Nail Salon Business Plan
If you want to start a new nail salon or expand your current nail salon business, you need a business plan.
Over the past 20+ years, we have helped over 5,000 entrepreneurs and salon owners create business plans to start and grow their nail salon businesses.
What Is a Nail Salon Business Plan?
A business plan provides a snapshot of your nail salon as it stands today, and lays out your growth plan for the next five years. It explains your business’ goals and your strategy for reaching them. It also includes nail salon market research to support your plans.
Why Do You Need a Business Plan for a Nail Salon?
If you’re looking to start a nail salon or grow your existing nail salon you need a solid business plan. A detailed business plan will help you raise funding, if needed, and plan out the growth of your nail salon in order to improve your chances of success. Your nail salon business plan is a living document that should be updated annually as your company grows and changes.
What Are the Sources of Funding for a Nail Salon?
With regards to funding, the main sources of funding for nail salons are bank loans and angel investors. With regards to bank loans, banks will want to review your nail salon’s business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a nail salon business.
The second most common form of funding for nail salons is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.
How to Write a Business Plan for a Nail Salon
Your business plan should include 10 key sections as follows:
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of nail salon you are operating and the status; for example, are you a startup, do you have a nail salon with existing customers and revenues that you would like to grow, or are you operating a chain of nail salons.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the nail salon industry. Discuss the type of nail salon you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your nail salon’s marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will detail the type of nail salon you are operating.
For example, you might operate one of the following types:
- Nail salon focusing strictly on nails
- Nail salon offering other salon services (hair, skin)
- Nail salon offering products
- Combination of the above types
In addition to explaining the type of nail salon you operate, the Company Analysis section of your business plan needs to provide background on your business.
Include answers to questions including:
- When and why did you start your nail salon business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the nail salon business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the nail salon industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards a new type of hair or nail service, it would be helpful to ensure your plan included offering such services.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the nail salon industry research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your nail salon business plan:
- How big is the nail salon business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your nail salon. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your nail salon plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of nail salon you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing promotions than teens.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most nail salons primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
Competitive Analysis
Your competitive analysis should identify your indirect and direct competitors and then focus on the latter.
Direct competitors are other nail salons.
Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes products (nail polish, nail files, etc.) they can purchase from supermarkets and other retailers both offline and online. You need to mention such competition to show you understand that not everyone in your target market frequents a nail salon on a regular basis or at all.
With regards to direct competition, you want to detail the other nail salons with which you compete. Most likely, your direct competitors will be nail salons located close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What services do they offer?
- What products do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to stand outside your competitors’ locations and ask customers as they leave what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior nail salon services?
- Will you provide superior nail salon products?
- Will you provide nail salon services that your competitors don’t offer?
- Will you make it easier or faster for customers to acquire your products?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a nail salon business plan, your marketing plan should include the following:
Product: in the product section you should reiterate the type of nail salon that you documented in your Company Analysis. Then, detail the specific services you will be offering.
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.
Place: Place refers to the location of your nail salon. Document your location and mention how the location will impact your success. For example, is your nail salon located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers.
Promotions: the final part of your nail salon marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Making your nail salon’s front store extra appealing to attract passing customers
- Developing and marketing your website
- Social media marketing (advertising and organic posts)
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Flyers
- Partnerships with local organizations
- Local radio advertising
- Banner ads at local venues
Also think about your nail salon’s Unique Selling Proposition (USP), which should answer why customers should choose you over other nail salons. Make sure your USP is reflected in your marketing.
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your nail salon such as serving customers, procuring supplies, keeping the nail salon clean, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.
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Management Team
To demonstrate your nail salon’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the nail salon business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in nail salons and/or successfully running retail and small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 20 customers per day or 50? Will your average price point be $50 or $100? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your nail salon, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 nail salon contract to provide nail salon services to their employees. Let’s assume the contract would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for supplies, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a nail salon:
- Location build-out including design fees, construction, etc.
- Cost of equipment like chairs, washing equipment, etc.
- Payroll or salaries paid to staff
- Business insurance
- Licenses and permits
- Legal expenses
Appendix
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your nail salon’s design blueprint or location lease.
Putting together a business plan for your nail salon business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the nail salon business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful nail salon business.
How Do I Download a Free Nail Salon Business Plan PDF?
You can download our nail salon business plan PDF template and use our sample nail salon business plan to help you write your own business plan.
If you are looking for the quickest and easiest way to complete your business plan, Growthink’s Ultimate Nail Salon Business Plan Template has numerous features not available in the free template including its financial projections template which automatically calculates your complete five-year financial projections including income statements, balance sheets, and cash flow statements.
Finish Your Nail Salon Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your nail salon business plan?
With Growthink’s Ultimate Nail Salon Business Plan Template you can finish your plan in just 8 hours or less!
Click here to finish your nail salon business plan today.
OR, Let Us Develop Your Plan For You
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
Click here to see how our professional business plan writers can create your business plan for you.
