5 Tips To Establish and Scale Your Salon Business

My role as a Sales Rep at CosmoProf and East Coast Beauty Supply in Pennsylvania and New Jersey involved assisting salon owners in establishing, operating, and managing successful salon businesses. While most salon owners I worked with already had established businesses, there were many instances when I would walk to my car to find a stylist waiting for me with dreams of opening their own business. Much to their surprise, I would often try and convince them not to - for a variety of reasons. 

Salon ownership has been romanticized for far too long. The start-up cost, the construction, the employees, the day to day expenses of utilities, rent and products, and the list went on and on. This was a difficult business model to operate. However, my perspective changed when the salon suite model was introduced in Pennsylvania in 2015. 

Owning Your Own Salon Business

What I realized early on was, beauty professionals were less inclined to undertake the complexities of a traditional salon business. Instead, they were seeking alternatives to enhance their work environment, increase their earnings, be more creative and seek a better work life balance. For so long, the only traditional option was a brick-and-mortar salon setup. When the salon suite model entered the industry, it offered the benefits the beauty professionals were looking for, without all of the cost. 

In 2016, I founded Allure Salon Group & Professional Education; the first privately owned salon suite facility in Pennsylvania. The concept and core idea offers stylists a ready-to-use private salon space and salon ownership resources that facilitate a seamless and cost-effective way to establish their own salon businesses, while adhering to the state’s cosmetology state board regulation.  

What became apparent to me was that establishing their businesses was straightforward, whereas cultivating and sustaining a successful salon business presented a different challenge. 

Here are my 5 tips to establish and scale your salon business:

#1: Set up your business

In beauty school, the primary focus is on passing the state board exams and obtaining a license; and working in salons doesn’t expose someone to the business side of salon ownership. When opening your salon, it’s important to first register your salon business to operate legally and professionally by obtaining:

• Register your fictitious name for your business 
• Decide the business structure; examples LLC, Sole Proprietorship 
• Register your business with the state 
• Apply for an EIN Number
• Check if your local municipality requires local business permit
• Obtain a Salon License by going to your state board of cosmetology and checking the requirements to open a salon business. For example in Pennsylvania, you must provide:
• A drawing of your space, identify all required items 
• All business documentation including your EIN number and LLC paperwork
• An in person inspection of your space before opening
• Product selection of hair color and retail
• Hours of Operation
• Pricing List of Services
• Booking Systems 

#2: Differentiate your salon with strong branding and marketing

Identify your ideal client and tailor your services and marketing efforts to meet their specific needs. Build an online presence, social media presence and email list to reach and engage with potential clients.

What most people overlook is the importance of a Website and a Google Business Page. Clients cannot find people on social media unless they happen to come across you.  Most people when looking for a new service or business typically do google searches.  So having a website is crucial, followed up by a Google Business Page. 

A Google Business Page is where your current clients can leave reviews to promote you and your business and where new clients get to know you before making an appointment. Social media pages are meant to showcase your work and keep in contact with your followers and clients.

Creating a customer email list is a great way to keep clients updated with available appointments, salon events and promotions.

#3: Establish Loyalty & Referral Programs

Implement a referral program to encourage satisfied clients to refer new customers. Finding the right referral program is crucial for your clients, but more importantly, finding what motivates referrals. Here are some examples:

• Free service with a new referral
• Free product or products when you refer a new client
• A discount, but I typically shy away from discounts or coupons because you run the risk of only attracting clients who want discounts
• Cross-promote with other beauty professionals in your facility 
• Positive Google reviews from clients are the BEST way to attract new clients; 5 Star reviews will catapult your business 

Loyalty programs, reward repeat customers and incentivize them to continue choosing your salon. The beauty industry standard goes by the 80 - 20 rule - 80% of new clients come from current clients while the other 20% comes from where you are conducting business.

#4: Manage Financials

Understanding your salon's financial aspects, including sales, expenses, and revenue, is essential for maintaining profitability. Familiarizing yourself with a profit and loss (P&L) statement helps in monitoring financial performance and making informed decisions. Proper tax management ensures compliance and avoids potential legal issues. Creating a business budget allows for efficient resource allocation and financial planning. Additionally, paying yourself appropriately is important for personal financial stability and motivation. 

To assist Beauty Professionals in monitoring their sales, income, and expenses on a daily, weekly, and monthly basis, I have designed a Salon Suite Business Tracker. This tool simplifies financial organization, alleviates tax-related stress, and offers insights into the financial standing of your business.

#5: Months 13 - 24; Optimize and Scale Your Salon Business

Once you’ve done 1-4 and have a solid foundation, focus on optimizing these processes to increase efficiency and productivity. Hiring employees can help manage increasing client demands and expand service offerings. Outsourcing certain business operations, such as accounting and marketing, allows you to concentrate on core activities and strategic growth. Working with a Sales Consultant is a vital step most independent salon owners overlook. Sales Consultant are trained on the brands you use. They can save you time and money by doing your ordering, keeping your inventory fresh and keeping you updated on new products, current trends and technical education of the products. A Sales Consultant should be looked at as your business assistant . 

Over the next 3-5 years the salon suite business model is going to accelerate at a faster pace because of the interest that private equity firms have taken in investing in all the major salon suite franchises. The popularity of salon suites will continue to grow and attract individuals wanting an alternative to a traditional salon environment. 

  In the past, I would dread encountering individuals interested in starting their own salon business. Now, I encourage and motivate them to begin their entrepreneurial journey, because with a private salon suite model like Allure’s, beauty professionals have access to the necessary support, guidance and resources needed to establish and maintain a successful salon business!