Salon business plan for starting your own beauty salon service

People like feeling good about themselves, and a salon business can help them to achieve that. The Professional Beauty Association estimates the salon and spa industry contributes approximately $40 billion annually to the U.S. economy
Approximately half the industry is classified as beauty salons offering mostly hair care services. However, entrepreneurs interested in making a <strong>salon business plan</strong> have many options as to the variety and level of services offered, ranging from a hair salon to full-service spa.
Salons can be setup in innumerable ways, so the purpose of business planning is to pin down the details to improve the chances of long-term success.
Planning should always start with identifying the customer. There may be several customer persona’s depending on your target market, people over 50 years old are a very different market to the Gen X clients.

Executive Summary

2.1 The Business

Julia’s Salon will be a licensed and registered beauty salon located near Brookhaven College, Atlanta. The business will be based on providing hair-cutting, styling, coloring, skincare and other services in the salon as well as by going to people’s homes.

2.2 Management

Before starting a salon, it’s essential to make business plan of a salon and enlist major decisions about your start up salon. In this sample business plan for a salon, we’re providing all details of Julia’s Salon ranging from startup expenses to management structure.

The main working structure of Julia’s Salon include hairdressers, makeup artists, expert cosmetologists, and general assistants. Besides them, the business will hire sales executives, accountants, and web developers.

To ensure efficient working from the first day, the salon will be making all arrangements one week before the launch. Staff will also be hired a week before because the owner of Julia’s Salon wants to assess staff herself.

2.3 Customers

Our major customers will be the young and adult men and women of our society. Besides them, senior citizens and teens are also expected to avail our services.

2.4 Business Target

Our target is to become the most renowned salon in our vicinity and to establish an average repeat customer rate of 60% by the end of the first year.

Salon Business Plan - 3 Years Profit Forecast

Salon Business Plan 1
Franchise Business Plan
Helps the franchisee get business case approval from the franchisor

Company Summary

3.1 Company Owner

Julia’s Saloon will be owned by Julia Fox. Julia is a graduate in social sciences. She has taken many courses related to beauty works. After working for three years in Sports Clips she has gained expertise in hair care and styling.

3.2 Why the salon business is being started

Julia has always remained interested in beauty and cosmetics works. It was due to her passion and interest in the industry that she got a job in a top hair care company. As Julia wanted to start a salon she took several courses relevant to the field while she was in her college.

A few months ago she started exploring business plan for salons and finally decided to initiate her own salon to generate profit through a business that is solely her passion. She believes that exceptional mission statement for a salon can lead her to the success, she is looking for.

3.3 How the salon business will be started

Julia decided to rent a large ground story to convert it into a salon. For writing a business plan for a beauty salon, she decided to hire a marketing and financial expert.

After acquiring the required licenses and registrations, Julia will purchase the required equipment such as furniture, mirrors, cosmetic tools and accessories, hair styling tools, hair treatment products, and other things.

She has also decided to hire her staff a week before the lauch so that she can assess them and they can understand the business environment and aims. To facilitate their clients, Julia’s salon will be providing services by going to their homes too. Moreover, the salon will set up a web-based system so that customers can pre-order or pay online.

Salon Business Plan - Startup Cost

The salon start up cost and requirements are given here in detail:

Start-up Expenses
Legal $190,300
Consultants $0
Insurance $46,000
Rent $42,000
Research and Development $38,500
Expensed Equipment $68,000
Signs $3,400
TOTAL START-UP EXPENSES $388,200
Start-up Assets $350,000
Cash Required $420,800
Start-up Inventory $56,000
Other Current Assets $260,000
Long-term Assets $302,000
TOTAL ASSETS $1,388,800
Total Requirements $1,777,000
START-UP FUNDING
Start-up Expenses to Fund $212,500
Start-up Assets to Fund $1,101,000
TOTAL FUNDING REQUIRED $1,313,500
Assets
Non-cash Assets from Start-up $420,000
Cash Requirements from Start-up $218,000
Additional Cash Raised $47,500
Cash Balance on Starting Date $39,500
TOTAL ASSETS $725,000
Liabilities and Capital
Liabilities $36,600
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $34,000
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $70,600
Capital
Planned Investment $1,313,500
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $1,313,500
Loss at Start-up (Start-up Expenses) $659,100
TOTAL CAPITAL $654,400
TOTAL CAPITAL AND LIABILITIES $725,000
Total Funding $1,313,500

Any questions? Get in Touch!

Services for Customers

Before formulating a salon business plan outline you must finalize which services you’ll be providing your customers because this decision of yours will be affecting the business in the long run.

The services as mentioned in Julia’s Salon business plan are given in detail here.

Our major beauty salon service will comprise of works related to hair. However, we’ll also offer some other services as described here:

Hair Cutting: Our primary service will be cutting the hairs of people of all ages and gender. We’ll hire haircut experts so that every customer will be able to get the look of their desire.

Hair Styling & Coloring: We will hire experts who will be able to make several hairstyles according to the customer’s looks and desires. Moreover, we’ll also provide services like hair coloring, highlights, color blending, hair shadowing, etc.

Makeup Services: We will provide makeup services for parties and usual events.

Hair & Skin Care Services: Our third major service will be providing hair treatments such as Fusio-Dose and protein treatment. Moreover, we’ll also be offering services in skincare and treatment like manicures, pedicures.

Salon Marketing Analysis

Before you start a salon you must know what are objectives of a beauty salon business. Generally, the aim is to satisfy your customers by enhancing their looks, and that is only possible when you have studied the market and market trends thoroughly.

Note

Before finalizing your beauty salon business plan template, you must research on what are the traditions, norms and modern fashions that are arising in your target market. Only then you will be able to recognize customers’ demands and decide what aspects to include in your salon business plan to meet the expectations of your customers.

5.1 Market Trends

Hair salons are one of those businesses that are flourishing in the market for a long time. Currently, 972,000 such businesses are running in the United States. According to the IBISWorld report, the business has seen a 1.4% growth rate over the period of the last five years. The industry is responsible for employing more than 1,352k people and has generated a revenue of $47bn in only 2019. To summarize, the business has a lot of potential and can be extremely profitable if you plan it accurately.

5.2 Marketing Segmentation

Salon Business Plan - Marketing Segmentation

The detailed marketing segmentation of our target audience is as follows:

Landlord business plan

5.2.1 Young & Adults: Our first target group will be young adults between 18 and 35 years of age. The people of this age run after the latest fashions and styles. That’s why we’ll be coming up with hairstyles, coloring and makeup techniques that are popular in people of this age group.

5.2.2 Senior Citizens: Our second target group comprises of citizens above 35 years of age. Since such people are interested in acquiring decent looks while following their norms and traditions thus we’ll be carrying out research to provide services of their interest.

5.2.3 Teens & Kids: Our third target group is expected to be accompanied by other target groups. For this group, we’ll be providing hairstyles and services that are liked by children and teens.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Young & Adults 47% 24,400 28,900 38,700 50,500 61,200 11.00%
Senior Citizens 34% 18,000 20,100 26,500 34,500 40,800 12.00%
Teens & Kids 19% 11,400 14,500 18,300 25,400 32,000 10.00%
Total 100% 53,800 63,500 83,500 110,400 134,000 10%
Any questions? Get in Touch

5.3 Business Target

  • To balance startup expenses by earned profits by the end of the first fifteen months
  • To achieve the net profit margin of $10k per month by the end of the first year
  • To maintain customer repeat rate of 60% by the end of the first year
  • To maintain an average rating of 4.6 by the end of the first year

5.4 Product Pricing

Our prices will be in the same ranges as that of our competitors, however, to get introduced to a wide group of people we’ll be offering several discounts in the first three months.

Marketing Strategy

Chris Stavrakaki
TrustPilot

Excellent preparation of business plan …

Excellent preparation of business plan reporting and timing of all deadlines.
I am extremely satisfied with the services.
Thank Alex for all your excellent work.

∙ Chris Stavrakaki

This section should describe how you are going to find your ideal client and make sure they become aware of your products and services. Once you have found your clients, how will you attract and retain them? If you have a bricks and mortar business, is the location good for your type of clients? Does your ideal client read traditional printed advertising or are they more focussed on digital marketing. If online is important, describe the process your clients go through to make a purchase. Is it quick and easy? Starting a beauty salon business plan will help you to focus on these points.

In this salon marketing plan sample we are providing the competitive aspects of Julia’s Salon as well as the advertising schemes, the salon will be employing to attract more and more customers.

6.1 Competitive Analysis

Our biggest competitive advantage is our top-class service. We’ll use high-quality material with extreme care to serve our customers. Secondly, our staff is expert in their respective domains. Besides, we’re highly customer-care oriented and we’ll always be ready to do unlimited modifications to satisfy our customers. Lastly, we’re providing home services because senior citizens usually want to have such tasks done at their own homes.

6.2 Sales Strategy

  • We’ll ensure a strong web presence
  • We’ll advertise us through Facebook and Instagram
  • We’ll get featured in magazines and local newspapers
  • We’ll offer a 20% discount on hair treatment services for the first month

6.3 Sales Monthly

Salon Business Plan - Sales Monthly

6.4 Sales Yearly

Salon Business Plan - Sales Yearly

6.5 Sales Forecast

Salon Business Plan - Unit Sales

Sales Forecast
Unit Sales Year 1 Year 2 Year 3
Hair Cutting 27,500 29,150 30,899
Hair Styling & Coloring 36,400 38,584 40,899
Makeup Services 21,000 22,260 23,596
Hair & Skin Care Services 23,000 24,380 25,843
TOTAL UNIT SALES 107,900 114,374 121,236
Unit Prices Year 1 Year 2 Year 3
Hair Cutting $78.00 $90.48 $104.96
Hair Styling & Coloring $53.00 $61.48 $71.32
Makeup Services $41.00 $47.56 $55.17
Hair & Skin Care Services $48.00 $55.68 $64.59
Sales
Hair Cutting $2,145,000.00 $2,637,492.00 $3,243,060.16
Hair Styling & Coloring $1,929,200.00 $2,372,144.32 $2,916,788.66
Makeup Services $861,000.00 $1,058,685.60 $1,301,759.81
Hair & Skin Care Services $1,104,000.00 $1,357,478.40 $1,669,155.44
TOTAL SALES $6,039,200.00 $7,425,800.32 $9,130,764.07
Direct Unit Costs Year 1 Year 2 Year 3
Hair Cutting $48.00 $54.00 $57.00
Hair Styling & Coloring $31.00 $34.00 $39.10
Makeup Services $20.00 $23.90 $26.00
Hair & Skin Care Services $28.00 $31.00 $33.00
Direct Cost of Sales
Hair Cutting $1,320,000.00 $1,574,100.00 $1,761,243.00
Hair Styling & Coloring $1,128,400.00 $1,311,856.00 $1,599,152.46
Makeup Services $420,000.00 $532,014.00 $613,485.60
Hair & Skin Care Services $644,000.00 $755,780.00 $852,812.40
Subtotal Direct Cost of Sales $3,512,400.00 $4,173,750.00 $4,826,693.46

Any questions? Get in Touch!

Personnel plan

To get an idea of how much you’ll need to spend on your salon business, you must first create a list of salon equipment with price and a list showing your employees, their job responsibilities and salaries.

7.1 Company Staff

Julia will manage the salon herself and hire the following people

  • 1 Accountant to take financial records
  • 1 Sales Executive to carry out the company’s sales strategy plan
  • 5 Hairdressers/Hairstylists/ Hair Coloring Experts to do clients hair
  • 2 Makeup Artists to do client’s makeover
  • 1 Cosmetologist to do with hair and skin treatments
  • 2 Manicure/Pedicure Specialist
  • 4 General Assistants to carry out general tasks
  • 2 Drivers to provide transport
  • 1 Cleaner
  • 1 Web Developer to manage company’s sites
  • 1 Customer Representative to receive customers

7.2 Average Salary of Employees

Personnel Plan
Year 1 Year 2 Year 3
Accountant $21,000 $23,100 $25,410
Sales Executive $20,000 $22,000 $24,200
Hairdressers/Hairstylists/Hair Coloring Experts $140,000 $154,000 $169,400
Cosmetologist $29,000 $31,900 $35,090
Manicure/Pedicure Specialist $44,000 $48,400 $53,240
Makeup Artists $55,000 $60,500 $66,550
Drivers $39,000 $42,900 $47,190
Cleaner $16,000 $17,600 $19,360
Web Developer $18,000 $19,800 $21,780
Customer Representative $18,000 $19,800 $21,780
General Assistants $50,000 $55,000 $60,500
Total Salaries $269,000 $495,000 $544,500

Financial Plan

The last step before starting your salon is to craft a detailed map showing and analyzing investments, costs of equipment, payrolls, taxes, and other expenses. A financial plan for a beauty salon must contain all the financial statements, details of projected profit and loss and measures to achieve estimated profits.

We’re providing a sample of Julia’s financial plan for anyone who wants to benefit. However, it is highly recommended to seek help from a financial advisor to have an accurate financial plan according to your figures.

8.1 Important Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.11% 8.90% 9.30%
Long-term Interest Rate 8.40% 9.04% 9.60%
Tax Rate 24.70% 26.20% 27.00%
Other 0 0 0

8.2 Brake-even Analysis

Salon Business Plan - Brake-even Analysis

Brake-Even Analysis
Monthly Units Break-even 5335
Monthly Revenue Break-even $138,200
Assumptions:
Average Per-Unit Revenue $253.30
Average Per-Unit Variable Cost $0.72
Estimated Monthly Fixed Cost $171,000

8.3 Projected Profit and Loss

Pro Forma Profit And Loss
Year 1 Year 2 Year 3
Sales $6,039,200 $7,425,800 $9,130,764
Direct Cost of Sales $3,512,400 $4,173,750 $4,826,693
Other $0 $0 $0
TOTAL COST OF SALES $3,512,400 $4,173,750 $4,826,693
Gross Margin $2,526,800 $3,252,050 $4,304,071
Gross Margin % 41.84% 43.79% 47.14%
Expenses
Payroll $269,000 $495,000 $544,500
Sales and Marketing and Other Expenses $120,000 $128,000 $136,000
Depreciation $2,530 $2,670 $2,880
Leased Equipment $0 $0 $0
Utilities $4,100 $4,350 $4,990
Insurance $2,400 $2,720 $2,940
Rent $5,400 $5,900 $6,400
Payroll Taxes $43,000 $47,800 $52,100
Other $0 $0 $0
Total Operating Expenses $446,430 $686,440 $749,810
Profit Before Interest and Taxes $2,080,370 $2,565,610 $3,554,261
EBITDA $2,080,370 $2,565,610 $3,554,261
Interest Expense $0 $0 $0
Taxes Incurred $416,074 $513,122 $710,852
Net Profit $1,664,296 $2,052,488 $2,843,408
Net Profit/Sales 27.56% 27.64% 31.14%

8.3.1 Profit Monthly

Salon Business Plan - Profit Monthly

8.3.2 Profit Yearly

Salon Business Plan - Profit Yearly

8.3.3 Gross Margin Monthly

Salon Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Salon Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Salon Business Plan - Projected Cash Flow

Pro Forma Cash Flow
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $53,400 $57,672 $63,400
Cash from Receivables $11,000 $11,880 $12,830
SUBTOTAL CASH FROM OPERATIONS $64,400 $69,400 $76,230
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $58,200 $60,100 $63,200
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $37,200 $39,000 $42,000
Bill Payments $20,050 $21,480 $22,300
SUBTOTAL SPENT ON OPERATIONS $48,300 $52,100 $54,900
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $55,300 $62,450 $67,500
Net Cash Flow $13,300 $15,400 $17,300
Cash Balance $27,600 $30,100 $36,400

8.5 Projected Balance Sheet

Pro Forma Balance Sheet
Assets Year 1 Year 2 Year 3
Current Assets
Cash $250,500 $280,560 $315,340
Accounts Receivable $21,300 $23,856 $26,814
Inventory $4,410 $4,939 $5,540
Other Current Assets $900 $900 $900
TOTAL CURRENT ASSETS $302,400 $338,688 $380,685
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $15,400 $17,248 $19,404
TOTAL LONG-TERM ASSETS $19,100 $21,392 $24,066
TOTAL ASSETS $311,300 $348,656 $392,238
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $19,900 $22,288 $25,052
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $14,200 $15,904 $17,876
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $14,950 $16,744 $18,820
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $119,200 $129,928 $142,921
Earnings $180,200 $196,418 $216,060
TOTAL CAPITAL $291,200 $317,408 $349,149
TOTAL LIABILITIES AND CAPITAL $308,600 $336,374 $370,011
Net Worth $282,300 $307,707 $338,478

8.6 Business Ratios

Ratio Analysis
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.08% 7.84% 8.69% 3.00%
Percent of Total Assets
Accounts Receivable 9.12% 10.10% 11.20% 9.80%
Inventory 5.35% 5.93% 6.57% 9.90%
Other Current Assets 2.50% 2.77% 3.07% 2.40%
Total Current Assets 151.00% 154.00% 157.00% 160.00%
Long-term Assets 11.20% 12.03% 13.09% 12.30%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.53% 4.57% 4.61% 4.46%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.02% 7.08% 7.14% 7.40%
NET WORTH 103.80% 104.63% 105.59% 112.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 98.04% 100.69% 103.51% 98.00%
Selling, General & Administrative Expenses 91.20% 93.66% 96.28% 98.30%
Advertising Expenses 1.88% 1.93% 1.98% 1.40%
Profit Before Interest and Taxes 43.10% 44.26% 45.50% 33.50%
Main Ratios
Current 37.65 39.1 40.0775 33
Quick 33.4 35.4 36.285 35
Total Debt to Total Assets 0.34% 0.23% -0.07% 0.48%
Pre-tax Return on Net Worth 75.02% 78.77% 82.71% 73.30%
Pre-tax Return on Assets 91.05% 95.60% 100.38% 112.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 36.04% 37.16% 38.31% N.A.
Return on Equity 59.10% 60.93% 62.82% N.A.
Activity Ratios
Accounts Receivable Turnover 7.5 7.8 8.112 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 36.8 38.64 40.572 N.A.
Accounts Payable Turnover 16.1 16.8 17.3 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 2.55 2.72 2.8 N.A.
Debt Ratios
Debt to Net Worth -0.05 -0.05 -0.06 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $214,500 $226,512 $239,197 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.77 0.847 0.9317 N.A.
Current Debt/Total Assets 2% 1% 0% N.A.
Acid Test 29.1 29.9 32.7 N.A.
Sales/Net Worth 2.2 2.2 2.3 N.A.
Dividend Payout 0 0 0 N.A.

Download Salon Business Plan Sample in pdf