So, you’re thinking of going out on your own to start a salon?
First, congratulations are in order! But before the celebrations officially begin, you’ll need some expert advice on getting started.
There’s a lot to know.
To help you get started, we’ve compiled the top six things you should know before opening your own salon business.
1. Know Your Odds
According to the Bureau of Labor Statistics, 20% of businesses fail within the first year. That number jumps to 50% by the fifth year. That’s right; half of all businesses will be closed by their fifth year. That’s why it’s important to be as prepared as possible before starting out on your own.
Of course, we could look at these statistics from the positive. Eighty percent of businesses survive their first year. Chances are, you will too. And, half of all businesses will still be in operation by their fifth year.
The Bureau of Labor Statistics has some other good news for the aspiring salon owner. The need for barbers, hair stylists, and cosmetologists will grow by 8% between 2018 and 2028. This growth will be driven by population growth.
Now that you know your odds, you’re probably wondering how to improve your chances of survival?
Explore the various tools and features Insight offers to busy salon and spa owners. Schedule a quick demo of Insight salon and spa management software and find out how it can decrease your workload today.
2. Know What You’ll Need
Of those businesses that don’t survive the first five years, the number one reason was lack of cash flow.
Starting a business is expensive and the money won’t start rolling in immediately. In fact, that first year of survival may be just that, survival. It won’t be glamorous or particularly easy. Having enough cash to keep yourself afloat for at least six months will be important.
It’s safe to assume you may not turn a profit in those first few months. Before you sign your name on the dotted line of a lease or any other large financial commitment, talk to a small business lender. While optimism will be the attitude that will get you through the first year, don’t be too optimistic when it comes to money. Ask for enough money to give yourself enough time to build a client base and, yes, enough time to recover from the mistakes you’ll inevitably make in the early days.
3. Know the Rules
This can’t be overstated enough. It won’t matter how much cash you have in the bank or how many people are lined up at your door waiting for your amazing services if you don’t know and follow the local and state laws for business registration and licensure.
Remember, there are specific licenses you’ll need to operate a salon, and there are other licenses required to operate any sort of business. Take a visit to your local city hall. There should be someone available on site to help you navigate the start-up process. They may even be able to help you understand your state’s laws.
Registering with the Secretary of State’s office in your state will be an important step you won’t want to overlook. Here’s a handy list of all the U.S. Secretary of State offices listed by state.
4. Know Your Market
Now we’re getting to the part that’s a little more challenging. How well do you know the market in your area? Is there a need for another salon?
If you live in a small town, this might be an easy question to answer on your own. You may even be able to answer what unique niche you’ll be able to fill within the existing market.
However, if your community is large and diverse, you may need some professional help to understand the local market’s landscape. Joining and relying on your local chamber of commerce is a great idea. Not only will this organization be invested in your success, they’ll be able to offer you a broader perspective on the population base and consumer habits.
For example, if you live in a university town, it will be important to know that the population drops by 50% in the summer months and during semester breaks. If you plan on catering your salon to a specific population, like college students, do you have a plan for staying afloat when your target market leaves for a large gap of time?
5. Know Your Competition
This, of course, is directly related to our previous point about knowing your market. As important as it is to know who your potential customers are, it’s more important to know who your competitors are. Competition shouldn’t scare you away from pursuing your dream of owning a salon but being aware of who you’re up against is necessary.
Just because another salon may be your competition doesn’t mean you have to be out for blood. It also doesn’t mean they need to be your direct competition. You should be unique and different. You should offer services not available at the salon across town.
Differentiation may be the secret to your success.
Further, being a friendly competitor will win you more business. Why not schedule a time to talk to other salon owners in the area? Let them know you’re starting a new business and be up front about the ways you’d like to differentiate yourself.
You’re not trying to steal their business; you’re trying to meet the market needs they aren’t meeting. By maintaining a warm, symbiotic relationship with the other businesses in the area, they’ll be more likely to refer clients looking for your unique services. Be ready to return the favor with good referrals, too.
Having the right tools at your fingertips is the most important step in sticking to a marketing plan that will deliver results. Learn how Insight Salon & Spa software can save you time and streamline your marketing.
6. Know Your Worth
Pricing is a tricky subject. Many start-ups are afraid to price their services at an appropriate level while they’re trying to build a client base. Without putting very clear parameters around an introductory price offer, or without being careful about the wording, you could find yourself stuck in a pricing model that isn’t sustainable. It’s very difficult to have the “we increased our price” conversation with an aggressive client. Save yourself from that awkward moment by starting out where you need to be. You can always offer one free service or a special discount that allows you to maintain the integrity of your pricing.
In short, establishing fair prices is essential to keeping the doors open beyond that first year. Make sure your established price is advertised and your customers get comfortable knowing your standard prices. This will make it easier to offer an introductory discount with a firm deadline that won’t keep you stuck in low-ball land indefinitely. And, yes, that squirmy, uncomfortable feeling you have in the beginning when someone asks you about your prices will go away with time, especially when clients start telling their friends how amazing you are.
We hope this expert advice will give you the nudge you needed to get the ball rolling on your new salon venture.
Now, go out there and create something awesome!