Salon Business Plan Template & Guide

Salon Business Plan?

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their salons. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a salon business plan template step-by-step so you can create your plan today.

Our salon business plan template works for all types of salons, including:

1. Hair or Beauty Salons: which most commonly include hair-cutting, coloring and styling hair and other beauty services
2. Nail Salons: which typically include nail treatments, manicures and pedicures
3. Hair Removal Salons: commonly include waxing and other forms of hair removal
4. Skin Care Salons: commonly include facials and other skin care services
5. Tanning Salons: include tanning services
6. Day Spa Salons: often include massages, aromatherapy and other services
7. Combination Salons: include services from more than one of the above salon types

This being said, we also do have specific pages for information on our hair salon business plan, nail salon business plan, and beauty salon business plan.

Download our Ultimate Salon Business Plan Template here >

What is a Salon Business Plan?

A business plan provides a snapshot of your salon as it stands today, and lays out your growth plan for the next five years. It explains your business’ goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Salon

If you’re looking to start a salon or grow your existing salon you need a business plan. A salon business plan will help you raise funding, if needed, and plan out the growth of your salon in order to improve your chances of achieving success. Your salon business plan is a living document that should be updated annually as your company grows and changes.

Source of Funding for Salons

With regards to funding, the main sources of funding for a salon are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a salon business.

The second most common form of funding for a salon is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a salon. They might consider funding a chain of salons, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Salon Business Plan Template and complete your plan and financial model in hours.

Salon Business Plan Template

Your salon business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of salon you are operating and the status; for example, are you a startup, do you have a beauty salon with existing customers and revenues  that you would like to grow, or are you operating a chain of salons.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the salon industry. Discuss the type of salon you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your salon’s marketing plan. Identify your management team. And offer an overview of your financial plan.

 

Company Analysis

In your company analysis, you will detail the type of salon you are operating.

For example, you might operate one of the following types:

1. Hair Salon
2. Beauty Salon
3. Nail Salon
4. Hair Removal Salon
5. Skin Care Salon
6. Tanning Salon
7. Day Spa
8. Combination of the above types

In addition to explaining the type of salon you operate, the Company Analysis section of your salon business plan needs to provide background on your business.

Include answers to question such as:

• • When and why did you start your salon business?

• • What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.

• • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the salon business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the salon industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards new hair services, nail services, spa services or beauty services, it would be helpful to ensure your plan included offering such services.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the salon industry research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your salon business plan:

• • How big is the beauty salon market and/or hair salon industry (in dollars)?

• • Is the market declining or increasing?

• • Who are the key competitors in the market?

• • Who are the key suppliers in the market?

• • What trends are affecting the industry?

• • What is the industry’s growth forecast over the next 5 – 10 years?

• • What is the relevant market size? That is, how big is the potential market for your salon. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.

 

Customer Analysis

The customer analysis section of your salon plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of salon you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing promotions than teens.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most salons primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Competitive Analysis

Your competitive analysis should identify your indirect and direct competitors and then focus on the latter.

Direct competitors are other salons.

Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes products they can purchase from supermarkets and other retailers both offline and online. You need to mention such competition to show you understand that not everyone in your target market frequents a salon on a regular basis or at all.

With regards to direct competition, you want to detail the other salons with which you compete. Most likely, your direct competitors will be salons located close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• • What types of customers do they serve?

• • What services do they offer?

• • What products do they offer?

• • What is their pricing (premium, low, etc.)?

• • What are they good at?

• • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to stand outside your competitors’ locations and ask customers as they leave what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• • Will you provide superior salon services?

• • Will you provide superior salon products?

• • Will you provide salon services that your competitors don’t offer?

• • Will you make it easier or faster for customers to acquire your products?

• • Will you provide better customer service?

• • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

 

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a salon business plan, your marketing plan should include the following:

Product: in the product section you should reiterate the type of salon that you documented in your Company Analysis. Then, detail the specific services you will be offering.

Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.

Place: Place refers to the location of your salon. Document your location and mention how the location will impact whether you achieve success. For example, is your beauty salon located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers.

Choosing a location for your salon is an extremely important decision. With the right location, the salon will at least launch on the right foot. With the wrong location, customers may never arrive in the first place. Consider the following two factors with regards to your location:

1. Proximity to Customer Base

To decide on a good location from a customer perspective, you must first know who your target customers are (stay-at-home moms, working women, teens, families) as discussed above. Once you’re clear on this, you can begin scouting locations. Being close to your customer base could mean being close to their homes, but could also mean being near their workplaces or en route between the two. Being close in distance is important, but being accessible (e.g., adequate parking) is even more important.

2. Landlord

Hopefully you’ll be in your location for many years. That means that you will be forming a long-term relationship, even a partnership, with your landlord. The landlord should be invested in the success of your business and understand that what is good for your salon is also good for them. During initial discussions with landlords, look out if you sense that they are focused solely on rules, restrictions and regulations, rather on what you want to do. If the landlord seems intent on starting an antagonistic relationship, think twice before signing the lease. When you choose your location, you are choosing a landlord so make sure you’ll be able to get along with them and have the leeway you need to run a successful salon.

Promotions: the final part of your salon marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• • Making your salon’s front store extra appealing to attract passing customers

• • Developing and marketing your website

• • Social media marketing (advertising and organic posts)

• • Advertising in local papers and magazines

• • Reaching out to local bloggers and websites

• • Flyers

• • Partnerships with local organizations

• • Local radio advertising

• • Develop marketing materials

Also think about your salon’s Unique Selling Proposition (USP), which should answer why customers should choose you over other salons. Make sure your USP is reflected in your marketing.

Here are some additional marketing tips if you are launching a new salon:

Promote the Opening of Your Salon

To be sure of a well-attended launch event, start promoting early, with attractive signage outside your salon. This should be geared towards your target demographic – women for most salons. Setting up an employee on the street outside or nearby to hand out flyers in the days leading up to and during the opening event can increase visibility, especially if this is an uncommon occurrence in your neighborhood. The point is to stand out and to reach a large portion of your intended customer market with the message that your opening event will be something they don’t want to miss.

Plan a Great Spa or Salon Deal to Increase Profits

When opening, develop a clear deal or incentive for customers to attend and to try your services during the opening day, week, or month. Rather than offering discounts on different products, freebies, two-for-ones and other offers, try to find one nice offer and promote it heavily so that it is memorable both to those who hear about it beforehand and to those who take advantage of it. For example, a free pedicure with purchase of a manicure if you are a nail salon. The offer does not have to break the bank – it could be a small free gift with any service of $50 or more.

Plan for Smooth Salon Operations

To show off your salon at its best, having a pristine and spotless store is a minimal requirement. The operations have to be smooth as clockwork on opening day, especially if appointments and walk-ins make it a very busy first day or week. Customers who use your services during this time can become ambassadors to your customer target group for you, speaking of how wonderful the experience was, or they can spread the word about how they waited forever without hearing what was happening, how salon staff were sloppy or rude, and how they would never return. You need the early adopters on your side, so make sure the human, computer, and mechanical systems are all ready to work perfectly from day one and that you have contingency plans for unforeseen problems.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Salon Business Plan Template and complete your plan and financial model in hours.

Operations Plan

While the earlier sections of your salon business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your salon such as serving customers, procuring supplies, salon equipment, keeping the salon clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.

 

Management Team

To demonstrate your salon’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the salon business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in salons and/or successfully running retail and small businesses.

 

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements. This section of plan should also include startup costs and whether or not you are seeking funding.

Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 20 customers per day or 50? Will your average price point be $50 or $100? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your salon, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 salon contract to provide salon services to their employees. Let’s assume the contract would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for supplies, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a salon:

• • Location build-out including design fees, construction, etc.

• • Cost of equipment like chairs, washing equipment, etc.

• • Payroll or salaries paid to staff

• • Business insurance

• • Licenses and permits

• • Legal expenses

 

Appendix

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your salon’s design blueprint or location lease.

 

Summary & Keys to Salon Success

Putting together a business plan for your salon is a worthwhile endeavor. If you follow the salon business plan template above, by the time you are done, you will truly be an expert. You will really understand the salon business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful beauty salon or hair salon.

Finally, in addition to completing your salon business plan template, be sure to pay special attention to the following factors that often define success for salon businesses:

1. Make sure all of your clients are thrilled with your services
2. Keep your salon clean at all times
3. Provide excellent communications with current and prospective clients
4. Embrace new technology, particularly social media to engage your clients and get them to return to your salon
5. Focus on growing revenues, but also on profits, by keeping a close eye on costs
6. Hire the right team, train them well and treat them well so their performance is strong and they are loyal to your business

 

Download Our Salon Business Plan PDF

You can download our salon business plan PDF here. This is a business plan template you can use in PDF format.

 

Salon Business Plan FAQs

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