Opening a Barbershop: The Complete Guide

opening a barbershop

Opening a barbershop: The complete step-by-step guide

Whether it’s a desire to sport a new hairstyle or they’ve simply had enough of DIY haircuts, growing numbers of men are heading to the barbershop for a trim, which means there’s plenty of opportunity for new salons. Opening your own barbershop is hard work but is incredibly rewarding, because it puts you in charge of everything.
Our step-by-step guide tells you all you need to know to get your new shop off to a flying start.

Step 1: Market research

Conduct thorough market research long before you sign a commercial lease or take on your first employee. It’s crucial in weighing up the future success of your venture and helps you make more informed business decisions.

The line between the traditional barbershop where you go for a basic trim and a shave, and a salon which focusses more on styling and grooming is becoming blurred. As a new salon owner, decide which camp you slot into or whether you’re going to operate a hybrid model. Will it be a basic short-back-and-sides service that caters to the lower end of the market, or are you planning to offer a premium service and complete grooming experience?

Also consider your target audience. Do you plan to cater purely for men, or will there be services for women and children too? Are you building a business from scratch, or do you have a roster of clients from previous freelancing, for example, to bring with you? What skills do you bring to the business? This determines the kind of service you offer.

There are no right or wrong answers, and you no doubt have a good idea of the kind of thing you want to do, but crystallise it in your mind before you start investing money.
Once you have an idea of what you’re going to do and where, research similar businesses in the area. Are there many competitors, or will you open somewhere with no barbershops? If there is competition, what are their strengths and weaknesses? Do they have any unique selling points? Are there any areas they’re not covering that you could capitalise on?

Step 2: Niche down until it hurts, then niche down some more

While the haircare world is a crowded one, there are plenty of opportunities, and if you want to be successful, you need to differentiate yourself and your services. If you offer exactly the same as the men’s salon down the road, it’s much harder to compete, because what’s to stop a customer going to them instead of you? But if you are really good at one specific thing, you become the go-to destination.

Niching down simply means having a clear focus on what services you offer and who your target market is, and aligning your marketing very specifically with that. The more you niche down, the better your chances are of appearing on page one of Google searches. Make sure that whatever your niche, you choose something profitable. It doesn’t have to be big, just big enough to be economically viable.

Read our chat with Melbourne barber Kenneth Geoffrey’s to learn about how owner Kizzi tapped into her niche here.

Opening a barbershop: The complete step-by-step guide

Step 3: Location, location, location

Where you offer your services is just as important as what you offer. If the area you’re looking at is saturated with established barbershops, you’ll have a much tougher time opening the business. Similarly, if it’s an area without much footfall or with nowhere for anyone to park, you might struggle.

Do your research when choosing a location, so your business has the best possible chance of succeeding. Being in a well-known place means customers can easily find you – you’ll also attract more new business than if you’re tucked away somewhere quiet. Take a look at the shops around your chosen location too – do they help or hinder you? Do they attract or repel your target customer?
Plan the inside of your new shop – have a property small enough for you to afford but large enough to create the atmosphere and culture you want.

Finally, consider the cost. A premium location attracts a premium fee, and although there’s no harm in negotiating, make sure you can afford it. Similarly, a low-rent area is low for a reason – it might not be an area your target audience ever visit, so you’ll struggle to attract clients.

Opening a barbershop: The complete step-by-step guide

An essential part of opening a barbershop is having the correct legal structure in place. It’s crucial you get this right because using the wrong structure could leave you paying more taxes and being personally liable for debts.
There are seven different types of company structure in Australia, although not all of them are suitable for a men’s hair and grooming salon. All of them have their pros and cons, so read about them in detail here. These are the most likely ones:

Sole trader

Pros

  • Easy to set up
  • Inexpensive
  • No need for a separate business bank account
  • Full control over business decisions
  • Fewer reporting requirements and you use your individual tax file number to file returns

Cons

  • You’re personally liable for all debts and losses in the business, and this liability is unlimited if things go wrong
  • You can’t split business profits or losses with family members
  • You may be liable personally to pay tax on any income derived from the business
  • Some people may not view it as professional

Company

Pros

  • A separate legal entity from you
  • You have limited liability – any debts belong with the company and you’re not usually personally liable
  • Greater access to funding and investment
  • Projects a higher level of professionalism

Cons

  • Higher set-up costs, more complex company structure and more expensive to run
  • Business operations are controlled by directors and owned by the shareholders
  • More complex tax filing arrangements
  • Any money the business earns belongs to the company, not you personally

Partnership

Pros

  • Easy and inexpensive to set up
  • Partners share control and management of the business
  • Minimal reporting requirements
  • You don’t pay income tax on income earned. Instead, each partner pays tax on the their share of net income from the partnership they receive

Cons

  • Lodge an annual partnership tax return with the Australian Tax office
  • Use separate tax file numbers
  • Register for Australian Business Number and use it in all dealings

Whichever structure you choose, make sure it’s on your business planning checklist and that it works for you.

Opening a barbershop: The complete step-by-step guide

Step 5: Work out your set-up costs

Work out your operating costs and establish a budget because if you don’t, it can quickly spiral out of control, leaving you in a ton of debt before you even pick up a pair of clippers. There are many different things to consider when you plan your barbershop, including:

  • Renting or buying commercial premises for your shop
  • Legal and set-up costs when choosing your company structure
  • Initial fit-out costs for your shop (lighting, heating, electrical work, decoration)
  • Equipment costs (barber chairs, razors, sinks, products etc)
  • Marketing materials and branding costs
  • Point of sale (POS) set-up expenses

Once you have an idea of costs, you’ll know how much you need to turn over each month to cover them. Look at ways you can keep your overheads low while you get started. From this budget, start to figure out what to charge your customers and estimate how much revenue you expect to bring in during your first year.
Once you’ve got a budget, look at opening a business bank account. Even if you decide to operate as a sole trader where you don’t legally need a separate account, it’s a good idea to have one – it makes accounting easier by keeping personal and business finances separate.
If you opt for online accounting software, it can integrate with Square to keep track of all your payment processing and customer appointments. Provided you meet the criteria, Square Loans also offer you the finance you need to get your business off the ground.

Step 6: Build your brand and marketing

Branding may be down the list on our guide, but it’s something to consider from the very start and at every step. Think long and hard about the name, especially if you’re setting up a limited company because this reflects the type of barbershop you want to run. It can also be hard to change it later on.
Once you’ve sorted the name, create a logo and promotional materials. Do this yourself on an app like Canva if your marketing budget is tight, or hire a professional to create your branding for you. Keep in mind your target audience and make sure it fits them.

How customers will find you

To reach your target audience, build an effective marketing strategy which appeals to their needs. If you’ve done your market research properly, you’ll know exactly who your ideal customer is and what services you’ll offer. So build that into your marketing campaigns. There are plenty of low cost marketing ideas to get you started, and here are certain areas to put extra effort into:

  • Social media – Social media is a very cost-effective way to put you in front of your target audience, but you don’t have to be across every platform – just pick the ones where your target audience mostly hangs out. Fortunately, hairstyling lends itself to great photos, impressive before-and-after pictures, and creative design.

  • Google business profile – Make sure you have a Google listing with the relevant details – location, opening hours, services, prices etc. This helps enormously with your ranking online and boosts your discoverability when someone searches for barbershops.

  • Website SEOSearch engine optimisation (SEO) means optimising your website for keywords and phrases people might use to find you, for example ‘men’s haircut Sydney’. Aim to appear as high up as possible in the organic results on the first page of Google because page one enjoys 95% of all traffic, according to Digital Synopsis. If you’re on pages two, three or four, the chances of you being found organically drop dramatically. SEO is something you can do yourself, especially if you have a good grasp of the back end of your site, or you can pay an expert to optimise your site for you.

  • Loyalty programmes – Getting new clients is important but so is keeping them coming back. It costs five times as much to attract new customers as it does to keep existing ones, so while your marketing efforts should focus on building a customer base in the beginning, consider also incentives to get them to return. Businesses which use Square Loyalty typically see a 26% uptick in customer visit frequency.

  • Feedback surveys – Gathering feedback is an important way of making sure you’re doing what your customers want and offering the right services. It also shows you care and that you hear them. Collect feedback with Square Feedback or integrate your system with email marketing apps such as Mailchimp.

Build a seamless customer journey

To build your brand, ensure your customers enjoy the buying journey, from the moment they first search for you online, to the point they leave their salon after that first cut, and beyond. Your branding should be an integral part of that at every stage, from the logo they see on your website and the ease of use when they book an appointment online through to the quality of the razors and scissors you use, the aprons your staff wear and the colour of the walls. The branding exemplifies everything that’s important to you about your brand.

Square Appointments

Scheduling that puts time in your hands.

But it’s not just how everything looks – the hardware you use to take payments is important too – a nice clear counter is far more attractive than one cluttered with a clunky old cash register. Square Register with its slick monitor and touchscreen-till system create the professional look you’re after. Take payments on the go with Square Reader while your client is finishing up, as well as online.

Opening a barbershop: The complete step-by-step guide

Step 7: Hire staff

Depending on the size of your planned business, you may need to hire staff – hairdressers, accountant, receptionist, web designer etc. Decide how to employ them – will they be full- or part-time employees, or will you hire them on a contract basis?

With people like web designers and accountants, it’s often easier, particularly in the beginning when you’re budgeting your business, to hire them on a contract basis to carry out specific jobs for you. As you grow, that may change.

For barbers, it’s slightly different. Take them on as employees, or use rent-a-chair agreements where they pay you for space in your salon, but have their own client portfolio.

These agreements work well for a new salon because you don’t have to directly employ a stylist and pay the associated costs of training, taxes etc. However, you have less control over them because they’re not an employee. Iron out questions like who does the promoting and how you make sure they align with your brand. Also plan what the implications might be with your landlord, because it’s a form of sub-leasing.

Whatever route you decide to go, you need a decent booking system and a way to manage staff. Square Appointments simplifies salon scheduling. It also integrates with Instagram so customers can book appointments directly through the app. Square Team Management helps you keep track of your employee schedules through your POS, design and publish rosters, and assign team commission rates for services and sales.

There’s a lot to think about before you open a barbershop, so follow our step-by-step guide to be up and running in no time.