July 6, 2023
Adam Hoeksema
When it comes to starting a salon, you may be eager to dive into the world of beauty and make your clients look and feel their best. However, it's important to recognize that writing a business plan is a crucial step, especially when seeking support from potential lenders and investors.
While it may not be the most exciting task, a well-prepared business plan demonstrates your commitment and professionalism, making it an essential tool to secure the necessary funding and outline your salon's path to success. It's also important to make sure your business plan and financial projections are realistic and inline with some industry averages for salons.
This guide is going to help you walk through the following:
With that in mind as the path forward, let’s dive in.
What Should be Included in a Salon Business Plan?
A salon business plan must convincingly show to prospective financiers and loan providers why clients would opt for your salon, why you or your crew are best suited to oversee the salon operations, and how the financial projection to ensure a favorable financial return on their investment. Here is a thorough breakdown of our complimentary salon business plan template.
Salon Business Plan Outline
I Executive Summary
II Market Analysis
III Business Description
IV Marketing and Sales Strategies
V Menu of Services and Pricing
VI Operational Plan
VII Financial Plan
- Startup Costs
- Projected Financial Summary
- Annual Sales, Gross Profit and Net Profit
- Key Financial Ratios
- Watch how to create financial projections for your very own salon
- Income Statement
- Balance Sheet
- Cash Flow Statement
VIII Conclusion
How to Conduct Market Research for a Salon Business Plan
At the core of any salon business plan is market research. It's necessary to understand your position within the market and establish that there is a substantial demand for your unique salon concept, location, and pricing tiers. You can delve more into our salon market research approach here, but essentially, you're seeking to understand your competitors, obtain insights on potential customer traffic, select an ideal location, and foresee any seasonal trends that may affect your business. Below are some tools and tactics for executing market research for your planned salon.
What Will be the Cost to Advertise my Salon?
We suggest using Google Keyword Planner to help you identify which keywords to promote to attract customers to your salon's website. The tool also offers an estimate of the cost per click for advertising using various keywords, as demonstrated below:
What Keywords are Customers Searching for?
We use both Google Keyword Planner and Ahrefs to identify which keywords are driving traffic to your competitors' websites. For example, you can run a report on a competitor's site to identify the keywords they rank for and the amount of organic traffic each keyword garners. This data can guide your SEO initiatives.
How Seasonal are Salons?
We like to utilize Google Trends to determine how seasonal your salon concept might be. For instance, you can observe below that the search volume for “salons near me” in the United States is somewhat seasonal in nature. June is consistently the peak, with the late fall tending to be the low point of the season
How Many Customers Visit my Competitors Each Month?
Finally, we recommend pulling foot traffic reports on your competitors to understand the average number of customers they typically serve in their salons. You can see an example below showing the number of visits per month for a specific location:
Ultimately, your potential customer base's size for your salon will be a crucial assumption underpinning your financial projections. Thus, grasping how many customers frequent your competitors can help you predict potential traffic to your salon.
How to Create Financial Projections for a Restaurant Business Plan
With comprehensive market research completed, it's time to develop financial projections for your salon. Our salon financial projection templates rely on various factors, such as client traffic and service capacity, to form the basis of your revenue projections. While some salons may have limitations on the number of available appointments, others may be constrained by the time it takes to deliver services effectively. Creating accurate financial projections is crucial to showcase your salon's potential to repay loans and provide a return on investment to potential stakeholders. To achieve this, consider the following steps:
- Estimate startup costs for your salon
- Forecast revenue (employee based, booth rent, salon suite, hybrid)
- Project supplies and labor cost
- Estimate your operating expenses like rent and utilities
- Calculate how much investor or loan capital you will need to open
Our salon projection template will guide you through this process and help format your projections in a standard format that meets the requirements of potential investors or lenders. Typically, startup salon projections should include an integrated income statement, balance sheet, and cash flow forecast.
By following these steps and utilizing our salon projection templates, you'll have a solid foundation for presenting your salon's financial outlook and demonstrating its potential profitability.
Example Salon Business Plan
Below you will find the text of our salon business plan. You can also access a downloadable Google Doc version of this salon business plan template here, enabling you to make personalized edits. Additionally, we have created a helpful video walkthrough that guides you through the process of tailoring the business plan to suit your salon concept.
Table of Contents
I Executive Summary
II Market Analysis
III Business Description
IV Marketing and Sales Strategies
V Menu of Services and Pricing
VI Operational Plan
VII Financial Plan
- Startup Costs
- Projected Financial Summary
- Annual Sales, Gross Profit and Net Profit
- Key Financial Ratios
- Watch how to create financial projections for your very own salon
- Income Statement
- Balance Sheet
- Cash Flow Statement
VIII Conclusion
Executive Summary
Our salon, called "Lux Beauty Spa," is a full-service beauty and wellness center that aims to provide a luxurious and rejuvenating experience for all of our clients. Our mission is to enhance the beauty and well-being of each individual that walks through our doors, through personalized and expert services.
We will offer a wide range of services including hair styling, nail care, skin treatments, massage therapy, and more.
Our target market is women and men of all ages who are looking for a high-quality beauty and wellness experience. We will be located in a high-end shopping center in downtown to attract our affluent target market. Our projected start-up costs are $200,000, and we anticipate reaching profitability within two years.
Market Analysis
The beauty and wellness industry is growing, with a projected global market size of $716.3 billion by 2027. In our target market, there is a growing demand for high-end beauty and wellness experiences, and a trend towards holistic and natural approaches to self-care.
Our main competitors include established high-end salons and spa centers in the area, but we differentiate ourselves through our focus on personalization and luxury. We will also offer services and products not commonly found in traditional salons, such as custom skincare treatments and exclusive hair care lines.
Business Description
Lux Beauty Spa will be a limited liability company (LLC), owned and operated by two experienced beauty professionals. We will be fully licensed and insured, and comply with all state and local regulations.
Services Offered:
Lux Beauty Spa will offer a comprehensive range of beauty and wellness services, including:
- Hair styling: We will have a team of skilled hair stylists offering cuts, coloring, and styling services for all hair types. We will use high-quality hair care products and tools, including well-known and exclusive brands.
- Nail care: Our nail technicians will offer a variety of nail services including manicures, pedicures, and gel polishes.
- Skin treatments: Our licensed estheticians will offer custom skincare treatments, including facials, peels, and microdermabrasion. We will use only the finest and natural skincare products.
- Massage therapy: Our licensed massage therapists will offer a range of massage services, including Swedish, deep tissue, and hot stone.
Marketing and Sales Strategies
To attract and retain clients, we will employ several marketing and sales strategies, including:
- Online advertising: We will create a professional and attractive website, and use targeted online advertising to reach our target market.
- Promotions and discounts: We will offer promotions and discounts to new clients and for special occasions, such as birthdays and holidays.
- Loyalty program: We will reward our regular clients with exclusive discounts and special offers.
- Referral program: We will incentivize our clients to refer their friends and family to Lux Beauty Spa with discounts and bonuses.
Menu of Services and Pricing
Our menu of services and pricing will be competitive with other high-end salons in the area. We will offer packages and memberships for regular clients, as well as a la carte services for those who prefer one-time treatments. Our prices will reflect the luxury and quality of our services and products.
Operational Plan
Lux Beauty Spa will operate 7 days a week, from 9 AM to 9 PM. Our staffing will include a manager, hair stylists, nail technicians, estheticians, massage therapists, and a receptionist. We will use scheduling software to manage appointments and ensure efficient use of our resources. Our inventory management will include regular monitoring of product levels and restocking as needed. We will also keep detailed financial records and regularly review our performance to make necessary adjustments to our operations.
Financial Plan
Our projected start-up costs are $200,000, which will cover rent, equipment and supplies, marketing, and salaries. Our operating expenses will include rent, utilities, supplies, salaries, and marketing. Our sales revenue will come from services and product sales, and we anticipate a steady growth in revenue over the next two years.
Our financial projections show we’ll break even in year 3 and grow profit considerably after that.
All of the unique financial projections you see below were generated using ProjectionHub’s Salon financial projection templates. Use PH20BP to enjoy a 20% discount on the template.
Startup Costs:
Projected Financial Summary:
Annual Sales, Gross Profit and Net Profit:
Key Financial Ratios:
Watch how to create financial projections for your very own salon:
Income Statement:
Balance Sheet:
Cash Flow Statement:
Conclusion
Lux Beauty Spa is poised to become a leading luxury beauty and wellness center, offering personalized and expert services to our affluent target market. With a strong focus on quality and luxury, we are confident in our ability to achieve profitability and success in the beauty and wellness industry.
Salon Business Plan FAQs
What should I include in a salon business plan?
A salon business plan should include sections on executive summary, company description, market analysis, target market and services, pricing and packages, marketing and promotion strategies, location and facilities, staffing and management, and financial projections.
How can I determine the ideal location for my salon?
When selecting a location for your salon, consider factors such as foot traffic, visibility, accessibility, competition in the area, parking availability, and proximity to your target market. A location near residential areas or commercial districts with a high demand for salon services can be ideal.
How can I estimate financial projections for my salon?
Financial projections for a salon should include estimates for start-up costs, monthly expenses (such as rent, utilities, products, and employee salaries), projected revenue based on service pricing and expected clientele, and a break-even analysis to determine when your salon will become profitable.
