Investing in a good business that will develop and grow depends on identifying a good niche.
Not only has the hairdressing sector remained invariable over the years, it has also evolved and grown, being able to offer very different business models such as franchises.
Demand is growing and the opportunities are very varied. Investing in a hairdressers is a good investment option, but it faces professional competition.
To invest successfully in a hairdressers, a serious and realistic business plan is required to clarify the competitive advantages that can be offered to enjoy continuous and progressive growth.
Let’s take a look at the issues that we have to take into account to set up a hairdressers.
Why set up a hairdressers?
This is probably the first question you’ve asked yourself. You can list some points that will give you the answer:
- The first thing to think about is if you truly have a passion for the hairdressing industry. Setting up a business requires dedication and knowledge, and passion is fundamental for reinventing yourself and growing with the business.
- Is it a market niche in demand? There are 967,013 hair salons in the US. In 2020, that is approximately one salon per 342 people. Demand exists and there is a large offer of services.
- Does it require a large investment? The hairdressing sector doesn’t involve a large investment and/or qualifications when compared to other businesses. Opening a business like this can be done easily.
Therefore, we are looking at a good business niche that, with a good business plan, can be the start of a very profitable investment.
Business plan for setting up a hairdressers
A business plan is a document that summarizes the operative and financial goals of a business and outlines the plans and budgets to meet goals.
As with starting any business, it’s an important first step and must comply with guidelines with regards to form and content. Each section must include specific elements and address relevant questions that the people reading it would ask.
The issues a professional business plan must show to set up a hairdressing salon are as follows:
A market study aims to understand the reasons why consumers will buy your product. It also evaluates the desired geographical situation to start the business and the competition type.
It’s very important to identify a good business location as it will be vital to getting customers, as well as getting to know the competition and competitive advantages.
A hairdressers located near a shopping mall or public places optimizes the passage of the target audience.
Once these two terms have been analyzed, it’s time to study consumer behavior, including how cultural, social and personal factors influence that behavior.
Some of the basic questions to be answered in market research are:
- Who will your customers be? It’s important to describe a clear customer profile, describing their age, occupation, income, lifestyle and educational level, etc.
- What hairdressing services do they use? Describe their hairdressing habits, including how frequently they go, their favorite providers, most popular features and how much they spend on average.
- What will make them use your services? This is a good question for identifying the competitive advantage which will set you apart from the rest. This could be anything from an attractive price model to innovative services or membership systems.
The more information you get and are able to analyze and comment on, the better the forecasts and final decision-making.
In the hairdressing business, the service given to customers is one of the most important elements to success.
What services can you offer? Do they respond to the needs of the target audience? Are these services different from those of the competition? How can you set yourself apart from the competition?
This series of questions can help you list your hairdressing services.
In addition to standard hairdressing services, including others is a very good option: manicure, hair removal, body treatments, sun beds…
At this point, we highlight the customer service. We are talking about a personal service and every detail counts when it comes to strengthening customer loyalty.
Know your customer well and you will know how to treat and keep them.
So, we have a hairdressing business we like, but we want to make money. It’s important to know the average turnover of this type of business. According to current data, it’s between €40,000-€100,000 depending on the size of the business.
With a sales estimate, it’s possible to forecast a weekly average number of customers and how much they spend on average. It also includes the different sources of income that the salon will have:
- Hairdressing services
- Sale of products
- Other types of beauty services
By knowing data about the industry, you can calculate a forecast of expenses and revenue that sheds some light on the estimated sales we can have during a certain period.
Investment and financing
Where do we get the money to start the business? Compared to other types of business, setting up a hairdressers isn’t s expensive.
In general, the average investment can be between €30,000-€50,000.
These figures may vary depending on the type of business and the services offered.
It’s time to find out what sources of funding or investment you have. Many entrepreneurs take their business plan to banks, while others go to different investors who are able to cover the initial investment.
In both cases, a good business plan is crucial to helping you finance your business project.
The Marketing plan is just as important as the business plan, especially at the beginning, as it will be key to the growth of the business.
A marketing plan describes an advertising strategy that a company will implement to generate leads and reach the target market.
With a marketing plan, you must consider:
- Market research to support decisions.
- Personalized messages directed at certain demographic and geographic areas. In this case, hairdressing services adapted to both the customer and time.
- Selecting the type of platform to promote the products and services: digital, radio, Internet or in magazines, as well as the combination of those platforms for each campaign. Especially relevant is the importance of digital marketing due to the rise of social and online media.
- Monitoring the metrics obtained in each marketing campaign.
Many things can happen throughout the creation and development of a business. Are we prepared for it?
A contingency plan lists a series of actions that an organization would take if an unexpected event or situation occurred.
Sometimes a contingency can be positive, such as an unexpected increase in revenue, but most of the time the term refers to a negative event, related to the financial health or the company’s ability to stay in business.
Finally, one of the most important parts of a good business plan is drafting an attractive and compelling executive summary.
This is a summary of what the business is and what it involves. It’s important to emphasize the strengths and opportunities it offers. It is not a question of hiding the weaknesses that may be linked to the business, but showing the relevant actions to deal with them.
The stronger and more thought out your business plan is, the more likely you are to get funding and make that project a reality.
The hairdressing business remains strong and consistent in a competitive and demanding market. With a professional business plan, you will get the necessary information to strengthen the idea for your project and make it grow over time.