IndustriesHair salon
A salon business plan built on chair utilisation
A salon is a property business with scissors: the rent is fixed, the chairs are finite, and everything turns on how full they are. Whether stylists are employed or rent their chair changes the whole model, and a plan that does not say which is unreadable.
Written for an SBA or bank loan, which is where most plans in this sector goNAICS 812112
Where the money goes
Typical shares of revenue in this sector. Shown as a starting point to argue with, never as a target to hit — your own figures replace all of these at intake.
- Stylist compensation
- 42%
- Commission or salary. Chair rental flips this into a rent line instead.
- Product and colour
- 8%
- Colour services carry far more product cost than cuts.
- Occupancy
- 13%
- High for the revenue base. Location drives footfall, so it is rarely worth cutting.
- Retail cost of goods
- 4%
- Retail is a margin line, not a revenue line — treat it separately.
A worked model
One plausible hair salon, built out in full.
Not an illustration. These assumptions were run through the same engine the product uses, and the plan review was run over the result. It is here so you can see the shape of the answer before you start.
- Year 1 revenue
- $515K
- Year 3 revenue
- $613.6K
- Operating profit from
- Month 2
- Year 3 net margin
- 4.2%
- Coverage, first full year
- 3.11×EBITDA less tax, over debt service
Balance sheet ties in all 60 periodsNo blocking findings — this model would exportLowest cash $19.8K in month 1
The revenue build
Not a growth rate. These are the drivers a reader can argue with, which is the only kind worth putting in a plan.
Services
Billable hours × rate
- Billable heads
- 5.0
- Hours per head per month
- 150
- UtilisationShare of hours actually billed
- 72%
- Hourly rate
- $85
- Heads added per month
- 0.000
Sixty months of it
Monthly revenue against monthly EBITDA. Both are flows, so they share an axis honestly — plotting a cumulative cash balance beside a monthly figure would flatten the one that matters. The cash trough is in the strip above.
- Monthly revenue
- Monthly EBITDA
Year by year
| Year | Revenue | EBITDA | Net income | Closing cash |
|---|---|---|---|---|
| Year 1 | $515K | $47.3K | $14.8K | $75.4K |
| Year 2 | $587.2K | $84.7K | $45.4K | $125.1K |
| Year 3 | $613.6K | $58K | $25.5K | $156.3K |
| Year 4 | $640K | $73.1K | $38.7K | $196.1K |
| Year 5 | $666.5K | $92.2K | $55.4K | $250.8K |
Sources and uses: $110K debt, $45K owner capital, $130K of fit-out and equipment. 7 people on the payroll by month 36.
Against the salon and personal care band
Benchmarks warn; they never overwrite. An assumption outside the band is flagged with its source so you can justify it — substituting an industry median would destroy the specificity that makes a plan credible.
- Gross margin, before direct labour
- 92.0%in band
- 80.0%median 87.0%92.0%The published band is quoted on cost of goods alone, so this is the comparable figure. After direct labour the statements show 51.7%.
- Net margin
- 4.2%in band
- 3.0%median 9.0%18.0%
Source: Personal care services trade data, 2026 · NAICS 812112 · secondary tier. Secondary-tier bands are usable as ranges, not as something a lender will read; where a figure has to survive scrutiny we substitute RMA Annual Statement Studies or IRS SOI data.
What they will ask first
A plan that answers these before they are asked reads as competent. One that does not gets sent back with them attached.
- Employed stylists or chair rental?
- They are two different businesses with different risk. Employment carries payroll and utilisation risk; chair rental carries vacancy risk and caps the upside.
- What is your chair utilisation at steady state?
- Chairs times open hours times utilisation times average ticket is the whole revenue model. Anything else is a guess dressed as a forecast.
Where these plans get sent back
Stylists leave with their clients
The book often belongs to the stylist, not the salon. A plan with no answer to this is a plan with an undeclared concentration risk.
Ramp on a new location
A new salon takes six to twelve months to fill chairs. A plan at full utilisation in month three will not be believed.
Licences and filings to budget for
These belong in the use of funds, not in a footnote. A missing permit line is the cheapest possible reason to be sent back.
- Cosmetology establishment licence, plus individual licences for every operator
- Health and sanitation inspection, often unannounced
- Chair rental agreements, where used, must be genuine independent contracts
Requirements vary by state, county and city, and they change. Treat this as the list to go and verify locally rather than as legal advice — the product tracks the dated ones as configuration with a source and an effective date, and prints which version it assumed.
Start from these defaults, then make them yours.
The intake pre-fills this sector’s drivers and tags each one as your figure or an industry default — and says which in the finished plan.