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Considering opening a salon?

Opening you own salon often comes as the next logical step for those hairdressers who have been successful at mobile hairdressing. Owning your own shop implies a better quality of the service you can offer and this is also more attractive to your customers.
Thousands of people decide that they want to run their own business every year.

It is important that when opening a business it meets with the needs of you as an individual and that it is viable. Hopefully this will happen in hairdressing as you will go into business in something that interests you, that way you hopefully wonít get bored.

You should ask yourself some questions before you start planning your salon like is there a market opening for your service? How can you differentiate so that you wonít be beaten by the competition? And how will you fund your proposal? Do you have money set aside or do you need to request a huge bank loan? If you do not have a means to differentiate massively, then you should perhaps consider buying a franchise or an existing salon name. There may be a way in that you can buy out your employer or run your salon as a family business, all of which have their advantages and disadvantages. For many people who open their own business, the main factor behind this is to be their own boss and determine their own working hours.

The hairdressing business is a competitive one, and you must not be fooled that it is always easy to succeed, but with a good business plan and a good strategy in place, coupled with a strong desire to be successful then there is no reason why you cannot provide a good quality of service and create a strong profitable business. You should ensure that you research and develop your business ideas as thoroughly as possible. It is essential that you determine whether there is room in the area you want to set up in.


• How to become a hairdresser • Become an apprentice in a salon
• Gain an NVQ
• Foundation Degree in Hairdressing
• Financing your idea
• Market Research
• Prepare a Business Plan • Executive Summary
• The Market and your Competitiors
• Marketing and Sales
• Your Team
• Financial Forecasting
• Useful Links

Financing your idea
Financing the development of your idea can be the hardest challenge that most people starting up in business will face. The most common route to go down is to be in contact with a financial advisor and establish a relationship with your bank so that they can advise you well on taking out a loan or an overdraft. There is also the opportunity to use government grants as they actively seek to encourage entrepreneurs and make support widely available. It is worth bearing in mind that you will probably need different amounts of money at different stages in the development of your business so be careful not to use it all in setting up, as you may find you need to embark on unexpected market research or competitor analysis for example.

As you develop your idea, you may speak to people outside your business interest, therefore openly exposing your idea to others. Once you do this, there is no reason why somebody may not pinch your idea. It is essential therefore that you protect your intellectual property. This can be done in several ways;

• By using a trademark

• Having a copyright

• Patenting your idea

• Using design rights that will protect the appearance of your product

If you have developed a partnership then the idea is likely to have been that of just one person. In this circumstance you should write a contract that determines what, if any, will be the difference of profit to each party.

Essentially, know that you can afford it. Before you start your own business, it is important to assess the start-up costs required and decide if you can physically afford it. The amount of money that you will need to start up a salon varies immensely depending on the type of service you are going to offer, the clientele you wish to target, the quality of your salon, the fixtures and fittings you would like to have, the equipment you will need, the amount of bookings you aim to take, the leasehold agreement you have, the rent you will pay and the opening inventory you will have, to name just a few factors to be considered.

Below is a table with a summary of some of the things that should be considered first.

Purchase price (or Tenancy, trade fixtures to fittings)  
Security deposit  
Rent one month - three months in advance  
Stock and Decoration and Refit  
Professional fees and training costs  
Removal costs and sundries  
New equipment  
Working capital  

If you decide that you can meet the necessary start-up costs then it is essential to start to plan effectively. It must be understood that there is more to running a salon than cutting hair, and so it is imperative that you as the owner are educated enough to be able to do things like balance the books, manage supplies, deal with reps, have excellent interpersonal skills, and that is just the start. Simple steps can be taken to ensure that you are a top business owner, as well as a top stylist. For example, go on courses, read books and the most valuable information you will get of all is from talking to people and listening to their experiences. All your employees, and of course yourself, will need to be qualified in hairdressing to NVQ Level 2 at least, which qualifies as a junior stylist.

Market Research
Hairdressing is a very competitive business, and you are more than likely to be setting up where there are already salons established. It is therefore essential that you have a good marketing strategy to get yourself known in the area and entice clientele. The name of your salon is one of the most important things you should decide. Primarily it should be a name that when someone hears it they never forget it. This can take a lot of time to decide on your salon name so make sure you experiment with it and talk to people about it before you come to a decision (obviously make sure nobody you speak to is going to pinch your idea!).

It is important that you conduct your market research effectively. Work out a good sample range dependent on the population where you will be locating your salon and make sure you ask this number of people if they would welcome a salon in their area, as if you come up against public disapproval this can cause many problems. You can use focus groups to see what they will want from your salon, for example, will it be unisex and will you provide beauty treatments? Having this approach allows you to ask questions but also allows for discussion of the idea. Although time consuming, it will be hugely beneficial to get the opinions of your potential customer base. Questionnaires can also provide highly useful information. They allow you to ask direct closed questions that will be answered matter-of-factly and also you can ask open-ended questions where the respondent can expand if they wish. This also allows anonymity and so you are likely to get honest answers and an idea if there is great public disapproval. You could also speak to other businesses in the area and get their ideas, if of course they are willing to discuss.

An important decision that you will need to make when opening a salon will be whether you want to be unisex or just for women or just for men. There are proís and conís of both. Being unisex means potentially more customers, but you will need to have the staff to cover a wider range of styles and services your customers may want. If your salon catered just for women, their cuts and styles commonly are less frequent, however they will usually require a higher standard and therefore cost more.

For menís and unisex salons, generally custom is obtained by passing trade and therefore the expense of advertising is usually minimum. However, for a womenís only salon, this is usually operated via bookings and so it is generally essential to market yourself well and gain custom. The cheapest and most valuable form of advertising is word of mouth. Make sure that everybody who comes into your salon is more than satisfied and leaves with nothing more than good words to say about you. This can be enhanced by having friendly staff, making the salon look and feel comfortable and clean. Most women love having their hair done so look into making their experience as memorable and relaxing as possible.

Prepare a Business Plan
It is essential that every business has a business plan in place that works. It is just as essential that the business plan is realistic and tailored specifically to meet the purpose of the business, and that it is followed.

What is it?

A business plan is a document that is compiled to show the businesses aims and objectives, its strategies, the market it is in, the customers it is targeting, a competitor analysis and its financial forecast.

Why do you need one?

The purpose of a business plan is to make sure that the proposed venture will make money and the will be financially stable; otherwise the business will cease to function. It is important to be ethically and socially responsible as a business, and it can improve your image if you are seen to be acting in such a way. Elements of how you propose to be corporately responsibility should be included in your plan. A business plan has a number of purposes. Primarily, it secures your external financial position and it is a means of measuring the success of your business.

Who is a business plan for?

Anybody with an interest in your business will want to see your business plan, but obviously essentially you decide who sees it. As it a means of securing your external funding, your bank will want to ensure that the document is as legitimate as possible as they are potential investors into your business. It would therefore be beneficial to you to ensure that your plan is as viable as possible before you show it to your bank.

The business plan, essentially, is for you. It is a means of identifying what market your business will operate in, what products you intend to sell, and identifying your potential and current competition. It enables you to also identify any pitfalls before they get you into trouble, because even if you do not spot them, letting friends or potential partners, or even a solicitor have a read may result in potential problem areas being spotted and you being able to resolve them.

Anyone who is interested in buying your business from you may wish to see your business plan so that they can gain an insight into where you were going with it and what you hoped to achieve. Consequently, it is imperative that you treat your business plan as a live document and update it all the time. This is important because if you diversify your product range, for example, this could impact the market you are operating in, the consumers you are targeting, and your competition, all of which could have a substantial effect on the financing of your business. You may, for example, need to borrow more money to expand an existing range in your product portfolio, and if this is worked into your business plan, you will be in a much more favourable position with the bank.

Be aware when writing your business plan that not everybody who has an interest in your business will be as business-minded so try to avoid using jargon and explain fully about the service and the products you will be offering. Make sure you get someone who is impartial to read your plan and make sure they can understand it.

What should a business plan include?

Your business plan should provide detailed information about the intent of your business and how you are going to develop it from an idea into a real up-and-running business.

The structure of your business plan can be categorised into sections as set out here. Your business plan should be of a manageable length, therefore keep it as short and concise as possible and make sure it looks professional as this will reflect your seriousness of opening a business. Ensure that it is proofread before you get it printed out on top quality paper and bound.

Executive Summary
The most important part of your plan and it should be written last. This will inform everybody who reads your business plan what it actually entails, and it is worth noting that it is in fact the only part of your plan that may be read of the whole document. The executive summary should include highlighted parts from each section which will explain to the reader what the business is about. You must ensure that you cover all the points your business plan talks about, and not make it simply an extended table of contents because this will add no value. You should ensure that your summary is truthful because although you want it to interest its readers it must not undermine the credibility of the whole document.

Your business its products and services

You must be able to get across clearly what your business will be doing. This section of the business plan explains who you are, what you intend to be doing and the market in which you will enter. Basically this section will answer if your plan viable.

The first part of your plan should start with an overview of your business.

• when you want to start trading

• any information that may be relevant, for example, how you acquired the business if you did so

• if you already have a business talk about this and what products and/or services it offers

• talk about your mission statement and your aims and objectives

The second part should talk about the products and/or services you will be offering.

• how it will benefit the market

• how it will benefit others

• why customers would want to use your service

• whether you have any design rights, copyrights, patents or trademarks

• include what your Unique Selling Points will be

• use business tools such as the Boston Matrix to explain whether your service will have a low or high market share in a growing or mature market

The Market and your Competitors
The third section should cover all the relevant information about the market you will be entering and who your competitors will be. You should write in here the results of any market research that has been undertaken, and be able to demonstrate that you are fully aware of how the market operates, its drivers and trends, that you will be participating in

• define your market

• quantify your market, for example, itís size, any relevant statistics

• explain your market, for example, any trends, any pending legislation, use business tools such as PESTEL and Ansoffís Matrix to explain if you are entering a new or existing market with a new or existing service, explain whether there are any restrictions on your market

• identify who your competition is and how much of the market you will share together

• you should be able to demonstrate that you will be successful in the market despite the current competition (if there is any)

• discuss who your targeted customer base will be and you know that you will gain custom from them

• talk about any competitor analysis that you may have carried out. For example, compare a SWOT analysis that you will have done on your business in comparison to a SWOT analysis of your competitors. Include here that you have thought about the future as well, so if there were to be any anticipated changes, how would you and your competitors react to these

Marketing and Sales
The fourth part of your plan should concern marketing and sales. This should discuss how you intend to sell your service and the products you may sell in your salon. You should invest some valuable time into this section as it is important that once you are up and running you can actually enter the market immediately and start building your self up as soon as possible. This time should also be used to make sure that your whole plan is achievable.

This part of the plan should answer the following questions:

• How will you create your marketing strategy? i.e. how will your service be positioned in the market?

• What are your customerís needs? Who are your customers? If anybody has shown an interest in you setting up your salon in a particular area, include any details and talk about how you will attract new customers to your salon.

• How will you price your service and products?

• How will you promote yourself? Look into sales methods, for example, PR, emails and advertising.

Your Team
Thorough consideration should go into the structure of your people planning Ė your management team and your employees. If you can see any foreseeable weaknesses then you should try to deal with them as effectively as possible.

For this part of your business plan you should talk specifically about your team members and how they fit into your business. For example, give background details on your stylists like how long they have been in the business and what qualifications they have. Ideally, you want your management team to have varied range of skills and experience to make the team as balanced as possible, which will lead to the greater success of your salon. You should also talk here about what you plan to pay your employees and what benefits, if any, you would like to offer.

This part of your plan should also talk about any training schemes you intend to run or recruitment days. You should probably provide the timescales of these and how much it would cost your business. You should be honest about your workforce. If you feel that motivation or absence is an issue or could potentially be one, then include your ideas about how you would overcome this.

Financial Forecasting
For your business plan you need to provide information that talks about your business in terms of money. This includes how much capital you need, if any. What security are you able to offer to the people that may be lending you any money? And what will your sources of revenue be?

Your financial forecast should include the following:

• Cashflow forecast. This will be your balance of cash and cashflow patterns for the first 18 months at least. This is to make sure that the business will be able to survive the first 18 months of trading.

• Profit and Loss forecast. This will be the amount of profit you expect to make, the amount you have projected for your sales and cost of goods and your overheads.

• Sales forecast. This will be the amount you expect to generate in sales.

This information should run for at least the next 3 years, but include most of the detail in the first 12 months. The investors should be able to clearly see what the thinking has been behind all the numbers.

A major concern to you may be how do you survive while you business is getting started. The easiest answer to this is to make you sure plan well. Be aware that you may not make any money in the first year of trading, and cover your back to at least make sure you can pay for all your outgoings (salaries, rent/mortgage, overheads etc.). Make the provisions also for any unexpected payments that may need to be made, for example, building works. Seek the advice from a financial advisor of how you can help yourself in the early days as well.

Making personal savings can help you. Small things like consolidating your debts. This can involve you paying a 0% APR and a single monthly payment is usually much cheaper than several. Re-mortgaging your property could be another way to release some money that would otherwise be tied up. Think about your own personal overheads like your bills and see if you can contact the companies concerned and make any additional savings. Set yourself a personal budget, but ensure that you are realistic in the process.

Make sure that you do not waste money at home or in your new business premises. Donít use electricity unnecessarily and think about your gas bills. All these little things will contribute to you having more money in the long-run.

As it may be difficult initially, it is a good idea to try and work out much money you made need to source within the first 12 months of trading.

You can do this by taking the following steps:

• work out what your estimated income will be from your sales

• work out what your expenses will be

• estimate what you will pay for salaries, including the tax

• and estimate what is left after your monetary requirements and how much you will take out.

Once calculated, this figure will tell you how much you may need to source from elsewhere. Be careful not to rely too much on external funding on things like bank overdrafts as this money can be spent very quickly and you reach your borrowing limits before you know it.

In the initial stages of starting up, you will more than likely always need money. Here are a few suggestions of places to look for where this may be found:

• Savings

• Sell unwanted assets

• Borrow from your family and friends

• Debt factor

• Release any unused equity

• Get another job!

To avoid disappointment, make sure you plan well and take advice from business tools that have dealt with business failures. Commonly, make you sure you do adequate market research, plan you finances well and thoroughly, always be aware of your competitors and know what they are doing as far as possible, make sure you have a high standard of customer service as customers are your main driver for success in your salon and make sure that you employee the right type of people with the right attitude.

All in all plan, plan, plan. If you fail to plan, you plan to fail and so make sure that everything is above board and you have a really good strategy in place. Apart from barriers to entering the market that are outside of your control, there is then no reason why you cannot succeed.

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