The wearing of wigs can be traced back all the way to ancient Egypt. Back then, people shaved their heads and wore a wig for sun protection. By the 4th century, wigs were worn to show rank – and to disguise headlice. These days, wigs are often worn for medical or religious reasons. However, they have also become a hot fashion accessory, allowing the wearer to quickly change a hairstyle to match a look or to follow a fashion trend.
However, starting a business from scratch can be intimidating, especially if you don’t know where to start. Fortunately, this comprehensive guide will provide you with all the necessary information to help you get started.
At its core, a wig store is a retail establishment specializing in selling wigs and hairpieces for various purposes, including medical, fashion, and cosplay. It caters to individuals looking for alternative hairstyles, those experiencing hair loss due to medical conditions, fashion enthusiasts, and individuals involved in the entertainment industry.
The technical aspects of wig consultation, fitting, styling, and selling are important, but focusing on customer service and relationships helps craft a welcoming, trustworthy brand image that keeps clients coming back. So, a successful wig store offers a diverse selection, exceptional customer service, and a comfortable shopping experience.
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The wig and hairpiece industry generated $628 million in 2022, although it slightly declined in 2021.
The industry is expected to rise due to increased consumer spending on hair care services and products, shifting hairstyle preferences and trends, as well as health conditions that can prompt hair loss and wig purchases. Additionally, technological advancements have led to more natural-looking and comfortable wigs, increasing their popularity.
Males and females in the 35 – 44 age group make up the most significant industry share, especially for patients suffering from rapid hair loss due to cancer treatment or alopecia. Wigs can make them feel like themselves again. For this market, a brick-and-mortar shop provides a better opportunity for consultations and fittings to ensure a wig or hairpiece is the perfect fit.
Steps To Start A Wig Store
Step 1: Market Research
Opening a profitable wig store requires carefully evaluating your market first. By doing this research, you will get insights into whether there’s room for your business and where you can carve out your niche.
First, determine your niche within the wig industry, as the niche you choose will determine the demographics you target. For instance, if you specialize in medical wigs, you will target a demographic of customers who are undergoing chemotherapy or suffering from alopecia. On the other hand, fashion wigs may appeal to a more diverse customer base, including those who want to change their hair look without undergoing permanent alterations. It’s important to determine the needs of your niche market to tailor your products and services accordingly.
Understanding the demographics of your area will be useful in assessing the market for a wig store. By using census data, you can determine the age, income level, race, health conditions, and other traits that are relevant to common wig purchasers in your area. This data will help you understand the potential customer base in your area and align your product selection accordingly. For instance, if you find that the majority of the population in your area is over 60 years old, you may need to focus on medical wigs. Whereas if the area has a high percentage of younger individuals, fashion wigs and extensions may be more profitable.
Next, conduct research on existing wig retailers in your area. This step allows you to gauge customer demand and evaluate how saturated the local market currently is. Start by identifying the number of wig stores in your vicinity and the range of products they offer.
Take a closer look at their target audience and marketing strategies. Are there any gaps or untapped customer segments that you can cater to? Are they effectively meeting the needs of the local market, or are there areas of improvement? This research will help you identify potential opportunities or areas where you can differentiate your business.
Step 2: Write a Business Plan
Starting a new business entails a lot of planning, and one of the ways to get organized is to write a business plan. This document goes beyond a simple to-do list; it’s the blueprint for your business’s future. Think of a business plan as your strategic roadmap. It’s where you flesh out your initial idea into the steps you’ll take, from securing funding and choosing a location to sourcing products and launching marketing campaigns.
A business plan also includes provides a detailed forecast of your expected revenues and anticipated expenses to project your cash flow. These projections are not only necessary when applying for business loans, but they give insights into whether your wig store is financially feasible or not.
Related: How to write a business plan
Step 3: Source Funding
Once you’ve identified a market for your wig store and crafted a business plan, the next step is to secure funding. Funding can be one of the toughest challenges you face when starting a business, so let’s explore the various sources of funding that are available to help get your wig store off the ground.
The first source of funding to consider is self-funding. Before reaching out to outside funding sources, evaluate how much personal savings you have available to finance your business. If personal savings isn’t enough to cover the startup costs, outside funding sources will be needed. Some of the most common funding sources for wig stores include:
Lenders: Banks provide one of the most common funding sources for new businesses. They typically require a borrower to invest at least 15% of their personal funds towards the total cost of the project, have a good credit score, and have sufficient collateral. If the bank deems the loan too risky, they may use an SBA (Small Business Administration) loan guarantee.
Friends and family: Friends and family can be another source of funding, but it’s important to put agreements in writing to avoid potential misunderstandings and financial conflicts.
Microloans: If you need a smaller amount of cash or have difficulty obtaining credit through a bank, microloans may be the right solution. Some microloan providers even provide business training in addition to offering funding.
Step 4: Register the Business
Starting a wig store comes with many legal requirements that must be taken to ensure your wig store is properly registered. This process varies by state, but here is a general overview to help you get started:
Choosing your business structure: There are four main types of business structures: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). Each has its advantages and disadvantages.
- Sole proprietorship: This is the simplest structure and involves one individual who owns and controls the business. The advantage of this structure is the ease of startup and lowest cost. The downside is that the owner is personally liable for all business debts and obligations.
- General partnership: This involves two or more people who agree to share in the profits and losses of a business. Like sole proprietors, partners are personally liable for business debts and obligations.
- Corporation: This is a legal entity separate from its owners, providing them with liability protection. Corporations are more complex to set up and have more administrative requirements to follow.
- Limited Liability Company (LLC): An LLC combines the liability protection of a corporation with the simplicity and flexibility of a partnership.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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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.
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.
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).
Occupational Licenses: Depending on where your store is located, you may need specific licensing related to wig retailing. Since wigs can be classified under beauty products, you must adhere to any labeling and safety testing requirements. Also, if your wig salon plans to offer cut and style services, a cosmetology license is typically going to be required.
In addition, there will be general licensing requirements such as a sales tax permit, occupation permit, and Employer Identification Number (EIN), depending on local regulations.
Step 5: Acquire & Set Up the Store
Now that you’ve done the groundwork, it’s time to bring your plans to life.
First, aim for a location that is easily accessible, visible, and has high foot traffic. Consider the demographics of the neighborhood and your target market. Choose an area that resonates with your potential customers. For example, a location near other complementary businesses, such as beauty salons or fashion boutiques, can help attract more customers to your store. Similarly, proximity to medical facilities may be advantageous if focusing on medical wigs.
Once you’ve found your ideal location, consider the space itself. Evaluate the size and layout of the space you’re considering. Ensure there is enough room for displaying your inventory, customer seating, and fitting and consultation areas. Don’t forget to factor in storage space for excess inventory and supplies.
One of the most important aspects of running a successful wig store is sourcing and selecting a diverse range of high-quality wigs that cater to the preferences and needs of your target market. Establish strong relationships with reliable suppliers to guarantee a consistent supply of inventory. This will enable you to offer a variety of styles, colors, and types of wigs to meet the demands of your customers.
Step 6: Hire Staff
As a new employer setting up a wig store, hiring employees is a step that comes with a significant set of responsibilities. It’s not just about finding the right people, but also fulfilling your legal obligations as an employer. These requirements will vary depending on your state, but we’ll go over the basics.
Before you bring your first employee on board, you’ll need to tackle some administrative groundwork. First, obtain an Employer Identification Number (EIN) from the IRS, which is necessary for tax purposes and to legally hire employees. Next, verify employment eligibility; every employee must be legally allowed to work in the U.S., which you’ll confirm through Form I-9.
You’ll also need to report new hires to the state, as all states have different requirements for reporting new employees, often for the purpose of tracking child support payments. Worker’s compensation insurance is mandated by most states to cover employees in case of work-related injuries or illnesses. Last, make sure you’re familiar with federal and state labor laws, which cover everything from minimum wage to work hours and break periods.
Step 7: Prepare to Open!
As you get ready to launch your wig store, there are a few remaining steps to ensure everything is in order. While the specific needs may vary depending on your unique situation, here are some common loose ends to tie up before starting:
Business insurance: You’ll need to consider several types of insurance, such as general liability insurance, property insurance, and possibly professional liability insurance.
Setting up bookkeeping: Utilize accounting software to handle daily transactions, track expenses, manage taxes, and generate financial statements. This will help streamline your financial management and ensure compliance.
Opening a business bank account: Separate your personal finances from your business activities by opening a business bank account. This account will help you keep track of income and expenses related to your wig store, making financial management more efficient.
Purchasing management software: Consider investing in industry-specific software to streamline your operations. Examples include inventory management systems, customer relationship management (CRM) software, or point of sale (POS) systems tailored for retail businesses.
Creating a marketing strategy: Develop a marketing strategy to promote your wig store to potential customers. This may include designing a memorable logo, building an appealing website, leveraging social media platforms, implementing targeted advertising campaigns, and exploring partnerships with local salons or medical facilities.
Preparing for the grand opening: Plan a grand opening event to introduce your store to potential customers. This could involve special promotions, demonstrations, or collaborations with other local businesses.
Common Questions When Starting a Wig Shop
How much does it cost to start a wig store?
Starting a wig store involves various expenses that can add up quickly and will vary based on location, size, and inventory choices. To give a rough estimate, starting a wig store could range from $20,000 to $150,000.
Location and setup: One of the biggest initial costs will be securing a retail space for your store. This may include rent deposits, utility connection fees, and leasehold improvements such as paint, flooring, and signage. Depending on your location and square footage, this cost can range anywhere from $5,000 to $50,000 or more.
Inventory and equipment: Another significant expense for a wig store is purchasing inventory and equipment. You’ll need to have a variety of wig types, styles, and colors to appeal to a broad customer base. This expense may also include purchasing salon chairs, wig stands, and other equipment necessary to operate your store. It is estimated the inventory and equipment can cost anywhere from $10,000 to $50,000.
Business registration: Registering your business and obtaining the necessary licenses can range from $50 to $500, depending on your state and the legal structure you choose.
Marketing and advertising: Initial marketing expenses may include creating a logo, building a website, signage, and marketing materials such as flyers or brochures. Marketing costs can range anywhere from $500 to $5,000.
Operating reserves: New business owners should be prepared to pay 3 to 6 months of operating costs while the wig store establishes itself. This financial buffer alleviates pressure as the venture finds its footing.
What skills are needed to run a wig store?
Retail experience: Previous experience in the retail industry will serve a wig store owner well. You’ll have a good understanding of the tricks and challenges of managing a store, understand pricing and inventory, and will be able to plan for specific customer segments and seasonal demands, for example.
Customer service and interpersonal skills: This is a vital skill and one you need to enjoy. Empathy and care are essential traits when dealing with clients dealing with hair loss and illness, for example. And don’t forget to maintain a solid relationship with your suppliers, hair stylists, and medical professionals.
Business management experience: Previous experience in hiring, training, and managing employees will benefit any shop with staff. In addition, a solid understanding of accounting practices and an ability to negotiate supply contracts will also be invaluable.