Do you enjoy doing hair for your friends or family but can’t quite call it your own business yet? Do you take pleasure in making your potential clients look good for different events? Perhaps you are thinking about starting your own hair salon and wish to be successful. Well, you may just be a few steps away from starting your very own dream business. We’ll give you some tips on how to start a salon.
Types of Salon/Spa Businesses
There are three different types of salons that you can choose to own. The first type is a franchise, where you pay an agreed upon sum (startup cost and possibly ongoing fees) for a well-known brand in exchange for nearly instant reputation. The benefit of choosing a franchise is the ability to get customers more quickly due to an existing brand’s notoriety.
The second type of salon is an already established, privately owned company that may be up for sale. Maybe you know someone in the business and they are looking to cash out. Perhaps they are tired of the hair salon business and want a change. This may be your opportunity to make an offer and buy their salon business outright.
The third and final option is to establish your very own salon with your capital and expertise. It will be your talent and hard work that will determine whether you make it in this business or falter. Your success in the salon business depends on your dedication and ability to adapt to the industry’s needs, as well as your customer’s desire for quality services.
You could, also, opt to rent a booth from a salon owner for a weekly or monthly fee. You will be responsible for providing your own supplies (from hair dryers to combs) and set your own schedule. This approach requires you to be a go-getter; setting your own hours and building your book of business.
Think of it like running your own business inside of an established salon. This option is low risk, although you may never reach the full potential you could when owning a salon on your own.
Figure Out Your Startup Cost
Starting your own business can cost a lot of money, and most salon or spa owners don’t turn a solid profit in their first two years. You should consider if you will be able to support yourself financially while your business is running and steadily growing.
Other questions that you should ask yourself: How much savings do I have? How much money does my business have to bring in every month so I can stay afloat?
Come up with a solid and detailed budget, which will include your expenses for rent, licensing, payroll, supplies, and other unforeseen expenses. A small emergency fund should be part of your plan.
If you don’t have your own funds, you could consider a loan from your local bank or another financial institution. Before approaching a loan officer for funding, write up a simple business plan of how you expect to turn a profit and repay your loan.
Choose the Right Location
Set up shop in a busy, high-traffic area. Busy highways or shopping malls where people go often are ideal because you’ll enjoy much needed visibility.
Make sure your customers have ample parking space. If it is a hassle to come to your salon, your potential customers may avoid your business altogether.
Don’t open a hair salon or spa directly near your competition, as you’ll be contending with each other. Open your salon in a location where you’ll be the only spa services company in a few mile radius.
Take Care of Licensing
Unfortunately, starting a business involves filing much paperwork and part of it is getting licensed for your trade. In the U.S., all workers who deal with personal appearance must be licensed. That includes hairdressers, nail estheticians, and makeup artists.
Before applying to get a license for your hair salon or spa, make sure your establishment is clean and can pass a health inspection from the health department to avoid being shut down or fined.
Hours of Operations
In your first few years in business as a salon, you should have extended business hours. We all know the salon business is not a 9 to 5, and when you first start out, it’s important to be able to accommodate as many clients as possible. Every satisfied client can be a repeat customer, who may, in turn, refer you to another potential client.
Many salons nowadays are open at least 6 days a week, and sometimes, even on holidays. Many customers with a corporate career or even busy moms may not be able to get to your salon during weekdays. For example, if your hair salon is closed on a Sunday, the prospective customer could be going elsewhere.
Normally, most salons are open long hours – from 10am to 9pm five or six days a week, with Sunday hours added if the owner should choose. Hair salons and spas tend to be busiest during lunch hours and early evenings. If you plan to service a special type of clientele, such as brides, you may have to open earlier on Sunday so that your clients can be on time to their wedding.
Set Your Pricing
Pricing will be one of your most important elements of promotion, especially when starting out. If you set your prices too high, you run the risk of being limited to a certain type of clientele who can afford your services. Set them too low, and you won’t be able to make a profit. The best way to set your rates is to survey your industry, yet offer a slightly lower rate or a promotion to entice new customers.
Of course, pricing will also be determined based on your demographics and service area, as well as your cost to do business. If your salon or spa is going be located in an upscale area, you can afford to charge slightly higher rates than the average salon. However, if your spa will be located in a fast-paced, local community, you may be inclined to charge sensible rates for basic haircutting and color services.
When setting your prices, consider the cost of labor, supplies, and overhead. Finally, after your staff and expenses are paid, you should aim to make a profit that’ll represent your salary (or at least what you would earn working for a business that’s not your own).
It’s important to stay on top of your costs. It is normal to have overhead cost of 40-50% respectively. That means that if your labor and materials cost for the year is $200,000 then you should expect overhead cost of at least $80,000 in addition. Surely these figures are just estimates and vary depending on your ability to cut costs and remain organized with all expenses.
The last fragment of pricing, and most important one by far, is profit. Average salon owners have reported a net profit of 11 to 15 percent, although some have seen higher margins.
Setting your prices will require you to calculate your target revenue for the year and divide it by how many hours you’ll be open. That should result in an hourly rate, which will be helpful in tweaking your pricing. Then, add about 10% to that number to allow for a profit margin.
Hire Qualified Personnel
If you hire employees who are not experienced, they could potentially cause health problems during a cosmetic procedure. It is vital for you to hire only experienced or highly trained stylists, beauticians, and other qualified staff.
As a salon owner, you want to make sure your employees understand the procedure of each service offered. They are the face of your company. Having a manual that outlines your salon’s procedures can assist the employee and avoid headaches for you.
Keep Your Clients Happy
It is important that your business creates a desirable reputation that projects a quality operation. You want your clients to return to your salon and refer you to other clients. If you keep your clients satisfied, they will trust you and promote your business to their friends and family. And, there’s certainly nothing better than marketing your business through word of mouth advertising.
Collect information from your clients such as a cell phone number or their e-mail address. If you have a computer-based spa software, you can easily send them a text or e-mail with updates or special offers. Staying in touch with your existing clients can boost your salon or spa’s revenue dramatically.