Your dream of opening a salon is finally starting to get some legs. You're checking out spaces on the trendiest street in town, flipping through catalogs of top-of-the-line equipment, and looking for a roster of rockstar stylists. But do you have a business plan?
Stop right there.
It doesn't matter how great your new digs are — without a proper, written business plan, even the most promising salons can go south. Whether you're refreshing your existing salon or opening a salon for the first time, this guide will help you write an effective business plan.
Formulate Your Ideas & Set Goals
One of the most important reasons to write a business plan is simply to get all of your great ideas, knowledge and plans out of your head and organized on paper.
Having your goals in your head just isn't enough. Writing a plan helps you think through potential obstacles and challenges you might not otherwise foresee, and come up with tactics for tackling them.
If you already have an established hair salon, writing a business plan may feel like unnecessary work. But having a set of goals is essential if you're going to successfully renovate your business.
Make Hard Choices
At some point, all salon owners face hard decisions. When you do, you'll wish you had a business plan.
Why? Because writing a business plan forces you to thoroughly define your philosophies regarding marketing, finances, branding and more. Whenever you're in a hard place, you can look to your business plan. What solution matches the goals and tactics in your plan? Which decision is aligned with your business philosophy?
Make a Financial Plan
There are many practical reasons for having a business plan, but the most pressing is that you need one in order to put together a solid plan for financing your new salon or renovation. Whether you're bootstrapping it, using a short-term program like Snap Finance, or thinking long-term with a lease-to-own program, a business plan will help you get a clear picture of your money flow and give investors confidence to invest.
A business plan is a formal, written document that details your business goals. Your plan should include information about your team and company, and an outline of how you plan to accomplish your goals.
The most important thing to remember is to be realistic. Setting goals that are too lofty or too pessimistic can set you up for failure. The best way to avoid this? Thorough research. It's crucial to understand your target market and do a deep dive into expenses in order to make informed projections about your finances.
Your business plan should be less than 12 pages and contain the following components:
Sound overwhelming? Don't worry. We'll break down each section, step by step.
Your cover page is your first impression. In the event you should ever need to share your plan with potential business partners or lenders, it's crucial to have a clean and professional cover. Be sure to include your salon name and address, as well as the owners' names and contact information. You may even want to include a table of contents.
Here's where you summarize the contents of your business plan. You'll want to include a brief background on your company, your goals for the next five years, and five to 10 of your main business objectives. Your executive summary should be less than one page long.
Having trouble? It may help to write your executive summary last, after you've written the rest of your business plan. This will give you a chance to nail down your goals so you can state them clearly and concisely.
Think of your company description as your pitch: it gives information about your beauty salon and its history, what services you offer, and what makes your salon unique.
Go into detail about why your salon stands out. How does it appeal to the demographics of your area? Why did you choose this location? How will it serve the community? Where do you see it going in the next five years?
Your mission statement is perhaps the most challenging and important piece of your business plan. A strong mission statement is able to dictate every aspect of your salon.
Your mission statement should sum up your approach to business, from daily operations and hiring to which products you carry and how you treat customers — all in just a few sentences. Of course, writing one is easier said than done. But once you get it down on paper, it will guide you in all your decision-making thereafter. It will also guide your employees, who should know it, believe in it, and live by it every single day.
This is an in-depth look at the market you're in. That means researching your local community, surrounding competitors, current trends and your industry at large. You can break this down into three sections:
A thorough market analysis not only demonstrates that you've done your research — it also provides invaluable insight as to what other salons are doing successfully or poorly, and how you should advertise your salon.
Your market analysis will serve as the foundation for your marketing strategy. First, define the type of clients you would like to attract. Create a detailed picture of your ideal clients: their age, gender, income, lifestyle, occupations, desires and needs.
Then, outline your position. How will your salon attract those clients? Will it be positioned as a trendy, upscale salon, or a laid-back family salon? How will you achieve your desired position? What sort of advertising, products, events and even interior decor will you need to attract your clients?
What does your management strategy look like? This is your chance to map out your management hierarchy, outline each employee's role and responsibilities, and determine compensation. This should include owners, stylists, front desk staff and service providers.
This is an especially challenging, but crucial section in your business plan. Creating a detailed financial plan can help you foresee obstacles and pitfalls, refine your cash flow, and get an idea of the month-to-month and year-to-year progress of your salon. Plus, if you're applying for a loan, a bank or agency may use your financial plan to determine your eligibility.
You'll need to include the following:
Feeling in over your head? You can always hire a CPA to help develop the financial section of your business plan. Getting professional guidance can help you create a strong plan that will set you up for success.
Your appendix is where you'll place any other relevant material that you think may help you in the future. This includes resumes, permits, licenses, leases, etc. It's an optional section, but it may help to have all of your documents and ideas organized in one place.
Once you've written your plan, give yourself a good pat on the back. You did it! Now here comes the tricky part: using it.
All too many business owners simply set their business plan aside to be forgotten in the filing cabinet. Your business plan should be your guiding light. Reference it often. Use it to help you make difficult choices, and update it regularly so that it remains relevant. Whatever you do, don't throw it in a drawer never to be seen again. A business plan is an invaluable tool for your salon's growth.
And you spent all this time writing it — so you might as well use it.
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