0

How to Open a Hair Salon

Note: This is a really long post. If you’re just interested in the resources we’ve assembled to help you open your own hair salon, you can skip down to the bottom section labeled “Resources”. We hope you’ll bookmark the post and find it useful, though!

Own a Hair SalonHair salon franchises are one of the most popular types of franchises and compared to restaurants, the startup costs can be relatively low. A typical hair salon franchise will cost anywhere from $100k-450k to open, which is roughly the same amount you’d expect to spend on a cafe-style restaurant franchise (like frozen yogurt or a juice bar with some equipment but not a full kitchen).

It sounds pretty reasonable until you consider that you can start your own salon for less than $100k in most cases – often less than $50k. The exception would be a highly trendy shop in a premium real estate market like NYC or LA. In those markets, you may have to spend a bit more or cut the size of your shop if you want to keep it under $100k. When you own your own store, you won’t be forced to pay ongoing fees and give away a portion of your revenue in royalties, either.

Fees to Open Popular Hair Salon Franchises

  • Great Clips Hair Salon Franchise – $114k – $216k
  • Supercuts Salon Franchise – $114K – 234K
  • A Suite Salon Franchise – $362K – 1M
  • Cherry Blow Dry Bar – $180K – 250K
  • Fantastic Sams Hair Salon Franchise – $136K – 246K
  • The Boardroom Salon for Men – $280K – 429K
  • SportClips Salon Franchise – $158K – 317K
  • V’s Barbershop Franchise – $170K – 339K

Although SBA failure rates for hair salon franchises are relatively low, this may be partially attributed to the fact that fewer people need SBA loans to come up with the investment needed to open a hair salon. Industry insiders have also hinted to me that many franchisors are also very good at structuring their fees so that franchisees can just stay in business – but they never really get ahead or make the kind of money they hoped to make by taking on the risk of business ownership.

What Franchising Offers

So let’s talk about what you’re supposed to be getting when you pay the massive franchise fees and royalties to open a hair salon.

  • A proven brand – Yes, opening a hair salon franchise means you’re getting a known brand. However, that brand can limit you as much as it can help you. Many existing hair salon franchise names are associated with “cheap but adequate” hairstyles. What if you want to evolve so you can sell more expensive services to less price-conscious customers? What if you want to sell additional product lines – hair accessories, head sunblock for men, cosmetics, different hair products?  Most brands won’t allow it. Worse yet, what if there’s a scandal that involves your chosen brand? Bad news unrelated to you can dramatically affect your sales.
  • Marketing support – I’ve worked with franchise systems and I’ve headed up teams that handled franchisee marketing. I can tell you without a doubt that it’s almost never worth what you pay. I’ve seen franchisors that took the national ad fund and gave uneven coverage to franchisees. I’ve seen grotesque mismanagement of funds. I’ve seen frustrated franchisees who wanted nothing more than to do their own marketing – yet corporate wouldn’t allow it (even when they weren’t holding up their end).
  • Guidance – It’s absolutely true, a franchisor will give you guidance to make sure that store gets open. After the store is open, however, many franchisees report much less support. It makes sense. They’re busy trying to bring in new franchisees. They don’t necessarily have the time for hand holding with every single existing store owner.

What the franchisors DON’T tell you is that you can open an independent hair salon and get most of these things in other ways.

Brand

99 designs brandingThis might come as a surprise, but you don’t need a national brand to launch a successful local business. You just need to let your local community know who you are, who your target customer is, and what you’re all about. You can communicate that with advertising, social media, word of mouth, and even subtle things like your location, decor, and signage. When a hair salon looks fancy, you don’t get a lot of moms with 5 kids coming in. If your place looks kid-friendly, you won’t attract a lot of well-to-do 30-something professional women. Know what you want to be and be it. If it’s a fancy logo you want, 99 Designs gives you access to a large number of talented designers who will offer mockups in a design competition format – meaning you get selection without paying for 10 different designers.

Marketing Support

First off, let go of the idea that your franchisor is going to do all the marketing work for you. If you weren’t thinking that, good for you. The number one thing I’ve heard from unhappy franchisees is that when they’re struggling, their contacts at corporate brush them off with vague recommendations to do more marketing.

Marketing drives business, there’s no doubt about that. Some businesses need it more than others. With a hair salon, marketing is crucial – especially in the early stages. So how can you replicate or improve upon the marketing support you’d get from a franchisor? There are several ways:

  • To start, read up a bit. Marketing is fairly simple at its core, and one or two books will give you as much information as you need to get started.
  • Consider hiring a local expert. Talk to other small businesses (not direct competitors) and ask for recommendations. You might also think about hiring a local college student for a reduced rate, but be aware you’ll need to offer more instruction if you hire someone without as much experience.
  • Experiment! Without a franchisor telling you what to do, you’re free to test different methods and see what works.

 

Guidance

Hair Salon MentorSo this is the big one. Maybe you feel perfectly capable of learning about marketing and crafting a brand, but many entrepreneurs think about the actual process of opening a salon and they get overwhelmed with fear and uncertainty. What kind of permits do I need? How do I pick a space? Who do I file with to become a real business? How do I hire employees? Where do I get a bookkeeper?

This is where franchising starts to look good to a lot of people. However, if you really want to open a salon and you don’t want the expense and limitations of buying a franchise, you have a lot of options for help that’s affordable and sometimes even free. You certainly don’t need to work over hundreds of thousands of dollars, especially not in this day and age where information is more freely available.

First off, I would recommend completing Don Steele’s How to Start a Hair Salon course. Don and his wife have been in the hair salon business for years, and they’ve owned both franchised salons and independent salons. This is a great overview to salon ownership from a guy who’s been in the trenches for years, and he’ll teach you how to sidestep a lot of the problems people run into when they open salons.

order now

Don’s How to Start a Hair Salon course is reasonably priced at only $47, and you have a 60-day money-back guarantee. If you don’t feel that it helps you, all you have to do is request a refund. Try doing that with a big franchise company and see how far you get… You literally have nothing to lose by reading what Don has to say and considering the possibilities.

For a more technical look at salon ownership, you can’t top Jeff Grissler’s books. His books are endorsed by the Professional Beauty Association (PBA) and Modern Salon magazine, and they’re full of the technical details you need to get your salon business off the ground. I’ve listed all of them below for your convenience. Please note that I’ve linked to the Kindle versions, as those are cheapest and you can read them on most smartphones or computers using their free apps or the Kindle Cloud Reader. The books are also available in paper editions, but those are a bit more expensive. If you’re the kind of person who likes to write on your books and mark lots of pages, you may prefer to have these in a hard copy.

  • The Start-Up Guide for Opening, Remodeling, & Running a Successful Beauty Salon –  This is probably the first of Grissler’s books that you’ll want to read. It goes into the early planning phases of your salon business – planning your venture, getting the funding in place, planning our your accounting and business management, and hiring staff.
  • The Salon Building Bible – This book gets into the nitty gritty of floors plans and expenses when opening a hair salon.
  • A Salon Owner’s Guide to Wealth – Once you get closer to opening your salon, you won’t want to miss this book. It covers topics like selling retail and squeezing more money out of your business. Often, the difference between successful business owners and unsuccessful business owners is in the little things they do differently. This book is your guide to those little things.
  • Salon Business: How to Manage a Salon in Good Times and Bad – This is the book every salon owner hopes he or she doesn’t need. It covers problems and day-to-day issues in the life of a salon.

Taking Action & Bringing in the Pros

Once you’ve done your homework, only then would I recommend turning to professional help. That might seem like an odd recommendation, but there’s a good reason for it. Even though professionals tend to be good at what they do, they all have different ways of doing things and they might have different visions for your business. By educating yourself first, you’re in a much better position to stand your ground on important issues and even recognize when a bad service provider is leading you down the wrong path. You may not know all the detail of contracting, marketing, bookkeeping, or filing permits, but if you know the basics, you’ll have a better idea of how it should all function.

You’ll also waste less time and spend less money in dealing with your chosen professionals. Why pay accountants and attorneys a small fortune to educate you on the most basics elements of the business when you can read an affordable book to get that information AND show yourself to be more of a professional.

The final reason I recommend reading up before taking action is that it will give you a better idea of whether this is really for you. Why not figure that out NOW before you spend a lot of time and money moving in a direction that may not be right for you? Maybe you’ll learn quickly that you’re happier working in someone else’s salon, or that a franchise really is right for you. That’s perfectly fine, and you’ll be much happier if you figure that out before spending your time and money on initial consultations with attorneys, accountants, contractors, and real estate agents.

sba logoOnce you ARE ready to move ahead on opening a salon, though, I’d strongly recommend contacting your local SBA (Small Business Administration) chapter – particularly if you’ve never run a business before. The SBA exists for the sole purpose of helping small business owners, and they can assist you with education, local information, and even help securing funding for your new venture. They’ll also let you know if your background makes you eligible for any specific funding sources (for instance, if you are a veteran). Bear in mind that this only applies within the United States.

 

Resources

Marketing:

Opening Your Salon:

  • Don Steele’s How to Start a Hair Salon course – I consider this to be the starting point for anyone who wants to open a salon. The author has extensive franchise and independent salon experience, and he offers a generous 60-day no questions asked refund policy.
  • The Start-Up Guide for Opening, Remodeling, & Running a Successful Beauty Salon –  This is probably the first of Grissler’s books that you’ll want to read if you want to open a salon. It goes into the early planning phases of your salon business – planning your venture, getting the funding in place, planning our your accounting and business management, and hiring staff.
  • The Salon Building Bible – This book gets into the nitty gritty of floors plans and expenses when opening a hair salon.
  • A Salon Owner’s Guide to Wealth – Once you get closer to opening your salon, you won’t want to miss this book. It covers topics like selling retail and squeezing more money out of your business. Often, the difference between successful business owners and unsuccessful business owners is in the little things they do differently. This book is your guide to those little things.
  • Salon Business: How to Manage a Salon in Good Times and Bad – This is the book every salon owner hopes he or she doesn’t need. It covers problems and day-to-day issues in the life of a salon.

Seeking Professional Help:

I hope this guide has proven helpful for you. If you’d like to see more articles, resources, and local events related to starting your own business, sign up for our email newsletter up at the top of the page (on the right side of your screen).

0

Do We Hate Franchises?

Some people might visit this site and assume we hate franchises. That’s not true at all. Franchising has been around for years, and the business model has helped a lot of people – both franchisees and franchisors – make a lot of money. However, it’s also torn apart families and driven a great many people to bankruptcy. Many more have lost all or most of their retirement savings, and they end up being forced to work well past the years they had originally planned.

That doesn’t mean we hate franchises, though. We just think they’re a bad fit for a lot of people. Are you one of them? Consider the bullet points below…

  • Franchises will quote a cost range, and they’ll generally narrow it down as they learn more about you and your location. Whatever they tell you, assume the true costs will be higher. Can you handle that? Can you handle it if they’re 25-50% higher? It’s relatively common for new franchisees to take out additional loans in the early days of their new business. If you can barely handle the stated costs, franchising is almost definitely not right for you.
  • Some franchises fail as much as 90% of the time. It’s extremely common for franchises to have failure rates in the 50% range. It’s tempting to tell yourself that you’ll work SO hard that you won’t be the one who fails. It’s tempting to think you’re smarter than the rest. Unfortunately, some things are just out of your control. For all you know, a similar business could open up nearby and you could both end up failing because neither of you are getting enough customers. A big employer could leave your town and take a lot of people and money with it. Roads could shirt and render your location unpopular almost overnight. There are things outside your control. If the loss of your investment would destroy you, franchising is probably not right for you.
  • Do you want to run YOUR business, or pay extra for the “privilege” of carrying out someone else’s dream? If you feel entrepreneurial urges and you don’t want to be forced into a mold, franchising is not for you. Even if you like the idea of working with a strict set of rules and guidelines, there’s nothing to stop you from doing research and studying other businesses to form a similar set of company guidelines.
  • Do you want to bring something unique and special to your community? Most franchises spell out nearly every aspect of how you can run “your” business. A few will allow you to decorate your store with local memorabilia, but many don’t even let you personalize the experience for your community. It can be nice, when you’re traveling, to spot a familiar sign and know you can get your beloved McDonald’s fries or Applebees Queso Dip – but at the same time, it can also be nice to try something wildly unfamiliar and form a unique memory. What do you want to build?  There’s no right or wrong answer, but if you prefer the unique alternatives, franchising is not for you.

The goal here is not to tell anyone they shouldn’t own a franchise. In fact, we may even highlight some franchises with below-average failure rates. The goal here is to be as unbiased as possible and offer potential entrepreneurs some alternatives to franchise investment. If you leave here feeling that franchising is the best choice for you, then congratulations – and best of luck with your new business.