Getting good advice on how to open a hair salon business can sometimes be a difficult task and with so much information available, we guess you have the question, "what do I need to open a salon"?
Where do you start?
Well…. to make it easy for you and give a head start, Belliata Salon Software has put together an opening salon checklist and startup guide for what steps to go through for you to learn how to become a salon owner.
It is essential that you plan your new hair salon properly, according to the US Small Business Administration only 50% of new business survive the first five years and many of the reasons for failure could be avoided.
If you have advice or tips on how to setup your own hair salon, don’t forget to leave a comment at the bottom of this page.
Well we might be stating the obvious but you might want to train to be a hairstylist before opening a hair salon…
But this is not one of the most essential requirements to open a hair salon these day.
As long as you employ a good Salon Manager or Creative Director with experience as a hairstylist then you don’t need to come from the industry and this is also how to open a hair salon without a cosmetology license.
In fact, we know hair salons which have a multi-million turnover where the owner is not a hairstylist!
But one thing to remember...
Starting your own salon is very different from working for someone else and takes much dedication and commitment.
A creative person doesn't always make a good business person.
So be prepared for hard work!
First of all, there are 86,000 beauty salons in the United States alone, so you need to make sure you have something different making sure salon stands out from the competition.
To create differentiated products or services why not think of...
It is always a great idea to carry out some market research in the area in which you are looking to open your salon. Don't be afraid to ask people in the street or neighboring bars, coffee shops and stores to get their feedback.
There are a number of different options for staff remuneration.
We will look briefly at each one individually, but most importantly....
You must check you local employment laws to ensure compliance.
Commission split - This is a popular format in high end salons and one where the stylists and colorists are generally self employed.
A salon owner will split the revenue per booking between the salon owner and the stylist or colorist; for instance, most salons will have a 60/40 split, so 40% goes to the stylist. If you start off with this level then it allows you to increase the ratio to retain stylists.
There are some legal issues around this for example....
if you have a legal minimum wage in your country, you will have to comply with this until the stylist has built their client base and earning more than the minimum wage.
The staff member would not get holiday or sick pay, but check your local laws on this. Some governments are becoming more aware of this and are reducing this employment option.
Salaried - This is very common for some of the bigger chains of salons (or franchises). Staff will get an hourly wage for the hours they worked.
The staff member will usually be entitled to sick and holiday pay.
Booth rental/chair rental - this is an easy option for salon owners but in our opinion does not deliver revenue growth for the salon owner, just a fixed monthly income; for example as your booth renters/chair renters become busier then you as a salon owner do not benefit.
There are other benefits to the salon owner; you do not need to worry about marketing to achieve success, as it is purely down to the individual renter to drive their own business.
Those salon owners choosing either commission or booth rental/chair rental must pass on the charge of the back bar and towel laundry costs to their self-employed partners, this is a big cost to the business and will drive profits down.
Failure to price your products or services correctly is also one of the top reasons why salons fail says the US Small Business Administration, they say you can be the cheapest or the best, but if you try to be both, you’ll fail.
Your price point must be relevant to where you have chosen your location (and obviously your staffing + rent costs):
When setting your prices for your salon, you need to remember to include in your pricing; the cost of back bar items, such as shampoo, conditioner and color.
You will need to roughly set prices prior to you building your business plan.
There are various opinions on whether charging back bar to your team is not, but from our viewpoint it important aspect of ensuring your run a profitable business.
On the excellent forum Beautytech.com, there is an interesting discussion regarding backbar charges and whether they are ethical or not.
This is essential when starting your business.
A business plan is a good way to focus you on what you have to deliver and it also makes sure your keep to budget when launching your new business and controlling your salon start-up costs.
It isn’t uncommon to go over budget if you’re not keeping to your hair salon financial plan.
There are many websites on the Internet showing you how to start a salon business plan, you can also find business plans already written for salons; all you have to do is fill in the numbers, add your business name and some specific other information.
Make sure you get your projections right (not over exaggerated or under-played).
The advantage of this is that you will find salon start-up costs for your business.
this is going to be your target for the future, especially if you get funding from a bank!
Some important things to remember when building the profit and loss section with your business plan to open a salon:
Firstly, you need to know how much money is needed to open up a hair salon and this comes from your business plan.
According to the US Small Business Administration, inadequate cash reserves are one of the main reasons salons fail. They recommend that you have at least six-month cash reserves until your salon business starts making money.
Are you able to fund the business yourself from your own savings?
If not, you could also ask friends and family to fund your business before going to ask for business loans from a bank or other business finance company.
But if you are going to talk to the bank, ensure your business plan is done, nothing worse than the bank asking for financial projections and you don’t have a clue.
Some especially relevant places to get funding for your new salon:
REMEMBER as a result of you borrowing money…
you have to pay it back!
So make sure you are able to deliver your business plan and generate that all-important cash flow.
There are other ways you can start to run your own business without a huge capital outlay.
One which is more common in the United States than any other country, is where you rent a ‘studio’ within a property full of ‘salon studios’. Companies such as Sola Salon Studios who have over 240 salon studio locations throughout the United States and it may be an easier way for you to open a salon.
There is one final idea and that is to open a hair salon in your own home, many people are converting spare rooms or garages in their homes and this could another way to allow you to open a salon.
Coming up with a great salon name can be one the most difficult things to do for your new salon business and one of the most important decisions yo will make.
According to Inc.com there are five key items which make up a great business name:
When choosing the name of your new salon, check the following:
Check Domain Name Availability – you should check if it available. Google has a service where you can check for domain name availability, if your domain isn’t available…..
If your domain isn’t available, don’t go with your chosen salon name…
Although you can also add your city or town to the domain name if the domain isn’t available, for example, a project I was involved in some years ago…
Taylor Taylor London is a leading hair salon chain in London wanted TaylorTaylor.com which wasn’t available, so we added London to the end of the domain and we got TaylorTaylorLondon.com, the 'London' element has now become part of the brand.
Taylor Taylor London added the word 'London' to get its domain name and which actually became its brand.
Make Sure People Can Spell your Hair Salon Name – don’t make it too difficult to remember or to spell! Check your chosen business name with people to see if they can spell it or recall it… Don’t ask close friends or family as they will also give a positive answer.
Check No-one Local Has Same or Similar Name – this is essential; do you don’t want to be giving business to a competitor?
Have a look at Google Maps to see if anyone has a similar name locally to your choice of salon name.
Check If It Is A Trademark - there is nothing worse than paying for all your marketing materials, website, and salon signage, to only find out that your chosen salon name is a trademark. Make sure you check the US Patents and Trademark office, if you are in the United States or if you are in Europe, you can carry out your search on European Union Intellectual Property Office.
It is all about location location location but sometimes from previous experience, if you…
….then location doesn’t always have to be the biggest thing.
Just make your salon easily findable online and make it the go-to salon in your area.
When looking for your locations, make sure you allow enough time to negotiate your lease agreement and allow it to go through lawyers....
According to International Tenant Representative Alliance, in their report 'Top 10 Lease Negotiation Site Selection Mistakes'; negotiations with the Landlord and preparation of the lease can take weeks, (even months).
Once the Lease is signed the interior usually needs to be finished or renovated, which can take one to two months.
Here are two top tips for negotiating the lease on your premises:
DON’T get excited by the first property you see and ensure you look at a wide selection.
Questions to ask yourself when you are looking for when finding your perfect location:
Generally a location with a good footfall is always a good bet.
Make sure your chosen location is big enough.
According to an article by Eileen Figure Sandlin on Entrepeneur.com; hair salons are usually between 1,200 to 2,000 square feet (110 to 186 square metres) and there are very few below 1000 square metres. If your hair salon is too small, there is no room for expansion.
Making sure your salon looks great and great design doesn’t always cost a fortune.
You can do it on a budget.
There are plenty of hacks on YouTube and Pinterest on how to turn Ikea furniture for example into unique pieces which will make your salon stand out and at a low-cost!
Try making your own chairs, choose mirrors from the local flea market, use your imagination and be creative, it will pay off.
Don’t make your hair salon look like it has been chosen from a hairdressing supplies catalog , like the picture above.
Belliata have put together some Pinterest Boards for you to get inspired…
No good business person would not check out their competition:
See what they are posting on their social media profiles, such as Facebook and Instagram
You could even book an appointment to see what their customer experience and the product is like, remember...this is going to be your benchmark.
If you are in a larger city or town, check out who you would like to compete against, many people travel further to visit a hair salon in larger cities.
Remember to check out all types of salons to ensure you don't miss anything.
In some countries (or even in different states within the USA) you need to have a certain type of business license when you open a salon, either as an individual or premises.
If you are not a hairdresser and opening a salon, you need to make sure you employ licensed staff (if a license is needed), do some research online for this or ask on some hairdressing forums in your country or state.
This is very important..if not essential for anyone opening a hair salon.
Treat insurance as an investment and not as a cost!
Many things can go wrong in a salon, whether it might be a cut with the scissors or an issue with hair dye, just make sure you have the correct insurance in your business. Avoiding this investment could, if something goes wrong, have fundamental issues for your business.
Insurance is there for the bad times and yes they sometimes happen.
Together with your business plan, you should develop a salon marketing plan which will ensure that your hair salon has the maximum awareness from day one of opening.
Ensuring your focus your marketing efforts, always results in financial benefit.
This topic is one of the most often ask questions when someone is looking at how to open a hair salon.
If you do not have a marketing plan for your hair salon you may not be as focused as you should be.
We would suggest you look at this hair salon marketing plan template to build a great plan.
Once you have chosen your name, make sure you get a good logo.
In an article on Entrepreneur.com, Su Mathews Hale, a senior partner at the New York brand-strategy and design firm Lippincott said that "A company's logo is its shorthand, a visual cue that tells a story of the brand's culture, behavior, and values."
Simple and clean logos always work best with a modern font.
Italics, handwriting type fonts aren’t good, as they are not very clear for people to read.
There are various places where you can get a logo designed….
to test your logo on people first before choosing the final version, getting feedback will ensure you have the right logo for your salon.
This can make or break your salon. If your website isn’t ranking well in Google search results, you won’t be the success you dream of.
Being the top of Google search results and map results will generally ensure business success!
There are many ways to get online these days.
WordPress – you can choose such to manage it yourself and use WordPress for instance and buy a specially designed ‘theme’ for hair salons, spa, barbers etc.
Website Builders – these are becoming more common, with services like Wix.com and Weebly.com which will get your online very quickly and easily but…..
you will be always quite restricted to the functionality of the website and you won’t be able to take your website to say WordPress when you want to leave.
According to a study by The Social Habit shows that 53 percent of Americans who follow brands on social are more loyal to those brands.
People like to check out Facebook and Instagram for your latest salon selfies et…
so make sure you set up your Facebook and Instagram profiles as a priority.
Make sure that you are setting up your Facebook profile you choose the profile as a local business and not any other profile type. If you choose the local business, it allows people to rate your business and show up on Facebook maps.
How much money are you prepared to lose from no-shows?
A report by the Medical Group Management Associations of medical professionals found that they had a no-show rate of 12%.
So with this in mind, what is your average booking value within your hair salon?
If you multiply this by the number of possible no-shows it is quite a bit of revenue you could be losing.
By using salon software, you can carry out SMS appointment reminders which have been shown to reduce no-shows by up to 70%.
Salon management software, is now an essential item for any salon, whether large or small, and often forgotten when people are looking at how to open a hair salon.
Salon software can help you with reducing no-shows, driving more retail sales, improve customer experience and other valuable marketing ideas.
Clientss are expecting now to be able to book their appointment online 24/7, so make sure from day one your hair salon clients are able to do this.
When looking for salon software, make sure it can send SMS appointment reminders, allow online appointment booking, and more importantly, works across Windows, Macs & iPads.
You need to put all that cash somewhere!
Look around for the best banking deals when choosing your bank.
Look at things such as cost of cash handling, overdraft limits charges and is there an Account Manager to support you.
Research by Dun & Bradstreet, the business information company, has shown that clients who pay by debit or credit card spend more.
If you are opening a bank account then you could have a card processing contract with your chosen bank.
But these days, there are many good alternatives without the monthly fee terminal fee, which your bank may charge. Yes, the transaction may be a little higher but you need to do the math and what is the most cost-effective credit card processing solution is for your hair salon.
These new breed of credit card processing providers allow you to make the transaction by your smartphone or tablet. Providers like:
If you come from another salon then you might be bringing some of your existing colleagues to your new salon.
There are always good places to list your salon jobs, such as
salonjobs.co – is a growing salon and spa jobs website offering totally free job listing website. There is a premium option also to make your job ad stand out.
No one should really miss using Craigslist which is the giant of recruitment websites and carries free recruitment ads in a wide range of cities.
Those in Europe can use Gumtree listings website, which is like Craigslist, but you have to pay for your job posting.
When posting your jobs, make sure to add in your website and any images of the salon, so people can see if they would like to work there.
Ensure you talk about career development within your salon, this will ensure you attract great stylists or technicians to your salon.
Which suppliers are you looking to have?
You can choose from an endless list of suppliers but make sure your product lines are at the right price point for your prospective clients. Don’t stock expensive products, when you have a low priced hair salon.
Don't take too much time researching which product supplier you should be using, remember you should be focusing on how to open a hair salon and not finding the latest Japanese trend in hair care products!
Some of the things to should ask your supplier are:
What onsite training do they do?
Do they provide marketing materials and how often?
Are there any marketing funds available for the launch of your hair salon?
Does their website have a salon location finder to help promote your hair salon?
What marketing are they doing to support their brand?
Finally, make sure you train your staff to promote the products. According to Wella Professionals' 'SavvySalon' via SalonToday.com found that 70% of stylist do not suggest treatments or products to clients but one of the most important pieces of information is that a good salon can make 30% of its revenues from retail sales!
Some states in the United States requires a health check of the premises prior to opening a hair salon; where as some local government offices in the UK require a fire check and this is especially the case if the building has had some structural changes made to it.
Check local rules and regulations for what you need to do, your local government planning department or local fire station can tell you what you need to have done.
This is one of the most important things you will do on our how to open a hair salon checklist!
According to the Local Consumer Review Survey by BrightLocal.com found that 95% of consumers had found a business online in the past 12 months.
So if you don’t do this properly, then you are cutting off a huge pipeline of new business when you open a salon.
The two most important places to list your business are:
Make sure you upload some nice photos of your hair salon before you open (so it looks amazing) and with no people in the pictures…
people age photographs, as fashions change. What is in fashion this year will not be in fashion the year after.
When your clients start coming to you, make sure you ask them to leave a review for you.
Don’t bribe clients to leave good reviews, or fake your reviews…
Yelp has years of experience and knows fake reviews from real ones.
To make sure you get good coverage and create a buzz in your local community, you need to make sure that you have a big impact on the opening of a new hair salon.
You should have an opening party and make sure you invite the following people:
Here is a great blog post from SproutSocial.com on how to use Facebook Events for your business.
Type of things you can have at your opening party:
If you look after your staff they will look after you (financially).
Make sure you offer ongoing training and development…
According to a survey by Jones/NCTI (a training company) they found that 70% younger respondents said that job-related training and development opportunities directly influence their decision to stay with a company.
Here are some simple and low-cost ways to train and develop creative people within your salon:
One of the key benefits to caring for your staff is that it creates a better customer experience for your clients and also creates loyalty, as we all know the client is mostly loyal to the hairstylist and not the salon.
So don't forget....
Good employee management is great for the bottom line.
Once opening a salon, you need to make sure you look after your clients. Remember the customer experience, which includes..
McKinsey (a world leading consultancy firm) found that 85% of clients of a bank , increased their purchases after receiving a positive customer experience.
Remember, like we said above about training, if you look after your staff they will deliver a great customer experience.
As Richard Branson, the Chairman of the Virgin Group commented in a blog post about staff retention, "If You Look After Your Staff, They'll Look After Your Customers. It's That Simple".
Once you have all that money coming in and cost going out you need to manage your finances properly.
This is one of the biggest failures of new salon owners according to the US Small Business Administration.
So make sure you set aside regular time for financial management, it will be hugely beneficial in the long term.
Look into using bookkeeping software such as Xero.com, Quickbooks.com, or Sage.com to manage all your finances and at the end of your financial year, simply press a button and hand it all over to your accountant to do the final stages.
So now you have learnt everything about how to open a hair salon, take a quick look at this video to get some final tips.
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