How To Write the Perfect Salon Business Plan for Your Salon in Just 7 Simple Steps
The US salon industry includes more than 80,000 establishments with a combined annual revenue of about $532 billion. So opening a salon, and owning a salon business is a pretty safe bet; it’s steady and profitable. But lack of proper planning makes it difficult to juggle all the aspects of your business, starting from marketing and sales, to accounting, and whatnot.
Here’s a quick tip!
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Check out this blog on opening your own salon business that gives you a comprehensive 10 step guide to help you get started now.
Writing a properly structured salon business plan is crucial to guarantee your salon’s success in this highly competitive market. Whether you’re wanting to secure a business loan for your salon or trying to expand or reinvent your salon business, a business plan for your salon will help you get there.
So how exactly would a business plan help you?
- A business plan will help you to figure out what you want your salon to offer, where you aim to take your salon’s growth, what kind of people you want to cater to, and who you’re competing against.
- If you are looking for investment from private investors, banks, or any other lending institutions or public grants, structuring a business plan is crucial.
- A business plan will help boost your salon business’s productivity through improved oversight and direction, and help you make informed decisions.
- As your salon business starts to grow and gain clientele, a well-developed business plan can help you acquire the capital needed to expand to new locations.
How to make the perfect business plan for your salon business?
Whipping up a perfect business plan can be pretty daunting because it needs to be immaculate. No worries! Here we’ve broken down the entire process into 7 easy-to-follow, foolproof steps, along with their templates, to help you create a successful salon business plan.
- Write a mission and vision statement
- Create an executive summary
- Analyze and identify your target market
- Perform a competitor analysis
- Write your salon’s business description
- Make strategies for advertising and outreach marketing
- Figure out your financial plan
Whether it’s a hairdressing salon business plan, a general beauty salon business plan, or even a small salon business plan for opening a salon on your own from scratch, we’ve got you covered. This is a complete, comprehensive guide to help you in the process of making a business plan for a salon. It’ll give you a basic understanding of how to write a salon business plan in the easiest possible way.
1. Write a mission and vision statement
i) Mission Statement
It articulates the immediate purpose of your salon business. Under this, you can state all the short-term goals that you plan on achieving with your salon within 6 months, stretching up to a year.
Here’s how you can nail a perfect mission statement
- Value – What is the value of your salon in the market? How can it help your clients?
- Inspiration – Why should people want to come to your salon?
- Remember to make your mission statement sound plausible and reasonable. Also, make it specific and concise – clarify all your short-term goals and the timeframe within which you’re planning on achieving them.
ii) Vision statement
Now, where do you aim to take the salon’s growth in the next 5 years? Well, if you’re dreaming, dream big! And you can be as ambitious as you want, the sky’s the limit.
Setting strategies for a longer-term makes sure that you don’t stumble on the road to success. It makes the overall structure of your business stronger. It prepares you for anything that the fickle market demands from you and throws at you.
Here’s how you can write a perfect vision statement :
- Review your long-term goals in a way that you can analyze how achieving your long-term goals could impact your business and the salon industry in general.
- Derive how your clients could benefit from the visions that you would be implementing.
- Your business’ end goals can drive your vision statement, For instance, if you’re planning to branch out to different locations after, say, 5 years, you can frame your vision statement in a way that states to make your salon a household name, popular in the neighboring areas and so on.
2. Create an executive summary
After you write the mission and vision statements, you can summarize everything that you’re aiming to achieve with your salon under an Executive Summary. Whether you’re writing a business plan for a hair salon or a business plan for a beauty salon, you should be properly aware of what your intentions are with the salon. This section is the most important part of your business plan as it dictates the tone of your salon, and makes an impression.
Remember to keep this section very brief and concise to give an overview, as you’ll be elaborating on these points in the later sections of your business plan.
If you’re having trouble writing your salon’s executive summary, you can always write it after you’re done with all the other sections in the business plan. This will give you a better understanding of your salon business and help you succinctly put your points together to describe it.
What can you do to write the most fitting executive summary for your salon?
- Start by stating all the short-term goals that you plan on achieving within, say, 6 months or a year. Remember to keep your goals realistic and feasible.
- Summarize your approach towards your business, to give an overview of how you will run things in your business.
- Clearly and briefly express the value proposition of your salon, and how it would potentially position your business in your target market.
How to write your salon’s executive summary: A simple template
Divide your business summary into sections of opportunities and expectations, and put brief points in those subsections in the most convincing way. The following template can help you with this :
- Propaganda mission :
- How are you trying to achieve recognition in your target market?
- What is your salon’s tagline/motto?
- What is your salon’s growth plan for the first 6 months after its launch?
- Market View :
- Which demographic is your salon meant for?
- How are your services aligned with your target market?
- Competitors :
- How many salons are there in the area of establishment of your salon?
- What products and services do they offer?
- What is the range of variation of their clientele?
- Why this salon?
- What products and services is your salon offering?
- What is the unique selling point of your business? For eg: If your salon is the only one in the area that offers holistic services with spiritual healing, then put it down as your differentiating point.
- How are you different from your competitors? For eg: Is it the lower cost of services of your salon, or the vast range of services that make your salon stand out?
Make sure you catch the eye of potential investors in the above section. Don’t forget to state how you can attract potential customers.
- Financial expectations and forecasts :
- What is the salon costing you? List down the projected expenses and costs that come from daily operations, rent, staff hiring, cosmetics, appliance expenditures, etc. for the first 6 months.
- What is the cash flow and how much profits are you bringing in for the initial 6 months? This is completely variable and the reaction of your target market to your salon decides this. So aligning your services with them is of utmost importance.
- Why does your salon need financing? For eg: you can convey that you’re trying to meet the anticipated growth of your salon in the market.
3. Analyze and identify your target market
Analyzing and defining a target market for your salon is very important as it goes hand in hand with your salon’s growth and outreach.
A beauty salon can service all genders and age groups. Your target audience can include working professionals, college students and teenagers, homemakers, to-be-Brides, and even children. And each group will require different types of services. So make sure you list down each individual section of your target market and what services they would require.
Here’s a checklist to make sure you’re going the right way about it.
Steps to analyze and identify your target market
- Find out what kind of people you think would resonate with your salon’s services the most. For example, if your salon offers low commitment (temporary) coloring services, you can get a lot of customer traffic from the millennials.
- As an extension to that, find out if your services are more inclined to serve a particular demographic better, or if you’re good with people of every demographic.
- Keep up with the trends in the salon industry to know what’s hot and what’s passé.
- Peek inside the brains of your target clients to know exactly what they want or like and tune your salon accordingly.
An easy-to-follow template to proceed with your target market analysis
- Segregate the people in the market pool into different categories.
Do not forget these bases:
- Personal income/occupation
- List out the services that your salon would offer that would fit one or more of the stated categories above.
For eg: If your salon offers Diamond Facial at $200.00, then you can list this service out as follows :
- Use social media to get an understanding of the trends in the market at present. Join salon and beauty communities on Twitter, Facebook, and Reddit, and follow beauty bloggers on Youtube and Instagram.
- Look up the people who subscribe to or follow these beauty pages and beauty bloggers to identify which trends appeal to a certain demographic. You can tell a lot about your target market’s behavior from the posts they like and the thoughts they share in the comment section of these posts and videos.
4. Perform a competitor analysis
With a great market demand, several strong competitors emerge. And we don’t want your salon to get lost in the sea of other salons now, do we? As it goes, keep your clients close but your competitors closer.
Figuring your competitors out gives you a necessary nudge in the right direction to take your business plan forward. It gives you an idea of what the other salons are practicing with their clients, and what gaps they’re leaving that you can fill up as you step into the salon business yourself.
How do you analyze your competition?
- Find out what the other salons in the area are doing successfully or poorly.
- Get a rough idea of the cost of services that the competitor salons are offering. This helps you price the services for your salon.
- Identify how many salons provide services that focus on a specific niche and do not serve a wide group of customers.
- Find out the industry-specific challenges they are facing that you may also face while running your own salon.
- Analyze what they can do differently to improve their situation, and implement it in your business mission plan to avoid facing such challenges yourself.
- Have your salon address these deficiencies in the market.
Follow these easy steps to perform your salon’s competitor analysis
- Visit your competitor salons’ websites.
- Follow them on social media platforms (Facebook, Instagram, Linkedin) to get an idea of how much influence and reach they have. Check out who follows their social media page to get an idea of the target market as well.
- Sign up for any interactive sessions that these salons might conduct and check how other people respond to these sessions, to understand their grip and dominance on the market.
- Visit the other salons in the market as customers, to get an idea of their quality of services.
5. Write your salon’s business description
So now that you have your market and your competitors figured out, it’s time to work on your salon business. A beauty salon or a hair salon is fine, but what kind of salon do you want yours to be like? Setting a proper description for your business gives your salon a custom style and personality.
Your business description should include an overview of the products and services that your salon would offer, and how your salon would stand out in the market. Setting a trademark vibe to your salon also helps with its brand image.
To get started, you can answer the following questions :
- What services would you offer?
- Would you specialize in any particular service like nail art or bridal makeup?
- Would you want your services segmented for various types of clients?
- What services would you want to offer in packages?
- Would you serve complimentary refreshments to the clients?
- What theme are you going for with respect to interiors and ambiance (Japanese zen, tropical beach day, etc, etc)?
- What would be your salon’s “it” factor that distinguishes it from the other salons in the area?
Once you’re done with the salon’s description and personality, set a brand logo and a tagline to go with it. To get a professionally designed custom logo, you can always reach out to freelancers or companies that can do it for you, like 99designs.
You can also use an online designing software like Canva to design your salon’s logo on your own.
And that should complete the branding.
Creating a business brand will prepare you to answer someone asking you “Why should I come to your Salon?”
Remember to make your salon stand out, noticeable, and interesting.
6. Make strategies for advertising and outreach marketing
Now you have to position your salon in the market in a way that makes people take an avid interest in “the new salon”. Your target audience will guide you towards the perfect approach to spread the word around about your salon.
A simple guide to writing the marketing plan for your salon business :
- Your salon should be Google-able. To show up in digital searches, make sure your business is listed in online directories.
- Create a website or a mobile application for a better customer experience.
- It’s always better to spread out to all social media platforms to promote your business so that your customers (and other potential clients) can get to know you on a more personal level. Connect with your business community by following other small businesses in the area. Actively engage with your target market and share behind-the-scenes content (like before and after photos of clients’ haircuts) to build your credibility and cultivate brand awareness.
- Partner up with other businesses that may share the same clientele as a salon would (like spa retreats) to offer coupons and vouchers, for outreach marketing.
- Another key tactic is to start out low-key. And what we mean by low-key is :
- Offer “first-service” discounts to your customers.
- Keep service rates lower than the other salons in the area to attract clients.
- Once the rapport is established, and your clients trust you with the service quality, you can cut out the discounts. It is also very important that you optimize the discounts in a way that you don’t run into a complete loss, but we’ll get to that in a minute.
- It is crucial to maintain the service quality to the highest degree after you start getting clients. Remember that your clients wear the marketing after they come out of your salon. This will definitely help you secure referrals from existing clients.
Want to pull off a great marketing campaign for your salon business but don’t know where to start? Do you feel like the marketing section in your business plan is incomplete?
For more detailed marketing ideas for your salon, check out our blog on 7 hand-picked salon marketing ideas to boost your business.
7. Figure out your financial plan
It’s time to play the number game. This is probably the trickiest part of writing a salon business plan because you have to be extremely careful while juggling your revenue and expenditure budget optimally.
You don’t want to scare or throw off your customers by charging exorbitant prices for the services, but at the same time, you don’t want to crash and drown in debt yourself. Not to forget, cutting costs on cosmetics may affect the service quality. Cut hair, not costs!
Ergo, you need to have a proper financial plan for your salon.
Writing a detailed financial plan will help you get a rough idea of how your salon would be progressing on a monthly/ yearly basis. Moreover, if you’re applying for a loan, your financial plan will determine your eligibility.
What can you do to create a solid financial plan for your salon?
- It helps to bifurcate all the expenses into Fixed costs, and Variable costs. Then you can analyze your fixed costs and variable costs to set an optimal budget.
Fixed Costs: This section includes all the costs associated with your salon business that must be paid regardless of the customer traffic in your salon.
- Rent or mortgage for the salon space.
- Payroll for the employees you hire.
- Equipment maintenance costs for hair spa and other services that are heavily equipment dependent.
Variable Costs: This section includes all the costs in your salon business that are directly associated with the customer traffic in your salon.
- Expenses of purchasing cosmetics and other salon supplies.
- Electricity consumption by salon equipment. For eg: If you’re writing a hair salon business plan, make sure you include the electricity consumption by blow dryers, hair straighteners.
- Have a clear idea of how much discount you plan on putting on your services during the first few months of opening your salon, and for what duration you will be offering these discounts. Note that during the first few months of opening your salon, your sales are likely to be lower than your projections, and that’s completely okay.
- Make a list of pros and cons for renting out space for your salon versus buying a place.
- If you’re renting and wish to own the salon space, spot out a tentative date of when you’ll become capable of buying the place.
- Figure out how many people you are going to hire in your staff, and how much salary you would be able to offer them. Note that you’ll have to improvise this according to how the customers respond to your salon.
- Reach out to your local chamber of commerce to get more insights on funding and loans.
- Tentatively figure out the time it will take you to break even, and start earning chunky profits.
Here’s an easy-to-follow template to proceed with your ‘financial plan’ section
The following simple template can help you make the financial plan for your salon:
i) Sales and revenue projections for the first five years :
Figure out how much you’ll charge for your services, and estimate how many services you may perform in a week. A periodic analysis of this over the next five years will give you the necessary projections. Put the details down in a spreadsheet to keep it organized. It also helps to collate all this information and analyze using bar graphs.
ii) Expenses’ budget:
Break down the expenditure of your salon for a given term, by referring to the “fixed and variable costs” list that you made. You can pick the term to be a month, a quarter, or a year long.
It’s a safer practice to stick to a month-long or a quarter-long term. You don’t want the budget analysis task to loom over you and become a burden. Not to forget, it keeps you in touch with the financial status of your salon business.
iii) Estimated profit margins:
Accumulate the sales projections and budget report analysis to find out the profit for that term. Display the margins in pie charts or bar graphs for easy comprehension.
Note all the losses that your salon business can possibly incur in the time period that you have defined as a term. For example, your blow dryers may stop functioning and need to be replaced.
Also include the factors that may stunt your business from growing. For example, you may be short on staff, or your nail salon is lacking an appointment scheduling and business management tool.
v) Cash flow statement:
Make a projected plan of cash flow-in and flow-out for your defined term, where you include cash flow from sources that are not directly related to your salon services or your salon business-related expenses.
Include the cash flow from loans, loan payments, taxes, and personal funds that you used for your salon.
vi) Break-even analysis:
Predict the break-even point for the first five years of your business. Break-even is achieved when your salon business has covered all the expenses, and your sales surpass the expenditure costs. From that point on, your salon will start earning profits.
Other ways to create your financial plan :
Dealing with numbers can be tedious and scary, especially when you already have a lot of other things on your mind as a salon business owner. Moreover, documenting the financial projections yourself can be a pretty daunting task, especially because there’s no room for mistakes.
Instead of making the document yourself, you can choose to consult professionals to help you write the perfect financial plan for your salon.
- Hire freelancers: You can collaborate with business plan consultants to make your financial plan. All you need to do is give them your salon’s budgetary estimates and inputs.
- Use Financial planning tools: It asks you to enter all your financial information. They use built-in formulas to give you the most accurate financial statements that include all the charts and projections that an investor would expect to see in a business plan.
Some important things to keep in mind :
- Keep reviewing the target market, competitor analysis, and marketing and advertising strategies once every while, however frequently necessary.
- Set realistic long-term goals that would be in sync with your current business performance. For example, you can think about branching out to two different locations after a few years. This will allow you to expand your local salon to an enterprise salon.
Go ahead with the pretty business plan
Executing a well-structured salon business should reap good-looking numbers. And the first step towards that is making a killer business plan for your salon.
It gives you the courage to place your faith in your business, and we don’t want you to doubt something you’re passionate about. Remember that you can convince the people in the market about all the great things your salon has to offer, only when you truly believe it yourself.
So go on ahead, start creating your salon business plan today, and give your dreams a much-needed flight. Good luck :))
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.
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