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When did you first realize you just had to own your own salon? Was it when you recognized that you have a desire to “to change hairdressing into a geometric art form,” like Vidal Sassoon? Or did you have “a strong sense of how things should be done and how clients should be treated and made to feel,” like Eva Scrivo?
Whatever your motivation, you have the dream and the drive to run a business. Now all you need is a little information to help you develop the salon business plan you’ll need to make your dreams a reality. A well-developed business plan gives your salon a guide for success and focus. It also can be used to obtain funding from banks or to recruit partners.
In this two-part blog, I’ll cover 9 steps to creating a salon business plan. This week, we’ll start with the first 5 steps.
Step 1: Describe Your Company
This first section of your salon business plan should cover the basics about your company, its mission and operational philosophies. Include your company name, address and contact information, as well as your business structure (sole proprietorship, Limited Liability Company (LLC, etc.). State the purpose of your organization and describe your customer service philosophy.
Step 2: Figure Out Your Finances
According to the Small Business Administration, about half of all new establishments survive five years or more and about a third survive 10 years or more. In many instances, a business’s failure to survive is due to poor planning and lack of funds to sustain it through its first few years of operation.
That’s why it’s imperative to figure out how much money you need to get started, where it will be coming from, what you will be spending it on, and how long it will take you to earn it back.
Create a financial summary section in your salon business plan that includes projected financial statements spanning at least three years, or until you estimate the business will be cash flow positive. Include all expected startup expenses based on your salon experience and list potential sources of initial funding. Estimate how many clients you will serve and how quickly your client base will grow, then base your revenue and direct cost estimates on these numbers.
Here are some other things to consider:
- Calculate your monthly expenses, including rent, licensing, training, payroll, supplies and an emergency fund.
- Calculate how much of a cushion you have in savings and how much you absolutely must make each month to stay in business.
- Figure out how much you'll charge for services. To do this, estimate how many services (such as, haircuts, colors, manicures, etc.) you might perform in a week and figure out how much you’ll need to charge in order for you to make a net profit. Try using a price point that is both fair for your clients and prosperous for you. Also, find out what other salons in your area charge so you can keep your prices competitive.
- Consult a certified public accountant (CPA) to help you estimate your taxes.
You might want to check out this business start-up cost calculator for a list of other items you may want to include in your financial summary.
Step 3: Define Your Target Market
Your target market is a description of who’s going to buy your services. In this section, try to be as specific as possible. If you define your target market too broadly in the hopes of appealing to more potential clients, you can run the risk of diluting the uniqueness of your services and branding that set you apart from your competitors.
Here are some questions you can ask yourself that will help you hone in on your target market:
- Are your target clients male, female or both?
- Will you offer hair styling for high-end clientele or hair cutting for children? What’s the range of your services?
- How old are your target clients?
- Where do they live?
- Is geography a factor?
- Is ethnicity a factor?
- What do your target clients do for a living?
- How much money do they make? (This can be an important factor that weighs into your assessment of what the clientele in your area can afford and will determine the prices you set for your services.)
- What other aspects of their lives matter? Are they moms, dads, singles, teens or grandparents?
- Is the community where you’re locating your salon affluent? Middle class? Blue collar?
Step 4: Create a Marketing Plan and an Initial Marketing Budget
Describing how you intend to effectively market your salon is a crucial part of your salon business plan. In fact, the marketing blueprint you develop now can help you achieve your business goals.
In this section, outline all the methods and outlets you plan to use to promote your salon – email marketing; your website; social networks like Facebook, Twitter, Pinterest, and Instagram; and directory sites like Yelp and MapQuest. Research whether local newspapers, radio stations or community magazines would effectively promote your services. Assess whether or not to offer membership and loyalty programs.
Step 5: Describe Your Products and Services
Over the years, you’ve developed a loyalty to certain product lines and hope to include them in the ones your salon offers.
But now you also need to decide what’s on the menu – literally. What services do you intend to offer to your clientele? And how are they different than the ones offered by your competition?
Here’s where you will discuss what hair cutting, styling, and coloring services you will provide, and whether you will include nail grooming, waxing and other beauty services.
This section of your salon business plan should also include customer service aspects such as:
- How the customer experience in your salon will differ from your competitors' services.
- How you plan to minimize customer wait-times.
- Whether you will cater to the upscale end of the market by taking reservations for personalized services, or serve walk-ins.
The Bottom Line
The bottom line here is that if you can offer unique styles and services, prospective clients will want to do business with your salon.
I hope these first 5 steps to creating a salon business plan have clarified some items and given you the information you need to begin. Come back next week for the remaining 4 steps you need to take to get your business plan off the ground!
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