May 28, 2013
If you are passionate about entrepreneurship and hair care, you will probably want to finance your own hair salon at some point in the future. If that is the case, you would probably want to know how to finance a hair salon.
Now, first of all, you need to understand that the amount of capital needed to establish a salon business typically depends on the type of services and products a salon offers its clients. For example, if you plan to offer only basic hair care services, you will not require as much money as, say, if you were to establish and run a full service hair salon.
3 Vital Steps For Financing A Hair Salon Business
It should be noted that the hair salon business is incredibly competitive and requires a great attention to detail. One’s process in opening such an establishment should be as meticulously planned as the services they intend to offer once the salon is up and running. Here are the top 3 vital steps you need to take in the process of financing your hair Salon business:
Define the Type and Level of Services You Intend to Offer Your Clients
This is by far the most important step in your endeavor to seek funding for your new business. By defining the type of service you will offer in your salon, you will be able to come up with clear estimates of the type of equipment, amount of space and number of employees you need to launch your business.
Once you get these estimates, you can get a good idea of the capitalization your business requires. Besides identifying the type of services, it is also crucial to identify the level of service you and your employees will offer since this will not only determine your niche market but also your pricing model.
Formulate a Business Plan
If you intend to get financial assistance from financial lenders in order to start you salon business, you must create a business plan that illustrates how you intend to set up a business and generate substantial financial returns. While making the business plan, pay special attention to the plan’s financial section.
Ensure you enumerate all your perceived major expenses such as marketing costs, fixture costs, wage expenses, insurance premiums, and equipment cost. Such costs will most likely determine the amount of financial assistance you receive. Some of the additional information that you can include in your business plan in order to inspire the trust and confidence of financial lenders includes the following:
- The location of your business and the factors that influenced your selection of that particular location.
- A detailed financial analysis detailing your short term/long term growth projections and your start-up and operating budget estimates.
- The amount of money/capital you already have in hand for your start up business.
- The type of equipment you require.
- Staffing requirements- describe the job descriptions of all the employees you intend to hire and their estimated remuneration.
When making budgetary estimations in your business plan, it is important to add at least 10% more than you think you require especially if you want to obtain the bulk of your capitalization funds from a financial lender. This is because; there are often numerous hidden costs that entrepreneurs do not foresee when starting a business.
However, even if a lender approves your business plan and you get a loan to finance a hair salon business, you must bear in mind the fact that most lenders will only give you sufficient funds to support the start-up stage of your business. As such, you need to ensure you build revenues quite fast in order to attain long-term financial stability and to be able to start repaying your loans.
Apply For Funding/Capital
Once you have a well-designed business plan, the next vital step you must take is to identify suitable lenders and apply for the financing you need to get your hair salon business on its feet. When making your application, ensure you complete all the forms provided accurately and clearly to improve your chances of getting the money you need. In addition to this, ensure you choose a financially stable person with a good credit history to guarantee your loan. If you intend to co-own the hair salon with other partners, each of you will need to indicate their own personal guarantees in order for the bank to approve your application.
Overall, once you get the necessary funds you require, ensure you manage these funds properly in order to ensure that your business is successful. If the amount of financial assistance you get from a financial lender is not sufficient to finance your hair salon, you can take measures such as applying for a revolving credit line with your lender in order to meet all you start-up expenses.
How Avalon Can Help
Avalon School of Cosmetology prides itself with providing its students with every possible advantage they may need to compete in the challenging and fulfilling beauty market. Whether it be through beauty training or business planning, Avalon has the experience and expertise to nurture our budding entrepreneurs to flourish in the field of their choosing. Contact us today to see how we may help with your future.