A Complete Guide on How To Start A Salon Business In India
Despite the substantial risks and the tough hours, owning a Salon business is one of the most rewarding experiences of your life. If you too have nurtured a lifelong ambition of starting up a salon, and don’t know how to go about it, or are currently in the middle of setting up your first Salon, then this article is just for you and will tell you in detail, how to start a salon business in India.
Hair & Beauty Industry in India
The overall Indian Hair & Beauty is one of the fastest growing in the world, and the size of salon industry is expected to cross $ 5 billion mark by the end of this financial year all because of rising incomes, rapid urbanization, increasing working population and technological advancements, more Indian want to looks good.
How To Start A Salon Business In India
Considering the massive opportunity that the Indian Hair and Beauty industry holds for both future & existing salon businesses, you must not waste any further time and dive, rather quickly, into this lucrative industry segment. Follow this step by step guide that will solve all your queries on how to open a Salon in India:
- Decide the concept of your salon
- Get investment to fund your salon business
- Evaluate setup costs involved
- Decide the location of your salon
- Get all the trade license required to start the salon business
- Get the workforce for your salon business
- Design a stellar menu for your salon
- Connect with vendors and suppliers for your salon
- Install the right technology at your salon
Now, once you have garnered the knowledge about the steps that are important for you to start a salon business in India, let’s dive deeper and know what exactly needs to be done that will help you to open a successful salon business in India:
1. Decide The Concept Of Your Salon
The first thing to consider while starting a salon business is deciding the idea. You need to keep many things in mind before deciding on a concept, the major one being the amount of capital you have for investment. The Average Price per Customer (APC) gives you a fair idea about the average amount of money a customer would spend in your salon.
Once you have decided on the concept, you must consider into the theme and menu services of your salon. The interiors must be in sync with your salon theme. Following which you should prepare a business plan for your salon as it would help you in planning the future development of your salon business and you can present it to any potential investor.
2. Get Investment To Fund Your Salon Business
Most aspiring salon dreams never see the light due to lack of funds, and this is one of the most important things to consider when you think of opening a salon business. Firstly, depending on the concept of your salon you must finalize on how much capital is required to start a salon in India when you have the numbers, then you can go about with these three ways through which you can raise money for your dream salon:
- Self-funding – If you have enough money in the bank, then congrats, you have crossed the first hurdle of opening a salon. It is also a good idea to open a salon in partnerships, as it reduces the risks of investment and also divide on the responsibilities.
- Loan- You can take a loan to fulfill your salon dream. However, securing a loan from a bank may include hassles as they look for collateral or someone who can underwrite the loan.
- VC/Angel funding- Getting investors on board can be difficult, especially if yours is a first-time venture. Investors usually look for your hair and beauty venture’s growth potential, quality, and the scalability of your business model. The performance of your first few centers is taken into consideration before one agrees to invest in your business.
3. Evaluate All Salon Costs Involved
Salon costs are a significant part of running a salon and need to be evaluated and planned carefully. Below are the significant costs involved in starting a salon business:
Service Costs- Service cost is the cost of all the raw materials used in performing a service. Ideally, the product cost should be around 20-30% of your menu price.
Overhead Costs– Overhead costs are the other expenses that are not related to product or labor. These include:
- Rent- The rent covers a significant part of your salon costs, and is profoundly affected by the location of the salon. However, the rent should never exceed 10% of your total revenues.
- Interiors– You can decide on the interiors based on your salon concept and theme, and your budget.
- Salon essential equipment- Purchasing right quality equipment may seem like heavy on the pockets, but they always recover their costs in the long run.
- License- Licenses are an essential part of your salon, and cannot be ignored. Based on your region or state, the license fee varies.
- POS- The new age, modern technology POS can smoothen your salon operations like never before. The price of POS depends on its features and functionalities, that should be chosen considering your salon needs. We have covered the topic of POS below in detail.
- Marketing- You should ideally spend 5% of your revenues on marketing your salon. There should be a perfect balance between offline and online marketing. Word of mouth or referral marketing, along with digital marketing can do wonders for your salon.
4. Decide The Location For Your Salon
The location is an essential factor to consider while discussing how to start a salon business, as it can determine the success of your salon. While choosing your salon’s location, it is a good idea to identify your competitor in that area and gauge their progress and understand their business model. The competition needs to be assessed not just in terms of services they provide, but also the type of guest experience they are offering to their clientele. Evaluating the competition would help you understand the client base that hovers in that area, their pocket size, frequency of visit and their preferences.
Other factors to be considered while deciding the location of the salon business in India, are-
- Visibility and accessibility- The salon should be located in a place which is easily visible as well as accessible. Upper floor locations are generally not considered suitable as their visibility is low, and customers also find them difficult to locate. A salon right in front of the road and on the ground, floor has higher footfalls.
- NOC- Before you open your salon, you would also need a No Objection Certificate (NOC) from at least three of your neighbors.
5. Get All Licenses Required To Start A Salon Business
You need to acquire licenses from the local government body to run a salon business in India. The cost of obtaining these licenses varies from place to place. It is advisable to apply for the permits early to avoid any hassle later after the opening of your salon business operations. Here is the list of significant licenses required to open a salon business in India:
- Trade license from the municipal corporation- Depending on the size of the salon, the cost varies. The licenses are issued for a financial year and need to be renewed in March every year.
- GST Registration- Salon are required to register under GST and get their GSTIN Number. GST registration is state specific, so if your salon has centers in different states, then you need to have a separate registration for each state.
- Professional Tax license- You need a professional tax license for employing salaried staff. This is payable on a monthly basis for all salon staff earning above Rs 10,000.
- Business Registration- You need to register your business as a proprietor, partnership firm or a Pvt Ltd company. You’ll need to file annual returns, audit your finances etc. Hire an accounting professional or CA to help you with the economics of your business.
There are a few other licenses required as well such as fire safety, certificate, music license etc.
6. Get Manpower For Your Salon Business
Hiring the right talent and retaining them is one of the biggest challenges while running a salon business in India. Hiring through referral is very well accepted, with existing employees referring their friends. As a first-time saloneur, you can hire through the traditional way: connect with any local academy providing staff, put up ‘We’re hiring’ posters, or hire through agencies. There are also many active groups on Facebook, from where you can source talent.
There are three types of staff required in a salon:
- Housekeeping staff- Your housekeeping staff, comprises the cleaner, assistant staff etc. They will mostly be unskilled labor.
- Service staff- The hairstylist, beautician, makeup artist, therapist staff etc. are your service staff. Since they have to interact with clients, they need to be good at communication and must be trained appropriately on your standards of service delivery.
- Management staff- Your salon manager, receptionist, floor manager, store manager etc. comprise the management staff, and they need to be educated as well as experienced.
Hiring the right hairstylist or beautician is extremely important for your salon as your service is what’s going to attract your clients. Apart from servicing, your senior hairstylist or beautician can also help in your menu, keeping in mind the products that are readily available, and train and lead the staff to deliver the services and consult of the professional products. Therefore, an experienced hairstylist or a beautician is a must for your salon. Before you start a salon business, you must also remember to train your staff not only regarding their job but also on how they should serve their clients to deliver stellar customer service as per the standard of your salon business.
7. Design A Stellar Menu
The next step to start a salon is designing a menu. A smartly designed menu can make a significant impact on your salon service costs. The menu should comprise of services that can be delivered as per the need and convenience of your clients. It is advisable to offer services that use similar products, which will help you to reduce your overall product consumption cost and the scope of the generation of waste.
The menu also needs to be designed in a way that lures customers to spend more.
8. Arrange Suppliers & Vendors For Your Salon
A healthy relationship with your supplier and vendor is essential for the smooth functioning of your salon. You must have at least two-three vendors in each category. This would help compare prices, and will also serve as a backup in case some problem comes up with one.
You must always have four to five days’ worth of stock in your inventory in case of emergency situations. The items must always be delivered in the morning and checked every day. Quantity check must be done at the closing time of your salon. It is always preferable to have long duration contracts with the vendor as it helps in maintaining the consistency of your consumable materials or retailing products. You also need to check the Trade Identification Number (TIN) of the vendor before you give him your salon’s supply contract.
9. Install Right Technology At Your Salon
Salon technology is often the most ignored part of running and managing a salon, though perhaps the most important. With new age modern technology, the robust POS has come up with a number of integrated features that has streamlined the salon operations to a great extent. Niche salon technology solutions are available for different types of salons.
The idea of owning a salon is excellent. However, starting a salon from scratch and running it successfully is a humongous task. With this article, we hope we were able to educate you about how to start a salon business in India. If you still have any doubts or questions regarding opening or managing your salon, do let us know in the chat option or email to us, and we promise we’ll help you out
Note: The figures and facts mentioned in this article are in accordance with the Indian hair and beauty space.