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How To Start A Barbershop

How To Start A Barbershop

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How To Start A Barbershop

How To Start A Barbershop

In today’s fast-paced world, a trip to the barbershop encourages us to slow down. If you have experience working as a barber, you probably already know the meaningful connections and relationships that good barbers forge with their customers. When you start a barbershop of your own, you can continue to develop these customer relationships while turning the business into the store of your – and your customer’s – dreams.

Owning a barbershop can be a financially and emotionally rewarding venture as you help customers achieve their ideal looks. This guide offers you an insight into the barbershop business, the essential steps needed to get started, and answers to common questions.

Business Overview

Barbershops have been around for centuries, and they’re currently enjoying a resurgence in popularity. These shops specialize in grooming for men and boys. They offer services, including hair cuts, shaves, hair care, and more, and many sell specialty hair and shaving products, too.

Many barbershops thrive on the small-town, close-knit feel that they can establish with their customers. Traditionally, shops are small, with just a few barbers on staff. Barbers are known for striking up conversations with their customers as they work, leading to a relationship and familiarity with customers. In many ways, barbers offer their customers an experience, rather than just a cut or a shave, and that experience and focus on the customer’s individual style and preferences is what helps barbers to earn loyal customers.

Industry Summary

The barbershop industry is thriving, with a projected steady growth rate in the coming years. The revival of traditional barbering services is largely attributed to the increased grooming consciousness among men. In addition, personalized services and the integration of technology have become vital aspects of the modern barbershop experience.

According to IBIS World, the barbershop industry is estimated to grow by .6% and reach $4.9 billion in sales by the end of 2023. The industry’s increased revenue is due to several factors. While demand for services hasn’t necessarily increased, a growing population has increased shops’ customer bases. As shops have expanded into more specialized services, they earned more money per customer, leading to increased income. An increase in per capita disposable income during that same time means that customers are more likely to purchase elective services, like shaving, than they were previously.

The barbershop industry is constantly evolving, and barbers need to keep up with all of the latest style trends to deliver what their customers are looking for. According to the National Barbers Association, one major trend that barbers should embrace is that women are increasingly looking for shorter haircuts and are turning to barbers who specialize in shorter styles. While barbers traditionally cater to men, encouraging women to step into the shop could open these stores up to a new customer base. Celebrities, moms, businesswomen, and more are looking to change their styles and go short with their hair. Barbershops should showcase their cuts to both male and female audiences.

Elegance notes that barbershops stand to benefit from the increased focus and value that men are placing on grooming. While customers can order cheap razors and products online, they’re willing to pay a premium for the personalized service and the higher-quality products they can get at their local barber. Specialty services, like hot towel shaves, are increasingly in demand, and barbershops are experiencing a resurgence as a result.

Also, with the rise in male grooming consciousness, the sale of specialized grooming products within the barbershop can add an additional revenue stream.

Target Market

Barbershops traditionally market to men with hair care or personal grooming needs. Many shops also offer haircuts for children. Some shops also market to women, while others may target specific cultural or niche markets, offering styles and services catering to particular cultural norms and expectations.

Understanding the target market is vital in crafting a business and marketing strategy that resonates with potential customers. By knowing who the barbershop aims to serve, owners can tailor the services, atmosphere, pricing, and promotional activities to meet the needs and preferences of their clientele.

Checklist To Start A Barbershop

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If you’re thinking about starting a barbershop, it’s important to do your research first. Here is a checklist to help you get started.

Step 1: Assess the Market

Starting a barbershop – or any business, for that matter – without first assessing the potential demand and conducting thorough market research can be a risky strategy. Finding out whether there’s enough demand for a barbershop not only helps to minimize your risk, but also helps to better understand the local market’s needs and preferences.

A few ways to research your market could include:

Conduct surveys and interviews: Use online survey tools or conduct face-to-face interviews with people in your target area. Ask about their grooming habits, preferences, and what they would like to see in a new barbershop.

Analyze competitors: Visit existing barbershops in the area to understand their services, pricing, and customer experience. Pay attention to their strengths and weaknesses.

Social media polls: Leverage social media to create polls or ask questions about people’s interest in a new barbershop. It’s a free way to engage potential customers directly.

Evaluate local demographics: Research the local population’s demographics, including age, gender, and income levels. Tools like the U.S. Census Bureau’s website and local economic development office can provide valuable data for this.

Step 2: Write a Business Plan

With a better understanding of your local market and that an opportunity exists, writing a business plan for a barbershop is the next step in transforming your vision into reality. A well-crafted business plan not only serves as a roadmap to guide you through the various stages of starting and running your business but will be used to approach banks or investors for funding.

While all of the sections are important in a business plan, some are more important when seeking funding.

Market analysis: This section highlights your understanding of the local market, competition, target customer profiles, and how your barbershop will differentiate itself. It supports your claim that there’s a viable market for your services.

Services and pricing: Outline the specific services, packages, and pricing strategies that your barbershop will offer. Detailing this information helps investors understand how you plan to attract and retain customers.

Management and staffing plan: Detailing the qualifications, roles, and responsibilities of your team provides assurance that you have the right people to execute your business plan.

Financial projections: Lenders and investors are especially at the potential profitability of a project before funding it. Your plan should include detailed financial projections, which give a clear picture of your expected revenue, expenses, profitability, and growth prospects.

Related: How to write a business plan

Step 3: Source Funding

Starting a barbershop involves various costs, including leasing a location, purchasing equipment, obtaining necessary licenses, and marketing, among others. While the startup costs for a small barbershop might be relatively manageable, especially if opting for a simpler setup, securing adequate funding is often a vital step in ensuring a smooth launch and sustainable operation.

Common sources of funding for a barbershop include:

Personal savings: Many aspiring barbershop owners begin with their personal savings, especially if the startup costs are on the lower end. Using personal savings means there are no loan payments to budget for, giving you more financial flexibility. It’s a quicker and more accessible way to fund your business without the complexities of loan applications.

When personal savings are not enough outside sources of funding will be needed. Common sources for a barbershop include:

Friends and family: A potential source of funds, though one to approach carefully is asking to borrow startup funds from friends and family. While there will be people that want to support your business, be sure to put all agreements in writing to help protect these relationships should things not turn out as expected.

Bank loan: Traditional bank loans are the most common source of funding for a new barbershop. When applying for a business loan, banks will thoroughly review your business plan, credit score, collateral, and your investment into the business (typically at least 15% of the total startup costs). If the bank feels the loan is too risky, they may use an SBA (Small Business Administration) loan guarantee to mitigate the risk.

Microloans: These are small loans offered by specialized lenders and local economic development programs, often aimed at helping small businesses or startups. Microloans are typically easier to obtain than traditional bank loans and can be a practical choice for entrepreneurs with less-than-perfect credit or those needing a smaller loan amount.

Angel investors: Though not as common for barbershops, angel investors might still be an option. These are typically local individuals with higher net worth who have an interest in supporting businesses in their community. Securing investment from angel investors can be hard, especially for a barbershop, as most investors are looking for high-growth and scalable businesses.

Related: Finding the money to start a business

Step 4: Select your Location

Finding and preparing the perfect location for a barbershop is the next step in the process. Having the funding secured before signing any contracts is essential, as it ensures that you have the necessary financial support in place. Funding can sometimes take longer than anticipated or be denied altogether, so having it secured helps avoid unnecessary delays and complications.

A prospective owner must consider the demographics of the area, ensuring that the location aligns with the target market of the barbershop. People will be willing to only travel so far to a barbershop, so it’s important to be located close to your target customer. Evaluating foot traffic and accessibility is an important consideration in site selection, as a location that is both visible and easy to reach can greatly enhance customer inflow. The proximity to other businesses, especially those that complement the barbershop, can be an advantage as well.

Barbershops will need spaces that can be modified to accommodate their needs for space, different stations, sinks, and more. When looking at potential properties, be sure to factor in renovation costs as running plumbing and electricity to the stations can get pricy. To get ideas on layout, visiting similar businesses in the area and barbershops that aren’t your competitors could provide insights into what works well in terms of layout and positioning.

When looking at the ideal location, costs, including rent, utilities, and maintenance, must be weighed against the expected revenue to determine if the location fits within the budget.

Finally, local regulations, such as zoning laws and permits, need to be considered before acquiring the property. Consulting with a real estate professional who is familiar with the local market and zoning can help you find a great location.

Related: Choosing a business location

Step 5: Register the Business

Starting a barbershop business involves more than just a passion for grooming and a knack for customer service; it also requires careful attention to legal details. Properly registering the business is fundamental to ensure compliance with the legal requirements that come with opening a barbershop. Each state is different, but here are common requirements to be aware of.

Choose a business structure: The first thing you’ll need to decide is what business structure is best for your business. The four main types of business structures are:

Sole Proprietorship: The simplest form, it offers ease of startup and lower costs but provides no personal liability protection.
Partnership: If you plan to have a business partner, this option allows shared responsibility. Partnerships can be general or limited.
Corporation: This structure offers strong liability protection but is generally more complex and costly to establish and maintain.
Limited Liability Company (LLC): An LLC combines some of the advantages of corporations with the flexibility of a sole proprietorship. It offers liability protection, separating personal assets from business debts.

Related: Comparison of business structures

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming a barbershop

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Barber’s license: Both the owner and employees may need to be licensed as barbers or cosmetologists, depending on the services offered. All 50 states regulate and license barbers. Because a barber’s work affects public health, barbers must acquire a license before opening a shop and are subject to regular inspections. Different states have different licensure requirements, and you may need to complete a barber program, an apprenticeship, or both.  Each state’s board regulates certification training. Certification typically takes around nine months to complete, and fees range between $20 and $100.

Health and safety permits: Barbershops may be required to register with the local health department. Before opening, consult with local health departments to ensure compliance with sanitation and safety regulations.

Obtain business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: What licenses do barbershops need?

Step 6: Design and Set Up the Barbershop

Starting a barbershop means designing and setting up the shop in a way that balances practicality with aesthetics.

First, you’ll want to outline the layout, considering how customers will move through the space, and where barber chairs, waiting areas, and product displays will be located. Focus on choosing durable and comfortable furniture that fits your budget and style. Proper lighting is essential, not only for the ambiance but for the barbers to work effectively.

If there are local health and safety regulations that apply to your business, be sure to reach out early in the process to make sure everything is up to code. Common regulations could include the placement of sanitation stations and ensuring proper ventilation.

Step 7: Purchase Equipment

With the barbershop renovations taking place, it’s time to start purchasing the equipment. Here are a few things to think about before purchasing equipment:

Identify necessary equipment: This step may have taken place when writing the business plan, but it’s time to take a closer look as there are several pieces of equipment that are needed to run a barbershop. Essential items include clippers, trimmers, edgers, barber shavers, straight razors, scissors, combs, and a sturdy barber chair. You might also need a cape, neck duster, and hand mirror.

Research suppliers: Look for suppliers that offer the equipment you need. Some places to start could include Buy Rite Beauty, Shop Salon City, and Barber Depot.

Compare prices and quality: Once you have identified potential suppliers, compare their products’ prices and quality. You want to ensure you are getting the best value for your money.

Check for warranty and support: Before making a purchase, check if the equipment comes with a warranty or if the supplier offers support services. This can save you money and stress in the long run.

Make the purchase: After doing your due diligence, you can proceed to buy the equipment. Be sure to keep all receipts and warranty documents, as you may need them in the future.

Remember, the right equipment can make a significant difference in the services you provide and your client’s satisfaction. Therefore, it’s crucial to invest time and effort in this step of setting up your barbershop.

Step 8: Get your Marketing Plan in Place

Marketing your barbershop is an exciting step that can help you build a loyal clientele and make your business a local go-to spot. In approaching marketing, you’ll want to consider both online and traditional strategies to get the message out to potential customers that your barbershop is open.

Starting with online strategies, consider being active on social media platforms, where sharing photos of your shop and eventually, the work you do are great images to build community and trust. Interacting with followers can create a buzz and doesn’t cost anything other than time.

Creating informative and appealing content on your website can enhance your online presence as well. Offering online booking, showcasing staff profiles, and including customer testimonials can be effective.

As customers begin using your services, look at email marketing, where you can share special offers or news with subscribers, can keep your customers engaged. Claiming your Google Business Profile and listing your business in other relevant directories, such as Yelp or local community websites will allow customers to find you easily through search and maps.

While digital marketing is cost-effective and powerful, don’t underestimate the power of traditional marketing strategies. Participating in local community events and partnering with nearby businesses can create strong local connections. Flyers, business cards, and targeted local newspaper advertising can also be powerful tools. Joining the Chamber of Commerce is also a great way to network with other business owners and tap into local resources and opportunities.

By combining online techniques with tried-and-true traditional methods, your barbershop can become a prominent fixture in the community. The key is to stay engaged, be responsive to your clients’ needs, and maintain a consistent, high-quality presence both online and offline.

While not technically “marketing” (but it kind of is) to help your barbershop stand out, don’t underestimate the importance of turning each customer’s visit into an experience. Small elements, like having quality reading material and complimentary water and snacks available, can instantly elevate a customer’s experience. Providing great customer service is essential, so focus on hiring barbers who are engaging, friendly, and who can easily establish connections with their customers.

Related: Low-cost ideas to market a new business

Step 9: Hire Employees

Some barbershops are started with or run only by the owner, while others will hire employees or provide booth rental. If your business plan includes bringing on other barbers, finding the right people is important as they will be interacting directly with the customer experience. Whether you decide to hire full-time employees or consider the option of booth rentals, understanding your staffing needs is key.

Before hiring employees or entering into booth rental agreements, compliance with legal requirements is important. Hiring employees includes obtaining an Employer Identification Number (EIN), ensuring workers are eligible for employment, adhering to wage and labor laws, and managing tax withholdings and reporting.

Instead of hiring employees, some barbershops will instead rent out chairs to other barbers.  While this guarantees a monthly income for the owner and not having to hassle with payroll taxes, the owner is somewhat limited to the amount of control the business has over the work of the renter. Booth rental arrangements should be governed by clear contracts outlining both parties’ responsibilities, including rent, utilities, insurance, and maintenance. To draft a contract, consider working with an attorney or RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.

Related: State guides for hiring your first employee

Step 10: Prepare to Open!

We’ve gone over the primary steps to starting a barbershop, but there are still a number of other items to finish. Every business will have unique needs, but here are some common loose ends you’ll likely need to tie up:

Business insurance: Protecting your business with the right insurance is paramount. This might include liability insurance to cover potential legal claims, property insurance for your physical location, and workers’ compensation if you have employees.

Related: What insurance do barbershops need?

Bookkeeping setup: Implementing a robust bookkeeping system from day one will help you manage your finances efficiently. Whether you use accounting software like Wave Accounting (FREE) or Quickbooks or hire a professional, maintaining accurate records is essential.

Banking: Opening a separate business bank account helps to keep personal and business finances distinct, simplifying tax preparation and financial management.

Point of Sale (POS) software: Investing in specialized software can streamline operations. A few popular options include Booker, Rosy Salon Software, and Square Appointments.

Accepting credit cards: Being equipped to accept credit card payments is almost a given in modern commerce. Partnering with a reputable payment processor like Square or Stripe can make this a seamless part of your business.

Preparing for the grand opening: Planning a memorable grand opening can generate buzz in your community. Consider promotions, special guests, or local partnerships to create an event that reflects your brand’s personality.

This material is property of StartingYourBusiness.com

Greg’s Tip: Barbershops often compete in a crowded market. Consider what sets your barbershop apart from others in your area. This could be a specialized service, exclusive products, exceptional customer care, or a unique ambiance, but whatever it is identify what resonates with your target market and make it the centerpiece of your brand.

Greg's Business Tip

Common Questions When Starting A Barbershop

How much does it cost to start a barbershop?

The cost to start depends on numerous factors such as location, size, and the level of luxury you want to provide. On average, however, the cost to start a barbershop is estimated to be between $50,000 and $200,000.

Below are the key components of the start-up costs:

Lease or purchase of space: Securing a location can be one of the most substantial costs. Depending on the area, expect to spend anywhere from $1,000 to $5,000 for initial deposits and even more if purchasing.

Renovation and design: Creating an inviting atmosphere with the right layout can cost between $20,000 and $50,000, including flooring, painting, plumbing, and electrical work.

Furnishing and equipment: Quality barber chairs, mirrors, station accessories (clippers, scissors, trimmers, combs, etc.), and other necessary furniture can range from $10,000 to $30,000.

Initial inventory: Hair products, shampoos, conditioners, and other grooming supplies might run around $1,000 to $3,000.

Licensing and permits: The costs for obtaining the necessary licenses and permits can vary by state but typically fall between $200 and $1,000.

Insurance: Initial insurance costs for liability and property coverage might be around $1,000 to $3,000.

Marketing for the grand opening: The cost for the website, marketing materials, online ads, and promotional activities for your grand opening can range from $1,000 to $5,000.

Technology and Point of Sale system: Implementing a POS system and related technology can be another $1,000 to $3,000.

All these costs add up, and it’s essential to plan your budget carefully. Along with the initial investment, it’s a good idea to have three to six months of operating expenses on hand as a buffer. This extra capital will help you navigate the first few months as you work to build clientele and steady revenue, giving you flexibility and stability as your new barbershop begins to grow.

How profitable is a barbershop?

Profit in the barbershop industry can vary widely based on factors such as location, size, pricing strategy, and operating costs.

A common formula to estimate profit involves subtracting total expenses from total revenue. Here’s a basic example:

Revenue: Let’s say a barbershop charges an average of $20 per service (this can vary widely based on location and the specific service provided). If the shop serves 20 customers per day for 6 days a week, the weekly revenue would be 20 customers x $20/service x 6 days = $2,400. Over a year (52 weeks), this amounts to $124,800 in revenue.

Expenses: Expenses can include rent, utilities, salaries, insurance, marketing, and supplies. For example, if we consider an average monthly rent of $2,000, utilities at $200, salaries at $4,000 (assuming the owner plus one employee), insurance at $150, marketing at $300, and supplies at $350, the total monthly expenses would amount to $7,000, or $84,000 annually.

Profit: Using the formula Profit = Revenue – Expenses, we can now calculate the annual profit: $124,800 (revenue) – $84,000 (expenses) = $40,800.

Keep in mind that these numbers are quite generalized and can vary greatly depending on your specific situation. Location, the experience and reputation of the barbers, the quality of products used, and many other factors can significantly impact both revenue and expenses. It’s advisable to consult with a financial advisor who understands the barbershop industry to create a more tailored and accurate financial plan for your particular business.

What skills are needed to run a barbershop?

While starting and running your own barbershop doesn’t require a business degree, certain skills, and experiences can increase the chance of this business being a success.

Barber experience: In addition to holding a barber license, a shop owner needs to have experience working as a barber to understand this industry’s challenges and nuances.

Active listening skills: A barber needs to be able to actively listen to clients to understand what they want.

Interpersonal skills: Great interpersonal skills are a must since any barber needs to know how to listen to customers and create an environment where they feel welcome and understood. Making small talk and establishing connections with people is important since this can help build customer loyalty.

Attention to detail: A barber needs to pay attention to all of the details in a business, from the work they do for clients to the shop’s cleanliness.

Physical endurance: Barbers spend long hours on their feet, and shampooing, styling, shaving, and tending to customers is physically demanding. A shop owner will need physical strength, dexterity, and endurance.

What is the NAICS code for a barbershop?

The NAICS code for a barbershop is 812111.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
American Barber Association
National Association of Barber Boards of America
National Association of Barbers
National Barbers Association
Professional Association for the Beauty Industry

How To Start A Barbershop

How To Start A Barbershop

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