Opening a barber shop can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful barber shop.
Importantly, a critical step in starting a barber shop is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
15 Steps To Open a Barber Shop:
- Choose the Name for Your Barber Shop
- Determine the Type of Barber Shop You Will Launch
- Develop Your Barber Shop Plan
- Choose the Legal Structure for Your Barber Shop
- Secure Startup Funding for Your Barber Shop (If Needed)
- Secure a Location for Your Business
- Register Your Barber Shop with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Barber Shop
- Buy or Lease the Right Barber Shop Equipment
- Develop Your Barber Shop Marketing Materials
- Purchase and Setup the Software Needed to Run Your Barber Shop
- Open for Business
1. Choose the Name for Your Barber Shop
The first step to opening a barber shop is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your barber shop:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your barber shop.
2. Determine the Type of Barber Shop You Will Launch
The next step is to determine the type of barber shop you will launch. The three main types of barber shops are:
- Full Service Barbershop: A full service barber shop provides haircuts and shaves, as well as related services such as beard trims, mustache trims, hot towel shaves, facial treatments and scalp massages.
- Unisex Barbershop: A unisex barber shop offers services for both men and women, including haircuts, styling and color treatments.
- Mobile Barber Shop: A mobile barber shop travels to customers’ homes or workplaces to provide services in the convenience of their own space.
3. Develop Your Barber Shop Business Plan
One of the most important steps in opening a barber shop is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your barber shop business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your barber shop.
- Company Overview – this section tells the reader about the history of your barber shop and what type of barber shop you operate. For example, are you a full service barber shop or a mobile barber shop?
- Industry Analysis – here you will document key information about the barber shop industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products or services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your barber shop? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your barber shop make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
4. Choose the Legal Structure for Your Barber Shop
Next you need to choose a legal structure for your barber shop and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the barber shop and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a barber shop together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a barber shop include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a barber shop is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your barber shop, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
5. Secure Startup Funding for Your Barber Shop (If Needed)
In developing your barber shop business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a barber shop to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a barber shop that they believe has high potential for growth.
6. Secure a Location for Your Business
Having the right space can be important for your barber shop.
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
7. Register Your Barber Shop with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
8. Open a Business Bank Account
It is important to establish a bank account in your barber shop’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
9. Get a Business Credit Card
You should get a business credit card for your barber shop to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
10. Get the Required Business Licenses and Permits
In order to operate a barber shop, you will need to obtain a number of business licenses and permits.
The most common licenses and permits needed for a barber shop include:
- Barber License
- Business License
- Health Department Permit
- Tax ID (EIN)
- Sales Tax Permit
- Workers’ Compensation Insurance
Each state has different requirements for what business licenses and permits are needed.
They might also require:
- Zoning Approval: typically at the city or county level, this provides authorization for construction or use of a building or land for a particular purpose
- Fire Department Approval: a process by which the local fire department reviews and approves the installation of a fire alarm system.
Depending on the type of barber shop you launch, you will have to obtain the necessary state, county and/or city licenses.
11. Get Business Insurance for Your Barber Shop
In order to protect your business, purchase business insurance.
There are a number of different types of business insurance to consider, including:
- General Liability Insurance: This insurance protects your business from financial losses caused by third-party injuries or property damage.
- Business Owner’s Policy (BOP): This policy combines general liability and property insurance into one package.
- Workers’ Compensation Insurance: This insurance provides benefits to employees who are injured or become ill as a result of their job.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
12. Buy or Lease the Right Barber Shop Equipment
There are a variety of different barber shop equipment that you will need in order to run your business. Some of the most common pieces of equipment include:
- Barber chairs
- Shampoo stations
- Hair dryers
You can buy or lease the equipment you need from a variety of different suppliers. You should speak with other barbers to get recommendations for suppliers.
When purchasing or leasing equipment, be sure to factor in the cost of replacement parts and service. Equipment breakdowns can be costly and frustrating, so it’s important to have a supplier who can provide quick and reliable service.
Be sure to also stock up on barber shop supplies, such as shampoo, hair products, and towels. You can find these items at local beauty supply stores or online retailers.
13. Develop Your Barber Shop Marketing Materials
Marketing materials will be required to attract and retain customers to your barber shop.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your barber shop. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional barber shop website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your barber shop.
14. Purchase and Setup the Software Needed to Run Your Barber Shop
You will need software to run your business, including:
- A point of sale system to manage appointments and transactions
- A customer management system to store contact and appointment information
- A marketing automation system to send automated marketing emails and track their performance
While there are many different software options available, some of the most popular programs for accounting include QuickBooks and Xero. Some of the most popular CRM programs include Salesforce, and Zoho.
Research the software that best suits your needs, purchase it, and set it up.
15. Open for Business
You are now ready to open your barber shop. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Open a Barber Shop FAQs
Is it hard to open a barber shop?
There is no one-size-fits-all answer to this question, as the ease or difficulty of opening a barber shop will vary depending on your skills, experience, and resources.
However, if you follow the steps above, you should be able to open your barber shop without too much difficulty.
How can I open a barber shop with no experience?
If you're interested in opening a barber shop but don't have any experience, there are a few things you can do to get started.
- Research the Industry
- Get Training
- Start Small
- Network with Other Barbers
What type of barber shop is most profitable?
The profitability of a barber shop will vary depending on a number of factors, including location, competition, and services offered.
However, in general, barber shops that offer a wide range of services, such as hair cutting, styling, and coloring, are more likely to be profitable than those that specialize in one or two services. Additionally, barber shops that are located in high-traffic areas tend to be more profitable than those that are located in less populated areas.
How much does it cost to open a barber shop?
The cost of opening a barber shop will vary depending on a number of factors, including the location of your business, the type of barber shop you want to open, and the amount of start-up capital you have. The average startup costs range between $30,000 and $50,000.
Startup costs may include securing a building or leasing space in an existing building, purchasing equipment, hiring employees or independent contractors, obtaining licenses and permits, advertising expenses, and more. It is important to thoroughly research the startup costs before taking the plunge and opening a barber shop.
What are the ongoing expenses for a barber shop?
The ongoing expenses for a barber shop range between $2,000 and $4,000 per month. Common expenses include rent or mortgage payments, utilities, employee wages, insurance costs, advertising fees, and more. It's important to factor in ongoing expenses when planning how much money you'll need for startup costs and how profitable your barber shop can be.
How does a barber shop make money?
A barber shop can make money by offering a variety of services, such as hair cutting, styling, and coloring. Additionally, barber shops that are located in high-traffic areas tend to be more profitable than those that are located in less populated areas. Another way to make money is to sell products such as hair care products, razors, and scissors. Finally, barber shops can also generate income by providing services to businesses or institutions.
Is owning a barber shop profitable?
Yes, owning a barber shop can be very profitable.
In fact, the barber industry is growing at a rate of 2.5% per year, which is faster than the average for all occupations. The most profitable type of barber shops are those that offer a variety of services, such as hair cutting, styling, and coloring. Additionally, barber shops that are located in high-traffic areas tend to be more profitable than those that are located in less populated areas.
Some of the key things you can do to make your barber shop more profitable include:
- Offering a variety of services, such as hair cutting, styling, and coloring
- Locating your barber shop in a high-traffic area
- Selling products such as hair care products, razors, and scissors
- Providing services to businesses or institutions
- Offering add-on services that complement your main offering.
- Optimizing your website for SEO to increase online visibility.
- Creating a unique selling proposition.
- Providing outstanding client service
Why do barber shops fail?
There are a few reasons why barber shops might fail. One reason could be that the shop is not located in a high-traffic area, which can limit its exposure and hinder its ability to attract new customers. Additionally, barber shops may fail if they do not offer a variety of services that appeal to their target market, or if they do not provide good customer service.
One of the main reasons that barber shops fail is a lack of planning. This can include not having a detailed business plan, not doing research on the industry, and not targeting the right customers.
Another reason is a lack of marketing and sales skills. This can include not creating a sales process and not have a clear and strong value proposition.
The last main reason is a lack of financial management skills. This can include not having a realistic budget, not tracking expenses, and not investing in the business.
Who are key players in the barber shop market?
The barber shop market is made up of a variety of different players, including small businesses, large enterprises, and even individuals.
Some of the key players in the market include:
- Tailored Hair
- Bespoke Barbers
- The Pomp Room
- The Hair Lounge
- Chop Shop Barbershop
However, there are many other players in your specific target market, and it is important to research the market to identify the key players that may have the most direct influence on the success of your business.
How much should I charge for my barber shop services?
Barber shop fees can vary depending on the type of barber shop services being offered, as well as the size and scope of the project.
However, some common barber shop fees include:
- Haircut - $20 to $50
- Beard Trim – $15 to $25
- Hot Towel Shave – $30 to $45
- Shampoo & Style – $15 to $25
The best way to determine the right fee for your barber shop services is to research the rates of similar businesses in your industry, and to also consider the value that you will be providing to the client.