What are the three types of financing in small business?

Businesses like hair salons have three forms of financing to choose from if they need an additional cash injection for their hair salon. Debt financing can be obtained from banks and alternative lenders in the form of loans, while equity financing involves selling stocks or equity. While plenty of small business loans is available for salon business owners, the top three beauty and hair salon financing options business owners usually opt for are: SBA loans for real estate purchases or business acquisitions; a business line of credit in case the business needs quick access to cash; and equipment loans for essential equipment needs.

Is it profitable to own a beauty salon?

The total revenue of 257,000 salons and barbershops all over the United States is around 67 billion, and it’s estimated that each beauty salon generates approximately $245,000 each year. On average, salons make a profit of $19,100 each year, and their profit margins could range between 2% to 17%, with an average profit margin of 8.2%. This average is significantly higher than the general business average of 7.7% and is said to be improving year after year.

How do you make money running a salon?

As mentioned above, improving salon ambiance can lead to a significant boost in the company’s overall profitability. But aside from salon ambiance, you can also increase your salon profits by creating a streamlined booking process, reducing salon overhead costs, and identifying niches that stand out from your competitor’s offerings. You can also create loyalty plans through gifts and certificates to make your customers feel appreciated.

Ezra Cabrera

CONTENT TEAM LEAD AT SMB COMPASS

Education

Indiana University Bloomington

Expertise

GovCon Financing Expert, Asset Based Lending, Invoice Factoring, SMB Advocate

Featured In

Experience

Matthew Gillman is the founder and CEO of SMB Compass, a bespoke business financing company focused on providing financing and education to small businesses across the U.S. The company has provided over $250 million to more than 1,250 businesses. Coming from a family of small business owners sparked Matthew’s passion to not only become an entrepreneur, but also to work with his fellow entrepreneurs to build long-lasting relationships.