Do you want to start a beauty salon from home? If YES, here is a complete guide to starting a beauty salon business with NO money and no experience plus a sample beauty salon business plan template.
A lot of people believe that the beauty industry takes care of only the glamorous, or perhaps the vain, or maybe just those in the spotlight. But this industry is very huge and more complicated than you think and it’s certainly not just the makeup, hair colour and perfume – it’s also the deodorant, toothpaste and even the ear hair clippers.
It’s not just the salons – it’s the barber shops, waxing franchises, massage franchises and a whole lot more. You need to understand that every product and service dedicated to helping people look and smell the way they want, or the way they believe they should is from this industry.
Industry trends were driven by celebrity taste-makers through their personal choices or professional endorsements. Since the dawn of the new millennium, the stock market has been in a freefall and the economy has been in the doldrums. But it was a good time to start a beauty salon.
According to reports, the general salon industry revenue grew 14.8 percent within the past three years. How is it possible for a service sector like the beauty industry to continue to grow? This is because a lot of the services offered by salons simply cannot be duplicated at home or at least not duplicated well.
Also we believe that in this era where people freely shell out $59.95 a month for unlimited cellular service or hundreds of dollars to lease the latest SUV model with the most bells and whistles, the price of a haircut probably doesn’t seem very high considering the lift it can give your spirits.
Indeed starting and managing a beauty salon can be a lucrative enterprise. Whether you are a trained beauty therapist, or are simply interested in setting up a business, running and managing a salon can be a very profitable venture, provided you follow a few simple rules.
But you need to understand that just like any other business, planning is a big part of what can make your beauty salon a sustainable success.
RELATED Beauty Salon and Spa Marketing Plan [Sample Template]
Steps to Starting a Beauty Salon Business With No Money
1. Understand the Industry
The beauty industry is known to be resistant to economic downturns and it fared very well during the Great Recession of 2008. Even though consumers tend to be more price conscious during those times, they do not stop spending.
So in today’s environment of rising per capita income, the beauty business is booming. According to reports, the industry generated .2 billion in the united states in 2015 alone. Hair care is the largest segment with 86,000 locations.
Skin care is a close second and growing fast, expected to have revenue of almost $11 billion by 2018. We believe that this growth is being driven in part by a generally increasing awareness of the importance of skin care, but also specifically due to an increase in the market for men.
Experts expect industry revenue to improve over the next five years, rising at an average annual rate of 3.2% to $58.7 billion by 2019. Experts believe that it will be driven by increases in per capita disposable income and reducing unemployment over the five-year period.
Higher disposable incomes will also lead hair salon customers to spend more on higher-value services such as manicures, pedicures, facials, hair modification treatments, and massages. Profits in this lucrative industry are also expected to see gains which could encourage more new businesses to enter the industry.
Profits have increased from 1.9% in 2009 to 5.7% in 2014. Continued profit gains will be mainly due to increased sales of higher-value products which have larger profit margins. We believe that improving market conditions will continue to increase the number of industry businesses at an average annual rate of 5.5%, reaching 1.3 million operators by 2019. Also have it in mind that the growing number of businesses in this industry will drive employment growth. Also the improving job market will continue to contribute to higher enrolments at cosmetology schools.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Indeed salons in general seem to draw in a diverse crowd, from young women to older men; certain characteristics define the majority of customers at each salon. Knowing and understanding your target market in this business can help you put together a business plan for a new beauty salon, write a general article for a trade journal, or get ideas to increase sales at an existing salon.
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Personal Care Services
The biggest households and older householders are the best customers of personal care services such as haircuts, massages, manicures, and facials. Householders aged 35 to 64 spend 8 to 14 percent more than average on this item. Married couples without children at home (most of them empty-nesters) spend 25 percent more than average on personal care services, while those with school-aged or older children at home (the largest households) spend 31 to 37 percent more than average.
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Hair Care Products
Note that the best customers of hair care products are the largest households and households with the most women. Married couples with children at home spend 58 percent more than average on this item, the figure peaking at 65 percent more than average among couples with pre-schoolers. Householders aged 35 to 54, many with children at home, spend 25 to 28 percent more than average on hair care products and control half the market.
3. Decide Which Niche to Concentrate On
Research has shown that beauty salons are continuing to perform well and show strong economic growth. We also believe that cheaper pop-up beauty salon locations are enjoying strong consumer demand. Also a number of recent trends, notably the increasing number of men seeking specialist health and beauty treatments, have provided real benefit to beauty salons up and down the country.
Note that consumer demand for natural and organic beauty is also on the rise so if you’re looking into how to open a beauty salon or spa, then taking a natural approach could help your business to thrive. So if you’re looking to open a salon or spa, you could pursue the following beauty salon ideas to make your business stand out among consumers and maximize on recent trends:
- Manicures and pedicures
- Bleaching, waxing and threading
- Deep tissue massage
- Facial massage
- Tanning services such as spray-on fake tans or sunbeds and tanning beds
- Specialist hair treatments such as hair extensions and Brazilian blow dry’s
- Specialist beauty treatments such as electrolysis, laser hair removal, Botox and cellulite reduction
- Professional make-up and makeovers
- A men’s beauty salon or spa
- A beauty salon or spa dedicated to wholly natural and organic products
- A pop-up beauty salon, in a central location with high footfall
The Level of Competition in the Industry
It’s very important to state that the demand in this industry is moved by demographics and population growth. We believe that the profitability of individual businesses rests on technical expertise and marketing skills. Bigger companies enjoy economies of scale in purchasing and marketing. While smaller businesses can compete successfully by offering superior service or securing favourable locations.
Have it in mind that the US industry is highly fragmented: the 50 largest companies generate about 15 percent of revenue. You also need to know that industry products are hair cutting, hair colouring, nail care, skin care, and merchandise sales.
A typical salon offers haircutting and styling, colouring, shampooing, and permanents. A lot of salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments. But note that the lower volume of demand for such specialty services often makes them uneconomical. Sales of hair care products are an important revenue source for many salons, providing from 5 to 15 percent of revenue. Gross margins are higher for hair care products than for services.
4. Know Your Major Competitors in the Industry
- Regis
- Ratner Companies
- Spisfers
- Fantasy nails
- Posh Spa
- Premier Salons
- Sport Clips
Economic Analysis
This industry will keep booming because of the constantly growing population. Also there are a number of trends within the industry that are driving growth and revenue. For instance, organic products and products produced in a sustainable (environmentally conscious) manner is now a very lucrative niche in this industry.
It has been a niche market for many years- but greater availability of information about the benefits, personal or global, are driving increased growth. Also the products and services focused on our aging population is also growing this industry. Whether you believe it or not, the United States has a large retired/retiring population, and many of them have money to spend.
Products and services channelled on babies and young children are also bringing in more revenues into this industry. This is frequently related to the organic/sustainable movement above. Also millennial moms are now ready to pay a premium to make sure their kids have the proper skin protection. Men’s product and services is still relatively new, but it’s still expected to drive growth for years to come.
You need to understand that a lot of beauty salons derive up to 15% of their revenue from product sales; putting the right product on the shelves can make or break a business. With strong and growing demand and with employment estimates through the roof, the beauty industry continues to provide fantastic opportunities.
5. Decide Whether to Buy a Franchise or Start from Scratch
Notably there are three ways with which you can start this business. First you can decide to open a franchise beauty salon in which you pay money upfront for the right of opening that salon using someone else’s established name (which gives you an instant reputation) and its resources (like advertising campaigns).
Secondly, you can purchase a salon from someone who is retiring from the business, has tired of the business, or has damaged the business and forced it into bankruptcy. Then thirdly and finally you can start and build your own salon using your own money, your own ingenuity and your own optimism that hard work and talent will push out.
However, when contemplating about the best way to start this business, have it in mind that this industry also has a niche called booth rental salons. Booth rental salons are owned by an individual, or more, who’s basically the landlord for a group of hairstylists and other service providers working under his or her roof.
But here as the landlord, the salon owner/operator collects a flat monthly fee from the service providers, for which they have the privilege of using salon space and non-removable equipment like a styling station and chair. But then those stylist and professionals are seen as independent contractors who must provide their own supplies (everything from hair dryers to perm rods), set their own hours, book their own appointments and have their own key to the building.
But then buying into a franchise in the beauty Salons industry is far more profitable or rather advisable than starting from the scratch. A franchisee buys more than the right to use a Business Name: he/she buys the benefits of the franchisor’s experience and the business’s formula for success. A lot of people choose to buy a franchise because they have a good business background but no experience in a particular industry.
Others know an industry well, but don’t have a background in business. Still others have both and just want the experience and support a franchise offers. One of the few benefits of opening a franchise is that the franchisee is provided with a turnkey operation. The franchisor helps you choose the site and negotiate the lease, tells you how to lay out the salon and where to order furnishings, provides information on what products you are required to use and what your opening inventory should be, and provides you with management and technical training.
6. Know the Possible Threats and Challenges You Will Face
Starting and managing a beauty salon can be a wonderful experience. Whether you’re a trained beauty therapist, or are simply interested in setting up a business, running and managing a salon can be a very profitable venture, provided you do a thorough market Feasibility and Research.
Indeed every successful salon owner has made her share of mistakes along the road to the top. But these mistakes didn’t discourage them but motivated them to do better. For you to successfully succeed in this business, you need to research and stay informed with industry trends and be cautious of some early threats, which may include;
- Overpaying technicians
- Hiring over experienced technicians
- Obscuring your business
- Inadequately Screening Prospective Technicians
- Failing to take care of your business
- No marketing plan
- Neglecting your employees
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When thinking of the best structure for your beauty salon, note that you have a choice of five possible legal structures: sole proprietorship, partnership, Limited Liability Company, S corporation or C corporation. As with many small businesses, an LLC is probably your best bet.
Forming your business as an LLC protects you from personal liability; only the amount of money you put into the business is at risk. (If one of your stylists gets sloppy around the ear, the wounded customer won’t be able to take your house or your car.) If you plan to open a chain of salons, set up a separate LLC for each location.
Even though corporations also limit personal liability, LLCs are easier and more flexible. They don’t need a board of directors, shareholder meetings and other managerial formalities. (Corporations and non-profits must have boards.). Note that this legal structure typically offers the most flexible tax treatment.
An LLC’s profits can be taxed as a corporate entity (a C Corporation) or as a “pass-through” entity (an S corporation), meaning that the company avoids paying taxes on both corporate profits and the owner’s personal income. A lot of LLCs choose the pass-through option. But some LLCs can choose a C Corporation tax structure and save money by funneling profits back into the business tax-free.
Note that another benefit of LLCs is that entrepreneurs can divvy up profits any way they choose, whereas with shareholders, the spoils have to be carved up in proportion to each shareholder’s percentage ownership in the corporation. Indeed hairdressers tend to work on commission or simply rent out their chairs, you could entice other employees or investors with a larger slice of the profits.
8. Discuss with an Agent to Know the Best Insurance Policies for You
You need to understand that when it comes to business insurance, you will face a unique set of risks. You have yourself, your customers, and your premises to protect, and a flexible policy makes this much easier. Note that with accurate and proper information you can choose what’s right for you, combining key covers into a single policy.
Whether you have your own premises or work on site, and whether you work on your own or employ people, it’s a quick, quality cover, without the hassle. Insurance and covers you may need may include (you don’t necessarily need to acquire all)…
- Public liability insurance
- Employers’ liability insurance
- Landlord insurance
- Barber insurance
- Beauty consultants insurance
- Beauty salon insurance
- Manicurists and nail technician insurance
- Massage therapists insurance
- Mobile beautician insurance
- Pedicurists insurance
- More beauty industry insurance
- Self-employed insurance
9. Protect your Intellectual Property With Trademark, Copyrights, Patents
We always take caution when planning to keep our goods safe from thieves. Yet a lot of business owners fail to take a similar degree of caution with their designs, ideas, and valuable business information and leave themselves at risk of theft and counterfeiting.
But new changes to the law should strengthen the protection of designs in the world, and the introduction of simpler patenting processes will make it easier for small businesses like a beauty salon to look after their IP and intangible assets. Ways to protect your business may include…
- Know your intellectual property
- Get help to find the right protection
- Watch the competition – and enforce the law
10. Get the Necessary Professional Certification
First and foremost, a certificate aids individuals gain the skills they require to get a particular position in their field of study. A lot of jobs need the completion of a program, and receiving a certificate can help you get the position that you want.
You need to understand that a course of study in the beauty industry covers topics surrounding cosmetology, make-up, hairdressing and aesthetician services. But we believe there are a number of reasons to pursue a certificate in beauty industry. The demand for cosmetology services has been growing, and there are a great number of opportunities in the business. However, most positions require the completion of a certificate, and earning one can help you get the job and increase your earning potential.
- Salon Management Certificate in Cosmetology (C55140B)
- Shellac Pro Certification
- Certified Nail Technician
- Certificate in Perfume & Cosmetics Management
- Nail technician certificate
- Certificate in Styling & Grooming
11. Get the Necessary Legal Documents You Need to Operate
Indeed building a lucrative beauty salon needs a lot of planning and consideration. Apart from having the proper permits and licenses, you also need to have undergone state-approved education to secure and maintain some of those licenses. The state of Texas, like many states, has its own set of requirements that must be met in order for a Beauty salon to operate within its borders.
- Operators license
- federal employer identification number
- fictitious business name permits
- zoning and land use permits
- sales tax license
- Salon license
- Permanent physical address for mobile beauty salons
- Insurance
12. Raise the Needed Startup Capital
For your beauty salon to become very successful, you need to secure the financing you need from a bank, your credit cards or investors. If you have the money yourself to invest then it is a good idea to rent rather than buy a building to cut costs and pay for your own launch yourself. However before you do anything you need to find money to finance your business plan. Sometimes you need to hire a professional to do it for you.
We can all agree that investors can be difficult to come by for any business because there has been a recession and times have been a bit hard. This is why you would need to prove to any investor that you can multiply the profits of your business exponentially by showing them a solid business plan. This is true even if you are opening a business that is considered to be quite reliable like a beauty salon. Ways of financing your beauty salon may include…
- Use Your Own Savings and Assets for Financing
- Family members and friends
- Venture Capitalists
- angel investors
- Credit Cards
- By using Money broker and finder
13. Choose a Suitable Location for your Business
Deciding on a suitable location for your salon is one of the most vital decisions you’ll make in the early stages of building your new business. Indeed you’ll want to locate it in an area that’s easily accessible by highway or byway, with plenty of traffic (both foot and the four-wheeled variety) and parking. But don’t forget that your surrounding area should be attractive, well-lighted and safe.
There should also be other retail businesses nearby (as opposed to commercial areas like industrial parks or a regional airport) because they can generate business for you even as they attract customers through their own doors. From our detailed research we believe that salons function out of three types of establishments: Free-standing buildings, storefront properties and shopping centres like strip malls.
Also sometimes beauty salons can found on the ground floor of office buildings in large metropolitan areas where there is a significant amount of foot traffic during the business day. But such locations may not be optimal if they’re in an urban area that doesn’t have much traffic in the evenings or on weekends. Also have it in mind that there is one other type of property that deserves serious consideration when you’re looking for a place to set up shop. We believe that a building that once served as a beauty salon may be a good choice for your new location.
The good news is, a lot of the infrastructure you’ll need, including extra plumbing, special electrical outlets, and maybe even fixtures like salon stations and the reception desk, may already be onsite and available for purchase with the building.
The bad news is, there might be a really good reason why the salon closed, like there’s too much competition in the area, the location is crummy, or the previous owner had a poor reputation among clients and in the community. The same goes for a salon that’s currently in business but is up for sale.
Beauty salons usually range from 1,200 to 2,000 square feet, although small spaces can be considerably smaller (fewer than 1,000 square feet). We believe you will need four separate areas in your salon: Reception and retail, shampoo, cutting/service, and storage.
The largest of these, of course, should be your salon services area, which should take up about 50 percent of the floor space. Note that about 20 percent of the space should be allotted for retail/reception, 10 percent for the shampoo area, and the remaining 20 percent for storage and an employee break/lunch room area.
14. Hire Employees for your Technical and Manpower Needs
Have it in mind that you need more than a good pair of scissors and the gift of gab to run a salon successfully. You need software to keep those chairs swiveling on time, day in and day out. We believe that the most common salon-management software programs come with appointment books, inventory control, financial reporting capabilities and payroll functions.
You can also build a list of clients and track their spending patterns. For instance, Elite Salon & Spa Management program, from Elite Software, offers the standard bells and whistles, plus unlimited training and technical support, for a monthly subscription of $79 (or $948 a year), plus whatever it costs to ship the software.
We also believe that one of the more challenging aspects of building and managing a beauty salon will be hiring and retaining good employees. This can seem like a daunting task, not just because both of these responsibilities can be very time-consuming, but also because there’s so much riding on employees’ skills.
Have it in mind that your employees will be the front-line representatives of the business you have lovingly and painstakingly cobbled out of little more than some loans, some ingenuity and a lot of “sheer” determination. You need to understand that their ability and talent, as well as their attitudes and work ethic, will influence every part of the business, from client retention rate to the bottom line. The workforce you will need for your business may include…
- Salon manager
- Salon assistant
- Hairstylist/Cosmetologist
- Manicurist
- Massage therapist
- Receptionist
- Aesthetician
The Service Delivery Process of the Business
In this industry, a lot of the heavy stuff–chairs, mirrors, washing and drying stations all comes from two major national suppliers: Belvedere and Takara Belmont. Note that to win your business; both companies may throw in some complimentary consulting services. And when one of your chairs breaks, these guys are pretty swift about scaring up replacement parts.
Immediately you get outfitted, you need the smaller items: shampoo, conditioner, brushes, bobby pins, etc. You could either go directly to a manufacturer of products–Aveda, Bumble and Bumble (both part of Estee Lauder ) or Paul Mitchell’s, or you can also work with a local distributor that offers several products. Have it in mind that to find a local distributor, you could hunt one down yourself (or they’ll hunt you down).
Also you need to carefully consider your hours of operation so you can accommodate the maximum number of clients during the business day. If you’re very conversant with this industry, you will sure note that the beauty business isn’t a 9-to-5 kind of industry.
Salons are now open seven days a week and on some of the traditional holidays, and their hours may be extended around prom time or during peak wedding season. What has driven this demand has been the proliferation of two-income couples who manage the demands of raising a family while juggling careers and managing their own personal business.
This is why even though it wasn’t so long ago that people wouldn’t even consider getting a haircut on Sunday, salon hours on Sunday are now a must (even if on an abbreviated schedule). Even day spas are open on Sundays, since this may be the only time during the week that a busy career mom can get away for some personal pampering.
We also believe that beauty salons in metropolitan areas are open from 10 a.m. to 9 p.m. six days a week, unless the owners are enlightened and add those Sunday hours mentioned above, and from 10 a.m. to 6 p.m. in smaller communities.
It’s very important to note that Sunday and holiday hours often are the same as those of local retailers like malls and department stores, and they generally run from noon to 5 p.m. Lunch hours and early evening hours we believe can be the busiest times for salons. You might also need to have special hours to accommodate special needs.
15. Write a Marketing Plan Packed with ideas & Strategies
The seriousness and sacrifice you imbed into your business will indeed tell if it succeeds or fails. You need to understand that making your business a success has to do with more than just your craft and the services that you sell.
You also have to pay close attention to the business side of things. In fact you need to learn how to actively promote your salon! In business, you are only as good as your reputation, and you can’t begin to build one without at least a little advertising. Here are few ways to start…
- Use the newspapers
- Networking
- The internet
- Business cards
- Leaflets
- Gift cards
- Referral programs
- Donations
16. Develop Iron-clad Competitive Strategies to Help You Win
Working hard everyday to win and overtake your competitors is essential in running a profitable beauty salon. For you to increase your business revenue, you need to either sell more services or increase prices. Ways to win in the industry may include…
- Give out free things like free manicures and pedicures
- Strive to get new customers and retain the ones you already have
- Give out punch cards
- Be creative
- Use the Internet
- Create an intimidating marketing strategy
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Your brand awareness is what makes you an outstanding entrepreneur in the industry. It is what makes people know that you exist, what you do and how you do it. Ways to do that for your beauty salon may include…
- Advertise a grand-opening special or offer a service at a discount.
- Have a digital strategy
- Team work pays off
- Move your beauty salon to a better traffic area if possible
- Dress up the interior of your salon to make it an inviting environment so customers are likely to come back.
- Deliver Your Promise to Your Clients
- Print your website and social media addresses on any materials associated with the beauty salon
- Display a sign-up sheet in the salon for email newsletters and special offers
- Use technology to advertise through QR, or quick response codes
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