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Hair Salon Business Plan Tips

Getting the numbers right for your hair salon business plan tips is the key to creating a compelling and valuable plan and, therefore, to the successful launch of your salon. The "right" type of numbers depends on who you are targeting the plan at. Consider the different needs of investors and lenders and what they want out of the financial section of your business plan.

Right for Investors

The numbers that investors want to see are realistic, but conservative, projections that still show a return that they feel is required by the level of risk they will take on by investing and by the opportunities to use their money elsewhere that they will give up (their opportunity risk). You lower the risk that investors feel they are taking on by showing proof of the management team's experience, well-thought out marketing and operations plans, a quantifiable customer target market with demonstrated needs that the services of your salon will fulfill, and a competitive landscape which presents an opportunity for your business to steal some market share from the current players. Within the financial section, you support this lower risk by explaining your revenue assumptions in a way that shows a gradual build up to profitability and a rationale for how the number of customers you expect is reasonable.

For some businesses, the return required by investors is only fully realized in the event of the sale of the business. However, an investor in a salon with modest dreams of being a local leader and an ongoing concern may show significant investor return through dividends paid out as the cash becomes available. For most investors, the return must be significantly greater than that of a safe investment like certificates of deposit or treasury bonds or mutual funds. Investors personally interested in your success (like family or friends) may not require as high of a annual return, while professional investors will be serious about a high return.

Right for Lenders

Lenders are most interested in the safe return of their principal with interest over time, and will not care so much about the absolute value of the company, beyond the value of its assets which can be seized and liquidated in the case of a loan default. To show lenders the numbers they want to see, the financial plan shows the business becoming cash flow positive relatively quickly to allow for these payments to begin, and for this situation to continue throughout the years after that point. Lenders will be interested in the value of assets that are being purchased (such as equipment, inventory, and real estate) and cautious lenders will want these assets to act as collateral and to limit their loan to this amount, unless personal assets are also offered as collateral. Lenders will share many of the same concerns as investors - that the rest of the plan is well-thought out, that financial assumptions are reasonable and conservative, and that the management team has the experience to lead.

Want more tips? Here's a related article: How to Start a Hair Salon.

Finish Your Plan Today With Our Quick & Easy Template!

If you want to create your own business plan quickly and easily, we now offer a business plan template that allows you to develop a professional business plan in hours or days, not weeks or months.

Visit this link to learn more: http://www.growthink.com/products/business-plan-template

OR, We Can Develop Your Plan For You


Our professional business plan writers can create your entire business plan for you. We will make sure your business plan is sound and ready for investors so you can continue to focus on running your business. Over the past decade, we have created business plans for hundreds of hair salon businesses.

To speak with a Growthink business plan consultant, call 800-506-5728 or complete the form below.

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