How to Write a Hair Salon Business Plan: Complete Guide

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your hair salon, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your business plan for a hair salon. Use this template to create a complete, clear and solid business plan that get you funded.

For more information on hair salons & barbershops, make sure to read our guides below:
How to Open a Hair Salon / Barbershop: Complete Guide
How Much Does it Cost to Start a Hair Salon / Barbershop?
How To Build a Financial Model For a Salon?
7 Strategies To Increase Revenues For Your Hair Salon
10 Salon KPIs you Should Track and How to Calculate Them

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.

Why do you need a business plan for your hair salon?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan)
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write your hair salon’s executive summary?

This section should not exceed 1 to 2 pages and provide a brief outline of the objectives and purpose of your business, market analysis & marketing strategies, company structure & key people, financial plan, and financial ask.

What are these things? Let’s take a quick look:

• Business overview: introduce your company and briefly describe your business model. For example, you may provide specialized hair care services only (such as a dry hair salon or highlighting, etc.) or a full-service hair salon (where you provide all types of possible services related to haircare). Also, make it clear where you store is located, whether you operate a franchise or an independent salon, and how many employees you plan to have.

• Market analysis: provide a deep market analysis that backs your decision to open a hair salon. The market analysis will include information like who your competitors are, your strengths and weaknesses, your target audience and their haircare needs, etc.

• People: mention who are the managers and why you have selected them along with their relevant industry experience. Also, speak about your staff and their reporting lines

• Financial plan: how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits?

• Financial ask: what loan/investment/grant are you seeking? How much do you need? How long will this last?

2. Business Overview

This is the section of your business plan where you will describe your hair salon business in detail. Try to answer the following questions concisely:

• Why do you want to open a hair salon?
• How big will be the facility and how many appointments will you serve daily (approximately)?
• Will you have standard operating hours or extended business hours?
• Where is the location and why did you select that location?
• Will you provide only services, or will you sell products too?

Try to cover as many questions as possible to create a convincing business overview to keep your potential investors and lenders hooked.

Let’s look at different subsections that you must include:

a) History of the Project

If you are yet to open your first hair salon business, you may not have a business history to share. However, you can share your training and past industry experiences. You can even demonstrate your passion and interest for the hair styling or beauty industry.

This is also where you should explain why you decided to create this business today. Did you find a gap in the market? Is there a lot of demand for hair styling services but few salons to accommodate customers?

Or are you trying to open a new format of hair salon, inspired from successful hair salons in other cities, effectively differentiating yourself from your competitors in your area?

b) Hair Salon Business Model

This section must include the following information:

• Are you building your hair salon from the ground up or are you purchasing an existing one?
• Is this a franchise or an independent hair salon?
• Will you allow advanced bookings through channels like a website or a mobile app, or will you allow walk-in customers or both?
• Will you focus only on services, or will you sell hair care products, too? 
• If you want to sell products, too, how do you intend to upsell them?
• Will you offer home visits, and if so, what will be the area of operation for that?
• Do you intend to expand to other services like manicure & pedicure, facials, body hair removal, etc.?

Provide a thorough description of your business model so that the potential lenders and investors can make financial assessments and projections.

c) Target Audience

Give an overview of your target audience. For example, answer the following questions:

• Will it be a unisex hair salon or a gender-specific hair salon?
• If gender specific, what is the gender distribution of location?
• What is the average family income of the target audience?
• How frequently do they visit hair salons?
• Is there a specific age group that you are targeting?

d) Hair Salon Products & Services

Your hair salon will primarily be a service-oriented business. However, that doesn’t mean you will not (or you cannot) sell related products. A simple table like the one below will do the trick:

Haircare	Products
Colors	Conditioners
Conditioning	Hair oils
Curling	Hair serum
Cuts	Shampoos
Perms	Texturizer
Shampoo	Volumizer
Waving	Anti-freeze

e) Hair Salon Pricing Strategy

Provide a pricing chart for both individual and bundled services. If your services are more expensive than or cheaper than your competitors, explain the logic and rationale behind that.

For example, you may be using 100% organic and chemical-free products that are costlier than cosmetic products. This can explain the extra price. Alternatively (or maybe additionally), you may have popular hair stylists offering those services, making them more expensive.

Also, include a pricing chart for the products that you want to sell. If you are selling bundled products at discounted prices, include them, too. 

It’s a great idea to include the estimated profit margins for your products and services as well. Indeed, a pricing chart for all major products you are offering can help the investors or lenders to tie your pricing strategy with your financial projections.

f) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Hair Salon Market Analysis

It is vital that you demonstrate a deep market knowledge to your potential investors and lenders. If you are not aware of the market where you want to run your business, you will invariably fail.

For example, if you are offering expensive haircare procedures in a low-income or middle-class area, you will run into losses. Similarly, if you are not abreast with the latest hairstyles and trends, you will find it difficult to attract customers.

a) Market Trends

If you are offering haircuts and hair makeup, you must be aware of the latest trends. Fashion is always a time-bound thing, and so is hairstyle.

For instance, if you are a hairstylist, latest hair trends (2022) may include styles like: sleek-front-loose-back, soft brown & gold, bangs, voluminous blowout, beach waves, etc.

Similarly, if organic hair care products are in demand and you try to sell chemically heavy cosmetic products, people are not going to buy them.

b) Competitor Analysis

The objective of the competitive analysis of your business plan should establish that starting a hair salon in your area makes sense. For example, there might be few competitors despite a lot of demand. Or, for example, existing competitors might not be adapted to the latest customer trends, effectively losing business to newcomers.

In your competitive analysis, try to include the following information:

• Number of competing hair salons or full-service beauty salons in your area
• Their target audience
• The list of products and services they are offering
• The number of stations each salon has
• Their marketing strategy
• Their strengths and weaknesses
• Their reputation as a brand

Hair Salon SWOT Analysis

Along with the competitive analysis, you must also perform a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Here you must provide the following information:

• Strengths: Examples – you may have years of industry experience, or you may be a celebrity hairstylist, or you may be offering unique services that no other competing hair salon is offering
• Weaknesses: Examples – you may not have enough experience with Millennials, or you may not have enough funds for sufficient inventory, etc.
• Opportunities: Examples – unlike your competitors, you may be offering a full-service hair salon experience complete with absolute mastery over recent hair trends
• Threats: Examples – the emergence of new hair salons that can possibly take a slice of your potential customer base or existing hair salons reducing their prices to counter your presence

Both competitive analysis and SWOT analysis can help you to come up with innovative marketing strategies that you can use to gain new customers and even chip off your competitor’s customer base.

c) Customers

This is the segment where you provide a detailed analysis of your target audience. The analysis must include things like:

• Demographic distribution of your target customers (you can find data from census.gov)
• Average monthly family income (this will give you an idea of the spending capacity)
• The frequency of hair salon visits (this will give you a fair idea of the number of customers you can expect in a month)
• Current hair trends in the location you want to operate in and the factors that influence those trends
• What channels do the customers use to share their hairstyles and/or hair salon experience?
• Things that your target audience like and dislike about the existing hair salons (this will tell you what you must do and things you can do to improve their experience)
• What is the average amount they spend per visit?
• Do they engage in haircare activities at home? (This will tell you whether you can sell haircare products or not)
• Do they like to use coupons and gift cards? (If yes, you may open a separate revenue stream by offering such products)

You can add more questions if you need to complete your customer or target audience study. The best way to get the answers is to conduct direct surveys and interact with your potential customer base. However, you will also find some data from competitive analysis.

A complete understanding of your target audience can help you develop sales and marketing strategies that can beat your competitors and give you an edge.

4. Marketing Strategy

This is the section of your business plan where you should outline your customer acquisition strategy. Try to answer the following questions:

• What are your Unique Selling Points (USPs)?
• What marketing channels will you use?
• How do you intend to track the success of your marketing strategy?
• What is your CAC or customer acquisition cost?
• What is your marketing budget?
• What introductory promos and offers do you intend to provide for attracting new customers?
• Will you offer gift cards to open an upfront revenue stream?
• Will you sell products? If yes, how do you intend to upsell them for revenue maximization?

Let’s expand a bit on a few questions below:

What marketing channels do Hair Salons use?

A few marketing channels that hair salons typically use are:

• Google My Business listing
• PPC ads and social media ads
• Social media promotions and user engagement on platforms like YouTube, Facebook, Instagram, Pinterest, Twitter, TikTok, etc.
• Email marketing
• Print ads, flyers, hoardings & billboards, etc.

You need to use all marketing channels. You can focus on a few (2 to 3 is more than enough). However, make sure that you include social media marketing as one of the options because it can help you to connect and continuously interact with your customers. In addition to that, social media can help you to go viral.

Also, do not forget to provide a fair and nearly accurate estimate of your marketing budget. Failure to display a well-planned and adequate cash flow for advertising and marketing can lead to investors losing confidence.

What are your Unique Selling Points (USPs)?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.

A few examples of USPs are:

• We are a full-service hair salon offering an entire spectrum of haircare services unlike the competitors who offer only limited services like cuts, colors, shampoo, and conditioning
• We offer all trending hairstyles including social media trends and Hollywood trends, which is something that the competitors do not offer
• We use only 100% organic and natural haircare products to prevent hair damage
• We will use our proprietary range of hair care products that will not be available with any other competing hair salon (you must have a range of approved and established products and your target audience must be aware of those products)

5. Management & People

You must address 2 things here:

• The management team and their experience/track record
• The organizational structure: what are the different teams and who reports to whom?

Management

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and technical knowledge of salon managers that you intend to hire to oversee your hair salon business.

Describe their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeed in their previous roles.

It is also important that you explain how their experiences and qualifications help you in implementing the hair salon services you are proposing. If they have specialized training (such as hair reconstruction), add that information.

Organization Structure

Even if you haven’t already hired salon managers, hairstylists/cosmetologists, salon/shampoo assistants, receptionists, etc., it is important that you provide a flowchart of the organizational structure defining the hierarchy of reporting.

Such a flowchart will demonstrate your management skills and plans to the interested investors or lenders. If necessary, they may even suggest changes to improve the management structure.

6. Hair Salon Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your hair salon is an attractive investment.

There should be 3 sections to your financial plan section:

• Your historical financials (only if you already operate the business and have financial accounts to show)
• The startup costs of your project (if you plan to open a new salon, renovate your salon, etc.)
• The 5-year financial projections

Historical Financials (if any)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

Hair Salon Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a hair salon, startup costs are all the expenses you incur before you start to receive customers and make money.

Startup costs vary based on a number of factors such as the location and size of your salon, the quality of the equipment, design and furniture, whether you rent or buy the space, etc.

On average, hair salons cost anywhere from $63,500 to $203,000 to start depending on whether you plan to lease the commercial space or buy it. Indeed, if the latter, you would have to take a loan and make a substantial deposit upfront instead.

Startup cost	Amount
Lease Security Deposit or Loan Down Payment	$10,500 (leasing) – $100,000 (buying)
Building Improvements & Renovation	$5,000 – $25,000
Hair Salon Furniture & Equipment	$27,000
Essential Supplies	$20,000
Other (POS, licenses, etc.)	$1,000 – $3,000
Total	$63,500 (leasing) – $203,000 (buying)

Hair Salon 5-Year Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model as part of your business plan for your hair salon.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 15%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of customers over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of customers as a small change in these assumptions will have a big impact on your revenues.

When it comes to the costs, consider both startup and operating costs. For more information on how much it costs to start and run a hair salon in the US, read our complete guide here.

7. Funding Ask

This is the last section of the business plan of your hair salon. Now that we have explained what your hair salon is about, what’s your strategy, where you go and how you get there, this section must answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to buy the real estate and do the renovations and design of the salon? Or will it cover mostly the cost of the salaries the first few months?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our hair salon financial model template, you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.