How to run a successful hair salon business
Owning your own hair salon can be a dream come true… but some parts of being a business owner can seem like a nightmare if you aren’t prepared to take on all the not-so-glamorous aspects such as accounting, managing staff and bringing in enough customers. This article is to help hair salon business owners know how to establish their salon and run a successful business, especially during the first few years when start-ups are in their most volatile stage.
Hair Salon Business Fundamentals
There are a handful of business principles that are essential for a hair salon start-up to have. They’re the simple (but not easy – they do require a bit of work and effort to figure out) fundamentals that give you a foundation to base the rest of your business plan around. It’ll also give you a few basics to benchmark yourself against competitors in the beauty industry to guarantee you’re putting your best foot forward.
Define your USP
Your unique selling proposition (USP) is a clearly communicated differentiator. It tells your customers why you’re different – and better – than your competition. If you don’t know what makes you special… how will your customers know? Before you open your doors, be able to articulate the value your business offers that others do not.
Examples of USPs could be as basic as your prices are cheaper than other salons in the area. It could be that you specialise in something (e.g. men’s cuts, extreme hair colours, wedding and special events styling, permanent curling/straightening). Make sure you provide the best customer experience possible by offering some sort of entertainment and snacks for customers as some hair sessions such as perms and colouring can take a long time.
Identify the Ideal customer
After you decide how you are going to distinguish yourself from the competition, you need to figure out who’s going to value that offering. Identifying your ideal customer gives you a target market. It might seem counter-intuitive to only market to a select few instead of everyone but trying to appeal to everyone ends up making you too generic and appealing to no one. Determine your ideal customer’s profile including their age, profession, interests, demographic, location, etc. The more you can build a persona, the easier it is to feel like you’re ‘talking’ to a real person when you figure out your marketing ideas instead of just creating content in the hopes that someone will like it.
Determine your channels
When you’re deciding on your marketing strategy, there are three main channels to include: online, on-premises and offline. You will figure out how much effort and money should be spent on each based on where your ideal customer is. If you’re looking to attract a young, working professional age then being on Instagram, TikTok or Snapchat might be the best places to start. If you’re creating a family-friendly salon then Pinterest and Facebook could be better platforms to focus on. Regardless of where you are, make sure your branding and message is the same. New customers should be able to recognise your advertisements and your salon’s atmosphere regardless of whether they walk past your store, get a flyer in their mailbox, or see a social media post.
Obtain a Salon Licence
To follow all licensing requirements and legally open a hair salon business, check with your local council and government. They most likely will need a certified hairdresser certification (such as the SHB30416 Certificate III in hairdressing from a registered training organisations in NSW), a registered business name (ABN) and Tax File Number (TFN), and compliance with relevant regulations (such as hygiene standards under the Public Health Regulations). For budgeting purposes, keep in mind that there might be fees associated with these licenses or permits.
Choose a Location
Because the services provided in hair salons are delivered in person, the location of your store is vital to ensure a successful business. Even though you might be itching to find a place and get started, be sure to thoroughly do your research before committing to a location. Here are a few aspects to consider when shopping around:
o How much existing competition is in the area? If there are a lot of established hair salons, how easily will it be for you to build a loyal customer base?
o Is there a lot of organic foot traffic that will let people stumble upon your business, or do they have to go out of their way to find you?
o Is the rent affordable? Ask neighbouring stores and talk to other property agents to understand the market rate.
o Is it close to your ideal customers? If you’re targeting families, then being by shopping centres and schools is a good idea. If you’re looking to cater to working professionals, then a location closer to their office might be a better fit.
o Is it close to public transport and easy to get to? Try to make it as easy as possible for your customers to come to you.
o Looking at the interior space: How many salon chairs can you fit in the space? Will you have enough staff to cover customers in these chairs?
o What utilities are available for you and your customers (i.e. will there be bathrooms in your salon or close by?)
Invest in your equipment
Once you have your branding, licenses and location ready to go, it’s time to get all your equipment ready. There are a lot of big purchase items that are involved in starting a salon. You might have collected some of it along the way, but don’t forget the behind-the-scenes platforms as well. The right POS system can help you manage your accounting, purchasing and inventory management. Computers, cash registers, and EFTPOS tap machines need to be current and reliable as well. Your hair salon equipment needs to be functioning, attractive, comfortable and clean.
The same standards go for your furniture and decorations. Other bits of equipment that add to your salon’s atmosphere like music systems should be included in your equipment list to ensure you have adequate budget. Having the resources to supply everything before opening the doors can be daunting, which is why many new businesses take out an equipment finance loan to help cover the start-up costs and guarantee quality from day one.
Loss prevention and security measurements
After putting so much attention and resources into your business, the last thing you want to do is deal with a break in or theft. Minimise that risk by installing adequate security for your premises. This could include cameras and an alarm system; however, be careful not to overdo it with the cameras. Having too many can make your customers feel uncomfortable so be strategic with your placement such as capturing the cash registers and doors. Don’t completely rely on your new security system though because unfortunate incidents can happen. Take out insurance to cover anything you can’t readily replace (or afford to replace) such as the building, equipment, and inventory.
Implement a Marketing Strategy
It’s best practice to regularly re-evaluate your marketing strategy to make sure your customer base is growing at a good pace. We’ve already covered the importance of having a USP, target customers and a marketing strategy earlier in this article, but it’s worth mentioning a couple other things regarding your customer experience.
When your customers go to the counter to pay and schedule their next appointment, what do you want them to see and experience? Consider the promotions/flyers, business cards, candy, products you want them to see. Decide if you want the hair products you sell to be displayed at the counter or elsewhere in the salon. Make sure it’s at an easy place for them to see and look at so they can browse without any pressure instead of putting it in an awkward place like the back corner of the shop.
Consider adding promotions to your marketing strategy to bring in new customers and establish loyalty. New customer or referral promotions could include ‘bring a friend and get 50% off your haircut’ or ‘20% off during your birthday month for any cut or style’. Loyalty promotions could look like ‘Get 5 haircuts and receive your next one free’ or ‘leave a review on Facebook and get 10% off your next cut/service’.
Word of Mouth
Today, friends and strangers’ opinions alike help shape buying decisions. Word of mouth referrals are one of the best ways to get new customers as people trust other people’s opinions, especially if it’s coming from someone they know. Encourage your customers to spread the word and share their experiences both online and offline. Showcasing testimonials online and in your advertising can help be the tipping point that convinces someone to give your hair salon a try.
Developing online marketing strategies to promote
We can’t stress enough the importance of having an online presence in today’s market. Many people take to the internet to do a bit of due diligence before buying – especially something as important and personal as their hair and looks. There are two key places where you should be online, besides having your own website: Google My Business and social media.
Your Google My Business account should have your website URL, NAP (name, address, phone number), highlight your services, and share your unique differentiator. Your social media accounts need to be regularly updated with promotions, before/after photos, products, show off your staff and their talent, information, etc. Be sure to tag the location of your salon in all social media posts so if someone stumbles upon a picture, they can find you easily.
One last thing to note regarding social media platforms is that you don’t need to be everywhere. It can feel like your hair salon needs to be on every new platform so you don’t miss anyone, but consistency is key. If you can’t regularly post (at least once a week, if not once a day) on each account then scale it back to something more manageable.
Recruit High Quality Staff
If your hair salon is ready to become more than a one-man-band and you’re looking to hire staff, focus on quality and skill. Your employees can be the difference between you exploding with success or you sinking all of your time into fixing their problems and handling their drama.
High quality employees
Having a high standard for your employees might make the hiring process a little more time consuming, but that effort will be rewarded in spades. High quality employees will create the right experience for your customers and maximise satisfaction both for them and you. They will minimise human error around inventory cousers, keeping in mind that those with experience might not be willing to change old habits if your processes are different to what they’re used to.
For that reason, be sure that you give a comprehensive onboarding session and regular training to all your employees, no matter their previous experience. This will ensure that everyone follows the processes you have in place to keep track of inventory, provide the right customer experience, and open/close the store correctly.
Regular training and upskilling will also keep your employees engaged. In today’s competitive market, if you aren’t providing new experiences that help with their career progression, someone else will. Take the time to invest in your team, and they’ll be more loyal in return because they know you care.
Inventory management can be a bit of a reactive guessing game when you first open your business. It’s key that you quickly figure out how to guesstimate and become comfortable with inventory purchase orders. Efficiently and accurately managing your cash flow and stock levels, making sure they match up with market/customer demands, will avoid overstocking and eating into your budget unnecessarily.
When you find suppliers that you’re satisfied with, negotiate for bulk deals. Your regular purchase orders can qualify you for further discounts, helping you to save money on the back end.
Budgeting can be one of those annoying aspects of business management for people who aren’t comfortable with (or interested in) tracking numbers. Having a good grasp on numbers though is vital for a successful hair salon business. Use previous expenses to help you forecast for future ones – keeping in mind that not all bills come at the same frequency. Keep track of monthly vs quarterly bills; set aside money each month for the quarterly bills to help spread costs effectively and avoid taking huge cuts every third month.
One way to keep track of all the expenses involved in running a business is to create an expense checklist. This will help you budget each month and remember all the smaller invoices that add up. It will also help with remembering to build a resource pool for the quarterly bills every month. A few of the expenses that might be on your list include:
o Store insurance
o Payroll & accounting costs
o Water bills
o Credit card fees
o Bank fees
As new bills come, add regular ones to your list. Keep track of random or one-off expenses that pop up so you can budget for “miscellaneous” costs as well.
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