How to Write a Hair Salon and Barbershop Business Plan
The hair salon and barbershop industry’s revenues have been growing moderately over the last several years, which is driven demand higher for hair salon business plans and barbershop business plans as well as hair salon and barbershop business plan templates and hair salon and barbershop pro forma financial projections.
There are numerous reasons for the elevated demand for hair salons and barbershop business plans. To illustrate, teenagers and young adults pride themselves on personal care and displaying individualism through creative hair designs. This demand has led to the increased popularity of both hair salons as well as barbershops. Because of the growing demand for business plans in these industries, our hair salon and barbershop business plan writer has come up with some tips and tricks for business owners and business plan writers to use when developing business plans, business plan templates, and pro forma financial projections for industry participants (1/22).
Executive Summary for a Hair Salon and Barbershop Business Plan.
The executive summary section for a hair salon and barbershop business plan should contain a summarized explanation of each segment within the business plan, such as company description, industry analysis, marketing, and financial highlights. Further, our hair salon business plan writer also strongly suggests the business owners accentuate their organization's core competencies and differentiating factors towards the beginning of the executive summary. For example, some hair salons also rent booths to aestheticians and even nail technicians. In this business model, our business plan writer would recommend discussing that hairstyling may be their core business model, but by providing complementary services, customers may enjoy a one-stop shop for all their personal care needs. This is just one example of how a business owner may introduce important competitive advantages early in the business plan writing process (5/22).
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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” of the company and their services. For example, a common problem (why) that a hair salon and barbershop solve for their customers is personal pride. Most people take pride in their appearance. 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.
In addition, where hair salon and barbershop business owners should also discuss in the company information section the location of the business and its inherent benefits. For example, if a barbershop is located in a busy strip mall with a brand-name anchor store such as a publisher Walmart, then the location may benefit from foot traffic. In contrast, some barbershops or hair salons choose to embrace a standalone location. The benefit of standalone locations may be that the owner can purchase the land and the building. In doing this, not only can business owners generate revenues from providing hair care services, but they also improve wealth through property price growth. Regardless of which strategy is embraced, make sure to document it and support it with your thoughts and ideas (10/21).
Product Description for a Hair Salon and Barbershop Business Plan.
The product description section for a hair salon or barber shop business plan should provide the reader with enough information to that the reader understands the specific services that your company will provide as well as your core competency services. When structuring this section, our barbershop and hair salon business plan writer recommends leaving off your product/service description with your main revenue generator. If your main revenue generator is providing haircuts, then lead off with this. However, in some circumstances, such as for barbers, shaves or beard trimming may be the number one revenue generator. Once the main revenue generator is stated and described, then continue your list and cover your envisioned secondary revenue generator and so on. In following the structure, readers, whether they be loan officers or investors, will be able to quickly ascertain how your business is going to make its line share of the money, and then they can easily understand you're described in the selected target market (8/22).
Competitive Advantages for a Hair Salon and Barbershop Business Plan.
Hair salon and barbershop business owners continually strive to create and sustain competitive advantages for the businesses. For example, our hair salon business plan writer recently wrote a business plan for a stylist that had decided to incorporate some Day spa activities in their hair salon business. By wrapping in day spa practices like infrared skin treatments or even teeth whitening, the aesthetician services ads to the revenue channels for the organization. Further, customers often enjoy the convenience of a one-stop shop. This is just one of many strategic moves that hair salon and barbershop business owners may include in their hair salon business plans or barbershop business plans to not only differentiate them from competitors but also show investors and loan officers a brief glimpse into their strategic action plans (12/21).
Location Description for a Hair Salon and Barbershop Business Plan
The location of 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 salons 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 salons 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 hairstylists 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 they're 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 is the hair and nail salon industry. Product and services segmentation for the hair salon and barbershop industry would include 45% of 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 have reached 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 that 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 and 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 the 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.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author