When looking to start a successful cosmetology school, there are numerous things you have to put into consideration. From classroom layout plans to local permit applications to choosing all the necessary equipment and supplies, you have a lot of crucial decisions ahead of you.
But whether you are just getting started, in the process of choosing the ideal location for your institution, or maybe you are renovating an existing space for your campus, it is always vital you put together a detailed business plan
Have it in mind that this plan with help provide answers to certain business questions and obstacles you meet along the way. If all goes well, your school will soon be bustling with students. A good business plan will provide you with a concise roadmap to offer unquantifiable services to your students and clients.
Steps on How to Write a Cosmetology School Business Plan
Table of Content
House of Nefertiti is a cosmetology school established in the city of Austin, Texas to provide its students quality education using the latest technology available in this modern age. Our curriculum at the House of Nefertiti will involve the most widely-used curriculum in cosmetology education today (the Milady Standard Text) and some other well-defined supplement materials. We will stay committed to creating a professional atmosphere where there is synergy, excitement, and teamwork.
a. Our Products and Services
Cosmetology programs are primarily to prepare students for the Texas State Licensing Board Cosmetology Exams. House of Nefertiti intends to offer programs in Cosmetology, Barbering, Esthetics, Nail Technology, and Makeup Artistry.
Note that all our programs will be taught in English. At House of Nefertiti, we are fully equipped to meet all the demands of today’s salon. The facility features private classrooms, client reception, and work areas, management offices, student lounge, and equipment. It is handicapped accessible, ADA (American Disabilities Act) compliant, and offers ample free parking.
b. Nature of the Business
Our plan at the House of Nefertiti is to provide the city of Austin with a Cosmetology institution that targets all socioeconomic standings and is a model for the industry nationally. At House of Nefertiti, our areas of business will include a full-service women’s salon, a men’s salon, a retail center, and an educational center.
c. The Industry
House of Nefertiti will focus on the US Cosmetology & Beauty Schools industry. Establishments in this industry offer training in barbering, hair styling, or cosmetic arts, such as makeup or skincare.
d. Mission Statement
Our mission at House of Nefertiti is to offer prospective students the platform to attain prosperous careers through quality education in practical, business, and customer service skills necessary for licensure and employment as professionals in their specialized fields.
e. Vision Statement
Our vision at House of Nefertiti is to establish a professional, productive, and profitable salon environment, supplying the community with a retail center, a school of cosmetology, and separate men’s and women’s salons that emphasize personal as well as environmental wellness.
f. Tagline or Slogan
House of Nefertiti – Beauty Has Come!
g. Legal Structure of the Business (LLC, C Corp, S Corp, LLP)
House of Nefertiti will be formed as a Subchapter S Corporation in the State of Texas.
h. Organizational Structure
- Owner/School Director
- Director of Admissions
- Director of Finances/Accountant
- Director of Education
- Cosmetology Instructor
- Cosmetology/Barbering Instructor
- Substitute Barbering Instructor
- Substitute Cosmetology Instructor
- Substitute Cosmetology Instructor
i. Ownership/Shareholder Structure and Board Members
Walter and Cynthia Darlington will legally own and control the House of Nefertiti, which is also legally recognized by the State Of Texas.
- Experienced management
- Moderate barriers to entry
- High gross margins from teaching services
- Relatively immune from negative changes in the economy.
- New business
- High operating expenses
- Industry competitions
- Can expand by increasing the number of disciplines
- Ability to provide ancillary course materials including online courses, podcasts, etc.
- A vibrant industry
i. How Big is the Industry?
According to industry reports, the market size, measured by revenue of the Cosmetology & Beauty Schools industry is $1.9bn in 2022.
ii. Is the Industry Growing or Declining?
According to reports, the market size of the Cosmetology & Beauty Schools industry in the US increased faster than the economy overall. It is still expected to increase by 1% in 2022.
iii. What are the Future Trends in the Industry
With a New Year comes new beauty trends, and as potential leaders in the beauty industry, we at House of Nefertiti can’t wait to see what the New Year has to offer in terms of hair, nails, skincare, and more. Nonetheless, here are the hottest beauty trends we hope to see and leverage in the New Year;
- Graphic Eyeliner
- Faux Freckles
- Ingredient Transparency
- Blue Beauty
- Glass Skin
iv. Are There Existing Niches in the Industry?
- Hair design and barbering training
- Nail care training
- Massage therapy training
- Esthetics training
- Makeup artist training
v. Can You Sell a Franchise of your Business in the Future?
Yes, our plan at House of Nefertiti is to open our first location in Austin before going on to open up more locations by leveraging the franchise route.
- Major and sustained economic recession
- Similar business in our location
i. Who are the Major Competitors?
- The Aveda Institute
- Paul Mitchell Schools
- Empire Beauty School
- Pivot Point Academy Beauty School
- The Sassoon Academy
- Tricoci University
- The Ogle School
- Xenon International Academy
- Hollywood Institute of Beauty
ii. Is There a Franchise for Cosmetology School Business?
- The Paul Mitchell Partner School: $1,020,000 – $1,430,000
- Salon Professional Education Company (SPEC): $145,500-$1,111,000
iii. Are There Policies, Regulations, or Zoning Laws Affecting Cosmetology School Business?
Yes, have it in mind that every state board is different. Note that to receive your license to operate, you are expected to meet requirements concerning space, layout, student requirements, classrooms, and more. Therefore, before you start making any critical decisions, it’s recommended you take time to research your state’s requirements.
Also note that many states in the United States dictate which classes cosmetology schools are expected to offer, and the cosmetology board will have to approve your course offerings and curriculum. It is advisable you carefully review your state board requirements before selecting any instructional activities, their scope, and scale.
Also note that some states expect you to have a certain amount of square footage, as well as a specific layout (classrooms, open space, pods, etc.), a diagram of classroom structure, and more.
a. Who is your target audience?
i. Age range
At House of Nefertiti, we expect our target audience to fall within the age range of 16 to 55 years.
ii. Level of Educational
At the House of Nefertiti, we always ask for a copy of a High school diploma, a GED certificate, an official transcript of secondary school completion, or a state certification of home-school completion, and a driver’s license or birth certificate from potential students.
iii. Income Level
House of Nefertiti will market to potential students that include high school students, and we do not expect them to already have a steady stream of income.
House of Nefertiti does not discriminate in its employment, admission, instruction, or graduation policies based on sex, age, race, color, religion, or ethnic origin.
Note that all our programs will be taught in English.
vi. Geographical Location
House of Nefertiti does not discriminate in its employment, admission, instruction, or graduation policies based on sex, age, race, color, religion, or ethnic origin.
House of Nefertiti won’t recruit students already attending or admitted to another school offering similar programs of study.
b. Advertising and Promotion Strategies
- Sign up for free listings in online directories that provide information on beauty schools across the country, such as the beauty schools directory.
- Build a website to market our beauty training course
- Secure good employees
- Showcase at public events
- Rent a booth at beauty or high school and college job fairs to attract students looking for a career in cosmetology.
- Use print ads in publications where prospective cosmetology students are likely to see and act on our messages, such as in local publications or community newspapers.
- Utilize standard advertising measures
i. Traditional Marketing Strategies
- Align with Spas and Fashion Houses
- Collaborate with Organizations for Good Causes
- Draw in Traffic to our Business Website
- Offer Promotions and Discounts
- Use Creative Packaging for our Retail Products
- Marketing through Direct Mail
ii. Digital Marketing Strategies
- Establish a community to build brand advocacy
- Add testimonials to our retail product web pages
- Powerful content marketing
- Make use of Micro-influencers
- Find customers through social listening
- Collaborate with high schools and spas
iii. Social Media Marketing Plan
- Post Content That Will Intrigue our Target Customer
- Use Facebook as a Key Communication Tool
- Use Twitter As An Information Source About Your Services
- Provide Incentives For Instagram Word-Of-Mouth
- Provide Group Deals
- Use Twitter hashtags
c. Pricing Strategy
In this line of business, how much you charge students will most often reflect the socioeconomic status of your clientele while also remaining competitive with other businesses. Ideally, $150 would be the low-end for short courses while $300 would be the high-end.
Sales and Distribution Plan
a. Sales Channels
For our retail stores and salons, we will only source inventory from well-known cosmetic and product manufacturers. The front of our salon will be totally committed to being a strong retail center, inviting shoppers to interact. At House of Nefertiti, our target is 40% retail sales to service dollar sales. Being the only area salon to be online and fully automated in our area, we will have the most aggressive marketing campaign strategy.
b. Inventory Strategy
We intend to use the Acctivate beauty supply inventory software to manage inventory at our retail stores and salons. This is a reliable system with real-time inventory control, robust EDI capabilities, and multi-channel order fulfillment. It offers our retail stores and salons the following benefits;
- Track inventory in real-time
- Create stocking level alerts
- Input detailed product descriptions
- Trace goods throughout the supply chain from the manufacturing point
- Forecast future inventory purchasing needs
- Access a centralized data system of customer order history
c. Payment Options for Customers
At House of Nefertiti, we plan to offer the following payment options to our clients;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Return Policy, Incentives, and Guarantees
For our retail stores and salons, here are our return policy and directions;
- At House of Nefertiti, we will always accept returns and exchanges, as long they are returned within 7 days of the delivery date.
- All returned items are subject to a 15% restocking fee.
- Customers will have to contact us for their R.A. (return authorization) number before shipping an item back.
- Original shipping charges are non-refundable. We will not refund any used items or items without the original packaging.
- Note that to qualify for a refund, all items are expected to be returned unused and in their original condition, including the original packaging and containers, documentation, warranty cards, manuals, all accessories.
- We will always refund the cash to the credit card or PayPal account the customer used to buy the item.
- In addition, we at the House of Nefertiti will refund shipping costs only if the return is a result of our own mistakes.
- Due to Health Department Regulations, the House of Nefertiti will not accept returns on the following products: hair brushes, nail polish, make-up/cosmetics, hair extensions, hairpieces, wigs, or any item that touches the hair, skin, or scalp.
e. Customer Support Strategy
Aside from the fact that students will be learning here, our real customers will also be coming here for salon services. We will always strive to ensure that our school boasts of a professional salon feel, complete with colors, design elements, and an overall theme. We believe this will give our students a better understanding of what it’s like to work in salons after they graduate.
Additionally, it will also make customers feel less like they’re being practiced at a salon school, and more like they’re getting professional services at a real salon. Truth be told, helping customers feel comfortable and relaxed remains one of the primary goals of House of Nefertiti.
House of Nefertiti is open Tuesday through Thursday: 9:00 AM – 9:00 PM, Friday 9:00 AM – 5:00 PM, and Saturday: 9:00 AM – 3:00 PM
a. What Happens During a Typical Day at a Cosmetology School Business?
Cosmetology schools tend to teach through a balance of books and hands-on learning. At cosmetology school, intellectual and practical training work together to provide students an all-encompassing education. Note that a typical day involves some semblance of textbooks, observation, and practice applying skills on mannequins. After some time with textbooks and mannequin practice, students start to practice on clients.
b. Production Process
Presently, there are no production plans and processes in place at the House of Nefertiti.
c. Service Procedure
Our aim at the House of Nefertiti is to offer our students extensive education through a sequential set of learning steps that address specific tasks required for graduation and job entry-level skills. Clinic equipment, implements, and products are comparable to those used in the industry.
Note that each student will receive instruction that relates to the performance of useful, creative, and productive career-oriented activities. All our courses are presented via well-developed lesson plans, and this will reflect current educational methods. Subjects are presented through lecture, demonstration, and student participation. Audio-visual aids, guest speakers, field trips, and other related learning methods are used in the course.
d. The Supply Chain
Truth be told, every cosmetology school is different, especially with rules and regulations varying across all 50 states. We at House of Nefertiti totally understand the need of getting a provider who can create custom-made furniture that fits our space.
We intend to only leverage suppliers and providers who specialize in beauty schools and can supply the whole package. We will have a provider who can sell us more than a few pieces and can also advise us every step of the way, helping with layout, space planning, bulk-package pricing, etc.
e. Sources of Income
- Cosmetology program fees
- Offering hair and beauty services
- Selling of beauty products
- Providing access to extracurricular activities
- Retailing of educational books and materials
a. Amount Needed to Start your Cosmetology School Business?
To start and run the House of Nefertiti successfully while keeping interests secure and the business healthy, we need a total of $420,880 to safely grow.
b. What are the Cost Involved?
- 6 months rent: $163,600.00
- School equipment: $142,000
- Plumbing: $2,000
- Interior needs: $3,760
- Retail displays: $14,000
- Storefront and artwork: $5,000
- Advertising: $30,000
- Structural needs: $7,000.00
- Classroom equipment: $18,000.00
- $10,000 Bond for school: $1,500
- State license: $400
- Text, mannequin, classroom supplies: $3,000
- Office equipment: $3,000
- Computer software: $2,590
- Retail inventory: $1,000
- Phone expenses: $925
- Miscellenous: $2,500
c. Do You Need to Build a Facility?
No! At House of Nefertiti, we do not plan to build a new facility, but rather to start with a long-term lease.
d. What are the Ongoing Expenses of Running a Cosmetology School Business?
- Marketing strategy and related advertising investments
- Education, travel, and market research
e. What is the Average Salary of your Staff?
- Owner/ School Director: $70,461/Annually
- Director of Admissions: $61,560/Annually
- Director of Finances / Accountant: $58,890/Annually
- Director of Education: $56,730/Annually
- Cosmetology Instructor: $52,410/Annually
- Cosmetology/Barbering Instructor: $52,410/Annually
- Substitute Barbering Instructor: $46,522/Annually
- Substitute Cosmetology Instructor: $46,522/Annually
- Receptionist: $34,960
f. How Do You Get Funding to Start a Cosmetology School Business
- Funds from personal savings and sale of personal stocks and properties
- Funds from investors and business partners
- Sell shares to investors
- Seeking business loans from banks
- Business grants and seed funding from, government, donor organizations, and angel investors
- Obtain soft loans from family members and friends.
a. How Much Should You Charge for your Service?
Just like it was stated above, how much you charge students will most often reflect the socioeconomic status of your clientele, while also remaining competitive with other businesses! Ideally, $150 would be the low-end for short courses while $300 would be the high-end. However, businesses in this industry are always advised to research what the competition is charging and set their prices accordingly.
b. Sales Forecast?
At House of Nefertiti, we will be the first to openly note that our vocational center, Salon, and store might not be able to generate the profitability baseline in the first month. However, we are very confident it will become fully profitable by the first quarter of the first year. We also expect our establishment to attain its full potential of sales in the first year.
- First Fiscal Year (FY1): $430,000
- Second Fiscal Year (FY2): $980,000
- Third Fiscal Year (FY3): $2.4 million
c. Estimated Profit You Will Make a Year?
Truth be told, our establishment might not generate a profitability baseline in the first month, however, we have carefully examined our place and come up with strategies to easily mitigate that possibility. In terms of sales from our retail store, we expect an exponential increment in the first four weeks of the store. With a full-scale store, we are looking to make around $180,000 to $460,000 annually on profit within the first few years of business.
d. Profit Margin of a Cosmetology School Business Product/Service
According to industry reports, the gross margins for cosmetology schools are typically around 43%, which can make it more daunting to incur new expenses and maintain profitability.
a. How do you intend to grow and expand?
At House of Nefertiti, our future growth plans include the expansion of our retail department with virtual shopping that will serve as an online shopping center. Our school will also start conducting advanced evening classes, maximizing productivity.
Also note that the ownership of the present building is planned, expanding an additional 4,500 square feet for school and salon. We also intend to have apartments in the upper level and offer housing options for our students for a fee. Once we have achieved all these, we intend to open up more locations by leveraging the franchise route to reach strategic locations in Texas and other key cities in the United State of America
b. Where do you intend to expand to and why?
- Hawaii-Maui-Kauai non-metropolitan area, Hawaii
- Cheyenne, Wyoming
- Southeast Alaska nonmetropolitan area, Alaska
- Valdosta, Georgia
- Lynchburg, Virginia
- Railbelt-Southwest Alaska nonmetropolitan area, Alaska
- Springfield, Illinois
- Far Eastern North Dakota nonmetropolitan area, North Dakota
- Billings, Montana
- San Francisco-San Mateo-Redwood City, California
We have chosen to expand to these locations owing to their viable fashion market, and also the tons of opportunities they offer to makeup artists, hairstylists, estheticians, massage therapists, and more.
At House of Nefertiti, we have decided that acquisition and mergers will better suit our business intentions better. In the general beauty industry, investor enthusiasm has risen encouragingly over the years and isn’t likely to change any time soon. Venture capital firms like Female Founders Fund and AN8 are always eager to partner with growing viable businesses. Owing to that, we at intend to build a brand that reeks of sustainability and inclusivity.