what do i need to know about starting my own hair salon?

Answer 1

There a hundred and one questions that will need to be answered. You have to be the one to answer them. Where is it going to be. Who will be your customers, how much will it cost to get the doors open and the most important question of all:

how much will it cost each week, month or year to run the joint?

This is the most important number to know. It is known as your break even.

In business there are two kinds of costs. There are fixed costs and there are variable costs. Fixed cost are those costs that happen every day, week or month whether or not you have any customers. The variable costs are those cost that increase as business increases. For instance: If you open your shop and have no customers for an entire month, at the end of the month you will have to pay the rent. However, since you had no customers, you didn't use any conditioner and therefore your cost of conditioner is Zero! On the other hand, if you have 100 customers the first month, the rent is the same (hence the term "fixed" expense) but you bill for conditioner will be much higher.

To figure out what your break even cost is, you must have two pieces of information. The first is the total of your fixed costs. The rent, insurance, utilities and of course your salary. Say for this example the total is 4200 per month. The second piece of information that is necessary is your gross profit margin. Gross profit margin is defined as your sales price minus your cost of material to provide the service. (labor should be included in this cost if someone who is not on salary is providing the labor) Lets imagine for this example that all you do are perms at $40 each. Lets further imagine that your cost of material for each perm is $10. That would mean, at a sale price of $40 you have a 75% gross profit, or $30 profit for each perm performed.

So now comes the break even question. In a month you need enough money in gross profit to cover the $4200 of fixed costs and you need enough money to pay for all the material required to generate those sales. The formula is fixed costs divided by gross profit equals break even. In our example 4200 / 0.75 = 5600 sales per month, or stated another way, you will need 140 customers per month willing to pay you $40 each for a perm.

Now lets look at gross profit. OMG super, I can't sell perms at $40 each, $25 is the going rate in my neighborhood. I say that's really great to know because your cost of material has not changed. It still costs $10 to provide the service, since you are now only making 1/2 the profit at $25 as you were at $40 ( $15 profit vs $30) That is a 60% gross profit vs 75%. Lets look at the impact of the new price on break even. You still have fixed expenses of $4200 per month, but now the break even equation looks like this 4200 / 0.6 = 7000 sales or stated another way you need 280 customer per month paying $25 each.

As you can see knowing your break even can answer a number of questions such as How much should I sell my product for? How many customers do I need to make it? Etc.

You should see from the break even calculation that controlling costs is one of a business owner's primary duties.

One other thing to consider. A good business person can run any kind of business because delivering the service is not the job of the business person. The job of the business person is to run the business. If you love doing hair, the one way to guarantee that you will do it less is to open an business that does hair.

good luck

Answer 2

First, don't know how to cut hair! If you do you will be cutting hair all day instead of running the business. They use this exact example in the book The E Myth. The E stands for Entrepreneur. I would check it out.

Answer 3

Go to city hall for business license then go to public library for tax forms, and loans for start up.