Business Plan to Set up a Hair Salon

We continue with our series of articles, where we analyze how to prepare a business plan. And in today’s article, we will focus on how to make a business plan to set up a hair salon.

Before entering the article’s main content, we will answer a question that has surely crossed your mind since you first thought about starting your hairdressing salon.

Why set up a hair salon?

Businesses related to personal care are booming, proving the proliferation of city franchises for both men and women.

It is a highly demanded service with many ways of differentiation, so the chances of successfully establishing yourself in the market are high by preparing a good business plan.

According to INE data, there is one hairdresser for every 900 inhabitants. This indicates that profitability is achieved with a small number of loyal customers thanks to being a regular consumption service.

In addition, it does not present entry barriers as a large investment or high qualification is not necessary to start the business. Although, as we will see later, there are possibilities of diversifying a hairdresser’s income that will require a higher investment and qualification.

Business plan for a hair salon

In the following points, we will analyze the different sections that your hairdresser’s business plan should have. Then, offering useful advice to help you understand the needs of your project.

Market research

First of all, you will need to research your market. Analyzing your environment to detect the opportunities and threats it presents.

Do not be alarmed if you find many threats to your project. All entrepreneurs have had to face them. And what separates successes from failures is how well they avoid threats or turn them into opportunities.

For example, the location of the premises where you establish your hairdresser will be key since proximity is one of the strongest decision factors for consumers in this sector.

You can consider a threat to place a place near a hairdresser with a long history. But it may be that it is focused solely on one type of public – users with a classic taste – and there is a lack of a service focused on a more modern public in the area.

This brings us to the next point: detecting your target audience. You must identify the type of public in the area where you locate your business and adapt the service accordingly (or vice versa). Going to your city’s census data will help you understand the demographic profile in each neighborhood of your city.

Finally, investigate your competition once you have identified your target audience and the environment where you have detected more opportunities in the market. For example, analyzing the level of service you provide, differential characteristics of your business, prices, etc.

Internal analysis

In the internal analysis, you must detect those characteristics that make you stand out from the competition. For example, in service as personal as a hairdresser, it will be related to your experience as a hairdresser, your organizational capacity to manage the business, client portfolio, quality of service, customer service, or an innovative business model that breaks with market standards.

Service

The service you provide to your customers will be the key to your business. And you must ensure that it adjusts to their tastes and needs to the maximum.

You do not have to provide the service that you have planned. However, you must identify what is being offered in the market and the target audience you are addressing and offer a service in its quality-price range that differentiates itself from your competitors.

You need to find the differentiating factors in the market and draw up a brand positioning strategy. So that the client is clear with what differential value you will offer him and that he will not be able to find in other nearby competitors.

At this point, you will have to define the variety of services you provide, the quality of the products you use, and the attention you provide to your customers.

Depending on your price, you will have to adjust the time dedicated to each client. However, you must take care of the treatment offered because it plays a fundamental role in service as close as a hairdresser.

Also, you should try to diversify your sources of income. For example, you can offer many complimentary services to haircuts and sell beauty products to your clients. Some of them are:

  • Make-up.
  • Hair removal.
  • Manicure.
  • Body treatments.
  • UV rays.

Operations and management

The next step will be to define the essential operations that will intervene in the development of the activity. As well as the necessary management tasks on a day-to-day basis.

Among them will be dealing with suppliers, setting the appointment schedule to cover employees’ working hours, training on new techniques or treatments, controlling expenses and income, and much more.

Marketing Plan

The hair salon business plan cannot miss the actions you will carry out to make it known in the market. You must dedicate some of your budget to marketing to get new clients.

Having a website, being present on social networks, holding contests, investing in online advertising campaigns, web positioning, or traditional advertising are some of the actions you can carry out.

But don’t make the mistake of stopping investing when your schedule starts to get full. Instead, keep investing, as this will give greater value to your brand, you will maintain the volume of work, and you will be able to increase prices when demand exceeds your offer.

Financial plan

In the financial plan, it will be necessary to forecast the expenses and income of the business. In this way, you can determine your financing needs with your funds and external funds.

Finally, make an estimate to calculate when the business will start to be profitable. We will analyze each of the parts with an example of the concepts that can be found in each of them.

Initial investment 

The initial investment that you may need to set up a small hairdressing salon can have the following concepts:

Incorporation and license expenses: $3,000

Rental of the premises (first month + two months deposit): $7,000

Furniture and tools (decoration, machinery, and utensils): $40,000

TOTAL: $50,000

Revenue Forecast

First of all, you have to calculate the average ticket. Then, you must write down the different services you provide and the price of each of them.

Then you will have to calculate the maximum level you can produce. That is the maximum capacity of your business. Adding the number of hours of each employee and the volume of work per hour.

In this way, you can make a forecast regarding the maximum production. Make a conservative forecast at the beginning and assume that your balance will show losses during the first year.

Fixed costs

Fixed costs do not vary according to the volume of work. That is, they will remain unchanged whether the store is closed or is full of customers. Among the main ones are:

  • Rental of the premises.
  • Advisory service.
  • Staff salaries.
  • Supplies.
  • Advertising and marketing.
  • Debt interest.

Variable costs

They will be those that derive from the provision of the service. For example, the products used in the provision of the same.

Breakeven threshold

With all this, you can calculate the profitability threshold of your business. You need to sell the minimum number of units to reach zero profit. Mark the point from which you will start to get benefits. The formula is as follows:

Profitability threshold = Fixed costs / (Unit sale price – Unit sale cost)

Contingency plan

The contingency or continuity plan is the document where the situations in which the business may be in danger of closing will be collected. Detailing what actions will have to be implemented to avoid it.

This is one of the most important parts of your hair salon business plan. Because in business, things rarely go our way.

Therefore, you must have a defined plan to overcome the adversities and challenges you will surely have to face as an entrepreneur.

Executive Summary

We have left the executive summary for last, even though it will be found in the first few pages of the document. And I leave it for the end because it will be the last thing you should write since it is a summary of the entire business plan.

You should write the executive summary thinking that it will be the first thing potential investors or the person in charge of the bank that studies the financing of your project reads. So you must highlight all the opportunities it offers, the strengths of your proposal, and how to deal with the threats you face.

Conclusions

Now you know what parts you should include in your hair salon business plan. But do not take it as a rigid structure, but as a guide with the minimum points it must contain.

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