What do the aspiring salon owner and the seasoned salon owner have in common? They both need a business plan! Even we share this common ground as an established salon supply store!
This is because, while owning a salon business is exciting, a lack of proper planning will make it difficult to have fun, motivate your team, juggle all of the aspects of your business and try to expand it. A business plan is a living document that outlines your business goals and strategies for achieving them. If updated annually and followed enthusiastically, it will help you to fully formulate ideas and set goals, make difficult decisions, have a clear financial understanding of your operation, raise funding and, ultimately, help you avoid getting overwhelmed by your business and improve your chances of success. Although each business plan will vary depending on their industry and operation specifics, a solid salon business plan should include the following elements:
1. Cover Page
Your cover page will be your first impression to potential business partners, investors or lenders that it’s shared with, so it’s crucial to have a clean and professional one. If you have a logo to add for aesthetic appeal, we suggest this as well! Aside from this, be sure to include your salon name, salon address, salon owners’ names and salon owners’ contact information. If your business plan is super comprehensive, you may even want to consider including a table of contents.
2. Executive Summary
Your executive summary should be the first section of your business plan, but because it will highlight what you intend to expand on in the rest of the plan, we actually suggest writing this section last!
Ultimately, this section should summarize what your business hopes to accomplish. Along with briefly highlighting important aspects of your business plan (like products or services you’ll offer and why they have the potential to be profitable), you’ll want to talk a little bit about why you’re starting this company and what experience you have in the industry. One of the most essential aspects of your executive summary, though, will be your company’s mission statement, so put some serious thought into crafting it!
A strong salon mission statement will summarize your approach to business in only a few sentences. Once you get them down on paper, though, these few sentences will guide your business in everything it does.
Your company description is the section to showcase why your company stands out from the competitors. It’s here that you should break down your salon’s strengths and advantages that will give it an edge to succeed. If you’ve chosen this location for a beneficial reason, if you’ve partnered with a certain supplier for a beneficial reason or if you’re working with the community in any way, this is the section to display it.
4. Market Analysis
Your market analysis is an opportunity to display how well you understand the industry and specific market you’re in or hoping to enter. This will mean identifying your target market, understanding your community’s wants and needs, analyzing local competitors and acknowledging current trends taking over the industry. Once you’ve put in the legwork for this section and have your market analysis, you can compare the strengths and advantages highlighted in your company description against this and hit home how your salon will stand above the rest.
5. Marketing Strategy
Your market analysis will lead the way to your marketing strategy. With your analysis complete, you should be able to confidently and concisely identify the type of clientele you’re aiming to attract (with specifics like their age, gender, income, lifestyle, desires and needs). From here, the goal is to outline the position you hope to play in their life. Describe how your salon will attract those clients and how it will achieve its desired position.
6. Breakdown of Management and Company Organization
Even if there’s not a whole lot going on here, it’s still important to introduce anyone involved with the business and indicate whether your business will operate as a sole proprietorship, a partnership or otherwise. For the aspiring salon owner, this might look like a brief description of your skills with a write-up about how your salon will operate as a sole proprietorship and insight as to how your salon’s organization will adapt to growth. For the seasoned salon owner, this might look like your collection of managers, with a brief description for each that outlines their skills and primary job responsibilities. If you’re a seasoned salon owner operating on a big scale, we suggest creating some sort of visual to display your company organization!
7. Financial Plan
Creating a detailed financial plan can be one of the most challenging parts of creating a business plan, but can also be one of the biggest reasons for your success. This section will open your eyes to less-obvious obstacles, hidden expenses and potential pitfalls if you’re an aspiring salon owner — and not only get an idea of, but improve your monthly and yearly progress if you’re a seasoned salon owner. Along with this, your financial plan will be the first thing that’s looked at when it comes to determining your eligibility for a loan. While it will depend on the current state of your salon, your financial plan could include:
A sales forecast, which is a detailed projection of your sales over the next three years.
An expense budget, which is an outline of what you’ll spend on expenses like rent, supplies and marketing to meet your sales forecast.
A cash-flow statement, which is a detailed breakdown of how cash will flow in and out of your business over a 12-month period. This includes revenue, costs, expenses, loans and loan payments, personal funds used for business and any other money associated with the operation of your salon.
A break-even analysis, which is a prediction of your break-even point when your expenses (including interest!) are equal to or lower than your sales.
Bring Your Business to Life
Don’t forget that your business plan should always be your guide in this pursuit of passion! Reference it often, update it regularly and remember why you wrote it in the first place!