How to Start a Barbershop

In this article:

• The pros and cons of owning a barbershop business
• Types of barbershops
• How to start a barbershop
• Costs of opening a barbershop
• Types of small business financing

Starting a barbershop, or any type of hair salon is a dream come true for many entrepreneurs. But just like any new business venture, there is a lot to understand before your barbershop business plan becomes a reality. In this article, we explore the barbershop industry and walk through some of the steps to get started.

The pros and cons of owning a barbershop business

Even if you’re passionate about hair and grooming and you have everything you need to get started, it won’t be all sunshine and roses. There are some incredible opportunities you can take advantage of, but you will also face some challenges.

The pros of owning a barbershop

Owning a barbershop offers a lot of benefits, including:

• Independence – Business owners have the privilege of working for themselves. They do not have to make decisions about operations, location, or services while considering their boss’s or supervisor’s instructions. They have the freedom to create their own business model, and hours of operations, and choose whether to hire a staff and how to design their salon.
• Passion – Entrepreneurs that offer health and beauty services, grooming, or work in any type of people-centered industry typically got started by doing something they love and have a natural talent for. The services provided by barbers and beauty shops are performed by trained individuals who choose that career path out of passion.
• Rewarding – Giving haircuts and styles, shaving faces, and helping customers look and feel their best is a rewarding experience for small business owners that are excited about making a difference in the lives of others. Barbers get to spend a lot of time getting to know their clients and brightening their days.
• Unlimited earning potential – Running your own barbershop means that you are in the driver’s seat of your own vehicle to success. Barbershops provide unlimited income potential for those who are business savvy and willing to take a few risks regarding growth.

The cons of owning a barbershop

While there are many advantages to being a barbershop owner, there are also some disadvantages to owning a business.

• Time – Many new business owners end up working very long hours, especially at the beginning of their entrepreneurship journey. You may be able to reduce your hours after your business becomes successful, but many entrepreneurs just invest their free time in growth.
• Paperwork – Having a barbershop in your name means that you are the one in charge of coordinating sales reports, permit applications, financial records, and sorting through countless invoices and employee applications.
• Decisions – While many individuals love being their own boss, they are also responsible for making all the decisions that will determine the business’s success. When you are an entrepreneur, it can be overwhelming to constantly have to make tough calls.
• Failure – It is not easy to start a successful business and owners must consider the possibility of failure since only 40% of startups ever become profitable.

Types of barbershops

Barbershops fall into the service industry and are often classified as health and beauty businesses, but there is more than one type of barbershop. The type of business you choose to open will depend on your experience, startup capital, growth goals, personal preferences, and business plan. One of the most inviting aspects of this industry is that no two barbershops are required to be the same. Check out these common types of salons barbers can consider when planning their startup venture:

Mobile services

Mobile barbershops do not rent or own a physical place of business and often rely on word of mouth to find clients. These entrepreneurs travel to their client’s homes to sell services as independent contractors. A mobile grooming business is the easiest barbershop business to start because it does not require much time or startup funding. Mobile barbers also have the option of starting their business on a part-time basis.

Franchise locations

Purchasing a franchise provides new entrepreneurs with the opportunity to start their own business while still being able to rely on corporate support, marketing tools, and a proven business model. Some of the most popular barbershop franchises include Legend’s Barbershop and Rooster’s Men’s Grooming Centers.

Storefront salons

If a traditional barbershop is your vision, then you may be interested in opening a storefront salon location. These types of barber businesses require leased or purchased real estate where clients can visit the location for hair care services. One of the best benefits of having a physical location is that these businesses are likely to get the most foot traffic and walk-in customers.

Shared space barbershops

Salon suites, or rented mini studios, have become far more popular over the last decade. Securing space in a salon suite is a great option for barbers that want the freedom and income of running their own business without the cost and risks of opening an independent location.

How to start a barbershop

Barbershops are a unique type of business, reserved for driven entrepreneurs and experienced barbers that have a specific goal in mind. No matter what the finish line will look like for you, the path of opening a startup barbershop, spa, or salon will likely require some traditional business planning.

Register your business

If you’ve decided to open your own business, you’ll first need to decide what you’d like to call your barbershop. Once you’ve come up with a name, you’ll want to register your business name and file the paperwork, which might include:

• Create a business entity – Choose an organizational structure, like a limited liability company (LLC) or sole proprietorship, which will impact the business’s liability for federal and state taxes. Typically businesses are registered with the state or local government.
• Trademark – Check the official trademark database to make sure your business name is not already trademarked and then apply for a trademark for an available business name.
• Doing Business As (DBA) – If you want to open your business as a DBA, consider registering the DBA name with the city, state, or county you plan to work in.
• Domain name – If an online presence is important to you and you will be building a website, register the domain name, or URL. You can register a URL online through a registrar.

Create a business plan

A business plan may be required to apply for business financing options, find government grants, work with investors, or appeal to a target audience. Business plans are also a great tool to aid in planning your strategy.

Obtain proper training, licenses, and permits

Be sure you understand the training and licenses required to start your barbershop business, which will vary depending on what type of shop you are opening. Common licenses and permits required for beauty salons and barbershops include:

• Occupational license – Cosmetologists and barbers are required to complete training and obtain a professional license from a cosmetology college or barber school. Occupational licenses are typically mandated by the state you are operating in.
• Operating license – Generally monitored by the county, operating business licenses give the owner permission to be open for operations.
• Zoning permits – The city zoning department issues permits that show your location is approved for the type of business you are running and that you’ve received a certificate of occupancy and met all licensing requirements.
• Health permits – Salons require a health permit from the city. Health permit requirements will vary depending on the city you’re in, so check with your local governing agency for more information.
• Employer Identification Number (EIN)– If you are going to have any individuals working with you, you’ll need to get an EIN from the IRS. An EIN or Tax ID number will also be required to open a business bank account.

Secure a location

Before opening for business, you’ll need to decide on what type of location you’d like. Consider contacting a licensed real estate broker if you are looking to purchase a location or lease commercial real estate. When shopping for locations, be sure to consider your budget and factor in any renovations or updates that will be needed.

Purchase insurance

Business insurance protects your business from an unexpected interruption in business, a lawsuit, a natural disaster, or any other unforeseen circumstance. When researching the requirements to own a barbershop business, consider learning about these types of insurance:

• Business owner’s umbrella policies
• General liability insurance
• Property insurance
• Worker’s compensation insurance

Costs of opening a barbershop

A small barbershop business may take anywhere from $50,000 to $2,000,000 to open, but startup costs and cash flow needs will vary depending on several factors including the type of shop, location, franchise affiliation, and real estate choices. During the market research phase of your new business, you’ll want to get a good idea of how much capital will be required to get your barbershop up and running. Consider researching the costs of each of the following categories when creating your step-by-step business plan.

Education, professional, and legal costs

Consider the costs of barber school or cosmetology training, required licenses and permits, registering your business, legal consult, and any other fees paid in preparing to open your business as a licensed barber.

Insurance

Business insurance policies are typically available where the annual premium is prepaid upfront, but also offer an option for monthly payments.

Location

Assess the costs to rent a spot in a salon suite, lease a shop, or purchase a new building. If you are purchasing real estate or building a new location, consider any upfront costs for renovations as well as fixtures and furniture, like salon chairs, waiting area furnishings, and wall mirrors.

Supplies

To run a successful barbershop, there is a list of supplies you’ll need to purchase. Of course, the exact product you’ll need will depend on the types of services you offer but may include:

• Signage
• Business cards
• Shampoo and styling gels
• Clippers and scissors
• Trimmers and razors
• Combs and brushes
• Sanitizing equipment
• Professional barber chairs
• Retail products
• Cash register
• Disinfectant and other basic cleaning supplies

Advertising

Many barbers rely on word of mouth to get the word out about their services, but if you are new to the industry, you may consider doing some advertising before opening your shop. The type of marketing you can do will depend on your marketing budget, business plan, growth strategies, and storefront exposure. Depending on their target market, most new business owners can see a great deal of success just by promoting their business to new customers through email campaigns or social media platforms.

Types of small business financing

As previously stated, the startup costs for your barbershop will depend on several factors including your location and business structure. Once you have a good idea of how much capital you’ll need to achieve your goals, you’ll want to explore business loans and other funding options for your new business. The following types of financing may be of use:

Crowdfunding

Crowdfunding is a type of financing where an entrepreneur collects small donations or investments from several different sources. The rising popularity of sites like GoFundMe and Kickstarter have made it easier for hopeful entrepreneurs to raise funds, but it is still challenging to collect enough donations within a reasonable time to start your business. Some crowdfunding sites also require that you give investors equity in the business or other rewards in exchange for their support.

Personal savings

Using your personal savings account, a personal loan, or retirement savings account proceeds is always an option for startup capital. However, using personal funds to finance a business is risky because if the business fails, you will be responsible for covering all losses.

Small business loans

The most common way startup entrepreneurs raise funds is through small business loans. Depending on the amount of funds you need, your credit history, and business demographics, one of the following types of financing may work well for a barbershop. Speaking with a loan expert at Biz2Credit is the best way to select the right funding source for your business needs.

• Term loan – A traditional type of business financing where the borrower receives a lump sum of money upfront and repays the loan according to predetermined repayment terms.
• Line of Credit – A line of credit approves the borrower for a maximum credit limit that they can then draw from any time they need funds. Once the balance is paid down, the funds become available again, similar to a business credit card.

Bottom Line

A barber shop is a great business for entrepreneurs that have a passion for helping people and who want to have unlimited earning potential. There are many types of barbershops including traveling services, salon suites, and traditional storefront locations. Once you’ve decided what type of shop you’d like to open it’s important to get a good idea of how much startup capital you’ll need and if you’re going to need a barbershop loan. If you are comparing loan options, reach out to Biz2Credit today, Jyoti Sharma was very impressed when Biz2Credit was able to help her secure a line of credit for her salon faster than traditional banks she had worked with in the past.

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