So You Want To Open a Salon?

People want to look and feel their best. They want to be attractive and desired. They crave beauty and want to exude it, which is why salons and spas are always in demand. Even in tighter economic times, people are consistently willing to spend money at them to escape and make themselves look good.

Serving those clients and making them feel better is a dream of many. However, having a dream of opening a salon or spa is one thing. Making it into a successful and thriving business is something completely different. When starting up your own business, there are a number of financial considerations you should seriously think about before taking the plunge, including financing, location, revenue streams, building the space and marketing.

First the Financing

For some, an hour in the hair salon or a drop-in massage can change their outlook on the world. While they may be willing to pay for it, the level of service and atmosphere has to match the price.

The cost for a start up can significantly range in price depending on the kind of clients you want to attract and the kind of income you desire. Entry level salons generally run about $75 per square foot to create while some of the high-end salon and spa combinations can reach upwards of $300.

To create the right salon for the type of clients you want to attract, you need to build a realistic budget based on your business plan and ensure you have adequate capital to make it happen. Unfortunately, these days it’s become more difficult to find a bank with the resources and willingness to lend to small businesses.

Look for a finance group that offers a wide range of programs to help meet the challenges of starting up a business. From pre-qualified credit lines to wrap leases that allow you to add in new equipment to your current contract, be sure your financial partner offers the flexibility you will need as your business grows.

Also, make sure your lender has accomodating payment structures to meet your cash flow needs. Some lenders offer programs with no payments for 120 days to allow your equipment to start working for you. This allows you to feel confident as you get established during your first few critical months of operation.

Location. Location. Location.

The location of a salon or spa is like any piece of business real estate. Without good visibility, easy access and adequate parking, your business will suffer.

First and foremost, higher traffic areas are going to get your business noticed. Before you’ve even opened your doors, potential customers are going to become aware of your new business as they drive by and see the construction. If you’re located in a popular mall, shoppers walking by will be curious about the new store opening up in their area and may even try to get a peek through the a window or partly-open door.

Good accessibility is as important as good visibility. If there’s a street divider in front of your shop and clients can only access the salon as they drive from one direction, you will limit the amount of potential customers that drop in.

Adequate parking is also vital. Don’t underestimate the importance of convenience, especially in more urban areas where people have to think strategically when in a car.

When picking a location, you should also consider zoning regulations and shopping center restrictions. One too many owners have started building only to realize it wasn’t zoned by the town for a salon or spa. Also, many shopping centers require tenants to be open for certain hours or don’t allow sublets, which can cause havoc if you want to open a booth-rental salon.

Crunch the Numbers

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. While good equipment and tools are necessary to style and cut hair, professional equipment makes customers look at your establishment as more sophisticated and worth the money.

A soft-sell money maker would be equipment that adds to an existing service, making it seem more indulgent and making customers eager to pay more at the register for a higher level of care. One example would be motorized-base chairs that look and feel more luxurious to clients than manually pumped ones. While you can’t directly charge customers for using them, clients happily pay for the more sumptuous experience. In the end, these durable chairs are extremely affordable for salon owners, costing about a dime per client.

Another soft-sell money maker would be equipment that may be more expensive initially but offers a quick return on investment for the shop owner. For example, Micro Mist treats damaged hair by using microscopic water particles that permeate deep into hair follicles. This sensational-looking hair treatment cannot be done anywhere else but a salon, creating a rare and sought-after experience for clients who will be willing to pay for the higher-level service. By charging more for each hair color treatment, the Micro Mist equipment is quickly paid for and keeps generating a higher profit to you in the years ahead.

Salon and spa owners should also consider direct income producers for their shop. Pedicure spas are the number one proven way to generate instant revenue. Within months, most business owners have already paid for the equipment and are making a healthy profit. 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.

At the end of the day, any product that is going to increase the professional look of a salon and add to the ambience should be considered. People are always willing to pay more for a great experience.

Budget for Building

When customers walk in to a place, the ambience 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. Whether you are building the creme de la creme of spas or a relaxed beauty shop, appropriately budgeting for functional improvements to the space as well as decorative details will create a balanced atmosphere the client will unknowingly sense.

Generally, 60% of your building budget will be utilized for improvements on your new space, including flooring, electrical systems, plumbing, HVAC and walls. Anything that is permanently attached to the structure will fall into this category. Although you can’t take these improvements with you if you outgrow the space or move, they are an important component to the client’s overall experience at your shop.

The remaining 40% of your budget should consist of items such as furniture, fixtures and equipment. Much like the furniture in your house, if you moved locations, you could easily pull these out of your space.

One of the biggest mistakes new salon and spa owners make is they don’t properly budget to begin with and run out of money as they are building. They end up skimping on furniture and fixtures, ultimately creating a space that doesn’t look or feel right for the type of experience they are trying to create. This suggested budgetary range allows owners to create a balanced feel for when the client walks into the door.

Show off your work

While the best type of marketing is word of mouth, as a new business owner you should set aside a percentage of your monthly operating costs for marketing right from the start. Nowadays, you can be extremely sophisticated with your marketing dollars, targeting people that live within a certain radius of your salon or fall into particular income categories through banners, direct mail, print advertising or even a media campaign.

As the salon becomes more successful, you can gradually increase your prices to expand and tweak your marketing efforts. One way to do this is as stylists become fully booked, raise their daily rates. While this may reduce their base number of clients who can afford or are willing to pay the new rate, you will still pull in more money daily as well as open up spots for new people that are willing to pay the higher price.

Opening a salon or spa can be a daunting endeavor. There are numerous decisions to make when starting up a business in the beauty market and some of these decisions can mean the difference between success and failure. These financial suggestions should get you going on the path to ownership but nothing replaces individual guidance from experts. Takara Belmont’s design consultants help salon and spa owners like you get up and running every day. No matter how large or small your new shop may be, they can help you find the resources you need to get started. For a consultation and more information, please click here and your nearest sales representative can talk to you about options.