Hair Salon Business Plan Template
You need a business plan for your salon whether you're trying to secure a business loan, expand, or reinvent the business. Here is a hair salon business plan template that includes the important elements you need to include in your business plan.
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To ensure your salon’s success in this highly competitive market, you need a properly structured salon business plan. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their hair salons. Using the following hair salon business plan template, you can put together an effective business plan.
Things to Know Before Writing a Hair Salon Business Plan
The hair care industry includes salons that specialize in haircutting, hair coloring, and hair styling. These companies may also offer facials, makeup applications (except permanent makeup), and retail beauty products.
Among the major products and services offered by this industry are
- Haircuts and styling
- Hair Color services
- Other services
- Resale of merchandise and cosmetic products
- Services related to skin care
As of 2023, there are 984,521 Hair Salon businesses in the US, according to IBIS-World.
Over most of the five years to 2022, the Hair Salon industry has benefited from rising consumer sentiment and per capita disposable income.
Additionally, these trends have driven the demand for ancillary services to standard haircuts, including straightening procedures, perms, relaxing treatments, and other skin care services.
During the three years to 2024, the industry is expected to return to growth, with revenues expected to increase by 5.6% annually to $46.7 billion.
Key Success Factors for Hair Salon Business
The hair salon industry has its challenges, but there are 6 factors that can boost profitability, efficiency, and success.
- Having a loyal customer base: Having satisfied clients encourages long-term customers, who account for the majority of your clients.
- Employees must have a license: Employees must hold the appropriate licenses to perform their duties.
- Accessibility to consumers: Walk-in clients and repeat customers are more likely to go to a salon that is conveniently located and easy to reach.
- Access to niche markets: Businesses that specialize in niche areas of service and expertise reduce the effects of local price competition.
- The right expertise in the appropriate area: In order to be financially successful, it is essential to have experience and skills in managing and operating a small business.
- Maintaining excellent customer relations: Operators who strive to maintain positive customer relations will promote customer satisfaction and encourage positive word-of-mouth advertising.
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What is a Hair Salon Business Plan?
A business plan for a hair salon is a written document that sets your company’s financial goals and discusses how you’ll reach them.
A solid, comprehensive strategy will serve as a road map for the next three to five years of the hair salon business. Any bank or investor you approach will require a hair salon business plan, so putting one together will be critical to securing funding.
In short, writing a business plan can help you succeed if you’re thinking of starting a hair salon business or pitching to investors or venture capitalists.
Why You Need a Hair Salon Business Plan
If you want to start a Hair Salon business or expand an existing one, the first thing you need to do is to write a business plan. A business plan is also necessary for attracting investors who want to know if your Hair Salon is on the right track and worth investing in.
A solid, detailed plan gives you a clear path to follow, forces you to examine the viability of a hair salon business idea, and may help you better understand your company’s finances and competition.
Owners who have a business plan grow 30% faster than those who don’t, and 71% of fast-growing businesses have one.
A hair salon business plan is a living document that should be updated annually as your company grows and changes.
What Does it Cost to Open a Hair Salon?
Costs for opening a salon vary. They usually range between $60,000 and $180,000. These are one-timeYou’ll need to pay one-time fees for rent on the space you’ve leased, equipment for running the business, furniture, insurance premiums, attorney fees for preparing legal documents and leasing documents, and hiring a contractor to build out the space.
Funding Sources for Hair Salon
Asking family and friends to invest in your hair salon is a great way to start. Once you’ve set a budget and identified what you’ll need to start the salon, take the services of your friends and family to help you get it off the ground. You might need to present the willing ones a solid business plan to reassure them that their chances of making a profit are good.
Bank loans and angel investors are the two most common sources of funding for a hair salon. When it comes to bank loans, banks will want to look over your hair salon business plan to make sure you’ll be able to pay it back with interest.
The loan officer will not simply want to ensure that your financials are reasonable in order to gain this confidence. They will, however, expect to see a professional plan. They will be more confident in your ability to run a business successfully and professionally if you have a plan like this.
Angel investors are the second most popular source of finance for a hair salon business. Wealthy individuals who will write you a cheque are known as angel investors.They will either want equity in exchange for their capital or will let you have a loan, similar to a bank.
Hair salons will not be funded by venture capitalists. A chain is more likely to get funding than an individual store. This is because most venture capitalists are looking for millions of doIt is because most venture capitalists are looking to make a million-dollar return on their investment, but individuals can rarely achieve such performance.
Free: Business Plan Examples
Do you need help creating a business plan? Check out these six free, proven business plan examples from different industries to help you write your own.
How to Write a Hair Salon Business Plan
To write a hair salon business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a hair salon business plan, or you can just download our proven sample business plan pdf to get a better idea.
Executive Summary
The executive summary is the most important part of the document since it outlines the whole business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.
It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.
Tell them what kind of hair salon you have and what stage you’re in; for example, are you a startup, do you have a hair salon that you want to expand, or do you have a lot of hair salons?
Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.
- Provide a high-level overview of the hair salon industry
- The name, location, and mission of your hair salon
- A description of your hair salon business, including management, advisors, and a brief history
- Discuss the type of hair salon you are operating, Give an overview of your target customers., and how your product differs from competitors in the industry
- Create a marketing plan that describes your company’s marketing strategies, sales, and partnership plans.
- And give an overview of your financial plan
Check out these executive summary examples to help you write a perfect one for your hair salon business plan.
Free: Executive Summary Examples
An executive summary is the most important part of your business plan, and it need not be challenging to write. This is why we have put together some awesome free Executive Summary examples for you.
Company Analysis
The company analysis follows the executive summary as the second section of a hair salon business plan. Your company overview will be short and clear, similar to the executive summary.
Even if they just have a few minutes, your reader has to understand what your company does and who your customers are.
The following sections will be included in your business plan’s Company Analysis:
- Company summary: Your company analysis will describe the type of hair salon you are running and its future goals.
The type of hair salon you might be focused on (e.g. An exclusive hair cutting and styling salon, A hair salon offering hair coloring services,skin care services and Salons that offer cosmetic products, The combination of the above types, etc.) - Company history: When and why did you start your hair salon?
- What milestones have you achieved so far? Your milestones could include sales goals achieved, new store openings, etc.
- Legal structure and ownership: Do you have S-Corp status? Is it an LLC? A sole proprietorship? Describe your legal structure.
- Locations and facilities: Information about your workspaces or plans to acquire them.
- Mission statement: An overview of your hair salon’s guiding principles. Learn how to write a perfect mission statement.
Industry Analysis
You need to include an overview of the hair salon in the industry analysis you performed before sitting down to write your hair salon business plan.
While this research may appear to be unnecessary, it helps you to build strategies that maximize business opportunities while lowering or avoiding the identified risk.
The second advantage of market research is that it can identify trends in the market and help you improve your strategy. For example, if a new type of hair or hair service trend were to emerge, it would be helpful to include it in your plan.
The third purpose for conducting market research is to demonstrate to readers that you are an industry expert.
Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.
- Give a quick overview of the hair salon industry. Define the hair salon business in terms of size (in dollars), historical background, service region, and products.
- Examine previous trends and growth patterns in the hair salon industry.
- Identify the market’s major competitors.
- Age, gender, and general lifestyle of the targeted market
- Who are the market’s main suppliers?
- Determine the factors that have an impact on the hair salon industry. These might include government regulatory rules and other businesses’ competitive activities.
- Using research data, the industry forecast expected growth over the next five to ten years. Predictions should be made for both the long and short term.
- Describe how your hair salon business intends to position itself in the industry. Concentrate on how your hair salon business can benefit from opportunities highlighted in the industry.
Customer Analysis
The first condition for a hair salon business is to identify its target customers clearly. Here are some examples of customer segments: Singles, Status Seeking, Trendy. Kid-friendly, Sporty, (30-50-year-old, Men) Conservative, Families. Environmentally conscious, Seniors.
The customer analysis section is an important part of any hair salon business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how the product will meet those requirements.
Customer analysis may be divided into two parts: psychosocial profiles (why your salon services suits a customer’s lifestyle) and demographic profiles (descriptions of a customer’s demographic qualities).
In terms of demographics, you should include information on the ages, genders, locations, and income levels of the consumers you want to serve. Because most hair salons serve consumers who live in the same city or town, such demographic data is easily accessible on government websites.
The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better your chances of attracting and retaining customers will be.
Competitor Analysis
It is necessary to do a competitor analysis. Not least because you may use their data to define your goals, marketing plans, tactics, new product lines, pricing, and more. Use competitor analysis to:
- Identify the strength of your hair salon competition.
- Search for opportunities to distinguish your hair salon from competitors.
- Set your service’s price.
On the market, you will almost certainly discover some extremely powerful competitors, some of whom will be offering services similar to yours at unbelievably low costs. However, not every competitor works with low-cost, low-quality hair services
The first step is to determine who your direct and indirect competitors are.
The direct competition consists of other hair salon businesses that offer essentially the same services or products to the same people as you do.
Your indirect competitors are other options customers have to purchase from you that aren’t direct competitors. These include items they can buy at supermarkets and other retailers both offline and online (hair polishing, hair files, etc.). This shows that you understand that not everyone in your target market visits a hair salon on a regular basis.
Once you’ve identified the competition, concentrate on the direct, head-to-head competitors, since they are the most threatening to your hair salon— but keep an eye on the indirect competition as well, just in case.
Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.
You will be able to position yourself competitively in the market if you perform proper competition research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:
- Prices – Are they offer cheaper hair salon services or more costly than you and other rivals, what value do buyers get for that price?
- Quality – Are they offer premium hair salon services, the perceived worth in the eyes of the customers
- Customer service – How they respond to their consumers, whether they treat them poorly or well, and the degrees of satisfaction customers show
- Reputation — The sum of everything mentioned above: their credibility, how loved the brand is, and the loyalty of their customers
The final section of your competitive analysis should include a list of your areas of competitive advantage. for example: Are you going to offer premium hair salon products or services? Will you offer unique hair salon services that your competitors don’t offer? Will you offer better pricing or will you offer greater customer support?
Consider how you will outperform your competitors and include them in this portion of your hair salon business plan.
Free: SWOT Analysis Examples
Take advantage of our free SWOT analysis examples. Make your business future-proof by identifying your strengths, weaknesses, opportunities, and threats using this free SWOT Analysis Template.
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Marketing Plan
Marketing plan for a business plan involves identifying the target demographic and finding hair salon services that suit their preferences.
As part of your marketing plan for a hair salon, you should include:
Pricing and Product Strategy
Your hair salon must offer hair salon services/products that are different from those of your competitors. Research what your competitors offer and how they price their hair salon services. Unique hair salon services identifies your hair salon as the place to go for unique designs and differentiates it from others.
Placing and Promotions
Place refers to the location of your hair salon. Is your hair salon business near an office building or gym that has a high population? If you plan to target a specific geographic region, mention how your location will impact your success.
Promoting your hair salon is the final part of your marketing plan. In this step, you document how you will drive customers to purchase your hair salon services. A few marketing methods you could consider are:
- Adding extra appeal to the front store of your hair salon to attract passing customers
- Marketing in local newspapers and magazines
- Approaching bloggers and websites
- Collaborations with other companies
- Advertising on the radio or television
- Event Marketing
- Marketing on social media
- Pay Per Click marketing
You should also think about your salon’s Unique Selling Proposition (USP), which should explain why clients should choose you over other Salons. Ensure that your USP is reflected in your marketing.
Operations Plan
While the previous sections of your hair salon business plan described your goals, your operations plan discusses how you will achieve them.
An operational plan in a business plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.
Your operational plan should be able to answer the following questions:
- Who – Personnel in charge of completing specific tasks.
- What – A breakdown of the responsibilities of each personnel.
- Where – The location of everyday operations.
- When –The deadlines for completing tasks and goals.
- How much – The amount of money required for each department to perform their job.
Your operations plan should be divided into two individual parts, as seen below.
All the daily tasks involved in running your hair salon business, such as serving customers, ordering inventory, maintaining a clean hair salon, etc., are short-term processes.
Long-term goals are milestones you hope to reach. It may be the date when you expect to serve your 5,000th customer or when you hope to reach $X in sales. Another example would be when you expect to hire your Xth employee or open a new location.
Management Team
The management section in a business plan‘ outlines your management team, staff, resources, and how your hair salon business ownership is structured.
This part may be easily organized by dividing it into the following points:
- Ownership Structure
- Internal Management Team
- External Management Resources
- Human Resources
Ownership Structure
This section outlines your hair salon’s legal structure. If your company is a sole proprietorship, it may simply be one phrase. It might be longer if your company is a partnership or a corporation. You should make it a point to clarify who owns what part of the business.
Internal Management Team
This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your hair salon business. Ideally, you and/or your team members have direct expertise in the hair salon business. If this is the case, highlight your experience and skills.
External Management Resources
Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with hair salon business.
An advisory board would consist of 3 to 7 people who would serve as mentors to your company. They would assist in answering queries and providing strategic direction.
If necessary, search for advisory board members with expertise running hair salon and small businesses, as well as experience with hair salon businesses.
Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches.
Human Resources
The final topic to consider in the management area of your hair salon business plan is your human resource needs.
Financial Plan
In financial plan of a business plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.
Income Statement
A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.
As you develop your income statement, you need to develop assumptions. For example, will you serve 20 clients per day or 50? Will sales increase by 3% or 15% per year? As you can imagine, your assumptions have a significant impact on your financial forecast. Do your best to verify your assumptions by conducting research.
Free: Income Statement Template
Create a financial statement for your business by downloading our free income statement templates.
Balance Sheet
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
The balance sheet shows your hair salon’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:
- Assets: Tangible goods with the monetary worth that the company owns.
- Liabilities: Debt owing to a company’s creditor.
- Equity: The net difference when the total liabilities are subtracted from the total assets.
The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.
Create a pro forma balance sheet for your hair salon business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.
Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.
For example, spending $150,000 to build out your hair salon business will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.
Similarly, if a bank sends you a check for $700,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.
Cash Flow Statement:
Your cash flow statement will help you determine how much money you need to start or grow your hair salon. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a hair salon:
- Design fees, construction fees, etc., associated with location build-out.
- Equipment costs, such as chairs, washing equipment, etc.
- Payroll or salaries paid to employees
- Purchasing business insurance
- Permits and licenses
- Legal expenses.
Free: Balance Sheet Template
Create a financial statement for your business by downloading our free balance sheet templates.
Appendix
List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.
Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix. You may, for instance, include some of your apparel designs.
Pro Tip: Find out what should be included in a business plan appendix while writing a hair salon business plan.
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Summary of the Hair Salon Business Plan
A hair salon business plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the hair salon business, your competition, and your customers. The plan will help you understand the steps necessary to launch and grow your hair salon.
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