Skip to Content

How to Start a Hair Salon Business With No Money

Hair Salon Business

Do you want to start a profitable hair salon from home? If YES, here is a complete guide to starting a hair salon business with NO money and no experience plus a sample hair salon business plan template.

Steps to Starting a Hair Salon Business

1. Understand the Industry

The hair salon business is one that helps people feel good about the way they look and this is through provision of salon services and products. If you intend to start a hair salon business it is very important that you understand the industry you are about to enter and also know where the industry is headed as this will help you determine if you should go into the business or not.

Also, learning about the industry will help you when writing a business plan for your hair salon business as you would be able to incorporate this knowledge into your business plan.

Interesting Statistics About the Industry

According to reports from SBDCNet, there are approximately 82,000 hair salons in the united states of America as well as 4,000 barber shops that brought in an estimated billion in annual sales as at 2012.

Also, it was found that the smaller salons contributed more to the industry as the 50 largest companies contributed just 15% of the total revenue for the industry. The target price and market for the hair salon business ranges between high end services, luxury services and budget hair services.

Also, according to SBDCNet, those who spent above the average of 10 to 14% on beauty products and services were those between the ages of 35 to 64 years. However, it was found that the best target market was one that consisted of households with children, especially as they were found to spend between 34 and 38% more than the average.

Also, an additional revenue money making way for salon services was found to be the sales of hair care products to households that had female children as they were likely to spend up to 83% more than households that had no kids.

The growth potential in this industry depends on a variety of factors which also includes the characteristics of the target market as well as the growth of the population nearby. It is important also to be updated about the latest beauty techniques as this will allow you take advantage of any growth opportunities.

Revenue growth in this industry is expected to increase in 2017 by 3.3% which will be due in part to people having more disposable income to spend on higher end services which include facials, massages, as well as buying special skin care products.

Also, according to the Professional Beauty Association, positions that will made available in this industry is likely grow by 16% between 2010 and 2022; this means that finding experienced and qualified personnel for your hair salon business might prove more difficult.

Profits have been projected to reach $49.3 billion by 2017 which will allow new salons open thereby creating more competition for already established businesses. Also, according to SBDCNet, there will be 1.3 million hair salons as well as barber shop owners by 2017. According to Forbes, the cost of starting a hair is minimal especially in some locations, thereby leading to stiffer competitions

In this industry, hair cutting services constitute the largest single service group which stands at about 46.9% of total industry revenue. Services that usually accompany haircuts include shampooing, blow drying as well as styling for all demographic groups.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those that require the services of a hair salon is limitless. Almost all females’ young and old have used a hair salon. This also includes certain males who prefer having their hair done in a certain fashion than the traditional cutting. Rising consumer sentiment as well as an increase in per capita income is responsible for the growth of this industry.

3. Decide Which Niche to Concentrate On

Hair salons are in the business of grooming the hair of clients and so might be involved in several services as well as additional ones to ensure that this is done. Some of the area of specialization for hair salons includes;

  • Hair cutting
  • Shampooing
  • Retail hair extensions
  • blow drying
  • hair coloring as well as hair styling services
  • facials and makeup applications
  • retail beauty products
  • Massage services.

Offering one or more of these services is likely to give you an edge over your competition. One thing about all these areas of specialization is that not all hair salons can afford to carry out these services except if they are large scale in nature.

The Level of Competition in the Industry

Starting a hair salon business might not be so difficult; however, keeping it running successfully is another matter entirely. The amount that you would need to start your hair salon depends entirely on the scale of hair salon business you intend to run, while you might have to start with less funds; another entrepreneur might have to start with more funds.

Also, on a competitive basis, you would be better off competing with those who offer same services in your target area than with those who offer more services than you; as offering more services will give your competitor an edge over you. However, you can ensure that you offer your customers personalized services so that they keep coming back for more.

4. Know Your Major Competitors in the Industry

It is a known fact that every industry has well-known brands that are better recognized than others. Listed below is a list of few of the well-known hair salon brands in the United States of America;

  • Fringe Hair Design
  • The Roose Parlour & Spa
  • Metropolis Salon
  • Ramirez Tran Salon
  • Kimble Hair Studio
  • Mi Hair Lounge
  • Nine Zero One
  • Jet Rhys Hair Salon

Economic Analysis

There are certain things you must research about the business you intend going into and the hair salon business is no different. Even though there was an economic downturn that saw fewer demand for hair salon services, the slow economic growth has seen this industry boasting more revenue, especially as more people are not only becoming sentimental about their hair, but there is a steady capita per disposable income. Once you have found that this is the business for you, you would need to determine if you have the funds to run the business successfully.

Another decision you would need to make that would ensure that your business becomes successful is in determining where you would locate your business. The location of your hair salon is very important as it will determine if your business will grow to become a success or if it will fail due to lack of customers. This means that you would need to ensure that your hair salon business is situated in an area with high foot and vehicular traffic.

5. Decide Whether to Buy a Franchise or Start from Scratch

Starting a business from scratch or purchasing a franchise is the total prerogative of the entrepreneur. As an entrepreneur, you should know the vision and goals of your hair salon business as this would help you determine if to buy from scratch or buy a franchise.

Starting from scratch has its advantages as you would be in full control of how your business runs as well as how it turns out. If you intend buying a franchise, ensure that you buy one that is successful even though it might be more expensive. Buying into a successful franchise will enable you tap into its success for the growth of your own business.

6. Know the Possible Threats and Challenges You Will Face

Every business no matter on what scale faces threats and challenges, which is no different for a hair salon business. The threats and challenges you are likely to face when starting your hair salon business are bad location, arrival of a competitor, as well as inefficient services to meet up with the demands of your customers. The way you handle your threats and challenges will determine if your business fails or succeeds.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

The decision of what legal structure to use for your hair salon business is a very important one as the structure you finally choose will have an effect on your business in the long run such as taxation, paperwork, as well as liabilities that will be encountered during the course of running the business.

A hair salon business allows six type of incorporation which includes a sole proprietorship, partnership, Limited Liability Company (LLC), Limited Liability Partnership (LLP), Limited Partnership (LP), and a-corporation. It is vital that you approach an attorney to help you choose the right legal structure for your hair salon business, especially as they will be able to choose the legal structure that will best suit your business.

8. Discuss with an Agent to Know the Best Insurance Policies for You

Insurance for your hair salon business is very vital as it will provide a cover for you when things go wrong when attending to a client. If you are confused on what insurance you would need for your business, you can talk to an insurance broker who would guide you on the best insurance policies for your hair salon business.

Some of the basic insurance cover that you should consider purchasing if you intend starting your hair salon business in the United States of America, include;

  • Business Owner’s Policy (BOP)
  • Business Liability
  • Workers’ Compensation Insurance
  • Commercial Auto Insurance
  • Business Property Insurance
  • Business Income Insurance

9. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you intend starting your own hair salon business in the United States of America, you should not bother considering an intellectual property protection as your priority. While you might decide to apply for an intellectual property protection for your salon’s logo, it is usually not something that should necessitate you bothering yourself about.

10. Get the Necessary Professional Certification

No formal training is required for owners of hair salon businesses who are mostly strictly managers; however, if you intend to become a stylist then you would be required to undergo formal cosmetology training.

Also, licensing is required for business owners who intend to start a hair salon; however, the licensing might vary depending on the state you are operating from. In general, stylists need to complete a state-approved cosmetology or barbering program, a designated number of practical experience as well as passing a state exam.

11. Get the Necessary Legal Documents You Need to Operate

Some of the legal documents that you would require to successfully run a hair salon business in the United States of America include;

  • Certificate of Incorporation
  • Business Plan
  • Business License
  • Operating Agreement
  • Employment Agreement
  • Insurance Policy
  • Contract Document

12. Write a Business Plan

Writing a business plan is very essential for your hair salon business especially if you intend to compete and make profit. A business plan helps you decide if the business you intend going into is worthy enough for you to invest your hard earned resources into it.

While you might not need to write a complicated business plan for your hair salon business, you will need to ensure that certain strategies and components are included as that will act a guide for you in your hair salon business.

A business plan which is an outline of your new business describes the mission of your hair salon, its operations, marketing strategy, and financial plan. If you write your business plan well, you will be also walking through the necessary steps required to start your hair salon business.

First off, you would need to write a summary of your company, its operational philosophies as well as its mission. This will also mean that you include your company name, contact information as well as the business structure. You will also need to state the purpose of your organization.

Write out a description of your services and whatever products you intend to sale. State what edge you have over your competitors in terms of services. Your business plan should also describe how you intend to minimize customers waiting times. It will also state your target market and any additional related services you intend to provide.

Your business plan should include a financial summary section that will show your projected financial statements for at least three years. This section will also include all startup expenses as well as list all potential sources of initial funding.

You will also need to create a marketing plan as well as an initial marketing budget. Your marketing strategy should include how you intend to advertise and promote your hair salon business. This will also include any incentive programs that you plan to offer and how frequent you intend to offer them. Your marketing strategy should depend totally on what kind of hair salon business you are offering as well as the target market you intend offering your services to.

Even though this might seem overwhelming for you as an entrepreneur, you could check online for free business plan resources that will aid you in writing your business plan without stress. If however, you intend running a large scale hair salon, you might need to hire the services of a business plan writer to help in writing a professional business plan for you.

13. Prepare a Detailed Cost Analysis

According to detailed research, the cost of starting up a hair salon business varies depending on the scale of business you intend to run. If you are planning on starting a small hair booth salon, where you get to rent a section of an already existing salon for your business, then you are definitely going to spend less than if you were renting a whole big space or purchasing a franchise.

Also, the equipment that will be needed for the hair salon will depend on how you start off. If you are going to be renting a booth, then certain equipment such as chair, hair dryer, and sink will be included as part of your rent. Another thing you would need to consider is the products you will need to purchase for use on clients as well as to sell.

Some of the requirements that you might need checked if you intend launching your own hair salon business in the United States of America include;

  • Total fee for incorporation would cost $500
  • Budget for liability insurance and license would cost $1,000
  • Amount needed for marketing and promotion would cost $5,000
  • Amount needed to acquire and equip a facility for a year would cost $20,000
  • Cost of equipping the hair salon with phones, computers, storage shelves, receptionist booth would cost $3,000
  • Cost of acquiring the required equipment for the hair salon such as hair dryer, sinks, chairs, mirrors, and other essential equipment would cost $20,000
  • Cost of launching an official website would cost $500
  • Additional expenditure such as business cards, fliers and signage would $500

From the above detailed report, to start your own hair salon business in the United States of America on a small scale would cost at least $51,000

If you intend to start your hair salon business on a medium scale in the United States of America, you should look towards having $110,000. If you intend to start your hair salon business on a large scale in the United States of America, then you should look towards raising at least $220,000

14. Raise the Needed Startup Capital

Obtaining the required financing for your hair salon business might be difficult especially due to the nature of the business as most banks and financial lending institutions are uncertain about lending to businesses they consider young or seasonal in nature. This does not however mean that there aren’t alternative hair salon financing options that entrepreneurs can take advantage of while starting out.

Financing is required if a hair salon intends to be successful as having the required finance will help it keep in sync with the latest fashion as well as contemporary trends. The financing can also help entrepreneurs acquire new equipment, train their employees, get treatments that are up-to-date, help renovate and repair the salon as well as cover for unexpected expenses.

This is where having a business plan for your hair salon business can help make the task of getting finance appear easier for you as a business owner. However, while acquiring the necessary financing for your hair salon business, ensure that the repayment options are flexible enough for you.

Some of the available options you have when it comes to raising money to start your hair salon business include;

  • Getting loan from a lending institution
  • Sales of personal properties and stocks to raise finance for your business
  • Souring for soft loans from family members and friends
  • Applying for loan from the bank
  • Raising money from investors

15. Choose a Suitable Location for your Business

One of the most important decisions you will make when it comes to your hair salon business especially during the early stages of establishing your business is the best location for your hair salon. Your decision as regards location should be one that ensures that your hair salon is located in an area that is not only accessible by highway but also by byways, and one that has plenty of foot and vehicular traffic as well as a parking lot. Your hair salon business also has to be in close proximity to other retail businesses as this will help generate customers for your business.

Hair salons usually operate out of three types of establishments such as storefront properties, freestanding buildings, and shopping centers like malls. Very few hair salons are located in malls especially due to the high rent in the malls as it is usually more common to find hair salons in freestanding buildings especially those located on a perimeter or even close to the mall.

Your choice of location also has to be driven not only by the available startup funds but also by the size of the facility you are looking to lease, and the availability of space in the target area you intend to do business in. You would also need to consider your local competition, how much of renovation you would have to carry out as well as what the local zoning requirements as regards your target location are.

Also, when getting a facility you would need to consider how the separate segments that a standard hair salon business must have will fit into the space of the intended facility you aim on getting. A standard salon requires four separate areas such as, shampoo, reception and retail, cutting/service as well as storage.

Other areas include a break room for the employees as well as a restroom. The largest area needs to be the salon service area, which should take up 50% of the space. This does not however mean that you break the bank while looking for a facility, ensure that you lease only what your budget can afford.

16. Hire Employees for your Technical and Manpower Needs

Depending on the type of hair salon you intend to run, you can rent some items on a monthly basis, while needing to buy some items brand new. If you are going to be leasing a booth, you will definitely not need to buy all the items, same as purchasing a franchise.

If however, you want to lease a whole big space for yourself by starting on a medium or large scale, you might need to purchase some items for fairly used. Listed below are some of the equipment needed to fully launch your hair salon business in the United States of America;

  • Sinks
  • Chairs
  • Hair Dryers
  • Sanitizers
  • Perm rods
  • Hair capes
  • Towels
  • Cleaning supplies
  • Washer
  • Scissors
  • Blow dryers
  • Brushes
  • Razors
  • Combs
  • Clippers

Depending on the type of hair salon business, you eventually decide to run; you might even run your business from home. However, most entrepreneurs starting this kind of business usually prefer to lease a facility or a booth. If you are starting on a small scale, then it would be best for you to lease a booth; if you are however starting on a large scale, you might need to lease a large facility.

The way the hair salon business runs is different from other forms of business. While you might need to employ a receptionist and a cashier, you might decide to lease some of your space out to other hair stylists in return for rent, or you might need to employ these stylists yourself.

This is totally your decision. If you are going to be handling a lot of customers, you alone cannot handle the business. Therefore you would need to hire a receptionist, cashier, marketing executive and hair stylists. This is about 6 to 10 employees.

The Service Delivery Process of the Business

The processes involved in the hair salon business usually depend entirely on what the clients want done. This process could range from washing of the hair, straightening and grooming the hair for the client. It could also involve trimming of the hair, adding extensions, and any other services that will be required by the client.

17. Write a Marketing Plan Packed with ideas & Strategies

One important area of any business is the marketing, because it helps you generate the needed money to run your hair salon business. This is because in marketing, you spend money to not only promote your business but also attract clients that would hopefully bring in more money for your business as well. Marketing is very essential for any business that is looking to build up on itself, grow and eventually become successful.

However, the fact that marketing is very important to your business does not mean you would need to spend amiss without having any laid down strategies. marketing strategies are very important as they would help you identify the conventional and unconventional marketing modes available and which would best your hair salon business.

This is because while one marketing method might work for one hair salon business, it might not work for you especially if your target customers are different. Listed below are some of the ideas and strategies needed to market your hair salon business;

  • Ensure that you market your hair salon business via radio and television
  • Send flyers to the mail of your target customers
  • Leave flyers on windscreen of cars parked in your target area
  • Share your business cards to homeowners and businesses around your target area
  • Make use of direct marketing
  • Ensure your family members and friends help with word of mouth marketing
  • Create a website with a memorable URL and use it to push your business
  • Ensure that your hair salon business is listed in offline directories such as yellow pages as well as online directories
  • Attend hair, beauty and fashion shows to advertise and promote your business
  • Make use of social media platforms such as Instagram, Twitter and Facebook to promote your business

18. Work Out a Reasonable Pricing for your Services & Products

There are several factors that determine what prices can be set on a product or service. Such factors include operational cost, overhead cost, and what competitors in same target area are charging. If you are looking to set your price, ensure that you do not set a price that will affect your profit as that would lead to your business failing before it even has a chance to start.

19. Develop Iron-clad Competitive Strategies to Help You Win

There are different reasons why customers often leave patronizing the services or products of a business for that of competitors and this could be due to the fact that they find that the competitors are offering a better service, or have an additional related service that is eye catching or better still offer a more affordable rate than the business they are currently using.

If therefore you intend to operate a hair salon business, bear in mind that there are other hair salon businesses existing in your intended area of operation and so you would need to ensure that you package your business in such a way as to give you an edge over your competitors.

One possible competitive strategy that can be used to win your competitors in the hair salon business is ensuring that there are different hair rates and services attached according to the price each client would pay. This means that your clients should feel comfortable coming to your hair salon knowing exactly what they will get.

Another competitive strategy is to ensure that you show your clients how much you care about them by passing along tips and advice that would help their hair.

20. Brainstorm Possible Ways to Retain Clients & Customers

Every business person knows it is easier to retain a customer than to get new ones. A retained customer shows more loyalty to the business than a new one and is likely to bring in more customers for the growth of the business. This is why businesses usually strive hard to ensure they reward their loyal customers with extra attention as well as excellent customer care. A customer is very likely to leave a business that does not give him or her the desired attention they need.

Another possible way to increase customer retention include you giving out regular incentives and discounts on certain days for your loyal customers. This does not mean that you do not give out incentives for first time customers, because this is also a means by which you can retain them.

21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If you intend to boost your brand as well as create a corporate identity for your hair salon business, then you would need strategies to achieve this. Without creating awareness for your business, no one might notice you and so if you want to grow your business to an admirable level of success, you need continuous promotion of your brand.

It is not however easy for anyone to concentrate on growing their business while also actively promoting their business, which is why most entrepreneurs usually hire a brand expert to handle this aspect of their business. Some of the platforms needed to boost the brand of your hair salon business as well as promote and create a corporate identity for your business include;

  • Create a viral video about your hair salon business by producing a ‘how to’ video
  • Ensure that you compose a catchy jingle in your radio and television ads that will get stuck in people’s memory
  • Place your fliers under the windshield wipers of parked cars in your target area or in a parking lot
  • Use social media platform such as Facebook, Twitter, Instagram and YouTube to maintain a presence as we provoke a response to most of your services.
  • Create a custom t-shirts with your hair salon logo on it and encourage your staff to where it, thereby passively promoting your company anywhere they go
  • Ensure that you attend special events such as fashion show, pageantries so as to network and create awareness about your salon

22. Create a Suppliers/Distribution Network

If you intend running a hair salon business, then there are certain supplies that you would need to ensure that your business runs efficiently and effectively. Because you constantly would need supplies to run your business, you would need to be in a good business with your suppliers, so that your business can run smoothly.

Apart from ensuring that your business runs efficiently, the point of bring in a good business relationship with your client is so that you can get some supplies on  discount and also get advice on which products are in rave and would best work for your hair salon business. Being in a good business relationship with your clients is likely to vastly improve the bottom line of your business.

23. Tips for Running a Hair Salon Business Successfully

No one starts a business with the intention to fail, however businesses fail when there are no laid don strategies in which one can run the business successfully. To ensure that your hair salon business becomes a success, you need to ensure that you pick the right location, especially one that has a lot of traffic.

Striking the right balance is essential in running your business. You would need to be careful on the things you buy for your salon as there is no need to splurge on state of the art equipment especially if you are going to be starting off on a tight budget. All, your salon needs is to be attractive, neat and tidy. You can save up on cash and instead use in promoting your business.

Another way to run your business successfully is to communicate clearly and consistently with your clients. Customers are the key to any business’ growth and so keeping them happy and satisfied should always be your number one priority.