online pre-payments, create gift cards, manage employee shifts, schedule resources, and more using a centralized dashboard to streamline business processes.
Starting a barber shop business definitely requires a lot of planning and work, but building your business from scratch, just how you want it to be, is worth its while. If you plan properly, follow all the steps, and keep your spirits high, it will go perfectly.
Besides, at the end of the day, you will do the work that you want, and how you want; and that alone will be incredibly rewarding.
If you have anything that you want to ask us, drop a comment below! We would love to hear from you!
We at Appointy, help business owners grow and run their businesses with our online scheduling software. This blog was a part of our ‘Manage your Business’ category, where we provide expert tips, and resources, or simply talk about the challenges that small and medium businesses face every day.
If you have any thoughts on this blog or would like to chat about your business struggles and achievements, let us know in the comments below.
We love a good talk!