Thinking of starting your own beauty services venture? Well, the first thing you need is a detailed beauty salon business plan. Whether you are looking to raise funds or just want a road map for your new venture, a business plan is an important document.
If you are looking to raise capital, it is even more crucial for you to spend time and effort in writing an awesome beauty salon business plan. That’s because a strong business plan increases your chances of impressing potential investors and getting the funds you need. It also makes it easier for you to think through the validity of your new business idea. Last but not the least, a sound business plan helps you understand your beauty salon’s financials and competition better.
Which begs the question: How do you write an effective beauty salon business plan?
Well, continue reading to find out for yourself. By the end of this article, you will know exactly how to come up with a solid business plan for your beauty salon.
Before we get started, you might be interested to check out our Ready-made Beauty Salon Business Plan Template with pre-written text and automatic financials which you can easily customize and adapt to your own project, no financial expertise required.
Step-by-step Guide for Writing a Compelling Beauty Salon Business Plan
Executive Summary
You should always start your business plan with a strong executive summary. It is the most important part of your plan and it does two things:
It introduces the reader to your beauty salon business plan
It provides a summary of your entire beauty salon concept and business opportunity
Both these things are important. No investor in the world will read a 30-page business plan if he or she finds the executive summary unprofessional, incomplete, or not compelling enough.
Which raises the question: How to crack the executive summary of your beauty salon business plan?
First, make sure you cover each of these topics:
Mission Statement of your Beauty Salon
Proposed Beauty Salon Concept
Execution Plan
Potential Costs to Start your Beauty Salon
Expected Return on Investments (ROI)
Two, follow these time-tested tips for writing a compelling executive summary:
Keep things short and simple
Time is money. So don’t waste potential investors’ time by handing them a long-drawn-out executive summary. Instead, sum up the main points concisely and neatly.
The main document is the place where you provide in-depth analysis to the readers, not the executive summary. Most experts agree that the executive summary for a startup business plan should not be more than one to two pages long.
Also, it is considered a good idea to include brief summaries of other sections of your business plan here. Last but not the least, you should write the executive summary in the end, after you have written all the other sections.
Introduce the problem your beauty salon business is solving
What needs your beauty salon is going to fulfill? Who has these needs? And just exactly how do you plan to tackle them?
The easiest way to grab and hold the readers’ attention is by showing them there’s a strong market for your beauty salon concept. After all, if there’s no demand for your business idea, you are just wasting yours and investors’ time.
Mention how much capital you need to launch your beauty salon
If you are looking for funds, clearly mention how much capital you need. Also, talk about the potential return. That is, what will be the payback process, and the kind of return on investment investors can expect.
Make sure your estimates are realistic and don’t forget to back them with hard facts and figures later in your business plan.
Here’s a sample executive summary:
ABC beauty salon will be a full-service salon with a focus on providing top-quality beauty products and services at reasonable rates. We will also maintain a creative, friendly and fair work environment that respects creativity and diversity and rewards hard work.
The timing could not be more right for launching this beauty services venture. The two owners, Jack Solo and Judy Logan, have been patiently searching for the ideal location for the past eight months and have finally found it. Strategically located at a busy street with thousands of houses within a kilometer radius, we are sure of the venture’s success.
Both Jack Solo and Judy Logan are professional and qualified beauticians themselves with over a decade of experience in this industry. Through their hard work, dedication, and service, they have created a large client following. They also plan to hire four other beauticians initially.
While there are two other salons in the area, both of them are high-end salons. On the other hand, our salon aims to provide a cost-effective alternative to clients who cannot afford super-expensive “day spas”.
Our beauty products and services include:
Hair: cuts, perms, relaxers, colors, curling, shampoo, conditioning, waving, and weaving.
Nails: manicures, polish, sculptured nails, and pedicures.
Skin Care: Facials, body waxing, and massage.
ABC beauty salon is looking for funding to launch and achieve its objectives. We need $150,000 to cover lease costs, equipment, furniture and renovations. The owners have $50,000 in cash, and the rest we plan to raise from investors.
Company Overview
In this section, you must talk about your beauty services company, its mission statement, and your organizational structure.
Here are some of the main questions to which you should provide answers in this section:
Who are the owner(s)?
What will be the company structure?
What is your company’s mission statement?
What are the other important details about the company?
How many people do you plan to hire?
How much are you going to pay them?
What are the startup costs?
To help you nail down this section, we have provided a sample.
Here’s a sample company structure section for your beauty salon:
Jack Solo and Judy Logan will jointly own ABC Beauty Salon. Both of them are trained and licensed beauticians with over 10 years of relevant experience under their belts. Both the owners will be involved with the day-to-day operations of the salon. In addition to the founders, four more beauticians will join the team.
We plan to pay no more than $20,000 a year per beautician. Each of the new employees will undergo training before they start handling clients. Jack and Judy will together train every new employee.
Upon commencement of operations, ABC Beauty Salon will sell a wide range of beauty products and services.
Our mission is to offer affordable yet high quality hair, nail, and skin services to our clients, along with a wide variety of handpicked beauty products. Unlike our competition, we will be providing all these services under one roof.
After spending many months looking for a great location, we have finally found one. We will be starting our salon from the ground up.
Our salon will be strategically located on a busy street and utilize 1,430 square feet of area. The location is extremely good, as it is on one of the busiest streets in the town.
ABC Beauty Salon needs $100,000 to cover its lease costs, equipment, furniture and resources. The two owners will contribute $25,000 each and the remaining they will raise from investors.
Marketing and Customer Analysis
You need to provide a market analysis and a customer analysis in this section. You can either club them together or divide this section into two sub-sections.
In the marketing analysis, it is important that you answer relevant questions pertaining to your beauty salon, such as:
General information regarding the beauty salon industry (such as growth forecast and trends)
Global and local market trends
Who are your direct and indirect competitors?
What are your unique selling points? That is, in other words, what qualities separate you from the competition?
Here’s a sample marketing analysis for your beauty salon business:
Research shows that the US beauty salon industry is growing at a rate of X% on year-to-year basis and the average customer spends $Y per visit to a beauty salon. We strongly believe a good growth rate, coupled with handsome margins on services and products, makes launching a beauty salon a good idea, more so when the salon in question is different from others in the neighborhood.
There are two other salons in our location, which has more than a thousand houses within its one-kilometer radius. However, both these businesses are high-end salons. In contrast, our salon is in the mid-range, providing a middle ground to clients who can’t afford super-expensive “day spas”.
Our main selling point is that we will provide a wide range of beauty services under one roof. These include the following:
Hair: cuts, perms, relaxers, colors, curling, shampoo, conditioning, waving, and weaving.
Nails: manicures, polish, sculptured nails, and pedicures.
Skin Care: facials, body waxing, and massage.
In the customer analysis section, you must share the profile of your target customers. In short, you should provide answers to these two questions:
Who are your target customers?
Why they would choose you over other salons?
Sales and Marketing Plan
If you wish, you can have two sub-sections in this part as well. First talk about your marketing plan. That is, how you plan to market your beauty salon. In the second section, you can share your sales forecasts as you have calculated it.
Most experts agree that you should include a sales forecast for the first three years at the very least. Needless to say, you must base your sales forecast on sound assumptions. Use graphs and charts to make it easier for the readers to process the information.
In case you are doing a business plan for an existing beauty salon, it is always a good idea to use historical data to map out the past and future trajectory of sales over time. However, if you are launching a new business, you cannot use historical data. That said, you can use the following tips to come up with accurate and realistic sales forecast:
Use Trade Publications – In the absence of historical data, start by digging into your industry numbers. These numbers may help you project your sales forecast depending on what others who came before you were able to achieve in their first few years.
Come up with Two Sales Projections – You can create one conservative projection and one aggressive projection. For the first one, your may assume low price points, little marketing, and lower sale volumes. For the latter, you may assume a full-on marketing strategy, a higher sale volume and higher price points. The actual business performance might lie somewhere in the middle.
Here’s a sample marketing plan:
ABC Beauty Salon will set itself apart from two others salon in the neighborhood by offering a wide range of high-quality services and products at reasonable prices. Thanks to a decade of experience in this industry, Jack Solo and Judy Logan have realized that most clients (if not all) prefer to have a variety of beauty services under one roof. For instance, customers don’t like to get their hair done at one salon and their nails at another. While the main focus of ABC Beauty Salon is hair services, we will offer clients a full suite of related services under one roof. We are targeting clients who want quality services but who cannot afford or do not want to visit high-end luxury salons.
ABC Beauty Salon is going to follow a simple marketing strategy—word of mouth advertising and a referral program. Each existing customer who refers a new one will receive a free hair or nail service.
We strongly believe that a satisfied and a happy customer is the most effective marketing tool. When a client walks out of our salon with a new look, he or she is advertising our name, along with the quality of our work, to others.
Other channels we will also use include social media marketing and display ads on important local portals. These channels will help us to mainly generate brand awareness.
Finally, we will also promote our latest hair and nail offers on popular discount websites, such as Gilt and Groupon, to acquire new customers online.
To summarize, it is a good idea to add a table with your key marketing channels and the budget you plan to allocate to each one of them.
Management Plan
In this section, focus on people who own and manage the beauty salon and discuss their qualifications. If the salon will be owned by two or more owners, tell investors how the profit will be shared and how much salary each person in the core management team will draw.
Financial Plan
This is the last section of your business plan. Here share information pertaining to how your beauty salon will be a financial success. Include information such as operating costs, income statements, cash flows, balance sheets, profitability analysis and break-even analysis.
