How to Start a Beauty Parlour Business
In a survey conducted by lifestyle experts it’s learnt that the cosmetics industry, in the last five years, has grown by 60% in India. Along with, there has been a rampant increase in the parlor or salon industry too by 35%. A report from leading lifestyle magazine forecasts, that in the years to come the beauty industry will grow twice as fast as the US and European markets in India. Beauty industry covers beauty products, establishment of beauty parlors, salons, wellness center etc. Salons or parlors are definitely a promising business with plenty of opportunities in India, especially for Women Entrepreneurs who play a major role in this Indusry. In this article, we look at beauty parlours business models and the procedure for starting a beauty parlour in India.
Beauty Parlour Business Models
A salon or beauty parlor can be categorized into different business types depending on what aspect of this business you would want to take up – a part of the service or the whole package. It all depends on the type of service you would offer to the customers. Depending on the service you are going to provide you and classify your beauty parlor type. The general notion about beauty parlor is that, “it is a place where you can avail services like – haircuts, manicures, pedicures etc. However there are different services that contribute to business types that are related to beauty industry but are specific to one or more services as follows:
- Spa center
- Reflexogy center
- Barber shop
- Wellness center
- Traditional beauty parlor or salon
- Hair and skin clinic
- Cosmetology center and more.
Beauty Parlour Ownership Types
The beauty parlor industry accommodates small business as well as a giant chain. Therefore, prior to starting the beauty parlour business, it is important for the Entrepreneur to decide on a model, scale and ownership structure for the business.
Independent Beauty Parlour
Independent beauty parlours or hair salons are the most popular and prevalent type of ownership structure. In this model, an independent Entrepreneur or group of Entrepreneurs would establish and operate an independent beauty parlour in a neighborhood with good customer base. Entrepreneurs experienced in the beauty industry could establish a successful beauty parlour under this model. The advantages of this model are that it requires very minimal investment and operational costs. However, these types of independent beauty parlours are now coming witnessing intense competition from Beauty Parlour chains with better branding and advertising capabilities. Limited liability partnership (LLP) or One Person Company (OPC) would be ideal business entities for this business model.
Franchisee of a Beauty Parlour Chain
Under this business model, the parlour will operate as a franchisee of a large beauty parlour chain. Since, the beauty parlour would be setup as a franchisee, the franchisor would provide support for setting up of the beauty parlour, operations, staff training, branding, advertising, etc., However, this types of a model would require a higher investment when compared to an independent beauty parlour. In addition to the initial setup fee for starting the beauty parlour, most Franchisors also require franchisee fee to be paid based on the revenue of the beauty parlour. Typical franchisee fee in the beauty parlour industry would be as follows:
- Royalty for First 3-6 months depending on the agreement is 0%.
- Following 3-6 months 10% to 15% or more as per agreement.
- And 15% or more once the franchisee starts making profits.
It is recommended that beauty parlour franchisees be establish in a limited liability partnership (LLP) or private limited company. This would ensure that the beauty parlour franchisee along with the franchisee rights, lease rental, licenses, tax registrations, equipment, etc., could be transferred to another person, if required.
Franchisor of a Beauty Parlour Chain
If you plan to start a beauty parlor with two or more store or salons at different locations under the same management, then you are looking at a chains of salons. Setting up a chain of successful beauty parlours would also allow the business to evolve over time as a Franchisor of a beauty parlour chain. To venture into chain of salons requires a lot of capital, high level of planning, vendor partnerships, branding, advertising and more. Further, since the brand of the beauty parlour chain would the most valuable intangible assets in this model, it is important to obtain trademark registration for the brand name at start. Entities like private limited company or limited company would be ideal entities for setting up a chain of beauty parlour chain or becoming a beauty parlour franchisor.
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