You’ve worked as a talented stylist for years. Now, you’re ready to open your own salon. It’s an exciting opportunity to turn your artistry into a successful entrepreneurship. And you’ve built a loyal client base, refined your craft, and filled your schedule months in advance. You have the skills. All you need now are the funds to bring your vision to life.
Here’s how to create an effective financing strategy, select a lender in the beauty industry, and secure salon business loans to transition from behind the chair to running the business.
Determine How Much Funding You Need
The first step in your transition is to understand your startup costs, which depend on factors such as your salon’s size, services offered, and location. Opening a small salon or suite can cost between $30,000 and $75,000, while a full-service salon with a retail section or spa components may require an investment of upwards of $100,000.
Most new salon owners have a mix of upfront and ongoing costs, such as:
- Business permits and licenses
- Lease deposits or property purchase expenses
- Renovations, signage, and design work to match your brand
- Equipment and furniture, both in the salon and reception area
- Inventory for retail products and supplies
- Staff training and initial payroll
- Advertisements and marketing materials
- POS and bookkeeping software
In addition to start-up costs, many new salons see inconsistent revenue during the first year. Managing your cash flow is a learning curve. Calculate predictable operating expenses, such as utilities, laundry, software subscriptions, and payroll. You can roll these costs into your initial financing, or arrange for a revenue-based loan or business line of credit to give you breathing room in your first year.
Be sure you understand your costs before applying for financing and identify the loan products that match your goals and support your business model.
Build a Clear Business Plan
Many lenders want to see your business plan and ensure your salon has a clear roadmap for success. Think of this as your financial blueprint.
Your plan should include details like:
- Market Analysis: Who your target clientele is and how your salon fills a market gap
- Owner Experience: What kind of experience and education you have
- Revenue Projections: How much you expect to earn monthly or annually
- Operations Plan: How your salon will function day-to-day
- Expense Breakdown: How much and which kinds of startup expenses
- Marketing Strategy: How you’ll attract and retain clients
A strong business plan enhances your funding application, increasing your chances of approval. It also keeps you accountable as you launch and helps you stay on track as your business grows.
Maintain a Healthy Credit Profile
Now that you’re moving into salon ownership, your business credit matters as much as your styling skills. You might have some credit history if you managed your own finances as an independent stylist or chair renter. If not, you might need to rely on your personal credit until you establish some business history.
Start by separating your business and personal finances. Open a bank account and consider obtaining a business cash advance credit card specifically for your salon. As you make consistent payments, you’ll build credit history and qualify for better loan terms down the line.
You can secure financing even if you haven’t established your business credit and your personal credit isn’t perfect. It all depends on who you work with. Small business lenders often provide fast unsecured business loans to owners with limited credit history.
Choose a Salon-Friendly Funding Partner
Your salon business thrives on relationships. Everything from your customer-oriented brand to your welcoming stylists earns your clients’ trust and loyalty. Shouldn’t the company that funds your dream and livelihood be equally trustworthy and personal?
Partner with lenders who understand your industry what it takes to move from stylist to ownership. They can simplify the transition from stylist to salon owner, allowing you to focus on your clients. Look for funding companies that offer:
- Fast applications, approvals, and funding processes
- Options for owners with limited credit history
- Loan amounts for a range of small business needs
- Tailored loan products for salon and spa businesses
- Flexible repayment schedules
- Transparent loan terms
- Competitive borrowing costs
- Dedicated loan advisors
Explore Flexible Financing Options
Salon-friendly lenders support business owners by offering speedy and flexible financing options as alternatives to traditional loans. They build these products specifically for small businesses and often provide options tailored to the beauty industry. Explore a few flexible financing products salon owners rely on for funding.
Working Capital Loans
These short-term loans provide quick access to funds. You can use them to cover rent deposits, marketing campaigns, initial payroll, or unexpected expenses. Working capital loans can stabilize your cash flow during the first few months of operation while your salon builds a steady customer base.
Equipment Financing
When transitioning from stylist to owner, you invest the most funds in equipment. After all, you need to furnish the salon and reception area, as well as invest in business infrastructure, such as a POS system.
Equipment financing lets you purchase or lease the tools, technology, and furnishings you need, and spread the payments over a specified period. And since the assets serve as collateral, you protect your personal investments while securing competitive rates and terms.
Business Line of Credit
A revolving business line of credit gives you ongoing access to funds. You can draw from your credit line when you need to restock inventory or repair the dryer, and only pay interest on the amount you use. It’s a revolving source of capital that replenishes with each payment you make. It’s a flexible tool for growing your business.
Merchant Cash Advance (MCA)
An MCA offers an advance on your future sales through a fast lump sum of capital. You typically repay the loan through a small percentage of your daily card sales, making it a good fit for salons that process frequent credit card transactions. This type of repayment aligns with your cash flow (you pay more when business is busy and less when it’s slower), helping you manage the unpredictable first year in the salon.
Use Financing to Launch and Grow
Launching your business is only the beginning. How you use your financing determines whether your salon thrives or struggles. So rather than investing heavily in decor or excess inventory, prioritize areas that drive profit.
Let’s say you secure a business line of credit to fund your new salon. You can allocate your funding strategically by reserving a portion of the credit for marketing and maintaining a cushion for unforeseen expenses. Investing in social media ads or partnerships with local influencers immediately after your launch helps you build traction. And the reserve funds keep a seasonal slowdown from closing your doors.
Consider how you can strategically invest your borrowed funds for all your new expenses. When your financing supports your business goals, you establish a solid foundation for long-term, sustainable success.
Funding a Beautiful Future
Becoming a salon owner is a bold move, but you know how to transform dramatic highlights and daring cuts into edgy and trendy hairstyles. Your day job is turning bold into beautiful. And when you follow an effective funding strategy, partner with experienced lenders, and secure financing tailored to salons, your courageous transition from stylist to owner can mark the beginning of a stunning future.
