Suggestions, revenue estimates and cost for salon set up

[GD BG]

Hi Everyone

I am new to this business and need advice. I have checked the forums and have a few queries for which I request experienced members on this forum to help me with answers.

I am planning to setup a salon in Sofia, Bulgaria. My initial plan is to have two hairstylists working full time at salon.

Haircuts are cheap here and average cost is around 5-7 euro. Blow-dry, nailcare and other services can offered for additional income.

I am even planning to run the salon on Sunday (here, salons don’t work on Sundays.) Maybe, someone can offer their experience of running their salon on Sunday.

I am taking up a shop on rent near a metro station with nearly 500 euro per month rent (shop size is 30 square meters).

Please note that I am not having experience in this field, so some of my questions might seem absurd to you. Please feel free to correct me wherever I am wrong.

I am at brainstorming stage and will adjust my calculations as per feedback from members on this forum.

Now the questions….

1. I am expecting around 30-35 customers per day. Please suggest if you think this would be possible?

2. Has anyone tried membership options for customers in order to have more repeat clients?

3. If you offer discount for a limited period, has it resulted in increased footfalls?

4. How much would be cost of setup for two chairs, equipment, nailcare setup and moderate quality interior decor? Please offer moderate cost estimates and breakup of the costs.

Salary cost for each hairstylist would be around 600 euro per month which would be 1200 euro per month cost. I am considering other costs like electricity at Euro 300 per month. Miscellaneous expenses (including hair color and nail color) at 500 euro per month.

Considering offering 1,000 different services (haircut, hair color, nailcare combined) and average cost of 5 Euro for each client, I am expecting 5000 Euro in revenue per month.

With total cost of 2500 euro per month, my initial estimates suggest 2000-2500 euro per month profit. (your viewpoint on this requested)

I would be open to any suggestions you might have for me, for additional services that can be offered to clients.

I will be very thankful for your suggestions. I can't approach other salon owners here as most of them will see my as competitor and might not offer the best advice.

Best Regards

Victor

 

[BannerPenguin]

Hi Victor,

To me, with those overheads and low incomes, it's not worth the time and hassle.

I think 30-35 customers per day seems almost impossible. Maybe after building a reputation and 3 years of building up the business but even then, I'd say that's pretty much a maximum if you're lucky.

 

[GD BG]

thanks for your comments BannerPenguin

i don't find the costs that high. and euro 2000-2500 is pretty good in terms of income for someone living in Bulgaria . however, that kind of profit would depend on many things.

However, it would be important to have high number of clients. For achieving that, i would pick up best possible location and won't mind offering better services or discounts. I understand that 30 clients per day could be high but for two people working, i am counting 15 per worker per day. My calculations could be way off the limit but I will be trying to achieve that.

Would love to hear from other members on this forum as well.

 

[GD BG]

would love to hear from other members about cost for setting up salon with two chairs, equipment and moderate interiors of salon.
thanks

 

[BannerPenguin]

15 treatments per stylist per day?

Most treatments are minimum 30mins, some 1hour. 8 hours day, 1 hour lunch = 7 hours solid work time = maximum 14x 30min clients a day back to back 7 days a week. Extremely unlikely for at least the foreseeable with a new business. You'd be lucky to fill 1 column like that, let alone 2.

What's going to make clients come to you over their current trusted beautician/stylist?

 

[AcidPerm]

Sorry, but I agree with BP and I think your projections are unrealistic.
You're very unlikely to get 2 clients per hour per Stylist for 7 hours every day at the start. It takes a while to build a business and even a popular salon will have cancellations and late clients to manage.

A wash/cut/blow is normally anywhere between 40-70 minutes depending on the service.
A cut and colour can be anything up to 3 hours depending on what they're having done.
Obviously, you can book a cut to be done whilst the colour is processing but if bleach is involved, you have to remove it at exactly the right time. You can't leave it another five minutes to process whilst you finish off your other client.

 

[GD BG]

Thanks for your inputs.

I want to learn from experts here and will adjust my projections as per your ideas.

I have noticed that average salons in my region are serving 8-10 clients per day and most of these salons are run by a single woman. My idea of 15 clients per day per employee was based on two major differences compared to salons I have tracked in the region. First, the location will be better. Second, will keep price lower compared to these salons.

Men need less of time compared to women.

The services aren't as expensive as they are in Western Europe. Maybe, for that reason, people come for services more often (just my guess).

 

[BannerPenguin]

Making prices cheaper and better location doesn't actually mean you'll be busy. Being cheaper means you attract the wrong type of clients.

 

[Hairyclairey]

I don't mean to come across as harsh but I think it's very unrealistic and naive of you and possibly setting yourself up for a shock,
clients won't come in more for a cut just because it's cheaper, Surely their hair grows the same rate as ours?? Plus ever heard the saying "pay cheap get cheap"

Also I think you may struggle to get staff with those expectations,
Just think there's only so many clients in the area if the other salons are busy there may not be enough for you to have 30 clients per day, (if you have 30 clients per day for 7 days per week on a 6 week rebook you will need to find 1260 clients)

 

[GD BG]

Thanks once again.
I am not talking about offering free lunch, but discounted pricing compared to competition.

I am still figuring out the best strategy, realistic number of clients and pricing and that is the reason I am here.

I am not setting these targets for first month. We will surely need time, effort and better marketing to reach those levels. It might be possible after 10-12 months to reach 30 clients per day.

Additionally, I would like to mention here that the area I am planning to setup the salon, has population of nearly 40 thousand.

My estimates were based on the following assumption

You have 40K people living in this area. 30K need a hair cut (maybe some of them go for a cut every six weeks).
There are 15 salons in the region working in the moment. As per my estimate, each salon has nearly 400-550 regular clients. Those with more than one stylist have higher number of clients. They offer nails, massage and other services as well.
Many people might be going to other neighborhoods for services.

I am aiming at 30 clients per day. It won't be easy but then, every business needs hard work and planning.

I won't be depending on this business for my expenses for next few months and will try my best to offer quality services to people at an affordable price.

I am still waiting for response from members on my other queries.

Thanks once again for all the responses till now. I am sure this thread will be helpful for others in future as well.

 

[daydreams01]

Personally I think you are being overly ambitious with your targets. 30 clients a day is a huge amount and you are setting yourself up for disappointment! It takes time to grow a new business so be prepared to make losses in your 1st year. It took me 18 months to break even and 2 years before I started paying myself a wage. Luckily I had another source of income for my 1st 2 years and 3.5 years in, I am finally in a profitable situation where I have finally paid back all my start up costs and can match my earnings to my previous job. It's been bloody hard work though and I have very little time off compared to my previous teaching job. I wouldn't change anything but running a salon is definitely not a means to get rich quick!
My advice would be to stop thinking in terms of customer numbers but to work out how much you need to make a month to cover your overheads. From that you can calculate a weekly/ daily target to aim for. Remember that certain days will be busier, e.g the bulk of my weekly takings is from Thursday to Saturday and the other days can vary and go from one extreme to the other in terms of business.
Once you have a daily / weekly target in mind, work on your price list so you know how much money an hour of work can generate and try and market your bigger ticket services. It's far better to do one client for a 2- 3 hour treatment then try and find 6 clients for 30minute treatments. There is a saying, work smarter not harder!
Also work on up selling and prebooking to increase your revenue.
Going too cheap in my opinion will also not attract the type of clients that have a more disposable income but the bargain hunters who are not very loyal.

 

[CFBS]

Personally I think you are being overly ambitious with your targets. 30 clients a day is a huge amount and you are setting yourself up for disappointment! It takes time to grow a new business so be prepared to make losses in your 1st year. It took me 18 months to break even and 2 years before I started paying myself a wage. Luckily I had another source of income for my 1st 2 years and 3.5 years in, I am finally in a profitable situation where I have finally paid back all my start up costs and can match my earnings to my previous job. It's been bloody hard work though and I have very little time off compared to my previous teaching job. I wouldn't change anything but running a salon is definitely not a means to get rich quick!
My advice would be to stop thinking in terms of customer numbers but to work out how much you need to make a month to cover your overheads. From that you can calculate a weekly/ daily target to aim for. Remember that certain days will be busier, e.g the bulk of my weekly takings is from Thursday to Saturday and the other days can vary and go from one extreme to the other in terms of business.
Once you have a daily / weekly target in mind, work on your price list so you know how much money an hour of work can generate and try and market your bigger ticket services. It's far better to do one client for a 2- 3 hour treatment then try and find 6 clients for 30minute treatments. There is a saying, work smarter not harder!
Also work on up selling and prebooking to increase your revenue.
Going too cheap in my opinion will also not attract the type of clients that have a more disposable income but the bargain hunters who are not very loyal.

Excellent answer. In total agreement with this answer.

 

[GD BG]

Personally I think you are being overly ambitious with your targets. 30 clients a day is a huge amount and you are setting yourself up for disappointment! It takes time to grow a new business so be prepared to make losses in your 1st year. It took me 18 months to break even and 2 years before I started paying myself a wage. Luckily I had another source of income for my 1st 2 years and 3.5 years in, I am finally in a profitable situation where I have finally paid back all my start up costs and can match my earnings to my previous job.

I agree to lot of things you have said. I am ready to work hard. I am still at brainstorming stage and looking for inputs from senior members who have been doing this for years.

thanks once again. Waiting for similar suggestions.

 

[RED STAR]

Before I got my shop, I had all kinds of ideas.....
I worked on my business plan, to include costings & projections.
I decided I'd have myself and another working full time.
I would also employ a part time stylist, and an apprentice.

My sister had already owned her own salon, and advised me to SLOW DOWN....
Go in on your own first, then depending on demand, that's when you recruit!

I did start on my own, and so glad I did!
It's quite a challenge - trying to attract the right kind of client, the regular loyal customer....as they are already being 'loyal' somewhere else!

I am still the only full timer, with one part time stylist and a Saturday assistant.
I have not been able to justify increasing my P/T stylist's hours yet, let alone afford to employ someone full time.....
And as for my apprentice ..... well that turned out to be a big mistake....

 

[GD BG]

thanks for providing example RedStar

I have some similarities to your story and I have made some plans. But, plans aren't good unless you get them validated from people who have walked on that path earlier. So, I came here.

I want to ask another question.

Have salon owners here promoted their business ? If yes, how ?
Getting less number of clients could be due to less effort being put on promotion.

 

[RED STAR]

What is your point of difference?

Here in London, hair & beauty salons are EVERYWHERE....and most compete on price!
Meaning, for the most part, none are earning a decent living.

The secret is to offer something else....that magic ingredient that others do not......

It isn't a discount
It isn't the COMPLIMENTARY coffee...., the cup cake, the beer, or free flowing Prosecco ........
Ultimately, even your attractive salon won't be enough to KEEP your 'guests' coming back, with it's chandelier, chaise lounge and/or stags head..........!

What 'IT' is, IMO, is a service that is personable, and consistently good.

Just that.

But I guess that just isn't 'sexy' enough for the social media mad world we now live in.

 

[GD BG]

Thanks for your inputs Red Star

I have been into internet marketing for last 15 years and things were easy in early days. They have become difficult to such an extent that I have left that.

Whatever people might tell, Facebook and Social media isn't worth the effort. Those channels have helped few lucky people but most of the people haven't received enough return on time, effort and money they have put on to promote themselves on social media.

Now, continuing with what you have said in your last message...

I don't doubt that service should be excellent.

1. I consider, offering complimentary coffee, beer or cup cakes as an important part of this service industry. The client also knows that price of these goodies in included in the services you offer them. But, such things add to your customer service.

2. IMO, Price is an important factor (considering you offer very good service).

3. Discounts - The aim is to get a client inside your salon. Afterwards, its your service level or engagement that will keep them coming back.

I think in London, its mostly the high rent that is leading to lower profitability. I have noticed some threads here where people pay around 30-50 bucks per day. Sounds pretty high to me.