People spending on haircuts and personal hygiene will never run out of fashion. Therefore, opening a salon business is a pretty steady and profitable business if managed prudently. It consists of strict working hours and substantial risks.
Having a firm and detailed, goal-oriented business plan will help to speed up the preparation process. In addition, a salon owner with a real niche will help gain a solid customer base. Besides, good salon culture, a knowledgeable team, and an understanding of the worth of services in the salon are a must.
Looking for a guide to help set up a high-grade salon business? This article offers a step-by-step guide to help establish a salon business by 2022.
A Strategic Guide To Set Up A Salon Business
Salon Market Overview
Want to establish a successful salon business? First, become thorough with the hair and beauty industry, competitors, and potential clients. Knowing about the customer demands will help to improve the end-product or services.
Seemingly counterintuitive, broadening the knowledge base helps to condense the focus in the long run. In addition, defining the niche of the salon business reduces competitors and increases target on specific client base. This, in turn, increases the salon’s visibility.
Proper market research is crucial for setting up any business. Salon business is no exception. It identifies business opportunities, reduces risks involved, and surpasses competitors. Getting hold of the latest trends and demands goes without saying. All these factors serve as a comprehensive first step to commence a salon business.
Concept and development planning
A significant factor when deciding on the concept and idea of the business plan is the capital available for investment. The APC or the Average Price per Customer offers a good idea of the amount spent by a customer in a salon. On the other hand, a business plan will act as a road map for owners and entrepreneurs to follow and consider all business areas. It thinks of the finances before a salon owner gets down to its investments for its long-term success.
A good idea of the target market and its customers alongside the chosen business route is crucial. Salon owners may buy a franchise of an established salon with a record of a loyal customer base. The owners may even purchase or rent a place to start building the salon from scratch. The third option is to get an existing salon with basic infrastructure and modify it as per the requirements.
One must thoroughly study the available marketing opportunities in the niche area. It will help to create a cost-effective business plan that offers a positive vision in ten years.
Defining and setting business goals
Keeping the goals of the salon business in mind may help the business grow in several ways. It helps increase employee efficiency, reduce costs involved, foresee upcoming struggles and boost overall business productivity. Salon business goals may be either long-term or short-term.
The short-term goals are targeted at the achievements in the next few months. The focus is on gaining momentum and reaching everyday targets with a realistic mindset.
On the other hand, long-term goals envision the salon business and its development over the next few years. It aims at building a roadmap while keeping the milestones intact.
Cost evaluation of salon setup
A salon setup may cost a fortune for some or fit in a specified budget for others. Typical costs of setup include the following.
- Permits and licenses: These are crucial for selling any service or product. Common permits include a cosmetology or beautician’s license, a business operation license, salon occupancy certificate, a retailer seller permit, and an employer identification number (EIN).
- Payroll: A payroll is to be paid to each of the employees. Payroll consists of the base salary, hourly wages, or commission pay.
- Real estate: A security deposit must be paid upfront for salon owners who are renting a place. Alongside, a monthly lease has to be paid to keep running the business in that place,
- Insurance: An insurance plan must be set aside to cover the business in case of any emergency.
- Equipment: Salon essentials like chairs, mirrors, sinks, drawers, dryers, and so are necessary to run a salon. Therefore, equipment costs may vary depending on the type and scale of the salon business.
- Inventory: Stock up the salon inventory with goods that may be sold to the customers.
Financing the business
Salon businesses are profitable, but they involve significant risks. This is why many banks withdraw from making any investments. However, there are undoubtedly available alternatives to traditional loan plans.
- SBA loans: Suitable for small startups, available at low rates, and offer short payback periods. However, the loans are relatively competitive and require a strong credit score for qualification.
- Alternative lenders: Term loans, asset-based loans, credit card loans are more immediate and easier to secure for any business scale.
- Microloans: This loan is more accessible to attend to and doesn’t require credit card history than SBA loans. Keep a calculated plan in hand to secure the loan.
- Equipment financing: It consists of leasing some of the expensive equipment rather than buying them upfront. This helps to reduce the cost entailed in setting up the salon.
Strategically choosing a location
Location is by far the biggest expense for starting a salon business. Keep certain factors in mind for choosing the location that suits the business needs. First, the area must be well-populated, accessible via public transportation. Second, the location secured must be spacious with parking facilities. Finally, make sure the salon is located in an area that isn’t near any competitive salon.
Hiring a suitable team for running the salon business
Recruiting staff for a salon may seem daunting. The chosen applicants must meet all the prerequisites of a chosen salon. Amongst them having an uplifting character and unique relationship=building abilities are a must.
Common types of staff necessary for running a salon business includes:
- Housekeeping staff consisting of cleaners, assistant staff, necessary for unskilled labor.
- Service staff like beauticians, hair-dressers, stylists, makeup artists, and therapists interact the most with customers. Having good communication skills and appropriate training may help maintain the standards of services delivered.
- Management staff like receptionists, floor, salon, or store managers must have proper education and experience dealing with clients.
Depending on the size and scale of the business, the amount of staff may vary. Salon owners may try posting job hiring advertisements on social media platforms. They may also hire freshers from different cosmetology institutes and schools. Try spreading the word amongst other communities within this profession. It helps to reach the right talent without comprising qualifications, skills, and loyalty towards their jobs.
Connecting to the vendors, suppliers, and distributors
For the smooth functioning of the salon, the owner must be on good terms with the vendors and the suppliers. For each product category, a salon owner must keep in touch with two to three vendors. Compare the prices and choose the one that suits the budget. Keep a vendor or supplier as a backup in case of any emergency.
Check the product quantities every day when closing the salon. This helps to keep the inventory stock levels in check in case an emergency arises. Preferably long-duration contracts with vendors maintain the consistency of the retailed products.
Developing a solid client base with a marketing plan
As mentioned before, marketing is crucial for any business to flourish. Being part of a community will help attract and retain more local loyal customers. Salon marketing is all about consistency and hard work.
- Listing in online directories helps the salon business to show up in online searches more often. Whoghost is a great web hosting provider that keeps all the database files intact. It makes the file accessible to the visitors as and when necessary.
- Customers these days focus on online ratings and feedbacks to evaluate salons. Salons must, therefore, manage their online reviews.
- Partnering with another business within a community helps to extend the salon’s reach. It helps to uplift the business’ brand reputation.
- Offer referral discounts to clients who are bringing in more customers. It allows them to spread the business’ goodwill and helps them stay loyal to one salon.
- Social media platforms are the final destinations for spreading the word. Follow other small businesses in the community and engage in target marketing. Besides, sharing behind-the-scenes content online helps to increase the salon’s credibility and awareness.
Using appropriate salon management tools
Upon establishing a minimum customer base, pick up the momentum and optimize the salon business. Several online tools and software are available to manage, regulate, and smoothly run the business. These tools are necessary for gaining the speed of the business in the long run. Certain areas of salon business in which such tools are required are as follows:
- Online appointments: It helps to reduce the time, effort, and resources that make and return the calls daily. Customers are free to make appointments at any time of the day. They have complete control over the staff they choose and the services they want. Appointy is one such great salon scheduling software, loved by many salon owners.
- Customer database management: Customer data would consist of the name, address, email id, mobile number, identity proof, and so. Maintain the services and staff chosen by regular customers through consultation. The software tools ease the management of such details.
- Effective email services: For proper engagement, provide promotional and non-promotional businesses to potential and current customers. Avoid spamming them with unnecessary emails. Instead, tailor-make their emails using software tools based on the services chosen before. Sending customized materials can earn the salon potential referrals and good ratings.
- Optimizing digital payments: Online transactions are in trend these days. Such transactions are secured through end-to-end encryptions. This helps to keep all the transactions safe and sound. Cashless payments may include credit or debit card payments, points on membership cards or loyalty cards, or wallet payment options.
Create a detailed plan and base the idea on the niche point. On its basis, create long-term or short-term goals for the business. Find the right option for financing in the salon business and make necessary investments. Choose a location that will meet all the business needs while keeping the competitive market in check.
A well-trained, skilled team of professionals with appropriate communication skills will help run the business efficiently. Make sure to keep healthy relationships with vendors and suppliers to prevent running out of supplies at any time. A solid customer base will make the business reach its maximum potential and succeed through it.
Strategic planning and efficient working can help elicit the benefits of a salon business in the long run. Keep the step-by-step checklist mentioned above in mind. It will enable salon owners to operate the business and curate the roadmap accordingly.