Nail Salon Financial Plan

Are you dreaming of creating beautiful nail art or pampering clients with luxurious treatments?

Well, running a nail salon can be an exciting and financially rewarding venture for you!

But before you start, it’s crucial to understand the financial aspect of your business, covering everything from startup costs to revenue projections and more.

That’s why you’ll need to have a solid financial plan in place!

If you need help writing one, explore this sample nail salon financial plan. It will help you build a strong financial plan and provide valuable insights into your nail salon’s profit and loss potential.

Ready to begin? Let’s dive right in.

Nail Salon Financial Outlook

Before jumping right into financial planning, let’s first explore the financial landscape of the nail care industry.

Here are some recent industry highlights:

• The global nail care market is estimated to generate a total revenue of $12.46 billion in 2024, experiencing a CAGR of 3.52%(2024-2028).
• In the United States, the nail care market revenue is projected to reach about $1.70 billion in 2024, with an annual growth rate of 1.86%.
• On average, the per-person revenue in the US nail market amounts to $4.98 in 2024, showing a lot of money spent on nails within the country.
• There has been an increasing trend for eco-friendly and cruelty-free nail products in the United States.

It’s indeed a profitable market for anyone who wants to open a nail salon. Now, let’s understand how to prepare a winning nail salon financial plan.

1. Calculate Business Startup Costs

Once you’ve decided to start a nail salon business, it’s very crucial to have a clear understanding of your finances, right? So, you’ll need to calculate nail salon startup costs very first!

You may start by identifying all the initial expenses associated with your nail salon, including salon renovation, furniture & equipment, supplies, insurance & licensing fees, marketing, staffing, and one-time costs.

You can also research local market conditions and industry standards to evaluate the typical costs of opening a nail salon. This will help you get accurate estimates.

Try to be clear and comprise every potential cost, no matter how small it is. You can make a specific list of all the expenses, as shown in the below table:

So, having a fair idea of startup costs will help you create a proper budget and determine the necessary capital to launch your business successfully.

2. Determine Financing Requirements & Strategy

Sometimes, people don’t have enough money to start their own business. So, they might need to ask for help from others to get the initial investment.

For your nail salon, you may evaluate the current monetary position and determine how much startup capital you’ll require to fund your business. Also, assess various financing options and develop a clear strategy to secure funding.

Here are a few funding options you may consider:

• Traditional bank loans
• Private investors
• Partnerships
• Small Business Administration (SBA) loans
• Venture Capital (VC) firms

For each option, you have to evaluate the terms, interest rates, and repayment methods. This will let you devise a financing strategy that aligns with your investment goals and risk tolerance.

Then, you can decide which funding option is the most appropriate for your nail salon.

Furthermore, while seeking credit from banks or investors, you’ll need a professional document that projects how your nail salon’s financial modeling works. It will assist potential lenders to have a better idea of your business.

3. Understand Your Business Model

Developing a scalable business model is a crucial aspect of a financial plan. This is something you have to decide before you start running your business.

It is a strategic framework that defines how you generate income, manage expenses, and reach your financial objectives.

Here is a list of different nail salon models you should consider:

• Traditional salon
• Mobile nail services
• Boutique spa salon
• Nail bar or lounge
• Express salon

While deciding on any of the above models, you have to understand their financial considerations, including revenue potential, profit margins, market demand, scalability, and operating costs.

This will help you make well-informed decisions and achieve your financial goals in the long run.

4. Identify Revenue Streams

Identifying your business revenue streams is an essential part of maximizing profitability. So, try to diversify your income sources beyond nail services and create a robust portfolio.

It will help potential investors or lenders determine how much revenue your business intends to generate over the next few years.

For instance, you may include the following revenue streams in your nail salon financial projections:

• Manicure & pedicure services
• Retail sales of nail care products
• Beauty treatments
• Waxing or skincare

Well, using Upmetrics could be a great help here. It will not just calculate financial projections but also help you identify relevant revenue streams.

For better understanding, you may consider the following example prepared using Upmetrics:

Furthermore, it allows you to make informed decisions about your revenue by using different ways to forecast income streams, such as unit sales, the charge per service, recurring/hourly charges, or fixed amounts.

So, this can be an effective and accurate way of estimating your income potential.

5. Market Analysis and Pre-Assumptions

A successful business requires a comprehensive market analysis to gain valuable insights into the local business landscape.

While writing a nail salon business plan, you’ve already conducted thorough market research and had a better understanding of the target market, customer preferences, industry trends, and competitor offerings.

So, it’s time to use that knowledge to prepare a financial forecast and make realistic assumptions about service pricing, rent or lease costs, wages, client volume, and operating expenses.

Here are a few key components that you should include in your plan:

Pricing Strategy

When it comes to devising a pricing strategy, there’s no bound law. Yet, you’ll need to analyze a few factors, such as your nail salon services, local market demand, and target customer demographics, to set optimal pricing.

You may conduct a competitive market analysis to comprehend the prevalent market prices and develop competitive yet profitable sales prices.

Remember, your prices should reflect the value of your nail salon services and still help you generate sufficient returns on your investment.

Sales Forecast

A sales forecast is a primary element of any business, serving as the cornerstone for its profitability and growth.

It helps you estimate the number of nail services or products you expect to sell over a specific period. You can predict future sales based on pricing trends, foot traffic, customer demographics, and seasonality.

Apart from that, you may consider market demand and assess the effectiveness of your promotional efforts to predict the total revenue for your nail salon over a specific timeframe, such as monthly or annually.

Business Expenses

Generally, business expenses are operating costs or day-to-day expenses that will keep your business running smoothly.

For your nail salon, you may conduct a detailed analysis of its anticipated expenses, including salon lease or rent, renovation and decoration, equipment purchases, supplies, staffing, utilities, insurance, advertising, and other administrative costs.

Apart from that, you may consider a few factors, like market trends, inflation rates, and industry standards, while estimating your business expenses.

Here, you should note one thing—you must account for probable cost overruns or unexpected expenses during business operations. So, be conservative in your financial projections.

6. Make Financial Projections

If you want to attract investors, let the numbers do the talking. This is so because potential investors or stakeholders will look at the financial reports once and decide whether or not to invest in your business.

So, ensure that financial reports give a clear picture of your nail salon’s economic health and viability.

Here’s a list of several financial statements and analyzes you should incorporate into your projections:

Cash flow statement

A cash flow statement helps you track the cash flow in and out of your business over a specific timeframe, generally monthly, quarterly, or annually.

It provides an in-depth knowledge of how much cash your nail salon brings in, pays out, and ends with the cash balance. Typically, it’s an illustration of how well your nail salon is generating cash.

You can track your nail salon’s cash inflows from sources like sales revenue, investments, and loans, as well as cash outflows for expenses such as rent, utilities, wages, supplies, and taxes.

Be realistic about your financial assumptions and measure your salon’s liquidity, capability to meet financial obligations, and sufficiency of cash flow to fund future investments and expense outlays.

Balance sheet

A balance sheet provides a quick overview of your business’s financial position at a specific time.

It clearly demonstrates what you own, what you owe to vendors or other debtors, and what’s left over for you. After all, it has three main elements:

• Assets: Cash, equipment, inventory, and accounts receivable
• Liabilities: Debts, loan repayments, and accounts payable
• Equity: Owners’ equity & other investments, stock proceeds, and retained earnings

Ideally, it is formulated as, assets = liabilities + equity

By looking at your balance sheet, anyone can get the exact idea of how financially stable your business is, how much cash you hold, and where your money is tied up.

Income statement

The income statement is also known as a profit and loss statement(P&L), explaining how your business made a profit or incurred a loss over a specific period, typically monthly, quarterly, or annually.

Depending on the structure and type of your business, consider adding these factors—revenue or sales, operating expenses, and gross margin to your profit and loss statement.

You may calculate the gross margin by subtracting the cost of sales or COGS from revenue. It enables you to determine your business’s efficiency in utilizing resources.

Further, the P&L statement should also include operating income, which is equivalent to EBITDA. And the net income is the ultimate goal of any business, found at the end by deducting the operational expenses from EBITDA.

Overall, the income statement helps you gauge your business’s profitability, financial performance, and feasibility in the long run.

Break-even Analysis

The break-even analysis allows you to determine the point at which your nail salon’s total revenue matches its total expenses, causing no profit or loss.

It helps you evaluate the level of sales or revenue your salon needs to cover its fixed & variable costs and start making profits.

This analysis provides valuable insights into your financial sustainability and helps you set sales targets, pricing strategies, and cost-control criteria.

7. Test Assumptions and Scenario Analysis

As your entire plan is prepared based on assumptions, you’ll need to regularly review and stress-test your financial projections to check their relevance with market realities and business performance.

In this stage, you may consider various “what-if” situations and think about scenarios where things go well or don’t.

For instance, you’ll need to consider the different market conditions, such as deviations in sales volume, pricing, or expenses, to measure the stability of your nail salon financial plan.

By performing test assumptions and sensitivity analysis, you can adjust your strategies accordingly to mitigate risks, optimize returns, and make well-informed business decisions.

8. Monitor and Update Your Plan

Once your plan is ready, continuously evaluate and monitor your nail salon’s financial performance closely against your financial projections and key performance indicators(KPIs).

You can compare the actual financial results with the projected income streams, expenses, and ROI to take note of any variances or deviations from the plan.

If some factors are remarkably different from projections, recognize the causes behind them. This will help you understand which areas need improvement and which works as anticipated.

Also, review and update your strategies accordingly to optimize financial results and achieve long-term success.

Now that you know how to create a solid nail salon financial plan, it’s time to explore an example for easy understanding.

Nail Salon Financial Plan Example

Writing a nail salon financial plan from scratch can be overwhelming, right? But not to worry; we’re here to help you with a realistic financial plan example prepared using Upmetrics.

It includes all the key elements of a nail salon’s financial projection, including the income statement, balance sheet, cash flow statement, and break-even point. This will streamline the entire planning process and help you get started.

Start Preparing Your Nail Salon Financial Plan

And that’s a wrap—we’ve discussed all the fundamental aspects of financial planning.

Now, it’s time to put that knowledge into action and start making a detailed financial plan for your startup business.

Sounds tough? Don’t worry; we have an easy way for you—Upmetrics’ financial forecasting feature that will make your process a breeze!

You’ll have to simply input the financial assumptions and let it figure out the rest.

So, wait no longer; try Upmetrics now!