What Are Your Long-Term Goals?
When you first set out to form your nail salon business, considering your long-term goals was an important part of the initial planning stage. Now that your business is successfully off the ground and ready to grow, take some time to consider how those goals may have changed or how you can work to better ensure they come to fruition.
These goals may be personal, professional, or financial. Think about the life of your business and how long you hope to keep it going. Do you see yourself running your salon into retirement and passing it on to your children or is your dream to grow a successful salon and eventually sell it and live off the proceeds? Will you keep this operation small or do you have plans to expand into multiple locations or franchises? Your long-term goals will help to inform the path you take as your business grows.
Diversify or Double Down?
At this stage of your business, it’s important to consider the best growth strategy for success. Most business growth comes down to two main models: diversifying your business offerings or doubling down on what has been working for you thus far. At the most basic level, diversifying your business simply means doing something different, while doubling down involves continuing to do more of the same. Both of these strategies can work wonderfully for your nail salon as long as you take the time to understand your specific business and what each of these growth models means for you.
If you’re ready to begin implementing growth strategies, your business must be doing something (or several things) right. Spend some time closely analyzing exactly what has pushed your salon to this successful place. Is there one or more services that really bring in the bulk of your business? Have you become known for any particular specialty service? When new clients come in, what are they typically looking for? Go through your reviews to see what praise stands out the most. These are the things you may consider doubling down on moving forward.
On the flip side, start to think about what services or other offerings may be missing from your salon. Look through reviews and speak to clients to get an idea of any products or services they wish you offered. Are there things you can add to your service menu or changes you can make to your overall business model that will excite your current client base and lead to an expansion of your market share? This may offer insights into different diversification options for your salon.
Diversification and doubling down are two very different growth models, but these strategies can often work hand in hand to create unique opportunities to expand your particular salon. Although the options listed below tend to fall into one category or the other, you may find that combining a little bit of both strategies can create an optimal growth path for your business. Keep an open mind and consider how each of these strategies may fit with the strengths of your business and your personal strengths as a business owner.
Open Another Location
One of the most common growth strategies and a simple way to double down on a business model that works is to open one or more new locations. At this stage in your business you have a great deal of information about what works and what does not. You should have solid operations in place, an effective hiring and training process, and a firm understanding of how to handle your budget, finances, taxes, and inventory. With all of these things working for you, you’re well-positioned to recreate this model in a new salon.
Opening a new salon will likely prove simpler than opening your first location, but it will not be quite as simple as copying and pasting your current business into another place. You will still need to choose a location, put together a thorough business plan, raise capital, market your new location, and hire an entirely new staff. Although you will rely a great deal on what worked the first time around, be sure not to cut too many corners or ignore important differences between your first and second locations. Consider things like how your marketing may change based on the physical location of your new salon, how you plan to keep the finances of each location separate, and how you will manage two locations at once.
Develop a Physical or Digital Product
If you’re happy operating your single location and enjoy a large market share in your area, diversifying product offerings is a great way to expand your existing business right where you are. Two great ways to do this are to develop your own line of nail products or create digital products in the form of online courses, beauty tutorials, or other pay-to-use resources for your clients.
Developing a product line is an excellent diversification strategy for a nail salon because you have a captive customer base in the form of your clients as well as a wealth of information about what products work and sell best. Replacing those products with your own is a great way to eventually increase your salon’s reach and profits. Beyond your salon, though, the key benefit to having your own product line is the ability to sell your line across other salons locally, regionally, or even nationally someday.
Although nail polish is the most obvious choice, you may also consider producing a line of manicure and pedicure tools, sanitation products, creams and lotions, or even salon furniture and equipment.
Another great product option that comes with considerably less overhead is to create and sell digital products. This can include anything from offering weekly or monthly video tutorials for clients who subscribe to your website to crafting and selling full online courses. Selling digital products is an excellent way to extend your salon’s reach beyond just your local market.
Acquire Another Business
Purchasing another business is another excellent growth strategy for your nail salon. It can also be used to either double down on your core business model or diversify your offerings.
If you are looking to open another location to offer the same services you currently offer, purchasing a fully functioning nail salon can save you time and money. Although you will likely still need to put a good deal of effort into converting the salon you buy to match your current operation, you will benefit from the salon’s existing infrastructure and at least some of its client base.
This strategy can be even more helpful for salons looking to diversify. If you have considered branching out into other beauty services such as hair care, spa services, or massage therapy, acquiring an existing business can take much of the guesswork out of the process.
Opening an entirely different type of salon involves a great deal of uncertainty even if you feel confident you’re ready to make this leap. Acquiring a working salon can temper some of the risk and allow you to apply your brand’s success to the new business without reinventing the wheel.
If you already have more than one location and feel confident in the success and stability of your salon’s operations, franchising can be an excellent way to both double down and diversify your business. At the core of franchising is replicating your successful business model. However, this growth strategy can also lead to expansion far outside your local market, allowing you to diversify your client base and potentially expand your product and service offers by region.
Franchising your salon involves selling the rights to your business name, logo, and model to a third party operator. Although franchising means sharing some of the control over your brand with others, it offers a number of benefits when it comes to expanding your business.
First, franchising allows you to physically expand your business without making a significant capital investment because each franchisee provides the capital required to open and operate each new location. Next, because each franchisee is making a sizable financial contribution to the business, this model can also produce more reliable and motivated management than opening and trying to staff several locations yourself. Finally, franchising allows you to expand much more rapidly while maintaining your ability to focus on your own salon operations. Several franchises may open at the same time in different locations with your franchisees taking on all of the responsibility of opening, staffing, and running the day-to-day operations.
Think Outside of the Box
Although the ideas listed above are some of the most common growth strategies, as an entrepreneur, you should never ignore your own intuition. You know your business and yourself better than anyone else. Consider every possible growth opportunity and do not be afraid to innovate if you see a unique path that fits your salon especially well.
Funding Your Business’s Growth
As a successful salon, you are likely in a good place financially right now. However, depending on what type of growth you’re planning, there’s a good chance you will need to raise at least part of the capital needed to get your next venture off the ground. Just as in the early days of your business plans, there are a few different options for funding your salon’s growth.
One of the most common ways to raise capital for a business expansion is to take out one or more business loans. However, you should still consider both the pros and cons of going into debt to expand your business.
To decide if this is the right funding method for you, consider your complete financial picture. If you are still paying off your startup loans or other debt used to open and run your business, taking out an additional loan may be too detrimental to your bottom line to be worth it. Using a loan to fund your expansion will also eat into any profits you are looking to make by growing your business. Consider how long it took you to pay off any previous debt and whether you are willing to go back to that model as you grow.
On the other hand, business loans can be a great tool for growing your salon without eating into your savings or sacrificing your control over the business. They also offer less uncertainty by allowing you to apply for exactly how much money you need. Because you have a successful business under your belt, getting approved for a loan in the amount you request should prove easier than it may have been as a startup, assuming you complied with the terms of any previous loans.
If you would prefer to expand without going into debt, seeking out investors is another great option. Securing investment capital allows you to fund the growth of your business without going into the red.
The major downside of taking on investors is that it means sharing a portion of your business and profits with others. As an entrepreneur, it can be very difficult to take that leap. However, the growth phase of your business may be a more attractive time to bring on partners than the startup phase. Depending on how you plan to expand, seeking out investment partners who are willing to not only invest money but also time into your business can be a great resource as you take on more responsibilities and expand your reach.
Cash (From Your Growth Budgeting)
Depending on your specific growth strategies, if you have been contributing money into a savings account throughout the life of your business, you may actually have enough cash on hand to cover the costs yourself.
At first glance, this seems like the most obvious choice for funding your expansion. If you can pay in cash, why not do so? But, like the rest of the options, this too comes with pros and cons. Being able to cover the cost to grow your business means that every dollar in profits your make from this growth goes right into your pocket. However, exhausting your rainy day fund to expand also means setting that account back to square one. If you do plan to use cash to fund your growth strategies, consider retaining at least part of your savings for an emergency.