8 Steps To Open a Barbershop

All small business startups need a well-researched, detailed business plan. Your business plan is crucial to your business. Don't rush it, and be as thorough as possible. Research the various facets of the grooming industry to understand the market and identify trends.

Your business plan will be the backbone of your barbershop. You'll refer back to it as you move through other steps of starting your barbershop and as you grow and scale your business. For example, your market research will inform your marketing strategy. You'll also use your financial forecast to secure financing.

Some information in your plan depends on the specifics and scope of your business. Still, plan to include details on the following areas of your barbershop:

• Are you buying into a barbershop franchise, taking over an existing business, or starting anew?
• Will your barbershop rent or buy space for your physical location?
• Are you the sole proprietor or working with other owners in a partnership?
• Which type of business entity will you choose when you register your business?
• How will you secure financing for your barbershop?
• Who are your competitors? Is there a market demand for haircare and grooming services in your area?
• What is your barbershop's niche? How will you stand out from competitors?
• What are you going to name your barbershop?
• What is your marketing plan?

The U.S. Small Business Administration (SBA) offers business plan templates you can use at no cost.

Choosing a Business Name

Choosing a name for your barbershop business is an essential step, as it lays the foundation for your shop's brand identity. Pick a memorable name that resonates with your target audience. Imagine how it sounds and how it will look in print, online, and on your signage. A good business name conveys the nature of your business concisely.

Your name must also be unique, meaning it's not already registered to another business in your state. You should also make sure that it's not protected under a federal trademark.

Most states' secretary of state websites have a tool you can use to search for registered business names. Use the trademark search tool from the U.S. Patent and Trademark Office (USPTO) to search for federal trademarks.

Also, check your name's social media and web domain availability before you commit.

Then, register your business name with your state. Keep in mind that registering your business name does not automatically afford you intellectual property rights. 

Consider trademarking your business name and logo. This allows you to enforce trademark rights should another party use these aspects of your branding.

You can apply for a federal trademark through the USPTO. Apply as soon as possible, as the application process can take up to 18 months to obtain final approval. This process can be arduous, so some business owners get help from a business attorney or intellectual property attorney.

You can also apply for a trademark at the state level, but this may not be necessary for your business if you have a federal trademark.

Choosing a Business Structure

If you don't choose a legal structure and register your business with the appropriate authority (usually a Secretary of state), the state considers you, by default, a sole proprietorship.

This means you and your business are a single legal entity in the eyes of the law. As the owner, you are responsible for any debts or obligations of your business. You must pay these from your personal assets.

While a sole proprietorship is the most straightforward type of legal entity for your business, other structures offer certain protections and flexibilities. Consider one of the structures below:

• Limited liability company (LLC): LLCs are a great option for newer small businesses with a single owner or only a few owners. What makes LLCs so attractive is their ability to shield owners from risk to their personal assets. Unlike sole proprietorships, LLCs are separate legal entities from their owners.
• Limited liability partnership (LLP): LLPs are like LLCs but with multiple owners who have agreed upon their roles within the company. Some states also refer to this structure as a "multi-member LLC." This type gives owners the option of whether to be hands-on or merely silent partners. This structure differs from a general partnership, which doesn't have to register with the state and may put your personal assets at risk.
• Corporations: Corporations are more common for large operations with 100 or more owners, often called shareholders. Like LLCs and LLPs, corporate structures benefit from personal risk aversion and pass-through taxation options. But corporations are more regulated than LLCs or LLPs.

To own and operate a barbershop, be prepared to front at least a quarter of the startup costs yourself. Generally, most entrepreneurs start their businesses by combining some of their personal funds with starting capital from outside financing.

Well-kept barbershops with personable services and amenities can become fixtures in their communities. Some owners choose to lease commercial space, while others buy a property and build it up. Consider the surroundings and needs of your future customers.

The ideal barbershop location is a busy area with a lot of traffic. But you don't want to set up shop too close to another barber. Pay attention to where your competitors are and use this information to create a location-scouting strategy.

Whether you lease or buy your storefront, consider your budget and expenses. You're running a for-profit business and do not want to overpay on location.

Your commercial real estate or rent and any necessary renovations will make up most of your startup costs. Beyond that, plan the following into your business budget:

• Cash register and point-of-sale (POS) technology
• Salon chairs, washbasins, and other furniture
• Styling products like shampoos, conditioners, creams, and balms
• Grooming equipment like clippers, dryers, towels, capes, and sterilizing equipment
• Insurance premiums
• Utilities
• Staffing and payroll
• Office equipment and technology
• Marketing and advertising costs
• Professional fees if get help from an account or business attorney

If you have good credit and a solid business plan, you should be able to secure a small business loan. You can also look into SBA-backed loans. These loans can be easier to secure since they reduce lender risk.

Apply for an EIN

Next, you'll need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The IRS uses these unique nine-digit numbers for tax and identification purposes. It's like a social security number for your business.

You will need your EIN to hire employees and open a business bank account. Apply online to get your EIN instantly and at no cost. Watch out for commercial sites charging a fee for an EIN—some of them look similar to the official IRS website.

Open a Business Bank Account

One common mistake many new business owners make is mixing personal and business assets. Even when selecting an entity type and registering your business, comingling your assets can prove dangerous if a party sues your shop or if your business incurs debts.

For these reasons, open a business bank account and keep your company's money separate from your personal bank account.

These bank accounts are also an excellent step to building good credit for your business credit. You can also use a company credit card to cover expenses and build your business credit. Just be sure to research the card's terms and interest rate carefully.

Every new business is subject to federal, state, and local government licensure requirements and regulations. Because of the tools used and services provided (like straight razors or chemical treatments), barber businesses are even more strictly regulated.

You and anyone performing barber services will need a barbering license. While this process varies by state, it typically entails the following:

• Education at an accredited barbering school
• Apprenticeship
• Passing a barber exam

Once you meet the requirements in your state, you can apply for your barber license. The application fee for this is around $125, depending on your state. There is also a periodic renewal fee.

Some states also require a specific barbershop registration or new shop inspection with the state licensing board. This is in addition to registering your business with your state's secretary of state. You may also need a salon manager certificate separate from your barber's license.

Your state may also have specific rules regarding safety and sanitation.

Some other licenses and permits you will likely need include:

• Sales tax permit
• Resale certificate (if you sell grooming products)
• Certificate of occupancy
• Construction permits (if you do renovations or build-outs)
• Zoning permit

Check with your state's business authority and barber or cosmetology licensing board to determine the requirements for your business. Many of your employees may need certain licenses as well.

Businesses operating without the necessary licenses and permits face heavy fines and penalties. The government can also shut down non-compliant businesses.

In addition to following all safety regulations, you should protect your barbershop with business insurance. Learn how business insurance covers your risks and what type of business insurance you need.

Business insurance insulates you from worst-case scenarios and provides peace of mind. Every business owner should carefully consider (or consult a broker) the full range of insurance policies they may want. Still, there are at least two types of insurance you'll need:

• Workers' compensation insurance provides coverage if an employee is injured on the job. Sharp objects and liquids can often spill in the shop, so this insurance is essential. It may also be mandatory in your state.
• General liability insurance covers theft, property damage, personal injuries, and other unforeseen events. For example, it protects you if a customer gets hurt at your barbershop.

Make a list of precautions you can take to avoid accidents and keep your premiums low. For example, require your employees to wear non-slip shoes on the job.

Pricing

Next, you'll need to set competitive pricing for your services. Research your competitors to get an idea of the typical rate for barber services in your market.

Compare your pricing to your operational costs. Are you charging enough to cover these costs and make a profit? Also, factor in the quality of your services, your barbers' experience, and your shop's unique value-add. Your pricing should reflect the value of the service you provide.

What people are willing to pay for a haircut or other grooming service can vary. Focus on your target market and research what they are comfortable spending for your services.

Create a Marketing Strategy

Marketing is one of the most important facets of starting a business. It's often how new customers first learn about your business. Here, you'll want to make an excellent first impression with your logo, signage, website, social media presence, and promotional strategies.

Keep your target market in mind as you formulate your strategy. This will help you tailor your messaging and allocate your resources.

Your marketing plan should combine both digital and traditional channels:

• Social media, blogging, and content marketing
• Search engine optimization (SEO) strategies
• Google Business Profile and Maps listings
• Text (SMS) and email marketing
• Publicity and local news coverage
• Direct mail
• Print advertisements in local publications
• Grassroots efforts, like participating in community events

Many barbershops allow customers to schedule appointments online or through an app. A user-friendly, accessible website and active social profiles are a must. You can also build buzz about your business by encouraging customers to leave reviews on Google and Yelp and post about your business on their social channels.

Word-of-mouth is still an effective channel. You can implement a referral program that rewards customers with discounts or incentives for referring their friends and family to your barbershop. You can also partner with Instagram and TikTok influencers, offering a free service in exchange for them mentioning your business.

Unless you're operating a single-chair barbershop, you must hire personable, experienced barbers you can trust to deliver top-quality services.

The cosmetology and barbering industries are highly regulated. Barbers must be licensed in all 50 states. Pay close attention to licensure when fielding applications. You are responsible for verifying that a candidate's license is current and in good standing.

Every licensed barbershop must have a registered barber as the designated shop manager. This is especially important when more than one barber works in the shop.

You must decide whether to hire barbers as employees or work with contractors. Booth rental (or chair rental) is common in this industry. This refers to independent contractors paying a barbershop owner rent for a booth or chair.

Before you start the hiring process, review hiring and employment laws. As an employer, you must be aware of workplace discrimination, rules for pre-employment tests, wage laws, and other regulations.