How to Write a Hair Salon and Barbershop Business Plan

The Hair Salon and Barbershop industry is a growing trend for several reasons.  First, innovations with haircare have spurred the demand for professional haircutting and hairstyling services. 

Some of these innovations, based on research from our business plan writer, have been hair extensions, innovative wigs, and stylish hair dying.  A second reason for the popularity of the hair salon and barbershop industry, which drives the need for a hair salon and barbershop business plans, would be that everybody needs a haircut.  It doesn’t matter if you like a hair longer short, everyone needs a trim.  From this, the perpetual demand for a hair salon and barbershop services should continue into the future.  A final reason for the growing demand for a hair salon and barbershop businesses is that barbershops have come back into demand.  Throughout the 90s, barbershops were considered a place for old men to hang out and get their hair cut weekly.  However, our business plan writer has found that trendy innovations that barbershops have spurred the demand for the services.  There is a multitude of other reasons why barbershops and hair salons are continually growing in demand.  Regardless, when starting or attempting to grow a barbershop or hair salon, a barbershop and hair salon business plan is always an excellent place to start.

Executive Summary for a Hair Salon and Barbershop Business Plan.

In the executive summary section of the Hair Salon and Barbershop business plan, make sure to first discuss what type of business your organization will be.  Options may include a limited liability company, limited liability partnership, or corporation.  For most hair salon and barbershops, our business plan writer has found that a limited liability company or limited liability partnership are often the prevailing legal business structures.  One of the reasons that a limited liability partnership is an excellent business option for hair salons and barbershops is that this allows for two or more people to not only owned the barber or hair salon but also to keep their wages separate from other partners.  At least this is what we have found in speaking with other barbershop and salon owners.

Also, in the executive summary section, make sure to discuss how your business will look and feel for customers.  The barbershop and hair salon industry relies on advertising, decor, and customer service to gain loyal customers and grow their business.  Because of this importance, our business plan writer almost always defines and discussed a customer’s perspective when we write a barbershop business plan or hair salon business plan.  In the customer perspective section, make sure to talk about the decor that you will embrace, primary colors that will be found throughout the facility, and how your advertising will highlight innovative aspects of your shop.

Company Information for a Hair Salon and Barbershop Business Plan.

The company information section of a Hair Salon and Barbershop business plan should start with explaining the problem that the company will solve for the client, then address the “Who, what, where, when, why, and hows.”  A common problem that a hair salon and barbershop solve for their customers is personal pride.  Most people take pride in their parents.  By having a professional barber or hairstylist set the foundation for your hairstyle, people tend to leave these facilities feeling better, more confident, and actually looking better.

Product Description for a Hair Salon and Barbershop Business Plan.

Hair Salon and Barbershop businesses generate revenues from several different channels.  The main revenue driver for a hair salon and barbershop companies would be booth rentals.  Booth rentals are when independent contractors rent a booth monthly from a hair salon or barbershop owner.  Booth rentals may run from $500 to over $2000.  This all depends on location, brand recognition, and other factors.  A second revenue driver for the hair salon and barbershop industry would be the sale of haircuts, styles, and other services from employees.  In this situation, the barbershop or hair salon owner will hire employees to perform services.  Employees may receive a commission for their sales and the shop keeps the rest.  A final major revenue driver for this industry would be product sales.  Almost all hair salon and barbershop organizations sell shampoos, styling gels, and other hair care items.  Because of the different revenue channels, our business plan writer recommends that structuring a hair salon and barbershop business plan follow a categorization structure.  The categorization structure should include booth rental revenues, salon services, and product sales.

Competitive Advantages for a Hair Salon and Barbershop Business Plan.

The Hair Salon and Barbershop industry have been growing substantially over the last several years thanks to innovations from a small business hair salon and barbershop owners.  Because innovation is so important in this industry, our business plan writer recommends that hair salon and barbershop owners document their competitive advantages in the business plan.  For example, some hair salon and barbershop businesses specialize in specific styling strategies.  If this is the case, make sure to include in your business plan a general description of how your organization will exploit this opportunity.

Location Description for a Hair Salon and Barbershop Business Plan

The location for a new Hair Salon and Barbershop facility is critical for the success of the business.  For the interior of the business, our business plan writer has found that most hair salon and barbershop owners select locations that offer approximately 1500 to 2000 ft.².  Space is enough for a moderate waiting area, reception desk, hairstyling booth, and a small office area in the back.

As for the general location of the Hair Salon and Barbershop facility, our business plan writer has found that these types of businesses do well in strip mall locations.  Stripmall locations offer a multitude of benefits for hair salon and barbershop business owners.  First, these businesses will benefit from foot traffic.  A large chain or anchor stores spend significant amounts of money on advertising.  These advertising dollars may also benefit smaller shops within the Plaza like hair salons and barbershops.  A second reason for strip mall locations is ample parking.  Almost all strip malls have significant parking available for all guests and visitors.

Target Market for a Hair Salon and Barbershop Business Plan.

A common Hair Salon and Barbershop target market are usually based on geography.  Hair salon and barbershops often open up their facilities in strip malls that are in front of large subdivisions, apartment complexes, or on major highways.  This practice makes going to the location convenient for potential loyal customers.  A second target market for business owners in this industry is also attracting seasoned hairstylist with a loyal following.  By targeting this demographic, when a hair salon and barbershop business owner lands an independent contractor with a loyal following, not only are they going to make money from booth rentals but there also going to make money from product sales from the independent contractor.

Industry research for a Hair Salon and Barbershop Business Plan

Based on quick research from our business plan writer, the main industry in which Hair Salon and Barbershop competitors compete in the hair and nail salons industry.  Product and services segmentation for the hair salon and barbershop industry would include 45% revenues generated from hair and styling services.  Approximately 17% of revenues are generated from hair coloring and highlighting services.  15% of the revenues are generated from nail care services like pedicures and manicures.  Industry experts also claimed that about 7% of all sales in the industry come from merchandise sales.  The rest of the revenue-generating segmentation sales would include beauty care products, skin care products and services, and other services that are customized and offered by individual shops.

In the last 12 months, the hair salon and barbershop industry generated approximately $63 billion in sales.  In the last five years, this industry has grown at about a 2.9% annual rate.  In the next five years, industry experts project a 2% growth rate.  Profits generated from this industry reach approximately $5.9 billion in the last 12 months.  Because of the labor-intensive needs of the industry, our business plan writer has found that wage payouts reached about $27 billion.  The industry as a whole is very segmented.  From this, approximately 1.2 million small businesses are competing in the hair salon and barbershop industry.

This information should be a starting point for industry research for a hair salon and barbershop business plan.  Keep in mind, when documenting your research, always cite your sources.

Owner and Management Section of a Hair Salon and Barbershop Business Plan

Owning and managing a Hair Salon and Barbershop business is quite different from other organizations.  This is because owners are also working employees.  What we mean by this is that hair salon and barbershop owners often participate in offering services like haircuts, hairstyles, and shavings.  From this, the business owner is actually working two jobs.  The first job is taking care of the business aspect of a hair salon and barbershop.  The second job is performing services within the company.

Funding Request for a Hair Salon and Barbershop Business Plan

Starting in the Hair Salon and Barbershop business is actually quite expensive.  Business owners need to first finance a buildout of the retail space.  The buildout may include hiring contractors for drywall, flooring, and to build shelves for hair products, skin products, and other cosmetics.  Next, equipment must be purchased which may include salon chairs, waiting area chairs, and small desk/mirror combos.  Finally, the reception area, complete with the computer, must be designed and built.  These are just a few of the startup costs for hair salon and barbershop industry.  Usually, our business plan writer has found that starting a hair salon and barbershop often takes approximately 75,000 to $150,000.

Financials for a Hair Salon and Barbershop Business Plan.

Financial projections and financial models for a Hair Salon and Barbershop business plan should first start with estimating how many customers your hair salon stylists will generate on an average daily basis.  Next, determine the average price for hair styling and cutting services.  Finally, determine how many hair care products and other cosmetic products you expect to sell daily.  Once this is complete, then multiply your daily projections by 30, which will give you your monthly revenue-generating expectations.  The final step to completing basic financial projections for a hair salon and barbershop organization would be to subtract monthly costs, which would include labor, from your profits.  With this done, this will give you a quick idea as to whether your hair salon or barbershop will be profitable once a business is started.

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Tutor With PaulQuality Business Plan, Quality Business Consultant.

Date: 2/16/2020