How to Start a Hair Salon Business (and What Mistakes to Avoid)

You may have been thinking about it for years: drafting up a hair salon business plan and strategizing.

Starting your own salon is such a high. I was over the moon happy and so proud of myself for finally jumping in full force on my dreams. 

But, as I got the ball rolling, I realized there are some crucial steps to take before starting a salon — plus some serious mistakes to avoid.

Here’s my best advice for starting your own salon.

First up… drafting your salon business plan. 😉

• How to Write a Hair Salon Business Plan
• 4 Mistakes to Avoid When Starting Your Own Hair Salon

How to Write a Salon Business Plan

There are quite a few pieces of information to include in your salon business plan, so I’ve made a comprehensive list to help keep you organized!

1. Cover Page

First things first, you’ll need a cover page. This doesn’t have to be anything fancy, but it does make the finished product look a little more professional

Your cover page should include your salon business name, address, owner’s name, phone numbers, email address, and all other contact information.

2. Executive Summary

Next, you’ll include an executive summary. This will basically be a brief overview of the rest of the business plan.

This is where you highlight the key points that will be included in the rest of your business plan to prepare readers for what’s coming.

This should be clear and concise, yet capture the reader’s attention.

3. Opportunity

Problem 

What need or problem will your salon be solving? Is there a need for haircuts or manicures in your area? Is there a need for affordable salon services in your area? 

Solution

How are you going to be solving this problem? What makes your salon different and what are you dedicated to?

Target Market

This is the group of people in which you are going to aim your services towards. They can be categorized by age, gender, income, and other aspects that make them unique, such as working or not working, has children or doesn’t, and more.

Competition & Advantages

What are the current alternatives to your business in your area? Are there other salons, and if so, what will set you apart? What do you have or what will you offer your clients that will be better than your competitors?

Keys to Success

What aspects of your business will lead to its success? This can include things like location, environment, convenience, reputation, and more.

4. Execution

Marketing Plan

How are you going to reach your target audience?

Are you going to utilize organic social media, advertisements, direct marketing, word of mouth and referrals, or a combination?

Make sure you’ve done your research on what works and why!

Sales

How do you anticipate your sales will look in a year?

If so, this could be because of your marketing and growing reputation, and more.

If your sales increase during year one, will you add another employee during year two?

This of your goals a year, two, three down the road, how your sales will look, and how you’ll change your behavior moving forward.

Operations

This section refers to location and facilities, including the address of your salon and square footage.

What is special or important about the location? Is it part of a strip mall or in a busy part of town? 

Milestones & Metrics

A table is a super clear and easy way to show your milestones.

Milestones include things like acquiring financing, hiring employees, beginning your marketing plan, and your grand opening.

Remember to include dates for each milestone!

As for key metrics, what are you going to measure to determine the success of your salon?

This could include average revenue per month, new business leads per month, new clients from word of mouth, and social media engagement and follower growth.

5. Company

Overview 

Include your company description and history. Is this part of a franchise, or a totally new business?

What makes your salon unique and special? Just a short summary will do, since you’ve described this elsewhere!

Mission Statement

A good mission statement answers the ‘why’ behind your business. Why does your business exist, and what beliefs do you hold true?

Don’t be afraid to ask your employees or team members how your mission statement sounds (and make sure it’s actually something you can stand behind).

Management Team

Identify the people that are a part of the management team and why they are qualified. 

Personnel Table

Create a table that includes your employees, their titles, and how much business you think they’ll attract (in dollars) each year for the next three years.

6. Financial Plan

This section will include a lot of charts and graphs. If you want examples of each one, check out this salon business plan example. 

Key Assumptions

Your financial projections will be based on some key assumptions. Include those here! Those assumptions can include things like:

• Pay structure – how will the owners be paid? Will your employees be paid based on commission, and if so, what percentage?
• Do you think you’ll have full-time employees, or will you utilize a booth rental structure? 
• What does your projected revenue look like? Will it start off increasing off the bat, or do you foresee a dip in your revenue when you first open?
• What are your projected costs? This can be categorical; it doesn’t have to be numerical.
• What are your projected sales? Again, this can be categorical; do they come from mainly services, or also products?
• Do you think you’ll run into any issues with reporting or sales? Include those here.

Revenue By Month

Use a chart to show your revenue by month over the next year. Take into account busy seasons, time it takes to get off the ground, and more!

Expenses By Month

Use a chart to show your expenses by month. This includes both direct and indirect costs.

Direct costs are the costs directly involved with the service, including labor and materials.

On the other hand, indirect costs are those not directly related to the service, including reception supplies, utilities, and technology. 

Net Profit/Loss By Year

Use a chart to show your net profit or loss by year for the next three years.

Financing – Use & Source of Funds

The use of funds includes initial expenses, tangible assets, and a cushion of cash to keep you up and running and in case of emergencies.

How much do you think the initial equipment will cost? What about supplies and initial losses incurred before launch?

Be sure to include a cushion that will help you feel comfortable moving forward!

The source of funds includes where you’ll be getting the funds from. This will most likely be a combination of owner savings and loans from a bank or investor.

Projected Profit & Loss Statement

Of course, this won’t be absolutely exact, but you’re just estimating here.

Create a chart that includes direct costs, operating expenses (salaries and wages, marketing expenses, rent, etc), and operating income over the next three years.

Projected Balance Sheet

This will be another chart that includes current assets, long-term assets, current and long-term liabilities, and total equity over the next three years.

Projected Cash Flow Statement

This will be the last chart you’ll need, we promise! This will include net cash flow, investing and financing, and cash at the end of the period over three years.

4 Mistakes to Avoid When Starting a Hair Salon Business

1. You’re Probably Not Focusing Enough on Budgeting

Knowing your strengths and weaknesses as an owner is key. Overspending on supplies is one of the biggest issues for beauty industry owners.

Having a clean cut budget and knowing what percentages per month you are allotted to spend on consumable supplies will change your life. 

Also, having clear systems and budgets for purchasing retail products is key.

Create an excel sheet or print out a sheet each month and write out what you’ve allotted to spend on consumables and retail products, then do your best to stick to it.  

2. You Put Off Hiring an Accountant and Bookkeeper

Hey, if numbers are your thing, knock yourself out. But be sure you are running your numbers and looking at your profit and loss statement every single month.

If not, this is where a bookkeeper comes in. 

I waited until year six to hire a bookkeeper, and it literally changed my life. Things became so much more clear. I had so much more time on my hands to focus on the business, and my books were accurate.

Likewise, having an accountant you can trust is very important.

You may have questions about your taxes, you may be overpaying, you may be underpaying. I ended up saving so much money per year when I found the right accountant. 

As stylists, managing our taxes and bookkeeping aren’t typically in our wheelhouse. So, get an accountant and a bookkeeper on retainer. Invest in protecting yourself and your money. 

3. You Don’t Invest Enough Time in Creating Your Brand

WOW! Great branding is a total game-changer. It’s one thing to start a business, but it’s a whole other level when you create a strong brand to go with it. 

You want to stand out amongst the crowd, but you also want to create longevity in your career. Your brand is what will carry you through. It is what connects you to your current and future clients. 

I wish I knew how important this was when I started my business. I was kind of all over the place and sensed I wasn’t attracting my perfect target client.

If you find yourself feeling the same way, I recommend you take some time to really dig deep and understand who you are and what your brand stands for.

This takes time, so don’t feel like you have to work it out in a few days. But the payoff will be huge. 

4. You’re Not Prepared for the Amount of Time It Takes to Start a Salon Business

Time? What is that? 

The time you have to invest in owning a business is never-ending, especially in the first three years or so.

I knew starting a salon business would take a lot of my time, but I had no idea that I would literally think about my business 24 hours a day, 365 days a year. 

In the first three years, you are still in the nurturing stage.

You are learning and growing and implementing new systems. All of this requires such a time investment, it can become very exhausting. 

Make sure that you’re organizing your days to the best of your abilities by cutting down on unnecessary busywork.

Start running all your appointments through an online appointment scheduler like Schedulicity so you’re spending less time playing phone tag (this also helps make sure you’re not wasting unnecessary time between appointments or thanks to client no-shows).

Set aside a specific time to look at your finances all at once.

Still, even as you get better about how you use your time, when you’re just starting out, it will always feel like there’s not enough of it. 

The good news: It does get easier, so there is hope for you and having some of your time back.

But when you’re just starting your salon, I would plan on eating, sleeping, and breathing your business for at least the first three years.

Year one is the hardest. (Entrepreneur calls it the year of “surviving”.) Every year gets easier from there. You start to become more comfortable with your leadership and the day-to-day of running your business.

And of course, to say that you successfully run your own business, the hard work is totally worth it.