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How to Open a Barbershop

Vintage Barber Shop

The men's grooming business is on the rise, and services are evolving beyond the old "shave and a haircut" standard. A good barbershop offers top-of-the-line services with friendly, educated professionals that keep their client base coming back again and again.

Barbershops can improve a customer's confidence and instill a sense of community and camaraderie. But going from an idea to a full-service barbershop takes passion and dedication. You should know all the ins and outs before entering this exciting industry.

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1. Decide If a Grooming Business is Right for You

No matter what industry you're working in, starting a business is a time-consuming affair. For this reason, you'll want to take a minute and figure out if you're financially and mentally ready for what lies ahead. Talk about your business plan with family and friends. Make sure you and your partner are on the same page before making transactions for the business.

Later, when the pace of the business picks up considerably, you'll be more confident knowing you've thought this through since day one.

2. Research the Industry and Draft a Detailed Business Plan

This second step is where you roll up your sleeves and begin building your dream. This starts with composing a researched, detailed business plan. The business plan is a crucial component of starting a business. Don't rush this. Take your time to research the ins and outs of the haircare service industry. You'll also want to chart out a course, not unlike the steps laid out here. A great business plan provides details on each of the following topics:

  • Are you buying into a barbershop franchise or starting anew?
  • Will your barbershop rent or buy space for your physical location?
  • Are you the sole proprietor or working alongside other owners?
  • Which legal business entity will you elect when you register with a state?
  • How will you secure financing for the opening of your barbershop?
  • Who are your competitors, and is there a market demand for hair care and grooming services in your area?
  • What services do the trendiest groomers provide, and what can you do to offer them?
  • What are you going to name your barbershop?
  • How will you market your new barbershop?

Templates are available online, so choose one that best suits your idea!

3. Obtain Financing for Your Barbershop

Dreams cost money. If owning and operating a barbershop is your dream, you should be prepared to front at least a quarter of the cost on your own. Generally, self-owned businesses are started by combining some of the owner's funds with starting capital from outside financiers.

If you have good credit and keep track of your financials, there's no time like the present to sit down with a bank representative and discuss loan options for your venture.

4. Register as a Legal Entity Structure

One of the essential steps in any company's life is when it registers as a legal entity with a state. When you don't register your business with a state governmental authority (usually a secretary of state), the law views you and your business as a single legal entity. This is not ideal because any debts and obligations of your business will have to be paid out of your personal assets.

Establishing your business as one of the following entities will afford you certain protections and flexibilities that are discussed in detail 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 that 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. Note that this structure differs from a general partnership, which does not have to register and is riskier to your personal assets.
  • Corporations: Corporations tend to be reserved for more extensive operations with 100 or more owners, often called shareholders. Like LLCs and LLPs, corporate structures benefit from personal risk aversion coupled with pass-through taxation options. Corporations are more regulated than the previous two options.

5. Apply for an EIN

No matter which legal entity you choose, you should still register it with the state. That's because registration allows you to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). If you plan on hiring employees or building credit, EINs are essential. Thankfully, the IRS makes applications for these nine-digit numbers extremely easy.

You can apply online, by phone, by fax, or by mail. The application is entirely free of charge.

6. Open a Business Bank Account

One common mistake many new business owners make is mixing personal and business assets. Even when you register as an entity type, comingling your assets can prove dangerous if you are sued or the business incurs debts. For these reasons, it is always recommended that you open a business bank account and keep your company's money separate from your personal bank account.

These bank accounts are also an excellent first step to building good credit for your business. Banks that see you diligently maintaining your finances will be more likely to lend money.

7. Register for Applicable Permits and Licenses

Every new business is subject to state licensures and regulations; the men's grooming industry is no different. This step requires you to check with your state's regulatory business authority to determine what's required of you in your specific state. Note that many of your employees will have to be licensed as well.

Do not overlook this step. Businesses operating without necessary licenses and permits face heavy fines and possible termination of their company. It's a bad outcome and, most importantly, it's avoidable. To find out which licenses and permits will apply to your barbershop, check with the U.S. Small Business Administration's (SBA) database.

8. Seek the Right Location

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. For this step, consider the surroundings and needs of your future customers.

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

Whether you lease or build, give ample consideration to your budget and expenses. You are running a for-profit business and do not want to overpay on location.

9. Get Business Insurance

You don't want all your hard work undone by forces outside your control. Therefore, in addition to following all safety precautions and regulations on-site, you'll also want to get business insurance as soon as possible.

Business insurance insulates you from worst-case scenarios and provides peace of mind. While every business owner should consult their local insurance provider in confirming the full range of insurances offered, there are at least two types of insurance that you'll need:

  • Workers' compensation insurance: This is insurance for your employees if they get injured on the job. Though unfortunate, accidents can happen. There are often sharp objects and liquids that can spill in the shop; so this insurance is essential.
  • General liability insurance: This is a similar principle as above, but for your customers. Here, you are covered in the event a customer has an accident on-site.

Make a list of precautions you can take to avoid accidents and keep your premiums low. Perhaps you require your employees to wear non-slip shoes on the job. You can take many precautions, and an insurance agent will help you determine which safeguards are appropriate.

10. Devise a Marketing Plan and Apply for Trademarks

This step can be done in tandem with earlier steps. In truth, it's never too early to start considering your marketing. Branding is one of the most important facets of starting a business because it is often how the customer first learns of your business. Here, you'll want to make an excellent first impression!

Many barbershops now utilize websites or apps that allow customers to schedule appointments via the internet, so an online presence is a must. You can also build buzz about your business through customers providing online reviews on social media.

No matter what approach you take, you will need to apply for a trademark for your brand as soon as possible. Trademarking lets you enforce your rights in your brand should some other party misuse it. The first step in that process is consulting the U.S. Patent and Trademark Office's (USPTO's) vast database of trademarks to ensure another business has not taken your idea. Once you've confirmed that yours is an original mark, you can begin the application process.

The USPTO application process can take up to a year and a half to obtain final approval. So, again, you must apply as soon as possible.

11. Hire Barbers for Your Shop

Now it's time to hire some personable, experienced barbers that your customers will want to return to regularly. Note that the cosmetology and beauty industries are highly regulated, and barbers are required to be licensed in all fifty states. Pay close attention to licensure when fielding applications.

12. Open Your Barbershop

You've put in the work and now opening the door to customers on your first day of business guarantees it will be a highly rewarding experience. The skills you amassed in building your business will now be indispensable in maintaining it.

Stay mindful and calm, and you'll always be a cut above the rest!

Start Your Barbershop Today

There are many considerations to factor in when starting a new business. For an industry on the rise like men's grooming, you'll want to take every measure to ensure your business is in good standing and in compliance with the law. Consider using our trusted, simple-to-use online business formation tool. We'll walk you through the steps of creating your business and help you meet all the legal requirements.

You can also search FindLaw's network of legal professionals to find a small business attorney in your area.

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