- Startup costs: $75,000-150,000
- Industry trend: Growing
- Difficulty: — Moderate to High
- Profitability: $20k-$100k
- Time to build: 9 to 18 months
- Commitment: Full-time
Remember those old barbershops with the red, white, and blue poles outside? Some are still places where people chat and laugh. Others have evolved into these fancy retreats where a simple haircut feels like a day at the spa.
Think about this: if you’re good at cutting hair, why not start a barber shop? One that’s a reflection of who you are and what you love.
Since 2013, the grooming industry has been steadily improving. This means a well-run barbershop can be a profitable venture.
But starting a business is hard. It’s like learning some dance moves. If you’re wondering how to start a barbershop. Dive in, and we’ll guide you through the steps.
How much money do you need to start a Barbershop?
According to the US Small Business Administration (SBA), the startup costs for barbershops typically sit between $50,100- $148,400. This includes barber school fees. So, if you’re already trained at a barber school, it’ll cost less.
Now, what do you need to open your shop? Here’s a simple list:
- Chairs for cutting hair and some extra for those waiting.
- Essential tools like scissors, hair clippers, and other stuff.
- A cash machine and stuff to keep the place clean.
To learn more about how much it costs to start, check out the startup costs for launching a barbershop.
Before diving in, you must draft your barbershop business plan that outlines all these costs.
What is the Average Barbershop Profit Margin?
The earnings of a barbershop business can vary based on several factors. Most barbershop owners rent out chair space to independent contractors, who then pay a percentage of their haircut earnings for the space.
As per IBIS World, a barbershop typically makes a profit of 10-20% of its total sales. On average, as of 2022, a barber shop owner in the United States earns about $53,654 annually. However, earnings can differ state by state, influenced by population and local business dynamics.
Pros and Cons of Starting a Barber Shop Business
Starting a barber shop business offers flexibility and networking opportunities, but it also comes with challenges.
- Building Business Connections: You will connect with many people with diverse backgrounds.
- High Customer Retention: Most people prefer to frequent a single hair salon. A satisfied customer might also become a source of word-of-mouth marketing.
- Steady Income: Once your business is firmly established, you can expect a consistent stream of earnings.
- Competitive Landscape: You might come across many barbershops in your area, leading to competition.
- Initial Investment: Building a customer base demands marketing expenditures.
- Persistence: Establishing a solid reputation requires an investment of time and patience.
Having weighed the pros and cons, let’s now dive into our comprehensive, step-by-step guide on how to establish and run a successful barbershop.
Step-by-step Guide to Start a Barbershop
1. Understanding the Barbershop Industry and Market
It’s essential to do market research to determine who your customers will be—whether it’s men, women, kids, families, or anyone with hair.
With that being said, here are some significant trends and statistics that you should know about:
Barbershop Industry Size: The US barbershop market will be worth $4.9 billion by the end of 2023.
Growth History: The industry’s annual revenue has grown by 1.5% since 2017.
Future Growth: The barbershop business and beauty salons are predicted to grow. According to IBISWorld, there’s an expected 19% annual growth in job openings for barbers and related professions through 2030.
Business Numbers: The US has over 107,000 barber shops.
Employment: Barber shops employ around 135,000 people in the US.
Technology and Innovations in Barbering:
- The barbering world has evolved, adopting modern tools like electric clippers, razors, and specialized software for efficient client management.
- Augmented reality tools allow previews of haircuts, reducing dissatisfaction rates and boosting trust.
Challenges in the barbershop business:
- Finding skilled and professional barbers.
- Managing risks like accidents and misunderstandings with customers.
Who works in barber shops?
Gender: Most barbershop managers (75%) are male, with 25% female.
Education: About 35% of these managers have a high school diploma.
Age: On average, a barber shop manager is 41 years old.
2. Brainstorm a Barber Shop Name
If you’re starting a barbershop, one of your first tasks will be to come up with a business name for it. This can be a challenging process, but here are a few tips to make it easier:
- Choose a business name that clients can remember, pronounce, and recommend easily.
- Ensure the name aligns with the products and services you offer.
- Consider asking friends, family, colleagues, or social media for their recommendations if you’re having trouble deciding.
- If you’re planning to have a website, include relevant keywords like “barber” or “hair” to improve search engine optimization (SEO).
- Use online tools to get suggestions for business names. Simply enter keywords and get instant ideas.
Once you’ve settled on a name, check its availability on the US Patent and Trademark Office website. Additionally, see if the related domain is available, preferably with “.com” or “.org” as they are more credible.
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3. Find the Right Location for Your Barber Shop
Making the right decision about your barbershop’s location is essential. The location can significantly impact the flow of customers and the returns on your investment.
When looking for a location to start a barbershop, choosing a place in a densely populated area with a high demand for men’s haircuts and grooming services is important. This could be near residential places or commercial complexes. You can use online platforms such as Craigslist, Crexi, and Instant Offices to search for available commercial spaces for rent in your area.
Be sure to pick a spot with excellent visibility to draw walk-in customers. Additionally, consider the presence of complementary businesses like beauty salons or men’s clothing stores. They can boost the number of people passing by your barbershop.
Lastly, Think about your crew. A place that’s easy to get to has local amenities and ample parking. It’s not just a win for customers; your team will thank you, too.
Here is the list of the best states for opening a barbershop:
4. Write a Barbershop Business Plan
Alright, here’s the deal: skills and experience? Check. But what’s the game plan? Crafting a rock-solid barbershop business plan is like cooking a master recipe – every ingredient matters.
Here’s what your barbershop business plan should include:
- Executive Summary: A short note about what’s in the plan. It’s better to write this last.
- Company Overview: Talk about what your shop is about, what you want to do, who owns it, and your main goals.
- Product and Services: List the services your shop will have.
- Market Analysis: Look at what customers want, popular trends, and areas you can grow in. Also, see where you stand compared to others.
- Competitive Analysis: Look at other barber shops. Note what they do well and not so well, and think about how your shop is different.
- Sales and Marketing: Think about what makes your shop special. Plan how you’ll tell people about it and get them to come.
- Management Team: List the main people running the shop, what they do, and their background.
- Operations Plan: Talk about where you’ll get your stuff, where the shop will be, the tools you’ll need, and how things will run day-to-day.
- Financial Plan: Plan your money for the next three years. Think about costs to start, when you’ll start making a profit, expected money coming in and going out, and overall financial health.
- Appendix: Add any other important papers or information about money or the business.
Crafting these sections with accuracy isn’t a simple task. It takes a lot of time, a keen eye for details, and ongoing hard work.
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5. Create a Service Menu
Alright, diving deep into setting up your barbershop, one of the important aspects to nail down is your service menu. This isn’t just a list—it’s the heart and soul of what you’re offering. Here’s what you should have on your radar:
Define Your Services:
- What’s going to be your barbershop’s signature offering? It could be the classic flat-razor shave or a trendy curly hairstyle. Understand your niche and your target market.
Pricing It Right:
- Understand the actual costs: Think materials, labor, and overheads.
- Experience Matters: Consider tiered pricing. Is the client getting styled by a seasoned barber or a newbie?
- Profit Margin: Know your breakeven point, and don’t forget to mark up. Value your craft.
Know Your Customer:
- Who’s your target audience? While “everyone” sounds excellent, it’s about understanding who sees value in what you’re charging.
- Pro Tip: Not everyone is hunting for a bargain. For some, a premium price signifies unmatched quality.
Stay Updated on Market Rates:
- What’s the going rate for the hair services you’re offering?
- Trends Alert: If mullets become the next big thing (thank Zac Efron for that), know that styles in vogue might fetch you a bit more.
Peek at Competitors:
- A glance at other barbershop or salon menus can spark ideas.
- Gap Spotting: Identify services missing from their offerings. That could be your golden ticket for a niche target market.
Craft Your Menu with Care:
- Language matters. Ditch the jargon. Opt for terms like “buzz cut” or “straight razor shave.”
- Perception Game: Is it a “price list” for you or a more upscale-sounding “service guide”?
6. Register Your Barber Shop
First and foremost, deciding on your business entity structure is crucial. If this is your maiden venture into the barber shop business, you have several entity options to consider:
Select the business structure first
First and foremost, deciding on the structure of your business is crucial. If this is your maiden venture into the barber shop business, you have a few options:
- Sole proprietorship
- General partnership
- Limited liability company
- Limited partnership
Many experts, including those from reputable sources like Forbes, often recommend selecting a business entity such as a Limited Liability Company (LLC) structure. It shields your personal assets from potential business debts and offers tax benefits.
Find a Registered Agent
With your business entity decided upon, especially if you’re leaning towards an LLC or Corporation, you’ll need to appoint a Registered Agent.
They are responsible for receiving and responding to official communications and legal documents on behalf of your barber shop.
An individual or an agency must be based in the same state as your business.
Register with the state and local laws & obtain business EIN
Next up is registering your barber shop with the state. Procedures vary depending on your state’s requirements, so it’s good to be thorough. Typically, you’ll liaise with your state’s Secretary’s office.
During this phase, you must also get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Think of this number as a unique identity for your business. This number is significant for tax-related matters and opening a business bank account.
Apply for tax registration
Lastly, let’s not forget about taxes. Make sure you’re registered appropriately for both state and federal taxes. This includes the usual suspects: sales tax, income tax, and employment taxes if you’re bringing some skilled barbers on board.
It might sound a tad complex, but having a registered agent by your side can make it flow much smoother, helping you navigate local laws and regulations.
7. Apply for Barbershop Business Licenses and Permits
If you’re taking steps on how to start a barbershop, you’ll soon realize that paperwork is an essential part of the journey. So, let’s get down to business!
First, it’s crucial to know that every barber shop business, or most small businesses, needs licenses or permits to kick off. The specifics might vary based on where you set up shop and local regulations.
At the state level, barber shops are usually under the microscope. But diving a bit deeper, here’s what you might need:
- Business Operation License: This is the green light from either your city or county. It permits you to run your barber shop in that specific area.
- Zoning and Land Use Permits: Before you fall in love with a location, make sure the local zoning laws give you a thumbs up. Some places have rules about where certain businesses can operate.
- Building Permit: Thinking of giving your space a makeover or starting from scratch? This permit ensures that any construction or remodeling you do is on the up and up.
- Sales Tax License: Regardless of its name, which varies by state, if you’re selling products or services, you’ll likely need this.
- Certificate of Occupancy: This isn’t just a piece of paper. It confirms that your barber shop meets building codes and is safe for business.
- Barber Shop or Salon License: Everyone needs to be licensed, whether you own the shop or hire employees. Plus, licenses often hinge on your shop’s location, and there’s usually a manager named as the point of contact. If hiring, ensure you’re bringing a licensed barber to maintain compliance. Don’t forget to keep up with your state’s safety requirements, too.
- Inspections: Depending on where you set up shop, your business might need to go through inspections from the building and health departments. Thanks to state and local laws, it’s just part of the deal.
Finally, a word of advice. Go through your state and local websites meticulously. They’ll guide you on the exact licenses and permits for your area. And, since paperwork is a recurring part of the barbershop business, keep track of renewal dates to ensure smooth sailing. Remember, staying compliant is a big part of running a successful business.
8. Get a Business Insurance
Starting a barbershop isn’t just about sharp scissors and comfy chairs. To ensure your barbershop thrives, you need to think about the unforeseen. This is where business insurance comes into play.
While diving into how to start a barbershop, you’ll discover that insurance is your safety net. It’s there to catch you when unexpected hiccups threaten your dream. Now, there’s a variety of insurance types to consider:
- General Liability Insurance: This is like the Swiss Army knife of insurance. It’s comprehensive, covering many aspects of your business, from injuries in your shop to property damage. If you choose one insurance, let this be the one.
- Business Property Insurance: It’s there to look after your gear and tools. After all, without them, there’s no barbershop!
- Equipment Breakdown Insurance: This insurance covers repair or replacement costs if machinery malfunctions.
- Worker’s Compensation: This one’s for your team. If someone gets hurt while working, it ensures they’re taken care of.
- Property Insurance: This secures your physical space, be it a cozy corner shop or a more substantial establishment.
- Business Owner’s Policy (BOP): This is a combo meal. It bundles several insurance types, offering a comprehensive cover.
9. Apply for a Business Bank Account & Credit Cards
Apply for a business bank account to keep your barber business finances clear and separate from personal assets. It’s like keeping your hair-cutting scissors separate from the ones you’d use for crafts. It ensures clarity and safety!
Here’s the simple breakdown:
Open Business Bank Account:
- Keeps personal and barber shop business expenses apart.
- Protect your savings like a pro.
- Makes handling money and paying business taxes smoother.
- Personal assets protection
Get a Business Credit Card:
A business credit card linked to your business accounts is not just about separating expenses. Business credit cards can also open doors to helpful funds like small business loans down the road.
10. Fund Your Business
Starting a barber shop requires an investment. It’s not just about getting a space and setting up chairs. You have to think about the tools, like clippers and scissors, and there are fees for licenses, insurance, and registrations. So, how can you get the funds to kick off your barber shop business?
Here’s the scoop:
- Debt Financing: This is basically borrowing money you’ll pay back with some interest. Many places offer this, from banks to government programs. Just make sure you know the terms.
- Equity Financing: Instead of a loan, you give a part of your barbershop ownership to someone, and they give you money. It’s a trade-off but can be beneficial if you find the right partner.
- Grants: Some organizations, like government bodies or charities, might offer grants. This money doesn’t need to be paid back, but getting a grant isn’t easy. You’ll need to do your research and put in a strong application.
- Friends and Family: Your loved ones might believe in your vision and want to help. Just be sure to get everything in writing so everyone’s on the same page. And get some legal advice, too, just to be safe.
- Crowdfunding: Websites like Kickstarter let people pitch in to make your dream a reality. There’s also Fundable and WeFunder, where investors can support your barber shop idea.
11. Build a Team
Starting a successful barbershop business requires more than just a great location and equipment; it’s also about the people. Your team will be essential in how customers view your barber shop. So, who should be part of your team? Here are the roles that you should include:
- Barbers – They cut hair and do other things.
- Receptionists – They set up appointments and talk to customers.
- Marketing Person – They help people find your shop online.
You might hire all of these people, or just some, depending on how big your shop is and what you need. Sometimes, you might have one person doing many jobs or many people doing one job.
To find workers without spending money, you can put job ads on places like LinkedIn, Facebook, or Jobs.com. If you want to spend a little, you can use websites like Indeed, Glassdoor, or ZipRecruiter. If you have some extra money, you can also get a special company (recruitment agency) to find workers for you.
12. Prepare to Launch Your Business
Before you launch your barbershop for customers, here are some things that you need to take care of:
Essential Barber Equipment:
Before opening the doors to your barber shop, ensure you have the right tools in place:
- Clippers and their accessories.
- Hair shears and trimmers.
- Shavers and a razor holder.
- Neck strips and their dispensers.
Going Digital with a Business Website:
In today’s digital age, having a business website is crucial for any barbershop business. It’s not just about online visibility; it’s about building a brand and reaching a wider audience.
Here’s what your website should have:
- Showcase essential details: location, contact information, and how customers can book appointments.
- Include high-quality pictures of your shop and team, complemented by clear descriptions of your services and pricing.
- Ensure your site is mobile-friendly, offering a seamless browsing experience for visitors.
Tools for Smooth Operations:
Running a barber business can be complex, with numerous roles to juggle. Thankfully, the digital world offers tools to make tasks easier:
Consider using management software. These tools can assist with appointment scheduling, customer data handling, and invoicing.
Amplifying Your Presence with Marketing Strategies:
A good marketing strategy is vital for both new and established businesses. It can expand your reach through digital platforms and bring in more customers.
Here’s how you can do this:
- Link your website to your social media platforms, ensuring consistent branding and messaging.
- Utilize platforms like Facebook for targeted ads, reaching out to specific groups, for instance, men under 50 in specific areas.
- Embrace Instagram’s visual appeal for showcasing your services and engaging with a different target audience.
- Optimize your website for search engines. A practical SEO approach can elevate your site’s ranking, making it more visible to potential clients.
- Encourage and respond to reviews on platforms like Yelp and Google My Business, essential for businesses like barber shops that thrive on local clientele.
With a good business plan, you have a better shot at getting the money you need to start your shop.
Now that you know the ins and outs of opening a barbershop, you can transform your shop into a bustling hotspot for fresh cuts and shaves.
Ready to take the leap? Use our barbershop business plan template to ensure you’ve thought of everything and get your barbershop ready for customers.