Hair salons can be profitable businesses if you’ve got the right business plan. To give you an example of this, there is a hair stylist named Ted Gibson who has a salon in New York City where he charges $1,200 per cut. Of course, Gibson is considered to be a celebrity stylist which is why he can get away with charging so much. Most salon owners, however, can charge much cheaper rates and still make quite a good living per year.
The Bureau of Labor Statistics shows there are over one million spas and salons in the United States and their combined total of annual sales is just over $45 billion. If you want to get in on this action and start your own salon, you need the right kind of legal and financial planning that will help make it a success for you too. Remember that owning a salon will require you to have a business operation license, a retail license, certificate of occupancy, building permit, state cosmetology license, and a fire department permit.
Pick A Business Model
Since not all salons are the same, you need to figure out what type of salon yours is going to be and what kind of business model it is going to have. The easiest way to get started would be to purchase an existing salon or franchise rather than start one from scratch. Since many people don’t want to pay royalties to a corporate office, purchasing an existing salon may be the way to go. That way, you can purchase all the equipment and receive whatever customer base they have already. Anyone who is selling their salon has probably not made much money with it, though. So, what you would want to do is rebrand the salon after you purchase it in order to separate yourself from the previous brand name that was there. If you choose the right brand name and make modifications to its business model, you can turn a failing salon into a thriving success.
Find Investment Capital
The one thing that always stops people from opening up their own business is the financial aspect of it. If this is your problem, then consider getting business partners or investors to help you start the business. This will allow you to focus on the creative side of running the business without having to worry about the expense part of it. Sure, you might have to split the profits with the co-owners, but at least you won’t have to spend too much of your own money to start the business. However, you can’t start scouting for business partners without having a complete business plan written out which outlines how you’re going to operate the business and how much money you expect it to earn. Investors and business partners will then look at this business plan as the basis for their decision of whether to invest their money into your idea.
Find A Location
After securing the money and having a complete business plan for your salon, you’ll now want to find a location for it. The average American salon is around 1,200 square feet and should be located in an area where people can easily find it. The salon should also have the proper space for the HVAC and electrical wiring that you’ll need for your equipment. If you find one that meets your liking, then you need to contact the landlord and tell them you’re interested in renting it. Commercial properties like these typically have leases with 5 or 10-year requirements. Go with the shortest term available for starters. You may also find that you’ll need financing for the salon equipment as well. If your investors aren’t going to give you the money for that, then you’ll need to go to an equipment financing company which will let you purchase equipment through a payment plan. This includes wash stations, chairs, desks, and so on.
Now that you have the money and the business model figured out, next you’ll want to hire employees that can service your customers. At first, try to keep employee costs down as much as possible. Consider using chair rentals as your business model in the beginning so that your stylists can work for you as independent contractors. This means they’ll have to purchase their own insurance, which cuts your costs down a lot. As your salon gets more business, then you can hire stylists who work on commission and tips. Also, consider forming a partnership with another company or product line that relates to hair styling. This kind of partnership will give you extra business and help elevate your company’s status to the next level of success. Meanwhile, keep track of your spending and make sure you’re not going over your budget. Hiring an accountant to track your revenue and expenses would be a wise thing to do as you get more business. This will ensure that you don’t go over budget on anything.
Join Professional Organizations
Finally, join as many professional and trade organizations as you can. The Professional Beauty Association, for example, provides salon owners with business blueprints and HR manuals that will help them be more successful at running their salons. It never hurts to get as much helpful information on running a salon as you can.