How to open a salon: A comprehensive 10 step guide to get you started
You know what will never go out of fashion? People getting haircuts and spending on personal hygiene and beauty.
With all those years in lockdown, probably even Rapunzel would need a good hair spa and the ultimate self-care day.
2020 was a crazy roller coaster ride for all types of businesses, salons in particular. But the industry only seems to be going uphill from here.
The global personal care market is projected to grow to $488.9 billion in 2025. This is a result of companies rearranging their operations and recovering from the Covid-19 downfall.
So, now could be a good time to dig into the $20 billion revenue per year industry. If you are looking for a simple guide on how to open a salon, you’ve come to the right place. We have curated a step-wise checklist to help you get off your feet.
Follow these 10 steps to open a successful salon:
- Understand the market
- Define your business model
- Set your goals
- Define your salon start-up costs
- Find a way to finance your business
- Choose a strategic location
- Decide on interiors and theme
- Hire your “A” team
- Get your initial customers
- Speed up with the right salon management tools
1. Understand the market
Testing the waters before you jump in is crucial.
Understanding your industry, competitors, and clients is essential for building a successful business. Finding who your customers are and what they really want will help you improve your products and services to meet their needs.
Know the market inside out and start strong!! Here are a few important points to get started with:
A. Define your niche:
It might sound counterintuitive, but to broaden your business reach you need to first narrow down your focus. By defining your niche, you reduce your competitors, you can target your specific clientele and increase visibility.
If you are wondering what a business niche means. Here is a simple definition of it.
“[A business niche] is a hole in the current market where the business’s USP (unique selling proposition) will be appreciated by a select group of customers, or target audience. This target audience might be one that is currently underserved and/or has a large market potential”-Charlene Walters (business and branding mentor and author of Own Your Other) to Business News Daily
Now that you know what it means, here’s how you can find the niche for your salon business:
- Identify your interests and passion
- Find out what problems you can solve
- Research your competition
- Look for whether there is enough profitability in your niche
- Consider how much you can stand out from the others
After deciding your niche, go above and beyond to provide the best products and services along with great marketing to put yourself on the top of the game.
B. Do your market research:
Market research is a vital step in starting any business. It helps you spot opportunities, lower business risk, and outsell competitors.
There are a bunch of active salon owner/manager groups on Facebook and LinkedIn. Join them and follow conversations you think are relevant to your business regularly. Follow threads with price points, types of services, staff hiring, etc. You’ll get to know what the buzz is in your space.
Know the latest trends (past 2 years to current) in your industry and make a plan to incorporate them in your marketing strategy.
C. Know the businesses in your space:
At times, learning by the first-hand experience can be expensive, so learn from your competitors’ mistakes and and try to avoid common pitfalls.
Search about different mid/small scale salon businesses in your area. Look at their client base, the demographics they are targeting, their pricing, and think about how you can do it differently or better.
Attend trade shows, barber expos, salon cons. There are several small to large scale expos you can attend to gain knowledge about your industry and trends.
D. Establish your target client base:
Segment clientele on the basis of demographics and annual income and decide on which type of client base you want to target. Begin with creating marketing personas, so you know the client base you will be working with, and then channel your business and marketing efforts towards them.
Your clientele could be high-budget clients, viral sensation millennial clients, or a bunch of other different types. It is important to take baby steps and target smaller group of audience, gain feedback, and then build further on it.
2. Define your business model
Decide on which of the following business route you want to take:
- Buying a franchise – buying a franchise of an established salon brand that has a proven track record and loyal customers.
- Building a salon from scratch – buying/renting a space and building your own salon brand from scratch.
- Buying a salon and modifying it – buying an existing salon in a strategic location, with a floor plan and infrastructure you like, and then modifying it according to your needs/requirements.
Study the different market opportunities in the area you want to set up your business, look at which model is more cost-effective, and moreover, think about your vision for your business and how you see it being in the next 5-10 years.
3. Set your goals
Get your pen and paper, and start right away!!
Planning processes and setting goals can help you increase staff efficiency, lower costs, foresee and prepare for stormy days, and pump up your overall business productivity.
How do you do it?
Plan for 2 types of goals. Short term and long term. Use a template to make it easier for you.
A. Short term goals:
These are targets that you want to achieve over the next few months. They help you focus and gain momentum. Be realistic and try to reach your target one day at a time. Keep milestones and build a roadmap.
Here are some typical questions you can ask yourself to set short term goals while starting out:
- How much money I’ll be needing to bootstrap my business?
- Planning for set up finances: How will I get that money?
- How do I decide on the location by this time next month?
- What is the number of staff I am looking to hire initially?
- What is the process of deciding the niche for my salon?
- How do I decide the vibe and decor I want my salon to resonate with?
B. Long term goals:
These are targets that make you look at the bigger picture and bring out a vision for your business. They help you define where you want to see your business in 3-5 years.
Long-term goals ultimately define your short-term goals and help you maintain your daily tally leading up to your vision for your business.
Here are some examples of questions you can ask to set long-term goals.
- How do I open my business in multiple locations?
- How can I get big brand collaborations?
- What is the road map to how I picture my business to be in 3-5 years?
Planning is important. No doubt about that. But don’t marry your plan. Give yourself scopes to twist it and tweak it a little, here and there.
Running a business is like raising a baby. There will be few things about parenting you’ll understand only when he turns a teenager. Give yourself that flexibility 😉
4. Define your salon start-up costs
Prior to mapping your accounts and getting financing, you’ll need to think about what, precisely, you need the money for. Here are some of the common salon start-up costs:
- Licenses and permits: You’ll be needing a business license and any permits that are required in your area. If you are planning to sell products, you will also need sellers’ permits.
Typical permits and licenses you’ll be needing are:
- State Cosmetology or Beautician’s License
- Salon Retail Seller Permit
- Salon Business Operation License
- Federal Employer Identification Number (EIN)
- Certificate of Occupancy
- Real estate: You can choose to rent or buy the place. Either way, you should be capable of financing for a monthly lease/mortgage and a security deposit/ principal amount upfront.
Look at typical real estate costs for any business in your area and make an estimate based on that.
The average size of a salon in the US is around 1,500 sq feet. If you plan on buying the space, the cost will increase significantly. The real estate cost will vary with the state you want to be based out of, the locality you are looking at and the basic structure of the space.
- Payroll: Decide on the number of employees you are looking to hire and keep aside at least 3 months of the pay for each employee. Also consider which payroll model you’ll be following, whether it will be hourly wages, base salaries, or commission pay.
- Salon tools/equipment: You would need salon tools like hair dryers, sinks, chairs, etc., and also 1-2 computers for managing the business. Depending on the scale of the business, make necessary decisions. Equipment costs will vary depending on the type of salon you want to open.
- Inventory: You will have to stock up on beauty/hair etc products before opening and if you are planning on retail, you will also need to have inventory ready to sell.
- Insurance: Set aside an amount for an insurance plan to legally cover your business.
5. Find a way to finance your business
Look at options to finance your business efficiently. The most common ways for a small scale business financing are as follows:
- SBA loans: It’s a long-term, low-interest small business loan that is partially guaranteed by the government, specifically the U.S. Small Business Administration. They are perfect for a small-scale business but you would need a strong credit score to be eligible for it.
- Microloans: The purpose of these loans is to jump-start a business, which can include acquiring inventory or raw materials, making down payments on larger investments, and a number of other uses for the money. Microloans usually have shorter interest rates and repayment terms.
- Equipment financing: Your credit will be reviewed along with your assets and cash flow to determine a reasonable loan amount and rate. You can also consider small business term loans for this. It is usually provided to a business owner who needs cash upfront for a specific task such as hiring or equipment purchase.
- Try Crowdfunding: Crowdfunding sites such as Kickstarter or GoFundMe can be an effective way to fund a super creative project or business. If you have figured out the stand-out factor for your business, Crowdfunding can be the best way to finance yourself. You’ll have to set a certain amount for a period of time, say, $15,000 in 30 days, and friends, family, or strangers who find your idea interesting can pledge some money.
- Attract an angel investor: Have a game plan before you even think about going to an angel investor. Make it clear what you are willing to give them in return and have a clear exit strategy for them.
6. Choose a strategic location
You could do everything else right in your business, but if you don’t have a strategic location for your salon, all your efforts might go in vain.
Some of the factors to keep in mind while deciding on the location.
- Are there any specific costs or taxes in the area?
- Is the lease agreement competitive?
- What are the local demographics like? What’s the average disposable income of people in the area?
- Is the area and surrounding in sync with your business theme and vision?
- Whether the community is seasonal in the area or stable all year?
- Is the area safe and lit up at night?
- How visible will your salon be?
- Will commute to and fro be easy?
- Is there adequate parking space in the area?
- Is it a raw space requiring electric installations?
7. Decide on interiors and theme
Salon in French means the “Living Room”. Do keep a comfy living room vibe in mind while setting up your salon.
Work on making your space look less industrial and more homely and welcoming.
The best ways to do so are by:
- Budgeting for a designer: “Work[ing] with a designer or space planner [can] ensure you are maximizing your revenue potential for the space,” said Miriam Deckert, marketing director at SalonSmart. They will help you make your salon look appealing and be functional. Try to get the best floor plan for the space you have without making it look clumsy. Don’t forget to keep client safety, hygiene, and comfort as a priority.
- Deciding on the theme and color palette for your salon: Incorporating the latest trends like having an indoor-outdoor space can have a major visual impact on your clients. Look at Pinterest for different types of salon decor ideas.
Decide on color tones, for example, setting the tone to white and pink pastel colors to which your customers can relate you to. Understanding color psychology can help you a great deal in tuning your salon’s vibe.
Don’t stick to one trend which will inevitably go away in time. Futureproof your salon using classic decors that never get out of style such as:
- Modern abstract patterns
- Pretty florals
- Eco elegant
8. Hire your “A” team
Salon recruiting can be hard, as you search for the correct applicant who will meet every one of your prerequisites, has extraordinary relationship building abilities, and an uplifting character. Choosing the right staff is probably the most crucial step in running your salon. Here are few things to keep in mind.
- Post job offerings on your website and social media groups and handles. Make sure your job description is in line with what you are looking for. If your job posting is precise and clear, you will be able to hire the right talent. Reach out to local cosmetology schools for freshers, sign up as an employer on hiring sites like Craigslist, Indeed, etc.
The staff you should be looking for are:
- Salon manager
- Ask for referrals. You can spread the word that you are hiring among community groups or people you know in this profession. Referrals are a great way to do an effective background check and foster loyalty. If someone who knows your business and culture well has a match in mind, they are more likely to refer to the perfect fit for the job.
- Conduct interviews. More than just looking at a resume, meet the person you think could be a good fit. Ask them situational questions and note how they respond to them.
An experienced person is always good for any job but that doesn’t mean you should be blindfolded to someone who is just starting out. If they can prove that they are hardworking, passionate, and have a track record of picking up skills fast, you can definitely consider hiring them.
- Invest in their training:
Set up a budget for training courses and equipment required.
“Train people well enough so that they can leave, treat them well enough so they don’t want to”– Richard Branson, entrepreneur and head of Virgin Group, Ltd.
If you want to know more about hiring the right staff for your salon, read more in this blog.
9. Get your initial customers
Getting initial customers is vital for any business. If your initial customers are happy with your services, it will truly be a domino effect from thereon.
Here are few ways to get your initial customers:
- List your business on Google my business and keep your profile filled and updated. This is how you show up in the map list on local Google searches like “hair salons near me.” Add your business information, website, your logo, a lot of photos, and correct hours so that customers can reach out to you.
- Add your business to Reserve with Google to get direct bookings with the “Book now button” from your Google my business listing.
- List your business on other online directories such as Google Places, Who do you, Best salon guide, etc. This will increase your visibility in relevant sectors.
- Make a website for your business and publicize it on different community forums. Build a strong and engaging website using different website builders such as Squarespace, Wix, etc.
- Set up social media accounts and post regularly on them. Promote your handles on different groups and encourage people to follow. Read more on how to make your social media handle more appealing.
- Get to the ground level and send out emails and your business posters/cards to prospect clients. Ask your friends to spread the word out on social media. Initially just try to get a decent footfall in your salon. Rest will follow up with different marketing strategies and referrals.
If you wanna know about salon marketing ideas, make sure to check out our upcoming blog. Just leave your email address below and we’ll send it directly to your inbox 🙂
10. Speed up with the right salon management tools
Once you have your initial customers say, 30-40 customers, you should go full speed forward from there and catch your momentum and optimize your business.
There are different online tools/software that can help you manage your day-to-day salon activities and optimize your business as a whole.
But, before that, do you know what tasks you’ll be needing these tools for?
Here are a few of the most important ones:
- Start taking appointments online: It will not only save you time and resources by having to answer and return back calls, it’s what all clients want. They want to be able to book their appointments at any time of the day at their ease and have total control over which service and staff they are choosing.
- Maintain customer database: This would include their general info such as name, phone number, email address, etc. If they are a recurring customer, maintain their choice of services and the staff they want to consult. You could do it in a simple excel spreadsheet but in the long run, a software to maintain it would be more beneficial.
- Keep a functioning email service: Provide your customers both promotional and non-promotional information regularly to keep them engaged with your business. But remember to never spam them. Send materials that can potentially earn you referrals and good ratings. Use your customer email list to your best ability.
- Optimize your digital payment processes: Go paperless to the maximum and take in online payments via Stripe, PayPal, Square, etc., and keep track of every transaction.
While you can use different software or tools individually for each of the above tasks, why take so much trouble? You can have one affordable salon software that can fit into your business seamlessly like a glove. And Appointy checks all of the boxes.
Appointy provides an all-in-one salon scheduling software that will help grow and manage your business. Get salon appointment calendar, mobile scheduling app, booking automation, appointment reminders, staff management, customer management, online payments, report and analysis, all under one software.
Trusted by 16,000+ salon professionals worldwide, Appointy is truly a one-stop solution for salon owners who are looking to save time and money.
If you have dreamt it, you can do it. With strategic planning and a whole lot of hard work, opening a salon and running it would be totally worth it!!
Go get ‘em!!
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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, 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.
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