If you have a passion for customer service along with expertise in styling hair or doing nails, opening a beauty salon could be a good option for you. However, beauty salons are regarded as a high-risk investment so special consideration should be given to such things as financing. Here are three items to consider when opening a beauty salon.

1. Your Customer Base

If you are opening a brand new salon, it is wise to establish a customer base prior to opening your doors. If you previously worked in another beauty parlor, some of your clients may follow you to your new establishment and help get the word out that you are now open in a new location. However, if you are completely new to the industry you will need to do some advertising online, on social media, and on bulletin boards in other businesses around the community.

In addition to advertising, consider the location of your salon and how it relates to your customer base and attracting new customers. Choose a building that is visible from the street and has a lot of foot traffic as well as parking.

2. Overhead Costs

Most of the overhead costs that go into opening beauty salons involve the purchasing of equipment and leasing the building itself. There is also payroll to consider as you hire exceptional employees to help your salon build a customer base. You also want a well-stocked inventory with supplies such as shampoos and conditioners, hair coloring treatments, and a wide variety of nail polish for manicures and pedicures.

3. Financing

Because opening a beauty salon is considered high-risk it is essential that you examine all of the financing options available to you before getting started on your venture. Some commercial financing options include:

• An SBA loan, which is partially guaranteed by the U.S. Small Business Administration and often issued by banks; SBA loans are low-interest but require a very good credit score to qualify
• An unsecured business cash advance, which does not require collateral and uses your creditworthiness to qualify
• Equipment leasing, which can free up your available cash to buy supplies and add employees to your payroll

Once you start growing your business and building a customer base, financing options will be easier to come by should you ever need them again.

Starting a new business can be very challenging. Consider these three factors if you are interested in opening a salon.