Not having enough money of your own does not have to stop you from starting your dream salon business! Many aspiring business owners allow not having finances to stop them from starting their business. However, there are multiple options available for new business owners when it comes to acquiring funding. We have outlined the various options for you to find funding, along with ways to save money when starting your dream salon!
To start a salon with no money, you will need to find at least enough money for your basic startup costs. You can find the funding you need through business grants, business loans, and crowdfunding. You can also keep your startup costs as low as possible by finding ways to save money on your supplies and equipment.
Receiving Funds Through Business Grants
Business grants can be a life-changing resource for new business owners who need more funding for their business. If you want to start a salon and you have no money, we recommend searching for business grants first. This is because grants are basically free money that you won’t have to pay back later, like loans!
The thing you need to keep in mind about business grants is they can be time-consuming to find. There are a few websites available that have databases full of potential grants that are available for small business owners. The government also has a website available that provides a list of grants available from government agencies.
When you are starting to look for business grants for your business, we recommend making a list of factors about your business that make you stand out! All grants will have individual requirements, and you need to meet every requirement in order to successfully apply for the grant. Some requirements will be regarding your gender, ethnicity, type of business, etc. When you apply for the grant, you want to stand out from other applicants!
You should set aside at least a few hours per week to search for grants. When you pull up each of the databases, you will see thousands of grants available. You need to search through the databases to find the grants that your specific salon will qualify for. We recommend first making a list of the links to the grants that you will qualify for and then applying for the grants after you have made your list. This will help keep you organized.
To find government grants that are available for small businesses, you want to visit grants.gov. Another website you should use to find grants is eda.gov, which is the Economic Development Administration. This is a U.S. Department of Commerce agency. Not only do they provide grants to small businesses, but they are also a great resource for tools and new business information that will help you as you start your salon!
You also want to reach out to your own state or business communities in your area. They may also have lists of grants that are specifically available for new businesses in your location. If you don’t take the time to reach out or search for the grants, you could be missing out on money that could help you grow your business!
Once you have your list of links for the grants that your business qualifies for, you want to apply for each of the grants. It is essential to take your time during this step and ensure that all of the information is correct! If any part of your application is not correct, then you may not qualify for the grant. Some grants won’t let you edit or make any changes to the application after you’ve submitted it.
If you have limited time and don’t have availability in your schedule to find the grants, one option is finding a trusted family member or friend to help you search for the grants you qualify for. If you decide to go this route, then we recommend ensuring the person searching for the grants has a clear understanding of what qualifications your business has and what grants would be the best fit for your business.
Along with taking time to find the grants you qualify for, you also need to keep in mind that it will take time to receive the funds as well. Once you’ve applied for grants, it can take a few weeks to a couple of months to hear back if you will receive the grant. Grants take much longer to receive than business loans do. However, you don’t have to pay grants back like you will for a business loan.
We recommend taking the time to look into business grants for all new salon business owners. If you don’t take the time to look through grants, you could be missing out on potential money to help you get your new salon up and running! Getting funding through grants can make a complete difference for your business.
Receiving Funds Through Business Loans
If you are short on time and don’t have the time to wait to receive a business grant, then you will want to look into business loans. Even if you do receive grants, you can use a loan to get the rest of the funding you need (if your grant doesn’t cover all of your startup costs).
We recommend applying for business grants first because grants are money that you don’t have to pay back. Once you have applied and received any grants, then you will know if you need a business loan to cover more costs and how much more funding you need.
Before you start searching for the right business loan for your salon, we recommend taking the time to develop a business plan. When you reach out to potential banks or credit unions for a loan, the loan officer will likely want to see a business plan before approving you. This will be especially true if you are asking for a larger amount of money for your salon.
When you are creating your business plan, you want to take your time! Your business plan should outline your short-term business goals, your target customer, the competition in your surrounding areas, marketing plans, and your long-term vision for your salon. Once you’ve created your business plan, you also want to proofread it for any mistakes.
The second task you want to complete before reaching out to potential banks is getting very clear on how much funding you are seeking. If you received some grants and need more funds to cover other costs, you want to know the amount you need before applying for loans. You want to be as accurate as possible when you are figuring out how much more funding you need for your salon.
If you don’t think about how much funding you need before applying for loans, you could end up receiving a business loan that doesn’t cover all of your startup costs. Then you will need to continue to search for funding to cover those extra costs (which can ultimately delay opening your salon).
Before filling out applications for loans, we also recommend having an idea of what your credit score is. By having an idea of what shape your credit is in, you can form an idea of what type of loan you may qualify for. Your credit score can also help your loan officer provide recommendations before you submit your application.
When you begin your search for business loans, we recommend comparing different interest rates with various banks. Although your specific interest rate will depend on what you are approved for, you can still ask banks what their interest rate range is for business loans. By getting the lowest interest rate possible, you will save yourself money in the long run.
As you are applying for business loans, you also want to be cautious about what the monthly payment will be for your loan. If your loan payment is too high, it can cause you to have a hard time paying it back and put your business finances at risk. You should also make sure you are clear on how long the loan is for as well.
Business loans can be an excellent resource if you need funding for your business quickly. Loans will be the quickest way to get money for your business (since both business grants and crowdfunding will take longer). However, the thing to keep in mind for loans is you will be paying back all the money you borrow, along with interest on the loan.
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Receiving Funds Through Crowdfunding
Crowdfunding is a unique way that has become popular to get funds to start new projects and businesses. This can be an excellent tool to get money to start your salon, depending on your business goals and the size of your current following!
Crowdfunding involves asking for funds for your business from others. These funds can be given as a donation, or the funds can be given in exchange for either a reward or equity in your salon. The right type of crowdfunding for your business will ultimately depend on what goals you have for your salon long term.
Crowdfunding through donation and by providing rewards are generally the easiest types of crowdfunding to start with, depending on your experience. There are various crowdfunding websites that you can set up campaigns with. You can design your campaign page, give more information about the salon you will be opening and tell your visitors about any potential rewards that might be included in your campaign.
If you are seeking crowdfunding by exchanging rewards, there are multiple options available for you with your salon! Examples of some of the rewards you could provide would be a set amount of free haircuts once someone donates a certain amount of money or getting their nails done for free when you open. You could also give away gift certificates for your salon once you’ve opened.
When it comes to crowdfunding through donations, those who are giving you money for your salon are not asking for anything in return. However, we still recommend keeping all of your donators in the loop when it comes to your business. If you achieve a new milestone like securing your location, you can send out an update to all of those who have donated!
By keeping your donors in the loop, it builds their excitement for your new salon as well. This will also make your donators more likely to tell their friends and family members about your salon, which begins your word of mouth marketing before you’ve even opened!
If you seek crowdfunding by exchanging equity in your salon, it is very important to be clear about the details with potential investors. Crowdfunding through equity generally includes much larger sums of money than other types of crowdfunding. Similar to business loans, it will be essential to have a well thought out business plan in place when crowdfunding for equity in your business. Investors want to see that you have a plan and have done your research.
Before seeking potential investors, you want to take the time to think about what type of funding you will be requesting from your potential investors, and you also want to carefully think about how much equity you are comfortable with giving. You need to thoughtfully write out the terms that outline what both parties would be committing to.
Crowdfunding is another great way to get funding for your new salon! Like business grants, there is the possibility that you won’t have to pay back the money that you are given (if you receive the funds through donations or by offering rewards). You do want to keep in mind that with crowdfunding, you will likely not receive the funds as quickly as you will with a loan.
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Saving Money on Supplies and Equipment
Even after you find funding through business grants, loans, or crowdfunding, it is still smart to save money where you can on your supplies and equipment. By saving money on your supplies, you will be able to use that money to pay back a loan quicker or use it to grow your business through marketing.
The first way we recommend saving money on supplies and equipment is searching for sales. When making purchases for your new salon, it is important to shop around and not buy from the first place you visit. By shopping around, you could end up saving yourself hundreds of dollars over time, if not thousands!
Depending on your budget, you can also save by purchasing used equipment that’s in good shape. If any salons in your area have recently gone out of business, it is likely that they will want to sell items like salon chairs, tables, etc. If you are purchasing used equipment, you want to check for any broken pieces and ensure that the item works properly.
When it is possible, we recommend saving by buying items in bulk. This is an excellent way to save on items that you will frequently be purchasing, like toilet paper for your bathrooms, cleaning supplies, etc. Getting a membership at a local bulk discount store will be well worth the investment in the long run.
You can also shop for cleaning supplies at your local discount store (like Dollar Tree). These stores will often have name brand supplies that work great, and the items will cost a fraction of what they would cost at your local Walmart or even Costco.
Overall, in order to save the most money for your salon, you need to consistently keep an eye out for any sales, deals, or promotions. If you are regularly thinking of ways to save yourself money for your salon, you will be more likely to notice an opportunity when it arises.
With all the opportunities and resources available to entrepreneurs today, not having money should not stop you from starting your dream salon! By using our recommendations above, you will be on your way to finding the money you need and also keeping more money in your pocket along your journey!
What are the benefits of starting a salon from my home?
The main benefit of starting a salon from your home is the lower cost. Without having to purchase or rent a commercial space, you will keep a large amount of money in your pocket. Monthly rent for space can cost thousands per month! Another benefit is you will have more control of the space (if you own your home). With renting a commercial space, the owner of the property may have regulations or rules you have to follow.
How much money will I need to start my own salon?
The amount of money you need to start your own salon will ultimately depend on what services you are providing and the location of your new business. For a commercial salon, the startup costs generally start around $20,000 and can go upwards of over $100,000.
Hair salons will typically cost more to start than nail salons, lash studios, or massage salons. This is mainly due to the equipment that will be required. You can minimize your startup costs by shopping around for your supplies and equipment. Another option is also starting your salon from home (until you have the funds for a commercial space).
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.”
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