Having a salon can be a great business option. After all, everyone wants to look and feel their best. They don’t mind spending money on the pursuit of beauty, and that’s why spas and salons are always in great demand. Women want to be attractive and desired. Even in uncertain economic times, people are always ready to invest money to try and help them look their best.
Knowing that these customers and clients are out there by the millions helps potential salon owners’ dream of how they can help their community, and also benefit themselves through strong sales and service. Great service is the hallmark of a great business, and it also gives the salon owner a sense of pride! However, having a dream of opening a salon or spa is one thing. Turning that dream into a successful business is something completely different. There are always considerations to look into before deciding on whether or not to become a business owner, especially financial ones. Location, building space, marketing costs, and revenue streams are some other areas to investigate.
First Let’s Look at Financing
For many women, an hour or so in the hair salon or a drop-in massage can really change their outlook on everything, if only for a short time. Always keep in mind that although guests may be willing to pay for it, the quality of service and atmosphere needs to be high enough to match the price.
The expenses for a start-up salon can significantly range in price depending on the level of clients you would like to attract and the type of income you require. As an entry level salon, expect to pay about $75 per square foot, while some of the high-end salon and spa combinations can be upwards of $300 for rental space.
When deciding on the right salon for the type of clients you want to attract, make sure to build a realistic budget that is based on a solid business plan and ensure you have sufficient capital outlays to give your business enough time to grow. These days, banks are not as eager or willing to lend to small businesses without long-term credit, and it may be harder to find the right one.
It’s important to find a finance group that offers more than the basic services, and that can help a growing business tackle all of the potential challenges it may face over time. A good financial partner can provide pre-qualified credit lines and wrap leases that allow you to add in new equipment to your current contract, so some research early on is important to the financial health of your new business.
Also, make sure your lender is accommodating to a payment structure that meets your cash flow needs. Having the right relationship with your lender will allow you to feel more confident as you grow your business during your first year of operation. Some lenders, such as Elite Salon Financing, offer programs with no payments for 120 days to allow your equipment to start working for you.
Location. Location. Location.
One of the most important aspects of your new business is going to be the location. If you have good visibility, easy access, and adequate parking, your business will greatly benefit.
You want your business to get noticed, so first and foremost focus on higher traffic areas when selecting a good location. As initial construction is going on, people will become aware of a new business that will be opening soon and you can generate exposure before the doors are even opened. Popular malls are a great location to open in, and there will be plenty of curious shoppers peeking through the windows as construction crews are working to get you ready for opening.
It’s also very important to have good accessibility for customers, so that they are able to enter the parking lot easily or be able to park along the street if that is necessary. One-way streets, and street dividers may limit the number of potential customers if they are unable to easily access your business.
Convenience can be a big factor in bringing in new clients, so make sure there is adequate parking available. Never underestimate the importance of convenience, especially in busier urban areas where people have to think strategically when driving.
Always consider zoning regulations and shopping center restrictions when selecting the right location for your store. Do your research and make sure that the location in question is zoned by the town for a salon or spa. Many potential tenants have overlooked this requirement at the start, only to get into trouble later on. Also, ensure that your landlord doesn’t require tenants to be open for certain hours or has specific rules allowing sublets, which can cause havoc if you want to open a booth-rental salon.
Crunch the Numbers
Don’t be afraid to properly invest in your business and provide the right equipment and services for your potential clients. In the salon and spa marketplace, “money makers” can be the classification for equipment that brings value-added services and a perception of higher quality to your customers. Every salon requires good equipment and tools to style and cut hair, but professional equipment will make clients look at your establishment as more sophisticated and well worth the prices.
A soft-sell money maker would be equipment that adds to an existing service, or to the salon atmosphere, making it seem more indulgent and giving customers a reason to pay more at the register for higher levels of care. An example would be using motorized-base chairs that provide a more luxurious look and feel to clients than manually pumped ones. Customers will be happy to pay for such luxuries because of the upgraded experience, even though you wouldn’t charge directly for their use. In the end, these durable chairs are extremely affordable for salon owners, costing about a dime per client. Having the right equipment can mean the difference between ensuring you have plenty of repeat customers vs. just first-timers.
Consider specialty equipment that may cost more initially but also bring in a quick return for the shop owner. An example would be Micro Mist, which treats damaged hair by using microscopic water particles that permeate deep into hair follicles. This incredible hair treatment cannot be done anywhere else but a salon, which creates a unique level of service for clients who will be willing to pay for this added experience. By charging more for each hair color treatment, the salon owner will have the Micro Mist equipment quickly paid for and generating higher profits in the years ahead.
Salon owners should also think about direct income producers for their shop. One of the best ways to generate fast revenue is pedicure spas. This specialty equipment can be paid for within months, ensuring high profits for many years. Also, if you place the equipment inside a spa rather than a salon, people will pay more for the full lavishness of the spa experience. Allow for the growth of your salon, with the potential to bring in more of a spa atmosphere and with it many more clients!
Think about how you would view your salon if you were a potential customer… Carefully consider the ambience, atmosphere, and what you would like to see inside. Take into account the décor, and specialty items such as wall posters, decals, music, lighting, gently flowing water fountains, and other assorted aspects. People are always willing to pay more for a great experience, and anything you can do to increase the professional look and feel, the better.
Budget for Building
When customers walk in to a salon, the ambience often tells them what they will spend for that day’s services. So the image you decide to create will determine what type of prices you can charge your customers. Remember that people are willing to pay for services and ambience if it seems worth it, so whether you are building the crème de la crème of spas or a relaxed beauty shop, make sure to appropriately budget for functional improvements to your shop in addition to the decorative details.
Plan on allocating 60% of your building budget for improvements on your new salon, which will include electrical systems, flooring, HVAC, plumbing, and walls. Anything that is permanently attached to the structure will fall into this category. Even though they may not be able to move with you if you eventually outgrow your location and move, they are still a very important component to your client’s overall experience.
The remaining 40% of your budget should consist of items such as furniture, fixtures and other assorted equipment. If you moved locations, then you could easily bring these along with you.
Make sure to properly budget from the start, to ensure that you won’t run out of money during the construction phase of your business. You don’t want to skimp on furniture and fixtures, which could affect the way your potential customers feel about your salon. This suggested budgetary range can help you to create the proper atmosphere and ambience for new customers so they will feel at home once the doors are opened.
Show off your work
Remember that marketing can be a very important expense for your new business right from the start. You are probably very proud of your hard work getting everything just right and ready for your new customers, so why not advertise? Even though the best type of marketing is word of mouth, as a new business owner you will want to set aside a percentage of your monthly operating costs for marketing in order to get the word out that you are open. There are many creative ways to get exposure today, and you can specifically target people that live within a certain area or would be more apt to take advantage of your services. Some advertising methods include direct mail, banners, print advertising, or even a Google AdWords campaign.
As your customer base increases, your prices can be adjusted accordingly, your marketing efforts can become more sophisticated to match your goals. One way to do this is as stylists become fully booked, raise their daily rates. This may potentially reduce the base number of clients who can afford or are willing to pay the higher rate, your profits will be increased because of the higher profit margin. Also, more spots will be opened up for customers willing to pay for your services.
Opening any business can seem incredibly daunting, as there are always many decisions to make along the way, which can often mean the difference between success and failure. These are just some initial suggestions on how to get started, but always try and get professional guidance from experts in order to help with your decision making. You can also hire a design consultant to help spa and salon owners like you get up and running, no matter how large or small your new shop may be. They can help you find the resources you need to get started, if you require more expert advice. SpaSalon.us also has an enormous selection and variety of salon items for your perusal, so be sure to check them out. They can also help with expert advice, and offer wholesale rates for the industry.