Many people dream of opening a salon – whether that’s hair, beauty, spa, massage or other – but the road can be long and arduous. These are our top 10 essential things to consider if you’re dreaming of being your own boss.
For more tips, ideas and inspiration, take a look at how Treatwell PRO can help you grow your business.
I’m in. What do I need to consider if I’m opening a salon of my own?
Owning your own business can be expensive, particularly in the first few months (or even the first few years). Ensuring that you’ve considered all the costs and factored them into your plans is essential. It also involves a lot of work, so it’s important to have a good business plan in place for your salon, and our tips are a great place to start. So, without further ado:
1. Check if you need a business license
Okay, so first off – we have to start with the (slightly dreary, but oh-so-important) foundations.
Before opening a hair or beauty salon, it’s important to check the permissions and permits that your business may need. This will vary widely depending on the type of business you want to open and your situation. This is especially true if you’re moving into new premises and changing its use.
Essentially – there’s not a one-size-fits-all solution, so if you’re unsure, your best bet is to reach out to your local council, and they’ll be able to advise you on licensing and planning requirements for your business.
If you’re planning to offer certain beauty treatments, such as microblading, some councils require special licenses to carry these out, so again, check that you have all the necessary permits in place. Outside of the UK, any new hair or beauty salon may need a special license to operate.
Also, don’t forget other licenses you may need, such as a PRS license to play music, or your word processing or accounting software. It might sound like a lot, but it’s worth the effort to make sure you’re all set up and ready to go!
2. Build an experienced team
Yes, the cost of hiring more experienced staff is higher than choosing less qualified staff, but you want your front-of-house and key stylist or therapist team to have experience that you can all learn from. You might think you can do it all, but the truth is, you can’t, and you’ll spend more time than you ever imagined on the day-to-day running of your new business. Experienced team members will bring fresh ideas and have faced situations that you haven’t, so they will be a real asset to your hair or beauty salon.
Also, it’s worth looking into hiring a team of professional experts to help with the financial and business side of things – a great accountant, solicitor and bookkeeper can help you save money and grow your business faster. Surrounding yourself with experts helps you fast-track your growth and not make too many expensive mistakes. Once you’re up and running, you can consider hiring some apprentices or trainees to grow your team.
For more tips and advice, read our article on how to hire the perfect salon team.
3. Know your market before you open
You may have found the perfect location and be dreaming of all the cutting-edge services you’re going to offer when opening a salon, but if the customers don’t want them, you’re going to find yourself out of pocket. You might have visions of a hip, young customer base, but the local area might be full of mature adults who hold all the disposable income. If the established salon down the road is offering the same services at a fraction of the price, something will have to give.
The primary metric that matters when opening a salon is becoming profitable as quickly as possible. And the only way to really find out what people want is to ask them. Any business plan you create needs to address these five things:
- knowing who your clients are
- understanding the services they want
- having a handle on who your competition is
- knowing what others are charging
- understanding what you’ll do that’s different to set you apart
A little bit of market research can go a long way to determining your success when opening a salon, so make sure you don’t skip this step.
4. Learn key business skills before opening a salon
You don’t get to run a successful hair salon by only knowing about hair, or a successful beauty salon by only knowing about beauty. (Not saying it’s impossible, but it’ll take you a lot longer to get to where you need to be.) Running a business isn’t just about having a skill – it’s about selling, promoting, financial management, running a legal entity, managing cash flow and even crisis management.
There are a lot of great free courses available online on starting a new business, and your bank will often have resources that can help you to upskill yourself, so you’re fully prepared for the journey ahead. If you’re looking for advice, our blog has a lot of great resources and tips, too.
5. Teach yourself management skills
You may have managed a team in your last role and have great team-building skills, but you’ll find it all feels a bit different when the buck ultimately stops with you. You need to be able to keep a close eye on your team culture and take accountability for fixing issues before they become big problems. And there’s the administrative side to consider too. Business owners have several legal and moral managerial obligations to their teams and customers (and the tax man). You need to be sure that you’re leading and motivating your teams, not belonging led by them, yet ensuring that their voices and opinions are valued and heard, whilst ensuring that you’re not overstepping the line or saying things that you could find backfiring on you.
Again, there are a number of free courses that you can take on this topic, to ensure you’re not just a good leader – you’re a great one.
6. Create a business plan for your salon – and follow it
Your business plan should tell you how much your business costs to set up and operate, your monthly outgoings and all the expenses that accrue from running your own business. It should set out your financial and growth goals for the next three to five years and show how quickly your business will become profitable.
You’ll know from your business plan how much money you need to make each month, and how much your team will cost, once things like holiday pay, taxes and National Insurance have all been factored in. If you’re planning on applying for a loan from your bank to open your hair salon, they’ll expect to see a business plan that’s based on realistic assumptions and presented with supporting evidence that shows that you’ll be able to comfortably repay your loan.
Once you’re up and running, it’s just as important to have a detailed view of everything that’s going on in your salon – from your incoming and outgoings, to your team and stock. That’s where we come in. With Treatwell PRO, you’ll have access to detailed analytics, stock management, and team management tools. You’ll have unparalleled insight into all your business in just a few clicks, so you can easily keep an eye on every aspect of your salon. Book a free demo with one of our experts today to find out just how we can help build your business.
7. Choose the right legal status when opening a salon
When you’re starting a new hair or beauty salon, you’ll need to consider if you’re going to operate as a sole trader, small business, legal partnership, or limited company. This can determine how much time and resources you’ll need to spend on actually running your business and presenting records to HMRC. There are pros and cons to choosing a limited company – it comes with more administration than running a sole trader business, but it does mean that your personal assets are protected if things go wrong.
If your projected turnover is greater than £85,000 a year, you’ll also need to register for VAT – this has advantages in that you can reclaim the VAT on things like any stock or supplies you purchase, but it requires quarterly reporting to HMRC that you are legally required to provide.
To know which legal status to choose, ask yourself the following questions:
- do I want to share the management and profits with a partner, or would I prefer to run my business alone?
- am I okay with being personally liable if things go wrong and my business goes bust? Do I risk losing my personal possessions to pay any debts?
- do I need to bring in other directors who have the skills or resources that I don’t?
8. Raise the necessary funds to be able to open a hair or beauty salon
Starting a new business requires cash. Probably more of it than you think. Many new businesses operate at a loss for their first few years, before they become profitable. It’s easy to think that it won’t happen to you, but it’s always better to plan for the worst-case scenario and be pleasantly surprised if it doesn’t happen. You may find that you can’t afford to pay yourself a wage at first – can you afford to take the hit?
There are pros and cons of taking over an established business, versus setting up a new one from scratch. A new premises and business will need a lot of money to set up and configure, while an established business will come with a customer base and staff who already know the ropes. Both options can impact your bottom line in different ways.
There will always be unexpected costs that come up, particularly in the early days of your business and you’ll need to be able to cover them. Perhaps you’re fortunate enough to be able to fund your new hairdressing salon yourself, but most people will need to ask a bank or building society for a loan.
To estimate the funds needed to launch your business, you must:
- factor in any upfront costs
- decide how much money you need each month to live on
- calculate how much money you will need each month to run your hair salon
- estimate the amount of taxes you’ll have to pay
Don’t forget that if you’re buying (rather than renting) business premises, property purchases come with their own sets of fees and charges, so it’s important to remember to include those. Don’t forget the cost of your solicitor fees – they can quickly add up.
If you’re applying for credit for a business loan or mortgage, your own credit record will be thoroughly checked, so ensure you’re in good financial shape before you apply.
9. Choose the right location for opening a salon
Finding the right premises can be difficult. Not only does it have to be what you’re looking for, in a place you want to be, but there are other things to consider too.
- check if there is nearby parking
- see if there’s lots of passing traffic (footfall)
- know where the nearest competitors are in the area
- find out what the business rates are
- ensure that you’ll be able to easily receive deliveries and that it’s accessible for disabled people
- get the right amount of space – (it can be expensive to pay for space you don’t use or limiting if you have no space to grow)
- is any remodelling or change of use needed?
- make sure there is enough space to store stock and retail
- check there’s a space for staff to take breaks
Nothing should be left to chance – before signing a purchase or rental agreement, be satisfied that you’ve properly estimated the amount of work that will be needed and have factored the costs into your business plan.
10. Put a great communication strategy in place before you launch
Don’t wait until you are up and running before you start spreading the word! Consider your communications strategy (read our handy guide to getting the most from social media) and tell people about it, so that you’re fully booked on launch day. Create a buzz in the local area. You’ll need:
- a website with appointment booking and appointment confirmation services
- a social media presence (ideally offering direct online bookings)
- a customer engagement and retention strategy
- a solid marketing plan
- a salon management platform to streamline admin and build your business
Treatwell PRO is Europe’s leading salon management platform, and helps you to successfully manage your everyday salon life, as well as giving you:
- unbeatable online visibility on Europe’s leading hair and beauty marketplace
- a smart digital calendar where you can organise and manage your daily work and appointments
- detailed analytics and reporting, to develop a successful strategy
- marketing, promotions, and communication tools to create winning campaigns, attract new clients, and build customer loyalty.
- cash, invoicing, and payment management tools to make finances a breeze
- a digital stock management warehouse to maximise efficiency
Book a free demo of Treatwell PRO today, and see for yourself how we can help to grow your business, and make life easier for salon owners.