Guide to creating a hair salon business plan

If you've got a passion for hairstyling and the dream of running your own salon, you're in for an exciting journey. Starting a hair salon is all about bringing your creative flair and business head together. But before you dive in, you need a plan. 

We've got your back with this no-nonsense guide on creating a hair salon business plan that'll help you turn your dream into reality. From defining your salon's unique vibe to crunching the numbers and figuring out how to attract clients, we'll walk you through how to get your ideas onto paper then into reality.

 

What is a business plan (and why does your salon need one)?

A business plan is a comprehensive written document that outlines a company's goals, strategies, financial projections, and operational details. It serves as a roadmap for the business, providing a clear and organised outline of how the company intends to operate, grow and achieve its objectives. 

 

Why does your salon need a business plan?

Business plans are typically used by salon and brand owners to guide decision-making, secure financing and communicate their vision. They help to:

• provide a clear and organised strategy for the business
• secure financing and investment from banks, investors or lenders
• guide daily operations and decision-making
• monitor and measure progress toward goals
• communicate the business's vision and goals to stakeholders and team members

Having a business plan for your salon is crucial for a variety of reasons, as it provides a structured and strategic roadmap for your salon's success. 

A business plan helps you articulate your salon's mission, goals and long-term vision. It ensures that you have a clear and defined direction for your business, helping you stay focused on your objectives. It also supports your financial planning, marketing and understanding of your business.

A good business plan can help you spot opportunities, give you a competitive advantage and operate more effectively as a business.

It also helps you to work out risks, set goals and communicate the goals of your business effectively. This can help with guidance for decision making and for long term planning for your business.

 

What should you include in your hair salon business plan?

Creating a salon business plan is a critical step in launching or managing your salon successfully. A well-structured business plan provides a clear roadmap for your salon's growth and sustainability.

Here's a step-by-step guide to help you create a comprehensive salon business plan and what to include:

1. Executive summary

The executive summary is a concise overview of your salon business plan. It should capture the reader's attention and provide a snapshot of what your salon is all about. Include things like:

• salon name, location, and contact information
• a brief description of your salon's mission, vision, and values
• a summary of your business's key highlights and objectives
• a mention of your funding needs (if any) and how you plan to use the funds

2. Business description

In this section, provide detailed information about your salon business to add some context to the rest of your business plan. Include information like:

• the type of salon (e.g., hair, nail, spa) and the services you will offer
• your target market, including demographics and preferences
• the specific problems or needs your salon addresses
• any unique selling points (USPs) that set your salon apart

3. Market analysis

Conduct thorough market research to understand your target market and industry. This means looking at your potential customers, competitors and what’s going on in the local area. Include research around things like:

• market size, growth trends and forecasts
• competitor analysis, identifying key competitors, their strengths and weaknesses
• customer analysis, including demographics, behaviours and preferences
• how your salon meets the demands of the market

4. Competitive analysis

Take a look at your competitors in more detail, rather than just in the context of the market. Describe your competitors and how you plan to have the competitive edge. This might be the services you offer, the atmosphere of your salon, your customer service or the products you use. It’ll be individual to your offering. Here’s the type of thing you might want to look at:

• key competitors in your area and their market presence
• your salon's strengths and weaknesses compared to competitors
• strategies for differentiating your salon and attracting customers

5. Marketing and sales strategy

Marketing’s a big deal in every industry, but even more so in a competitive industry like hair and beauty. Outline your plans for attracting and retaining customers— getting this right is absolutely key for success. Include information about:

• marketing tactics such as advertising, social media and promotions
• pricing strategies and how your salon sets prices
• sales channels and distribution methods

6. Management and organisation

Provide details about the structure of your salon, how it’s going to be set up and how the business will actually be run day to day.  Discuss:

• how your salon’s going to be set up (e.g. as a limited company, sole trader etc)
• the management team, their roles and qualifications
• staffing needs and any recruitment plans
• plans for financial management
• details of essentials for management, such as specialist hair salon insurance
• details of the services your salon offers, and why

7. Financial projections

Create financial statements and forecasts to demonstrate your salon's profitability and financial health.

If you’re seeking external financing then you should also provide details on the amount of funding needed and how you will use the funds, whether you're seeking a loan, investment or other funding sources and the terms of repayment or equity offered to investors, as well as:

• income statements (profit and loss), balance sheets and cash flow statements
• revenue forecasts for the first few years, including sales, expenses, and profitability
• a break-even analysis that shows when your salon is expected to become profitable

You might also want to include key information as appendices. It’s also important to review, revise, update and implement these plans too. Use your business plan as a dynamic tool to guide your salon's operations and decision-making. Regularly revisit the plan to measure your progress, make adjustments, and adapt to changing market conditions.

 

How to track the progress of your business plan

To make sure that your business plan doesn't gather dust on a shelf, it's essential to track its progress. This process goes beyond mere monitoring and requires active management of your goals, strategies and key performance indicators. There’s no point in having a business plan if you don’t actually use it in your business. 

Your business plan should include specific, measurable and time-bound goals. Use these goals to create milestones that you can track. Identify key performance indicators (also known as KPIs) that are relevant to your salon business. These may include metrics like revenue, customer retention rates, appointment bookings and online reviews.

Compare your actual financial performance (income statements, balance sheets, and cash flow statements) with the projections in your business plan. This helps you identify any discrepancies and make financial adjustments if necessary.

Regularly gather and analyse customer feedback and satisfaction data. This can provide insights into the customer experience and help you make improvements. The same goes for employee performance too. 

You need to also keep an eye on marketing and sales data, market trends and competition, how you get customers and how efficiently the business operates. Schedule periodic reviews of your business plan. This can be quarterly, semi-annually, or annually, depending on your preferences and the pace of change in your industry.

 

When to track business plan progress

Some key performance indicators, such as revenue and customer satisfaction, should be monitored on a regular basis, such as monthly or quarterly. Conduct a comprehensive review of your business plan at least once a year. This annual assessment allows you to set new goals and strategies for the upcoming year.

You should also review your business plan when you reach major milestones, such as a significant increase in revenue, the addition of new services, or expansion to a new location. Whenever significant changes occur in your business or industry (e.g., a recession, a major competitor entering the market or a shift in consumer preferences), reevaluate your business plan to ensure it remains relevant and effective.

If you plan to secure financing or investment, ensure that your business plan aligns with your current performance and future goals. Potential lenders or investors will expect to see an up-to-date plan.

Regular tracking of your business plan's progress allows you to stay proactive in managing your salon. It ensures that you're aware of any challenges or opportunities and can make adjustments to optimise performance and achieve your goals.

 

Common mistakes when writing a salon business plan

Writing a business plan for a hair salon is an essential step toward launching a salon, but it's not without its challenges. Let's take a look at some common mistakes that aspiring salon owners might make in the process.

One of the most prevalent mistakes is underestimating the financial parts of the business plan. Many salon owners tend to overlook or miscalculate expenses, from rent and utilities to supplies and employee salaries. You need to plan properly, and realistically—while creating a contingency plan for unexpected expenses. 

A business plan isn't just about operations—it should also outline how you'll attract and retain clients.

Neglecting to include a comprehensive marketing strategy is a common error. Effective marketing is essential to build a client base, and in the competitive world of hair salons, this is crucial.

Your business plan should detail your target audience, online and offline marketing strategies and how you'll be different from the competition. Don't forget to allocate a budget for marketing initiatives, and remember that consistent, engaging promotion is key to building a strong clientele.

Another common mistake is failing to address the legal and regulatory aspects of opening a salon. This can involve licensing requirements, permits, insurance and compliance with health and safety regulations. Ignoring these factors can lead to delays or even legal issues that could hinder your salon's opening.

To avoid this, thoroughly research the legal and regulatory requirements specific to your location and include a detailed plan for meeting and maintaining compliance in your business plan.

 

Should you create a business plan for your salon?

Creating a hair salon business plan is the first step on your exciting journey to salon ownership and hairstyling success. Your plan isn’t just a document; it's a roadmap, a vision board and a foundation for your dreams. Remember that your business plan will evolve, adapt and grow with you. 

It's a living document that reflects your determination, creativity, and commitment to offering fantastic hair services. So, get out there, bring your vision to life, and create a salon that makes people look and feel good.

 

Specialist hair salon insurance through Ripe

As part of your hair salon business plan, you may want to consider insurance. Having specialist hair salon insurance can give you peace of mind if the worst were to happen.

Specialist hair salon insurance through Ripe includes up to £10m public and products liability cover as standard, as well as treatment risk cover to protect you against third-party claims for injury or property damage following hair and beauty treatments up to the value of £5m.

You can learn more about hair salon insurance through Ripe here or click to get a quick online quote today.