A key component of every successful hair salon business is having a clear and quality plan ahead of you before you get started. If you are new to running a hair salon, you may not be sure what that could look like. That is why we have compiled a list of successful hair salon business models for you to learn from.
Successful hair salons utilize a variety of business models including giving their establishment a theme, encouraging referrals, offering a commission to employees, and branding themselves as an educational business.
While each of these business models will provide a very different environment for your customers, they are each a potential way for you to find success in your new endeavor, all while doing what you love.
Establish a Hair Salon Business Theme
Giving any business endeavor a specific theme is a quality marketing decision.
The purpose of this theme is to help you stand out in the minds of your customers, potential customers, and community. There are likely multiple hair and beauty salon options for your community to choose from. Including a theme in your business model will help potential customers understand what makes you special.
Note: While establishing a theme for your business can be one way to help you find success, it is not the only way. It may not feel right for you to brand your hair salon in this way and that is completely okay. There are many other ways to set your hair salon up with a successful business model.
If establishing a theme for your business feels right for you, here are a few potential options to consider:
Natural Hair Salon Business
One way that various businesses market themselves is by embracing a holistic mindset for all that they do.
In a hair salon, this could impact nearly every decision you make from what type of products you utilize to what type of building materials you use to how you decorate your hair salon business.
While this theme will not attract everyone, the customers who choose your business because of its theme will likely be loyal fans for life.
If you decide to move forward with this theme, consider asking for assistance from those who fully embrace this lifestyle so that you do not miss any opportunity to cater to your ideal client. Market research will also help you understand what type of natural products would be most important to your future customers.
High-End Hair Salon Business
You can also make your hair salon business stand out by attempting to be the fanciest salon in town.
If you can nail this niche, you may even be able to raise your prices as you will be attracting clientele who prefer to pay for the very best service out there, regardless of pricing.
The potential downside to choosing this theme for your business is that your initial investment might be higher than it would be with other themes.
For example, to keep up a “high-end” image, you may need to purchase:
- High-end products
- High-end décor
- High-end tools
- High-end staff
- High-end building materials
That being said, if you can afford to spend a little extra time figuring out a way to do-it-yourself, you may be able to cut down costs dramatically.
Should you choose to do so, make sure you understand what your ideal target customer is looking for most. Do they just want the establishment to feel high-end or do they truly need to see brand-name products and decorations all around them?
Vintage or Art-Oriented Hair Salon Business
In the same way, you might theme your hair salon business for a high-end customer or a naturally-focused customer, you can cater to those who enjoy art and vintage-themed businesses.
Again, you will want to listen carefully during your market research so that you fully understand what is most important to these customers.
Often, art-oriented or vintage salon businesses include a great deal of art. They may also include atypical architecture and products.
A great way to be successful with your art-oriented hair salon is to reach out to the local community for their favorite local artists and treasures. Often, people will come out of the woodwork if it means their talents might be featured by someone who will appreciate it.
You can also rotate various pieces of décor so that people are encouraged to continue visiting your business so that they can always see the latest, trendiest pieces that are on display.
A Referral Business Model
Another business model option to consider is creating a referral system.
Referral systems can help spread the word about your hair salon business without you actively spending any money on advertising or publicity.
For a referral system to work, you need to offer something so valuable to your customers in exchange for them getting their friends or family members to sign up for one of your services that they do so.
Personal experience speaks loudest when it comes to advertising.
This means that no matter how wonderful you tell other people that your business is, people will always believe someone else’s experience of your business over your experience. This is because you, as the business owner, have much to gain over them using your service whereas a random customer typically is not impacted whether or not their friend uses your services.
When you establish a referral system, you are offering a benefit to that friend or family member to spread the word and encourage others to sign up.
This could be a discount on one of their services or even a free visit to your hair salon.
Some business owners may see this as losing money, but in reality, it is a great business model because the value of a new customer’s first visit is much higher than your loyal customer’s regularly scheduled one.
While you might miss out on 25%, 50%, or 100% (depending on the discount you offer) of your loyal customer’s payment, you have gained a new customer that you can continue to reach for many more visits to your hair salon.
Check out our guide for creating a business plan HERE.
Offer Commission to Hair Salon Employees
Another business model that helps hair salons succeed is when they offer their employees a commission.
This means that any time an employee has a customer sign up to work with them, they make a certain percentage of the money that is made. This is very similar to a referral program, except you are giving your staff an incentive to drive traffic to your hair salon rather than your customers.
Offering commission can be a great way to give your hair salon employees a bit of entrepreneurial encouragement. In a sense, it gives them more control over the amount of money that they make.
They can decide not to seek out new customers and simply make whatever you were already planning to pay them or they can increase their revenue dramatically by encouraging everyone they know to sign up with them, and thus, sign up with your business.
Educational Hair Salon Business Model
Finally, you can find success in your new endeavor by branding your hair salon as an educational business.
This does not mean you stop serving the hair needs of your clients.
Instead, this means you will add a component to your daily work: providing value.
The value you provide can and should be both online and offline.
The idea is that you are putting continuous effort into training people on all things related to hair. As you continue to serve them, they will repeatedly recognize you as an expert in your field.
They will grow to trust you over time and that will make them more likely to buy from your services.
If you find that most of the people you are helping online are not local to your hair salon business, you may need to consider finding other ways to monetize your efforts from afar.
This might look like selling a hair product or even packaging your lessons as a course. Whatever you decide to do, make sure you are constantly focused on your customers and how you can best help them.
How do I determine what theme I should give my hair salon business?
The best way to determine what theme your hair salon business should have is to conduct proper market research. You can do this by surveying as many people in your business’s community as possible. Once you understand what the majority of people want to see, you will be better equipped to decide whether to give your business a theme and what it should be.
How do I know when my hair salon business is successful?
Everyone has their version of what success is.
Some business owners want to make as much money as humanly possible. They may have an exact dollar amount in mind or they may just want to continuously grow.
Other business owners have a more modest level of income in mind but want to maintain a healthy work-life balance. These folks may prioritize spending time with friends and family over making as much as they possibly can.
Still, other business owners just want to work for themselves in a field they enjoy, rather than working for someone else for more money. As long as they aren’t taking on debt and can pay their bills, they are happy to do what they love.
As long as you know what success means to you, you can pursue it with everything you have!
Looking to start your own Salon? Get the documents you need to get organized and funded here.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
Our mission is to empower you as a strong leader of your client base. We’ll teach you online marketing strategies, smart branding moves, and more that will make your salon business memorable and worth talking about.