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With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Business Plan Writer
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans
Are Updated for 2017


Hair Salon SWOT Analysis

 

Strengths

 

One of the best things about operating a hair salon is that their revenues remain stable in all economic climates. Men and women desire to have high quality haircuts at all times. Additionally, for professional people, having styled hair is a requirement. As such, most hair salons are able to remain profitable and cash flow positive. The barriers to entry for a new hair salon are moderate. Startup costs for a new salon ranges from $50,000 to $150,000 depending on the location and size of the startup business. It should be noted that proper licensure to operate as an esthetician is usually required to start operations in most states. Banks and financing companies like to place capital with hair salons given that their revenues are immune from negative economic changes. The high gross margins produced by these businesses are generally able to ensure that a loan is repaid.

 

Weaknesses

 

As with more retail service based businesses, hair salons face tremendous competition within local and regional markets. The moderate barriers to entry allows properly licensed owners to start these businesses very quickly. As such, salon owners need to look for ways to properly differentiate their locations from other businesses. For many businesses, the best way to compete is on pricing.

 

Opportunities

 

Salons generally are able to produce additional income by renting space to hair and nail stylists. Some companies seek to hire additional stylists in order boost the revenues of their businesses. Hair salon owners may also seek to acquire existing locations that are already in profitable operation. While this is an expensive method of expanding revenues, it carries only a modest risk. Most existing hair salons that are sold to third parties carry a price to earnings multiple of 3 to 5 times the previous year's revenues.

 

Threats

 

Hair salons, barber shops, and related businesses have been around for hundreds of years. The operations of these businesses have changed very little during this time. Outside of ongoing competitive issues that are common to these businesses, it is not expected that anything major will change in regards to hair salons. It should be noted that many stylists are being hired as independent contactors rather than employees in order to reduce tax liabilities and related expense.


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